Exhibit 10(a)
MORTGAGE LOAN PURCHASE AGREEMENT
This MORTGAGE LOAN PURCHASE AGREEMENT ("Agreement"), dated as of _____________,
1996, by and between Chevy Chase Preferred Capital Corporation, a Maryland
corporation having its principal office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Purchaser") and Chevy Chase Bank, F.S.B., a federal savings
bank having its principal office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ("Seller").
W I T N E S S E T H.:
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to purchase
from Seller, certain conventional residential first mortgage loans ("Mortgage
Loans") on a servicing retained basis as described herein, and which shall be
delivered as whole loans on the Closing Date, as defined below;
WHEREAS, each Mortgage Loan is secured by a mortgage, deed of trust or other
security instrument creating a first lien on a residential dwelling located in
the jurisdiction indicated on the Mortgage Loan Schedule; and
WHEREAS, Purchaser and Seller wish to prescribe the manner of the conveyance,
servicing and control of the Mortgage Loans.
NOW, THEREFORE, in consideration of the promises and mutual agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Purchaser and Seller agree as
follows:
SECTION 1. DEFINITIONS. For purposes of this Agreement the following
capitalized terms shall have the respective meanings set forth below. Other
capitalized terms used in this Agreement and not defined herein shall have the
respective meanings set forth in the Servicing Agreement attached hereto as
Exhibit B.
"Accepted Servicing Practices" means, with respect to any Mortgage Loan, those
mortgage servicing practices of prudent mortgage lending institutions which
service mortgage loans of the same type as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located.
"Act" means The National Housing Act, as amended from time to time.
"Adjustable Rate Mortgage Loan" or "ARM" means any individual Mortgage Loan
purchased pursuant to this Agreement the interest rate of which adjusts
periodically.
"Affiliate" means, with respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition,
"Control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement" means this Mortgage Loan Purchase Agreement and all amendments and
supplements hereto.
"ALTA" means The American Land Title Association or any successor thereto.
"Ancillary Income" means all late charges, assumption fees, escrow account
benefits, reinstatement fees, and similar types of fees arising from or in
connection with any Mortgage, to the extent not otherwise payable to the
Mortgagor under applicable law or pursuant to the terms of the related Mortgage
Note.
"Appraised Value" means the value set forth in an appraisal made in connection
with the origination of the related Mortgage Loan as the value of the Mortgaged
Property.
"Assignment and Assumption Agreement" has the meaning set forth in Section 19
hereof.
"Assignment of Mortgage" means an assignment of the Mortgage delivered in blank,
or equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
sale of the Mortgage to Purchaser.
"Business Day" means any day other than (i) a Saturday or Sunday, or (ii) a day
on which banking and savings and loan institutions in the State of Maryland are
authorized or obligated by law or executive order to be closed.
"Closing Date" means ____________, 1996, or such other date as is mutually
agreed upon by the parties.
"Code" means the Internal Revenue Code of 1986, as amended.
"Condemnation Proceeds" means all awards or settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
"Conventional Loan" means a conventional residential first lien mortgage loan
which is a Mortgage Loan.
"Convertible Mortgage Loan" means any individual Mortgage Loan purchased
pursuant to this Agreement which contains a provision whereby the Mortgagor is
permitted to convert the Mortgage Loan to a fixed rate Mortgage Loan in
accordance with the terms of the related Mortgage Note.
"Custodial Account" means the separate trust account created and maintained
pursuant to Section 2.04 of the Servicing Agreement.
"Cut-off Date" means ______________, 1996.
"Deleted Mortgage Loan" means a Mortgage Loan that is repurchased or replaced
with a Qualified Substitute Mortgage Loan by Seller in accordance with the terms
of this Agreement.
"Determination Date" means the earlier of two (2) Business Days prior to the
related Remittance Date or the 15th day of the month in which the related
Remittance Date occurs.
"Due Date" means the day of the month on which the Monthly Payment is due on a
Mortgage Loan, exclusive of any days of grace.
"Escrow Account" means the separate account created and maintained pursuant to
Section 2.06 of the Servicing Agreement with respect to each Mortgage Loan, as
specified in the Servicing Agreement.
"Escrow Payments" means, with respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.
"FHA" means the Federal Housing Administration, an agency within the United
States Department of Housing and Urban Development, or any successor thereto and
including the Federal Housing Commissioner and the Secretary of Housing and
Urban Development where appropriate under the FHA Regulations.
"FHLMC" means the Federal Home Loan Mortgage Corporation, or any successor
thereto.
"FNMA" means the Federal National Mortgage Association, or any successor
thereto.
"HUD" means the Department of Housing and Urban Development, or any federal
agency or official thereof which may from time to time succeed to the functions
thereof with regard to FHA mortgage insurance. The term "HUD," for purposes
of this Agreement, is also deemed to include subdivisions thereof such as the
FHA and Government National Mortgage Association.
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"Index", with respect to each ARM Loan, shall have the respective meaning
ascribed to it in each related Mortgage Note.
"Insurance Proceeds" means, with respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
"Interest Rate Adjustment Date" means, with respect to each ARM Loan, the date,
specified in the related Mortgage Note and the Mortgage Loan Schedule, on which
the Mortgage Interest Rate is adjusted.
"Lifetime Rate Caps" means the provision of each Mortgage Note related to an ARM
Loan which provides for an absolute maximum Mortgage Interest Rate thereunder.
The Mortgage Interest Rate during the terms of each ARM Loan shall not at any
time exceed the amount per annum set forth on Exhibit J hereto.
"Liquidation Proceeds" means cash received in connection with the liquidation of
a defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or the sale of the
related Mortgaged Property if the Mortgaged Property is acquired in satisfaction
of the Mortgage Loan.
"Loan-to-Value Ratio" or "LTV" means, with respect to any Mortgage Loan, the
ratio (expressed as a percentage) of the original principal amount of the
Mortgage Loan to the lesser of (a) the Appraised Value of the Mortgaged Property
at origination and (b) if the Mortgage Loan was made to finance the acquisition
of the related Mortgaged Property, the purchase price of the Mortgaged Property.
"Margin" means, with respect to each ARM Loan, the fixed percentage amount set
forth in the related Mortgage Note which amount is added to the Index in
accordance with the terms of the related Mortgage Note to determine on each
Interest Rate Adjustment Date the Mortgage Interest Rate for such Mortgage Loan.
"Monthly Payment" means the scheduled monthly payment of principal and interest
on a Mortgage Loan.
"Mortgage" means the mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first lien on an unsubordinated estate in fee
simple in real property securing the Mortgage Note; except that with respect to
real property located in jurisdictions in which the use of leasehold estates for
residential properties is a widely accepted practice, the mortgage, deed of
trust or other instrument securing the Mortgage Note may secure and create a
first lien upon a leasehold estate of the Mortgagor.
"Mortgage File" means the items pertaining to a particular Mortgage Loan
referred to in Exhibit A annexed hereto, and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
"Mortgage Interest Rate" means the annual rate of interest set forth in a
Mortgage Note, which, in the case of an ARM Loan, shall be adjusted from time to
time, with respect to each Mortgage Loan.
"Mortgage Interest Rate Cap" means, with respect to each ARM Loan, the limit on
each Mortgage Interest Rate adjustment as set forth in the related Mortgage
Note.
"Mortgage Loan" means an individual Mortgage Loan which is the subject of this
Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the applicable Mortgage Loan Schedule, which Mortgage Loan
includes without limitation the Mortgage File, the Monthly Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
and all other rights, benefits, proceeds and obligations arising from or in
connection with such Mortgage Loan, excluding replaced or repurchased mortgage
loans.
"Mortgage Loan Documents" means, with respect to each Mortgage Loan, the
following documents pertaining to such Mortgage Loan:
a. The original Mortgage Note (or, with respect to the Mortgage Loan listed on
Schedule I to Exhibit A hereto, a lost note affidavit, executed by an
officer of Seller, with a copy of the original note attached thereto)
bearing all intervening endorsements, endorsed "Pay to the order of _____
without recourse" and signed in the name of Seller by
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an authorized officer. To the extent that there is no room on the face of
the Mortgage Notes for endorsements, the endorsement may be contained on an
allonge, if applicable state law so allows. If the Mortgage Loan was
acquired by Seller in a merger, the endorsement must be by "[Seller],
successor by merger to [name of predecessor]". If the Mortgage Loan was
acquired or originated by Seller while doing business under another name,
the endorsement must be by "[Seller], formerly known as [previous name]";
and
b. The original Assignment of Mortgage for each Mortgage Loan in form and
substance acceptable for recording endorsed "Pay to the order of ______" and
signed in the name of Seller. If the Mortgage Loan was acquired by Seller in
a merger, the Assignment of Mortgage must be made by "[Seller], successor by
merger to [name of predecessor]". If the Mortgage Loan was acquired or
originated by Seller while doing business under another name, the Assignment
of Mortgage must be by "[Seller], formerly known as [previous name]".
c. The original of any guarantee executed in connection with the Mortgage Note.
d. The original Mortgage, with evidence of recording thereon. If in connection
with any Mortgage Loan, Seller cannot deliver or cause to be delivered the
original Mortgage with evidence of recording thereon on, or prior to the
Closing Date because of a delay caused by the public recording office where
much Mortgage has been delivered for recordation, a photocopy of such
Mortgage certified by Seller to be true and correct will be delivered; if
such Mortgage has been lost or if such public recording office retains the
original recorded Mortgage, Seller shall deliver or cause to be delivered to
Purchaser, a photocopy of such Mortgage, certified by such public recording
office to be a true and complete copy of the original recorded Mortgage.
e. The originals of all assumption, modification, consolidation or extension
agreements, if any, with evidence of recording thereon or certified copies
of such documents if the originals thereof are unavailable.
f. Originals of all intervening assignments of the Mortgage with evidence of
recording thereon, if such intervening assignment has been recorded.
g. The original mortgagee policy of title insurance or, in the event such
original title policy is unavailable, a certified true copy of the related
policy binder or commitment for title certified to be true and complete by
the title insurance company.
h. Any security agreement, chattel mortgage or equivalent executed in
connection with the Mortgage.
i. For Mortgage Loans with original LTV's greater than 85%, evidence of a PMI
Policy.
"Mortgage Loan Schedule" means the schedule of Mortgage Loans attached hereto as
Exhibit J setting forth at least the following information with respect to each
Mortgage Loan: (1) Seller's Mortgage Loan identifying number; (2) the
Mortgagor's name; (3) the street address of the Mortgaged Property including the
city, state and zip code; (4) a code indicating whether the Mortgaged Property
is owner-occupied, second home or investor owned; (s) the type of residential
units constituting the Mortgaged Property; (6) the original number of months to
maturity; (7) the remaining months to maturity from the Cut-off Date, based on
the original amortization schedule, and, if different, the maturity expressed in
the same manner but based on the actual amortization schedule; (8) the Loan-to-
Value Ratio at origination; (9) the Mortgage Interest Rate as of the Cut-off
Date; (10) the stated maturity date; (11) the amount of the Monthly Payment as
of the Cut-off Date; (12) the original principal amount of the Mortgage Loan;
(13) the principal balance of the Mortgage Loan as of the close of business on
the Cut-off Date, after deduction of payments of principal due on or before the
Cut-off Date whether or not collected; (14) a code indicating the purpose of the
loan (i.e., purchase, rate and term refinance, equity take-out refinance); (15)
a code indicating the documentation style (i.e. full, alternative or reduced);
(16) a code indicating whether the Mortgage Loan is a Convertible Mortgage Loan;
(17) the number of times during the 12 month period preceding the Closing Date
that any Monthly Payment has been received thirty or more days after its Due
Date; (18) the type of Mortgage Loan product, if any; (19) the first payment Due
Date; (19) the initial Mortgage Interest Rate; (20) the amount of the first
Monthly Payment; (21) the name of any Qualified Insurer with respect to a PMI
Policy; and (22) the Servicing Fee Rate; and, with respect to any ARM Loan: (1)
the Interest Rate Adjustment Dates; (2) the Margin; (3) the Lifetime Rate Cap;
(4) any Periodic Rate Caps; (5) any minimum interest rate, if other than the
Margin; (6) the first Rate Adjustment Date after
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the Cut-off Date; and (8) the applicable Index, in each case, under the terms of
the Mortgage Note. With respect to the Mortgage Loans in the aggregate, the
Mortgage Loan Schedule shall set forth the following information, as of the Cut-
off Date: (1) the number of Mortgage Loans; (2) the current aggregate
outstanding principal balance of the Mortgage Loans; (3) the weighted average
Mortgage Interest Rate of the Mortgage Loans; and (4) the weighted average
maturity of the Mortgage Loans.
"Mortgage Note" means the note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
"Mortgaged Property" means the real property (or leasehold estate, if
applicable) securing repayment of the debt evidenced by a Mortgage Note.
"Mortgagor" means the obliger on a Mortgage Note.
"Officer's Certificate" means a certificate signed by the Chairman of the Board
or the Vice Chairman of the Board or a President or a Vice President and by the
Treasurer or the Secretary or one of the Assistant Treasurers or Assistant
Secretaries of Seller, and delivered to Purchaser as required by this Agreement.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel for
Seller, reasonably acceptable to Purchaser.
"Periodic Rate Cap" means the provision of each Mortgage Note related to each
ARM Loan which provides for an absolute maximum amount by which the Mortgage
Interest Rate therein may increase or decrease on an Interest Rate Adjustment
Date above or below the Mortgage Interest Rate previously in effect. The
Periodic Rate Cap for each ARM Loan is the rate set forth on Exhibit K hereto.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, limited liability company,
unincorporated organization, government or any agency or political subdivision
thereof.
"PMI Policy" means a policy of primary mortgage guaranty insurance issued by a
Qualified Insurer.
"Principal Prepayment" means any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date, including
any prepayment penalty or premium thereon and which is not accompanied by an
amount of interest representing scheduled interest due on any date or dates in
any month or months subsequent to the month of prepayment.
"Purchase Price" means the price paid on the Closing Date by Purchaser to Seller
in exchange for the Mortgage Loans purchased on the Closing Date as set forth in
Section 4 of this Agreement.
"Purchaser" means Chevy Chase Preferred Capital Corporation, its designees,
successors or assigns.
"Qualified Appraiser" means an appraiser who had no interest, direct or indirect
in the Mortgaged Property or in any loan made on the security thereof, and whose
compensation is not affected by the approval or disapproval of the Mortgage
Loan, and such appraiser and the appraisal made by such appraiser both satisfy
the requirements of Title XI of the Federal Institutions Reform, Recovery, and
Enforcement Act of 1989 and the regulations promulgated thereunder, all as in
effect on the date the Mortgage Loan was originated.
"Qualified Insurer" means an insurance company which is: duly qualified as such
under the laws of the state in which the related Mortgaged Property is located;
duly authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided; approved as an insurer by FNMA and
FHLMC with respect to primary mortgage insurance; and, with respect to hazard
and flood insurance, rated by Best's in one of its two highest categories.
"Qualified Substitute Mortgage Loan" means a mortgage loan eligible to be
substituted by Seller for a Deleted Mortgage Loan which must, on the date of
such substitution, (i) have an outstanding principal balance, after deduction of
all scheduled payments due in the month of substitution (or in the case of a
substitution of more than one mortgage loan for a Deleted
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Mortgage Loan, an aggregate principal balance), not in excess of the outstanding
principal balance of the Deleted Mortgage Loan (the amount of any shortfall will
be deposited in the Custodial Account by Seller in the month of substitution);
(ii) have a Mortgage Interest Rate equal to, or not more than 1.00% greater
than, the Mortgage Interest Rate of the Deleted Mortgage Loan; (iii) have a
remaining term to maturity equal to, or not more than one year less than that of
the Deleted Mortgage Loan (iv) be of the same type as the Deleted Mortgage Loan
(i.e., Mortgage Loan with the same Mortgage Interest Rate Caps or fixed rate);
and (v) comply with each representation and warranty (respecting individual
Mortgage Loans) set forth in Section 8.02 hereof.
"Remittance Date" is defined in the Servicing Agreement.
"Repurchase Price" means, with respect to any Mortgage Loan, a price equal to
(i) the unpaid principal balance of such Mortgage Loan plus (ii) interest on
such unpaid principal balance of such Mortgage Loan at the Mortgage Interest
Rate from the last date through which interest has been paid and distributed to
Purchaser to the date of repurchase, less amounts received or advanced, if any,
by Seller in respect of such repurchased Mortgage Loan.
"RESPA" means the Real Estate Settlement Procedures Act, as amended.
"Seller" means Chevy Chase Bank, F.S.B., its successors and assigns.
"Servicing Agreement" means the agreement, attached hereto as Exhibit B, to be
entered into by Seller, as servicer, and Purchaser.
"Servicing Fee" means the fee to be paid to Seller by Purchaser for servicing
each Mortgage Loan as more specifically defined in the Servicing Agreement.
"Servicing Fee Rate" means, with respect to each Mortgage Loan, the rate
specified in the Mortgage Loan Schedule with respect to such Mortgage Loan.
"Servicing File" means with respect to each Mortgage Loan, the file retained by
Seller during the period in which Seller is acting as servicer pursuant to the
Servicing Agreement consisting of originals of all documents in the Mortgage
File which are not delivered to Purchaser and copies of the Mortgage Loan
Documents.
"Stated Principal Balance" means as to each Mortgage Loan, (i) the principal
balance of the Mortgage Loan at the Cut-off Date after giving effect to payments
of principal due on or before such date, whether or not received, minus (ii) all
amounts previously received by Purchaser with respect to the related Mortgage
Loan representing payments or recoveries of principal or advances in lieu
thereof.
[SECTION 2. RESERVED.]
[SECTION 3. RESERVED.]
SECTION 4. AGREEMENT TO PURCHASE. Seller agrees to sell and Purchaser agrees to
purchase at par Mortgage Loans having an aggregate principal balance on the Cut-
off Date of $________, or such other amount as agreed by Purchaser and Seller as
evidenced by the actual aggregate principal balance of the Mortgage Loans
accepted by Purchaser on the Closing Date. The initial principal amount of the
Mortgage Loans shall be the aggregate principal balance of the Mortgage Loans,
so computed as of the Cut-off Date, after application of scheduled payments of
principal due on or before the Cut-off Date whether or not collected.
In addition to the Purchase Price as described above, Purchaser shall pay to
Seller, at closing, accrued interest on the initial principal amount of the
related Mortgage Loans at the weighted average Mortgage Interest Rate of those
Mortgage Loans, minus any amounts attributable to Servicing Fees as provided in
the Servicing Agreement from the Cut-off Date through the day prior to the
Closing Date, inclusive.
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The Purchase Price plus accrued interest as set forth in the preceding paragraph
shall be paid on the Closing Date by wire transfer of immediately available
funds.
Purchaser shall be entitled to (1) all scheduled principal due after the Cut-off
Date, (2) all other recoveries of principal collected on or after the Cut-off
Date (provided, however, that all scheduled payments of principal due on or
before the Cut-off Date and collected after the Cut-off Date shall belong, and
be paid , to Seller), and (3) all payments of interest on the Mortgage Loans net
of applicable Servicing Fees collected on or after the Cut-off Date (minus that
portion of any such payment which is allocable to the period prior to the Cut-
off Date). The outstanding principal balance of each Mortgage Loan as of the
Cut-off Date is determined after application of payments of principal due on or
before the Cut-off Date whether or not collected, together with any unscheduled
principal prepayments collected prior to the Cut-off Date; provided, however,
that payments of scheduled principal and interest prepaid for a Due Date beyond
the Cut-off Date shall not be applied to the principal balance as of the Cut-off
Date. Such prepaid amounts shall be the property of Purchaser. Any such prepaid
amounts shall be deposited into the Custodial Account, which account is
established for the benefit of Purchaser for subsequent remittance to Purchaser.
SECTION 5. EXAMINATION OF MORTGAGE FILES. Prior to the date hereof, Seller has
(a) delivered to Purchaser in escrow, for examination with respect to each
Mortgage Loan to be purchased, the related Mortgage File, including a copy of
the Assignment of Mortgage, pertaining to each Mortgage Loan, or (b) made the
related Mortgage File available to Purchaser for examination at Seller's offices
or such other location as shall otherwise be agreed upon by Purchaser and
Seller. The fact that Purchaser has conducted or has failed to conduct any
partial or complete examination of the Mortgage Files shall not affect
Purchaser's (or its successor's) rights to demand repurchase, substitution or
other relief as provided herein.
SECTION 6. CONVEYANCE FROM SELLER TO PURCHASER.
6.01. Conveyance of Mortgage Loans; Possession of Files. Seller hereby agrees
to sell, transfer, assign and convey to Purchaser on the Closing Date, without
recourse, but subject to the terms of this Agreement, all right, title and
interest of Seller in and to the Mortgage Loans and the Mortgage Files and all
rights and obligations arising under the documents contained therein. The
Servicing File shall be retained by Seller in accordance with the terms of the
Servicing Agreement and, as provided therein, shall be appropriately identified
in Seller's books and records to clearly reflect the sale of the related
Mortgage Loan to Purchaser.
On and after the Closing Date, each Mortgage and related Mortgage Note shall be
possessed solely by Purchaser. All rights arising out of the Mortgage Loans
including, but not limited to, all funds received by Seller after the Cut-off
Date in connection with a Mortgage Loan shall be vested in Purchaser provided,
however, that all funds received on or in connection with a Mortgage Loan shall
be received and held by Seller in trust for the benefit of Purchaser as the
owner of the Mortgage Loans pursuant to the terms of this Agreement.
The sale of each Mortgage Loan shall be reflected on Seller's balance sheet and
other financial statements as a sale of assets by Seller.
6.02. Delivery of Mortgage Loan Documents. On the Closing Date, Seller shall
deliver to Purchaser the Mortgage Loan Documents with respect to each Mortgage
Loan set forth on the Mortgage Loan Schedule. Seller shall forward to Purchaser
original documents evidencing an assumption, modification, consolidation,
conversion or extension of any Mortgage Loan entered into in accordance with
this Agreement within two (2) weeks of their execution, provided, however, that
Seller shall provide Purchaser with a certified true copy of any such document
submitted for recordation within two (2) weeks of its execution, and shall
promptly provide the original of any document submitted for recordation or a
copy of such document certified by the appropriate public recording office to be
a true and complete copy of the original within ninety (90) days of its
submission for recordation.
In the event that such original or copy of any document submitted for
recordation to the appropriate public recording office is not so delivered to
Purchaser within 90 days following the Closing Date (other than with respect to
the Assignments of Mortgage which shall be delivered to Purchaser in blank and
recorded subsequently by Purchaser), and in the event that Seller does not cure
such failure within 30 days of discovery or receipt of written notification of
such failure from Purchaser, the related Mortgage Loan shall, upon the request
of Purchaser, be repurchased by Seller at the price and in the manner specified
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in Subsection 8.03. The foregoing repurchase obligation shall not apply in the
event that Seller cannot deliver, or cause to be delivered, such original or
copy of any document submitted for recordation to the appropriate public
recording office within the specified period due to a delay caused by the
recording office in the applicable jurisdiction; provided that Seller shall
instead deliver, or cause to be delivered, a recording receipt of such recording
office or, if such recording receipt is not available, an officer's certificate
of a servicing officer of Seller confirming that such documents have been
accepted for recording; provided that, upon request of Purchaser and delivery by
Purchaser to Seller of a schedule of the related Mortgage Loans, Seller shall
reissue and deliver to Purchaser said officer's certificate relating to the
related Mortgage Loans.
Seller shall pay all initial recording fees, if any, for the Assignments of
Mortgage and any other fees or costs in transferring all original documents to
Purchaser. Purchaser shall be responsible for recording the Assignments of
Mortgage and shall be reimbursed by Seller for the reasonable costs associated
therewith pursuant to the preceding sentence.
SECTION 7. SERVICING OF THE MORTGAGE LOANS. The Mortgage Loans have been sold
by Seller to Purchaser on a servicing retained basis. Purchaser shall retain
Seller as independent contract servicer of the Mortgage Loans pursuant to and in
accordance with the terms and conditions contained in the Servicing Agreement.
Purchaser and Seller shall execute the Servicing Agreement on the Closing Date
in the form attached hereto as Exhibit B. Pursuant to the Servicing Agreement,
Seller shall begin servicing the Mortgage Loans on behalf of Purchaser and shall
be entitled to the Servicing Fee and any Ancillary Income with respect to such
Mortgage Loans from the Closing Date until the termination of the Servicing
Agreement with respect to any of the Mortgage Loans as set forth in the
Servicing Agreement.
SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS OF Seller; REMEDIES FOR
BREACH.
8.01. Representations and Warranties Regarding Seller. Seller represents,
warrants and covenants to Purchaser that as of the date hereof and as of the
Closing Date:
a. DUE ORGANIZATION AND AUTHORITY; ENFORCEABILITY. Seller is a federal savings
bank duly organized, validly existing and in good standing under the laws of
the United States and has all licenses necessary to carry on its business as
now being conducted in each state wherein it owns or leases any material
properties or where a Mortgaged Property is located. Seller is in compliance
with the laws of any such state to the extent necessary to ensure the
enforceability of the related Mortgage Loan in accordance with the terms of
this Agreement; Seller has the full corporate power, authority and legal
right to hold, transfer and convey the Mortgage Loans and to execute and
deliver this Agreement and to perform its obligations hereunder; the
execution, delivery and performance of this Agreement (including all
instruments of transfer to be delivered pursuant to this Agreement) by
Seller and the consummation of the transactions contemplated hereby have
been duly and validly authorized; this Agreement and all agreements
contemplated hereby have been duly executed and delivered and constitute the
valid, legal, binding and enforceable obligations of Seller subject to
bankruptcy laws and other similar laws of general application affecting
rights of creditors and subject to the application of the rules of equity,
including those respecting the availability of specific performance, none of
which will materially interfere with the realization of the benefits
provided thereunder, regardless of whether such enforcement is sought in a
proceeding in equity or at law; and all requisite corporate action has been
taken by Seller to make this Agreement and all agreements contemplated
hereby valid and binding upon Seller in accordance with their terms;
b. ORDINARY COURSE OF BUSINESS. The consummation of the transactions
contemplated by this Agreement are in the ordinary course of business of
Seller, and the transfer, assignment and conveyance of the Mortgage Notes
and the Mortgages by Seller pursuant to this Agreement are not subject to
the bulk transfer or any similar statutory provisions in effect in any
applicable jurisdiction;
c. NO CONFLICTS. Neither the execution and delivery of this Agreement, the sale
of the Mortgage Loans to Purchaser, the consummation of the transactions
contemplated hereby, nor the fulfillment of or compliance with the terms and
conditions of this Agreement, will conflict with or result in a breach of
any of the terms, conditions or provisions of Seller's charter or by-laws or
any legal restriction or any agreement or instrument to which Seller is now
a party or by which it is bound, or constitute a default or result in an
acceleration under any of the foregoing, or result in the violation of any
law, rule, regulation, order, judgment or decree to which Seller or its
property is subject, or result in the creation or imposition of any lien,
charge or encumbrance that would have an adverse effect upon any of its
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properties pursuant to the terms of any mortgage, contract, deed of trust or
other instrument, or impair the ability of Purchaser to realize on the
Mortgage Loans, impair the value of the Mortgage Loans, or impair the
ability of Purchaser to realize the full amount of any mortgage insurance
benefits accruing pursuant to this Agreement;
d. ABILITY TO PERFORM; SOLVENCY. Seller does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement. Seller is solvent and the sale of the Mortgage
Loans will not cause Seller to become insolvent. The sale of the Mortgage
Loans is not undertaken with the intent to hinder, delay or defraud any of
Seller's creditors;
e. NO LITIGATION PENDING. There is no action, suit, proceeding or investigation
pending or threatened against Seller, before any court, administrative
agency or other tribunal asserting the invalidity of this Agreement, seeking
to prevent the consummation of any of the transactions contemplated by this
Agreement or which, either in any one instance or in the aggregate, could
result in any material adverse change in the business, operations, financial
condition, properties or assets of Seller, or in any material impairment of
the right or ability of Seller to carry on its business substantially as now
conducted, or in any material liability on the part of Seller, or which
would draw into question the validity of this Agreement or the Mortgage
Loans or of any action taken or to be taken in connection with the
obligations of Seller contemplated herein, or which would be likely to
impair materially the ability of Seller to perform under the terms of this
Agreement;
f. NO CONSENT REQUIRED. No consent, approval, authorization or order of, or
registration or filing with, or notice to any court or governmental agency
or body including HUD is required for the execution, delivery and
performance by Seller of or compliance by Seller with this Agreement or the
Mortgage Loans, the delivery of a portion of the Mortgage Files to Purchaser
or the sale of the Mortgage Loans or the consummation of the transactions
contemplated by this Agreement, or if required, such approval has been
obtained prior to the Closing Date;
g. SELECTION PROCESS. The Mortgage Loans were selected from among the
outstanding one- to four-family mortgage loans in Seller's portfolio at the
Closing Date as to which the representations and warranties set forth in
Subsection 8.02 could be made and such selection was not made in a manner so
as to affect adversely the interests of Purchaser;
h. INITIAL PORTFOLIO. The aggregate characteristics of the Mortgage Loans are
as set forth under the heading " Business and Strategy--Description of
Initial Portfolio" in the Prospectus of Purchaser dated ______, 1996;
i. NO UNTRUE INFORMATION. Neither this Agreement nor any information,
statement, tape, diskette, report, form, or other document furnished or to
be furnished pursuant to this Agreement or in connection with the
transactions contemplated hereby contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading;
and
j. NO BROKERS. Seller has not dealt with any broker, investment banker, agent
or other person that may be entitled to any commission or compensation in
connection with the sale of the Mortgage Loans.
8.02. Representations and Warranties Regarding Individual Mortgage Loans.
Seller hereby represents and warrants to Purchaser that, as to each Mortgage
Loan, as of the Closing Date for such Mortgage Loan:
a. MORTGAGE LOANS AS DESCRIBED. The information set forth in the Mortgage
Loan Schedule is complete, true and correct in all material respects;
b. PAYMENTS CURRENT; STATUS. All payments required to be made up to, but not
including, the Cut-off Date for the Mortgage Loan under the terms of the
Mortgage Note have been made and credited. No payment required under the
Mortgage Loan is delinquent nor has any payment under the Mortgage Loan
been 30 days or more delinquent more than once within the twelve (12)
months prior to the Cut-off Date. The Mortgage Loan is not, and has not
been at any time in the preceding twelve months, (i) classified, (ii) in
nonaccrual status or (iii) renegotiated due to the deterioration of the
financial condition of the Mortgagor;
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c. NO OUTSTANDING CHARGES. There are no defaults in complying with the terms
of the Mortgage, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground
rents which previously became due and owing have been paid, or an escrow
of funds has been established in an amount sufficient to pay for every
such item which remains unpaid and which has been assessed but is not yet
due and payable. Seller has not advanced funds, or induced, solicited or
knowingly received any advance of funds by a party other than the
Mortgagor, directly or indirectly, for the payment of any amount required
under the Mortgage Loan, except for interest accruing from the date of the
Mortgage Note or date of disbursement of the Mortgage Loan proceeds,
whichever is earlier, to the day which precedes by one month the Due Date
of the first installment of principal and interest;
d. ORIGINAL TERMS UNMODIFIED. The terms of the Mortgage Note and Mortgage
have not been impaired, waived, altered or modified in any respect except
by a written instrument which has been recorded (if necessary to protect
the interests of Purchaser) and which has been delivered to Purchaser and
the terms of which are reflected in the Mortgage Loan Schedule, if
applicable. The substance of any such waiver, alteration or modification
has been approved by the title insurer, if any, to the extent required by
the policy, and its terms are reflected on the Mortgage Loan Schedule, if
applicable. No Mortgagor has been released, in whole or in part, except in
connection with an assumption agreement, which assumption agreement is
part of the Mortgage Loan File delivered to Purchaser and the terms of
which are reflected in the Mortgage Loan Schedule;
e. NO DEFENSES. The Mortgage Loan is not subject to any right of rescission,
set-off, counterclaim or defense, including without limitation the defense
of usury, nor will the operation of any of the terms of the Mortgage Note
or the Mortgage, or the exercise of any right thereunder, render either
the Mortgage Note or the Mortgage unenforceable, in whole or in part and
no such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto, and no Mortgagor is now or was, at the time
of origination of the related Mortgage Loan, a debtor in any state or
Federal bankruptcy or insolvency proceeding;
f. HAZARD INSURANCE. Pursuant to the terms of the Mortgage, all buildings or
other improvements upon the Mortgaged Property are insured by a generally
acceptable insurer against loss by fire, hazards of extended coverage and
such other hazards as are set forth in Section 2.10 of the Servicing
Agreement. If required by the Flood Disaster Protection Act of 1973, as
amended, the Mortgage Loan is covered by a flood insurance policy which
meets all current federal guidelines and conforms to FNMA and FHLMC
guidelines , as well as all additional requirements set forth in Section
2.10 of the Servicing Agreement. All individual insurance policies contain
a standard mortgagee clause naming Seller and its successors and assigns
as mortgagee, and all premiums thereon have been paid. The Mortgage for
each Mortgage Loan obligates the Mortgagor thereunder to maintain the
hazard insurance policy at the Mortgagor's cost and expense, and on the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to
obtain and maintain such insurance at such Mortgagor's cost and expense,
and to seek reimbursement therefor from the Mortgagor. Where required by
state law or regulation, the Mortgagor has been given an opportunity to
choose the carrier of the required hazard insurance, provided the policy
is not a "master" or "blanket" hazard insurance policy covering a
condominium, or any hazard insurance policy covering the common facilities
of a planned unit development. The hazard insurance policy is the valid
and binding obligation of the insurer, is in full force and effect, and
will be in full force and effect and inure to the benefit of Purchaser
upon the consummation of the transactions contemplated by this Agreement.
Seller has not engaged in, and has no knowledge that the Mortgagors have
engaged in, any act or omission which would impair the coverage of any
such policy, the benefits of the endorsement provided for herein, or the
validity and binding effect of either including, without limitation, no
unlawful fee, commission, kickback or other unlawful compensation or value
of any kind has been or will be received, retained or realized by any
attorney, firm or other person or entity, and no such unlawful items have
been received, retained or realized by Seller;
g. COMPLIANCE WITH APPLICABLE LAWS. All applicable federal, state and local
laws and regulations including, without limitation, usury, truth-in-
lending, real estate settlement procedures, consumer credit protection,
fair housing, equal credit opportunity and disclosure laws applicable to
the Mortgage Loan have been complied with, the consummation of the
transactions contemplated hereby will not involve the violation of any
such laws or regulations, and Seller shall maintain in its possession,
available for Purchaser's inspection, and shall deliver to Purchaser upon
demand, evidence of such compliance. ****
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h. NO SATISFACTION OF MORTGAGE. The Mortgage has not been satisfied,
canceled, subordinated or rescinded, in whole or in part, and the
Mortgaged Property has not been released from the lien of the Mortgage, in
whole or in part, nor has any instrument been executed that would effect
any such release, cancellation, subordination or rescission. Seller has
not waived the performance by the Mortgagor of any action, if the
Mortgagor's failure to perform such action would cause the Mortgage Loan
to be in default, nor has Seller waived any default resulting from any
action or inaction by the Mortgagor;
i. LOCATION AND TYPE OF MORTGAGED PROPERTY. The Mortgaged Property is located
in the state identified in the Mortgage Loan Schedule and consists of a
single parcel of real property with a detached single family residence
erected thereon, or a townhouse, or a two- to four-family dwelling, or an
individual condominium unit in a condominium project, or an individual
unit in a planned unit development, provided, however, that any
condominium unit or planned unit development shall conform with
requirements acceptable to FNMA or FHLMC regarding such dwellings and that
no residence or dwelling is a single parcel of real property with a
cooperative housing corporation erected thereon, a mobile home or a
manufactured dwelling. As of the date of origination, no portion of the
Mortgaged Property is used for commercial purposes, and since the date of
origination no portion of the Mortgaged Property is used for commercial
purposes;
j. VALID FIRST LIEN. The Mortgage is a valid, subsisting, enforceable and
perfected first lien on the Mortgaged Property, including all buildings
and improvements on the Mortgaged Property and all installations and
mechanical, electrical, plumbing, heating and air conditioning systems
located in or annexed to such buildings, and all additions alterations and
replacements made at any time with respect to the foregoing. The lien of
the Mortgage is subject only to:
1. the lien of current real property taxes and assessments not yet due
and payable;
2. covenants, conditions and restrictions, rights of way, easements and
other matters of the public record as of the date of recording
acceptable to prudent mortgage lending institutions generally and
specifically referred to in the lender's title insurance policy
delivered to the originator of the Mortgage Loan and (a) specifically
referred to or otherwise considered in the appraisal made for the
originator of the Mortgage Loan or (b) which do not adversely affect
the Appraised Value of the Mortgaged Property set forth in such
appraisal; and
3. other matters to which like properties are commonly subject which do
not materially interfere with the benefits of the security intended to
be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property.
Any security agreement, chattel mortgage or equivalent document related to
and delivered in connection with the Mortgage Loan establishes and creates
a valid, subsisting, enforceable and perfected first lien and first
priority security interest on the property described therein and Seller
has full right to sell and assign the same to Purchaser. The Mortgaged
Property was not, as of the date of origination of the Mortgage Loan,
subject to a mortgage, deed of trust, deed to secure debt or other
security instrument creating a lien subordinate to the lien of the
Mortgage (except any such subordinate loan which was created in connection
with the origination of the related Mortgage Loan details of which are
contained in the related Mortgage File);
k. VALIDITY OF MORTGAGE DOCUMENTS. The Mortgage Note and the Mortgage and any
other agreement executed and delivered by a Mortgagor in connection with a
Mortgage Loan 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, the Mortgage and any other such related
agreement had legal capacity to enter into the Mortgage Loan and to
execute and deliver the Mortgage Note, the Mortgage and any such
agreement, and the Mortgage Note, the Mortgage and any other such related
agreement have been duly and properly executed by such parties. No fraud,
error, omission, misrepresentation, negligence or similar occurrence with
respect to a Mortgage Loan has taken place on the part of any Person,
including without limitation, the Mortgagor, any appraiser, any builder or
developer, or any other party involved in the origination of the Mortgage
Loan. Seller has reviewed all of the documents constituting the Servicing
File and has made such inquiries as it deems necessary to make and confirm
the accuracy of the representations set forth herein;
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l. FULL DISBURSEMENT OF PROCEEDS. The Mortgage Loan has been closed and the
proceeds of the Mortgage Loan have been fully disbursed and there is no
requirement for future advances thereunder, and any and all requirements
as to completion of any on-site or off-site improvement and as to
disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making or closing the Mortgage Loan
and the recording of the Mortgage were paid, and the Mortgagor is not
entitled to any refund of any amounts paid or due under the Mortgage Note
or Mortgage;
m. OWNERSHIP. Seller is the sole owner of record and holder of the Mortgage
Loan and the indebtedness evidenced by each Mortgage Note, except for the
assignments of mortgage which have been sent for recording and upon
recordation, Seller will be the owner of record of each Mortgage and the
indebtedness evidenced by each Mortgage Note, and upon the sale of the
Mortgage Loans to Purchaser, Seller will retain the Mortgage Files or any
part thereof with respect thereto not delivered to Purchaser in trust only
for the purpose of servicing and supervising the servicing of each
Mortgage Loan. The Mortgage Loan is not assigned or pledged, and Seller
has good, indefeasible and marketable title thereto, and has full right to
transfer and sell the Mortgage Loan to Purchaser free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim
or security interest, and has full right and authority subject to no
interest or participation of, or agreement with, any other party, to sell
and assign each Mortgage Loan pursuant to this Agreement and following the
sale of each Mortgage Loan, Purchaser will own such Mortgage Loan free and
clear of any encumbrance, equity, participation interest, lien, pledge,
charge, claim or security interest. Seller intends to relinquish all
rights to possess, control and monitor the Mortgage Loan, except
indirectly for purposes of servicing the Mortgage Loan as set forth in the
Servicing Agreement. After the Closing Date, Seller will have no right to
modify or alter the terms of the sale of the Mortgage Loan and Seller will
have no obligation or right to repurchase the Mortgage Loan or substitute
another Mortgage Loan, except as provided in this Agreement;
n. DOING BUSINESS. All parties which have had any interest in the Mortgage
Loan, whether as mortgagee, assignee, pledges or otherwise, are (or,
during the period in which they held and disposed of such interest, were)
(1) in compliance with any and all applicable licensing requirements of
the laws of the state wherein the Mortgaged Property is located, and (2)
either (i) organized under the laws of such state, or (ii) qualified to do
business in such state, or (iii) a federal savings and loan association, a
savings bank or a national bank having a principal office in such state,
or (3) not doing business in such state;
o. LTV, PMI POLICY. No Conventional Loan has an LTV greater than 95%. The
original LTV of each Conventional Loan either was not more than 85% or the
excess over 75% is and will be insured as to payment defaults by a PMI
Policy until the LTV of such Conventional Loan is reduced to 85%. All
provisions of such PMI Policy have been and are being complied with, such
policy is valid and remains in full force and effect, and all premiums due
thereunder have been paid. No action, inaction, or event has occurred and
no state of facts exists that has, or will result in the exclusion from,
denial of, or defense to coverage by the PMI Policy. Any Conventional Loan
subject to a PMI Policy obligates the Mortgagor thereunder to maintain the
PMI Policy and to pay all premiums and charges in connection therewith.
The Mortgage Interest Rate for each Conventional Loan as set forth on the
Mortgage Loan Schedule is net of any such insurance premium;
p. TITLE INSURANCE. The Mortgage Loan is covered by an ALTA lender's title
insurance policy or other generally acceptable form of policy or insurance
acceptable to FNMA or FHLMC and each such title insurance policy is issued
by a title insurer acceptable to FNMA or FHLMC and qualified to do
business in the jurisdiction where the Mortgaged Property is located,
insuring Seller, its successors and assigns, as to the first priority lien
of the Mortgage in the original principal amount of the Mortgage Loan,
subject only to the exceptions contained in clauses (1), (2) and (3) of
paragraph (j) of this Subsection 8.02, and against any loss by reason of
the invalidity or unenforceability of the lien resulting from the
provisions of the Mortgage providing for adjustment to the Mortgage
Interest Rate and Monthly Payment. Where required by state law or
regulation, the Mortgagor has been given the opportunity to choose the
carrier of the required mortgage title insurance. Additionally, such
lender's title insurance policy affirmatively insures ingress and egress,
and against encroachments by or upon the Mortgaged Property or any
interest therein. Seller, its successor and assigns, are the sole insureds
under such lender's title insurance policy, and such lender's title
insurance policy is valid and remains in full force and effect and will be
in force and effect upon the consummation of the transactions contemplated
by this Agreement. No claims have been made under such lender's title
insurance policy,
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and no prior holder of the related Mortgage, including Seller, has done,
by act or omission, anything which would impair the coverage of such
lender's title insurance policy, including without limitation, no unlawful
fee, commission, kickback or other unlawful compensation or value of any
kind has been or will be received, retained or realized by any attorney,
firm or other person or entity, and no such unlawful items have been
received, retained or realized by Seller;
q. NO DEFAULTS. No default, breach, violation or event which would permit
acceleration exists under the Mortgage or the Mortgage Note and no event
which, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation or
event which would permit acceleration, and neither Seller nor its
predecessors have waived any default, breach, violation or event which
would permit acceleration;
r. NO MECHANICS' LIENS. There are no mechanics' or similar liens or claims
which have been filed for work, labor or material (and no rights are
outstanding that under law could give rise to such liens) affecting the
related Mortgaged Property which are or may be liens prior to, or equal
with, the lien of the related Mortgage;
s. LOCATION OF IMPROVEMENTS; NO ENCROACHMENTS. All improvements which were
considered in determining the Appraised Value of the Mortgaged Property
lay wholly within the boundaries and building restriction lines of the
Mortgaged Property, and no improvements on adjoining properties encroach
upon the Mortgaged Property. No improvement located on or being part of
the Mortgaged Property is in violation of any applicable zoning law or
regulation;
t. ORIGINATION; PAYMENT TERMS. The Mortgage Loan was originated by a
mortgagee approved by the Secretary of Housing and Urban Development
pursuant to Sections 203 and 211 of the Act, a savings and loan
association, a savings bank, a commercial bank, credit union, insurance
company or similar institution which is supervised and examined by a
federal or state authority. The documents, instruments and agreements
submitted for loan underwriting were not falsified and contain no untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary to make the information and statements therein
not misleading. Principal payments on the Mortgage Loan commenced no more
than sixty (60) days after funds were disbursed in connection with the
Mortgage Loan. The Mortgage Interest Rate, as well as the Lifetime Rate
Cap and the Periodic Rate Cap if the Mortgage Loan is an ARM Loan, are as
set forth on Exhibit J and/or Exhibit K hereto. The Mortgage Note is
payable on the first day of each month in equal monthly installments of
principal and interest, which installments of interest are subject to
change if the Mortgage Loan is an ARM Loan due to the adjustments to the
Mortgage Interest Rate on each Interest Rate Adjustment Date, with
interest calculated and payable in arrears, sufficient to amortize the
Mortgage Loan fully by the stated maturity date, over an original term of
not more than thirty years from commencement of amortization. There is no
negative amortization with respect to any Mortgage Loan. Each Convertible
Mortgage Loan contains a provision allowing the Mortgagor to convert the
Mortgage Note from an adjustable interest rate Mortgage Note to a fixed
interest rate Mortgage Note in accordance with the terms of the Mortgage
Note or a rider to the related Mortgage Note;
u. CUSTOMARY PROVISIONS. The Mortgage contains customary and enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the
benefits of the security provided thereby, including, (i) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (ii)
otherwise by judicial foreclosure. Upon default by a Mortgagor on a
Mortgage Loan and foreclosure on, or trustee's sale of, the Mortgaged
Property pursuant to the proper procedures, the holder of the Mortgage
Loan will be able to deliver good and merchantable title to the Mortgaged
Property. There is no homestead or other exemption available to a
Mortgagor which would interfere with the right to sell the Mortgaged
Property at a trustee's sale or the right to foreclose the Mortgage,
subject to applicable federal and state laws and judicial precedent with
respect to bankruptcy and right of redemption or similar law. The Mortgage
contains due-on-sale provisions providing for the acceleration of the
payment of the unpaid principal balance of such Mortgage Loan in the event
that all or any part of the Mortgaged Property is sold or transferred
without the prior written consent of the Mortgagee;
v. CONFORMANCE WITH AGENCY AND UNDERWRITING STANDARDS. The Mortgage Loan was
underwritten in accordance with the underwriting standards of Seller (a
copy of which is attached hereto as Exhibit L), or FNMA's underwriting
standards (except that the principal balance of certain Mortgage Loans may
have exceeded the limits of FNMA), in
13
each case in effect at the time the Mortgage Loan was originated. The
Mortgage Note and Mortgage are on forms acceptable to FHLMC or FNMA,
except with respect to Mortgage Loans underwritten in accordance with the
underwriting guidelines of Seller, which are on forms acceptable to
Purchaser, in Purchaser's sole discretion, as evidenced by Purchaser's
purchase of the related Mortgage Loans, and, in either case, Seller has
not made any representations to a Mortgagor that are inconsistent with the
mortgage instruments used. All Mortgage Loans have full asset
verification;
w. OCCUPANCY OF THE MORTGAGED PROPERTY. As of the Closing Date, the Mortgaged
Property is lawfully occupied under applicable law. All inspections,
licenses and certificates required to be made or issued with respect to
all occupied portions of the Mortgaged Property and, with respect to the
use and occupancy of the same, including but not limited to certificates
of occupancy and fire underwriting certificates, have been made or
obtained from the appropriate authorities. Unless otherwise specified on
the description of characteristics for the Mortgage Loans delivered
pursuant to Section 10 on the Closing Date in the form attached as Exhibit
K hereto and the Mortgage Loan Schedule attached as Exhibit J hereto, the
Mortgagor represented at the time of origination of the Mortgage Loan that
the Mortgagor would occupy the Mortgaged Property as the Mortgagor's
primary residence;
x. NO ADDITIONAL COLLATERAL. The Mortgage Note is not and has not been
secured by any collateral except the lien of the corresponding Mortgage
and the security interest of any applicable security agreement or chattel
mortgage referred to in clause (j) above;
y. DEEDS OF TRUST. In the event the Mortgage constitutes a deed of trust, a
trustee, authorized and duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is named in
the Mortgage, and no fees or expenses are or will become payable by
Purchaser to the trustee under the deed of trust, except in connection
with a trustee's sale after default by the Mortgagor;
z. ACCEPTABLE INVESTMENT. There are no circumstances or conditions with
respect to the Mortgage, the Mortgaged Property, the Mortgagor, the
Mortgage File or the Mortgagor's credit standing that can reasonably be
expected to cause the Mortgage Loan to become delinquent, or adversely
affect the value or marketability of the Mortgage Loan;
aa. DELIVERY OF MORTGAGE DOCUMENTS. The Mortgage Note, the Mortgage, the
Assignment of Mortgage and any other Mortgage Loan Documents for each
Mortgage Loan have been delivered to Purchaser. Seller is in possession of
a complete, true and accurate Mortgage File in compliance with Exhibit A
hereto, except for such documents the originals of which have been
delivered to Purchaser;
bb. CONDOMINIUMS/PLANNED UNIT DEVELOPMENTS. If the Mortgaged Property is a
condominium unit or a planned unit development, it is acceptable to FNMA
or FHLMC or is located in a condominium or planned unit development
project which has received project approval from FNMA or FHLMC;
cc. TRANSFER OF MORTGAGE LOANS. The Assignment of Mortgage with respect to
each Mortgage Loan is in recordable form and is acceptable for recording
under the laws of the jurisdiction in which the Mortgaged Property is
located;
dd. ASSUMABILITY. The Mortgage Loan Documents provide that a related Mortgage
Loan may only be assumed if the party assuming such Mortgage Loan meets
certain credit requirements stated in the Mortgage Loan Documents, except
that with respect to Mortgage Loans underwritten in accordance with the
underwriting guidelines of Seller, the Mortgage Loan Documents relating to
such Mortgage Loans do not preclude assumability;
ee. NO BUYDOWN PROVISIONS; NO GRADUATED PAYMENTS OR CONTINGENT INTERESTS. The
Mortgage Loan does not contain provisions pursuant to which Monthly
Payments are paid or partially paid with funds deposited in any separate
account established by Seller, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it
contain any other similar provisions which may constitute a "buydown"
provision. The Mortgage Loan is not a graduated payment mortgage loan and
the Mortgage Loan does not have a shared appreciation or other contingent
interest feature;
ff. RESERVED
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gg. MORTGAGED PROPERTY UNDAMAGED; NO CONDEMNATION PROCEEDINGS. There is no
proceeding pending or threatened for the total or partial condemnation of
the Mortgaged Property. The Mortgaged Property is undamaged by waste,
fire, earthquake or earth movement, windstorm, flood, tornado or other
casualty so as to affect adversely the value of the Mortgaged Property as
security for the Mortgage Loan or the use for which the premises were
intended and each Mortgaged Property is in good repair. There have not
been any condemnation proceedings with respect to the Mortgaged Property
and Seller has no knowledge of any such proceedings in the future;
hh. COLLECTION PRACTICES; ESCROW DEPOSITS; INTEREST RATE ADJUSTMENTS. The
origination and collection practices used by Seller with respect to the
Mortgage Loan have in all respects been in compliance with Accepted
Servicing Practices, applicable laws and regulations, and have in all
respects been legal and proper. With respect to escrow deposits and Escrow
Payments, all such payments are in the possession of, or under the control
of, Seller, and there exist no deficiencies in connection therewith for
which customary arrangements for repayment thereof have not been made. All
Escrow Payments have been collected in full compliance with state and
federal law and the provisions of the related Mortgage Note and Mortgage.
An escrow of funds is not prohibited by applicable law and has been
established in an amount sufficient to pay for every item that remains
unpaid and has been assessed but is not yet due and payable. No escrow
deposits or Escrow Payments or other charges or payments due Seller have
been capitalized under the Mortgage or the Mortgage Note. All Mortgage
Interest Rate adjustments to the Monthly Payment, if the Mortgage Loan is
an ARM Loan, have been made in strict compliance with state and federal
law and the terms of the related Mortgage and Mortgage Note on the related
Interest Rate Adjustment Date. With respect to each ARM Loan, the Mortgage
Interest Rate adjusts as set forth herein. If, pursuant to the terms of
the Mortgage Note, another index was selected for determining the Mortgage
Interest Rate, the same index was used with respect to each Mortgage Note
which required a new index to be selected, and such selection did not
conflict with the terms of the related Mortgage Note. Seller executed and
delivered any and all notices required under applicable law and the terms
of the related Mortgage Note and Mortgage regarding the Mortgage Interest
Rate and the Monthly Payment adjustments. Any interest required to be paid
pursuant to state, federal and local law has been properly paid and
credited;
ii. OTHER INSURANCE POLICIES. No action, inaction or event has occurred and no
state of facts exists or has existed that has resulted or could result in
the exclusion from, denial of, or defense to coverage under any hazard
insurance policy or PMI Policy. In connection with the placement of any
such insurance, no commission, fee, or other compensation has been or will
be received by Seller or by any officer, director, or employee of Seller
or any designee of Seller or any corporation in which Seller or any
officer, director, or employee had a financial interest at the time of
placement of such insurance;
jj. NO VIOLATION OF ENVIRONMENTAL LAWS. There is no pending action or
proceeding directly involving the Mortgaged Property in which compliance
with any environmental law, rule or regulation is an issue; there is no
violation of any environmental law, rule or regulation with respect to the
Mortgaged Property; and nothing further remains to be done to satisfy in
full all requirements of each such law, rule or regulation constituting a
prerequisite to use and enjoyment of said property;
kk. SOLDIERS' AND SAILORS' CIVIL RELIEF ACT. The Mortgagor has not notified
Seller and Seller has no knowledge of any relief requested or allowed to
the Mortgagor under the Soldiers' and Sailors' Civil Relief Act of 1940;
ll. APPRAISAL. The Mortgage File contains an appraisal of the related
Mortgaged Property signed prior to the approval of the Mortgage Loan
application by a Qualified Appraiser who had no interest, direct or
indirect in the Mortgaged Property or in any loan made on the security
thereof, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both
satisfy the requirements of PUMA or FHLMC and Title XI of the Federal
Institutions Reform, Recovery, and Enforcement Act of 1989 and the
regulations promulgated thereunder, all as in effect on the date the
Mortgage Loan was originated;
mm. DISCLOSURE MATERIALS. The Mortgagor has received all disclosure materials
required by and Seller complied with all applicable law with respect to
the making of the Mortgage Loans;
15
nn. CONSTRUCTION OR REHABILITATION OF MORTGAGED PROPERTY. No Mortgage Loan was
made in connection with the construction or rehabilitation of a Mortgaged
Property or facilitating the trade-in or exchange of a Mortgaged Property;
oo. VALUE OF MORTGAGED PROPERTY. Seller has no knowledge of any circumstances
existing that could reasonably be expected to adversely affect the value
or the marketability of any Mortgaged Property or Mortgage Loan;
pp. NO DEFENSE TO INSURANCE COVERAGE. No action has been taken or failed to be
taken, no event has occurred and no state of facts exists or has existed
on or prior to the Closing Date (whether or not known to Seller on or
prior to such date) which has resulted or will result in an exclusion
from, denial of, or defense to coverage under any primary mortgage
insurance (including, without limitation, any exclusions, denials or
defenses which would limit or reduce the availability of the timely
payment of the full amount of the loss otherwise due thereunder to the
insured) whether arising out of actions, representations, errors,
omissions, negligence, or fraud of Seller, the related Mortgagor or any
party involved in the application for such coverage, including the
appraisal, plans and specifications and other exhibits or documents
submitted therewith to the insurer under such insurance policy, or for any
other reason under such coverage, but not including the failure of such
insurer to pay by reason of such insurer's breach of such insurance policy
or such insurer's financial inability to pay;
qq. ESCROW ANALYSIS. With respect to each Mortgage, Seller has within the last
twelve months (unless such Mortgage was originated within such twelve
month period) analyzed the required Escrow Payments for each Mortgage and
adjusted the amount of such payments so that, assuming all required
payments are timely made, any deficiency will be eliminated on or before
the first anniversary of such analysis, or any overage will be refunded to
the Mortgagor, in accordance with RESPA and any other applicable law; and
rr. PRIOR SERVICING. Each Mortgage Loan has been serviced in all material
respects in compliance with Accepted Servicing Practices; provided that,
in the event any Mortgage Loan was not so serviced, Seller shall not be
required to repurchase such Mortgage Loan unless such breach had, and
continues to have, a material and adverse effect on the value of the
related Mortgage Loan or the interest of Purchaser therein.
8.03. Remedies for Breach of Representations and Warranties. It is understood
and agreed that the representations and warranties set forth in Subsections 8.01
and 8.02 shall survive the sale of the Mortgage Loans to Purchaser and shall
inure to the benefit of Purchaser, notwithstanding any restrictive or qualified
endorsement on any Mortgage Note or Assignment of Mortgage or the examination or
failure to examine any Mortgage File. Upon discovery by either Seller or
Purchaser of a breach of any of the foregoing representations and warranties
which materially and adversely affects the value of the Mortgage Loans or the
interest of Purchaser (or which materially and adversely affects the interests
of Purchaser in the related Mortgage Loan in the case of a representation and
warranty relating to a particular Mortgage Loan), the party discovering such
breach shall give prompt written notice to the other.
Promptly after discovery of a breach of any representation or warranty, Seller
shall notify Purchaser of such breach and the details thereof. Within sixty (60)
days of the earlier of (i) notice by Seller pursuant to the immediately
preceding sentence or (ii) notice by Purchaser to Seller of any breach of a
representation or warranty with respect to a Mortgage Loan, Seller shall use its
best efforts promptly to cure such breach in all material respects and, if such
breach cannot be cured, Seller shall, at Purchaser's option and subject to
Subsection 8.04, repurchase such Mortgage Loan at the Repurchase Price, unless
Seller elects to substitute a Qualified Substitute Mortgage Loan for such
Mortgage Loan pursuant to this Subsection. In the event that a breach shall
involve any representation or warranty set forth in Subsection 8.01, and such
breach cannot be cured within sixty (60) days of the earlier of either discovery
by or notice to Seller of such breach, all of the Mortgage Loans shall, at
Purchaser's option and subject to Subsection 8.04, be repurchased by Seller at
the Repurchase Price. However, if the breach shall involve a representation or
warranty set forth in Subsection 8.02 and Seller discovers or receives notice of
any such breach within two (2) years of the Closing Date, Seller may, at
Seller's option and provided that Seller has a Qualified Substitute Mortgage
Loan, rather than repurchase the Mortgage Loan as provided above, remove such
Mortgage Loan (a "Deleted Mortgage Loan") and substitute in its place a
Qualified Substitute Mortgage Loan or Loans, provided that any such substitution
shall be effected not later than two (2) years after the Closing Date. If Seller
has no Qualified Substitute Mortgage Loan, it shall repurchase the deficient
Mortgage Loan. Any repurchase of a Mortgage Loan or Loans pursuant to the
foregoing provisions of this Subsection 8.03 shall be accomplished by either (a)
if the Servicing Agreement is in effect, by
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deposit in the Custodial Account of the amount of the Repurchase Price for
payment to Purchaser on the next scheduled Remittance Date, after deducting
therefrom any amount received in respect of such repurchased Mortgage Loan or
Loans and being held in the Custodial Account for future distribution or (b) if
the Servicing Agreement is no longer in effect, by direct remittance of the
Repurchase Price to Purchaser in accordance with Purchaser's instructions.
At the time of repurchase or substitution, Purchaser and Seller shall arrange
for the reassignment of the Deleted Mortgage Loan to Seller and the delivery to
Seller of any documents held by Purchaser relating to the Deleted Mortgage Loan.
In addition, upon any such repurchase, all funds maintained in the Escrow
Account with respect to such Deleted Mortgage Loan shall be transferred to
Seller. In the event of a repurchase or substitution, Seller shall,
simultaneously with such reassignment, give written notice to Purchaser that
such repurchase or substitution has taken place, amend the Mortgage Loan
Schedule to reflect the withdrawal of the Deleted Mortgage Loan from this
Agreement, and, in the case of substitution, identify a Qualified Substitute
Mortgage Loan and amend the Mortgage Loan Schedule to reflect the addition of
such Qualified Substitute Mortgage Loan to this Agreement. In connection with
any such substitution, Seller shall be deemed to have made as to such Qualified
Substitute Mortgage Loan the representations and warranties set forth in this
Agreement except that all such representations and warranties set forth in this
Agreement shall be deemed made as of the date of such substitution. Seller shall
effect such substitution by delivering to Purchaser for such Qualified
Substitute Mortgage Loan the documents required by Subsection 6.03, with the
Mortgage Note endorsed as required by Subsection 6.03. No substitution will be
made in any calendar month after the Determination Date for such month. Seller
shall deposit in the Custodial Account the Monthly Payment, or in the event that
the Servicing Agreement is no longer in effect remit directly to Purchaser in
accordance with Purchaser's instructions the Monthly Payment less the Servicing
Fee due, if any, on such Qualified Substitute Mortgage Loan or Loans in the
month following the date of such substitution. Monthly Payments due with respect
to Qualified Substitute Mortgage Loans in the month of substitution shall be
retained by Seller. For the month of substitution, payments to Purchaser shall
include the Monthly Payment due on any Deleted Mortgage Loan in the month of
substitution, and Seller shall thereafter be entitled to retain all amounts
subsequently received by Seller in respect of such Deleted Mortgage Loan.
For any month in which Seller substitutes a Qualified Substitute Mortgage Loan
for a Deleted Mortgage Loan, Seller shall determine the amount (if any) by which
the aggregate principal balance of all Qualified Substitute Mortgage Loans as of
the date of substitution is less than the aggregate Stated Principal Balance of
all Deleted Mortgage Loans (after application of scheduled principal payments
due in the month of substitution). The amount of such shortfall shall be
distributed by Seller directly to Purchaser in accordance with Purchaser's
instructions within two (2) Business Days of such substitution.
In addition to such repurchase or substitution obligation, Seller shall
indemnify Purchaser and hold it harmless against any losses, damages, penalties,
fines, forfeitures, reasonable and necessary legal fees and related costs,
judgments, and other costs and expenses resulting from any claim, demand,
defense or assertion based on or grounded upon, or resulting from, a breach of
Seller representations and warranties contained in this Agreement. It is
understood and agreed that the obligations of Seller set forth in this
Subsection 8.03 to cure, substitute for or repurchase a defective Mortgage Loan
and to indemnify Purchaser as provided in this Subsection 8.03 constitute the
sole remedies of Purchaser respecting a breach of the foregoing representations
and warranties.
Any cause of action against Seller relating to or arising out of the breach of
any representations and warranties made in Subsections 8.01 and 8.02 shall
accrue as to any Mortgage Loan upon (i) discovery of such breach by Purchaser or
notice thereof by Seller to Purchaser, (ii) failure by Seller to cure such
breach or repurchase such Mortgage Loan as specified above, and (iii) demand
upon Seller by Purchaser for compliance with this Agreement.
SECTION 9. CLOSING. The closing for the purchase and sale of the Mortgage Loans
shall take place on the Closing Date. At Purchaser's option, the closing shall
be either: by telephone, confirmed by letter or wire as the parties shall agree,
or conducted in person, at such place as the parties shall agree.
Such closing shall be subject to the following conditions:
a. all of the representations and warranties of Seller under this Agreement
and under the Servicing Agreement (with respect to each Mortgage Loan, as
specified therein) shall be true and correct as of the Closing Date and no
event shall have occurred which, with notice or the passage of time, would
constitute a default under this Agreement or an Event of Default under the
Servicing Agreement;
17
b. Purchaser shall have received, or Purchaser's attorneys shall have
received in escrow, all closing documents as specified in Section 10 of
this Agreement, in such forms as are agreed upon and acceptable to
Purchaser, duly executed by all signatories other than Purchaser as
required pursuant to the terms hereof;
c. Seller shall have delivered and released to Purchaser all Mortgage Loan
Documents with respect to each Mortgage Loan; and
d. all other terms and conditions of this Agreement shall have been complied
with.
Subject to the foregoing conditions, Purchaser shall pay to Seller on the
Closing Date the Purchase Price, plus accrued interest pursuant to Section 4 of
this Agreement, by wire transfer of immediately available funds to the account
designated by Seller.
SECTION 10. CLOSING DOCUMENTS. The closing documents for the Mortgage Loans to
be purchased on the Closing Date shall consist of fully executed originals of
the following documents:
a. this Agreement;
b. the Servicing Agreement, dated as of the Cut-off Date, in the form of
Exhibit B hereto;
c. a Custodial Account Letter Agreement or a Custodial Account Certification,
as applicable, as required under the Servicing Agreement;
d. an Escrow Account Letter Agreement or an Escrow Account Certification, as
applicable, as required under the Servicing Agreement;
e. an Officer's Certificate, in the form of Exhibit C hereto, including all
attachments thereto;
f. an Opinion of Counsel of Seller (who may be an employee of Seller), in the
form of Exhibit D hereto;
g. a Security Release Certification, in the form of Exhibit G or Exhibit H.
if applicable, hereto executed by any person, as requested by Purchaser,
if any of the Mortgage Loans have at any time been subject to any security
interest, pledge or hypothecation for the benefit of such person;
h. a certificate or other evidence of merger or change of name, signed or
stamped by the applicable regulatory authority, if any of the Mortgage
Loans were acquired by Seller by merger or acquired or originated by
Seller while conducting business under a name other than its present name,
if applicable;
i. the underwriting guidelines of Seller to be attached hereto as Exhibit L;
and
j. Exhibit K to this Agreement.
Seller shall bear the risk of loss of the closing documents until such time as
they are received by Purchaser or its attorneys.
SECTION 11. COSTS. Purchaser shall pay all legal fees and expenses of its
attorneys. All other costs and expenses incurred in connection with the transfer
and delivery of the Mortgage Loans including recording fees, fees for recording
Assignments of Mortgage, fees for title policy endorsements and continuations,
if applicable, Seller's attorney's fees, shall be paid by Seller.
SECTION 12. MERGER OR CONSOLIDATION OF SELLER. Seller will keep in full effect
its existence, rights and franchises as a federal savings bank, and will obtain
and preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its duties under this Agreement.
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Any Person into which Seller may be merged or consolidated, or any corporation
resulting from any merger, conversion or consolidation to which Seller shall be
a party, or any Person succeeding to the business of Seller, shall be the
successor of Seller hereunder, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided, however, that the successor or surviving
Person shall have a tangible net worth of at least $30,000,000.
SECTION 13. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST. The sale and
delivery on the Closing Date of the Mortgage Loans described on the Mortgage
Loan Schedule is mandatory from and after the date of the execution of this
Agreement, it being specifically understood and agreed that each Mortgage Loan
is unique and identifiable on the date hereof and that an award of money damages
would be insufficient to compensate Purchaser for the losses and damages
incurred by Purchaser (including damages to prospective purchasers of the
Mortgage Loans) in the event of Seller's failure to deliver (i) each of the
Mortgage Loans or (ii) one or more Qualified Substitute Mortgage Loans or (iii)
one or more Mortgage Loans otherwise acceptable to Purchaser on or before the
Closing Date. Seller hereby grants to Purchaser a lien on, and a continuing
security interest in, each Mortgage Loan and each document and instrument
evidencing each such Mortgage Loan to secure the performance by Seller of its
obligations under this Agreement, and Seller agrees that it shall hold such
Mortgage Loans in custody for Purchaser subject to Purchaser's (i) right to
reject any Mortgage Loan (or Qualified Substitute Mortgage Loan) under the terms
of this Agreement and to require another Mortgage Loan (or Qualified Substitute
Mortgage Loan) to be substituted therefor, and (ii) obligation to pay the
Purchase Price plus accrued interest as set forth in Section 4 hereof for the
Mortgage Loans. All rights and remedies of Purchaser under this Agreement are
distinct from, and cumulative with, any other rights or remedies under this
Agreement or afforded by law or equity and all such rights and remedies may be
exercised concurrently, independently or successively.
SECTION 14. NOTICES. All demands, notices and communications hereunder shall be
in writing and shall be deemed to have been duly given if mailed, by registered
or certified mail, return receipt requested, or, if by other means, when
received by the other party at the address as follows:
If to Seller:
Chevy Chase Bank, F.S.B.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
If to Purchaser:
Chevy Chase Preferred Capital Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
SECTION 15. SEVERABILITY CLAUSE. Any part, provision, representation or
warranty of this Agreement which is prohibited or unenforceable or is held to be
void or unenforceable in any jurisdiction shall be ineffective, as to such
jurisdiction, to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction as to any Mortgage Loan shall not
invalidate or render unenforceable such provision in any other jurisdiction. To
the extent permitted by applicable law, the parties hereto waive any provision
of law which prohibits or renders void or unenforceable any provision hereof. If
the invalidity of any part, provision, representation or warranty of this
Agreement shall deprive any party of the economic benefit intended to be
conferred by this Agreement, the parties shall negotiate, in good faith, to
develop a structure the economic effect of which is nearly as possible the same
as the economic effect of this Agreement without regard to such invalidity.
SECTION 16. COUNTERPARTS. This Agreement may be executed simultaneously in any
number of counterparts. Each counterpart shall be deemed to be an original, and
all such counterparts shall constitute one and the same instrument.
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SECTION 17. GOVERNING LAW. This Agreement shall be deemed in effect when a
fully executed counterpart thereof is received by Purchaser in the State of
Maryland and shall be deemed to have been made in the State of Maryland. The
Agreement shall be construed in accordance with the laws of the State of
Maryland and the obligations, rights and remedies of the parties hereunder shall
be determined-in accordance with the substantive laws of the State of Maryland
(without regard to conflicts of laws principles), except to the extent preempted
by Federal law.
SECTION 18. INTENTION OF THE PARTIES. It is the intention of the parties that
Purchaser is purchasing, and Seller is selling the Mortgage Loans and not a debt
instrument of Seller or another security. Accordingly, the parties hereto each
intend to treat the transaction for Federal income tax purposes as a sale by
Seller, and a purchase by Purchaser, of the Mortgage Loans.
SECTION 19. SUCCESSORS AND ASSIGNS; ASSIGNMENT OF PURCHASE AGREEMENT. This
Agreement shall bind and inure to the benefit of and be enforceable by Seller
and Purchaser and the respective permitted successors and assigns of Seller and
the successors and assigns of Purchaser. This Agreement shall not be assigned,
pledged or hypothecated by Seller to a third party without the consent of
Purchaser. This Agreement may be assigned, pledged or hypothecated by Purchaser
without the prior consent of Seller. If Purchaser assigns all or any of its
rights as Purchaser hereunder, the assignee of Purchaser will become the
"Purchaser" hereunder to the extent of such assignment, provided that at no time
shall there be more than fifteen (15) persons having the status of '"Purchaser"
hereunder. Any assignment by Purchaser shall be accompanied by the delivery and
execution of an Assignment and Assumption Agreement (the "Assignment and
Assumption Agreement") substantially in the form attached hereto as Exhibit I.
The Servicer shall be required to remit all amounts required to be remitted to
Purchaser hereunder to said assignee commencing with the first Remittance Date
falling after receipt of said copy of the related Assignment and Assumption
Agreement provided that Seller receives said copy no later than three (3)
Business Days immediately prior to the first day of the month of the related
Remittance Date.
SECTION 20. WAIVERS. No term or provision of this Agreement may be waived or
modified unless such waiver or modification is in writing and signed by the
party against whom such waiver or modification is sought to be enforced.
SECTION 21. EXHIBITS. The exhibits to this Agreement are hereby incorporated
and made a part hereof and are an integral part of this Agreement.
SECTION 22. GENERAL INTERPRETIVE PRINCIPLES. For purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires:
a. the terms defined in this Agreement have the meanings assigned to them in
this Agreement and include the plural as well as the singular, and the use
of any gender herein shall be deemed to include the other gender;
b. accounting terms not otherwise defined herein have the meanings assigned
to them in accordance with generally accepted accounting principles;
c. references herein to "Articles", "Sections," "Subsections," "Paragraphs,"
and other subdivisions without reference to a document are to designated
Articles, Sections, Subsections, Paragraphs and other subdivisions of this
Agreement;
d. reference to a Subsection without further reference to a Section is a
reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
e. the words "herein", "hereof", "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular
provision; and
f. the term "include" or "including" shall mean without limitation by reason
of enumeration.
SECTION 23. REPRODUCTION OF DOCUMENTS. This Agreement and all documents
relating thereto, including, without limitation, (a) consents, waivers and
modifications which may hereafter be executed, (b) documents received by any
party at the closing, and (c) financial statements, certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process.
20
The parties agree that any such reproduction shall be admissible in evidence as
the original itself in any judicial or administrative proceeding, whether or not
the original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
SECTION 24. FURTHER AGREEMENTS. Seller and Purchaser each agree to execute and
deliver to the other such reasonable and appropriate additional documents,
instruments or agreements as may be necessary or appropriate to effectuate the
purposes of this Agreement.
SECTION 25. RECORDATION OF ASSIGNMENTS OF MORTGAGE. To the extent permitted by
applicable law, each of the Assignments of Mortgage is subject to recordation in
all appropriate public offices for real property records in all the counties or
their comparable jurisdictions in which any or all of the Mortgaged Properties
are situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected at Seller's expense for a single recordation
with respect to each Assignment of Mortgage in the event recordation is either
necessary under applicable law or requested by Purchaser at its sole option.
IN WITNESS WHEREOF, the parties have executed this Agreement under seal as of
the date and year first above written.
ATTEST: CHASE PREFERRED CAPITAL CORPORATION (Purchaser)
By:
---------------------------- -----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
ATTEST: CHEVY CHASE BANK, F.S.B. (Seller)
By:
---------------------------- ------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
21
EXHIBIT A
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include each of the
following items which shall be available for inspection by Purchaser and which
shall be delivered to Purchaser pursuant to Section 6.03 of the Mortgage Loan
Purchase Agreement (the "Agreement"):
1. The original Mortgage Note (or, with respect to the Mortgage Loan listed
on Schedule I hereto, a lost note affidavit, executed by an officer of
Seller, with a copy of the original note attached thereto) bearing all
intervening endorsements, endorsed "Pay to the order of ____ without
recourse" and signed in the name of Seller by an authorized officer. To
the extent that there is no room on the face of the Mortgage Notes for
endorsements, the endorsement may be contained on an allonge, if
applicable state law so allows. If the Mortgage Loan was acquired by
Seller in a merger, the endorsement must be by "[Seller], successor by
merger to [name of predecessor]". If the Mortgage Loan was acquired or
originated by Seller while doing business under another name, the
endorsement must be by "[Seller], formerly known as [previous name]".
2. The original of any guarantee executed in connection with the Mortgage
Note.
3. The original Mortgage, with evidence of recording thereon. If in
connection with any Mortgage Loan, Seller cannot deliver or cause to be
delivered the original Mortgage with evidence of recording thereon on or
prior to the Closing Date because of a delay caused by the public
recording office where such Mortgage has been delivered for recordation, a
photocopy of such Mortgage certified by Seller to be true and correct will
be delivered; if such Mortgage has been lost or if such public recording
office retains the original recorded Mortgage, Seller shall deliver or
cause to be delivered to Purchaser, a photocopy of such Mortgage,
certified by such public recording office to be a true and complete copy
of the original recorded Mortgage.
4. The originals of all assumption, modification, consolidation or extension
agreements, if any, with evidence of recording thereon or certified copies
of such documents if the originals thereof are unavailable.
5. The original Assignment of Mortgage for each Mortgage Loan endorsed "Pay
to the order of ___ " and signed in the name of Seller by an authorized
officer. If the Mortgage Loan was acquired by Seller in a merger, the
Assignment of Mortgage must be made by "[Seller], successor by merger to
[name of predecessor]". If the Mortgage Loan was acquired or originated by
Seller while doing business under another name, the Assignment of Mortgage
must be by "[Seller], formerly known as [previous name]".
6. Originals of all intervening assignments of the Mortgage with evidence of
recording thereon if such intervening assignment has been recorded.
7. The original mortgagee policy of title insurance or, in the event such
original title policy is unavailable, a certified true copy of the related
policy binder or commitment for title certified to be true and complete by
the title insurance company.
8. Any original security agreement, chattel mortgage or equivalent executed
in connection with the Mortgage.
9. The original hazard insurance policy and, if required by law, flood
insurance policy, in accordance with Section 8.02(f) of the Agreement.
10. Residential loan application.
11. Mortgage Loan closing statement.
12. Verification of employment and income.
13. Verification of acceptable evidence of source and amount of down payment.
22
14. Credit report on the Mortgagor(s).
15. Residential appraisal report.
16. Photograph of the Mortgaged Property.
17. Survey of the Mortgaged Property, if any.
18. Copy of each instrument necessary to complete identification of any
exception set forth in the exception schedule in the title policy, i.e.,
map or plat, restrictions, easements, sewer agreements, home association
declarations, etc.
19. All required disclosure statements.
20. If available, termite report, structural engineer's report, water
portability and septic certification.
21. Sales contract.
22. Tax receipts, insurance premium receipts, ledger sheets, insurance claim
files, correspondence, current and historical computerized data files, and
all other processing, underwriting and closing papers and records which
are customarily contained in a mortgage loan file and which are required
to document the Mortgage Loan or to service the Mortgage Loan.
23. For Mortgage Loans with original LTV's greater than 85%, evidence of a PMI
Policy.
In the event that such original or copy of any document submitted for
recordation to the appropriate public recording office is not so delivered to
Purchaser within 90 days following the Closing Date (other than with respect to
the Assignments of Mortgage which shall be delivered to Purchaser in blank and
recorded subsequently by Purchaser), and in the event that Seller does not cure
such failure within 30 days of discovery or receipt of written notification of
such failure from Purchaser, the related Mortgage Loan shall, upon the request
of Purchaser, be repurchased by Seller at the price and in the manner specified
in Subsection 8.03 of the Agreement. The foregoing repurchase obligation shall
not apply in the event that Seller cannot deliver such original or copy of any
document submitted for recordation to the appropriate public recording office
within the specified period due to a delay caused by the recording office in the
applicable jurisdiction; provided that Seller shall instead deliver a recording
receipt of such recording office or, if such recording receipt is not available,
an officer's certificate of a servicing officer of Seller, confirming that all
such documents have been accepted for recording; provided that, upon request of
Purchaser and delivery by Purchaser to Seller of a schedule of the related
Mortgage Loans, Seller shall reissue and deliver to Purchaser said officer's
certificate relating to the related Mortgage Loans.
23
EXHIBIT B
24
EXHIBIT C
FORM OF SELLER'S OFFICER'S CERTIFICATE
I,_________ , hereby certify that I am the duly elected [Vice] President of
Chevy Chase Bank, F.S.B., a federal savings bank organized under the laws of the
United States ("Seller") and further certify as follows:
1. Attached hereto as Exhibit 1 is a true, correct and complete copy of
Seller's Charter which is in full force and effect on the date hereof and
which has been in effect without amendment, waiver, rescission or
modification since
2. Attached hereto as Exhibit 2 is a true, correct and complete copy of the
bylaws of Seller which are in effect on the date hereof and which have
been in effect without amendment, waiver, rescission or modification since
3. Attached hereto as Exhibit 3 is a certificate of corporate existence of
Seller issued by the Office of Thrift Supervisions within 90 days of the
date hereof, and no event has occurred since the date thereof which would
render such certificate inaccurate.
4. Attached hereto as Exhibit 4 is a true, correct and complete copy of the
corporate resolutions of the Board of Directors of Seller authorizing
Seller to execute and deliver the Mortgage Loan Purchase Agreement, dated
as of ___________, 1996, by and between Chevy Chase Preferred Capital
Corporation ("Purchaser") and Seller (the "Purchase Agreement"), and to
endorse the mortgage notes and execute the assignments of mortgages by
original or facsimile signature, and such resolutions are in effect on the
date hereof and have been in effect without amendment, waiver, rescission
or modification since
5. Either (i) no consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Seller of or compliance by Seller with the Purchase
Agreement, the sale of the mortgage loans or the consummation of the
transactions contemplated by the Purchase Agreement; or (ii) any required
consent, approval, authorization or order has been obtained by Seller.
6. Neither the consummation of the transactions contemplated by, nor the
fulfillment of the terms of, the Purchase Agreement conflicts or will
conflict with or results or will result in a breach of or constitutes or
will constitute a default under the charter or by-laws of Seller, the
terms of any indenture or other agreement or instrument to which Seller is
a party or by which it is bound or to which it is subject, or any statute
or order, rule, regulations, writ, injunction or decree of any court,
governmental authority or regulatory body to which Seller is subject or by
which it is bound.
7. To the best of my knowledge, there is no action, suit, proceeding or
investigation pending or threatened against Seller which, in my judgment,
either in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition,
properties or assets of Seller or in any material impairment of the right
or ability of Seller to carry on its business substantially as now
conducted or in any material liability on the part of Seller or which
would draw into question the validity of the Purchase Agreement or the
Mortgage Loans or of any action taken or to be taken in connection with
the transactions contemplated hereby, or which would be likely to impair
materially the ability of Seller to perform under the terms of the
Purchase Agreement.
8. Each person listed on Exhibit 5 attached hereto who, as an officer or
representative of Seller, signed the Purchase Agreement and any other
document delivered prior to or on the date hereof in connection with any
purchase described in the Purchase Agreement was, at the respective times
of such signing and delivery, and is now, a duly elected or appointed,
qualified and acting officer or representative of Seller, who holds the
office set forth opposite his or her name on Exhibit 5, and the signatures
of such persons appearing on such documents are their genuine signatures.
9. Seller is duly authorized to engage in the transactions described and
contemplated in the Purchase Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal of Chevy
Chase Bank, F.S.B.
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Dated: , 1996 By:
------------------------ -----------------------------
Name:
----------------------------
Title: Vice President
----------------------------
I, __________________________, a Vice President of Chevy Chase Bank, F.S.B.,
hereby certify that ________ is the duly elected, qualified and acting Vice
President of Seller and that the signature appearing above is [her] [his]
genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: , 1996 By:
------------------------ ----------------------------
Name:
----------------------------
Title: Vice President
----------------------------
26
EXHIBIT D
FORM OF OPINION OF COUNSEL TO SELLER
November ___, 1996
---------------------------------
---------------------------------
---------------------------------
Dear Sirs:
You have requested [my] opinion, as General Counsel of Chevy Chase Bank, F.S.B.
("Seller"), with respect to certain matters in connection with the sale by
Seller of the Mortgage Loans pursuant to that certain Mortgage Loan Purchase and
Warranties Agreement by and between Seller and Chevy Chase Preferred Capital
Corporation ("Purchaser"), dated as of __________________, 1996 (the "Purchase
Agreement") which sale is in the form of whole loans, delivered pursuant to a
Purchase Agreement and serviced pursuant to an Servicing Agreement, dated as of
_____________, 1996, by and between Seller and Purchaser (the "Servicing
Agreement"). Capitalized terms not otherwise defined herein have the meanings
set forth in the Purchase Agreement and the Servicing Agreement.
I have examined the following documents:
1. the Purchase Agreement;
2. the Servicing Agreement;
3. the form of Assignment of Mortgage;
4. the form of endorsement of the Mortgage Notes; and
5. such other documents, records and papers as we have deemed necessary and
relevant as a basis for this opinion.
To the extent I have deemed necessary and proper, I have relied upon the
representations and warranties of Seller contained in the Purchase Agreement. I
have assumed the authenticity of all documents submitted to me as originals, the
genuineness of all signatures, the legal capacity of natural persons and the
conformity to the originals of all documents.
Based upon the foregoing, it is my opinion that:
1. Seller is a federal savings bank duly organized, validly existing and in
good standing under the laws of the United States and is qualified to
transact business in, and is in good standing under all applicable laws;
2. Seller has the power to engage in the transactions contemplated by the
Purchase Agreement and all requisite power, authority and legal right to
execute and deliver the Purchase Agreement and to perform and observe the
terms and conditions of such agreements.
3. The Purchase Agreement has been duly authorized, executed and delivered by
Seller and is a legal, valid and binding agreement enforceable in
accordance with its respective terms against Seller, subject to bankruptcy
laws and other similar laws of general application affecting rights of
creditors and subject to the application of the rules of equity, including
those respecting the availability of specific performance, none of which
will materially interfere with the realization of the benefits provided
thereunder or with Purchaser's ownership of the Mortgage Loans.
4. Seller has been duly authorized to allow certain specified officers to
execute any and all documents by original signature in order to complete
the transactions contemplated by the Purchase Agreement and, by original
or facsimile signature, in order to execute the endorsements to the
Mortgage Notes and the Assignments of Mortgages, and the
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original or facsimile signature of the officer at Seller executing the
endorsements to the Mortgage Notes and the Assignments of Mortgages
represents the legal and valid signature of said officer of Seller.
5. Either (i) no consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Seller of or compliance by Seller with the Purchase
Agreement and the sale of the Mortgage Loans or the consummation of the
transactions contemplated by the Purchase Agreement or (ii) any required
consent, approval, authorization or order has been obtained by Seller.
6. Neither the consummation of the transactions contemplated by, nor the
fulfillment of the terms of, the Purchase Agreement conflicts or will
conflict with or results or will result in a breach of or constitutes or
will constitute a default under the charter or by-laws of Seller, the
terms of any indenture or other agreement or instrument to which Seller is
a party or by which it is bound or to which it is subject, or violates any
statute or order, rule, regulations, writ, injunction or decree of any
court, governmental authority or regulatory body to which Seller is
subject or by which it is bound.
7. There is no action, suit, proceeding or investigation pending or, to the
best of my knowledge, threatened against Seller which, in my judgment,
either in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition,
properties or assets of Seller or in any material impairment of the right
or ability of Seller to carry on its business substantially as now
conducted or in any material liability on the part of Seller or which
would draw into question the validity of the Purchase Agreement or the
Mortgage Loans or of any action taken or to be taken in connection with
the transactions contemplated thereby, or which would be likely to impair
materially the ability of Seller to perform under the terms of the
Purchase Agreement.
8. The sale of each Mortgage Note and Mortgage as and in the manner
contemplated by the Purchase Agreement is sufficient to fully transfer to
Purchaser all right, title and interest of Seller thereto as noteholder
and mortgagee.
9. The Mortgages have been duly assigned and the Mortgage Notes have been
duly endorsed as provided in the Purchase Agreement. The Assignments of
Mortgage are in recordable form, except for the insertion of the name of
the assignee, and upon the name of the assignee being inserted, and to the
best of my knowledge, are acceptable for recording under the laws of the
states in which such recording would occur. The endorsement of the
Mortgage Notes, the delivery to Purchaser of the Assignments of Mortgage,
and the delivery of the original endorsed Mortgage Notes to Purchaser, are
sufficient to permit Purchaser to avail itself of all protection available
under applicable law against the claims of any present or future creditors
of Seller, and are sufficient to prevent any other sale, transfer,
assignment, pledge or hypothecation of the Mortgages and the Mortgage
Notes by Seller from being enforceable.
This opinion is given to you for your sole benefit, and no other person or
entity is entitled to rely hereon except that Purchaser or purchasers to which
you initially and directly resell the Mortgage Loans may rely on this opinion as
if it were addressed to them as of its date.
Very truly yours,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
General Counsel
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EXHIBIT G
November ___1996
Federal Home Loan Bank of Atlanta (the "Association")
Attention:
Re: Notice of Sale and Release of Collateral
Dear Sirs:
This letter serves as notice that Chevy Chase Bank, F.S.B. ("Bank") has
committed to sell to Chevy Chase Preferred Capital Corporation ("Purchaser")
under a Mortgage Loan Purchase Agreement, dated as of ________, 1996, certain
mortgage loans originated by the Association. The Bank warrants that the
mortgage loans to be sold to Purchaser are in addition to and beyond any
collateral required to secure advances made by the Association to the Bank.
The Bank acknowledges that the mortgage loans to be sold to Purchaser shall not
be used as additional or substitute collateral for advances made by the
Association. Purchaser understands that the balance of the Bank's mortgage loan
portfolio may be used as collateral or additional collateral for advances made
by the Association, and confirms that it has no interest therein.
Execution of this letter by the Association shall constitute a full and complete
release of any security interest, claim, or lien which the Association may have
against the mortgage loans to be sold to Purchaser.
Very truly yours,
Chevy Chase Bank, F.S.B.
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
Date:
-----------------------------
Acknowledged and approved:
Federal Home Loan Bank of Atlanta
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
Date:
-----------------------------
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EXHIBIT H
FORM OF SECURITY RELEASE CERTIFICATION
I. Release of Security Interest
The financial institution named below hereby relinquishes any and all right,
title and interest it may have in all Mortgage Loans to be purchased by Chevy
Chase Preferred Capital Corporation from Chevy Chase Bank, F.S.B. pursuant to
that certain Mortgage Loan Purchase Agreement, dated as of _____, 1996, and
certifies that all notes, mortgages, assignments and other documents in its
possession relating to such Mortgage Loans have been delivered and released to
Chevy Chase Bank, F.S.B. or its designees, as of the date and time of the sale
of such Mortgage Loans to Chevy Chase Preferred Capital Corporation.
Name and Address of Financial Institution
(name)
(Address)
By:
II. Certification of Release
Chevy Chase Bank, F.S.B. hereby certifies to Chevy Chase Preferred Capital
Corporation that, as of the date and time of the sale of the above-mentioned
Mortgage Loans to Chevy Chase Preferred Capital Corporation, the security
interests in the Mortgage Loans released by the above-named financial
institution comprise all security interests relating to or affecting any and all
such Mortgage Loans. The Company warrants that, as of such time, there are and
will be no other security interests affecting any or all of such Mortgage Loans.
By: Title: Date:
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EXHIBIT I
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated ___, between ____, a
corporation ("Assignor") and ____, a corporation ("Assignee"):
For good and valuable consideration the receipt and sufficiency of which hereby
are acknowledged, and of the mutual covenants herein contained, the parties
hereto hereby agree as follows:
1. The Assignor hereby grants, transfers and assigns to Assignee, as
Purchaser, all of the right, title and interest of Assignor with respect to the
mortgage loans listed on Exhibit A attached hereto ("Mortgage Loans"), and with
respect to such Mortgage Loans, in, to and under (a) that certain Mortgage Loan
Purchase and Warranties Agreement dated _____, 1996 by and between Chevy Chase
Bank, F.S.B. ("Seller") and Chevy Chase Preferred Capital Corporation ("Purchase
Agreement"), and (b) that certain Servicing Agreement dated as of _________
1996, by and between Purchaser and Chevy Chase Bank, F.S.B. ("Servicer")
("Servicing Agreement"; the Servicing Agreement and the Purchase Agreement are
collectively referred to as the "Agreements").
2. The Assignor warrants and represents to, and covenants with, the Assignee
that:
a. The Assignor is the lawful owner of the Mortgage Loans with the full
right to transfer the Mortgage Loans free from any and all claims and
encumbrances whatsoever;
b. The Assignor has not received notice of, and has no knowledge of, any
offsets, counterclaims or other defenses available to Seller with
respect to the Agreements or the Mortgage Loans;
c. The Assignor has not waived or agreed to any waiver under, or agreed
to any amendment or other modification of, the Agreements. The
Assignor has no knowledge of, and has not received notice of, any
waivers under or amendments or other modifications of, or assignments
of rights or obligations under, the Agreements; and
d. Neither the Assignor nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Mortgage Loans
or any interest in the Mortgage Loans, or solicited any offer to buy
or accept a transfer, pledge or other disposition of the Mortgage
Loans, or any interest in the Mortgage Loans or otherwise approached
or negotiated with respect to the Mortgage Loans, or any interest in
the Mortgage with any person in any manner, or made any general
solicitation by means of general advertising or in any other manner,
or taken any other action which would constitute a distribution of the
Mortgage Loans under the Securities Act of 1933, as amended (the "1933
Act") or which would render the disposition of the Mortgage Loans a
violation of Section 5 of the 1933 Act or require registration
pursuant thereto.
3. The Assignee warrants and represents to, and covenants with, Assignor and
Seller pursuant to the Agreements that:
a. The Assignee is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation,
and has all requisite corporate power and authority to acquire, own
and purchase the Mortgage Loans;
b. The Assignee has full corporate power and authority to execute,
deliver and perform under this Assignment and Assumption Agreement,
and to consummate the transactions set forth herein. The execution,
delivery and performance of the Assignee of this Assignment and
Assumption Agreement, and the consummation by it of the transactions
contemplated hereby, have been duly authorized by all necessary
corporate action of the Assignee. This Assignment and Assumption
Agreement has been duly executed and delivered by the Assignee and
constitutes the valid and legally binding obligation of the Assignee
enforceable against the Assignee in accordance with its respective
terms;
c. To the best of Assignee's knowledge, no material consent, approval,
order or authorization of, or declaration, filing or registration
with, any governmental entity is required to be obtained or made by
the Assignee in
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connection with the execution, delivery or performance by the Assignee
of this Assignment and Assumption Agreement, or the consummation by it
of the transactions contemplated hereby;
d. The Assignee agrees to be bound, as Purchaser, by all of the terms,
covenants and conditions of the Agreements, the Mortgage Loans, and
from and after the date hereof, the Assignee assumes for the benefit
of each of Seller and the Assignor all of the Assignor' s obligations
as Purchaser thereunder, including, without limitation, the limitation
on assignment set forth in Section _ of the Purchase Agreement;
e. The Assignee understands that the Mortgage Loans have not been
registered under the 1933 Act or the securities laws of any state;
f. The purchase price being paid by the Assignee for the Mortgage Loans
is in excess of $250,000 and will be paid by cash remittance of the
full purchase price within sixty (60) days of the sale;
g. The Assignee is acquiring the Mortgage Loans for investment for its
own account only and not for any other person;
h. The Assignee considers itself a sophisticated institutional investor
having such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of investment in
the Mortgage Loans;
i. The Assignee has been furnished with all information regarding the
Mortgage Loans that it has requested from the Assignor or Seller;
j. Neither the Assignee nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Mortgage Loans
or any interest in the Mortgage Loans, or solicited any offer to buy
or accept a transfer, pledge or other disposition of the Mortgage
Loans or any interest in the Mortgage Loans, or otherwise approached
or negotiated with respect to the Mortgage Loans or any interest in
the Mortgage Loans with any person in any manner which would
constitute a distribution of the Mortgage Loans under the 1933 Act or
which would render the disposition of the Mortgage Loans a violation
of Section 5 of the 1933 Act or require registration pursuant thereto,
nor will it act, nor has it authorized or will it authorize any person
to act, in such manner with respect to the Mortgage Loans; and
k. Either: (1) the Assignee is not an employee benefit plan ("Plan")
within the meaning of section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or a plan (also "Plan")
within the meaning of section 4975(e)(1) of the Internal Revenue Code
of 1986 ("Code"), and the Assignee is not directly or indirectly
purchasing the Mortgage Loans on behalf of, investment manager of, as
named fiduciary of, as Trustee of, or with assets of, a Plan; or (2)
the Assignee's purchase of the Mortgage Loans will not result in a
prohibited transaction under section 406 of ERISA or section 4975 of
the Code.
4. a. The Assignee's address for purposes of all notices and correspondence
related to the Mortgage Loans and the Agreements is:
b. The Assignee's wire instructions for purposes of all remittances and
payments related to the Mortgage Loans are:
c. The Assignor's address for purposes for all notices and correspondence
related to the Mortgage Loans and this Agreement is:
5. This Agreement shall be construed in accordance with the substantive laws
of the State of Maryland (without regard to conflicts of laws principles) and
the obligations, rights and remedies of the parties hereunder shall be
determined in accordance with such laws, except to the extent preempted by
federal law.
6. This Agreement shall inure to the benefit of the successors and assigns of
the parties hereto. This Agreement may not be assigned by the Assignee without
the express written consent of the Assignor. Any entity into which the Assignor
or
32
Assignee may be merged or consolidated shall, without the requirement for any
further writing, be deemed the Assignor or Assignee, respectively, hereunder.
7. No term or provision of this Agreement may be waived or modified unless
such waiver or modification is in writing and signed by the party against whom
such waiver or modification is sought to be enforced.
8. This Agreement shall survive the conveyance of the Mortgage Loans and the
assignment of the Agreements by the Assignor.
9. Notwithstanding the assignment of the Agreements by either the Assignor or
Assignee, this Agreement shall not be deemed assigned by the Assignor or the
Assignee unless assigned by separate written instrument.
10. For the purpose for facilitating the execution of this Agreement as herein
provided and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and such counterparts shall constitute and be one and the same
instrument.
IN WITNESS WHEREOF, the parties have caused this Assignment and Assumption
Agreement to be executed by their duly authorized officers as of the date first
above written.
Assignor Assignee
By: By:
Its: Its:
Taxpayer Identification No. Taxpayer Identification No.
33