EXHIBIT 99.2
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NEW CENTURY MORTGAGE SECURITIES, INC.
as Purchaser,
NC RESIDUAL II CORPORATION
as Seller,
and
NC CAPITAL CORPORATION
as Responsible Party
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MORTGAGE LOAN SALE AND CONTRIBUTION AGREEMENT
Series 2004-1
Dated as of April 19, 2004
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS...........................................................2
Section 1.1 Definitions.............................................2
ARTICLE II
SALE OF MORTGAGE LOANS AND RELATED PROVISIONS.........................2
Section 2.1 Sale of Mortgage Loans..................................2
Section 2.2 Agreement to Purchase...................................5
ARTICLE III
REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH...................5
Section 3.1 Representations and Warranties..........................5
ARTICLE IV
SELLER'S COVENANTS...................................................20
Section 4.1 Covenants of the Seller................................20
ARTICLE V
INDEMNIFICATION BY THE SELLER .......................................20
Section 5.1 Indemnification........................................21
ARTICLE VI
TERMINATION..........................................................21
Section 6.1 Termination............................................21
ARTICLE VII
MISCELLANEOUS PROVISIONS.............................................22
Section 7.1 Amendment..............................................22
Section 7.2 Governing Law..........................................22
Section 7.3 Notices................................................22
Section 7.4 Severability of Provisions.............................23
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Section 7.5 Relationship of Parties................................23
Section 7.6 Counterparts...........................................23
Section 7.7 Further Agreements.....................................23
Section 7.8 Intention of the Parties...............................23
Section 7.9 Successors and Assigns; Assignment of
Purchase Agreement.....................................24
Section 7.10 Survival...............................................24
EXHIBIT A
MORTGAGE LOAN SCHEDULE..............................................A-1
EXHIBIT B
FORM OF LOST NOTE AFFIDAVIT.........................................B-1
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This MORTGAGE LOAN SALE AND CONTRIBUTION AGREEMENT (this
"Agreement"), dated as of April 19, 2004, is made among NC Residual II
Corporation (the "Seller"), New Century Mortgage Securities, Inc. (the
"Purchaser") and NC Capital Corporation (the "Responsible Party").
W I T N E S S E T H:
WHEREAS, the Seller owns the Mortgage Loans indicated on the
Mortgage Loan Schedule attached as Exhibit 1 hereto (the "Mortgage Loans"),
including rights to (a) any property acquired by foreclosure or deed in lieu of
foreclosure or otherwise, (b) the proceeds of any insurance policies covering
the Mortgage Loans and (c) its rights with respect to each of the Cap Contracts;
and
WHEREAS, the parties hereto desire that the Seller sell the Mortgage
Loans to the Purchaser and transfer its rights under each of the Cap Contracts
to the Purchaser, and that the Originator make certain representations and
warranties on the Closing Date and undertake certain obligations on the Closing
Date with respect to such Mortgage Loans, in each case pursuant to the terms of
this Agreement; and
WHEREAS, pursuant to the terms of an Amended and Restated Trust
Agreement dated as of April 21, 2004 (the "Trust Agreement"), among the
Purchaser, as depositor, Wilmington Trust Company, as owner trustee (the "Owner
Trustee") and Deutsche Bank National Trust Company, as certificate registrar and
certificate paying agent, the Purchaser will convey the Mortgage Loans to the
Issuer; and
WHEREAS, pursuant to the terms of a Servicing Agreement dated as of
April 21, 2004 (the "Servicing Agreement"), among New Century Mortgage
Corporation, as master servicer (the "Master Servicer"), a Trust Estate
designated as New Century Home Equity Loan Trust 2004-1, a Delaware statutory
trust (the "Issuer") and Deutsche Bank National Trust Company ("Deutsche Bank"),
as Indenture Trustee (the "Indenture Trustee"), the Master Servicer will service
the Mortgage Loans directly or through one or more Sub-Servicers; and
WHEREAS, pursuant to the terms of an Indenture dated as of April 21,
2004 (the "Indenture"), between the Issuer and the Indenture Trustee, the Issuer
will pledge the Mortgage Loans to the Indenture Trustee and issue and transfer
to the Purchaser the Asset-Backed Notes, Series 2004-1, Class A-1, Class ▇-▇,
▇▇▇▇▇ ▇-▇, Class A-4, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5 and
Class M-6 Notes (collectively, the "Notes"), representing debt of the Issuer;
and
WHEREAS, the parties intend these transactions to be treated for
federal, state and local tax purposes as the retention by the Seller of
ownership of the Mortgage Loans and issuance by the Seller of secured
indebtedness evidenced by the Notes, and have mutually covenanted to treat the
transactions consistent with that intent for all federal, state and local tax
purposes;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For all purposes of this Mortgage Loan Sale
and Contribution Agreement, except as otherwise expressly provided herein or
unless the context otherwise requires, capitalized terms not otherwise defined
herein shall have the meanings assigned to such terms in the Definitions
attached to the Indenture as Appendix A, which is incorporated by reference
herein. All other capitalized terms used herein shall have the meanings
specified herein.
ARTICLE II
SALE OF MORTGAGE LOANS AND RELATED PROVISIONS
Section 2.1 Sale of Mortgage Loans.
(a) The Seller, by the execution and delivery of this Agreement,
does hereby sell, assign, set over, and otherwise convey to the Purchaser,
without recourse but subject to the terms of this Agreement, all of the Seller's
right, title and interest in, to and under the Mortgage Loans, after giving
effect to all payments due on the Mortgage Loans on or before the Cut-off Date,
whether or not received including the right to any Prepayment Charges payable by
the related Mortgagors in connection with any Principal Prepayments on the
Mortgage Loans, whether now existing or hereafter acquired and wherever located,
on the Closing Date and as of the Cut-off Date, as well as all of its right,
title and interest in, to and under each of the Cap Contracts.
(b) In connection with such conveyances by the Seller, the Seller
shall on behalf of the Purchaser deliver to the Indenture Trustee, on or before
the Closing Date, the following documents or instruments with respect to each
Mortgage Loan:
(i) the original Mortgage Note, endorsed in blank or in the
following form "Pay to the order of Deutsche Bank National Trust
Company, as Indenture Trustee under the applicable agreement,
without recourse," with all prior and intervening endorsements
showing a complete chain of endorsement from the originator to the
Person so endorsing to the Indenture Trustee;
(ii) the original Mortgage with evidence of recording thereon,
and the original recorded power of attorney, if the Mortgage was
executed pursuant to a power of attorney, with evidence of recording
thereon;
(iii) an original Assignment in blank;
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(iv) the original recorded Assignment or Assignments showing a
complete chain of assignment from the originator to the Person
assigning the Mortgage to the Indenture Trustee as contemplated by
the immediately preceding clause (iii);
(v) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any; and
(vi) the original lender's title insurance policy or, if the
original title policy has not been issued, the irrevocable
commitment to issue the same.
If a material defect in any Mortgage File is discovered which may
materially and adversely affect the value of the related Mortgage Loan, or the
interests of the Indenture Trustee (as pledgee of the Mortgage Loans), the
Noteholders or the Certificateholders in such Mortgage Loan including if any
document required to be delivered to the Indenture Trustee has not been
delivered (provided that a Mortgage File will not be deemed to contain a defect
for an unrecorded assignment under clause (iii) above if the Seller has
submitted such assignment for recording pursuant to the terms of the following
paragraph), the Responsible Party shall cure such defect, repurchase the related
Mortgage Loan at the Purchase Price or substitute a Qualified Substitute
Mortgage Loan for the related Mortgage Loan upon the same terms and conditions
set forth in Section 3.1 hereof for breaches of representations and warranties
as to the Mortgage Loans.
With respect to a maximum of approximately 2.0% of the Mortgage
Loans, by outstanding Stated Principal Balance of the Mortgage Loans as of the
Cut-off Date, if any original Mortgage Note referred to in Section 2.1(b)(i)
above cannot be located, the obligations of the Seller to deliver such documents
shall be deemed to be satisfied upon delivery to the Purchaser of a photocopy of
such Mortgage Note, if available, with a lost note affidavit substantially in
the form of Exhibit B hereto. If any of the original Mortgage Notes for which a
lost note affidavit was delivered to the Purchaser is subsequently located, such
original Mortgage Note shall be delivered to the Purchaser within three Business
Days.
The Seller promptly shall (within sixty Business Days following the
later of the Closing Date and the date of the receipt by the Seller of the
recording information for a Mortgage but in no event later than ninety days
following the Closing Date) submit or cause to be submitted for recording, at no
expense to the Purchaser (or the Trust Estate or the Indenture Trustee under the
Indenture), in the appropriate public office for real property records, each
Assignment referred to in clauses (b)(iii) and (b)(iv) of this Section 2.1 and
shall execute each original Assignment in the following form: "Deutsche Bank
National Trust Company, as Indenture Trustee under the applicable agreement." In
the event that any such Assignment is lost or returned unrecorded because of a
defect therein, the Seller promptly shall prepare a substitute Assignment or
cure such defect, as the case may be, and thereafter cause each such Assignment
to be duly recorded.
Notwithstanding the foregoing, however, for administrative
convenience and facilitation of servicing and to reduce closing costs, the
Assignments shall not be required to be submitted for recording (except with
respect to any Mortgage Loan located in Maryland) unless such failure to record
would result
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in a withdrawal or a downgrading by any Rating Agency of the rating on any Class
of Notes; provided, however, each Assignment shall be submitted for recording by
the Seller in the manner described above, at no expense to the Purchaser, upon
the earliest to occur of: (i) reasonable direction by Holders of Notes entitled
to at least 25% of the Voting Rights, (ii) the occurrence of a Master Servicer
Event of Default, (iii) the occurrence of a bankruptcy, insolvency or
foreclosure relating to the Master Servicer, (iv) the occurrence of a servicing
transfer as described in Section 6.02 of the Servicing Agreement, (v) with
respect to any one Assignment, the occurrence of a bankruptcy, insolvency or
foreclosure relating to the Mortgagor under the related Mortgage and (vi) any
Mortgage Loan that is 90 days or more delinquent. Upon (a) receipt of written
notice that recording of the Assignments is required pursuant to one or more of
the conditions (excluding condition (vi) above) set forth in the preceding
sentence or (b) upon the occurrence of condition (vi) in the preceding sentence,
the Seller shall be required to deliver such Assignments within 30 days
following receipt of such notice.
If any of the documents referred to in Sections 2.1(b)(ii), (iii) or
(iv) above has, as of the Closing Date, been submitted for recording but either
(x) has not been returned from the applicable public recording office or (y) has
been lost or such public recording office has retained the original of such
document, the obligations of the Seller to deliver such documents shall be
deemed to be satisfied upon (1) delivery to the Purchaser or its assignee,
transferee or designee of a copy of each such document certified by the
Originator in the case of (x) above or the applicable public recording office in
the case of (y) above to be a true and complete copy of the original that was
submitted for recording and (2) if such copy is certified by the Originator,
delivery to the Purchaser or its assignee, transferee or designee promptly upon
receipt thereof of either the original or a copy of such document certified by
the applicable public recording office to be a true and complete copy of the
original. Notice shall be provided to the Indenture Trustee and the Rating
Agencies by the Seller if delivery pursuant to clause (2) above will be made
more than 180 days after the Closing Date. If the original lender's title
insurance policy was not delivered pursuant to Section 2.1(b)(vi) above, the
Seller shall deliver or cause to be delivered to the Purchaser or its assignee,
transferee or designee promptly after receipt thereof, the original lender's
title insurance policy. The Seller shall deliver or cause to be delivered to the
Purchaser or its assignee, transferee or designee promptly upon receipt thereof
any other original documents constituting a part of a Mortgage File received
with respect to any Mortgage Loan, including, but not limited to, any original
documents evidencing an assumption or modification of any Mortgage Loan.
Each original document relating to a Mortgage Loan which is not
delivered to the Purchaser or its assignee, transferee or designee, if held by
the Seller, shall be so held for the benefit of the Purchaser, its assignee,
transferee or designee.
(c) The parties hereto intend (other than for federal, state and
local tax purposes) that the transactions set forth herein, including the sale
of the Mortgage Loans pursuant to this Agreement, constitute a sale by the
Seller to the Purchaser of all the Seller's right, title and interest in and to
the Mortgage Loans and other property as and to the extent described above. In
the event the transactions set forth herein are deemed not to be a sale, the
Seller hereby grants to the Purchaser a security interest in all of the Seller's
right, title and interest in, to and under the Mortgage Loans and such other
property, to secure all of the Seller's obligations hereunder, and this
Agreement shall constitute a security agreement
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under applicable law. The Seller agrees to take or cause to be taken such
actions and to execute such documents, including without limitation the filing
of all necessary UCC-1 financing statements filed in the State of California
(which shall have been submitted for filing as of the Closing Date with respect
to the Stated Principal Balance of the Mortgage Loans), any continuation
statements with respect thereto and any amendments thereto required to reflect a
change in the name or corporate structure of the Seller or the filing of any
additional UCC-1 financing statements due to the change in the principal office
of the Seller, as are necessary to perfect and protect the Purchaser's interests
in each Mortgage Loan and the proceeds thereof.
Section 2.2 Agreement to Purchase.
The Seller agrees to sell and the Purchaser agrees to purchase, on
or before April 21, 2004 (the "Closing Date"), certain fixed-rate and
adjustable-rate, first lien and second lien, conventional, one- to four-family,
residential mortgage loans (the "Mortgage Loans"), having an aggregate principal
balance as of the close of business on April 1, 2004, (the "Cut-off Date") of
$1,520,309,307.69 (the "Closing Balance"), after giving effect to all payments
due on the Mortgage Loans on or before the Cut-off Date, whether or not received
including the right to any Prepayment Charges payable by the related Mortgagors
in connection with any Principal Prepayments on the Mortgage Loans. The purchase
price payable in connection with such sale shall consist of (i) the cash
proceeds from the sale of the Notes in the amount of $1,456,209,625.20 and (ii)
delivery of the Class M-6 Notes and the Trust Certificates to the Seller.
The Seller and the Purchaser intend that the sale of the Mortgage
Loans to the Purchaser, followed by the Purchaser's sale of the Mortgage Loans
to the Issuer, shall be treated for federal, state and local tax purposes as a
transfer by the Seller directly to the Issuer (followed by the issuance by the
Issuer of Notes that are intended by all parties to such issuance to be treated
for federal, state and local tax purposes as indebtedness of the Seller secured
by the Mortgage Loans).
ARTICLE III
REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH
Section 3.1 Representations and Warranties. The Responsible Party
(in the case of (a) and (c) below) and Seller (in the case of (b) below) hereby
represents and warrants to the Purchaser as of the Closing Date (or if otherwise
specified below, as of the date so specified):
(a) As to the Responsible Party:
(i) The Responsible Party is duly organized, validly existing
and in good standing as a corporation under the laws of the State of
California with full corporate power and authority to conduct its
business as presently conducted by it to the extent material to the
consummation of the transactions contemplated herein. The
Responsible Party has the full corporate power and authority to
execute and deliver, engage in the transactions contemplated by, and
perform and observe the terms and conditions of this Agreement.
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(ii) The Responsible Party has duly authorized the execution,
delivery and performance of this Agreement, has duly executed and
delivered this Agreement, and this Agreement, assuming due
authorization, execution and delivery by the Seller and the
Purchaser, constitutes a legal, valid and binding obligation of the
Responsible Party, enforceable against it in accordance with its
terms except as the enforceability thereof may be limited by
bankruptcy, insolvency or reorganization or by general principles of
equity.
(iii) The execution, delivery and performance of this
Agreement by the Responsible Party (x) does not conflict and will
not conflict with, does not breach and will not result in a breach
of and does not constitute and will not constitute a default (or an
event, which with notice or lapse of time or both, would constitute
a default) under (A) any terms or provisions of the articles of
incorporation or by-laws of the Responsible Party, (B) any term or
provision of any material agreement, contract, instrument or
indenture, to which the Responsible Party is a party or by which the
Responsible Party or any of its property is bound or (C) any law,
rule, regulation, order, judgment, writ, injunction or decree of any
court or governmental authority having jurisdiction over the
Responsible Party or any of its property and (y) does not create or
impose and will not result in the creation or imposition of any
lien, charge or encumbrance which would have a material adverse
effect upon the Mortgage Loans or any documents or instruments
evidencing or securing the value of the Mortgage Loans.
(iv) No consent, approval, authorization or order of,
registration or filing with, or notice on behalf of the Responsible
Party to any governmental authority or court is required, under
federal laws or the laws of the State of California, for the
execution, delivery and performance by the Responsible Party of, or
compliance by the Responsible Party with, this Agreement or the
consummation by the Responsible Party of any other transaction
contemplated hereby and by the Indenture; provided, however, that
the Responsible Party makes no representation or warranty regarding
federal or state securities laws in connection with the sale or
distribution of the Notes and Certificates.
(v) This Agreement does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements contained herein not misleading. The written statements,
reports and other documents prepared and furnished or to be prepared
and furnished by the Responsible Party pursuant to this Agreement or
in connection with the transactions contemplated hereby taken in the
aggregate do not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements
contained therein not misleading.
(vi) The Responsible Party is not in violation of, and the
execution and delivery of this Agreement by the Responsible Party
and its performance and compliance with the terms of this Agreement
will not constitute a violation with respect to, any order or decree
of any court or any order or regulation of any federal, state,
municipal or governmental
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agency having jurisdiction over the Responsible Party or its assets,
which violation might have consequences that would materially and
adversely affect the condition (financial or otherwise) or the
operation of the Responsible Party or its assets or might have
consequences that would materially and adversely affect the
performance of its obligations and duties hereunder.
(vii) The Responsible Party 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.
(viii) There are no actions or proceedings against, or
investigations known to it of, the Responsible Party before any
court, administrative or other tribunal (A) that might prohibit its
entering into this Agreement or any other Basic Agreement, (B)
seeking to prevent consummation of the transactions contemplated by
this Agreement or (C) that might prohibit or materially and
adversely affect the performance by the Responsible Party of its
obligations under, or validity or enforceability of, this Agreement.
(ix) There is no litigation currently pending or, to the best
of the Responsible Party's knowledge without independent
investigation, threatened against the Responsible Party that would
reasonably be expected to adversely affect the issuance of the Notes
and Certificates or the execution, delivery, performance or
enforceability of this Agreement, or that would result in a material
adverse change in the financial condition of the Responsible Party.
(b) As to the Seller:
(i) The Seller is duly organized, validly existing and in good
standing as a corporation under the laws of the State of California
with full corporate power and authority to conduct its business as
presently conducted by it to the extent material to the consummation
of the transactions contemplated herein. The Seller has the full
corporate power and authority to own the Mortgage Loans and to
transfer and convey the Mortgage Loans to the Purchaser and has the
full corporate power and authority to execute and deliver, engage in
the transactions contemplated by, and perform and observe the terms
and conditions of this Agreement.
(ii) The Seller has duly authorized the execution, delivery
and performance of this Agreement, has duly executed and delivered
this Agreement, and this Agreement, assuming due authorization,
execution and delivery by the Responsible Party and the Purchaser,
constitutes a legal, valid and binding obligation of the Seller,
enforceable against it in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency or
reorganization or by general principles of equity.
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(iii) The execution, delivery and performance of this
Agreement by the Seller (x) does not conflict and will not conflict
with, does not breach and will not result in a breach of and does
not constitute and will not constitute a default (or an event, which
with notice or lapse of time or both, would constitute a default)
under (A) any terms or provisions of the articles of incorporation
or by-laws of the Seller, (B) any term or provision of any material
agreement, contract, instrument or indenture, to which the Seller is
a party or by which the Seller or any of its property is bound or
(C) any law, rule, regulation, order, judgment, writ, injunction or
decree of any court or governmental authority having jurisdiction
over the Seller or any of its property and (y) does not create or
impose and will not result in the creation or imposition of any
lien, charge or encumbrance which would have a material adverse
effect upon the Mortgage Loans or any documents or instruments
evidencing or securing the Mortgage Loans.
(iv) No consent, approval, authorization or order of,
registration or filing with, or notice on behalf of the Seller to
any governmental authority or court is required, under federal laws
or the laws of the State of California, for the execution, delivery
and performance by the Seller of, or compliance by the Seller with,
this Agreement or the consummation by the Seller of any other
transaction contemplated hereby and by the Indenture; provided,
however, that the Seller makes no representation or warranty
regarding federal or state securities laws in connection with the
sale or distribution of the Notes and Certificates.
(v) This Agreement does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements contained herein not misleading. The written statements,
reports and other documents prepared and furnished or to be prepared
and furnished by the Seller pursuant to this Agreement or in
connection with the transactions contemplated hereby taken in the
aggregate do not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements
contained therein not misleading.
(vi) The Seller is not in violation of, and the execution and
delivery of this Agreement by the Seller and its performance and
compliance with the terms of this Agreement will not constitute a
violation with respect to, any order or decree of any court or any
order or regulation of any federal, state, municipal or governmental
agency having jurisdiction over the Seller or its assets, which
violation might have consequences that would materially and
adversely affect the condition (financial or otherwise) or the
operation of the Seller or its assets or might have consequences
that would materially and adversely affect the performance of its
obligations and duties hereunder.
(vii) The Seller does not believe, nor does it have any reason
or cause to believe, that it cannot perform each and every covenant
contained in this Agreement.
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(viii) Immediately prior to the sale of the Mortgage Loans to
the Purchaser as herein contemplated, the Seller will be the owner
of the related Mortgage and the indebtedness evidenced by the
related Mortgage Note, and, upon the payment to the Seller of the
Mortgage Loan Purchase Price, in the event that the Seller retains
or has retained record title, the Seller shall retain such record
title to each Mortgage, each related Mortgage Note and the related
Mortgage Files with respect thereto in trust for the Purchaser as
the owner thereof from and after the date hereof.
(ix) There are no actions or proceedings against, or
investigations known to it of, the Seller before any court,
administrative or other tribunal (A) that might prohibit its
entering into this Agreement, (B) seeking to prevent the sale of the
Mortgage Loans by the Seller or the consummation of the transactions
contemplated by this Agreement or (C) that might prohibit or
materially and adversely affect the performance by the Seller of its
obligations under, or validity or enforceability of, this Agreement.
(x) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Seller, and
the transfer, assignment and conveyance of the Mortgage Notes and
the Mortgages by the Seller are not subject to the bulk transfer or
any similar statutory provisions.
(xi) [intentionally omitted]
(xii) The Seller has not dealt with any broker, investment
banker, agent or other person, except for the Purchaser or any of
its affiliates, that may be entitled to any commission or
compensation in connection with the sale of the Mortgage Loans
(except that an entity that previously financed the Seller's
ownership of the Mortgage Loans may be entitled to a fee to release
its security interest in the Mortgage Loans, which fee shall have
been paid and which security interest shall have been released on or
prior to the Closing Date).
(xiii) There is no litigation currently pending or, to the
best of the Seller's knowledge without independent investigation,
threatened against the Seller that would reasonably be expected to
adversely affect the transfer of the Mortgage Loans, the issuance of
the Notes and Certificates or the execution, delivery, performance
or enforceability of this Agreement, or that would result in a
material adverse change in the financial condition of the Seller.
(c) As to each Mortgage Loan:
(i) The information set forth in the Mortgage Loan Schedule,
including the field concerning any related Prepayment Charge, is
complete, true and correct as of the Cut-off Date;
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(ii) [intentionally omitted]
(iii) (a) All payments required to be made on or before the
first day of the month prior to the month of the Closing Date, with
respect to such Mortgage Loan under the terms of the Mortgage Note
have been made; (b) none of the Seller, the Responsible Party or the
Originator has advanced funds, or induced, solicited or knowingly
received any advance of funds from a party other than the owner of
the related Mortgaged Property, directly or indirectly, for the
payment of any amount required by the Mortgage Note or Mortgage and
(c) as of April 1, 2004, except with respect to 0.04% of the
Mortgage Loans, the payment required under any Mortgage Loan will
not and has not been 30 or more days delinquent more than once
during the last twelve months;
(iv) There are no delinquent taxes, ground rents, water
charges, sewer rents, assessments, insurance premiums, leasehold
payments, including assessments payable in future installments or
other outstanding charges affecting the related Mortgaged Property;
(v) To the best knowledge of the Responsible Party, the terms
of the Mortgage Note and the Mortgage have not been impaired,
waived, altered or modified in any respect, except by written
instruments, recorded in the applicable public recording office if
necessary to maintain the lien priority of the Mortgage; the
substance of any such waiver, alteration or modification has been
approved by the title insurer, to the extent required by the related
policy, and is reflected on the Mortgage Loan Schedule. No
instrument of waiver, alteration or modification has been executed
by the Responsible Party or the Originator or any other person in
the chain of title from the Originator to the Responsible Party to
the Seller to the Purchaser, and no Mortgagor has been released, in
whole or in part, except in connection with an assumption agreement
approved by the title insurer, to the extent required by the policy,
and the terms of which are reflected in the Mortgage Loan Schedule;
(vi) The Mortgage Note and the Mortgage are not subject to any
right of rescission, set-off, counterclaim or defense, including the
defense of usury, nor will the operation of any of the terms of the
Mortgage Note and the Mortgage, or the exercise of any right
thereunder, render the Mortgage unenforceable, in whole or in part,
or subject to any right of rescission, set-off, counterclaim or
defense, including the defense of usury and no such right of
rescission, set-off, counterclaim or defense has been asserted with
respect thereto;
(vii) All buildings 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 customary in the
area where the Mortgaged Property is located, pursuant to insurance
policies conforming to the requirements of the Servicing Agreement.
All such insurance policies contain a standard mortgagee clause
naming the Originator, its successors and assigns as mortgagee and
all premiums thereon have been paid. If upon
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origination of the Mortgage Loan, the Mortgaged Property was in an
area identified on a Flood Hazard Map or Flood Insurance Rate Map
issued by the Federal Emergency Management Agency as having special
flood hazards (and such flood insurance has been made available) a
flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration is in effect
which policy conforms to the requirements of ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇
Mac. The Mortgage obligates the Mortgagor thereunder to maintain all
such insurance at the Mortgagor's cost and expense, and on the
Mortgagor's failure to do so, authorizes the holder of the Mortgage
to maintain such insurance at the Mortgagor's cost and expense and
to seek reimbursement therefor from the Mortgagor;
(viii) Any and all requirements of any federal, state or local
law including, without limitation, all applicable predatory and
abusive lending laws, usury, truth in lending, real estate
settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws applicable to the origination and
servicing of the Mortgage Loan have been complied with. Any and all
statements or acknowledgments required to be made by the Mortgagor
relating to such requirements are and will remain in the Mortgage
File;
(ix) 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 satisfaction, cancellation, subordination,
rescission or release;
(x) The Mortgage is a valid, existing and enforceable first or
second lien on the Mortgaged Property, including all improvements on
the Mortgaged Property subject only to (a) the lien of current real
property taxes and assessments not yet due and payable, (b)
covenants, conditions and restrictions, rights of way, easements and
other matters of the public record as of the date of recording being
acceptable to mortgage lending institutions generally and
specifically referred to in the lender's title insurance policy
delivered to the originator of the Mortgage Loan and which do not
adversely affect the appraised value of the Mortgaged Property, (c)
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 and (d) the first
lien on the Mortgaged Property, in the case of the Mortgages that
are second liens. Any security agreement, chattel mortgage or
equivalent document related to and delivered in connection with the
Mortgage Loan establishes and creates a valid, existing and
enforceable first or second lien and first or second priority
security interest, as applicable, on the property described therein
and the Seller had full right to contribute and assign the same to
the Purchaser. The Mortgaged Property was not, as of the date of
origination of the Mortgage Loan, subject to a mortgage, deed of
trust, deed to secure debt or other security instrument creating a
lien subordinate to the lien of the Mortgage;
11
(xi) The Mortgage Note and the related Mortgage are genuine
and each is the legal, valid and binding obligation of the maker
thereof, enforceable in accordance with its terms;
(xii) All parties to the Mortgage Note and the Mortgage had
legal capacity to enter into the Mortgage Loan and to execute and
deliver the Mortgage Note and the Mortgage, and the Mortgage Note
and the Mortgage have been duly and properly executed by such
parties. The Mortgagor is a natural person who is a party to the
Mortgage Note and the Mortgage is in an individual capacity or
family trust that is guaranteed by a natural person;
(xiii) The proceeds of the Mortgage Loan have been fully
disbursed to or for the account of the Mortgagor and there is no
obligation for the Mortgagee to advance additional funds thereunder
and any and all requirements as to completion of any on-site or
off-site improvement and as to disbursements of any escrow funds
therefor have been complied with. All costs, fees and expenses
incurred in making or closing the Mortgage Loan and the recording of
the Mortgage have been paid, and the Mortgagor is not entitled to
any refund of any amounts paid or due to the Mortgagee pursuant to
the Mortgage Note or Mortgage;
(xiv) As of the Closing Date and prior to the sale of the
Mortgage Loan to the Purchaser, the Seller was the sole legal,
beneficial and equitable owner of the Mortgage Note and the Mortgage
and has full right to transfer and sell the Mortgage Loan to the
Purchaser free and clear of any encumbrance, equity, lien, pledge,
charge, claim or security interest;
(xv) All parties which have had any interest in the Mortgage
Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest,
were) in compliance with any and all applicable "doing business" and
licensing requirements of the laws of the state wherein the
Mortgaged Property is located;
(xvi) The Mortgage Loan is covered by an ALTA lender's title
insurance policy, and with respect to each adjustable-rate Mortgage
Loan, an adjustable rate mortgage endorsement in an amount at least
equal to the balance of the Mortgage Loan as of the Cut-off Date,
such endorsement substantially in the form of ALTA Form 6.0 or 6.1,
acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac, issued by a title insurer
acceptable to ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac and qualified to do
business in the jurisdiction where the Mortgaged Property is
located, insuring (subject to the exceptions contained in (x)(a) and
(b) above) the Originator, its successors and assigns as to the
first or second priority lien of the Mortgage in the original
principal amount of the Mortgage Loan and against any loss by reason
of the invalidity or unenforceability of the lien resulting from the
provisions of the Mortgage providing for adjustment in the Mortgage
Rate and monthly payment.
12
Additionally, such lender's title insurance policy affirmatively
insures ingress and egress to and from the Mortgaged Property, and
against encroachments by or upon the Mortgaged Property or any
interest therein. The Originator is the sole insured of such
lender's title insurance policy, and such lender's title insurance
policy is in full force and effect and will be in full force and
effect upon the consummation of the transactions contemplated by
this Agreement. No claims have been made under such lender's title
insurance policy, and no prior holder of the related Mortgage,
including the Originator, the Responsible Party and the Seller, has
done, by act or omission, anything which would impair the coverage
of such lender's title insurance policy;
(xvii) Other than as specified in paragraph (iii) above, if
applicable, there is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note and no
event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration, and neither the
Originator nor the Seller has waived any default, breach, violation
or event of acceleration;
(xviii) There are no mechanics' or similar liens or claims
which have been filed for work, labor or material (and no rights are
outstanding that under law could give rise to such lien) affecting
the related Mortgaged Property which are or may be liens prior to,
or equal or coordinate with, the lien of the related Mortgage;
(xix) All improvements which were considered in determining
the Value of the related Mortgaged Property lay wholly within the
boundaries and building restriction lines of the Mortgaged Property,
and no improvements on adjoining properties encroach upon the
Mortgaged Property. Each appraisal has been performed in accordance
with the provisions of the Financial Institutions Reform, Recovery
and Enforcement Act of 1989;
(xx) The Mortgage Loan was (i) originated by the Originator or
by a savings and loan association, a savings bank, a commercial bank
or similar banking institution which is supervised and examined by a
federal or state authority, or by a mortgagee approved as such by
the Secretary of HUD or (ii) acquired by the Originator directly
through loan brokers or correspondents such that (a) the Mortgage
Loan was originated in conformity with the Originator's underwriting
guidelines, (b) the Originator approved the Mortgage Loan prior to
funding and (c) the Originator provided the funds used to originate
the Mortgage Loan and acquired the Mortgage Loan on the date of
origination thereof;
(xxi) Principal payments on the Mortgage Loan commenced no
more than two months after the proceeds of the Mortgage Loan were
disbursed. The Mortgage Loan bears interest at the Mortgage Rate.
With respect to the Adjustable-Rate Mortgage Loans, the Mortgage
Note is payable on the first day of each month in Monthly Payments
which are changed on each Adjustment Date to an amount which will
amortize the Stated Principal Balance of the Mortgage Loan over its
remaining term at the Mortgage Rate.
13
Interest on the Mortgage Loan is calculated on the basis of a
360-day year consisting of twelve 30-day months. The Mortgage Note
does not permit negative amortization. No Adjustable-Rate Mortgage
Loan permits the Mortgagor to convert the Mortgage Rate thereon to a
fixed Mortgage Rate;
(xxii) The origination and collection practices used by the
Master Servicer with respect to each Mortgage Note and Mortgage have
been in all respects legal, proper, prudent and customary in the
mortgage origination and servicing industry. The Mortgage Loan has
been serviced in accordance with the terms of the Mortgage Note.
With respect to escrow deposits and Escrow Payments, if any, all
such payments are in the possession of, or under the control of, the
Master Servicer and there exist no deficiencies in connection
therewith for which customary arrangements for repayment thereof
have not been made. No escrow deposits or Escrow Payments or other
charges or payments due the Master Servicer have been capitalized
under any Mortgage or the related Mortgage Note;
(xxiii) The Mortgaged Property is free of damage and waste and
there is no proceeding pending for the total or partial condemnation
thereof;
(xxiv) The Mortgage and related Mortgage Note contain
customary and enforceable provisions such as to render the rights
and remedies of the holder thereof adequate for the realization
against the Mortgaged Property of the benefits of the security
provided thereby, including, (a) in the case of a Mortgage
designated as a deed of trust, by trustee's sale and (b) otherwise
by judicial foreclosure. Since the date of origination of the
Mortgage Loan, the Mortgaged Property has not been subject to any
bankruptcy proceeding or foreclosure proceeding and the Mortgagor
has not filed for protection under applicable bankruptcy laws. There
is no homestead or other exemption available to the Mortgagor which
would interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage. To the best
of the Seller's knowledge, the Mortgagor has not notified the
Originator or the Master Servicer of any relief requested or allowed
to the Mortgagor under the Servicemembers Civil Relief Act and, to
the best of the Responsible Party's knowledge, no such request has
been made or allowance granted.
(xxv) The related Mortgaged Property is not a leasehold estate
or, if such Mortgaged Property is a leasehold estate, the remaining
term of such lease is at least ten (10) years greater than the
remaining term of the related Mortgage Note;
(xxvi) The Mortgage Note is not and has not been secured by
any collateral except the lien of the corresponding Mortgage on the
Mortgaged Property and the security interest of any applicable
security agreement or chattel mortgage referred to in (x) above;
14
(xxvii) The Mortgage File contains an appraisal of the related
Mortgaged Property made and signed, prior to the approval of the
Mortgage Loan application, by a qualified appraiser, approved by the
Originator or the Responsible Party, who had no interest, direct or
indirect in the Mortgaged Property or in any loan made on the
security thereof, whose compensation is not affected by the approval
or disapproval of the Mortgage Loan and who met the minimum
qualifications of ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac;
(xxviii) In the event the Mortgage constitutes a deed of
trust, a trustee, duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is
named in the Mortgage, and no fees or expenses are or will become
payable by the Purchaser to the trustee under the deed of trust,
except in connection with a trustee's sale after default by the
Mortgagor;
(xxix) No Mortgage Loan contains provisions pursuant to which
Monthly Payments are (a) paid or partially paid with funds deposited
in any separate account established by the Originator, the
Responsible Party, the Seller, the Mortgagor, or anyone on behalf of
the Mortgagor, (b) paid by any source other than the Mortgagor or
(c) contains any other similar provisions which may constitute a
"buydown" provision. The Mortgage Loans are not graduated payment
mortgage loans and the Mortgage Loans do not have shared
appreciation or other contingent interest features;
(xxx) With respect to the Adjustable-Rate Mortgage Loans, the
Mortgagor has executed a statement to the effect that the Mortgagor
has received all disclosure materials required by applicable law
with respect to the making of Adjustable-Rate Mortgage Loans; and if
the Mortgage Loan is a Refinanced Mortgage Loan, the Mortgagor has
received all disclosure and rescission materials required by
applicable law with respect to the making of a Refinanced Mortgage
Loan, and evidence of such receipt is and will remain in the
Mortgage File;
(xxxi) No Mortgage Loan was made in connection with (a) the
construction or rehabilitation of a Mortgaged Property or (b)
facilitating the trade-in or exchange of a Mortgaged Property;
(xxxii) [Reserved];
(xxxiii) The Mortgaged Property is lawfully occupied under
applicable law; all inspections, licenses and certificates required
to be made or issued with respect to all occupied portions of the
Mortgaged Property and, with respect to the use and occupancy of the
same, including but not limited to certificates of occupancy, have
been made or obtained from the appropriate authorities;
(xxxiv) No error, omission, misrepresentation, negligence,
fraud or similar occurrence with respect to a Mortgage Loan has
taken place on the part of any person,
15
including, without limitation, the Mortgagor, any appraiser, any
builder or developer, or any other party involved in the origination
of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan;
(xxxv) Each Assignment is in recordable form and is acceptable
for recording under the laws of the jurisdiction in which the
Mortgaged Property is located;
(xxxvi) Any principal advances made to the Mortgagor prior to
the Cut-off Date have been consolidated with the outstanding
principal amount secured by the Mortgage, and the secured principal
amount, as consolidated, bears a single interest rate and single
repayment term. The lien of the Mortgage securing the consolidated
principal amount is expressly insured as having first or second lien
priority by a title insurance policy, an endorsement to the policy
insuring the mortgagee's consolidated interest or by other title
evidence acceptable to ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac. The consolidated
principal amount does not exceed the original principal amount of
the Mortgage Loan;
(xxxvii) No Mortgage Loan has a balloon payment feature;
(xxxviii) If the Residential Dwelling on the Mortgaged
Property is a condominium unit or a unit in a planned unit
development (other than a de minimis planned unit development) such
condominium or planned unit development project meets the ▇▇▇▇▇▇
Mae's eligibility requirements;
(xxxix) Neither the Originator nor any affiliate of the
Originator has made a mortgage on any Mortgaged Property other than
the Mortgage Loan;
(xl) [Reserved];
(xli) The Mortgage Loan was not intentionally selected in a
manner intended to adversely affect the interest of the Purchaser;
(xlii) [Reserved];
(xliii) The Mortgaged Property consists of a parcel of real
property of not more than ten acres with a single family residence
erected thereon, or a two to four-family dwelling, or a multi-family
property, or an individual condominium unit in a low-rise or
high-rise condominium project, or an individual unit in a planned
unit development. The Mortgaged Property is improved with a
Residential Dwelling. Without limiting the foregoing, the Mortgaged
Property does not consist of any of the following property types:
(a) co-operative units, (b) log homes, (c) earthen homes, (d)
underground homes, (e) mobile homes and (f) manufactured homes (as
defined in the ▇▇▇▇▇▇ ▇▇▇ Originator-Servicer's Guide), except when
the appraisal indicates that the home is of comparable construction
to a stick or beam construction home, is readily marketable, has
16
been permanently affixed to the site and is not in a mobile home
"park." The Mortgaged Property is either a fee simple estate or a
long-term residential lease. If the Mortgage Loan is secured by a
long-term residential lease, unless otherwise specifically disclosed
in the Mortgage Loan Schedule, (A) the terms of such lease expressly
permit the mortgaging of the leasehold estate, the assignment of the
lease without the lessor's consent (or the lessor's consent has been
obtained and such consent is the Mortgage File) and the acquisition
by the holder of the Mortgage of the rights of the lessee upon
foreclosure or assignment in lieu of foreclosure or provide the
holder of the Mortgage with substantially similar protection; (B)
the terms of such lease do not (x) allow the termination thereof
upon the lessee's default without the holder of the Mortgage being
entitled to receive written notice of, and opportunity to cure, such
default or (y) prohibit the holder of the Mortgage from being
insured under the hazard insurance policy relating to the Mortgaged
Property; (C) the original term of such lease is not less than 15
years; (D) the term of such lease does not terminate earlier than
ten years after the maturity date of the Mortgage Note; and (E) the
Mortgaged Property is located in a jurisdiction in which the use of
leasehold estates for residential properties is an accepted
practice;
(xliv) At the time of origination, the Loan-To-Value Ratio of
the Mortgage Loan was not greater than 100.00%;
(xlv) The Mortgage, and if required by applicable law the
related Mortgage Note, contains a provision for the acceleration of
the payment of the unpaid principal balance of the Mortgage Loan in
the event that the Mortgaged Property is sold or transferred without
the prior written consent of the Mortgagee, at the option of the
Mortgagee;
(xlvi) The Mortgage Loan either contains a customary
due-on-sale clause or may be assumed by a creditworthy purchaser of
the related Mortgaged Property;
(xlvii) As of any Adjustment Date for any Adjustable-Rate
Mortgage Loan, the Index applicable to the determination of the
Mortgage Rate on such Mortgage Loan will be the average of the
interbank offered rates for six-month or one-month United States
dollar deposits in the London market, generally as published in The
Wall Street Journal and as most recently available as of either (i)
the first business day 45 days prior to such Adjustment Date or (ii)
the first business day of the month preceding the month of such
Adjustment Date, as specified in the related Mortgage Note;
(xlviii) [Reserved];
(xlix) The Originator is a HUD approved mortgagee pursuant to
Section 203 and Section 211 of the National Housing Act. No event
has occurred, including but not limited to a change in insurance
coverage, that would make the Originator unable to comply with HUD
eligibility requirements or that would require notification to HUD;
17
(l) No Mortgage Loan is covered by the Home Ownership and
Equity Protection Act of 1994 ("HOEPA") and no Mortgage Loan is in
violation of any comparable state law;
(li) No Mortgage Loan that was originated on or after October
1, 2002 and before March 7, 2003 is secured by property located in
the State of Georgia;
(lii) No Mortgage Loan that was originated on or after March
7, 2003, is a "high cost home loan" as defined under the Georgia
Fair Lending Act;
(liii) (a) No Mortgage Loan in the trust is a "high cost
home," "covered," (excluding home loans defined as "covered home
loans" pursuant to clause (1) of the definition of that term in the
New Jersey Home Ownership Security Act of 2002), "high risk home" or
"predatory" loan under any other applicable state, federal or local
law (or a similarly classified loan using different terminology
under a law imposing heightened regulatory scrutiny or additional
legal liability for residential mortgage loans having high interest
rates, points and/or fees);
(liv) No proceeds from any Mortgage Loan were used to finance
single-premium credit insurance policies;
(lv) No Mortgage Loan originated on or after October 1, 2002
will impose a Prepayment Charge for a term in excess of three years.
Any Mortgage Loans originated prior to such date will not impose
Prepayment Charges in excess of five years;
(lvi) No Mortgage Loan is a "High-Cost" loan as defined under
the New York Banking Law Section 6L, effective as of April 1, 2003;
(lvii) No Mortgage Loan is a "High-Cost Home Loan" as defined
under the Arkansas Home Loan Protection Act, effective as of July
14, 2003;
(lviii)No Mortgage Loan is a "High-Cost Home Loan" as defined
under Kentucky State Statute KRS 360.100, effective as of June 25,
2003;
(lix) Each Mortgage Loan at the time it was made complied in
all material respects with applicable local, state, and federal
laws, including, but not limited to, all applicable predatory and
abusive lending laws; and
(lx) Each Prepayment Charge is enforceable and was originated
in compliance with all applicable federal, state and local laws
(except to the extent that the enforceability thereof may be limited
by bankruptcy, insolvency, moratorium, receivership and other
similar laws affecting creditor's rights generally or the
collectability thereof may be limited due to acceleration in
connection with a foreclosure.
18
(lxi) None of the mortgage loans are High Cost as defined by
the applicable predatory and abusive lending laws.
Upon discovery by the Responsible Party or upon notice from the
Purchaser, the Issuer, the Owner Trustee, the Master Servicer or the Indenture
Trustee, as applicable, of any materially defective document in, or that a
document was not transferred by the Seller (as listed on the Indenture Trustee's
preliminary exception report) as part of any Mortgage File, or of a breach of
any representation or warranty in this Section which materially and adversely
affects the interests of the Noteholders or the Certificateholders, as
applicable, in any Mortgage Loan, the Responsible Party shall, within 60 days of
its discovery or its receipt of notice of such breach, deliver such missing
document or cure such defect or breach in all material respects or, in the event
the Responsible Party cannot deliver such missing document or cannot cure such
defect or breach, the Responsible Party shall, within ninety (90) days of its
discovery or receipt of notice, either (i) repurchase the affected Mortgage Loan
at the Purchase Price (as such term is defined in the Indenture) or (ii)
pursuant to the provisions of the Indenture, cause the removal of such Mortgage
Loan from the Trust and substitute one or more Qualified Substitute Mortgage
Loans. The Responsible Party shall amend the Closing Schedule to reflect the
withdrawal of such Mortgage Loan from the terms of this Agreement and the
Indenture. The Responsible Party shall deliver to the Purchaser such amended
Closing Schedule and shall deliver such other documents as are required by this
Agreement within five (5) days of any such amendment. Any repurchase pursuant to
this Section 3.1(c) shall be accomplished by transfer to an account designated
by the Purchaser of the amount of the Purchase Price (as such term is defined in
the Indenture) in accordance with Section 2.03 of the Servicing Agreement. Any
repurchase required by this Section 3.1(c) shall be made in a manner consistent
with Section 2.03 of the Servicing Agreement. The Purchase Price for any such
Mortgage Loan repurchased by the Responsible Party shall be paid by the
Responsible Party to the Master Servicer for deposit in the Collection Account
maintained by it pursuant to Section 3.10 of the Servicing Agreement.
(c) It is understood and agreed that the obligations of the
Responsible Party set forth in this Section 3.1 to cure or repurchase a
defective Mortgage Loan shall, except to the extent provided in Section 5.1 of
this Agreement, constitute the sole remedies of the Purchaser, the Issuer, the
Certificateholders (or the Owner Trustee on behalf of the Certificateholders)
and the Noteholders (or the Indenture Trustee, or the Master Servicer, acting
pursuant to the Servicing Agreement, on behalf of the Noteholders) against the
Responsible Party respecting a missing document or a breach of the
representations and warranties contained in this Section 3.1. It is understood
and agreed that the representations and warranties set forth in this Section 3.1
shall survive delivery of the respective Mortgage Files to the Issuer.
ARTICLE IV
SELLER'S COVENANTS
Section 4.1 Covenants of the Seller. The Seller hereby covenants
that, except for the transfer hereunder with respect to the Mortgage Loans, the
Seller will not sell, pledge, assign or transfer
19
to any other Person, or grant, create, incur or assume any Lien on, any Mortgage
Loan, whether now existing or hereafter created, or any interest therein; the
Seller will notify the Issuer, as assignee of the Purchaser, of the existence of
any Lien (other than as provided above) on any Mortgage Loan immediately upon
discovery thereof; and the Seller will defend the right, title and interest of
each of the Issuer and the Indenture Trustee, as assignee of the Purchaser and
the Issuer, respectively, in, to and under the Mortgage Loans, whether now
existing or hereafter created, against all claims of third parties claiming
through or under the Seller.
ARTICLE V
INDEMNIFICATION BY THE RESPONSIBLE PARTY
Section 5.1 Indemnification. The Responsible Party shall indemnify
and hold harmless each of (i) the Purchaser, (ii) the Underwriters, (iii) the
Person, if any, to which the Purchaser assigns its rights in and to a Mortgage
Loan and each of their respective successors and assigns and (iv) each person,
if any, who controls the Purchaser within the meaning of Section 15 of the
Securities Act of 1933, as amended (the "1933 Act") ((i) through (iv)
collectively, the "Indemnified Party") against any and all losses, claims,
expenses, damages or liabilities to which the Indemnified Party may become
subject, under the 1933 Act or otherwise, insofar as such losses, claims,
expenses, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (a) any untrue statement or alleged untrue statement of any
material fact contained in the Prospectus Supplement or the omission or the
alleged omission to state therein the material fact necessary in order to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with (i)
information furnished in writing to the Purchaser or any of its affiliates by
the Originator or any of its affiliates specifically for use therein, which
shall include, with respect to the Prospectus Supplement, the information set
forth under the captions "Summary--The Mortgage Loans," "Risk Factors" (to the
extent of information concerning the Mortgage Loans contained therein), "The
Mortgage Pool", or (ii) the data files containing information with respect to
the Mortgage Loans as transmitted by modem to the Purchaser by the Responsible
Party or any of its affiliates (as such transmitted information may have been
amended in writing by the Responsible Party or any of its affiliates with the
written consent of the Purchaser subsequent to such transmission), (b) any
representation, warranty or covenant made by the Responsible Party or any
affiliate of the Responsible Party herein or in the Servicing Agreement, on
which the Purchaser has relied, being, or alleged to be, untrue or incorrect or
(c) any updated collateral information provided by any Underwriter to a
purchaser of the Notes or Certificates derived from the data contained in clause
(ii) and the Remittance Report or a current collateral tape obtained from the
Responsible Party or an affiliate of the Responsible Party, including the
current principal balances of the Mortgage Loans; provided, however, that to the
extent that any such losses, claims, expenses, damages or liabilities to which
the Indemnified Party may become subject arise out of or are based upon both (1)
statements, omissions, representations, warranties or covenants of the Seller
described in clause (a), (b) or (c) above and (2) any other factual basis, the
Responsible Party shall indemnify and hold harmless the Indemnified Party only
to the extent that the losses, claims, expenses, damages, or liabilities of the
person or persons asserting the claim are determined to rise from or be based
upon matters
20
set forth in clause (1) above and do not result from the gross negligence or
willful misconduct of such Indemnified Party. This indemnity shall be in
addition to any liability that the Responsible Party may otherwise have.
ARTICLE VI
TERMINATION
Section 6.1 Termination. The respective obligations and
responsibilities of the Seller and the Purchaser created hereby shall terminate,
except for the Responsible Party's indemnity obligations as provided herein,
upon the termination of the Issuer pursuant to the terms of the Trust Agreement.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.1 Amendment. This Agreement may be amended from time to
time by the Seller and the Purchaser by written agreement signed by the Seller
and the Purchaser, which consent shall not be unreasonably withheld.
Section 7.2 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
Section 7.3 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered addressed as follows:
(i) if to the Seller:
NC Residual II Corporation
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
or, such other address as may hereafter be furnished to the Purchaser in writing
by the Seller.
(ii) if to the Purchaser:
New Century Mortgage Securities, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
or such other address as may hereafter be furnished to the Seller in writing by
the Purchaser.
21
(iii) if to the Responsible Party:
NC Capital Corporation
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
or such other address as may hereafter be furnished to the Seller in writing by
the Purchaser.
(iv) if to the Owner Trustee:
Wilmington Trust Company
▇▇▇▇▇▇ Square North
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Attention: Corporate Trust Administration
(v) if to the Issuer:
New Century Home Equity Loan Trust Series 2004-1
c/o New Century Mortgage Securities, Inc.
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Attention: ▇▇▇▇▇ ▇▇▇▇▇
(vi) if to the Indenture Trustee:
Deutsche Bank National Trust Company
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Attention: Trust Administration - NC0401
Section 7.4 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
Section 7.5 Relationship of Parties. Nothing herein contained shall
be deemed or construed to create a partnership or joint venture between the
parties hereto, and the services of the Seller shall be rendered as an
independent contractor and not as agent for the Purchaser.
Section 7.6 Counterparts. This Agreement may be executed in two or
more counterparts and by the different parties hereto on separate counterparts,
each of which, when so executed, shall be deemed to be an original and such
counterparts together shall constitute one and the same agreement.
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Section 7.7 Further Agreements. The Purchaser, the Responsible Party
and the Seller each agree to execute and deliver to the other such additional
documents, instruments or agreements as may be necessary or appropriate to
effectuate the purposes of this Agreement. Each of the Purchaser, the
Responsible Party and the Seller agrees to use its best reasonable efforts to
take all actions necessary to be taken by it to cause (i) the Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes and Class A-4 Notes to be issued and rated
"Aaa" by Moody's and "AAA" by Standard & Poor's, (ii) the Class M-1 Notes to be
issued and rated "Aa2" by Moody's and "AA" by Standard & Poor's, (iii) the Class
M-2 Notes to be issued and rated "A2" by Moody's and "A" by Standard & Poor's,
(iv) the Class M-3 Notes to be issued and rated "A3" by Moody's and "A-" by
Standard & Poor's, (v) the Class M-4 Notes to be issued and rated "Baa1" by
Moody's and "BBB+" by Standard & Poor's, (vi) the Class M-5 Notes to be issued
and rated "Baa2" by Moody's and "BBB" by Standard & Poor's and (vii) the Class
M-6 Notes to be issued and rated "Baa3" by Moody's and "BBB-" by Standard &
Poor's, with the Notes to be offered pursuant to the Purchaser's shelf
registration statement, and each party will cooperate with the other in
connection therewith.
Section 7.8 Intention of the Parties. The Seller and the Purchaser
agree that it is their intention that the sale of the Mortgage Loans to the
Purchaser, and the Purchaser's sale of the Mortgage Loans to the Issuer pursuant
to the Trust Agreement shall be treated for federal, stated and local tax
purposes as a transfer directly by the Seller to the Issuer (with the Issuer's
issuance of the Notes treated for federal, state and local tax purposes as the
issuance by the Seller of indebtedness secured by the Mortgage Loans) and
mutually covenant to report this and all related transactions for all federal,
stated and local tax reporting purposes in a manner consistent with that intent.
The Purchaser will have the right to review the Mortgage Loans and the Related
Documents to determine the characteristics of the Mortgage Loans which will
affect the federal, stated and local tax consequences of owning the Mortgage
Loans and the Seller will cooperate with all reasonable requests made by the
Purchaser in the course of such review.
Section 7.9 Successors and Assigns; Assignment of Purchase
Agreement. This Agreement shall bind and inure to the benefit of and be
enforceable by the Seller, the Responsible Party, the Purchaser and their
respective successors and assigns. The obligations of the Seller and the
Responsible Party under this Agreement cannot be assigned or delegated to a
third party without the consent of the Purchaser, which consent shall be at the
Purchaser's sole discretion. The parties hereto acknowledge that (i) the
Purchaser is acquiring the Mortgage Loans for the purpose of selling them to the
Issuer who will in turn pledge the Mortgage Loans to the Indenture Trustee for
the benefit of the Noteholders and (ii) the Purchaser is acquiring the rights
with respect to the Cap Contracts for the purpose of transferring them to the
Issuer who will in turn assign these rights to the Indenture Trustee for the
benefit of the Noteholders. As an inducement to the Purchaser to purchase the
Mortgage Loans, the Seller and the Responsible Party acknowledge and consent to
(i) the assignment by the Purchaser to the Issuer of all of the Purchaser's
rights against the Seller and the Responsible Party pursuant to this Agreement
and to the enforcement or exercise of any right or remedy against the Seller and
the Responsible Party pursuant to this Agreement as assigned by the Purchaser
and (ii) the assignment by the Issuer to the Indenture Trustee of such rights
and to the enforcement or exercise of any right or remedy by the Indenture
Trustee, or the Master Servicer acting pursuant to the Servicing Agreement,
against the Seller and the Responsible Party pursuant to this Agreement as
assigned by the Issuer. Such enforcement of a right or remedy by the Issuer, the
Owner
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Trustee, the Master Servicer or the Indenture Trustee, as applicable, shall have
the same force and effect as if the right or remedy had been enforced or
exercised by the Purchaser directly.
Section 7.10 Survival. The representations and warranties made
herein by the Seller and the Responsible Party and the provisions of Article V
hereof shall survive the purchase of the Mortgage Loans hereunder.
Section 7.11 Third Party Beneficiary. The Indenture Trustee shall be
deemed a third- party beneficiary of this Agreement to the same extent as if it
were a party hereto, and shall have the right to enforce the provisions of this
Agreement.
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IN WITNESS WHEREOF, the Seller, the Responsible Party and the
Purchaser have caused their names to be signed to this Mortgage Loan Sale and
Contribution Agreement by their respective officers thereunto duly authorized as
of the day and year first above written.
NEW CENTURY MORTGAGE SECURITIES, INC.
as Purchaser
By:
-----------------------------------
Name:
Title:
NC RESIDUAL II CORPORATION
as Seller
By:
-----------------------------------
Name:
Title:
NC CAPITAL CORPORATION
as Responsible Party
By:
-----------------------------------
Name:
Title:
EXHIBIT A
MORTGAGE LOAN SCHEDULE
(Filed Manually)
A-1
EXHIBIT B
FORM OF LOST NOTE AFFIDAVIT
Loan #: ____________
Borrower: _____________
LOST NOTE AFFIDAVIT
I, as ____________________ of ______________________, a
_______________ corporation am authorized to make this Affidavit on behalf of
_____________________ (the "Seller"). In connection with the administration of
the Mortgage Loans held by ____________________, a _________________ corporation
as Seller on behalf of New Century Mortgage Securities, Inc. (the "Purchaser"),
_____________________ (the "Deponent"), being duly sworn, deposes and says that:
1. The Seller's address is: _____________________
_____________________
_____________________
2. The Seller previously delivered to the Purchaser a signed Initial
Certification with respect to such Mortgage and/or Assignment of
Mortgage.
3. Such Mortgage Note and/or Assignment of Mortgage was assigned or
sold to the Purchaser by ________________________, a ____________
corporation pursuant to the terms and provisions of a Mortgage Loan
Sale and Contribution Agreement dated as of __________ __, _____.
4. Such Mortgage Note and/or Assignment of Mortgage is not outstanding
pursuant to a request for release of Documents.
5. Aforesaid Mortgage Note and/or Assignment of Mortgage (the
"Original") has been lost.
6. Deponent has made or caused to be made a diligent search for the
Original and has been unable to find or recover same.
7. The Seller was the Seller of the Original at the time of the loss.
8. Deponent agrees that, if said Original should ever come into
Seller's possession, custody or power, Seller will immediately and
without consideration surrender the Original to the Purchaser.
B-1
9. Attached hereto is a true and correct copy of (i) the Note, endorsed
in blank by the Mortgagee and (ii) the Mortgage or Deed of Trust
(strike one) which secures the Note, which Mortgage or Deed of Trust
is recorded in the county where the property is located.
10. Deponent hereby agrees that the Seller (a) shall indemnify and hold
harmless the Purchaser, its successors and assigns, against any
loss, liability or damage, including reasonable attorney's fees,
resulting from the unavailability of any Notes, including but not
limited to any loss, liability or damage arising from (i) any false
statement contained in this Affidavit, (ii) any claim of any party
that has already purchased a mortgage loan evidenced by the Lost
Note or any interest in such mortgage loan, (iii) any claim of any
borrower with respect to the existence of terms of a mortgage loan
evidenced by the Lost Note on the related property to the fact that
the mortgage loan is not evidenced by an original note and (iv) the
issuance of a new instrument in lieu thereof (items (i) through (iv)
above hereinafter referred to as the "Losses") and (b) if required
by any Rating Agency in connection with placing such Lost Note into
a securitization, shall obtain a surety from an insurer acceptable
to the applicable Rating Agency to cover any Losses with respect to
such Lost Note.
11. This Affidavit is intended to be relied upon by the Purchaser, its
successors and assigns. _____________________, a ______________
corporation represents and warrants that is has the authority to
perform its obligations under this Affidavit of Lost Note.
Executed this ____ day, of ___________ ______.
SELLER
By:_______________________________
Name:
Title:
On this _____ day of ________, _____, before me appeared
_________________ to me personally known, who being duly sworn did say that he
is the _____________________ of ____________________ a ______________
corporation and that said Affidavit of Lost Note was signed and sealed on behalf
of such corporation and said acknowledged this instrument to be the free act and
deed of said corporation.
Signature:
[Seal]
B-2
