Exhibit 99.2
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EXECUTION COPY
MORTGAGE LOAN PURCHASE AGREEMENT
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS, INC.
Purchaser
and
FIRST FRANKLIN FINANCIAL CORPORATION
Seller
Dated as of May 1, 2007
Conventional Fixed Rate Mortgage Loans
Second Liens
Relating to
First Franklin Mortgage Loan Trust, Series 2007-FFC
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TABLE OF CONTENTS
Page
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SECTION 1. Definitions................................................ 1
SECTION 2. Purchase; Sale Treatment................................... 12
SECTION 3. Final Mortgage Loan Schedules.............................. 13
SECTION 4. Purchase Price............................................. 13
SECTION 5. Examination of Mortgage Files.............................. 13
SECTION 6. Conveyance from Seller to Initial Purchaser................ 13
SECTION 7. Representations, Warranties and Covenants of the Seller:
Remedies for Breach........................................ 15
SECTION 8. Closing.................................................... 30
SECTION 9. [Reserved]................................................. 30
SECTION 10. Costs...................................................... 30
SECTION 11. [Reserved]................................................. 30
SECTION 12. Removal of Mortgage Loans from Inclusion under This
Agreement Upon a Whole Loan Transfer or a Securitization on
One or More Reconstitution Dates........................... 41
SECTION 13. The Seller................................................. 36
SECTION 14. [Reserved]................................................. 37
SECTION 15. Termination................................................ 41
SECTION 16. Successor to the Seller.................................... 41
SECTION 17. Financial Statements....................................... 37
SECTION 18. Mandatory Delivery; Grant of Security Interest............. 38
SECTION 19. Notices.................................................... 38
SECTION 20. Severability Clause........................................ 38
SECTION 21. Counterparts............................................... 38
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SECTION 22. Governing Law.............................................. 39
SECTION 23. Intention of the Parties................................... 39
SECTION 24. Successors and Assigns..................................... 39
SECTION 25. Waivers.................................................... 39
SECTION 26. Exhibits................................................... 39
SECTION 27. Nonsolicitation............................................ 39
SECTION 28. General Interpretive Principles............................ 40
SECTION 29. Reproduction of Documents.................................. 40
SECTION 30. Further Agreements......................................... 40
SECTION 31. Protection of Confidential Information..................... 40
SECTION 32. Survival................................................... 41
EXHIBITS
EXHIBIT 1 CONTENTS OF EACH MORTGAGE FILE
SCHEDULE I FINAL MORTGAGE LOAN SCHEDULE
SCHEDULE II PREPAYMENT CHARGE SCHEDULE
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MORTGAGE LOAN PURCHASE AGREEMENT
This is a MORTGAGE LOAN PURCHASE AGREEMENT (the "Agreement"), dated as of
May 1, 2007, by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., having an
office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, 4 World Financial ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ (the "Initial Purchaser", and the Initial Purchaser or the Person, if
any, to which the Initial Purchaser has assigned its rights and obligations
hereunder as Purchaser with respect to a Mortgage Loan, and each of their
respective successors and assigns, the "Purchaser") and First Franklin Financial
Corporation, a Delaware corporation and subsidiary of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank and
Trust Co., FSB (the "Seller"), having an office at ▇▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
WITNESSETH:
WHEREAS, the Seller desires to sell to the Purchaser, and the
Purchaser desires to purchase from the Seller, certain conventional fixed rate,
residential, second lien mortgage loans (the "Mortgage Loans") as described
herein on a servicing-retained basis;
WHEREAS, each Mortgage Loan is secured by a mortgage, deed of trust or
other security instrument creating a second lien on a residential dwelling
located in the jurisdiction indicated on the Final Mortgage Loan Schedule, which
is to be annexed hereto on the Closing Date as Schedule I;
WHEREAS, the Purchaser and the Seller wish to prescribe the manner of
the conveyance, and control of the Mortgage Loans; and
WHEREAS, following its purchase of the Mortgage Loans from the Seller,
the Purchaser desires to sell the Mortgage Loans in a public or private
mortgage-backed securities transaction;
NOW, THEREFORE, in consideration of the premises and mutual agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Purchaser and the Seller agree
as follows:
SECTION 1. Definitions. For purposes of this Agreement the following
capitalized terms shall have the respective meanings set forth below.
Agreement: This Mortgage Loan Purchase Agreement including all
exhibits, schedules, amendments and supplements hereto.
Appraised Value: With respect to any Mortgaged Property, the lesser of
(i) the value thereof as determined by an appraisal made for the originator of
the Mortgage Loan at the time of origination of the Mortgage Loan by an
appraiser who met the minimum requirements of ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac, or
pursuant to a value assigned by Seller's automated appraisal methodology in
accordance with Seller's underwriting guidelines, and (ii) the purchase price
paid for the related Mortgaged Property by the Mortgagor with the proceeds of
the Mortgage Loan, provided, however, in the case of a Refinanced Mortgage Loan,
such value of the Mortgaged Property is based solely upon the value determined
by an appraisal made for the originator of such Refinanced Mortgage Loan at the
time of origination of such Refinanced
Mortgage Loan by an appraiser who met the minimum requirements of ▇▇▇▇▇▇ Mae and
▇▇▇▇▇▇▇ Mac, or pursuant to a value assigned by Seller's automated appraisal
methodology in accordance with Seller's underwriting guidelines.
Assignment of Mortgage: An individual assignment of the Mortgage,
notice of transfer or equivalent instrument in recordable form, sufficient under
the laws of the jurisdiction wherein the related Mortgaged Property is located
to give record notice of the sale of the Mortgage to the Purchaser.
Balloon Loan: A Mortgage Loan identified on the Final Mortgage Loan
Schedule as a balloon mortgage loan.
Business Day: Any day other than a Saturday or Sunday, or a day on
which banking and savings and loan institutions in the State of California or
the State of New York are authorized or obligated by law or executive order to
be closed.
Buydown Mortgage Loan: A Mortgage Loan in which buydown funds are used
to pay a portion of the interest payable on the Mortgage Loan for a specified
period of time.
Closing Date: May 29, 2007.
Code: The Internal Revenue Code of 1986, or any successor statute
thereto.
Combined Loan-to-Value Ratio or CLTV: With respect to any Mortgage
Loan, the fraction, expressed as a percentage, the numerator of which is the sum
of (a) the original principal balance of the Mortgage Loan, plus (b) the unpaid
principal balance of any related senior mortgage loan or loans secured by the
Mortgaged Property, and the denominator of which is the Appraised Value of the
related Mortgaged Property.
Commission: The United States Securities and Exchange Commission.
Condemnation Proceeds: All awards, compensation and settlements in
respect of a taking of all or part of a Mortgaged Property by exercise of the
power of condemnation or the right of eminent domain.
Credit Score: The credit score of the Mortgagor provided by an
organization providing credit scores at the time of the origination of a
Mortgage Loan. If two credit scores are obtained, the Credit Score shall be the
lower of the two credit scores. If three credit scores are obtained, the Credit
Score shall be the middle of the three credit scores.
Custodial Account: One or more accounts that shall be held as a
special deposit by the depository institution maintaining such accounts in a
fiduciary capacity, separate and apart from its funds or general assets and
shall not be held in any capacity that would create a debtor-creditor
relationship between the depository institution maintaining the accounts and the
Seller or Purchaser.
Custodial Agreement: The agreement between the Initial Purchaser and
the Custodian, governing the retention of the originals of the Mortgage Loan
Documents.
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Custodian: The custodian designated by the Initial Purchaser under the
Custodial Agreement, or its successor in interest or assigns, or any successor
to the Custodian under the Custodial Agreement.
Cut-off Date: May 1, 2007.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Qualified Substitute Mortgage Loan.
Depositor: The depositor, as such term is defined in Regulation AB,
with respect to any Securitization Transaction.
Due Date: With respect to each Remittance Date, the first day of the
calendar month in which such Remittance Date occurs, which is the day on which
the Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace.
Exchange Act: The Securities Exchange Act of 1934, as amended.
▇▇▇▇▇▇ ▇▇▇: ▇▇▇▇▇▇ ▇▇▇ or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
Final Mortgage Loan Schedule: The schedule of Mortgage Loans to be
annexed hereto as Schedule I (or a supplement thereto) on the Closing Date in
both hard copy and floppy disk, such schedule setting forth the following
information with respect to each Mortgage Loan in the Mortgage Loan Package:
(1) the Seller's Mortgage Loan identifying number;
(2) the Mortgagor's first and last name;
(3) the street address of the Mortgaged Property including the state
and zip code;
(4) a code indicating whether the Mortgaged Property is
owner-occupied;
(5) the type of Residential Dwelling constituting the Mortgaged
Property;
(6) the original months to maturity;
(7) the original date of the Mortgage Loan and the remaining months
to maturity from the Cut-off Date, based on the original
amortization schedule;
(8) the Loan-to-Value Ratio at origination;
(9) the Mortgage Interest Rate in effect immediately following the
Cut-off Date;
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(10) the date on which the first Monthly Payment was due on the
Mortgage Loan;
(11) the stated maturity date;
(12) the amount of the Monthly Payment at origination;
(13) the amount of the Monthly Payment as of the Cut-off Date;
(14) the last Due Date on which a Monthly Payment was actually applied
to the unpaid Stated Principal Balance;
(15) the original principal amount of the Mortgage Loan;
(16) the Stated Principal Balance of the Mortgage Loan as of the close
of business on the Cut-off Date;
(17) a code indicating the purpose of the loan (i.e., purchase
financing, rate/term refinancing, cash-out refinancing);
(18) the Mortgage Interest Rate;
(19) a code indicating the documentation style (i.e., full,
alternative or reduced);
(20) a code indicating if the Mortgage Loan is subject to a Primary
Insurance Policy;
(21) a code indicating whether the Mortgage Loan is a Buydown Mortgage
Loan;
(22) a code indicating the product type of the Mortgage Loan;
(23) a code indicating whether the Mortgage Loan is subject to a
Prepayment Charge and the term of such Prepayment Charge;
(24) the Appraised Value of the Mortgaged Property;
(25) the sale price of the Mortgaged Property, if applicable;
(26) the Credit Score of the Mortgagor;
(27) the Mortgagor's debt to income ratio;
(28) the risk grade for each Mortgage Loan;
(29) points at origination, described in the aggregate;
(30) a code indicating whether the borrower is self-employed;
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(44) the Mortgagor's monthly disposable income;
(45) the number of months from disposition of bankruptcy (use "999" to
indicate no bankruptcy);
(46) the number of months from disposition of foreclosure (use "999"
to indicate no foreclosure);
(47) the Combined Loan-to-Value Ratio;
(48) the original balance on any mortgage loan senior in priority to
the Mortgage Loan;
(49) the Mortgagor's social security number; and
(50) the type of appraisal performed on the Mortgaged Property.
With respect to the Mortgage Loans in the aggregate, the Final Mortgage Loan
Schedule shall set forth the following information, as of the Cut-off Date:
(1) the number of Mortgage Loans;
(2) the current principal balance of the Mortgage Loans;
(3) the weighted average Mortgage Interest Rate of the Mortgage
Loans; and
(4) the weighted average maturity of the Mortgage Loans.
First Lien: With respect to each Mortgaged Property, the lien of the
mortgage, deed of trust or other instrument securing a Mortgage Note which
creates a first lien on the Mortgaged Property.
▇▇▇▇▇▇▇ Mac: The Federal Home Loan Mortgage Corporation or any
successor thereto.
Group One Mortgage Loan: A Mortgage Loan identified on the Final
Mortgage Loan Schedule as a Group One Mortgage Loan.
HOEPA: The Home Ownership and Equity Protection Act of 1994 and its
implementing regulations, including 12 CFR Section 226.32(a)(1)(i) and (ii).
Initial Purchaser: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., or any
successor.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Liquidation Proceeds: Amounts, other than Insurance Proceeds and
Condemnation Proceeds, received in connection with the liquidation of a
defaulted Mortgage Loan through trustee's sale, foreclosure sale or otherwise.
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MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
MERS Loan: Any Mortgage Loan registered with MERS on the MERS System.
MERS System: The system of recording transfers of mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number for any MERS Loan.
MOM Loan: Any Mortgage Loan as to which MERS is acting as mortgagee,
solely as nominee for the originator of such Mortgage Loan and its successors
and assigns.
Monthly Payment: With respect to any Mortgage Loan, the scheduled
combined payment of principal and interest payable by a Mortgagor under the
related Mortgage Note on each Due Date.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. or its successor in interest.
Mortgage: The mortgage, deed of trust or other instrument creating a
second on Mortgaged Property securing the Mortgage Note.
Mortgagee: The mortgagee or beneficiary named in the Mortgage and the
successors and assigns of such mortgagee or beneficiary.
Mortgage File: The items pertaining to a particular Mortgage Loan
referred to in Exhibit 1 annexed hereto, and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
Mortgage Interest Rate: With respect to each Mortgage Loan, the fixed
annual rate of interest provided for in the related Mortgage Note.
Mortgage Loan: Each second lien, residential mortgage loan, sold,
assigned and transferred to the Purchaser pursuant to this Agreement and
identified on the Final Mortgage Loan Schedule annexed to this Agreement on the
Closing Date, 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.
Mortgage Loan Documents: The following documents:
(1) The original Mortgage Note endorsed, "Pay to the order of
______________, without recourse" and signed in the name of the Seller by
an authorized officer of the Seller, together with all riders thereto. The
Mortgage Note shall include all intervening endorsements showing a complete
chain of the title from the originator of the Mortgage Loan to
[____________________];
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(2) Except as provided below and for each Mortgage Loan that is not a
MERS Loan, the original recorded Mortgage together with all riders thereto,
with evidence of recording thereon, or, if the original Mortgage has not
yet been returned from the recording office, a copy of the original
Mortgage together with all riders thereto certified to be a true copy of
the original of the Mortgage that has been delivered for recording in the
appropriate recording office of the jurisdiction in which the Mortgaged
Property is located and in the case of each MERS Loan, the original
Mortgage together with all riders thereto, noting the presence of the MIN
of the Mortgage Loan and either language indicating that the Mortgage Loan
is a MOM Loan or if the Mortgage Loan was not a MOM Loan at origination,
the original Mortgage and the assignment thereof to MERS, with evidence of
recording indicated thereon, or a copy of the Mortgage certified by the
public recording office in which such Mortgage has been recorded;
(3) In the case of each Mortgage Loan that is not a MERS Loan, the
original Assignment of Mortgage, executed in blank. If the Mortgage Loan
was acquired by the Seller in a merger or other type of acquisition, the
assignment must be by "[Seller], successor [by merger to or in interest to,
as applicable] [name of predecessor]"; and in the event that the Mortgage
Loan was acquired or originated by the Seller while doing business under
another name, the assignment must be by "[Seller], successor in interest to
[previous name]";
(4) The original policy of title insurance (or a preliminary title
report, commitment or binder if the original title insurance policy has not
been received from the title insurance company);
(5) Originals of any intervening assignments of the Mortgage, with
evidence of recording thereon or, if the original intervening assignment
has not yet been returned from the recording office, a copy of such
assignment certified to be a true copy of the original of the assignment
which has been sent for recording in the appropriate jurisdiction in which
the Mortgaged Property is located;
(6) With respect to a Mortgage Loan that, according to the Final
Mortgage Loan Schedule is covered by a primary mortgage insurance policy,
the original or a copy of the policy of primary mortgage insurance;
(7) Originals of all assumption and modification agreements, if any;
and
(8) If in connection with any Mortgage Loan, the Seller cannot deliver
the Mortgage, Assignments of Mortgage or assumption, consolidation or
modification, as the case may be, with evidence of recording thereon, if
applicable, concurrently with the execution and delivery of this Agreement
solely because of a delay caused by the public recording office where such
Mortgage, Assignments of Mortgage or assumption, consolidation or
modification, as the case may be, has been delivered for recordation, the
Seller shall deliver or cause to be delivered to the Purchaser written
notice stating that such Mortgage or assumption, consolidation or
modification, as the case may be, has been delivered to the appropriate
public recording office for recordation. Thereafter, the Seller shall
deliver or cause to be delivered to the Purchaser such Mortgage,
Assignments
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of Mortgage or assumption, consolidation or modification, as the case may
be, with evidence of recording indicated thereon, if applicable, upon
receipt thereof from the public recording office. To the extent any
required endorsement is not contained on a Mortgage Note or an Assignment
of Mortgage, the Seller shall make or cause to be made such endorsement.
Mortgage Note: The original executed note or other evidence of the
Mortgage Loan indebtedness of a Mortgagor.
Mortgaged Property: The Mortgagor's real property securing repayment
of a related Mortgage Note, consisting of a fee simple interest or leasehold
interest in a single parcel of real property improved by a Residential Dwelling.
Mortgagor: The obligor on a Mortgage Note, the owner of the Mortgaged
Property and the grantor or mortgagor named in the related Mortgage and such
grantor's or mortgagor's successor's in title to the Mortgaged Property.
Officer's Certificate: A certificate signed by the Chairman of the
Board or the Vice Chairman of the Board or a President or a Vice President and
by the Treasurer or the Secretary or one of the Assistant Treasurers or
Assistant Secretaries of the Person on behalf of whom such certificate is being
delivered.
Opinion of Counsel: A written opinion of counsel, who may be salaried
counsel for the Person on behalf of whom the opinion is being given, reasonably
acceptable to each Person to whom such opinion is addressed.
Person: An individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Pooling and Servicing Agreement: The pooling and servicing agreement,
dated as of May 1, 2007, by and among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., as
depositor, Home Loan Services, Inc., as servicer, and LaSalle Bank National
Association, as trustee.
Prepayment Charge: With respect to any Mortgage Loan, the premiums,
fees, or charges, if any, due in connection with a full or partial prepayment of
such Mortgage Loan in accordance with the terms thereof.
Prepayment Charge Schedule: As of any date, the information on
Prepayment Charges on the Final Mortgage Loan Schedule on such date together
with the matrix of Prepayment Charge information prepared by the Seller which is
attached hereto as Schedule II. The Prepayment Charge Schedule shall be prepared
by the Seller and shall allow the identification of the following information
with respect to each Prepayment Charge:
(i) the Mortgage Loan identifying number;
(ii) the type of Prepayment Charge;
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(iii) the state of origination of the related Mortgage Loan;
(iv) the date on which the first monthly payment was due on the
related Mortgage Loan;
(v) the term of the related Prepayment Charge;
(vi) the original principal balance of the related Mortgage Loan; and
(vii) the principal balance of the related Mortgage Loan as of the
Cut-off Date.
The Prepayment Charge Schedule shall be amended if necessary by the Seller and a
copy of such amended Prepayment Charge Schedule shall be furnished by the Seller
to the Purchaser or its designees.
Primary Insurance Policy: A policy of primary mortgage guaranty
insurance issued by a Qualified Insurer.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date, including
any Prepayment Charge, which is not accompanied by an amount of interest
representing scheduled interest due on any date or dates in any month or months
subsequent to the month of prepayment.
Purchase Price: The price paid on the Closing Date by the Purchaser to
the Seller in exchange for the Mortgage Loans purchased on the Closing Date as
calculated as provided in Section 4.
Qualified Correspondent: Any Person from which the Seller purchased
Mortgage Loans, provided that the following conditions are satisfied: (i) such
Mortgage Loans were originated pursuant to an agreement between the Seller and
such Person that contemplated that such Person would underwrite mortgage loans
for sale to the Seller, in accordance with underwriting guidelines designated by
the Seller ("Designated Guidelines") or guidelines that do not vary materially
from such Designated Guidelines; (ii) such Mortgage Loans were in fact
underwritten as described in clause (i) above and were acquired by the Seller
within 180 days after origination; (iii) either (x) the Designated Guidelines
were, at the time such Mortgage Loans were originated, used by the Seller in
origination of mortgage loans of the same type as the Mortgage Loans for the
Seller's own account or (y) the Designated Guidelines were, at the time such
Mortgage Loans were underwritten, designated by the Seller on a consistent basis
for use by lenders in originating mortgage loans to be purchased by the Seller;
and (iv) the Seller employed, at the time such Mortgage Loans were acquired by
the Seller, pre-purchase or post-purchase quality assurance procedures (which
may involve, among other things, review of a sample of mortgage loans purchased
during a particular time period or through particular channels) designed to
ensure that Persons from which it purchased mortgage loans properly applied the
underwriting criteria designated by the Seller. For the avoidance of doubt, a
"Qualified Correspondent" includes a "table broker" or mortgage lender that
originates loans underwritten and funded by the Seller or an Affiliate of the
Seller.
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Qualified Insurer: Any insurer which meets the requirements of ▇▇▇▇▇▇
Mae and ▇▇▇▇▇▇▇ Mac.
Qualified Substitute Mortgage Loan: A mortgage loan substituted for a
Deleted Mortgage Loan pursuant to the terms of this Agreement which must, on the
date of such substitution, (i) have an outstanding principal balance, after
application of all scheduled payments of principal and interest due during or
prior to the month of substitution, not in excess of the Stated Principal
Balance of the Deleted Mortgage Loan as of the Due Date in the calendar month
during which the substitution occurs, (ii) have a Mortgage Interest Rate not
less than (and not more than one percentage point in excess of) the Mortgage
Interest Rate of the Deleted Mortgage Loan, (iii) have a net Mortgage Interest
Rate not less than (and not more than one percentage point in excess of) the net
Mortgage Interest Rate of the Deleted Mortgage Loan, (iv) have a remaining terms
to maturity not greater than (and not more than one year less than) that of the
Deleted Mortgage Loan, (v) have the same Due Date as the Due Date on the Deleted
Mortgage Loan, (vi) have a Combined Loan-to-Value Ratio as of the date of
substitution equal to or lower than the Combined Loan-to-Value Ratio of the
Deleted Mortgage Loan as of such date, (vii) conform to each representation and
warranty set forth in Subsection 7.02 of this Agreement and (viii) be the same
type of mortgage loan (i.e. fixed rate). In the event that one or more mortgage
loans are substituted for one or more Deleted Mortgage Loans, the amounts
described in clause (i) hereof shall be determined on the basis of aggregate
principal balances, the Mortgage Interest Rates described in clause (ii) hereof
shall be determined on the basis of weighted average Mortgage Interest Rates,
the Mortgage Rates described in clause (iii) hereof shall be satisfied as to
each such mortgage loan, the terms described in clause (iv) shall be determined
on the basis of weighted average remaining terms to maturity, the Combined
Loan-to-Value Ratios described in clause (vi) hereof shall be satisfied as to
each such mortgage loan and, except to the extent otherwise provided in this
sentence, the representations and warranties described in clause (viii) hereof
must be satisfied as to each Qualified Substitute Mortgage Loan or in the
aggregate, as the case may be.
Reconstitution: Any Securitization Transaction or Whole Loan Transfer.
Refinanced Mortgage Loan: A Mortgage Loan the proceeds of which were
not used to purchase the related Mortgaged Property.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation
AB), 17 C.F.R. Sections 229.1100-229.1123, as such may be amended from time to
time, and subject to such clarification and interpretation as have been provided
by the Commission in the adopting release (Asset-Backed Securities, Securities
Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the
staff of the Commission, or as may be provided by the Commission or its staff
from time to time.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
Remittance Date: The eighteenth (18th) day of each month, commencing
on the eighteenth day of the month next following the month in which the Cut-off
Date occurs, or if
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such eighteenth (18th) day is not a Business Day, the first Business Day
immediately following such eighteenth (18th) day.
Repurchase Price: With respect to any Mortgage Loan, the price for
such repurchase shall be equal to par, multiplied by the outstanding principal
balance of the Mortgage Loan to be repurchased as of the date of the repurchase,
plus accrued interest thereon at the Mortgage Interest Rate on the Mortgage Loan
from the last paid installment date through the last day of the month in which
such repurchase occurs. The Repurchase Price shall also include any costs and
damages incurred by the Purchaser or any assignee of the Purchaser in connection
with any violation by the repurchased Mortgage Loan of any representation or
warranty.
Residential Dwelling: Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
one-family dwelling unit in a condominium project which meets the eligibility
requirements of the Seller, or (iv) a detached one-family dwelling in a planned
unit development, none of which is a cooperative, mobile or manufactured home.
Second Lien: With respect to each Mortgaged Property, the lien of the
mortgage, deed of trust or other instrument securing a Mortgage Note which
creates a second lien on the Mortgaged Property.
Securities Act: The Securities Act of 1933, as amended.
Securitization Transaction: Any transaction involving either (1) a
sale or other transfer of some or all of the Mortgage Loans directly or
indirectly to an issuing entity in connection with an issuance of publicly
offered or privately placed, rated or unrated mortgage-backed securities or (2)
an issuance of publicly offered or privately placed, rated or unrated
securities, the payments on which are determined primarily by reference to one
or more portfolios of residential mortgage loans consisting, in whole or in
part, of some or all of the Mortgage Loans.
Seller Information: As defined in Section 12.05(a).
Servicing File: With respect to each Mortgage Loan, the file retained
by the Seller consisting of originals of all documents in the Mortgage File
which are not delivered to the Purchaser or the Custodian and copies of the
Mortgage Loan Documents.
S&P: Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
or its successor in interest.
Stated Principal Balance: As to each Mortgage Loan as of any date of
determination, (i) the principal balance of the Mortgage Loan as of the Cut-off
Date after giving effect to payments of principal received on or before such
date, minus (ii) all amounts previously distributed to the Purchaser with
respect to the related Mortgage Loan representing payments or recoveries of
principal.
Static Pool Information: Static pool information as described in Item
1105(a)(1)-(3) and 1105(c) of Regulation AB.
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Third-Party Originator: Each Person, if any, other than a Qualified
Correspondent, that originated Mortgage Loans acquired by the Seller and shall
not include a mortgage broker that does not fund loans.
Whole Loan Transfer: Any sale or transfer of some or all of the
Mortgage Loans by the Purchaser to a third party, which sale or transfer is not
a Securitization Transfer.
SECTION 2. Purchase; Sale Treatment.
(a) The Seller does hereby sell, and the Purchaser does hereby
purchase Mortgage Loans having an aggregate principal balance on the Cut-off
Date of $590,502,429.47. The obligation of the Purchaser to purchase any
Mortgage Loan from the Seller on the Closing Date shall be subject to the
satisfaction of the conditions precedent to the Purchaser's obligation to
purchase set forth in Section 8. The Purchase Price and additional amounts set
forth in Section 4 will be paid with proceeds of the related Securitization
Transaction.
(b) The closing of the purchase and sale of the Mortgage Loans shall
take place on the Closing Date at the office of the Purchaser's counsel in New
York, New York or such other place as the parties shall agree.
(c) It is the express intent of the parties hereto that the conveyance
of the Mortgage Loans by the Seller to the Purchaser, as contemplated by this
Agreement be, and be treated as, a sale. It is, further, not the intention of
the parties that such conveyance be deemed a pledge of the Mortgage Loans by the
Seller to the Purchaser to secure a debt or other obligation of the Seller.
However, in the event that, notwithstanding the intent of the parties, the
Mortgage Loans are held by a court of competent jurisdiction to continue to be
property of the Seller, then (i) this Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the applicable
Uniform Commercial Code; (ii) the transfer of the Mortgage Loans provided for
herein shall be deemed to be a grant by the Seller to the Purchaser of a
security interest in all of the Seller's right, title and interest in and to the
Mortgage Loans and all amounts payable to the holders of the Mortgage Loans in
accordance with the terms thereof and all proceeds of the conversion, voluntary
or involuntary, of the foregoing into cash, instruments, securities or other
property, to the extent the Purchaser would otherwise be entitled to own such
Mortgage Loans and proceeds, including all amounts, other than investment
earnings, from time to time held or invested in any accounts created pursuant to
the Pooling and Servicing Agreement, whether in the form of cash, instruments,
securities or other property; (iii) the possession by the Purchaser or the
Trustee of Mortgage Notes and such other items of property as constitute
instruments, money, negotiable documents or chattel paper shall be deemed to be
"possession by the secured party" for purposes of perfecting the security
interest pursuant to Section 9-305 (or comparable provision) of the applicable
Uniform Commercial Code; and (iv) notifications to persons holding such
property, and acknowledgments, receipts or confirmations from persons holding
such property, shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Purchaser for the purpose of perfecting such security interest under
applicable law. Any assignment of the interest of the Purchaser pursuant to any
provision hereof or pursuant to the Pooling and Servicing Agreement shall also
be deemed to be an assignment of any security interest created hereby. The
Seller and the Purchaser shall, to the extent consistent with this
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Agreement, take such actions as may be reasonably necessary to ensure that, if
this Agreement were deemed to create a security interest in the Mortgage Loans,
such security interest would be deemed to be a perfected security interest of
first priority under applicable law and will be maintained as such throughout
the term of the Pooling and Servicing Agreement.
SECTION 3. Final Mortgage Loan Schedule. The Seller shall deliver the
Final Mortgage Loan Schedule at least one (1) Business Day prior to the Closing
Date.
SECTION 4. Purchase Price. The Purchase Price for each Mortgage Loan
listed on the Final Mortgage Loan Schedule shall be the Stated Principal Balance
thereof as of the Cut-off Date.
In addition to the Purchase Price as described above, the Initial
Purchaser shall pay to the Seller, at closing, accrued interest on the Stated
Principal Balance of each Mortgage Loan as of the Cut-off Date at the Mortgage
Interest Rate from the Cut-off Date through the day prior to the Closing Date,
both inclusive.
The Purchaser shall own and be entitled to receive with respect to
each Mortgage Loan purchased, (1) all recoveries of principal collected after
the Cut-off Date and (2) all payments of interest on the Mortgage Loans due
after the Cut-Off Date.
SECTION 5. Examination of Mortgage Files. In addition to the rights
granted to the Initial Purchaser to underwrite the Mortgage Loans and review the
Mortgage Files prior to the Closing Date, prior to the Closing Date, the Seller
shall (a) deliver to the Custodian in escrow, for examination with respect to
each Mortgage Loan to be purchased on the Closing Date, the related Mortgage
File, including the Assignment of Mortgage, pertaining to each Mortgage Loan, or
(b) make the related Mortgage File available to the Initial Purchaser for
examination at the Seller's offices or such other location as shall otherwise be
agreed upon by the Initial Purchaser and the Seller. Such examination may be
made by the Initial Purchaser or its designee at any reasonable time before or
after the Closing Date. If the Initial Purchaser makes such examination prior to
the Closing Date and identifies any Mortgage Loans that do not conform to the
Seller's underwriting standards, such Mortgage Loans may, at the Initial
Purchaser's option, be rejected for purchase by the Initial Purchaser. If not
purchased by the Initial Purchaser, such Mortgage Loans shall be deleted from
the Final Mortgage Loan Schedule and may be replaced by a Qualified Substitute
Mortgage Loan pursuant to Section 7. The Initial Purchaser may, at its option
and without notice to the Seller, purchase all or part of the Mortgage Loans
without conducting any partial or complete examination. The fact that the
Initial Purchaser has conducted or has determined not to conduct any partial or
complete examination of the Mortgage Files shall not affect the Initial
Purchaser's (or any of its successors') rights to demand repurchase or other
relief or remedy provided for in this Agreement.
SECTION 6. Conveyance from Seller to Initial Purchaser.
Subsection 6.01 Conveyance of Mortgage Loans; Possession of Servicing
Files.
The Servicing File retained by the Seller with respect to each
Mortgage Loan pursuant to this Agreement shall be appropriately identified in
the Seller's computer system to reflect clearly the sale of such related
Mortgage Loan to the Purchaser. The Seller shall release
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from its custody the contents of any Servicing File retained by it only in
accordance with this Agreement, except when such release is required in
connection with a repurchase of any such Mortgage Loan pursuant to Subsection
7.03 or 7.04.
In addition, in connection with the assignment of any MERS Loan, the
Seller agrees that on or prior to the Closing Date it will cause, at its own
expense, the MERS System to indicate that the related Mortgage Loans have been
assigned by the Seller to the Purchaser in accordance with this Agreement by
including in such computer files the information required by the MERS System to
identify the Purchaser as owner of such Mortgage Loans.
Subsection 6.02 Books and Records.
Record title to each Mortgage and the related Mortgage Note as of the
Closing Date shall be in the name of the Seller, the Purchaser, the Custodian or
one or more designees of the Purchaser, as the Purchaser shall designate.
Notwithstanding the foregoing, beneficial ownership of each Mortgage and the
related Mortgage Note shall be vested solely in the Purchaser or the appropriate
designee of the Purchaser, as the case may be. All rights arising out of the
Mortgage Loans including, but not limited to, all funds received by the Seller
after the Cut-off Date on or in connection with a Mortgage Loan as provided in
Section 4 shall be vested in the Purchaser or one or more designees of the
Purchaser; provided, however, that all such funds received on or in connection
with a Mortgage Loan as provided in Section 4 shall be received and held by the
Seller in trust for the benefit of the Purchaser or the assignee of the
Purchaser, as the case may be, as the owner of the Mortgage Loans pursuant to
the terms of this Agreement.
It is the express intention of the parties that the transactions
contemplated by this Agreement be, and be construed as, a sale of the Mortgage
Loans by the Seller and not a pledge of the Mortgage Loans by the Seller to the
Purchaser to secure a debt or other obligation of the Seller. Consequently, the
sale of each Mortgage Loan shall be reflected as a sale on the Seller's business
records, tax returns and financial statements.
Subsection 6.03 Delivery of Mortgage Loan Documents.
The Seller shall from time to time in connection with the Closing
Date, at least five (5) Business Days prior to the Closing Date or such other
date as is mutually agreed to by the parties hereto, deliver and release to the
Custodian the Mortgage Loan Documents with respect to each Mortgage Loan to be
purchased and sold on the Closing Date and set forth on the Final Mortgage Loan
Schedule delivered with such Mortgage Loan Documents.
The Custodian shall certify its receipt of all such Mortgage Loan
Documents for the Closing Date, pursuant to an initial custody receipt and
initial certification of the Custodian.
The Seller shall forward to the Custodian original documents
evidencing an assumption, modification, consolidation or extension of any
Mortgage Loan entered into in accordance with this Agreement within two weeks of
their execution, provided, however, that the Seller shall provide the Custodian
with a certified true copy of any such document submitted for recordation within
two weeks of its execution, and shall provide the original of any document
submitted for recordation or a copy of such document certified by the
appropriate public
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recording office to be a true and complete copy of the original within one
hundred twenty (120) days of its submission for recordation.
SECTION 7. Representations, Warranties and Covenants of the Seller:
Remedies for Breach.
Subsection 7.01 Representations and Warranties Respecting the Seller.
The Seller represents, warrants and covenants to the Purchaser and the
Class A Certificate Insurer as of the date hereof and as of the Closing Date or
as of such date specifically provided herein:
(1) The Seller is duly organized, validly existing and in good
standing under the laws of the state of Delaware and is and will remain in
compliance with the laws of each state in which any Mortgaged Property is
located to the extent necessary to ensure the enforceability of each Mortgage
Loan and the servicing of the Mortgage Loan in accordance with the terms of this
Agreement. No licenses or approvals obtained by the Seller have been suspended
or revoked by any court, administrative agency, arbitrator or governmental body
and no proceedings are pending which might result in such suspension or
revocation;
(2) The Seller has the full power and authority to hold each Mortgage
Loan, to sell each Mortgage Loan, and to execute, deliver and perform, and to
enter into and consummate, all transactions contemplated by this Agreement. The
Seller has duly authorized the execution, delivery and performance of this
Agreement, has duly executed and delivered this Agreement, and this Agreement,
assuming due authorization, execution and delivery by the Purchaser, constitutes
a legal, valid and binding obligation of the Seller, enforceable against it in
accordance with its terms except as the enforceability thereof may be limited by
bankruptcy, insolvency or reorganization;
(3) The execution and delivery of this Agreement by the Seller and the
performance of and compliance with the terms of this Agreement will not violate
the Seller's articles of incorporation or by-laws or constitute a default under
or result in a breach or acceleration of, any material contract, agreement or
other instrument to which the Seller is a party or which may be applicable to
the Seller or its assets;
(4) 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;
(5) 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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(6) The Mortgage Loan Documents have been delivered to the Custodian.
With respect to each Mortgage Loan, the Seller is in possession of a complete
Mortgage File in compliance with Exhibit 1, except for such documents as have
been delivered to the Custodian;
(7) Immediately prior to the payment of the Purchase Price for each
Mortgage Loan, the Seller was the owner of record of the related Mortgage and
the indebtedness evidenced by the related Mortgage Note and upon the payment of
the Purchase Price by the Purchaser, in the event that the Seller retains record
title, the Seller shall retain such record title to each Mortgage, each related
Mortgage Note and the related Mortgage Files with respect thereto in trust for
the Purchaser as the owner thereof and only for the purpose of servicing and
supervising the servicing of each Mortgage Loan;
(8) There are no actions or proceedings against, or investigations of,
the Seller before any court, administrative agency or other tribunal (A) that
might prohibit its entering into this Agreement, (B) seeking to prevent the sale
of the Mortgage Loans or the consummation of the transactions contemplated by
this Agreement or (C) that might prohibit or materially and adversely affect the
performance by the Seller of its obligations under, or the validity or
enforceability of, this Agreement;
(9) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of, or compliance by the Seller with, this Agreement
or the consummation of the transactions contemplated by this Agreement, except
for such consents, approvals, authorizations or orders, if any, that have been
obtained prior to the Closing Date;
(10) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Seller, and the
transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by
the Seller pursuant to this Agreement are not subject to the bulk transfer or
any similar statutory provisions;
(11) The consideration received by the Seller upon the sale of the
Mortgage Loans constitutes fair consideration and reasonably equivalent value
for such Mortgage Loans;
(12) The Seller is solvent and will not be rendered insolvent by the
consummation of the transactions contemplated hereby. The Seller is not
transferring any Mortgage Loan with any intent to hinder, delay or defraud any
of its creditors; and
(13) The Seller is in good standing, and will comply in all material
respects with the rules and procedures of MERS in connection with the servicing
of the MERS Loans for as long as such Mortgage Loans are registered with MERS.
Subsection 7.02 Representations and Warranties Regarding Individual
Mortgage Loans.
(a) The Seller hereby represents and warrants to the Purchaser and the
Class A Certificate Insurer that, as to each Mortgage Loan, as of the Closing
Date for such Mortgage Loan:
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(1) The information set forth in the Final Mortgage Loan Schedule is
complete, true and correct;
(2) [Reserved];
(3) There are no defaults in complying with the terms of the Mortgage
as they relate to the holder thereof, and all taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges, leasehold payments or
ground rents or other outstanding charges affecting the Mortgaged Property which
previously became due and owing have been paid, or escrow funds have been
established in an amount sufficient to pay for every such escrowed item which
remains unpaid and which has been assessed but is not yet due and payable. There
exist no deficiencies with respect to escrow deposits and payments, if escrows
are required, for which customary arrangements for repayment thereof have not
been made, and other than in connection with a modification or work-out
agreement contained in the Mortgage File, no escrow deficits or payments of
other charges or payments have been capitalized under the Mortgage or the
applicable Mortgage Note;
(4) The Seller has not waived, altered or modified the Mortgage or
Mortgage Note (except that a Mortgage Loan may have been modified by a written
instrument (a copy of which is in the Mortgage File and the terms of which are
reflected on the Final Mortgage Loan Schedule) which has been recorded or is in
the process of being recorded, if necessary to protect the validity and first
priority lien of the owner of such Mortgage Loan; the substance of any such
waiver, alteration or modification has been approved by the issuer of any title
insurance policy, to the extent required by the related policies); satisfied,
canceled, rescinded or subordinated such Mortgage in whole or in part; released
the applicable Mortgaged Property in whole or in part from the lien of such
Mortgage; or executed any instrument of cancellation, rescission or satisfaction
with respect thereto. No instrument of release or waiver has been executed in
connection with any Mortgage Loan, and no Mortgagor has been released, in whole
or in part from its obligations in connection with a Mortgage Loan;
(5) The Mortgage Note and the Mortgage are not subject to any valid
right of rescission, set-off, counterclaim or defense, including the defense of
usury, nor will the operation of any of the terms of the Mortgage Note and the
Mortgage, or the exercise of any right thereunder, render the Mortgage
unenforceable (subject to bankruptcy, insolvency, moratorium, reorganization and
similar laws or by equitable principles affecting the enforceability of the
rights of creditors, including those respecting the availability of specific
performance), in whole or in part, and to the Seller's knowledge no such right
of rescission, set-off, counterclaim or defense has been asserted with respect
thereto;
(6) All buildings upon the Mortgaged Property are insured by a
generally acceptable insurer in accordance with the Seller's underwriting
guidelines against loss by fire, hazards of extended coverage and such other
hazards as are customary in the area where the Mortgaged Property is located.
All such insurance policies contain a standard mortgagee clause naming the
Seller, its successors and assigns as mortgagee and all premiums thereon have
been paid or escrowed funds have been established in an amount sufficient to pay
the premium. If the Mortgaged Property is in an area identified on a Flood
Hazard Map or Flood Insurance Rate Map issued by the Federal Emergency
Management Agency as having special flood hazards (and such
17
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 Seller's underwriting guidelines. The
Mortgage obligates the Mortgagor thereunder to maintain all such insurance at
the Mortgagor's cost and expense, and on the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to maintain such insurance at Mortgagor's
cost and expense and to seek reimbursement therefor from the Mortgagor;
(7) Any and all requirements of any applicable federal, state or local
law including, without limitation, laws governing prepayment penalties, usury,
truth in lending, real estate settlement procedures, consumer credit protection,
equal credit opportunity, fair housing and disclosure laws applicable to the
origination (as such laws existed as of the date of origination) and servicing
of mortgage loans of a type similar to the Mortgage Loans have been complied
with and the consummation of the transactions contemplated hereby will not
involve the violation of any such applicable laws;
(8) The Mortgage has not been satisfied, cancelled, subordinated or
rescinded, in whole or in part, and the Mortgaged Property has not been released
from the lien of the Mortgage, in whole or in part, nor has any instrument been
executed that would effect any such satisfaction, cancellation, subordination,
rescission or release;
(9) The related Mortgage is properly recorded and is a valid, existing
and enforceable second lien and second priority security interest 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) a First Lien on the
Mortgaged Property. Any security agreement, chattel mortgage or equivalent
document related to and delivered in connection with the Mortgage Loan
establishes and creates a valid, existing and enforceable second lien and second
priority security interest on the property described therein and the Seller has
full right to sell and assign the same to the Purchaser. The Mortgaged Property
was not, as of the date of origination of the Mortgage Loan, subject to a
mortgage, deed of trust, deed to secure debt or other security instrument
creating a lien subordinate to the lien of the Mortgage;
(10) Each Mortgage Note and the related Mortgage are genuine and each
is the legal, valid and binding obligations of the maker thereof, enforceable in
accordance with their terms subject to bankruptcy, insolvency, moratorium,
receivership, conservatorship, reorganization and similar laws on or hereafter
in effect of general application affecting creditors' rights generally and
subject to the application of the general principles of equity, including those
respecting the availability of specific performance (regardless of whether such
enforcement is considered in a proceeding in equity or at law);
18
(11) 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;
(12) All Persons that have had any interest in the Mortgage Loan,
whether as originator, mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were): (A)
organized under the laws of such state, or (B) qualified to do business in such
state, or (C) federal savings and loan associations, national banks or national
bank operating subsidiaries or (D) not doing business in such state so as to
require qualification or licensing, or (E) not otherwise required to be licensed
in such state under laws applicable to such Person. All parties which have had
any interest in the Mortgage Loan were in compliance with any and all "doing
business" and licensing requirements of the laws of the state wherein the
Mortgaged Property is located applicable to such Person or were not required
under the laws applicable to such Person to be licensed in such state;
(13) The Mortgage Loan is covered by an ALTA lender's title insurance
policy acceptable to ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac, issued by a title insurer
acceptable to ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring (subject to the
exceptions contained above in (9)(a), (b) and (d)) the Seller, its successors
and assigns as to the first priority lien of the Mortgage in the original
principal amount of the Mortgage Loan. Additionally, such lender's title
insurance policy affirmatively insures ingress and egress to and from the
Mortgaged Property, and against encroachments by or upon the Mortgaged Property
or any interest therein. The Seller is the sole insured of such lender's title
insurance policy, and such lender's title insurance policy is in full force and
effect and will be in full force and effect upon the consummation of the
transactions contemplated by this Agreement. No claims have been made under such
lender's title insurance policy, and no prior holder of the related Mortgage,
including the Seller, has done, by act or omission, anything which would impair
the coverage of such lender's title insurance policy;
(14) 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 no
such default, breach, violation or event of acceleration has been waived. With
respect to each Mortgage Loan, (i) the First Lien is in full force and effect,
(ii) there is no default, breach, violation or event of acceleration existing
under such First Lien mortgage or the related mortgage note, (iii) no event
which, with the passage of time or with notice and the expiration of any grace
or cure period, would constitute a default, breach, violation or event of
acceleration thereunder, and either (A) the First Lien mortgage contains a
provision which allows or (B) applicable law requires, the mortgagee under the
Mortgage Loan to receive notice of, and affords such mortgagee an opportunity to
cure any default by payment in full or otherwise under the First Lien mortgage;
(15) To the Seller's knowledge, there are no mechanics' liens or
similar liens or claims for work, labor or material affecting any Mortgaged
Property which have been filed (and no rights are outstanding that under law
could give rise to such liens), which are or may be a lien
19
prior to, or equal with, the lien of such Mortgage, except those which are
insured against by the title insurance policy with respect to the Mortgage Loan;
(16) All improvements which were considered in determining the
Appraised Value of the related Mortgaged Property lay wholly within the
boundaries and building restriction lines of the Mortgaged Property, and to the
Seller's knowledge, no improvements on adjoining properties encroach upon the
Mortgaged Property;
(17) The Mortgage Loan bears interest at the Mortgage Interest Rate.
With respect to each Mortgage Loan other than a Mortgage Loan with an interest
only payment period, the Mortgage Note is payable on the first day of each month
in Monthly Payments, which (A) are sufficient to fully amortize the original
principal balance over the original term thereof and to pay interest at the
related Mortgage Interest Rate and are sufficient to fully amortize the original
principal balance over the original term thereof and to pay interest at the
related Mortgage Interest Rate and (B) in the case of a Balloon Loan, are based
on a twenty (20), thirty (30), forty (40) or fifty (50) year amortization
schedule, as set forth in the related Mortgage Note, and a final monthly payment
substantially greater than the preceding monthly payment which is sufficient to
amortize the remaining principal balance of the Balloon Loan and to pay interest
at the related Mortgage Interest Rate;
(18) The origination practices used by the Seller 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 for mortgage loans
similar to the Mortgage Loans. The Mortgage Loan has been serviced in accordance
with the terms of the Mortgage Note;
(19) The Mortgaged Property is free of damage and waste and there is
no proceeding pending or to the Seller's knowledge, threatened for the total or
partial condemnation thereof nor is such a proceeding currently occurring;
(20) The Mortgage and related Mortgage Note contain customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property of the
benefits of the security provided thereby, including, (a) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (b) otherwise by
judicial foreclosure. The Mortgaged Property is not subject to any bankruptcy
proceeding (or with respect to each Mortgage Loan for which the proceeds were
used to pay off a bankruptcy of the Mortgagor, the related Mortgaged Property is
no longer subject to any bankruptcy proceeding) or foreclosure proceeding, nor
are any such proceedings pending and the Mortgagor has not filed for protection
under applicable bankruptcy laws. There is no homestead or other exemption
available to the Mortgagor which would interfere with the right to sell the
Mortgaged Property at a trustee's sale or the right to foreclose the Mortgage.
The Mortgagor has not notified the Seller and the Seller has no knowledge of any
relief requested or allowed to the Mortgagor under the Servicemembers' Civil
Relief Act;
(21) The Mortgage Loan was underwritten in accordance with the Seller
underwriting guidelines in effect at the time the Mortgage Loan was originated;
and the Mortgage Note and Mortgage are on forms acceptable to ▇▇▇▇▇▇ ▇▇▇ or
▇▇▇▇▇▇▇ Mac;
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(22) The Mortgage File contains an appraisal of the related Mortgaged
Property which satisfied the standards of Uniform Standards of Professional
Appraisal Practice and was made and signed, prior to the approval of the
Mortgage Loan application, by a qualified appraiser, duly appointed by the
Seller, who had no interest, direct or indirect in the Mortgaged Property or in
any loan made on the security thereof, whose compensation is not affected by the
approval or disapproval of the Mortgage Loan. Each appraisal of the Mortgage
Loan was made in accordance with the relevant provisions of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989;
(23) 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;
(24) No Mortgage Loan contains provisions pursuant to which Monthly
Payments are paid or partially paid with funds deposited in any separate account
established by the Seller, the Servicer, the Mortgagor, or anyone on behalf of
the Mortgagor. 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;
(25) To the Seller's knowledge, 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. To
the Seller's knowledge, no improvement located on or being part of any Mortgaged
Property is in violation of any applicable zoning law or regulation;
(26) Each original Mortgage was recorded and all subsequent
assignments of the original Mortgage (other than any intervening transfer to the
Purchaser) have been recorded, or are in the process of being recorded, in the
appropriate jurisdictions wherein such recordation is necessary to perfect the
lien thereof as against creditors of the Mortgagor. The Assignment of Mortgage
is in recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property is located;
(27) 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 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;
(28) The Mortgaged Property is in material compliance with all
applicable environmental laws pertaining to environmental hazards including,
without limitation, asbestos,
21
and neither the Seller nor, to the Seller's knowledge, the related Mortgagor,
has received any notice of any violation or potential violation of such law;
(29) No selection procedures were used by the Seller to select those
mortgage loans originally offered for sale by the Seller to the Purchaser
(including the Mortgage Loans) that identified such mortgage loans as being less
desirable or valuable than comparable mortgage loans otherwise being offered for
sale by the Seller;
(30) Each Mortgage Loan is a "qualified mortgage" within the meaning
of Section 860G of the Code (as determined without regard to Treas. Reg. Section
1.860G-2(a)(3) or any similar rule that treats a defective obligation as a
qualified mortgage for a temporary period). Any breach of this representation
shall be deemed to materially and adversely affect the value of the Mortgage
Loan and shall require a repurchase of the affected Mortgage Loans;
(31) No Mortgage Loan provides for interest other than at a single
fixed rate in effect throughout the term of the Mortgage Loan;
(32) With respect to each Mortgage, (i) the related First Lien does
not permit negative amortization, and (ii) either no consent for the Mortgage
Loan is required by the holder of the First Lien or such consent has been
obtained and is contained in the Mortgage File;
(33) With respect to each Mortgage Loan, where required or customary
in the jurisdiction in which the related Mortgaged Property is located, the
original lender has filed for record a request for notice of any action by the
senior lienholder under the related First Lien, and the original lender has
notified any senior lienholder in writing of the existence of the Mortgage Loan
and requested notification of any action to be taken against the Mortgagor by
the senior lienholder;
(34) The Mortgage Loan Documents with respect to each Mortgage Loan
subject to Prepayment Charges specifically authorizes such Prepayment Charges to
be collected; the information set forth in the Prepayment Charge Schedule is
complete, true and correct in all material respects on the date or dates when
such information is furnished and each Prepayment Charge is permissible and
enforceable in accordance with the terms of the related Mortgage Loan Documents
and applicable law;
(35) The Mortgage 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 thereunder at the option of the mortgagee and such provision is
enforceable (unless the transfer is permitted by applicable federal law without
the consent of the mortgagee thereunder);
(36) No predatory or deceptive lending practices, as defined by
applicable federal, state or local law applicable to the Seller in effect on the
origination date of the Mortgage Loan, including but not limited to, the
extension of credit to the mortgagor without regard for the mortgagor's ability
to repay the Mortgage Loan and the extension of credit to the mortgagor which
has no apparent benefit to the mortgagor, were employed by the originator of the
Mortgage Loan, or any Affiliate of the originator of the Mortgage Loan, in
connection with the origination of the Mortgage Loan;
22
(37) Each Mortgage Loan and related Prepayment Charge at the time it
was made complied in all material respects with applicable local, state and
federal laws, including, without limitation, usury, equal credit opportunity,
real estate settlement procedures, predatory, abusive and fair lending laws,
truth-in-lending and disclosure laws, and the consummation of the transactions
completed hereby will not involve the violation of any such laws. Any breach of
this representation shall be deemed to materially and adversely affect the value
of the Mortgage Loan and shall require a repurchase of the affected Mortgage
Loans;
(38) No Mortgage Loan is a "High Cost Loan" or "Covered Loan", as
applicable (as such terms are defined in the current Standard & Poor's LEVELS(R)
Glossary which is now Version 5.7 Revised, Appendix E);
(39) No litigation is pending or, to the Seller's knowledge,
threatened with respect to the Mortgage Loan or Mortgaged Property;
(40) With respect to each Group One Mortgage Loan, no Mortgage Loan
has an original principal balance that exceeds the applicable ▇▇▇▇▇▇▇ Mac loan
limit for Second Lien mortgage loans. Any breach of this representation shall be
deemed to materially and adversely affect the value of the Mortgage Loan and
shall require a repurchase of the affected Mortgage Loans;
(41) With respect to each Group One Mortgage Loan, the sum of the
original principal balance of such Mortgage Loan and the original principal
balance of the First Lien mortgage loan relating to the same mortgaged property
does not exceed the applicable ▇▇▇▇▇▇▇ Mac loan limit for First Lien mortgage
loans for that property type. Any breach of this representation shall be deemed
to materially and adversely affect the value of the Mortgage Loan and shall
require a repurchase of the affected Mortgage Loans;
(42) Each Group One 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 or abusive lending laws. Any breach
of this representation shall be deemed to materially and adversely affect the
value of the Mortgage Loan and shall require a repurchase of the affected
Mortgage Loans;
(43) With respect to each Group One Mortgage Loan, no borrower was
encouraged or required to select a Mortgage Loan product offered by the Seller
which is a higher cost product designed for less creditworthy borrowers, unless
at the time of the Mortgage Loan's origination, such borrower did not qualify
taking into account credit history and debt-to-income ratios for a lower-cost
credit product then offered by the Seller or any affiliate of the Seller. If, at
the time of loan application, the borrower may have qualified for a for a
lower-cost credit product then offered by any mortgage lending affiliate of the
Seller (other ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Corporation), the Seller referred the
borrower's application to such affiliate for underwriting consideration. Any
breach of this representation shall be deemed to materially and adversely affect
the value of the Mortgage Loan and shall require a repurchase of the affected
Mortgage Loan;
(44) The methodology used in underwriting the extension of credit for
each Group One Mortgage Loan employs objective mathematical principles which
relate the borrower's
23
income, assets and liabilities to the proposed payment and such underwriting
methodology does not rely on the extent of the borrower's equity in the
collateral as the principal determining factor in approving such credit
extension (other than no documentation Mortgage Loans). Such underwriting
methodology confirmed that at the time of origination (application/approval) the
borrower had a reasonable ability to make timely payments on the Mortgage Loan;
(45) With respect to each Group One Mortgage Loan, no borrower was
required to purchase any single premium credit insurance policy (e.g., life,
mortgage, disability, accident, unemployment, or health insurance product) or
debt cancellation agreement as a condition of obtaining the extension of credit.
No borrower obtained a prepaid single- premium credit insurance policy (e.g.,
life, mortgage, disability, accident, unemployment or health insurance policy)
or debt cancellation agreement in connection with the origination of the
Mortgage Loan; No proceeds from any Mortgage Loan were used to purchase single
premium credit insurance policies (e.g., life, mortgage disability, accident,
unemployment, or health insurance product) or debt cancellation agreements as
part of the origination of, or as a condition to closing, such Mortgage Loan;
(46) With respect to each Group One Mortgage Loan, no borrower was
charged "points and fees" (whether or not financed) in an amount greater than
(a) $1,000 or (b) 5% of the principal amount of such loan, whichever is greater.
Such 5% limitation is calculated in accordance with ▇▇▇▇▇▇▇ Mac's requirements
as set forth in the ▇▇▇▇▇▇▇ Mac Investment Requirements. All points and fees
related to each Mortgage Loan are listed on the Final Mortgage Loan Schedule and
are complete, true and correct. Any breach of this representation shall be
deemed to materially and adversely affect the value of the Mortgage Loan and
shall require a repurchase of the affected Mortgage Loans;
(47) With respect to each Group One Mortgage Loan, no Mortgage Loan is
subject to the requirements of HOEPA and no Mortgage Loan or Refinanced Mortgage
Loan has an "annual percentage rate" or "total points and fees" payable by the
borrower (as each such term is defined under HOEPA) that equal or exceed the
thresholds defined under HOEPA (Section 32 of Regulation Z, 12 C.F.R. Section
226.32(a)(1)(i) and (ii)) and no Mortgage Loan is in violation of any comparable
state or local law. Any breach of this representation shall be deemed to
materially and adversely affect the interests of the owner of the Mortgage Loan
and shall require a repurchase of the affected Mortgage Loans;
(48) No Mortgage Loan was originated on or after October 1, 2002 and
prior to March 7, 2003, which is secured by property located in the State of
Georgia. No Mortgage Loan was originated on or after March 7, 2003 which is a
"high cost home loan" as defined under the Georgia Fair Lending Act. Any breach
of this representation shall be deemed to materially and adversely affect the
interests of the owner of the Mortgage Loan and shall require a repurchase of
the affected Mortgage Loan;
(49) With respect to each Group One Mortgage Loan, no Mortgage Loan is
a "High-Cost Home Loan" as defined in New York Banking Law 6-1; No Mortgage Loan
is a "High-Cost Home Loan" as defined in the Arkansas Home Loan Protection Act
effective July 16, 2003 (Act 1340 of 2003); No Mortgage Loan is a "High-Cost
Home Loan" as defined in the Kentucky high-cost home loan statute effective June
24, 2003 (Ky. Rev. Stat. Section 360.100);
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No Mortgage Loan is a "High-Cost Home Loan" as defined in the New Jersey Home
Ownership Act effective November 27, 2003 (N.J.S.A. 46:10B-22 et seq.); No
Mortgage Loan is a "High-Cost Home Loan" as defined in the New Mexico Home Loan
Protection Act effective January 1, 2004 (N.M. Stat. ▇▇▇. Sections 58-21A-1 et
seq.); No Mortgage Loan is a "High-Risk Home Loan" as defined in the Illinois
High- Risk Home Loan Act effective January 1, 2004 (815 Ill. Comp. Stat. 137/1
et seq.); No Mortgage Loan is a "High-Cost Home Mortgage Loan" as defined in the
Massachusetts Predatory Home Loan Practices Act, effective November 6, 2004
(Mass. ▇▇▇. Laws Ch. 183C); and No Mortgage Loan is a "High Cost Home Loan" as
defined in the Indiana Home Loan Practices Act, effective January 1, 2005 (Ind.
Code ▇▇▇. Sections 24-9-1 through 24-9-9);
(50) With respect to each Group One Mortgage Loan, no borrower
obtained a prepaid single-premium credit-life, credit disability, credit
unemployment or credit property insurance policy in connection with the
origination of the Mortgage Loan. Any breach of this representation shall be
deemed to materially and adversely affect the value of the Mortgage Loan and
shall require a repurchase of the affected Mortgage Loans;
(51) With respect to any Group One Mortgage Loan that contains a
provision permitting imposition of a Prepayment Charge: (a) the Mortgage Loan
provides some benefit to the Mortgagor (e.g., a rate or fee reduction) in
exchange for accepting such Prepayment Charge; (b) prior to the Mortgage Loan's
origination, the Mortgagor was offered the option of obtaining a Mortgage Loan
that did not require payment of such Prepayment Charge; (c) the Prepayment
Charge was adequately disclosed to the Mortgagor pursuant to applicable state
and federal law; (d) no Mortgage Loan originated on or after October 1, 2002
will provide for Prepayment Charges for a term in excess of three years and any
loans originated prior to such date, and any Mortgage Loans, will not provide
for Prepayment Charges for a term in excess of five years; unless the Mortgage
Loan was modified to reduce the Prepayment Period to no more than three years
from the date of the note and the Mortgagor was notified in writing of such
reduction in Prepayment Period; and (e) such Prepayment Charge shall not be
imposed in any instance where the Mortgage Loan is accelerated or paid off in
connection with the workout of a delinquent mortgage or due to the Mortgagor's
default, notwithstanding that the terms of the Mortgage Loan or state or federal
law might permit the imposition of such penalty. Any breach of this
representation shall be deemed to materially and adversely affect the value of
the Mortgage Loan and shall require a repurchase of the affected Mortgage Loans;
(52) The Seller and any predecessor servicer for each Group One
Mortgage Loan has fully furnished in accordance with the Fair Credit Reporting
Act and its implementing regulations, accurate and complete information (e.g.,
favorable and unfavorable) on its borrower credit files to Equifax, Experian and
Trans Union Credit Information Company, on a monthly basis, except for those
instances in which the Servicer believes it prudent to not report for the
prevention or resolution of disputes with the Mortgagors. Any breach of this
representation shall be deemed to materially and adversely affect the interests
of the owner of the Mortgage Loan and shall require a repurchase of the affected
Mortgage Loans;
(53) With respect to any Group One Mortgage Loan originated on or
after August 1, 2004, neither the related Mortgage nor the related Mortgage Note
requires the borrower to submit to arbitration to resolve any dispute arising
out of or relating in any way to the mortgage loan transaction. Any breach of
this representation shall be deemed to materially and adversely
25
affect the interests of the owner of the Mortgage Loan and shall require a
repurchase of the affected Mortgage Loans;
(54) With respect to any Group One Mortgage Loan originated on or
after August 1, 2004, neither the related Mortgage nor the related Mortgage Note
requires the Mortgagor to submit to arbitration to resolve any dispute arising
out of or relating in any way to the Mortgage Loan transaction. Any breach of
this representation shall be deemed to materially and adversely affect the
interests of the owner of the Mortgage Loan and shall require a repurchase of
the affected Mortgage Loans;
(55) All of the Group One Mortgage Loans are exclusively secured by
single-family, one-to-four unit Residential Dwellings, and none of the Group One
Mortgage Loans are secured by multi-family, commercial, industrial, agricultural
or undeveloped property or on any property except in the continental United
Stated, Alaska, Hawaii, Puerto Rico, the Virgin Islands or Guam. Any breach of
this representation shall be deemed to materially and adversely affect the
interests of the owner of the Mortgage Loan and shall require a repurchase of
the affected Mortgage Loans;
(56) None of the Group One Mortgage Loans are underlined by
manufactured housing units. Any breach of this representation shall be deemed to
materially and adversely affect the interests of the owner of the Mortgage Loan
and shall require a repurchase of the affected Mortgage Loans;
(57) None of the Group One Mortgage Loans can be secured by a
condominium unit that is part of a condominium development that operates as, or
holds itself as, a condominium hotel ("condotel"). Any breach of this
representation shall be deemed to materially and adversely affect the interests
of the owner of the Mortgage Loan and shall require a repurchase of the affected
Mortgage Loans;
(58) No Group One Mortgage Loan is "seasoned" as defined in the
▇▇▇▇▇▇▇ Mac Investment Requirements. Any breach of this representation shall be
deemed to materially and adversely affect the interests of the owner of the
Mortgage Loan and shall require a repurchase of the affected Mortgage Loans;
(59) No Mortgage Loan is classified as a high cost mortgage loan under
HOEPA, and no Mortgage Loan 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 that were
originated between November 26, 2003 and July 7, 2004), "high risk home" or
"predatory" loan under any applicable state, federal or local law (or a
similarly classified loan using different terminology under an applicable law
imposing heightened regulatory scrutiny or additional legal liability for
residential mortgage loans having high interest rates, points and/or fees). Any
breach of this representation shall be deemed to materially and adversely affect
the interests of the owner of the Mortgage Loan and shall require a repurchase
of the affected Mortgage Loan; and
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(60) As of the Closing Date, the Seller would not, based on the
delinquency status of the Mortgage Loans, institute foreclosure proceedings with
respect to any of the Mortgage Loans prior to the next scheduled payment for
such Mortgage Loan.
(b) In the event, a net interest margin securitization transaction is
entered into by the Seller or any of its affiliates in which any of the
certificates issued therein serve as part or all of the collateral securing such
transaction, the Seller additionally represents and warrants as follows:
(1) The information set forth in the Prepayment Charge schedule
(including the Prepayment Charge summary attached thereto) is complete, true and
correct in all material respects on the date or dates when such information is
furnished and each Prepayment Charge is permissible and enforceable in
accordance with its terms (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) under
applicable federal, state and local law; and
(2) Either: (a) The Seller shall ensure that the related Servicer will
not waive any Prepayment Charge or part of a Prepayment Charge unless such
waiver would maximize recovery of total proceeds taking into account the value
of such Prepayment Charge and related mortgage loan and doing so is standard and
customary in servicing mortgage loans similar to the mortgage loans (including
any waiver of a Prepayment Charge in connection with a refinancing of a mortgage
loan that is related to a default or a reasonably foreseeable default), and in
no event will it waive a Prepayment Charge in connection with a refinancing of a
mortgage loan that is not related to a default or a reasonably foreseeable
default; or
(b) The Seller shall ensure that the related Servicer will not
waive any part of any Prepayment Charge unless the waiver relates to a default
or a reasonably foreseeable default, the Prepayment Charge would cause an undue
hardship to the related borrower, the Mortgaged Property is sold by the
Mortgagor, the collection of any Prepayment Charge would violate any relevant
law or regulation or the waiving of the Prepayment Charge would otherwise
benefit the Trust Fund and it is expected that the waiver would maximize
recovery of total proceeds taking into account the value of the Prepayment
Charge and related Mortgage Loan and doing so is standard and customary in
servicing similar Mortgage Loans (including any waiver of a Prepayment Charge in
connection with a refinancing of a Mortgage Loan that is related to a default or
a reasonably foreseeable default). The related Servicer will not waive a
Prepayment Charge in connection with a refinancing of a Mortgage Loan that is
not related to a default or a reasonably foreseeable default.
Subsection 7.03 Remedies for Breach of Representations and Warranties.
It is understood and agreed that the representations and warranties
set forth in Subsections 7.01 and 7.02 shall survive the sale of the Mortgage
Loans to the Purchaser and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note or
Assignment of Mortgage or the examination or lack of examination of any Mortgage
File. Upon discovery by any of the Seller, the Purchaser or the Class A
Certificate
27
Insurer of a breach of any of the foregoing representations and warranties which
materially and adversely affects the value of the Mortgage Loans or the interest
of the Purchaser (or which materially and adversely affects the interests of the
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.
With respect to the representations and warranties described in this
Section 7.02 which are made to the best of the Seller's knowledge, if it is
discovered by either the Servicer or the Trustee that the substance of such
representation and warranty is inaccurate and such inaccuracy materially and
adversely affects the value of the related Mortgage Loan or the interests of the
Certificateholders therein, notwithstanding the Seller's lack of knowledge with
respect to the substance of such representation or warranty, such inaccuracy
shall be deemed a breach of the applicable representation or warranty.
Within sixty (60) days of the earlier of either discovery by or notice
to the Seller of any breach of a representation or warranty which materially and
adversely affects the value of a Mortgage Loan or the Mortgage Loans, the Seller
shall use its best efforts promptly to cure such breach in all material respects
and, if such breach cannot be cured, the Seller shall repurchase such Mortgage
Loan at the Repurchase Price. In the event that a breach shall involve any
representation or warranty set forth in Subsection 7.01 and such breach cannot
be cured within sixty (60) days of the earlier of either discovery by or notice
to the Seller of such breach, all of the Mortgage Loans shall be repurchased by
the Seller at the Repurchase Price. The Seller shall, at the request of the
Purchaser and assuming that Seller has a Qualified Substitute Mortgage Loan,
rather than repurchase the Mortgage Loan as provided above, remove such Mortgage
Loan and substitute in its place a Qualified Substitute Mortgage Loan or Loans;
provided that such substitution shall be effected not later than one hundred
twenty (120) days after the Closing Date. If the Seller has no Qualified
Substitute Mortgage Loan, it shall repurchase the deficient Mortgage Loan. Any
repurchase of a Mortgage Loan(s) pursuant to the foregoing provisions of this
Subsection 7.03 shall occur on a date designated by the Purchaser and shall be
accomplished by wire transfer of immediately available funds on the repurchase
date to an account designated by the Purchaser.
Notwithstanding the foregoing and solely with respect to Mortgage
Loans that are a part of a Securitization Transaction or net interest margin
security related to such Securitization Transaction, within 90 days of the
earlier of discovery by the Seller or receipt of notice by the Seller of the
breach of the representation or covenant of the Seller set forth in Section
7.02(34) which materially and adversely affects the interests of any holder of
any certificate representing the right to receive the Prepayment Charges in any
such Prepayment Charge, the Seller shall remedy such breach as follows: if the
representation made by the Seller in Section 7.02(34) is breached and a
Principal Prepayment has occurred in the applicable prepayment period, the
Seller must pay the amount of the scheduled Prepayment Charge, in accordance
with instructions provided by the Purchaser, net of any legally enforceable
Prepayment Charge applicable to such Mortgage Loan.
At the time of repurchase of any deficient Mortgage Loan, the
Purchaser and the Seller shall arrange for the reassignment of the repurchased
Mortgage Loan to the Seller and the delivery to the Seller of any documents held
by the Custodian relating to the repurchased
28
Mortgage Loan. In the event the Repurchase Price is deposited in the Custodial
Account, the Seller shall, simultaneously with such deposit, give written notice
to the Purchaser that such deposit has taken place. Upon such repurchase the
Final Mortgage Loan Schedule shall be amended to reflect the withdrawal of the
repurchased Mortgage Loan from this Agreement.
As to any Deleted Mortgage Loan for which the Seller substitutes a
Qualified Substitute Mortgage Loan or Loans, the Seller shall effect such
substitution by delivering to the Purchaser for such Qualified Substitute
Mortgage Loan or Loans the Mortgage Loan Documents with the Mortgage Note
endorsed as required herein. The Seller shall deposit in the Custodial Account
the Monthly Payment due on such Qualified Substitute Mortgage Loan or Loans in
the month following the date of such substitution. Monthly Payments due with
respect to Qualified Substitute Mortgage Loans in the month of substitution will
be retained by the Seller. For the month of substitution, distributions to the
Purchaser will include the Monthly Payment due on such Deleted Mortgage Loan in
the month of substitution, and the Seller shall thereafter be entitled to retain
all amounts subsequently received by the Seller in respect of such Deleted
Mortgage Loan. The Seller shall give written notice to the Purchaser that such
substitution has taken place and shall amend the Final Mortgage Loan Schedule to
reflect the removal of such Deleted Mortgage Loan from the terms of this
Agreement and the substitution of the Qualified Substitute Mortgage Loan. Upon
such substitution, such Qualified Substitute Mortgage Loan or Loans shall be
subject to the terms of this Agreement in all respects, and the Seller shall be
deemed to have made with respect to such Qualified Substitute Mortgage Loan or
Loans, as of the date of substitution, the covenants, representations and
warranties set forth in Subsections 7.01 and 7.02.
For any month in which the Seller substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Seller
will determine the amount (if any) by which the aggregate principal balance of
all such Qualified Substitute Mortgage Loans as of the date of substitution is
less than the aggregate Stated Principal Balance of all such Deleted Mortgage
Loans (after application of scheduled principal payments due in the month of
substitution). Accordingly, on the date of such substitution, the Seller will
deposit from its own funds into the Custodial Account an amount equal to such
amount.
The Seller indemnifies and holds the Issuing Entity, the Trustee (or
its custodian, as applicable), the Purchaser, the Servicer, each
Certificateholder and the Class A Certificate Insurer harmless against any and
all taxes, claims, losses, penalties, fines, forfeitures, reasonable legal fees
and related costs, judgments, and any other costs, fees and expenses that the
Issuing Entity, the Trustee (or its custodian, as applicable), the Purchaser,
the Servicer and any Certificateholder may sustain in connection with any
actions of the Seller relating to a repurchase of a Mortgage Loan other than in
compliance with the terms of this Section 7, to the extent that any such action
causes (i) any federal or state tax to be imposed on the Issuing Entity or any
REMIC provided for in the Pooling and Servicing Agreement, including without
limitation, any federal tax imposed on "prohibited transactions" under Section
860F(a)(1) of the Code or on "contributions after the startup day" under Section
860G(d)(1) of the Code, or (ii) any REMIC created in the Pooling and Servicing
Agreement to fail to qualify as a REMIC at any time that any Certificate is
outstanding. In furtherance of the foregoing, if the Seller is not a member of
MERS and repurchases a Mortgage Loan which is registered on the MERS System, the
Seller, at its own expense and without any right of reimbursement, shall cause
MERS to execute and
29
deliver an assignment of the Mortgage in recordable form to transfer the
Mortgage from MERS to the Seller and shall cause such Mortgage to be removed
from registration on the MERS System in accordance with MERS' rules and
regulations.
Any cause of action against the Seller relating to or arising out of
the breach of any representations and warranties made in Subsections 7.01 or
7.02 shall accrue as to any Mortgage Loan upon (i) discovery of such breach by
the Purchaser or Class A Certificate Insurer or notice thereof by the Seller to
the Purchaser, (ii) failure by the Seller to cure such breach or repurchase such
Mortgage Loan as specified above, and (iii) demand upon the Seller by the
Purchaser for compliance with the relevant provisions of this Agreement.
SECTION 8. Closing. The closing shall take place on the Closing Date.
At the Purchaser's option, the closing shall be either: by telephone, confirmed
by letter or wire as the parties shall agree, or conducted in person, at such
place as the parties shall agree.
The closing for the Mortgage Loans to be purchased on the Closing Date
shall be subject to each of the following conditions:
(a) all of the representations and warranties of the Seller under
this Agreement shall be true and correct 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;
(b) the Seller shall have delivered and released the Mortgage Loan
Documents to the Custodian; and
(c) all other terms and conditions of this Agreement shall have been
complied with.
Subject to the foregoing conditions, the Initial Purchaser shall pay
to the Seller on the Closing Date the Purchase Price, plus accrued interest
pursuant to Section 4, by wire transfer of immediately available funds to the
account designated by the Seller.
SECTION 9. [Reserved].
SECTION 10. Costs. The Purchaser shall pay any commissions due its
salesmen and the legal fees and expenses of its attorneys. All other costs and
expenses incurred in connection with the transfer and delivery of the Mortgage
Loans, including without limitation recording fees, fees for title policy
endorsements and continuations, fees for recording Assignments of Mortgage and
the Seller's attorney's fees, shall be paid by the Seller.
SECTION 11. [Reserved].
SECTION 12. Securitization Transactions and Whole Loan Transfers.
Subsection 12.01 Removal of Mortgage Loans from Inclusion Under This
Agreement Upon a Whole Loan Transfer or a Securitization Transaction on One or
More Reconstitution Dates.
30
The Seller and the Initial Purchaser agree that with respect to some
or all of the Mortgage Loans, the Initial Purchaser may effect either:
(1) one or more Whole Loan Transfers; and/or
(2) one or more Securitization Transactions.
With respect to each Whole Loan Transfer or Securitization
Transaction, as the case may be, entered into by the Initial Purchaser, the
Seller agrees:
(1) to cooperate fully with the Purchaser and any prospective
purchaser with respect to all reasonable requests and due
diligence procedures including participating in meetings with
rating agencies, bond insurers and such other parties as the
Purchaser shall designate and participating in meetings with
prospective purchasers of the Mortgage Loans or interests therein
and providing information reasonably requested by such
purchasers;
(2) to deliver to the Purchaser for inclusion in any prospectus or
other offering material such publicly available information
regarding the Seller, its financial condition or as is otherwise
reasonably requested by the Purchaser and which the Seller is
capable of providing without unreasonable effort or expense, and
to indemnify the Purchaser and its affiliates for material
misstatements or omissions contained (i) in such information and
(ii) on the Final Mortgage Loan Schedule;
(3) to deliver to the Purchaser and to any Person designated by the
Purchaser, at the Purchaser's expense, such statements and audit
letters of reputable, certified public accountants pertaining to
information provided by the Seller pursuant to clause 2 above as
shall be reasonably requested by the Purchaser; and
(4) to deliver to the Purchaser, and to any Person designated by the
Purchaser, such legal documents and in-house Opinions of Counsel
as are customarily delivered by originators or servicers, as the
case may be, and reasonably determined by the Purchaser to be
necessary in connection with Whole Loan Transfers or
Securitization Transactions, as the case may be, such in-house
Opinions of Counsel for a Securitization Transaction to be in the
form reasonably acceptable to the Purchaser, it being understood
that the cost of any opinions of outside special counsel that may
be required for a Whole Loan Transfer or Securitization
Transaction, as the case may be, shall be the responsibility of
the Purchaser.
Subsection 12.02 Intent of the Parties; Reasonableness.
The Purchaser and the Seller acknowledge and agree that the purpose of
Section 12 of this Agreement is to facilitate compliance by the Purchaser and
any Depositor with the
31
provisions of Regulation AB and related rules and regulations of the Commission.
Although Regulation AB is applicable by its terms only to offerings of
asset-backed securities that are registered under the Securities Act, the Seller
acknowledges that investors in privately offered securities may require that the
Purchaser or any Depositor provide comparable disclosure in unregistered
offerings. References in this Agreement to compliance with Regulation AB include
provision of comparable disclosure in private offerings. Neither the Purchaser
nor any Depositor shall exercise its right to request delivery of information or
other performance under these provisions other than in good faith, or for
purposes other than compliance with the Securities Act, the Exchange Act and the
rules and regulations of the Commission thereunder (or the provision in a
private offering of disclosure comparable to that required under the Securities
Act). The Seller acknowledges that interpretations of the requirements of
Regulation AB may change over time, whether due to interpretive guidance
provided by the Commission or its staff, consensus among participants in the
asset-backed securities markets, advice of counsel, or otherwise, and agrees to
comply with requests made by the Purchaser or any Depositor in good faith for
delivery of information under these provisions on the basis of evolving
interpretations of Regulation AB. In connection with any Securitization
Transaction, the Seller shall cooperate fully with the Purchaser to deliver to
the Purchaser (including any of its assignees or designees) and any Depositor,
any and all statements, reports, certifications, records and any other
information necessary in the good faith determination of the Purchaser or any
Depositor to permit the Purchaser or such Depositor to comply with the
provisions of Regulation AB, together with such disclosures relating to the
Seller, any Third-Party Originator and the Mortgage Loans, or the servicing of
the Mortgage Loans, reasonably believed by the Purchaser or any Depositor to be
necessary in order to effect such compliance.
The Purchaser (including any of its assignees or designees) shall
cooperate with the Seller by providing timely notice of requests for information
under these provisions and by reasonably limiting such requests to information
required, in the Purchaser's reasonable judgment, to comply with Regulation AB.
Subsection 12.03 Additional Representations and Warranties of the
Seller.
(a) The Seller shall be deemed to represent to the Purchaser and to any
Depositor, as of the date on which information is first provided to the
Purchaser or any Depositor under Subsection 12.04 that, except as disclosed in
writing to the Purchaser or such Depositor prior to such date: (i) there are no
material legal or governmental proceedings pending (or known to be contemplated)
against the Seller or any Third-Party Originator; and (ii) there are no
affiliations, relationships or transactions relating to the Seller or any
Third-Party Originator with respect to any Securitization Transaction and any
party thereto identified by the related Depositor of a type described in Item
1119 of Regulation AB.
(b) If so requested by the Purchaser or any Depositor on any date following
the date on which information is first provided to the Purchaser or any
Depositor under Subsection 12.04, the Seller shall, within five Business Days
following such request, confirm in writing the accuracy of the representations
and warranties set forth in paragraph (a) of this Section or, if any such
representation and warranty is not accurate as of the date of such request,
provide reasonably adequate disclosure of the pertinent facts, in writing, to
the requesting party.
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Subsection 12.04 Information to Be Provided by the Seller.
In connection with any Securitization Transaction occurring on or
after January 1, 2006, the Seller shall (i) within five Business Days following
request by the Purchaser or any Depositor, provide to the Purchaser and such
Depositor (or, as applicable, cause each Third-Party Originator to provide), in
writing and in form and substance reasonably satisfactory to the Purchaser and
such Depositor, the information and materials specified in paragraphs (a) and
(b) of this Section, and (ii) as promptly as practicable following notice to or
discovery by the Seller, provide to the Purchaser and any Depositor (in writing
and in form and substance reasonably satisfactory to the Purchaser and such
Depositor) the information specified in paragraph (d) of this Section.
(a) If so requested by the Purchaser or any Depositor, the Seller shall
provide such information regarding (i) the Seller, as originator of the Mortgage
Loans (including as an acquirer of Mortgage Loans from a Qualified
Correspondent), or (ii) each Third-Party Originator, as is requested for the
purpose of compliance with Items 1103(a)(1), 1105, 1110, 1117 and 1119 of
Regulation AB. Such information shall include, at a minimum:
(A) the originator's form of organization;
(B) a description of the originator's origination program and how long
the originator has been engaged in originating residential mortgage loans,
which description shall include a discussion of the originator's experience
in originating mortgage loans of a similar type as the Mortgage Loans;
information regarding the size and composition of the originator's
origination portfolio; and information that may be material, in the good
faith judgment of the Purchaser or any Depositor, to an analysis of the
performance of the Mortgage Loans, including the originators'
credit-granting or underwriting criteria for mortgage loans of similar
type(s) as the Mortgage Loans and such other information as the Purchaser
or any Depositor may reasonably request for the purpose of compliance with
Item 1110(b)(2) of Regulation AB;
(C) a description of any material legal or governmental proceedings
pending (or known to be contemplated) against the Seller and each
Third-Party Originator; and
(D) a description of any affiliation or relationship between the
Seller, each Third-Party Originator and any of the following parties to a
Securitization Transaction, as such parties are identified to the Seller by
the Purchaser or any Depositor in writing in advance of such Securitization
Transaction:
(1) the sponsor;
(2) the depositor;
(3) the issuing entity;
(4) any servicer;
(5) any trustee;
(6) any originator;
(7) any significant obligor;
(8) any enhancement or support provider; and
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(9) any other material transaction party.
(b) If so requested by the Purchaser or any Depositor and to the extent
received by the Seller from various assignees of the Seller's mortgage loans,
the Seller shall provide (or, as applicable, cause each Third-Party Originator
to provide) Static Pool Information with respect to the mortgage loans (of a
similar type as the Mortgage Loans, as reasonably identified by the Purchaser as
provided below) originated by (i) the Seller, if the Seller is an originator of
Mortgage Loans (including as an acquirer of Mortgage Loans from a Qualified
Correspondent), and/or (ii) each Third-Party Originator. Such Static Pool
Information shall be prepared by the Seller (or Third-Party Originator) on the
basis of its reasonable, good faith interpretation of the requirements of Item
1105(a)(l)-(3) of Regulation AB. To the extent that there is reasonably
available to the Seller (or Third-Party Originator) Static Pool Information with
respect to more than one mortgage loan type, the Purchaser or any Depositor
shall be entitled to specify whether some or all of such information shall be
provided pursuant to this paragraph. The content of such Static Pool Information
may be in the form customarily provided by the Seller, and need not be
customized for the Purchaser or any Depositor. Such Static Pool Information for
each vintage origination year or prior securitized pool, as applicable, shall be
presented in increments no less frequently than quarterly over the life of the
mortgage loans included in the vintage origination year or prior securitized
pool. The most recent periodic increment must be as of a date no later than 135
days prior to the date of the prospectus or other offering document in which the
Static Pool Information is to be included or incorporated by reference. The
Static Pool Information shall be provided in an electronic format that provides
a permanent record of the information provided, such as a portable document
format (pdf) file, or other such electronic format reasonably required by the
Purchaser or the Depositor, as applicable. The Seller shall in good faith use
its best efforts to obtain from its assignees data needed to prepare Static Pool
Information.
Promptly following notice or discovery of a material error in Static
Pool Information provided pursuant to the immediately preceding paragraph
(including an omission to include therein information required to be provided
pursuant to such paragraph), the Seller shall provide corrected Static Pool
Information to the Purchaser or any Depositor, as applicable, in the same format
in which Static Pool Information was previously provided to such party by the
Seller.
If so requested by the Purchaser or any Depositor, the Seller shall
provide (or, as applicable, cause each Third-Party Originator to provide), at
the expense of the requesting party (to the extent of any additional incremental
expense associated with delivery pursuant to this Agreement), such agreed-upon
procedures letters of certified public accountants reasonably acceptable to the
Purchaser or Depositor, as applicable, pertaining to Static Pool Information
relating to prior securitized pools for securitizations closed on or after
January 1, 2006 or, in the case of Static Pool Information with respect to the
Seller's or Third-Party Originator's originations or purchases, to calendar
months commencing January 1, 2006, as the Purchaser or such Depositor shall
reasonably request. Such statements and letters shall be addressed to and be for
the benefit of such parties as the Purchaser or such Depositor shall designate,
which may include, by way of example, any Sponsor, any Depositor and any broker
dealer acting as underwriter, placement agent or initial purchaser with respect
to a Securitization Transaction.
34
Any such statement or letter may take the form of a standard, generally
applicable document accompanied by a reliance letter authorizing reliance by the
addressees designated by the Purchaser or such Depositor.
(c) [Reserved].
(d) If so requested by the Purchaser or any Depositor for the purpose of
satisfying its reporting obligation under the Exchange Act with respect to any
class of asset-backed securities, the Seller shall (or shall cause each
Third-Party Originator to) (i) notify the Purchaser and any Depositor in writing
of (A) any material litigation or governmental proceedings pending against the
Seller or any Third-Party Originator and (B) any affiliations or relationships
that develop following the closing date of a Securitization Transaction between
the Seller or any Third-Party Originator and any of the parties specified in
clause (D) of paragraph (a) of this Section (and any other parties identified in
writing by the requesting party) with respect to such Securitization
Transaction, and (ii) provide to the Purchaser and any Depositor a description
of such proceedings, affiliations or relationships.
Subsection 12.05 Indemnification; Remedies.
(a) The Seller shall indemnify the Purchaser, each affiliate of the
Purchaser, and each of the following parties participating in a Securitization
Transaction: each sponsor and issuing entity; each Person responsible for the
preparation, execution or filing of any report required to be filed with the
Commission with respect to such Securitization Transaction, or for execution of
a certification pursuant to Rule 13a-14(d) or Rule 15d-14(d) under the Exchange
Act with respect to such Securitization Transaction; each broker dealer acting
as underwriter, placement agent or initial purchaser, each Person who controls
any of such parties or the Depositor (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act); and the respective present
and former directors, officers, employees and agents of each of the foregoing
and of the Depositor, and shall hold each of them harmless from and against any
losses, damages, penalties, fines, forfeitures, legal fees and expenses and
related costs, judgments, and any other costs, fees and expenses that any of
them may sustain arising out of or based upon:
(i) (A) any untrue statement of a material fact contained or alleged
to be contained in any information, report, certification, accountants'
letter or other material provided under this Section 12 by or on behalf of
the Seller, or provided under this Section 12 by or on behalf of any
Third-Party Originator (collectively, the "Seller Information"), or (B) the
omission or alleged omission to state in the Seller Information a material
fact required to be stated in the Seller Information or necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, by way of clarification,
that clause (B) of this paragraph shall be construed solely by reference to
the Seller Information and not to any other information communicated in
connection with a sale or purchase of securities, without regard to whether
the Seller Information or any portion thereof is presented together with or
separately from such other information;
35
(ii) any failure by the Seller or any Third-Party Originator to
deliver any information, report, certification, accountants' letter or
other material when and as required under this Section 12; or
(iii) any breach by the Seller of a representation or warranty set
forth in Subsection 12.03(a) or in a writing furnished pursuant to
Subsection 12.03(b) and made as of a date prior to the closing date of the
related Securitization Transaction, to the extent that such breach is not
cured by the Closing Date, or any breach by the Seller of a representation
or warranty in a writing furnished pursuant to Subsection 12.03(b) to the
extent made as of a date subsequent to the Closing Date.
In the case of any failure of performance described in clause (ii) of this
Section, the Seller shall promptly reimburse the Purchaser, any Depositor, as
applicable, and each Person responsible for the preparation, execution or filing
of any report required to be filed with the Commission with respect to such
Securitization Transaction, or for execution of a certification pursuant to Rule
13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect to such
Securitization Transaction, for all costs reasonably incurred by each such party
in order to obtain the information, report, certification, accountants' letter
or other material not delivered as required by the Seller or any Third-Party
Originator.
(b) Any failure by the Seller or any Third-Party Originator to deliver any
information, report, certification, accountants' letter or other material when
and as required under this Section 12, or any breach by the Seller of a
representation or warranty set forth in Subsection 12.03(a) or in a writing
furnished pursuant to Subsection 12.03(b) and made as of a date prior to the
closing date of the related Securitization Transaction, to the extent that such
breach is not cured by the Closing Date, or any breach by the Seller of a
representation or warranty in a writing furnished pursuant to Subsection
12.03(b) to the extent made as of a date subsequent to the Closing Date, shall
immediately and automatically, without notice or grace period, constitute an
Event of Default with respect to the Seller under this Agreement and the
operative agreement pursuant to any applicable Reconstitution.
SECTION 13. The Seller.
Subsection 13.01 Merger or Consolidation of the Seller.
The Seller shall keep in full force and effect its existence, rights
and franchises as a corporation under the laws of the state of its incorporation
except as permitted herein, and shall obtain and preserve its qualification to
do business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans, and to enable the
Seller to perform its duties under this Agreement.
Any Person into which the Seller may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Seller shall be a party, or any Person succeeding to the business of the Seller,
shall be the successor of the 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
36
successor or surviving Person shall be an institution whose deposits are insured
by the FDIC or a company whose business is the origination and servicing of
mortgage loans and shall be a ▇▇▇▇▇▇ ▇▇▇- or ▇▇▇▇▇▇▇ Mac-approved
seller/servicer.
Subsection 13.02 Limitation on Liability of the Seller and Others.
Neither the Seller nor any of the officers, employees or agents of the
Seller shall be under any liability to the Purchaser for any action taken or for
refraining from the taking of any action in good faith in connection with the
servicing of the Mortgage Loans pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the Seller or
any such person against any breach of warranties or representations made herein,
or failure to perform its obligations in strict compliance with any standard of
care set forth in this Agreement, or any liability which would otherwise be
imposed by reason of any breach of the terms and conditions of this Agreement.
The Seller and any officer, employee or agent of the Seller may rely in good
faith on any document of any kind prima facie properly executed and submitted by
any Person respecting any matters arising hereunder. The Seller shall not be
under any obligation to appear in, prosecute or defend any legal action which is
not incidental to its obligation to sell or duty to service the Mortgage Loans
in accordance with this Agreement and which in its opinion may result in its
incurring any expenses or liability; provided, however, that the Seller may,
with the consent of the Purchaser, undertake any such action which it may deem
necessary or desirable in respect to this Agreement and the rights and duties of
the parties hereto. In such event, the legal expenses and costs of such action
and any liability resulting therefrom shall be expenses, costs and liabilities
for which the Purchaser shall be liable, and the Seller shall be entitled to
reimbursement therefor from the Purchaser upon written demand except when such
expenses, costs and liabilities are subject to the Seller's indemnification
under Subsections 7.03 or 13.01.
SECTION 14. [Reserved].
SECTION 15. Financial Statements. The Seller understands that in
connection with the Purchaser's marketing of the Mortgage Loans, the Purchaser
shall make available to prospective purchasers financial statements of the
Seller and the Seller's parent company, if applicable, for the most recently
completed three fiscal years respecting which such statements are available. The
Seller also shall make available any comparable quarterly financial statements
and other interim statements to the extent such other interim statements have
been prepared by the Seller (and are available upon request to the public at
large). The Seller, if it has not already done so, agrees to furnish promptly to
the Purchaser copies of the statements specified above.
SECTION 16. Mandatory Delivery; Grant of Security Interest. The sale
and delivery of each Mortgage Loan on or before the Closing Date is mandatory,
it being specifically understood and agreed that each Mortgage Loan is unique
and identifiable on the date hereof and that an award of money damages would be
insufficient to compensate the Initial Purchaser for the losses and damages
incurred by the Initial Purchaser (including damages to prospective purchasers
of the Mortgage Loans) in the event of the Seller's failure to deliver (i) each
of the related Mortgage Loans, (ii) one or more Qualified Substitute Mortgage
Loans delivered pursuant to Section 7, or (iii) one or more Mortgage Loans
otherwise acceptable to the Initial
37
Purchaser on or before the Closing Date. The Seller hereby grants to the Initial
Purchaser a lien on and a continuing security interest in each Mortgage Loan and
each document and instrument evidencing each such Mortgage Loan to secure the
performance by the Seller of its obligation hereunder, and the Seller agrees
that it holds such Mortgage Loans in custody for the Initial Purchaser subject
to the Initial Purchaser's (i) right to reject any Mortgage Loan under the terms
of this Agreement, and (ii) obligation to pay the related Purchase Price for the
Mortgage Loans. All rights and remedies of the Purchaser under this Agreement
are distinct from, and cumulative with, any other rights or remedies under this
Agreement or afforded by law or equity and all such rights and remedies may be
exercised concurrently, independently or successively.
SECTION 17. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed, by
registered or certified mail, return receipt requested, or, if by other means,
when received by the other party at the address as follows:
(i) if to the Purchaser:
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(ii) if to the Seller:
First Franklin Financial Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Director, Capital Markets
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 18. Severability Clause. Any part, provision, representation
or warranty of this Agreement which is prohibited or which is held to be void or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any part,
provision, representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall
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.
SECTION 19. 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.
38
SECTION 20. Governing Law. The Agreement shall be construed in
accordance with the laws of the State of New York without regard to any
conflicts of law provisions and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with the laws of the State
of New York, except to the extent preempted by Federal law.
SECTION 21. Intention of the Parties. It is the intention of the
parties that the Initial Purchaser is purchasing, and the Seller is selling, the
Mortgage Loans and not a debt instrument of the Seller or another security.
Accordingly, the parties hereto each intend to treat the transaction for Federal
income tax purposes as a sale by the Seller, and a purchase by the Purchaser, of
the Mortgage Loans. The Initial Purchaser shall have the right to review the
Mortgage Loans and the related Mortgage File to determine the characteristics of
the Mortgage Loans which shall affect the Federal income tax consequences of
owning the Mortgage Loans and the Seller shall cooperate with all reasonable
requests made by the Initial Purchaser in the course of such review.
SECTION 22. Successors and Assigns. This Agreement shall bind and
inure to the benefit of and be enforceable by the Seller and the Purchaser and
the respective successors and assigns of the Seller and the Purchaser. The
Purchaser may assign this Agreement to any Person to whom any Mortgage Loan is
transferred whether pursuant to a sale or financing and to any Person to whom
the servicing or master servicing of any Mortgage Loan is sold or transferred.
Upon any such assignment, the Person to whom such assignment is made shall
succeed to all rights and obligations of the Purchaser under this Agreement to
the extent of the related Mortgage Loan or Mortgage Loans and this Agreement, to
the extent of the related Mortgage Loan or Loans, shall be deemed to be a
separate and distinct Agreement between the Seller and such Purchaser, and a
separate and distinct Agreement between the Seller and each other Purchaser to
the extent of the other related Mortgage Loan or Loans. In the event that this
Agreement is assigned to any Person to whom the servicing or master servicing of
any Mortgage Loan is sold or transferred, the rights and benefits under this
agreement which inure to the Purchaser shall inure to the benefit of both the
Person to whom such Mortgage Loan is transferred and the Person to whom the
servicing or master servicing of the Mortgage Loan has been transferred;
provided that, the right to require a Mortgage Loan to be repurchased by the
Seller pursuant to Subsection 7.03 or 7.04 shall be retained solely by the
Purchaser. This Agreement shall not be assigned, pledged or hypothecated by the
Seller to a third party without the consent of the Purchaser.
SECTION 23. 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 24. Exhibits. The exhibits to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this Agreement.
SECTION 25. Nonsolicitation. The Seller covenants and agrees that it
shall not take any action to solicit the refinancing of any Mortgage Loan
following the date hereof or provide information to any other entity to solicit
the refinancing of any Mortgage Loan; provided that, the foregoing shall not
preclude the Seller from engaging in solicitations to the general
39
public by newspaper, radio, television or other media which are not directed
toward the Mortgagors or from refinancing the Mortgage Loan of any Mortgagor
who, without solicitation, contacts the Seller to request the refinancing of the
related Mortgage Loan.
SECTION 26. 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 27. Reproduction of Documents. This Agreement and all
documents relating thereto, including, without limitation, (a) consents, waivers
and modifications which may hereafter be executed, (b) documents received by any
party at the closing, and (c) financial statements, certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding, whether or not the original is in existence and whether or not such
reproduction was made by a party in the regular course of business, and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
SECTION 28. Further Agreements. The Seller and the Purchaser each
agree to execute and deliver to the other such reasonable and appropriate
additional documents, instruments or agreements as may be necessary or
appropriate to effectuate the purposes of this Agreement.
SECTION 29. Protection of Confidential Information. The Seller agrees
that the Purchaser has or will introduce subsequent Purchasers to the Seller,
that purchasers of the Mortgage Loans are customers of the Purchaser and that
the relationships of the Purchaser to purchasers of the Mortgage Loans are
confidential. The Seller agrees that, for a period of two
40
(2) years following the Closing Date with respect to a subsequent Purchaser, the
Seller will not, for the purpose of purchasing and selling other Mortgage Loans,
communicate with or sell such other mortgage loans to such purchaser of the
Mortgage Loans unless such subsequent Purchaser is independently introduced to
the Seller; provided, however, that the foregoing shall not apply to a purchaser
of the Mortgage Loans that is ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac. The Seller will keep
confidential and will not, without the Purchaser's written consent, divulge to
any party the Purchase Price of the Mortgage Loans, except to the extent that it
is appropriate to do so in working with legal counsel, auditors, taxing
authorities or other governmental agencies.
Seller agrees and acknowledges that as to all nonpublic personal
information received or obtained by it with respect to any Mortgagor: (a) such
information is and shall be held by Seller in accordance with all applicable
law, including but not limited to the privacy provisions of the ▇▇▇▇▇-▇▇▇▇▇-
Bliley Act of 1999; (b) such information is in connection with a proposed or
actual secondary market sale related to a transaction of the Mortgagor for the
purposes of 16 C.F.R., Section 313.14(a)(3); and (c) Seller is hereby prohibited
from disclosing or using any such information internally other than to carry out
the express provisions of this Agreement.
SECTION 30. Survival. The Seller agrees that the representations,
warranties and agreements made by the Seller herein and in any certificate or
other instrument delivered pursuant hereto shall be deemed to be relied upon by
the Purchaser, notwithstanding any investigation heretofore or hereafter made by
the Purchaser or on the Purchaser's behalf, and that the representations,
warranties and agreements made by the Seller herein or in any such certificate
or other instrument shall survive the delivery and payment for the Mortgage
Loans.
SECTION 31. Third Party Beneficiary. The Class A Certificate Insurer
shall be a third party beneficiary of this Agreement with the right to enforce
the obligations of the parties hereto as though it was a party hereto until the
later of (i) the Class A Certificate Guaranty Insurance Policy remains in effect
and (ii) all amounts owed the Class A Certificate Insurer under the Policy and
Insurance Agreement have been paid.
41
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly authorized
as of the date first above written.
FIRST FRANKLIN FINANCIAL CORPORATION
(Seller)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS, INC.
(Initial Purchaser)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT 1
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, which shall be available for inspection by the
Purchaser and which shall be retained by the Seller or delivered to the
Custodian:
(1) Mortgage Loan Documents.
(2) Residential loan application.
(3) Mortgage Loan closing statement.
(4) Verification of employment and income (other than with respect to
the No Income Verification and No Documentation Programs of the
Seller).
(5) Verification of acceptable evidence of source and amount of
downpayment.
(6) Credit report on Mortgagor.
(7) Residential appraisal report.
(8) Photograph of the Mortgaged Property.
(9) Survey of the Mortgaged Property.
(10) Copy of each instrument necessary to complete identification of
any exception set forth in the exception schedule in the title
policy, i.e., map or plat, restrictions, easements, sewer
agreements, home association declarations, etc.
(11) All required disclosure statements and statement of Mortgagor
confirming receipt thereof.
(12) If available, termite report, structural engineer's report, water
potability and septic certification.
(13) Sales Contract, if applicable.
(14) Hazard insurance policy.
(15) Tax receipts, insurance premium receipts, ledger sheets, payment
history from date of origination, insurance claim files,
correspondence, current and historical computerized data files,
and all other processing, underwriting and closing papers and
records which are customarily contained in a mortgage loan file
and which are required to document the Mortgage Loan or to
service the Mortgage Loan.
Exhibit 1-1
(16) Amortization schedule, if available.
(17) Payment history for Mortgage Loans that have been closed for more
than ninety (90) days.
Exhibit 1-2
SCHEDULE I
FINAL MORTGAGE LOAN SCHEDULE
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SCHEDULE II
PREPAYMENT CHARGE SCHEDULE
[INTENTIONALLY OMITTED]