Common use of Repurchase or Substitution of Mortgage Loans by the Sellers- Assignment of Interest in Pledged Assets Clause in Contracts

Repurchase or Substitution of Mortgage Loans by the Sellers- Assignment of Interest in Pledged Assets. (a) Upon discovery or receipt of notice of any materially defective document in, or that a document is missing from, a Mortgage File or of the breach by a Seller of any representation, warranty or covenant under the Mortgage Loan Purchase Agreement in respect of any Mortgage Loan which materially adversely affects the value of such Mortgage Loan or the interest therein of the Certificateholders, by the Trustee, the Master Servicer or the Depositor shall promptly notify such Seller and the Trustee, the Master Servicer and the Depositor of such defect, missing document or breach and request that such Seller deliver such missing document or cure such defect or breach within 90 days from the date such Seller was notified of such missing document, defect or breach, and if such Seller does not deliver such missing document or cure such defect or breach in all material respects during such period, the Master Servicer (or, in accordance with Section 3.02(b), the Trustee) shall enforce the obligations of such Seller under the Mortgage Loan Purchase Agreement to repurchase such Mortgage Loan from the Trust Fund at the Purchase Price within 90 days after the date on which such Seller was notified (subject to Section 2.03(d)) of such missing document, defect or breach, if and to the extent that such Seller is obligated to do so under the Mortgage Loan Purchase Agreement. If such defect or breach can ultimately be cured but is not reasonably expected to be cured within the 90-day period, then the applicable Seller shall have such additional time, if any, as is reasonable, to cure such defect or breach, provided that the applicable Seller has commenced curing or correcting such defect or breach and is diligently pursuing same. The Purchase Price for the repurchased Mortgage Loan shall be deposited in the Collection Account, within three Business Days of expiration of the applicable time period referred to above, and the Trustee, upon receipt of written certification from the Master Servicer of such deposit, shall release to the applicable Seller the related Mortgage File and shall execute and deliver such instruments of transfer or assignment, in each case without recourse, as such Seller shall furnish to it and as shall be necessary to vest in such Seller any Mortgage Loan released pursuant hereto, and the Trustee shall have no further responsibility with regard to such Mortgage File. In lieu of repurchasing any such Mortgage Loan as provided above, if so provided in the related Mortgage Loan Purchase Agreement, a Seller may cause such Mortgage Loan to be removed from the Trust Fund (in which case it shall become a Defective Mortgage Loan) and substitute one or more Eligible Substitute Mortgage Loans in the manner and subject to the limitations set forth in Section 2.03(d). If the breach of representation and warranty that gave rise to the obligation to repurchase or substitute a Mortgage Loan pursuant to Section 3.2 of the Mortgage Loan Purchase Agreement was the representation and warranty set forth in clause (xlvi) of Section 3.1 thereof, then the Master Servicer shall request that PHH Mortgage pay to the Trust Fund, concurrently with and in addition to the remedies provided in the preceding four sentences, an amount equal to any liability, penalty or expense that was actually incurred and paid out of or on behalf of the Trust Fund, and that directly resulted from such breach, or if incurred and paid by the Trust Fund thereafter, concurrently with such payment. In furtherance of the foregoing, if the Seller that repurchases the Mortgage Loan is not a member of MERS and the Mortgage is registered on the MERS® System, the Master Servicer, at its own expense and without any right of reimbursement, shall cause MERS to execute and deliver an assignment of the Mortgage in recordable form to transfer the Mortgage from MERS to such Seller and shall cause such Mortgage to be removed from registration on the MERS® System in accordance with MERS’ rules and regulations. It is understood and agreed that the obligation of a Seller to cure or to repurchase (or to substitute for) any Mortgage Loan as to which a document is missing, a material defect in a constituent document exists or as to which such a breach has occurred and is continuing shall constitute the sole remedy respecting such omission, defect or breach available to the Depositor, the Master Servicer or the Trustee on behalf of the Certificateholders. (b) Within 90 days of the earlier of discovery by the Master Servicer or receipt of notice by the Master Servicer of the breach of any representation, warranty or covenant of the Master Servicer set forth in Section 2.04 which materially and adversely affects the interests of the Certificateholders in any Mortgage Loan, the Master Servicer shall cure such breach in all material respects. (c) Any substitution of Eligible Substitute Mortgage Loans for Defective Mortgage Loans made pursuant to Section 2.03(a), in the case of a Seller, must be effected prior to the date which is two years after the Closing Date. As to any Defective Mortgage Loan for which a Seller substitutes a Eligible Substitute Mortgage Loan or Loans, such substitution shall be effected by such Seller delivering to the Trustee, for such Eligible Substitute Mortgage Loan or Loans, the Mortgage Note, the Mortgage, the Assignment to the Trustee, and such other documents and agreements, with all necessary endorsements thereon, as are required by Section 2.01, together with an Officers’ Certificate providing that each such Eligible Substitute Mortgage Loan satisfies the definition thereof and specifying the Substitution Shortfall Amount (as described below), if any, in connection with such substitution. The Trustee shall acknowledge receipt of the original Mortgage Note for such Eligible Substitute Mortgage Loan or Loans and, within ten Business Days thereafter, review such documents in the manner specified in Section 2.02 and deliver to the Depositor and the Master Servicer, with respect to such Eligible Substitute Mortgage Loan or Loans, a certification substantially in the form attached hereto as Exhibit I-1, with any applicable exceptions noted thereon. Within one year of the date of substitution, the Trustee shall deliver to the Depositor and the Master Servicer a certification substantially in the form of Exhibit I-2 hereto with respect to such Eligible Substitute Mortgage Loan or Loans, with any applicable exceptions noted thereon. Monthly Payments due with respect to Eligible Substitute Mortgage Loans in the month of substitution are not part of the Trust Fund and will be retained by the related Seller. For the month of substitution, distributions to Certificateholders will reflect the Monthly Payment due on such Defective Mortgage Loan on or before the Due Date in the month of substitution, and the related Seller shall thereafter be entitled to retain all amounts subsequently received in respect of such Defective Mortgage Loan. The Depositor shall give or cause to be given written notice to the Certificateholders that such substitution has taken place, shall amend the Mortgage Loan Schedule to reflect the removal of such Defective Mortgage Loan from the terms of this Agreement and the substitution of the Eligible Substitute Mortgage Loan or Loans and shall deliver a copy of such amended Mortgage Loan Schedule to the Trustee. Upon such substitution, such Eligible Substitute Mortgage Loan or Loans shall constitute part of the Mortgage Pool and shall be subject in all respects to the terms of this Agreement and, in the case of a substitution effected by a Seller, the Mortgage Loan Purchase Agreement, including, in the case of a substitution effected by a Seller, all applicable representations and warranties thereof included in the Mortgage Loan Purchase Agreement in each case as of the date of substitution. For any month in which a Seller substitutes one or more Eligible Substitute Mortgage Loans for one or more Defective Mortgage Loans, the Master Servicer will determine the amount (the “Substitution Shortfall Amount”), if any, by which the aggregate principal balance of all such Eligible Substitute Mortgage Loans as of the date of substitution is less than the aggregate Stated Principal Balance of all such Defective Mortgage Loans (in each case after application of the principal portion of the Monthly Payments due in the month of substitution that are to be distributed to the Certificateholders in the month of substitution). On the date of such substitution, the applicable Seller will deliver or cause to be delivered to the Master Servicer for deposit in the Collection Account an amount equal to the Substitution Shortfall Amount, if any, and the Trustee, upon receipt of the related Eligible Substitute Mortgage Loan or Loans and certification by the Master Servicer of such deposit, shall release to the applicable Seller the related Mortgage File or Files and shall execute and deliver such instruments of transfer or assignment, in each case without recourse, as such Seller shall deliver to it and as shall be necessary to vest therein any Defective Mortgage Loan released pursuant hereto. In addition, the applicable Seller shall obtain at its own expense and deliver to the Trustee an Opinion of Counsel to the effect that such substitution will not cause (a) any federal tax to be imposed on the Trust Fund, including without limitation, any federal tax imposed on “prohibited transactions” under Section 860F(a)(1) of the Code or on “contributions after the startup date” under Section 860G(d)(1) of the Code, or (b) any REMIC to fail to qualify as a REMIC at any time that any Certificate is outstanding. (d) Upon discovery by the Depositor, a Seller, the Master Servicer or the Trustee that any Mortgage Loan does not constitute a “qualified mortgage” within the meaning of Section 860G(a)(3) of the Code, the party discovering such fact shall within two Business Days give written notice thereof to the other parties. In connection therewith, the related Seller shall repurchase or, subject to the limitations set forth in Section 2.03(c), substitute one or more Eligible Substitute Mortgage Loans for the affected Mortgage Loan within 60 days of the earlier of discovery or receipt of such notice with respect to such affected Mortgage Loan. Such repurchase or substitution shall be made by the related Seller, as the case may be, if the affected Mortgage Loan’s status as a non-qualified mortgage is or results from a breach of any representation, warranty or covenant made by the related Seller under the Mortgage Loan Purchase Agreement. Any such repurchase or substitution shall be made in the same manner as set forth in Sections 2.03(a), if made by the related Seller. The Trustee shall reconvey to the related Seller the Mortgage Loan to be released pursuant hereto in the same manner, and on the same terms and conditions, as it would a Mortgage Loan repurchased for breach of a representation or warranty. (e) The Depositor hereby assigns to the Trustee its security interest in and to any Pledged Assets, its right to receive amounts due or to become due in respect of any Pledged Assets, all of its rights in each Pledged Asset Agreement, and its rights as beneficiary under the Limited Purpose Surety Bond in respect of any Pledged Asset Loans. With respect to any Pledged Asset Loan, the Pledged Asset Servicer shall cause to be filed in the appropriate recording office a Form UCC-3 giving notice of the assignment of the related security interest to the Trust Fund and shall thereafter cause the timely filing of all necessary continuation statements with regard to such financing statements.

Repurchase or Substitution of Mortgage Loans by the Sellers- Assignment of Interest in Pledged Assets. (a) Upon discovery or receipt of notice of any materially defective document in, or that a document is missing from, a Mortgage File or of the breach by a Seller of any representation, warranty or covenant under the Mortgage Loan Purchase Agreement in respect of any Mortgage Loan which materially adversely affects the value of such Mortgage Loan or the interest therein of the Certificateholders, by the Trustee, the Master Servicer or the Depositor shall promptly notify such Seller and the Trustee, the Master Servicer and the Depositor of such defect, missing document or breach and request that such Seller deliver such missing document or cure such defect or breach within 90 days from the date such Seller was notified of such missing document, defect or breach, and if such Seller does not deliver such missing document or cure such defect or breach in all material respects during such period, the Master Servicer (or, in accordance with Section 3.02(b), the Trustee) shall enforce the obligations of such Seller under the Mortgage Loan Purchase Agreement to repurchase such Mortgage Loan from the Trust Fund at the Purchase Price within 90 days after the date on which such Seller was notified (subject to Section 2.03(d)) of such missing document, defect or breach, if and to the extent that such Seller is obligated to do so under the Mortgage Loan Purchase Agreement. If such defect or breach can ultimately be cured but is not reasonably expected to be cured within the 90-day period, then the applicable Seller shall have such additional time, if any, as is reasonable, to cure such defect or breach, provided that the applicable Seller has commenced curing or correcting such defect or breach and is diligently pursuing same. The Purchase Price for the repurchased Mortgage Loan shall be deposited in the Collection Account, within three Business Days of expiration of the applicable time period referred to above, and the Trustee, upon receipt of written certification from the Master Servicer of such deposit, shall release to the applicable Seller the related Mortgage File and shall execute and deliver such instruments of transfer or assignment, in each case without recourse, as such Seller shall furnish to it and as shall be necessary to vest in such Seller any Mortgage Loan released pursuant hereto, and the Trustee shall have no further responsibility with regard to such Mortgage File. In lieu of repurchasing any such Mortgage Loan as provided above, if so provided in the related Mortgage Loan Purchase Agreement, a Seller may cause such Mortgage Loan to be removed from the Trust Fund (in which case it shall become a Defective Mortgage Loan) and substitute one or more Eligible Substitute Mortgage Loans in the manner and subject to the limitations set forth in Section 2.03(d). If the breach of representation and warranty that gave rise to the obligation to repurchase or substitute a Mortgage Loan pursuant to Section 3.2 of the Mortgage Loan Purchase Agreement was the representation and warranty set forth in clause (xlvi) of Section 3.1 thereof, then the Master Servicer shall request that PHH Mortgage pay to the Trust Fund, concurrently with and in addition to the remedies provided in the preceding four sentences, an amount equal to any liability, penalty or expense that was actually incurred and paid out of or on behalf of the Trust Fund, and that directly resulted from such breach, or if incurred and paid by the Trust Fund thereafter, concurrently with such payment. In furtherance of the foregoing, if the Seller that repurchases the Mortgage Loan is not a member of MERS and the Mortgage is registered on the MERS® System, the Master Servicer, at its own expense and without any right of reimbursement, shall cause MERS to execute and deliver an assignment of the Mortgage in recordable form to transfer the Mortgage from MERS to such Seller and shall cause such Mortgage to be removed from registration on the MERS® System in accordance with MERS’ rules and regulations. It is understood and agreed that the obligation of a Seller to cure or to repurchase (or to substitute for) any Mortgage Loan as to which a document is missing, a material defect in a constituent document exists or as to which such a breach has occurred and is continuing shall constitute the sole remedy respecting such omission, defect or breach available to the Depositor, the Master Servicer or the Trustee on behalf of the Certificateholders. (b) Within 90 days of the earlier of discovery by the Master Servicer or receipt of notice by the Master Servicer of the breach of any representation, warranty or covenant of the Master Servicer set forth in Section 2.04 which materially and adversely affects the interests of the Certificateholders in any Mortgage Loan, the Master Servicer shall cure such breach in all material respects. (c) Any substitution of Eligible Substitute Mortgage Loans for Defective Mortgage Loans made pursuant to Section 2.03(a), in the case of a Seller, must be effected prior to the date which is two years after the Closing Date. As to any Defective Mortgage Loan for which a Seller substitutes a Eligible Substitute Mortgage Loan or Loans, such substitution shall be effected by such Seller delivering to the Trustee, for such Eligible Substitute Mortgage Loan or Loans, the Mortgage Note, the Mortgage, the Assignment to the Trustee, and such other documents and agreements, with all necessary endorsements thereon, as are required by Section 2.01, together with an Officers’ Certificate providing that each such Eligible Substitute Mortgage Loan satisfies the definition thereof and specifying the Substitution Shortfall Amount (as described below), if any, in connection with such substitution. The Trustee shall acknowledge receipt of the original Mortgage Note for such Eligible Substitute Mortgage Loan or Loans and, within ten Business Days thereafter, review such documents in the manner specified in Section 2.02 and deliver to the Depositor and the Master Servicer, with respect to such Eligible Substitute Mortgage Loan or Loans, a certification substantially in the form attached hereto as Exhibit I-1, with any applicable exceptions noted thereon. Within one year of the date of substitution, the Trustee shall deliver to the Depositor and the Master Servicer a certification substantially in the form of Exhibit I-2 hereto with respect to such Eligible Substitute Mortgage Loan or Loans, with any applicable exceptions noted thereon. Monthly Payments due with respect to Eligible Substitute Mortgage Loans in the month of substitution are not part of the Trust Fund and will be retained by the related Seller. For the month of substitution, distributions to Certificateholders will reflect the Monthly Payment due on such Defective Mortgage Loan on or before the Due Date in the month of substitution, and the related Seller shall thereafter be entitled to retain all amounts subsequently received in respect of such Defective Mortgage Loan. The Depositor shall give or cause to be given written notice to the Certificateholders that such substitution has taken place, shall amend the Mortgage Loan Schedule to reflect the removal of such Defective Mortgage Loan from the terms of this Agreement and the substitution of the Eligible Substitute Mortgage Loan or Loans and shall deliver a copy of such amended Mortgage Loan Schedule to the Trustee. Upon such substitution, such Eligible Substitute Mortgage Loan or Loans shall constitute part of the Mortgage Pool and shall be subject in all respects to the terms of this Agreement and, in the case of a substitution effected by a Seller, the Mortgage Loan Purchase Agreement, including, in the case of a substitution effected by a Seller, all applicable representations and warranties thereof included in the Mortgage Loan Purchase Agreement in each case as of the date of substitution. For any month in which a Seller substitutes one or more Eligible Substitute Mortgage Loans for one or more Defective Mortgage Loans, the Master Servicer will determine the amount (the “Substitution Shortfall Amount”), if any, by which the aggregate principal balance of all such Eligible Substitute Mortgage Loans as of the date of substitution is less than the aggregate Stated Principal Balance of all such Defective Mortgage Loans (in each case after application of the principal portion of the Monthly Payments due in the month of substitution that are to be distributed to the Certificateholders in the month of substitution). On the date of such substitution, the applicable Seller will deliver or cause to be delivered to the Master Servicer for deposit in the Collection Account an amount equal to the Substitution Shortfall Amount, if any, and the Trustee, upon receipt of the related Eligible Substitute Mortgage Loan or Loans and certification by the Master Servicer of such deposit, shall release to the applicable Seller the related Mortgage File or Files and shall execute and deliver such instruments of transfer or assignment, in each case without recourse, as such Seller shall deliver to it and as shall be necessary to vest therein any Defective Mortgage Loan released pursuant hereto. In addition, the applicable Seller shall obtain at its own expense and deliver to the Trustee an Opinion of Counsel to the effect that such substitution will not cause (a) any federal tax to be imposed on the Trust Fund, including without limitation, any federal tax imposed on “prohibited transactions” under Section 860F(a)(1) of the Code or on “contributions after the startup date” under Section 860G(d)(1) of the Code, or (b) any the REMIC to fail to qualify as a REMIC at any time that any Certificate is outstanding. (d) Upon discovery by the Depositor, a Seller, the Master Servicer or the Trustee that any Mortgage Loan does not constitute a “qualified mortgage” within the meaning of Section 860G(a)(3) of the Code, the party discovering such fact shall within two Business Days give written notice thereof to the other parties. In connection therewith, the related Seller shall repurchase or, subject to the limitations set forth in Section 2.03(c), substitute one or more Eligible Substitute Mortgage Loans for the affected Mortgage Loan within 60 days of the earlier of discovery or receipt of such notice with respect to such affected Mortgage Loan. Such repurchase or substitution shall be made by the related Seller, as the case may be, if the affected Mortgage Loan’s status as a non-qualified mortgage is or results from a breach of any representation, warranty or covenant made by the related Seller under the Mortgage Loan Purchase Agreement. Any such repurchase or substitution shall be made in the same manner as set forth in Sections 2.03(a), if made by the related Seller. The Trustee shall reconvey to the related Seller the Mortgage Loan to be released pursuant hereto in the same manner, and on the same terms and conditions, as it would a Mortgage Loan repurchased for breach of a representation or warranty. (e) The Depositor hereby assigns to the Trustee its security interest in and to any Pledged Assets, its right to receive amounts due or to become due in respect of any Pledged Assets, all of its rights in each Pledged Asset Agreement, and its rights as beneficiary under the Limited Purpose Surety Bond in respect of any Pledged Asset Loans. With respect to any Pledged Asset Loan, the Pledged Asset Servicer shall cause to be filed in the appropriate recording office a Form UCC-3 giving notice of the assignment of the related security interest to the Trust Fund and shall thereafter cause the timely filing of all necessary continuation statements with regard to such financing statements.