EXHIBIT 4.3
NORWEST MORTGAGE, INC.
Seller of the Mortgage Loans,
and
[-------------]
Purchaser of the Mortgage Loans
LOAN PURCHASE AGREEMENT
Dated as of ___________, 199_
LOAN PURCHASE AGREEMENT
Loan Purchase Agreement (the "Agreement") dated as of __________, 199_
between Norwest Mortgage, Inc. (the "Seller") and Directors Asset Conduit
Corporation (the "Purchaser").
BACKGROUND
The following statements are the mutual representations of the parties
with respect to certain factual matters forming the basis for this Agreement and
are an integral part of this Agreement.
A. MORTGAGE LOANS. The Seller possesses (i) the notes or other
evidence of indebtedness (the "Mortgage Notes") under the home equity lines of
credit so indicated on Schedule I hereto referred to below (the "Mortgage
Loans"), (ii) the mortgages (the "Mortgages") on the properties (the "Mortgaged
Properties") securing such Mortgage Loans, including rights to (a) any property
acquired by foreclosure or deed in lieu of foreclosure or otherwise, and (b) the
proceeds of any insurance policies covering the Mortgage Loans or the Mortgaged
Properties or the obligors on the Mortgage Loans.
B. SALE OF MORTGAGE LOANS. The parties desire that the Seller sell the
Mortgage Loans ([inclusive][exclusive] of the obligation to fund future advances
under each Loan Agreement after the Closing Date) to the Purchaser pursuant to
the terms of this Agreement. Pursuant to the terms of a [__________] Agreement
dated as of ________, 199_ (the "[_________] Agreement") among the Purchaser, as
depositor, [________], as servicer, and [__________], as trustee (the
"Trustee"), the Purchaser will convey the Mortgage Loans ([inclusive][exclusive]
of the obligation to fund future advances under each Loan Agreement after the
Closing Date) to [____________] Home Equity Loan Trust 199__-__ (the "Trust").
C. DEFINITIONS. Capitalized terms not specifically defined in this
Agreement which are defined in the [_____________ _____] Agreement shall have
the same meaning when used herein as when used in the [____________________].
STATEMENT OF AGREEMENT
The parties, each in consideration of the promises of the other and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, hereby agree as follows:
Section 1. SALE OF MORTGAGE LOANS. The Seller, concurrently with the
execution and delivery of this Agreement, does hereby sell, assign, set over,
and otherwise convey to the Purchaser, without recourse, all of its right, title
and interest in, to and under the following, whether now existing or hereafter
acquired and wherever located: (i) the Mortgage Loans, including the Asset
Balance (including all Additional Balances) and all collections of interest and
principal in respect thereof received on or after the Cut-off Date (except
collections in respect of interest for the period from [_____________] to
[_____________]); (ii) property which secured a Mortgage Loan and which has been
acquired by foreclosure or deed in lieu of foreclosure; (iii) the interest of
the Seller in any insurance policies in respect of the Mortgage Loans; (iv) the
Seller's rights under the [_________ _________]; and (v) all proceeds of the
foregoing[; provided, however, that the Purchaser does not assume the obligation
under each Loan Agreement (including, without limitation, such obligation under
the Loan Agreement for each Mortgage Loan after the Closing Date) to fund future
advances to the Mortgagor thereunder, and the Purchaser shall not be obligated
to fund any such future advances]. [Future advances made to a Mortgagor under a
Loan Agreement (each an "Additional Balance") shall be part of the related Asset
Balance. The Seller shall give the Purchaser monthly notice of such advances on
or prior to each Determination Date.]
In connection with such conveyance, the Seller further agrees, at its
own expense, on or prior to the date of this Agreement (a) to indicate in its
books and records that the Mortgage Loans have been sold to the Purchaser
pursuant to this Agreement and (b) to deliver to the Purchaser a computer file
or microfiche list containing a true and complete list of all such Mortgage
Loans specifying for each such Mortgage Loan, as of the Cut-off Date, (i) its
account number, (ii) its delinquency status, and (iii) the aggregate amount
outstanding under the Mortgage Loan as of the Cut-off Date. Such file, which
forms a part of Exhibit __ to the [_________] Agreement, shall also be marked as
Schedule I to this Agreement and is hereby incorporated into and made a part of
this Agreement.
In connection with such sale and assignment by the Seller to the
Purchaser, the Seller on or prior to the Closing Date shall deliver to the
Purchaser the following documents or instruments with respect to each Mortgage
Loan so transferred and assigned:
(i) The original Mortgage Note endorsed without recourse to
[____________________];
(ii) the original recorded Assignment of Mortgage from
[____________________] in recordable form[, which, in the case of any
Mortgage Loan secured by Mortgaged Property located in the State of
New York, shall state that such Assignment of Mortgage is not subject
to the requirements of Section 275 of the Real Property Law because it
is an assignment within the secondary mortgage market];
(iii) the original recorded Mortgage with an evidence of a
recording indicated thereon or, if, in connection with any Mortgage
Loan, the Seller cannot deliver the original Mortgage with evidence of
recording thereon on or prior to the Closing Date because such
original Mortgage has been lost, the Seller shall deliver or cause to
be delivered to the Purchaser a true and correct copy of such
Mortgage, together with a certificate by the appropriate county
recording office where such Mortgage is recorded;
(iv) the title search, and either a full appraisal or a
drive-by inspection, obtained by the originator at the time the
Mortgagor applied for the Mortgage Loan;
(v) with respect to each Mortgage Loan listed on Schedule
II, a title policy;
(vi) the original of any guaranty executed in connection
with the Mortgage Note;
(vii) the original of each assumption, modification,
consolidation or substitution agreement, if any, relating to the
Mortgage Loan; and
(viii) any security agreement, chattel mortgage or
equivalent instrument executed in connection with the Mortgage.
The Seller further hereby confirms to the Purchaser that it has caused
the portions of the Electronic Ledger relating to the Mortgage Loans maintained
by the Servicer to be clearly and unambiguously marked to indicate that the
Mortgage Loans have been sold to the Purchaser.
The Purchaser hereby acknowledges its acceptance of all right, title
and interest to the property, now existing and hereafter created, conveyed to it
pursuant to this Section 1.
The parties hereto intend that the transaction set forth herein be a
sale by the Seller to the Purchaser of all the Seller's right, title and
interest in and to the Mortgage Loans and other property described above. In the
event the transaction set forth herein is deemed not to be a sale, the Seller
hereby grants to the Purchaser a security interest in all of the Seller's right,
title and interest in, to and under the Mortgage Loans whether now existing or
hereafter created, all monies due or to become due on the Mortgage Loans and all
proceeds of any thereof; and this Agreement shall constitute a security
agreement under applicable law.
In connection with such sale, assignment, and conveyance, the Seller
has filed, in the appropriate office in the State of [______], a UCC-1 financing
statement executed by the Seller as seller, naming the Purchaser as purchaser
and listing the Mortgage Loans and the other property described above as
collateral. In connection with such filing, the Seller agrees that it shall
cause to be filed all necessary continuation statements thereof and to take or
cause to be taken such actions and execute such documents as are necessary to
perfect and protect the Purchaser's interest in the Mortgage Loans and the other
property described above.
(b) [No assignment from the Seller of any Mortgage Loan shall be
required to be recorded in any public real property or other records so long as
no Assignment Event shall have occurred. Upon the occurrence of an Assignment
Event, at the request of the Purchaser, the Seller shall as promptly as
practicable, (a) endorse, or cause to be endorsed, each Mortgage Note without
recourse to the order of the Trustee, on behalf of the Certificateholders, and
(b) prepare and execute, or cause to be prepared and executed, an assignment to
the Trustee in recordable form for each Mortgage Loan sold by the Seller
hereunder and deliver such endorsed Mortgage Notes and assignments to the
Purchaser.]
Section 2. PAYMENT OF PURCHASE PRICE FOR CUT-OFF DATE ASSET BALANCES
[AND ADDITIONAL BALANCES].
(a) [The purchase price ("Purchase Price") for each Mortgage Loan, and
for each Additional Balance, shall be the Cut-off Date Asset Balance thereof (or
the principal amount of the draw under the Credit Line Agreement, in the case of
an Additional Balance) on the due date for payment for such Mortgage Loan, in
the case of a Mortgage Loan, or the date of the creation of the Additional
Balance, in the case of an Additional Balance. In consideration of the sale of
the Mortgage Loans (including Additional Balances) from the Seller to the
Purchaser on the Closing Date, the Purchaser agrees to pay to the Seller on the
date of this Agreement, by book-entry transfer or otherwise on the books and
records of the Purchaser and the Seller, an amount equal to $[_____________].
The remainder of the Purchase Price of the Mortgage Loans sold to the Purchaser
as of the Closing Date shall be contributed as capital by the Seller to the
Purchaser.
(b) The Purchase Price for Mortgage Loans and Additional Balances
shall be paid or provided for on the Closing Date and each subsequent date on
which Additional Balances are drawn on the Credit Line Agreements in either of
the following ways: (i) by payment in cash of immediately available funds; or
(ii) in the event that the total Purchase Price is not paid in full in cash by
the Purchaser on the date of purchase, the Seller shall convey the amount of
such cash shortfall as a capital contribution to the Purchaser. The monthly
notice delivered by the Seller to the Purchaser pursuant to Section 1 of this
Agreement shall indicate the amount of the Purchase Price for Additional
Balances paid by the Purchaser during the prior month in cash and the amount of
capital contributions by the Seller to the Purchaser.]
Section 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
hereby makes to and for the benefit of the Purchaser each of the following
representations and warranties:
(a) The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of
[______________] and has the power to own its property and to conduct
its business as it is presently owned and as such business is
presently conducted;
(ii) The Seller is neither required to qualify nor to
register as a foreign corporation in any state in order to conduct its
business, and is not required under federal or state law to obtain any
licenses or approvals with respect to such business except such as
have been obtained prior to the Closing Date;
(iii) The Seller has the power and authority to make,
execute, deliver and perform its obligations under this Agreement and
all of the transactions contemplated under this Agreement, and has
taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement;
(iv) The Seller is not required to obtain the consent of any
other party or any consent, license, approval or authorization from,
or registration or declaration with, any governmental authority,
bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement, except such
as have been obtained or filed, as the case may be, prior to the
Closing Date;
(a) The execution, delivery and performance of this
Agreement by the Seller will not violate or conflict with any
provision of any existing law or regulation or any order or decree of
any court applicable to the Seller or any provision of the
[Certificate of Incorporation] [Articles of Incorporation] [Articles
of Association] or By-laws of the Seller, or constitute a material
breach of any mortgage, indenture, contract or other agreement to
which the Seller is a party or by which the Seller may be bound;
(v) There are no proceedings or investigations pending or,
to the best knowledge of the Seller, threatened, before any court,
regulatory body, administrative agency, arbitrator or other tribunal
or governmental instrumentality (i) asserting the invalidity of this
Agreement, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement, (iii) seeking any
determination or ruling that, in the reasonable judgment of the
Seller, would materially and adversely affect the transactions
contemplated by this Agreement or the performance by the Seller of its
obligations under this Agreement, (iv) seeking any determination or
ruling that would materially and adversely affect the validity or
enforceability of this Agreement, (v) seeking to affect adversely the
Federal income tax attributes of the Trust, or (vi) seeking to impose
any tax upon the Seller as a result of the sale of the Mortgage Loans
pursuant to this Agreement; and
(vi) The Seller is not insolvent and will not be insolvent
following the consummation on the Closing Date of the transactions
contemplated by this Agreement and has not entered into such
transactions, including the transfer by the Seller to the Purchaser of
the property specified in Section 1, in contemplation of insolvency or
with a view to hindering its creditors.
The representations and warranties set forth in this Section 3 shall
survive the sale of the Mortgage Loans to the Purchaser and the transfer of the
Mortgage Loans by the Purchaser to the Trust and the delivery of the Mortgage
Files to the Trustee. Upon discovery by the Seller or the Purchaser of a breach
of any of the foregoing representations and warranties, the party discovering
such breach shall give prompt written notice thereof to the other party.
Section 4. REPRESENTATIONS AND WARRANTIES OF THE SELLER REGARDING THIS
AGREEMENT AND THE MORTGAGE LOANS: REPURCHASE OF CERTAIN MORTGAGE LOANS. The
Seller represents and warrants to the Purchaser as of the Transfer Date with
respect to each Mortgage Loan sold to the Purchaser (except as otherwise
expressly stated) that, as to each Mortgage Loan or its related Asset Balance:
(a) this Agreement constitutes a legal, valid and binding
obligation of the Seller, enforceable against the Seller in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect affecting the enforcement of
creditors' rights in general and except as such enforceability may be
limited by general principles of equity (whether considered in a
proceeding at law or in equity);
(ii) this Agreement constitutes a valid sale and assignment
to the Purchaser of all right, title and interest of the Seller in and
to the Mortgage Loans, all monies due or to become due with respect
thereto, and all proceeds of such Mortgage Loans;
(iii) the information set forth with respect to each
Mortgage Loan on Schedule I hereto was true and correct in all
material respects as of the date or dates respecting which such
information is furnished;
(iv) immediately prior to the sale of the Mortgage Loans to
the Purchaser, the Seller was the sole owner and holder of the
Mortgage Loans, free and clear of any and all liens, pledges,
participations, charges or security interests of any nature
whatsoever, and had full right and authority, subject to no interest
or participation of, or agreement with, any other party, to sell and
assign the same;
(a) each Mortgage evidences a valid, subsisting and
enforceable first or second lien on the Mortgaged Property therein
described, which lien secures the indebtedness outstanding under the
Mortgage Loan as of the Cut-off Date and the indebtedness thereafter
incurred as a result of any Additional Balances created under such
Mortgage Loan subsequent to the Cut-off Date; such Mortgaged Property
is free and clear of all encumbrances and liens having priority over
the lien of the related Mortgage except for (A) if such lien is a
second lien, the first lien on such Mortgaged Property and (B) such
other encumbrances and liens to which like properties are commonly
subject and that are commonly acceptable to home equity mortgage
lenders in the jurisdiction where the related Mortgaged Property is
located that do not individually or in the aggregate materially affect
the benefits of the security intended to be provided by the Mortgage;
[with respect to each Mortgage Loan secured by Mortgaged Property
located in the State of Connecticut, subsequent to the recording of
the related original Mortgage, the Seller has not received written
notice of any mortgage, lien, attachment, lis pendens, legal
proceedings or adjudication against such Mortgaged Property; with
respect to each Mortgage Loan secured by Mortgaged Property located in
the State of New York, subsequent to the recording of the related
original Mortgage, the Seller has not received written notice of any
mechanic's lien filed against the property pursuant to the New York
Lien Law;] any security agreement, chattel mortgage or equivalent
document related to, and delivered to the Purchaser in connection
with, such Mortgage Loan establishes a valid and subsisting first or
second lien on the property described therein; and the terms of the
Mortgage, and any security agreement, chattel mortgage or equivalent
document relating to such Mortgage, may be enforced by the Purchaser
and its successors and assigns;
(v) the Seller has not impaired, waived, altered or modified
the related Mortgage or Mortgage Note in any material respect, except
by a written instrument that has been recorded, or satisfied, canceled
or subordinated such Mortgage in whole or in part, released the
Mortgaged Property in whole or in part from the lien of such Mortgage,
or executed any instrument of release, cancellation, modification or
satisfaction with respect to such Mortgage;
(vi) there are no defaults in complying with the terms of
any Mortgage, and all taxes, governmental assessments, insurance
premiums, and water, sewer and municipal charges, if applicable, that
previously became due and owing have been paid; the Seller has not
advanced funds, or induced, solicited or knowingly received any
advance of funds by a party other than the Mortgagor, directly or
indirectly, for the payment of any amount required by the Mortgage;
(vii) there is no proceeding pending or threatened for the
total or partial condemnation of any Mortgaged Property; each
Mortgaged Property is undamaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty, so as to have a
material adverse effect on the value of the related Mortgaged Property
as security for the related Mortgage Loan or the use for which the
premises were intended; and no Mortgaged Property is located on a
hazardous or toxic waste site;
(viii) each Mortgaged Property is free and clear of all
mechanics' and materialmen's liens, or other similar liens, that are
prior to or equal to the lien of the related Mortgage; and there are
no rights outstanding that could result in any such prior or equal
mechanics' or materialmen's lien or similar lien being imposed on a
Mortgaged Property;
(a) each Mortgaged Property consists of a fee simple estate
in real property; all of the improvements that are included for the
purpose of determining the Appraised Value of the Mortgaged Property
lie wholly within the boundaries and building restriction lines of
such property (and, if the related Mortgaged Property is a condominium
unit, such improvements lie wholly within the project); and, [based
upon a "drive-by" inspection, with respect to Credit Limits of up to
and including $___, or an appraisal, with respect to Credit Limits of
over $___, made in connection with the application for the related
Mortgage Loan,] no improvements on adjoining property that encroach on
the Mortgaged Property have been revealed by such "drive-by"
inspection or appraisal, unless Federal Housing Administration or
Veterans' Administration regulations, or FNMA or FHLMC guidelines,
permit such an encroachment;
(ix) each Mortgage Loan meets, or is exempt from, applicable
state or federal laws, regulations or other requirements pertaining to
usury, and no Mortgage Loan is usurious;
(x) no improvement located on or being part of a Mortgaged
Property is in violation of any applicable zoning law or regulation;
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;
(xi) the Seller and every other holder of each Mortgage, if
any, were authorized to transact business in the jurisdiction in which
the related Mortgaged Property is located at all times when such party
held such Mortgage;
(xii) no payment required to be made on any Mortgage Loan
under the terms of the related Mortgage Note is more than 90 days
delinquent;
(xiii) each Mortgage Note and the related Mortgage are
genuine and each is the valid and binding obligation of the maker
thereof, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of creditors' rights
generally and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law); all
parties to each Mortgage Note and the related Mortgage had legal
capacity to execute such Mortgage Note and such Mortgage, and each
Mortgage Note and Mortgage has been duly and properly executed by the
Mortgagor;
(xiv) any and all requirements of any federal, state or
local law, including, without limitation, truth-in-lending, real
estate settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws, applicable to the Mortgage Loan have
been complied with;
(xv) all improvements securing each Mortgage Loan are
insured, by a generally acceptable insurance company licensed to do
business in the jurisdiction where the Mortgaged Property is located,
against loss by fire and such hazards as are customarily covered under
a standard extended coverage endorsement in the area where the related
Mortgaged Property is located, in an amount that is not less than the
amount required pursuant to the [____________________] Agreement. If
the Mortgaged Property is a condominium unit, it is included under the
coverage afforded by a blanket policy for the project to the extent
not covered by an individual unit insurance policy consistent with the
immediately preceding sentence. If, upon origination of the Mortgage
Loan, the Mortgaged Property was in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special
flood hazards (and such flood insurance has been made available), a
flood insurance policy meeting the requirements of the guidelines of
the Federal Insurance Administration is in effect with a generally
acceptable insurance carrier, in an amount that is not less than the
amount required pursuant to the [_________ _________] Agreement. Each
Mortgage obligates the Mortgagor thereunder to maintain all such
insurance at the Mortgagor's cost and expense; and each of the
foregoing insurance policies contains a standard mortgagee clause that
names the originator and its successors and assigns as first or second
mortgagee, as the case may be. Each of the hazard insurance policies
is the valid and binding obligation of the related insurer, is in full
force and effect, and will be in full force and effect and insure to
the benefit of the Purchaser upon the consummation of the transactions
contemplated by this Agreement. The Seller has not engaged in, and has
no knowledge of the Mortgagor's having engaged in, any act or omission
that would impair the coverage of any such policy, the benefits of the
endorsement provided for herein, or the validity and binding effect of
either;
(xvi) there is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Mortgage Note
and no event that, 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 the Seller has not
waived any default, breach, violation or event of acceleration.
(xvii) no Mortgage Note is subject to any right of
rescission, set-off, counterclaim or defense, including the defense of
usury, nor will the operation of any of the terms of any Mortgage
Note, or the exercise of any right thereunder, render such Mortgage
Note unenforceable, in whole or in part, or subject it to any right of
rescission, set-off, counterclaim or defense, including the defense of
usury, and no such right of rescission, setoff, counterclaim or
defense has been asserted with respect thereto;
(xviii) each Mortgage Note is not and has not been secured
by any collateral except the lien of the corresponding Mortgage and
the security interest of any applicable security agreement, chattel
mortgage or equivalent document referred to in subparagraph (v) above;
(xix) each Mortgage contains customary and enforceable
provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property of
the benefits of the security provided thereby, including, without
limitation, (i) in the case of a Mortgage designated as a deed of
trust, by trustee's sale and (ii) otherwise by judicial foreclosure;
and there is no exemption available to the Mortgagor that would
interfere with such right to foreclose or sell the Mortgaged Property
at a trustee's sale;
(xx) no Mortgagor is a debtor in any state or federal
bankruptcy or insolvency proceeding;
(xxi) the Mortgaged Properties are located in the States of
[____________________]; each Mortgaged Property consists of a single
parcel of real property with a one-to-four-family residence erected
thereon, a townhouse, an individual condominium unit, or an individual
unit in a planned unit development, provided, however, that any such
condominium unit or planned unit development is either (i) located in
a project that has been approved by, or would otherwise be acceptable
to, FNMA or FHLMC or (ii) the Combined Loan-to-Value Ratio of the
Mortgage Loan secured by such condominium unit or unit in a planned
unit development is [____]% or less as of the Cut-off Date; and no
such parcel has erected thereon a mobile home or manufactured
dwelling;
(xxii) as of the Closing Date, each Mortgage Loan meets the
requirements set by the OTS for investment by a federal savings and
loan association, subject to such association's charter and bylaws and
applicable governmental regulation regarding percentage of assets
limitations;
(xxiii) the Seller maintains either a blanket hazard
insurance policy or a mortgage impairment insurance policy providing
coverage for, among other things, fire and the extended coverage
hazards, with respect to the Mortgage Loans and, as of the Closing
Date, any such policy is in full force and effect;
(xxiv) each Mortgaged Property is either an owner-occupied
primary residence, a second home or a residential investor property;
(xxv) with respect to each Mortgage Loan, the Loan Rate as
of the Cut-off Date, net of the premium payable on any related credit
life insurance policy, was either [____]%, [____]%, or [____]% per
annum and the weighted average of the Loan Rates as of the Cut-off
Date was [____]% per annum;
(xxvi) each Mortgage Loan contains a "due-on-sale" clause
permitting the mortgagee to accelerate the payment of the indebtedness
evidenced thereby upon the sale of the related Mortgaged Property;
(xxvii) no Mortgage Loan had a Combined Loan-to-Value Ratio in
excess of [___]%;
(xxviii) upon the Seller's transfer of the Mortgage Loans to
the Purchaser in accordance with the terms hereof, the Purchaser
became the sole owner of all the right, title and interest in, to and
under the Mortgage Loans, including all principal amounts thereof
outstanding as of the Cut-off Date and all principal amounts that may
hereafter be outstanding thereunder as a result of future Draws or the
capitalization of interest due and unpaid thereon, free and clear of
all liens, pledges, charges and encumbrances whatsoever;
(xxix) no Mortgage Note has been prepared on a form other
than the forms of Mortgage Notes attached hereto as Exhibit A, no
Mortgage has been prepared on a form other than the forms of Mortgages
attached hereto as Exhibit B and no riders were appended to any
Mortgage at the time of execution thereof;
(xxx) each Mortgage Loan was originated by a savings and
loan association, savings bank, commercial bank, credit union,
insurance company, or similar institution which is supervised and
examined by a federal or state authority, or by a mortgagee approved
by the Secretary of Housing and Urban Development pursuant to sections
203 and 211 of the National Housing Act;
(xxxi) the Mortgage Note for each Mortgage Loan provides
that the Loan Rate is [fixed][adjusted monthly on each Interest Rate
Adjustment Date to equal the sum of the Index and the Gross Margin,
subject to any Rate Cap]; the Mortgage Note is payable monthly on each
Due Date in amounts calculated in the manner set forth therein, with
interest calculated and payable in arrears; no Mortgage Note contains
provisions permitting negative amortization (other than the provision
for Capitalized Interest); and the average Cut-off Date Asset Balance
was approximately $[---------------];
(xxxii) the Mortgaged Property is lawfully occupied under
applicable law; and all inspections, licenses and certificates
required to be made or issued with respect to all occupied portions of
the Mortgaged Property and, with respect to the use and occupancy of
the same, including but not limited to certificates of occupancy and
fire underwriting certificates, have been made or obtained from the
appropriate authorities;
(xxxiii) in the event the Mortgage constitutes a deed for
trust, a trustee, duly qualified under applicable law to serve as
such, has been properly designated, 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; and
(xxxiv) the Mortgage Note, the Mortgage, and any other
documents required to be delivered under the Pooling and Servicing
Agreement with respect to the Mortgage Loans have been delivered to
the Trustee or the Custodian; and the Trustee or the Custodian is in
possession of a complete, true and accurate Mortgage File.
The representations and warranties set forth in this Section 4 shall
survive the sale of the Mortgage Loans to the Purchaser and the transfer of the
Mortgage Loans by the Purchaser to the Trust and the delivery of the Mortgage
Files to the Trustee. Upon discovery by the Seller or the Purchaser of a breach
of any of the representations and warranties set forth in this Section 4, the
party discovering such breach shall give prompt written notice thereof to the
other party. Within 60 days of its discovery or its receipt of notice of breach,
the Seller shall use all reasonable efforts to cure such breach in all material
respects or shall, not later than the Business Day immediately preceding the
Distribution Date in the month following the Collection Period in which any such
cure period expired, repurchase such Mortgage Loan from the Purchaser in the
same manner and subject to the same conditions as set forth in Section 5, other
than with respect to breaches solely related to the representations and
warranties set forth in clause (i) or (ii) of this Section 4. Upon making such
repurchase and sending any required payment to the Purchaser, the Seller shall
be entitled to receive an instrument of assignment or transfer, without
recourse, representation or warranty, from the Purchaser to the same extent as
set forth in Section 5 with respect to the repurchase of the Mortgage Loans
under that Section. It is understood and agreed that the obligation of the
Seller to repurchase a Mortgage Loan as to which a breach has occurred and is
continuing and to make any required payment to the Purchaser shall constitute
the sole remedy respecting such breach available to the Purchaser against the
Seller; PROVIDED, HOWEVER, that the Seller shall defend and indemnify the
Purchaser against all costs, expenses, losses, damages, claims and liabilities,
including reasonable fees and expenses of counsel, which may be asserted against
or incurred by the Purchaser as a result of any breach of any such
representation or warranty. Notwithstanding the foregoing, with regard to any
breach of the representation and warranty set forth in clause (iv) of this
Section 4, the sale and assignment of the affected Mortgage Loans shall be
deemed void and the Seller shall pay to the Purchaser the sum of (i) the amount
of the related Asset Balances and (ii) the amount of any losses suffered with
respect to the affected Mortgage Loans.
In the event of a breach of any of the representations and warranties
in clause (i) or clause (ii) of this Section 4 that materially and adversely
affects the interests of the Purchaser, the Purchaser by written notice to the
Seller, may direct the Seller to repurchase all of the Mortgage Loans within 60
days of such notice. The Seller shall repurchase such Mortgage Loans on the
Distribution Date immediately succeeding the expiration of such applicable
period; provided that such repurchase will not be required to be made if on the
Business Day prior to such Distribution Date, such representation and warranty
shall then be true and correct in all material respects or the breach of such
representations and warranties no longer materially and adversely affects the
interests of the Purchaser. The Seller shall pay to the Purchaser an amount
equal to the aggregate Asset Balances of the Mortgage Loans on the Distribution
Date on which the repurchase is scheduled to be made plus an amount equal to all
interest accrued but unpaid on such Mortgage Loans through the end of the
related Collection Period. If the Purchaser gives a notice as provided above,
the obligation of the Seller to make any such deposit will constitute the sole
remedy respecting a breach of the representations and warranties available to
the Purchaser against the Seller.
Section 5. ACCEPTANCE BY THE PURCHASER: REPURCHASE OF MORTGAGE LOANS.
The Purchaser hereby acknowledges its acceptance of the sale and assignment of
the Mortgage Notes and the Mortgages, and its receipt of the Mortgage Files
delivered pursuant to Section 1. If the time to cure any defect in respect of
any Mortgage Loan of which the Purchaser has notified the Seller following the
Purchaser's review of the Mortgage Files has expired or if at any time any loss
is suffered by the Purchaser in respect of any Mortgage Loan as a result of (i)
a defect in any document constituting a part of its Mortgage File, (ii) an
assignment of the related Mortgage not having been recorded as required by
Section 1(a), or (iii) the failure by the Seller to satisfy its obligation under
Section 1(b), then on the next succeeding Business Day, the Seller shall be
obligated to repurchase all right, title and interest of the Purchaser in and to
such Mortgage Loan, without recourse, representation or warranty, on such
Business Day; PROVIDED, HOWEVER, that interest accrued on the Asset Balance of
such Mortgage Loan to the end of the Collection Period during which the date of
repurchase occurs shall be the property of the Purchaser. Within two Business
Days after the Business Day on which such repurchase arises the Seller shall pay
to the Purchaser an amount in immediately available funds equal to the Asset
Balance of such Mortgage Loan (the "Repurchase Price"). Upon receipt of the
Repurchase Price for such Mortgage Loan, the Purchaser shall execute such
documents and instruments of transfer presented by the Seller, and take such
other actions as shall reasonably be requested by the Seller to effect the
repurchase by the Seller of such Mortgage Loan pursuant to this Section. It is
understood and agreed that the obligation of the Seller to repurchase such a
Mortgage Loan shall constitute the sole remedy respecting such defect available
to the Purchaser against the Seller.
Section 6. COVENANTS OF THE SELLER. The Seller hereby covenants that:
(a) SECURITY INTERESTS. Except for the conveyances hereunder and the
[____________________] Agreement, the Seller will not sell, pledge, assign or
transfer to any other Person, or grant, create, incur, assume or suffer to exist
any Lien on any Mortgage Loan or the related Mortgaged Property, whether now
existing or hereafter created, or any interest therein; and the Seller will
defend the right, title and interest of the Purchaser in, to and under the
Mortgage Loans and the related Mortgaged Property, whether now existing or
hereafter created, against all claims of third parties claiming through or under
the Seller; PROVIDED, HOWEVER, that nothing in this Section 6(a) shall prevent
or be deemed to prohibit the Seller from suffering to exist upon any Mortgage
Loans or the related Mortgaged Property any Liens for municipal or other local
taxes and other governmental charges if such taxes or governmental charges shall
not at the time be due and payable or if the Seller shall currently be
contesting the validity thereof in good faith by appropriate proceedings and
shall have set aside on its books adequate reserves with respect thereto.
(b) NOTICE OF LIENS. The Seller shall notify the Purchaser promptly
after becoming aware of the existence of any Lien on any Mortgage Loans or the
related Mortgaged Property other than the conveyances hereunder and the
[____________________] Agreement.
(c) DELIVERY OF COLLECTIONS. In the event that the Seller receives
payments or other proceeds with respect to the Mortgage Loans conveyed
hereunder, the Seller agrees to remit to the Purchaser or its designee all such
payments or other proceeds as soon as practicable after receipt thereof by the
Transferor, but in no event later than [__] Business Days after the receipt by
the Seller thereof.
Section 7. TERMINATION. The respective obligations and
responsibilities of the Seller and the Purchaser created hereby shall terminate,
except for the Seller's indemnity obligations as provided herein, upon the
termination of the Trust as provided in Article [__] of the
[____________________] Agreement.
Section 8. AMENDMENT. (a) This Agreement may be amended from time to
time by the Purchaser and the Seller, without the consent of any of the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other provisions herein, or
to add any other provisions with respect to matters or questions arising under
this Agreement which shall not be inconsistent with the provisions of this
Agreement or the [____________________] Agreement; PROVIDED, HOWEVER, that such
action shall not, (i) as evidenced by a letter from each Rating Agency rating
the Investor Certificates delivered to the Trustee, adversely affect the rating
on the Investor Certificates, or (ii) as evidenced by an opinion of counsel
satisfactory to the Trustee, cause the Trust to be characterized for federal
income tax purposes as an association taxable as a corporation or a taxable
mortgage pool or adversely affect the treatment of the Certificates as debt for
federal income tax purposes.
(b) This Agreement may also be amended from time to time by the
Purchaser and the Seller with the consent of the Holders of Investor
Certificates evidencing Percentage Interests aggregating not less than 51%, for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement or modifying in any manner the rights of
the Certificateholders hereunder; PROVIDED, HOWEVER, that no such amendment
shall (i) reduce in any manner the amount of, or delay the timing of,
collections of payments on Mortgage Loans or distributions which are required to
be made on any Certificate without the consent of the Holder of such Certificate
or (ii) reduce the aforesaid percentage required to consent to any such
amendment, without the consent of Holders of all Certificates then outstanding.
(c) Promptly after the execution of any such amendment made with the
consent of the Investor Certificateholders, the Purchaser shall furnish, or
cause to be furnished, written notification of the substance of such amendment
to each Investor Certificateholder. The Purchaser shall give, or cause to be
given, to each Rating Agency ten Business Days' notice of any proposed amendment
pursuant to this Section 8, and the Purchaser shall give, or cause to be given,
to each Rating Agency notice of any amendment adopted pursuant to this Section.
(d) Not less than 10 days prior to the execution of any amendment to
this Agreement under subsection 8(b), the Purchaser shall furnish written notice
of such amendment including a copy of the text of the proposed amendment to each
Investor Certificateholder and to the Rating Agencies. Promptly after the
execution of any amendment the Purchaser shall furnish, or cause to be
furnished, written notification of the substance of such amendment to each
Investor Certificateholder and to the Rating Agencies.
(e) It shall not be necessary for the consent of Investor
Certificateholders under this Section 8 to approve the particular form of any
proposed amendment, but it shall be sufficient if such Certificateholders shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Certificateholders
shall be subject to such reasonable requirements as the Trustee may prescribe.
Section 9. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, this Agreement may not be assigned by the Purchaser or the
Seller except as contemplated by this Section 9; PROVIDED, HOWEVER, that
simultaneously with the execution and delivery of this Agreement, the Purchaser
shall assign all of its right, title and interest herein to the Trustee for the
benefit of the Certificateholders as provided in the [____________________]
Agreement, to which the Seller hereby expressly consents. The Seller agrees to
perform its obligations hereunder for the benefit of the Trust and that the
Trustee may enforce the provisions of this Agreement, exercise the rights of the
Purchaser and enforce the obligations of the Seller hereunder without the
consent of the Purchaser and to the same effect as if the Trustee was a party
hereto.
Section 10. THIRD-PARTY BENEFICIARIES. This Agreement will inure to
the benefit of and be binding upon the parties hereto, the Trustee, and the
Certificateholders, which shall be considered to be third-party beneficiaries
hereof. Except as otherwise provided in this Agreement, no other person will
have any right or obligation hereunder.
Section 11. PURCHASER INDEMNIFICATION. The Seller shall pay, indemnify
and hold harmless the Purchaser, the Trust, the Trustee and each Investor
Certificateholder from and against any loss, liability, expense, damage or
injury (except, in the case of indemnification of any Certificateholder, to the
extent that they arise from any action by such Investor Certificateholder)
suffered or sustained pursuant to this Agreement, including, but not limited to,
any judgment, award, settlement, reasonable attorneys' fees and other costs or
expenses incurred in connection with the defense of any actual or threatened
action, proceeding or claim; PROVIDED, HOWEVER, that the Seller shall not
indemnify the Purchaser, the Trust, the Trustee or the Investor
Certificateholders if such loss, liability, expense, damage or injury is due to
the gross negligence or willful misconduct of the Purchaser or the Trustee and
provided further that the Seller shall not indemnify the Trust or the Investor
Certificateholders for any liabilities, costs or expenses of the Trust or the
Investor Certificateholders arising under any tax law, including, without
limitation, Federal, State or local or franchise taxes. The provisions of this
indemnity shall run directly to and be enforceable by an injured party subject
to the limitations hereof.
Section 12. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, THE SELLER. (a) The Seller shall not consolidate with or merge
into any other corporation or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(i) The corporation formed by such consolidation or into
which the Seller is merged or the Person which acquires by conveyance
or transfer the properties and assets of the Seller substantially as
an entirety shall be organized and existing under the laws of the
United States of America or any State or the District of Columbia,
and, if the Seller is not the surviving entity, shall expressly
assume, by an agreement supplemental hereto, executed and delivered to
the Purchaser and the Trustee, in form satisfactory to the Purchaser
and the Trustee, the performance of every covenant and obligation of
the Seller, as applicable hereunder and shall benefit from all the
rights granted to the Seller, as applicable hereunder; and
(ii) The Seller shall have delivered to the Purchaser and
the Trustee an Officer's Certificate signed by a Vice President (or
any more senior officer) of the Seller and an Opinion of Counsel each
stating that such consolidation, merger, conveyance or transfer and
such supplemental agreement comply with this Section 12 and that all
conditions precedent herein provided for relating to such transaction
have been complied with.
(b) The obligations of the Seller hereunder shall not be
assignable nor shall any Person succeed to the obligations of the Seller
hereunder except in each case in accordance with the provisions of the foregoing
paragraph and of Section 9.
Section 13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HERETO SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
Section 14. ENTIRE AGREEMENT. This Agreement contains the entire
agreement and amends, restates and supersedes any prior agreement between the
parties relating to the subject matter hereof, and there are no other
representations, endorsements, promises, agreements or understandings, oral,
written or inferred, between the parties relating to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
date first set forth above.
NORWEST MORTGAGE, INC.
as Seller
Name:
Title:
DIRECTORS ASSET CONDUIT CORPORATION
as Purchaser
Name:
Title:
SCHEDULE I
Mortgage Loan Information
SCHEDULE II
EXHIBIT A
Forms of Mortgage Note
EXHIBIT B
Forms of Mortgage
