EXECUTION COPY
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of October 27, 2006,
between Residential Funding Company, LLC, a Delaware limited liability company
("RFC") and Residential Asset Securities Corporation, a Delaware corporation
(the "Company").
Recitals
A. RFC has entered into seller contracts ("Seller Contracts") with
certain sellers and servicers.
B. The Company wishes to purchase from RFC certain Mortgage Loans (as
hereinafter defined) originated pursuant to the Seller Contracts.
C. The Company, RFC, as master servicer (in such capacity, the "Master
Servicer"), and U.S. Bank National Association, as trustee (the "Trustee"), are
entering into a Pooling and Servicing Agreement dated as of October 27, 2006
(the "Pooling and Servicing Agreement"), pursuant to which the Trust proposes to
issue Home Equity Mortgage Asset-Backed Pass-Through Certificates, Series
2006-EMX9 (the "Certificates") consisting of seventeen classes designated as
Class A-I-1, Class A-I-2, Class A-I-3, Class A-I-4, Class A-II, Class M-1, Class
M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class
M-9, Class M-10, Class SB and Class R representing beneficial ownership
interests solely in a trust fund consisting primarily of a pool that will be
divided into (i) the adjustable and fixed rate one-to four-family mortgage loans
identified on Exhibit F-1 to the Pooling and Servicing Agreement (the "Group I
Loans") and (ii) the adjustable and fixed rate one- to four-family mortgage
loans identified on Exhibit F-2 to the Pooling and Servicing Agreement (the
"Group II Loans," and together with the Group I Loans, the "Mortgage Loans").
D. In connection with the purchase of the Mortgage Loans, the Company
will assign to RFC the Class SB and Class R Certificates (the "Retained
Certificates"). The Class A-I-1, Class A-I-2, Class A-I-3, Class A-I-4, Class
A-II, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class
M-7, Class M-8, Class M-9 and Class M-10 Certificates were offered to investors
pursuant to a Prospectus Supplement dated October 25, 2006 (the "Prospectus
Supplement").
E. In connection with the purchase of the Mortgage Loans and the
issuance of the Certificates, RFC wishes to make certain representations and
warranties to the Company and to assign certain of its rights under the Seller
Contracts to the Company, and the Company wishes to assume certain of RFC's
obligations under the Seller Contracts.
F. The Company and RFC intend that the conveyance by RFC to the Company
of all its right, title and interest in and to the Mortgage Loans pursuant to
this Agreement shall constitute a purchase and sale and not a loan.
NOW THEREFORE, in consideration of the recitals and the mutual promises
herein and other good and valuable consideration, the parties agree as follows:
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1. All capitalized terms used but not defined herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.
2. Concurrently with the execution and delivery hereof, RFC hereby
assigns to the Company without recourse all of its right, title and interest in
and to the Mortgage Loans, including all interest and principal received on or
with respect to the Mortgage Loans after the Cut-off Date (other than payments
of principal and interest due on the Mortgage Loans in October 2006). In
consideration of such assignment, RFC will receive from the Company, in
immediately available funds, an amount equal to $716,819,049.08 and the Retained
Certificates. In connection with such assignment and at the Company's direction,
RFC has in respect of each Mortgage Loan endorsed the related Mortgage Note
(other than any Destroyed Mortgage Note, hereinafter defined) to the order of
the Trustee and delivered an assignment of mortgage in recordable form to the
Trustee or its agent. A "Destroyed Mortgage Note" means a Mortgage Note the
original of which was permanently lost or destroyed.
The Company and RFC intend that the conveyance by RFC to the Company of
all its right, title and interest in and to the Mortgage Loans pursuant to this
Section 2 shall be, and be construed as, a sale of the Mortgage Loans by RFC to
the Company. It is, further, not intended that such conveyance be deemed to be a
pledge of the Mortgage Loans by RFC to the Company to secure a debt or other
obligation of RFC. Nonetheless (a) this Agreement is intended to be and hereby
is deemed to be a security agreement within the meaning of Articles 8 and 9 of
the Minnesota Uniform Commercial Code and the Uniform Commercial Code of any
other applicable jurisdiction; (b) the conveyance provided for in this Section
shall be deemed to be a grant by RFC to the Company of a security interest in
all of RFC's right (including the power to convey title thereto), title and
interest, whether now owned or hereafter acquired, in and to (A) the Mortgage
Loans, including the Mortgage Notes, the Mortgages, any related insurance
policies and all other documents in the related Mortgage Files, (B) all amounts
payable pursuant to the Mortgage Loans in accordance with the terms thereof and
(C) any and all general intangibles consisting of, arising from or relating to
any of the foregoing, and all proceeds of the conversion, voluntary or
involuntary, of the foregoing into cash, instruments, securities or other
property, including, without limitation, all amounts from time to time held or
invested in the Certificate Account or the Custodial Account, whether in the
form of cash, instruments, securities or other property; (c) the possession by
the Trustee, the Custodian or any other agent of the Trustee of Mortgage Notes
or such other items of property as constitute instruments, money, payment
intangibles, negotiable documents, goods, deposit accounts, letters of credit,
advices of credit, investment property, certificated securities or chattel paper
shall be deemed to be "possession by the secured party," or possession by a
purchaser or a person designated by such secured party, for purposes of
perfecting the security interest pursuant to the Minnesota Uniform Commercial
Code and the Uniform Commercial Code of any other applicable jurisdiction
(including without limitation, Sections 8-106, 9-313 and 9-106 thereof); and (d)
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 Trustee for the purpose
of perfecting such security interest under applicable law. RFC shall, to the
extent consistent with this Agreement, take such reasonable actions as may be
necessary to ensure that, if this Agreement were deemed to create a security
interest in the Mortgage Loans and the other property described above, such
security interest would be deemed to be a perfected security interest of first
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priority under applicable law and will be maintained as such throughout the term
of this Agreement. Without limiting the generality of the foregoing, RFC shall
prepare and deliver to the Company not less than 15 days prior to any filing
date, and the Company shall file, or shall cause to be filed, at the expense of
RFC, all filings necessary to maintain the effectiveness of any original filings
necessary under the Uniform Commercial Code as in effect in any jurisdiction to
perfect the Company's security interest in or lien on the Mortgage Loans
including without limitation (x) continuation statements, and (y) such other
statements as may be occasioned by (1) any change of name of RFC or the Company,
(2) any change of location of the state of formation, place of business or the
chief executive office of RFC, or (3) any transfer of any interest of RFC in any
Mortgage Loan.
3. Concurrently with the execution and delivery hereof, the Company
hereby assigns to RFC without recourse all of its right, title and interest in
and to the Retained Certificates as part of the consideration payable to RFC by
the Company pursuant to this Agreement.
4. RFC represents and warrants to the Company, with respect to each
Mortgage Loan that on the date of execution hereof (or, if otherwise specified
below, as of the date so specified and provided that all percentages of the
Mortgage Loans described in this Section 4 are approximate percentages by
outstanding principal balance determined as of the Cut-off Date after deducting
payments due during the month of the Cut-off Date):
(i) Immediately prior to the delivery of the Mortgage Loans to
the Company, RFC had good title to, and was the sole owner of, each
Mortgage Loan free and clear of any pledge, lien or security interest
(other than (a) rights to servicing and related compensation, and (b)
any senior lien relating to a Mortgage Loan listed on Exhibit A attached
hereto (the "Junior Lien Mortgage Loans")) and had full right and
authority to sell and assign the Mortgage Loans pursuant to this
Agreement.
(ii) The proceeds of the Mortgage Loan have been fully
disbursed, there is no requirement for future advances thereunder and
any and all requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds therefor
(including any escrow funds held to make Monthly Payments pending
completion of such improvements) have been complied with. All costs,
fees and expenses incurred in making, closing or recording the Mortgage
Loans were paid.
(iii) The Mortgagor (including any party secondarily liable
under the Mortgage File) has no right of set-off, defense, counterclaim
or right of rescission as to any document in the Mortgage File except as
may be provided under the Relief Act.
(iv) RFC and any other originator, servicer or other previous
owner of each Mortgage Loan has obtained all licenses and effected all
registrations required under all applicable local, state and federal
laws, regulations and orders, including without limitation truth in
lending and disclosure laws, necessary to own or originate the Mortgage
Loans (the failure to obtain such licenses or to comply with such laws,
regulations and orders would make such Mortgage Loans void or voidable).
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(v) A policy of title insurance, in the form and amount that is
in material compliance with the Program Guide, was effective as of the
closing of each Mortgage Loan, is valid and binding, and remains in full
force and effect except for Mortgaged Properties located in the State of
Iowa where an attorney's certificate has been provided in accordance
with the Program Guide. No claims have been made under such title
insurance policy and no holder of the related mortgage, including RFC,
has done or omitted to do anything which would impair the coverage of
such title insurance policy.
(vi) Each Mortgage Loan is a valid and enforceable first lien
(or in the case of the Junior Lien Mortgage Loans, junior lien) on the
Mortgaged Property subject only to (1) the lien of nondelinquent current
real property taxes and assessments, (2) covenants, conditions and
restrictions, rights of way, easements and other matters of public
record as of the date of recording of such Mortgage, such exceptions
appearing of record being acceptable to mortgage lending institutions
generally or specifically reflected in the appraisal made in connection
with the origination of the related Mortgage Loan, and (3) other matters
to which like properties are commonly subject that do not materially
interfere with the benefits of the security intended to be provided by
such Mortgage.
(vii) All improvements which were considered in determining the
Appraised Value of the Mortgaged Property lie wholly within the
boundaries and the building restriction lines of the Mortgaged Premises,
or the policy of title insurance affirmatively insures against loss or
damage by reason of any violation, variation, encroachment or adverse
circumstance that either is disclosed or would have been disclosed by an
accurate survey.
(viii) There are no delinquent tax or delinquent assessment
liens against the related Mortgaged Property, and there are no
mechanic's liens or claims for work, labor or material or any other
liens affecting such Mortgaged Property which are or may be a lien prior
to, or equal with, the lien of the Mortgage assigned to RFC, except
those liens that are insured against by the policy of title insurance
and described in (v) above.
(ix) Each Mortgaged Property is free of material damage and is
in good repair and no notice of condemnation has been given with respect
thereto.
(x) The improvements upon the Mortgaged Property are insured
against loss by fire and other hazards as required by the Program Guide,
including flood insurance if required under the National Flood Insurance
Act of 1968, as amended. The Mortgage requires the Mortgagor to maintain
such casualty insurance at the Mortgagor's expense, and on the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to
obtain and maintain such insurance at the Mortgagor's expense and to
seek reimbursement therefore from the Mortgagor.
(xi) The appraisal was made by an appraiser who meets the
minimum qualifications for appraisers as specified in the Program Guide.
(xii) Each Mortgage Note and Mortgage constitutes a legal, valid
and binding obligation of the Mortgagor enforceable in accordance with
its terms except as limited by bankruptcy, insolvency or other similar
laws affecting generally the enforcement of creditors' rights.
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(xiii) Each Mortgage Loan is covered by a standard hazard
insurance policy.
(xiv) None of the Mortgage Loans are secured by a leasehold
estate.
(xv) The information set forth on the Mortgage Loan Schedule
with respect to each Mortgage Loan is true and correct in all material
respects as of the date or dates which such information is furnished.
(xvi) None of the Group I Loans are 30 to 59 days Delinquent in
payment of principal or interest. No more than approximately 0.1% of the
Group I Loans have been a maximum of 30 to 59 days Delinquent in payment
of principal or interest in the last 12 months. None of the Group I
Loans are 60 or more days Delinquent in payment of principal or
interest. None of the Group I Loans have been a maximum of 60 or more
days Delinquent in payment of principal or interest in the last 12
months. None of the Group II Loans are 30 or more days Delinquent in
payment of principal or interest. No more than approximately 0.1% of the
Group II Loans have been a maximum of 30 or more days Delinquent in
payment of principal or interest in the last 12 months. For the purposes
of this representation a Mortgage Loan is considered Delinquent if a
Subservicer or the Master Servicer has made any advances on the Mortgage
Loan that have not been reimbursed out of payments by the mortgagor or
on the mortgagor's behalf from a source other than a Subservicer, a
Seller, the Master Servicer or an affiliated entity of either.
(xvii) None of the Mortgage Loans with Loan-to-Value Ratios, or
combined Loan-to-Value Ratios with respect to Junior Lien Loans, at
origination in excess of 80% are insured by a borrower-paid, primary
mortgage insurance policy.
(xviii) The weighted average Loan-to-Value Ratios with respect
to the Group I Loans, and the Group II Loans, in each case by
outstanding principal balance at origination, are 86.3% and 86.7%,
respectively.
(xix) No more than approximately 0.5% of the Group I Loans are
located in any one zip code area in Maryland and no more than
approximately 0.5% of the Group I Loans are located in any one zip code
area outside of Maryland. No more than approximately 0.6% of the Group
II Loans are located in any one zip code area outside of Massachusetts
and no more than approximately 0.4% of the Group II Loans are located in
any one zip code area outside of Massachusetts.
(xx) All of the Mortgage Loans that are adjustable-rate loans
will adjust semi-annually based on Six-Month LIBOR. Each of the Mortgage
Loans that are adjustable-rate loans will adjust on the Adjustment Date
specified in the related Mortgage Note to a rate equal to the sum
(rounded as described in the related Mortgage Note) of the related Index
described in the Prospectus Supplement and the Note Margin set forth in
the related Mortgage Note, subject to the limitations described in the
Prospectus Supplement, and each Mortgage Loan has an original term to
maturity from the date on which the first monthly payment is due of not
more than approximately 30 years. On each Adjustment Date, the Mortgage
Rate on each Mortgage Loan that is an adjustable-rate loan will be
adjusted to equal the related Index plus the related Gross Margin,
subject in each case to the Periodic Rate Cap, the Mortgage Rate and the
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Minimum Mortgage Rate. The amount of the monthly payment on each
Mortgage Loan that is an adjustable-rate loan will be adjusted on the
first day of the month following the month in which the Adjustment Date
occurs to equal the amount necessary to pay interest at the
then-applicable Mortgage Rate to fully amortize the outstanding
principal balance of such Mortgage Loan over its remaining term to
stated maturity. No Mortgage Loan is subject to negative amortization.
(xxi) With respect to each Mortgage constituting 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
such Mortgage, and no fees or expenses are or will become payable by the
holder of the Mortgage Loan to the trustee under the deed of trust,
except in connection with a trustee's sale after default by the
Mortgagor.
(xxii) Approximately 15.1% and 11.1% of the Mortgaged Properties
related to the Group I Loans and the Group II Loans, respectively, are
units in detached planned unit developments. Approximately 2.4% and 1.9%
of the Mortgaged Properties related to the Group I Loans and the Group
II Loans, respectively, are units in attached planned unit developments.
Approximately 1.6% and 1.2% of the Mortgaged Properties related to the
Group I Loans and the Group II Loans, respectively, are units in
townhouses. Approximately 7.0% and 7.3% of the Mortgaged Properties
related to the Group I Loans and the Group II Loans, respectively, are
condominium units. Each Mortgaged Property is suitable for year-round
occupancy.
(xxiii) Approximately 94.0% and all of the Mortgaged Properties
related to the Group I Loans and the Group II Loans, respectively, are
secured by the owner's primary residence. Approximately 2.1% and none of
the Mortgaged Properties related to the Group I Loans and the Group II
Loans, respectively, are secured by the owner's second or vacation
residence. Approximately 3.9% and none of the Mortgaged Properties
related to the Group I Loans and the Group II Loans, respectively, are
secured by a non-owner occupied residence.
(xxiv) Approximately 62.7% and 69.7% of the Mortgaged Properties
related to the Group I Loans and the Group II Loans, respectively, are
secured by detached one-family dwelling units. Approximately 11.1% and
9.0% of the Mortgaged Properties related to the Group I Loans and the
Group II Loans, respectively, are secured by two- to four-family
dwelling units.
(xxv) The average outstanding principal balance of the Group I
Loans at origination was approximately $191,469. The average outstanding
principal balance of the Group II Loans at origination was approximately
$177,209. No Group I Loan at origination had a principal balance of less
than $13,000 or more than $1,000,000. No Group II Loan at origination
had a principal balance of less than $15,400 or more than $416,800.
(xxvi) As of the Cut-off Date, all Mortgage Rate adjustments on
the Mortgage Loans that have reached an Adjustment Date have been done
in accordance with the terms of the related Mortgage Note.
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(xxvii) Any escrow arrangements established with respect to any
Mortgage Loan are in compliance with all applicable local, state and
federal laws and are in compliance with the terms of the related
Mortgage Note.
(xxviii) Except as otherwise specifically set forth herein,
there is no default, breach, violation or event of acceleration existing
under any Mortgage Note or Mortgage and no event which, with notice and
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 by RFC or by any
other entity involved in originating or servicing a Mortgage Loan.
(xxix) Each Mortgage Loan constitutes a "qualified mortgage"
under Section 860G(a)(3)(A) of the Code and Treasury Regulation Section
1.860G 2(a)(1), (2), (4), (5), (6), (7) and (9), without reliance on the
provisions of Treasury Regulation Section 1.860G 2(a)(3) or Treasury
Regulation Section 1.860G 2(f)(2) or any other provision that would
allow a Mortgage Loan to be treated as a "qualified mortgage"
notwithstanding its failure to meet the requirements of Section
860G(a)(3)(A) of the Code and Treasury Regulation Section 1.860G
2(a)(1), (2), (4), (5), (6), (7) and (9).
(xxx) No more than 45.2% of the Group I Loans have been
classified by RFC as Credit Grade A4 Mortgage Loans, no more than 33.9%
of the Group I Loans have been classified by RFC as Credit Grade A5
Mortgage Loans, no more than 10.6% of the Group I Loans have been
classified by RFC as Credit Grade AX Mortgage Loans, no more than 5.8%
of the Group I Loans have been classified by RFC as Credit Grade AM
Mortgage Loans, no more than 2.7% of the Group I Loans have been
classified by RFC as Credit Grade B Mortgage Loans and no more than 2.1%
of the Group I Loans have been classified by RFC as Credit Grade C
Mortgage Loans, in each case as described generally in the Prospectus
Supplement.
(xxxi) No more than 42.9% of the Group II Loans have been
classified by RFC as Credit Grade A4 Mortgage Loans, no more than 34.2%
of the Group II Loans have been classified by RFC as Credit Grade A5
Mortgage Loans, no more than 11.2% of the Group II Loans have been
classified by RFC as Credit Grade AX Mortgage Loans, no more than 6.2%
of the Group II Loans have been classified by RFC as Credit Grade AM
Mortgage Loans, no more than 2.8% of the Group II Loans have been
classified by RFC as Credit Grade B Mortgage Loans and no more than 3.0%
of the Group II Loans have been classified by RFC as Credit Grade C
Mortgage Loans, in each case as described generally in the Prospectus
Supplement.
(xxxii) No Mortgage Loan is a graduated payment loan or has a
shared appreciation or contingent interest feature.
(xxxiii) With respect to each Mortgage Loan, either (i) each
Mortgage Loan contains a customary provision for the acceleration of the
payment of the unpaid principal balance of the Mortgage Loan in the
event the related Mortgaged Property is sold without the prior consent
of the mortgagee thereunder or (ii) the Mortgage Loan is assumable
pursuant to the terms of the Mortgage Note.
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(xxxiv) No Mortgage Loan provides for deferred interest or
negative amortization.
(xxxv) None of the Mortgage Loans are buydown Mortgage Loans.
(xxxvi) Each Mortgaged Property is a single parcel of real
estate with a one- to four-unit single family residence thereon, a
condominium unit, a manufactured housing unit, a unit in a townhouse, a
planned unit development, a leasehold or a modular home; and no Mortgage
Property consists of a mobile home or a manufactured housing unit that
is not permanently affixed to its foundation.
(xxxvii) No more than approximately 31.9% and 37.8% of the Group
I Loans and Group II Loans, respectively, were made to Mortgagors with
credit scores as described generally in the Prospectus Supplement of
less than 600, excluding Mortgagors whose credit scores are not
available to RFC. The weighted average of the credit scores for the
Group I Loans and the Group II Loans for which Credit Scores are
available to RFC was approximately 629 and 615, respectively, as of the
Cut-off Date.
(xxxviii) No instrument of release or waiver has been executed
in connection with the Mortgage Loans, and no Mortgagor has been
released, in whole or in part from its obligations in connection with a
Mortgage Loan.
(xxxix) The weighted average remaining term to stated maturity
of the Group I Loans and the Group II Loans, as of the cut-off date,
will be approximately 361 months and 362 months, respectively. The
weighted average original term to maturity of the Group I Loans and the
Group II Loans, as of the cut-off date, will be approximately 345 months
and 349 months, respectively.
(xl) No Group I Loan has a prepayment penalty term that extends
beyond five years after the date of origination.
(xli) Approximately 64.7% of the Group I Loans and 65.8% of the
Group II Loans are Balloon Mortgage Loans.
(xlii) None of the Mortgage Loans are loans that, under
applicable state or local law in effect at the time of origination of
such Mortgage Loan, are referred to as (1) "high cost" or "covered"
loans or (2) any other similar designation if the law imposes greater
restrictions or additional legal liability for residential mortgage
loans with high interest rates, points and/or fees.
(xliii) Each Mortgage Loan as of the time of its origination
complied in all material respects with all applicable local, state and
federal laws, including, but not limited to, all applicable predatory,
abusive and fair lending laws.
(xliv) None of the Mortgage Loans are subject to the Home
Ownership and Equity Protection Act of 1994 ("HOEPA").
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(xlv) None of the Mortgaged Properties are units in manufactured
housing developments.
(xlvi) There is no Mortgage Loan in the trust that was
originated on or after October 1, 2002 and before March 7, 2003, which
is secured by property located in the State of Georgia.
(xlvii) No Mortgage Loan is a High Cost Loan or Covered Loan, as
applicable (as such terms are defined in the current version of Appendix
E of the Standard & Poor's Glossary For File Format For LEVELS(R)
Version 5.7 (attached hereto as Exhibit B); and there is no mortgage
loan in the trust that was originated on or after January 1, 2005, which
is a "high cost home loan" as defined under the Indiana Home Practices
Act (I.C. 2409); provided that no representation and warranty is made in
this clause (xlvii) with respect to 0.2% and 0.1% of the Group I Loans
and Group II Loans, respectively, secured by property located in the
State of Kansas or with respect to 0.2% and 0.1% of the Group I Loans
and the Group II Loans, respectively, secured by property located in the
State of West Virginia.
(xlviii) With respect to each Group II 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.
(xlix) The related Subservicer or the Master Servicer for each
Mortgage Loan has fully furnished, in accordance with the Fair Credit
Reporting Act and its implementing regulations, accurate and complete
information (i.e., favorable and unfavorable) on its borrower credit
files to Equifax, Experian, and Trans Union Credit Information Company
(three of the credit repositories), on a monthly basis.
(l) The Subservicer for each Mortgage Loan or the Master
Servicer will fully furnish, in accordance with the Fair Credit
Reporting Act and its implementing regulations, accurate and complete
information (i.e., favorable and unfavorable) on its borrower credit
files to Equifax, Experian, and Trans Union Credit Information Company
(three of the credit repositories), on a monthly basis.
(li) With respect to any Group II Loan that contains a provision
permitting imposition of a penalty upon a prepayment prior to maturity:
(i) the Seller's pricing methods include mortgage loans
with and without prepayment premiums;
(ii) borrowers selecting Group II Loans which include
such prepayment premiums receive some benefit, (e.g. a
rate or fee reduction), in exchange for selecting a
Group II Loan with a prepayment premium;
(iii) the originator of the Group II Loans had a
verifiable policy of offering the borrower, or requiring
third-party brokers to offer the borrower an array of
mortgage loan products that included mortage loan
products with prepayment premiums and mortgage loan
products that did not require payment of such a premium;
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(iv) the prepayment premium is disclosed to the borrower
in the loan documents pursuant to applicable state and
federal law;
(v) notwithstanding ay state or federal law to the
contrary, the Master Servicer shall not impose such
prepayment premium in any instance when the mortgage
debt is accelerated as the result of the borrower's
default in making the loan payments; and
(vi) no Group II Loan has a prepayment penalty term that
extends beyond three years after the date of
origination.
(lii) The originator of each Group II Loan offered the related
borrower mortgage loan products for which the borrower qualified and we
are not aware that the originator encouraged or required the borrower to
select a mortgage loan product that is a higher cost product designed
for less creditworthy borrowers.
(liii) The originator of the Group II Loans adequately
considered the borrower's ability to make payments by employing
underwriting techniques that considered a variety of factors, such as:
the borrower's income, assets and liabilities, and not solely the
collateral value, in deciding to extend the credit at the time of
origination.
(liv) No borrower under a Group II Loan in the trust was charged
"points and fees" in an amount greater than (a) $1,000 or (b) 5% of the
principal amount of such Mortgage Loan, whichever is greater. For
purposes of this representation, "points and fees" (x) include
origination, underwriting, broker and finder's fees and charges that the
lender imposed as a condition of making the Mortgage Loan, whether they
are paid to the lender or a third party; and (y) exclude bona fide
discount points, fees paid for actual services rendered in connection
with the origination of the mortgage (such as attorney's fees, notaries
fees and fees paid for property appraisals, credit reports, surveys,
title examinations and extracts, flood and tax certifications, and home
inspections); the cost of mortgage insurance or credit-risk price
adjustments; the costs of title, hazard, and flood insurance policies;
state and local transfer taxes or fees; escrow deposits for the future
payment of taxes and insurance premiums; and other miscellaneous fees
and charges, which miscellaneous fee and charges, in total do not exceed
0.25 percent of the loan amount.
(lv) With respect to any Group II 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.
(lvi) The principal balance at origination for each Group II
Mortgage Loan that is secured by a single family property located in any
state other than the States of Hawaii or Alaska did not exceed $417,000.
The principal balance at origination for each Group II Mortgage Loan
that is secured by a single family property located in the States of
Hawaii or Alaska or the Territories of Guam or the Virgin Islands did
not exceed $625,500. The principal balance at origination for each Group
II Mortgage Loan that is secured by a two-, three- or four-family
property located in any state other than the States of Hawaii or Alaska
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did not exceed $553,850, $645,300 or $801,950, respectively. The
principal balance at origination for each Group II Mortgage Loan that is
secured by a two-, three- or four-family property located in the States
of Hawaii or Alaska or the Territories of Guam or the Virgin Islands did
not exceed $800,775, $967,950 and $1,202,925, respectively.
(lvii) With respect to any Group II Loan that is a subordinate
lien mortgage loan:
(i) such lien is on a one- to four-family residence
that is the principal residence of the borrower;
(ii) no subordinate lien mortgage loan has an
original principal balance that exceeds one-half
of the one-unit limitation for first lien
mortgage loans, i.e. $208,500 (in Alaska, Guam,
Hawaii or Virgin Islands: $312,750), without
regard to the number of units; and
(iii) the original principal balance of the first lien
mortgage loan plus the original principal
balance of any subordinate lien mortgage loans
relating to the same mortgaged property does not
exceed the applicable Xxxxxxx Mac loan limit for
first lien mortgage loans for that property type
(as set out in Section 4(lvi) above).
(lviii) No Group II Loan is "seasoned" (a seasoned mortgage loan
is one where the date of the mortgage note is more than 1 year before
the date of issuance of the related security).
(lix) No refinance or purchase money mortgage loan in the trust
has an APR or total points and fees that exceed the thresholds set by
the Home Ownership and Equity Protection Act of 1994 ("HOEPA") and its
implementing regulations, including 12 CFR ss. 226.32(a)(1)(i) and (ii).
Upon discovery by RFC or upon notice from the Company or the Trustee of
a breach of the foregoing representations and warranties in respect of any
Mortgage Loan, or upon the occurrence of a Repurchase Event (as described in
Section 5 below), which materially and adversely affects the interests of any
holders of the Certificates, the Certificate Insurer or the Company in such
Mortgage Loan (notice of which breach or occurrence shall be given to the
Company by RFC, if it discovers the same), RFC shall, within 90 days after the
earlier of its discovery or receipt of notice thereof, either cure such breach
or Repurchase Event in all material respects or, except as otherwise provided in
Section 2.04 of the Pooling and Servicing Agreement, either (i) purchase such
Mortgage Loan from the Trustee or the Company, as the case may be, at a price
equal to the Purchase Price for such Mortgage Loan or (ii) substitute a
Qualified Substitute Mortgage Loan or Loans for such Mortgage Loan in the manner
and subject to the limitations set forth in Section 2.04 of the Pooling and
Servicing Agreement. Notwithstanding the foregoing, it is understood by the
11
parties hereto that a breach of the representations and warranties made in any
of clauses (xliii) through (lix) of this Section 4 with respect to any Group II
Loan will be deemed to materially and adversely affect the interests of the
Holders of the Certificates in the related Mortgage Loan. Notwithstanding the
foregoing, RFC shall not be required to cure breaches, Repurchase Events or
purchase or substitute for Mortgage Loans as provided above if the substance of
such breach or Repurchase Event also constitutes fraud in the origination of the
Mortgage Loan. If the breach of representation and warranty that gave rise to
the obligation to repurchase or substitute a Mortgage Loan pursuant to this
Section 4 was the representation set forth in clause (xliii) of this Section 4,
then RFC shall pay to the Trust Fund, concurrently with and in addition to the
remedies provided in the preceding sentence, 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.
5. With respect to the Mortgage Loans, a repurchase event ("Repurchase
Event") shall have occurred if it is discovered that, as of the date hereof, the
related Mortgage Loan was not a valid first lien or junior lien in the case of a
Junior Lien Loan on the related Mortgaged Property subject only to (i) the lien
of real property taxes and assessments not yet due and payable, (ii) covenants,
conditions, and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage and such other
permissible title exceptions as are listed in the Program Guide and (iii) other
matters to which like properties are commonly subject which do not materially
adversely affect the value, use, enjoyment or marketability of the Mortgaged
Property.
6. Concurrently with the execution and delivery hereof, RFC hereby
assigns to the Company, and the Company hereby assumes, all of RFC's rights and
obligations under the Seller Contracts with respect to the Mortgage Loans to be
serviced under the Pooling and Servicing Agreement, insofar as such rights and
obligations relate to (a) any representations and warranties regarding a
Mortgage Loan made by a Seller under any Seller Contract and any remedies
available under the Seller Contract for a breach of any such representations and
warranties if (i) the substance of such breach also constitutes fraud in the
origination of the Mortgage Loan or (ii) the representation and warranty relates
to the absence of toxic materials or other environmental hazards that could
affect the Mortgaged Property, or (b) the Seller's obligation to deliver to RFC
the documents required to be contained in the Mortgage File and any rights and
remedies available to RFC under the Seller Contract in respect of such
obligation or in the event of a breach of such obligation; provided that,
notwithstanding the assignment and assumption hereunder, RFC shall have the
concurrent right to exercise remedies and pursue indemnification upon a breach
by a Seller under any Seller Contract of any of its representations and
warranties. If the Company or RFC asserts that it is not required to cure
breaches or to purchase or substitute for Mortgage Loans under the Pooling and
Servicing Agreement because the substance of the breach also constitutes fraud
in the origination of any Mortgage Loan, then the substance of the related
breach shall automatically be deemed to constitute fraud in the origination of a
Mortgage Loan for purposes of clause (i) of this Section 6.
7. RFC hereby represents and warrants to the Company that with respect
to each Mortgage Loan, the REMIC's tax basis in each Mortgage Loan as of the
Closing Date is equal to or greater than 100% of the Stated Principal Balance
thereof.
8. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns, and no other person
shall have any right or obligation hereunder.
12
9. RFC, as master servicer under the Pooling and Servicing Agreement
(the "Master Servicer"), shall not waive (or permit a sub-servicer to waive) any
Prepayment Charge unless: (i) the enforceability thereof shall have been limited
by bankruptcy, insolvency, moratorium, receivership and other similar laws
relating to creditors' rights generally, (ii) the enforcement thereof is
illegal, or any local, state or federal agency has threatened legal action if
the prepayment penalty is enforced, (iii) the collectability thereof shall have
been limited due to acceleration in connection with a foreclosure or other
involuntary payment or (iv) such waiver is standard and customary in servicing
similar Mortgage Loans and relates to a default or a reasonably foreseeable
default and would, in the reasonable judgment of the Master Servicer, maximize
recovery of total proceeds taking into account the value of such Prepayment
Charge and the related Mortgage Loan. In no event will the Master Servicer 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. If a Prepayment
Charge is waived, but does not meet the standards described above, then the
Master Servicer is required to pay the amount of such waived Prepayment Charge
to the holder of the Class SB Certificates at the time that the amount prepaid
on the related Mortgage Loan is required to be deposited into the Custodial
Account. Notwithstanding any other provisions of this Agreement, any payments
made by the Master Servicer in respect of any waived Prepayment Charges pursuant
to this Section shall be deemed to be paid outside of the Trust Fund and not
part of any REMIC.
[Signatures begin on following page.]
13
IN WITNESS WHEREOF, the parties have entered into this Assignment and
Assumption Agreement as of the date first above written.
RESIDENTIAL FUNDING COMPANY, LLC
By:________________________________
Name:
Title:
RESIDENTIAL ASSET SECURITIES
CORPORATION
By:________________________________
Name:
Title:
14
EXHIBIT A
LIST OF JUNIOR LIEN MORTGAGE LOANS
[SEE ATTACHMENT OR ON FILE WITH THE DEPOSITOR]
EXHIBIT A-1
EXHIBIT B
APPENDIX E OF THE STANDARD & POOR'S GLOSSARY FOR
FILE FORMAT FOR LEVELS(R) VERSION 5.7
REVISED April 18, 0000
XXXXXXXX X - STANDARD & POOR'S PREDATORY LENDING CATEGORIES
Standard & Poor's has categorized loans governed by anti-predatory
lending laws in the Jurisdictions listed below into three categories based upon
a combination of factors that include (a) the risk exposure associated with the
assignee liability and (b) the tests and thresholds set forth in those laws.
Note that certain loans classified by the relevant statute as Covered are
included in Standard & Poor's High Cost Loan Category because they included
thresholds and tests that are typical of what is generally considered High Cost
by the industry.
STANDARD & POOR'S HIGH COST LOAN CATEGORIZATION
---------------------------- ---------------------------------------- ---------------------------
CATEGORY UNDER
NAME OF ANTI-PREDATORY LENDING APPLICABLE ANTI-
STATE/JURISDICTION LAW/EFFECTIVE DATE PREDATORY LENDING LAW
---------------------------- ---------------------------------------- ---------------------------
Arkansas Arkansas Home Loan Protection Act, High Cost Home Loan
Ark. Code Xxx. xx.xx. 00-00-000 et seq.
Effective July 16, 2003
---------------------------- ---------------------------------------- ---------------------------
Cleveland Heights, OH Ordinance No. 72-2003 (PSH), Mun. Covered Loan
Code xx.xx. 757.01 et seq.
Effective June 2, 2003
---------------------------- ---------------------------------------- ---------------------------
Colorado Consumer Equity Protection, Colo. Stat. Covered Loan
Xxx. xx.xx. 5-3.5-101 et seq.
Effective for covered loans offered or
entered into on or after January 1,
2003. Other provisions of the Act
took effect on June 7, 2002
---------------------------- ---------------------------------------- ---------------------------
EXHIBIT B-1
---------------------------- ---------------------------------------- ---------------------------
CATEGORY UNDER
NAME OF ANTI-PREDATORY LENDING APPLICABLE ANTI-
STATE/JURISDICTION LAW/EFFECTIVE DATE PREDATORY LENDING LAW
---------------------------- ---------------------------------------- ---------------------------
Connecticut Connecticut Abusive Home Loan High Cost Home Loan
Lending Practices Act, Conn. Gen. Stat.
xx.xx. 36a-746 et seq.
Effective October 1, 2001
---------------------------- ---------------------------------------- ---------------------------
District of Columbia Home Loan Protection Act, D.C. Code Covered Loan
xx.xx. 26-1151.01 et seq.
Effective for loans closed on or after
January 28, 2003
---------------------------- ---------------------------------------- ---------------------------
Florida Fair Lending Act, Fla. Stat. Xxx. High Cost Home Loan
xx.xx. 494.0078 et seq.
Effective October 2, 2002
---------------------------- ---------------------------------------- ---------------------------
EXHIBIT B-2
---------------------------- ---------------------------------------- ---------------------------
STATE/JURISDICTION NAME OF ANTI-PREDATORY LENDING CATEGORY UNDER
LAW/EFFECTIVE DATE APPLICABLE ANTI-
PREDATORY LENDING LAW
---------------------------- ---------------------------------------- ---------------------------
Georgia (Oct. 1, 0000 - Xxxxxxx Xxxx Xxxxxxx Xxx, Xx. Code High Cost Home Loan
Mar. 6, 2003) Xxx. xx.xx. 7-6A-1 et seq.
Effective October 1, 2002 - March 6
2003
---------------------------- ---------------------------------------- ---------------------------
Georgia as amended Georgia Fair Lending Act, Ga. Code High Cost Home Loan
(Mar. 7, 2003 - current) Xxx. xx.xx. 7-6A-1 et seq.
Effective for loans closed on or after
March 7, 2003
---------------------------- ---------------------------------------- ---------------------------
HOEPA Section 32 Home Ownership and Equity Protection High Cost Loan
Act of 1994, 15 U.S.C. ss. 1639, 12
C.F.R. xx.xx. 226.32 and 226.34
Effective October 1, 1995, amendments
October 1, 2002
---------------------------- ---------------------------------------- ---------------------------
Illinois High Risk Home Loan Act, Ill. Comp. High Risk Home Loan
Stat. tit. 815, xx.xx. 137/5 et seq.
Effective January 1, 2004 (prior
to this date, regulations under
Residential Mortgage License Act
effective from May 14, 2001)
---------------------------- ---------------------------------------- ---------------------------
Kansas Consumer Credit Code, Kan. Stat. Xxx. High Loan to Value
xx.xx. 16a-1-101 et seq. Consumer Loan (id. ss.
16a-3-207) and;
Sections 16a-1-301 and 16a-3-207 ---------------------------
became effective April 14, 1999; High APR Consumer Loan
Section 16a-3-308a became effective (id. ss. 16a-3-308a)
July 1, 1999
---------------------------- ---------------------------------------- ---------------------------
Kentucky 2003 KY H.B. 287 - High Cost Home High Cost Home Loan
Loan Act, Ky. Rev. Stat. xx.xx.
360.100 et seq.
Effective June 24, 2003
---------------------------- ---------------------------------------- ---------------------------
Maine Truth in Lending, Me. Rev. Stat. tit. High Rate High Fee
9-A, xx.xx. 8-101 et seq. Mortgage
Effective September 29, 1995 and as
amended from time to time
---------------------------- ---------------------------------------- ---------------------------
EXHIBIT B-3
---------------------------- ---------------------------------------- ---------------------------
STATE/JURISDICTION NAME OF ANTI-PREDATORY LENDING CATEGORY UNDER
LAW/EFFECTIVE DATE APPLICABLE ANTI-
PREDATORY LENDING LAW
---------------------------- ---------------------------------------- ---------------------------
Massachusetts Part 40 and Part 32, 209 C.M.R. xx.xx. High Cost Home Loan
32.00 et seq. and 209 C.M.R. xx.xx.
40.01 et seq.
Effective March 22, 2001 and amended
from time to time
---------------------------- ---------------------------------------- ---------------------------
Nevada Assembly Xxxx No. 284, Nev. Rev. Stat. Home Loan
xx.xx. 598D.010 et seq.
Effective October 1, 2003
---------------------------- ---------------------------------------- ---------------------------
New Jersey New Jersey Home Ownership Security High Cost Home Loan
Act of 2002, N.J. Rev. Stat. xx.xx.
46:10B- 22 et seq.
Effective for loans closed on or after
November 27, 2003
---------------------------- ---------------------------------------- ---------------------------
New Mexico Home Loan Protection Act, N.M. Rev. High Cost Home Loan
Stat. xx.xx. 58-21A-1 et seq.
Effective as of January 1, 2004;
Revised as of February 26, 2004
---------------------------- ---------------------------------------- ---------------------------
New York N.Y. Banking Law Article 6-1 High Cost Home Loan
Effective for applications made on or
after April 1, 2003
---------------------------- ---------------------------------------- ---------------------------
North Carolina Restrictions and Limitations on High High Cost Home Loan
Cost Home Loans, N.C. Gen. Stat.
xx.xx. 24-1.1E et seq.
Effective July 1, 2000; amended
October 1, 2003 (adding open-end lines
of credit)
---------------------------- ---------------------------------------- ---------------------------
Ohio H.B. 386 (codified in various sections Covered Loan
of the Ohio Code), Ohio Rev. Code Xxx.
xx.xx. 1349.25 et seq.
Effective May 24, 2002
---------------------------- ---------------------------------------- ---------------------------
Oklahoma Consumer Credit Code (codified in Subsection 10 Mortgage
various sections of Title 14A)
Effective July 1, 2000; amended
effective January 1, 2004
---------------------------- ---------------------------------------- ---------------------------
EXHIBIT B-4
---------------------------- ---------------------------------------- ---------------------------
STATE/JURISDICTION NAME OF ANTI-PREDATORY LENDING CATEGORY UNDER
LAW/EFFECTIVE DATE APPLICABLE ANTI-
PREDATORY LENDING LAW
---------------------------- ---------------------------------------- ---------------------------
South Carolina South Carolina High Cost and High Cost Home Loan
Consumer Home Loans Act, S.C. Code
Xxx. xx.xx. 37-23-10 et seq.
Effective for loans taken on or after
January 1, 2004
---------------------------- ---------------------------------------- ---------------------------
West Virginia West Virginia Residential Mortgage West Virginia Mortgage
Lender, Broker and Servicer Act, W. Loan Act Loan
Va. Code Xxx. xx.xx. 31-17-1 et seq.
Effective June 5, 2002
---------------------------- ---------------------------------------- ---------------------------
STANDARD & POOR'S COVERED LOAN CATEGORIZATION
---------------------------- ---------------------------------------- ---------------------------
STATE/JURISDICTION NAME OF ANTI-PREDATORY LENDING CATEGORY UNDER
LAW/EFFECTIVE DATE APPLICABLE ANTI-
PREDATORY LENDING LAW
---------------------------- ---------------------------------------- ---------------------------
Georgia (Oct. 1, 2002 - Georgia Fair Lending Act, Ga. Code Covered Loan
Mar. 6, 2003) Xxx. xx.xx. 7-6A-1 et seq.
Effective October 1, 2002 - March 6,
2003
---------------------------- ---------------------------------------- ---------------------------
New Jersey New Jersey Home Ownership Security Covered Home Loan
Act of 2002, N.J. Rev. Stat. xx.xx.
46:10B 22 et seq.
Effective November 27, 2003 - July 5,
2004
---------------------------- ---------------------------------------- ---------------------------
STANDARD & POOR'S HOME LOAN CATEGORIZATION
---------------------------- ---------------------------------------- ---------------------------
STATE/JURISDICTION NAME OF ANTI-PREDATORY LENDING CATEGORY UNDER
LAW/EFFECTIVE DATE APPLICABLE ANTI-
PREDATORY LENDING LAW
---------------------------- ---------------------------------------- ---------------------------
Georgia (Oct. 1, 2002 - Georgia Fair Lending Act, Ga. Code Home Loan
Mar. 6, 2003) Xxx. xx.xx. 7-6A-1 et seq.
Effective October 1, 2002 - March 6,
2003
---------------------------- ---------------------------------------- ---------------------------
EXHIBIT B-5
---------------------------- ---------------------------------------- ---------------------------
STATE/JURISDICTION NAME OF ANTI-PREDATORY LENDING CATEGORY UNDER
LAW/EFFECTIVE DATE APPLICABLE ANTI-
PREDATORY LENDING LAW
---------------------------- ---------------------------------------- ---------------------------
New Jersey New Jersey Home Ownership Security Home Loan
Act of 2002, N.J. Rev. Stat. xx.xx.
46:10B- 22 et seq.
Effective for loans closed on or after
November 27, 2003
---------------------------- ---------------------------------------- ---------------------------
New Mexico Home Loan Protection Act, N.M. Rev. Home Loan
Stat. xx.xx. 58-21A-1 et seq.
Effective as of January 1, 2004;
Revised as of February 26, 2004
---------------------------- ---------------------------------------- ---------------------------
North Carolina Restrictions and Limitations on High Consumer Home Loan
Cost Home Loans, N.C. Gen. Stat.
xx.xx. 24-1.1E et seq.
Effective July 1, 2000; amended
October 1, 2003 (adding open-end lines
of credit)
---------------------------- ---------------------------------------- ---------------------------
South Carolina South Carolina High Cost and Consumer Consumer Home Loan
Home Loans Act, S.C. Code Xxx. xx.xx.
37-23-10 et seq.
Effective for loans taken on or after
January 1, 2004
---------------------------- ---------------------------------------- ---------------------------
EXHIBIT B-6
