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EXHIBIT 10.1
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Exhibit 10.1
PURCHASE AGREEMENT
Between
ADVANTA NATIONAL BANK
and
ADVANTA FINANCE CORP.
as the Originators
and
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
as Purchaser
Dated as of September 1, 1998
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TABLE OF CONTENTS
Page
ARTICLE I Definitions....................................................................................1
ARTICLE II Procedures for Purchases of Mortgage Loans; Conditions Precedent; Settlements................5
Section 2.01. Purchase and Sale...............................................................5
Section 2.02. Delivery of Documents; Purchase of Mortgage Loans...............................6
Section 2.03. Survival of Representations.....................................................7
Section 2.04. Proceeds of Mortgage Loans......................................................7
Section 2.05. Defective Mortgage Loans........................................................7
ARTICLE III Protective Security Interest.................................................................7
ARTICLE IV Representations and Warranties................................................................8
Section 4.01. Representations and Warranties of Originators...................................8
Section 4.02. Representations and Warranties Regarding Mortgage Loans........................10
Section 4.03. Representations and Warranties of Purchaser....................................10
Section 4.04. Remedies for Breach of Representations and Warranties; Repurchase
Obligation.....................................................................11
ARTICLE V Covenants and Warranties of Originators.......................................................12
Section 5.01. Affirmative Covenants..........................................................12
Section 5.02. Negative Covenants.............................................................13
ARTICLE VI Sale of Mortgage Loans by Purchaser..........................................................13
ARTICLE VII Additional Remedies.........................................................................15
ARTICLE VIII Term.......................................................................................15
ARTICLE IX Exclusive Benefit of Parties; Assignment.....................................................15
ARTICLE X Amendment; Waivers............................................................................15
ARTICLE XI Execution in Counterparts....................................................................16
ARTICLE XII Effect of Invalidity of Provisions..........................................................16
ARTICLE XIII Governing Law..............................................................................16
ARTICLE XIV Notices.....................................................................................16
ARTICLE XV Entire Agreement.............................................................................16
ARTICLE XVI Indemnities.................................................................................17
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ARTICLE XVII RESPA Obligations..........................................................................18
ARTICLE XVIII Survival..................................................................................18
ARTICLE XIX Consent to Service..........................................................................18
ARTICLE XX Submission to Jurisdiction; Waiver of Trial by Jury..........................................19
ARTICLE XXI Construction................................................................................19
ARTICLE XXII Further Assurances.........................................................................19
SCHEDULES AND EXHIBITS
Schedule I Schedule Of HELOC Mortgage Loans
Schedule II Schedule Of HLTV Mortgage Loans
Exhibit A HELOC Mortgage Loan Representations And Warranties
Exhibit B HLTV Mortgage Loan Representations And Warranties
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THIS PURCHASE AGREEMENT (this "Agreement") is made as of
September 1, 1998 between Advanta National Bank, a national banking association
("ANB"), and Advanta Finance Corp., a Nevada corporation ("AFC"), on one hand,
and Advanta Mortgage Conduit Services, Inc. ("Purchaser"), on the other hand.
ANB and AFC are sometimes individually referred to herein as an "Originator" and
sometimes collectively referred to herein as the "Originators."
WHEREAS, the Originators desire to sell to Purchaser, and
Purchaser desires to purchase from the Originators, the Mortgage Loans (as
defined below), all in accordance with the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual
promises herein made and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
Capitalized terms not defined herein shall have the meanings
set forth in the Sale and Servicing Agreement or, if not defined therein, the
Indenture. As used in this Agreement, the following terms shall have the
following meanings:
"Additional Balance": With respect to any HELOC Mortgage Loan
as of any date of determination, the aggregate amount of all Draws by the
related Mortgagor subsequent to the Cut-Off Date.
"Assignee": With respect to any Person, any immediate or
mediate assignee, pledgee or other transferee of such Person.
"Assignment of Mortgage": With respect to each Mortgage Loan,
any assignment of the Mortgage, notice of transfer or equivalent instrument, in
recordable form, sufficient under the laws of the jurisdiction in which the
related Mortgaged Property is located to reflect the recordation of the pledge
of the Mortgage Loan to the Indenture Trustee for the benefit of the
Noteholders.
"Business Day": Any day that is not a Saturday, Sunday or
other day on which commercial banking institutions in the State of New York or
in the city in which the principal corporate trust office of the Indenture
Trustee is located are authorized or obligated by law or executive order to be
closed.
"Certificates": The trust certificates evidencing the
beneficial ownership interests in Holding, substantially in the form of Exhibit
A to the Holding Trust Agreement.
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"Charged-off Loan": Any Mortgage Loan that either (i) has been
Delinquent for a period of 180 consecutive days (irrespective of any grace
periods) or (ii) has become a Liquidated Loan, whichever shall occur first.
"Class A Noteholder" or "Noteholder": A Person in whose name a
Class A Note is registered in the Note Register.
"Class A Notes": The Class A-1 Notes and the Class A-2 Notes.
"Class A-1 Note": Any note executed and authenticated by the
Indenture Trustee substantially in the form set forth in Exhibit A to the
Indenture.
"Class A-2 Note": Any note executed and authenticated by the
Indenture Trustee substantially in the form set forth in Exhibit B to the
Indenture.
"Closing Date": September 30, 1998.
"Credit Line Agreement": With respect to any HELOC Mortgage
Loan, the related home equity line of credit agreement, security instrument and
promissory note executed by the related Mortgagor and any amendment or
modification thereof.
"Cut-Off Date": With respect to each Mortgage Loan (other than
a Qualified Replacement Mortgage), the opening of business on September 1, 1998.
[With respect to each Qualified Replacement Mortgage, the related Replacement
Cut-Off Date.]
"Cut-Off Date Principal Balance": With respect to any Mortgage
Loan, the unpaid principal balance thereof as of the related Cut-Off Date.
"Draw": With respect to any HELOC Mortgage Loan, an additional
borrowing by the Mortgagor subsequent to the Cut-Off Date in accordance with the
related Credit Line Agreement.
"Event of Termination": As defined in Article VII hereof.
"HELOC Mortgage": The mortgage, deed of trust or other
instrument creating a first or junior lien on an estate in fee simple interest
in real property securing a Credit Line Agreement.
"HELOC Mortgage Loan": A Mortgage Loan which is an
adjustable-rate home equity revolving credit line secured by a first or junior
mortgage or deed of trust on Mortgaged Property.
"HLTV Mortgage": The note evidencing a HLTV Mortgage or the
Credit Line Agreement pursuant to which a HELOC Mortgage is issued.
"HLTV Mortgage Loan": A Mortgage Loan which is a fixed-rate
closed-end high-loan-to-value junior Mortgage Loan under the Mortgage Notes.
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"Holding": Advanta Holding Trust, a Delaware business trust.
"Holding Trust Agreement": The trust agreement dated as of
September 1, 1998 between the Sponsor and Wilmington Trust Company, as owner
trustee, relating to the formation of Holding.
"Indenture": The Indenture dated as of September 1, 1998
between the Trust and the Indenture Trustee.
"Indenture Trustee": Bankers Trust Company of California, N.A.
or any successor Indenture Trustee appointed in accordance with the Indenture
that has accepted such appointment in accordance with the Indenture.
"Liquidated Loan": A Mortgage Loan with respect to which (i)
the related Mortgage Property has been acquired, liquidated or foreclosed upon
or (ii) the Master Servicer, in its reasonable good faith business judgment, has
determined that all Liquidation Proceeds that it expects to recover have been so
recovered (exclusive of the possibility of any deficiency judgment). A Mortgage
Loan which is purchased from the Trust pursuant to Section 3.3, 3.4, 3.6(b) or
4.10 of the Sale and Servicing Agreement is not a "Liquidated Loan."
"Loan Rate": As defined in the Sale and Servicing Agreement.
"Losses": Any and all out-of-pocket losses, claims, damages,
liabilities or expenses (including reasonable attorneys' fees and disbursements)
directly incurred by any person specified in this Agreement, resulting from
transactions entered into under this Agreement (other than liability for taxes).
Losses must be accounted for and presented for reimbursement documented in
reasonable detail and within a reasonable time.
"Master Servicer": Advanta Mortgage Corp. USA, a Delaware
corporation, and its permitted successors and assigns.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first or junior lien on an estate in fee simple interest in real
property securing an underlying Mortgage Note.
"Mortgage File": For each Mortgage Loan, the relevant items
listed in Exhibit A to the Sale and Servicing Agreement.
"Mortgage Loans": The mortgage loans identified in the
Mortgage Loan Schedules attached hereto, together with any Qualified Replacement
Mortgages substituted therefor in accordance with this Agreement [or the Sale
and Servicing Agreement]. The term "Mortgage Loan" includes any Mortgage Loan
which is Delinquent, which relates to a foreclosure or which relates to a
Mortgaged Property which is REO Property prior to such Mortgaged Property's
disposition by the Trust. Any mortgage loan which, although intended by the
parties hereto to have been, and which purportedly was, transferred and assigned
by an Originator to Purchaser, by Purchaser to
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Holding and by Holding to the Trust, in fact was not so transferred and assigned
for any reason whatsoever shall nevertheless be considered a "Mortgage Loan" for
all purposes of this Agreement.
"Mortgage Loan Schedules": Together, the schedule of HELOC
Mortgage Loans attached hereto as Schedule I and the schedule of HLTV Mortgage
Loans attached hereto as Schedule II.
"Mortgage Note": The promissory note and/or other
documentation evidencing the indebtedness of a Mortgagor under a HLTV Mortgage
Loan.
"Mortgaged Property": The underlying property securing a
Mortgage Loan.
"Mortgagor": In the case of a HELOC Mortgage Loan, the obligor
on the related Credit Line Agreement, and in the case of a HLTV Mortgage Loan,
the obligor on the related Mortgage Note.
"Officer's Certificate": A certificate signed by any
Authorized Officer of any Person delivering such certificate and delivered to
the Indenture Trustee.
"Payment Date": Any date on which the Indenture Trustee is
required to make distributions to the Class A Noteholders, which shall be the
25th day of each month, commencing in the month following the Closing Day or, if
such day is not a Business Day, then on the succeeding Business Day.
"Principal Balance": As to any Mortgage Loan, other than a
Charged-off Loan, and as of any date, the related Cut-Off Date Principal
Balance, plus (i) any Additional Balance in respect of such Mortgage Loan, minus
(ii) all collections credited as principal against the Principal Balance of such
Mortgage Loan in accordance with the related Credit Line Agreement or related
Mortgage Note prior to such date. For purposes of this definition, a Charged-off
Loan shall be deemed to have a Principal Balance of zero as of the first day of
the Remittance Period following the Remittance Period in which such Mortgage
Loan becomes a Charged-off Loan and at all times thereafter.
"Qualified Replacement Mortgage": A Mortgage Loan substituted
for another pursuant to Section 2.2(b), 3.3 or 3.4 of the Sale and Servicing
Agreement, which (i) bears a variable rate of interest in the case of a HELOC
Mortgage Loan or a fixed rate of interest in the case of a HLTV Mortgage Loan,
(ii) has a Loan Rate at least equal to the Loan Rate of the Mortgage Loan being
replaced, (which, in the case of a HELOC Mortgage Loan, shall mean a Mortgage
Loan having the same interest rate index, a margin over such index and a maximum
interest rate at least equal to those applicable to the Mortgage Loan being
replaced), (iii) is of the same or better property type and the same or better
occupancy status as the replaced Mortgage Loan, (iv) shall be of the same or
better credit quality classification (determined in accordance with the relevant
Originator's credit underwriting guidelines) as the Mortgage Loan being
replaced, (v) shall mature no later than the Payment Date occurring in October
2021 in the case of a HELOC Mortgage Loan or October 2023 in the case of a HLTV
Mortgage
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Loan, (vi) has a Combined Loan-to-Value Ratio as of the Cut-Off Date no higher
than the Combined Loan-to-Value Ratio of the replaced Mortgage Loan at such
time, (vii) has a Principal Balance as of the related Replacement Cut-Off Date
equal to or less than the Principal Balance of the replaced Mortgage Loan as of
such Replacement Cut-Off Date, (viii) is in the same lien position or better.
"Remittance Period": As to any Payment Date, the calendar
month preceding the month of such Payment Date.
"REO Property": A Mortgaged Property acquired by the Master
Servicer or any Sub-Servicer on behalf of the Trust through foreclosure or
deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan.
"Replacement Cut-Off Date": With respect to any Qualified
Replacement Mortgage, the first day of the calendar month in which such
Qualified Replacement Mortgage is conveyed to the Trust.
"Sale and Servicing Agreement": The Sale and Servicing
Agreement dated as of September 1, 1998 among the Sponsor, Holding, the Trust,
the Master Servicer and the Indenture Trustee.
"Sponsor": Advanta Mortgage Conduit Services, Inc.
"Trust": Advanta Home Equity Loan Trust 1998-B, a Delaware
business trust.
"Trust Agreement": The trust agreement dated as of September
1, 1998 among the Sponsor, Holding and Wilmington Trust Company, as owner
trustee, relating to the formation of the Trust.
ARTICLE II
Procedures for Purchases of Mortgage Loans;
Conditions Precedent; Settlements
Section 2.01 Purchase and Sale. The Originators hereby agree
to sell, assign, transfer, convey and set over to Purchaser, and Purchaser
hereby agrees to purchase and acquire from the Originators, without recourse
(subject to the Originators' obligations herein), on the Closing Date, all of
the Originators' respective right, title and interest in and to (a) each
Mortgage Loan, including its Principal Balance as of the Cut-Off Date and all
collections in respect of such Mortgage Loan received on or after the Cut-Off
Date (excluding any payments of accrued interest due prior to the Cut-Off Date);
(b) each Mortgaged Property that is acquired by foreclosure or deed in lieu of
foreclosure; (c) all rights under any hazard insurance policies covering a
Mortgaged Property; (d) all proceeds with respect to the foregoing; and (e) the
Mortgage File and other documents relating to the foregoing. As full
consideration for the Originators' sale, transfer, assignment and conveyance to
Purchaser of all of their respective right, title and
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interest in and to the Mortgage Loans and other properties specified above, on
the Closing Date, Purchaser shall (x) pay to or upon the order of the
Originators that amount in immediately available funds equal to the Originators'
pro rata share of the proceeds of the sale of the Notes, net of any underwriting
discounts and other transaction costs (including the items described in Section
9.01 hereof), and (y) direct the issuance of the Certificates to or upon the
order of the Originators, all in such relative proportions as the Originators
shall jointly determine on or before the Closing Date.
Section 2.02 Delivery of Documents; Purchase of Mortgage
Loans. Prior to the purchase of the Mortgage Loans:
(a) Each Originator shall have delivered to Purchaser or any
agent appointed by Purchaser the Mortgage File for each of the Mortgage Loans.
(b) Purchaser shall have received copies of the Mortgage Loan
Schedules.
(c) Purchaser shall have received copies of the resolutions of
the Board of Directors of each Originator, certified by its Secretary, approving
this Agreement.
(d) Purchaser shall have received copies of the articles of
incorporation, articles of association or charter of each Originator.
(e) Purchaser shall have received from each Originator (i) a
certificate of the Secretary or Assistant Secretary of such Originator
certifying the names and signatures of the officers authorized on its behalf to
execute this Agreement and any other documents to be delivered by it hereunder
and (ii) a copy of such Originator's by-laws.
(f) Purchaser shall have received an opinion of counsel to
each Originator as to the due authorization, execution and delivery by such
Originator of this Agreement and as to the validity and enforceability of the
transfers contemplated hereunder and addressing such other matters as Purchaser
may reasonably request.
(g) Each Originator shall have instructed the applicable
debtor, trustee, paying agent, authenticating agent, transfer agent, registrar,
predecessor in interest, owner (if any of the Mortgage Loans are in the form of
a security agreement) or servicer, if any, in respect of the related Mortgage
Loans to reflect on their books and records the transfer of such Mortgage Loans
to Purchaser, as owner or secured party (if any of the Mortgage Loans are in the
form of a security agreement).
(h) Purchaser shall have received the most recent available
standard servicing or lien reports in summary form, if any, with respect to all
of the mortgages in each Originator's portfolio similar to the HELOC Mortgage
Loans or the HLTV Mortgage Loans, as applicable.
(i) Purchaser shall be permitted to perform its standard loan
review of each Mortgage Loan to be purchased.
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(j) UCC-1 financing statements duly executed by each
Originator as debtor shall have been filed naming Purchaser as secured party and
the Indenture Trustee on behalf of the Trust as assignee.
Section 2.03.Survival of Representations. The terms and
conditions of the purchase and sale of each Mortgage Loan shall be as set forth
in this Agreement. Each Originator will be deemed on the Closing Date to have
made to Purchaser the representations and warranties set forth in Article IV
hereof, and such representations and warranties of such Originator shall be true
and correct on and as of the Closing Date. In addition, such Originator will be
deemed to have reaffirmed the representations and warranties contained in
Article IV hereof on the date of disposition of the Mortgage Loans by Purchaser
pursuant to the Sale and Servicing Agreement.
Section 2.04.Proceeds of Mortgage Loans. The sale, assignment,
transfer and conveyance hereby of all of the Originators respective right, title
and interest in and to each Mortgage Loan shall include all proceeds, products
and profits derived therefrom, including all scheduled payments of principal of
and interest on such Mortgage Loan and other amounts due or payable or to become
due or payable in respect thereof and proceeds thereof, including all monies,
goods and other tangible or intangible property received upon the liquidation or
sale thereof, except any payments in respect of accrued interest due prior to
the Cut-Off Date.
Section 2.05. Defective Mortgage Loans. If any Mortgage Loan
sold by an Originator hereunder is re-transferred to Purchaser pursuant to
Section 2.2(b) of the Sale and Servicing Agreement, the Originator shall, at
Purchaser's option, either (a) repurchase such Mortgage Loan at the Loan
Purchase Price therefor or (b) substitute in lieu thereof a Qualified
Replacement Mortgage (provided that the Originator has any such loans available
for sale at the time) and deliver to or upon the order of Purchaser the related
Substitution Amount, all in accordance with and subject to the applicable terms
and conditions of the Sale and Servicing Agreement.
ARTICLE III
Protective Security Interest
It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans (including the related Mortgage Files and the
other rights and properties described in Section 2.01 hereof) by the Originators
to Purchaser as contemplated by this Agreement be construed as a sale of the
Mortgage Loans by the Originators to Purchaser. It is, further, not the intent
of the parties that such conveyance be deemed a pledge of the Mortgage Loans by
the Originators to Purchaser or any assignee or other transferee of Purchaser,
including, but not limited to, the Indenture Trustee, to secure a debt or other
obligation of the Originators. However, in the event and to the extent that,
notwithstanding the intent of the parties hereto, any or all of the Mortgage
Loans (including the related Mortgage Files and the other rights and properties
described in Section 2.01 hereof) are held to be property of either or both of
the Originators, then (i) this Agreement shall also be deemed to be a security
agreement within the meaning of
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Article 9 of the New York Uniform Commercial Code; (ii) the conveyance provided
for herein shall be deemed to be a grant by the Originators to Purchaser of a
first priority security interest in all of the Originators' right, title and
interest in and to the Mortgage Loans (including the related Mortgage Files and
the other rights and properties described in Section 2.01 hereof) and all
amounts payable to the holder of the Mortgage Loans and/or such rights or
properties in accordance with the terms thereof and all proceeds of the
conversion, voluntary or involuntary, of the foregoing into cash, instruments,
securities or other property, including all amounts from time to time held or
invested in the Note Account, the Reserve Account or the Principal and Interest
Account, whether in the form of cash, instruments, securities or other property;
(iii) the possession by Purchaser or any of its Assignees or their respective
agents of items of property that constitute instruments, money, negotiable
documents or chattel paper shall be deemed to be "possession by the secured
party" for purposes of perfecting the security interest pursuant to Section
9-305 of the New York Uniform Commercial Code; (iv) notifications to persons
holding such property, and acknowledgments, receipts or confirmations from
persons holding such property, shall be deemed notifications to, or
acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of Purchaser for the purpose of perfecting
such security interest under applicable law; and (v) the obligations secured by
the first priority security interest described in clause (iii) above shall be
deemed to include any and all obligations of Purchaser or any of its Assignees
(including the Issuer) to pay the principal of and interest on the Notes to the
Noteholders and to pay the fees, expenses and other amounts required to be paid
to the Master Servicer, the Indenture Trustee, the Owner Trustee, the Note
Insurer and the Certificateholders, all in accordance with and otherwise subject
to the Operative Documents (including the Indenture). Any assignment of the
interest of Purchaser under any provision hereof shall also be deemed to be an
assignment of any security interest created hereby. Each of the Originators and
Purchaser shall, to the extent consistent with this Agreement, take such actions
as may be necessary to ensure that, if this Agreement were deemed to create a
security interest in the Mortgage Loans, such security interest would be deemed
to be a perfected security interest of first priority under applicable law and
would be maintained as such throughout the terms of this Agreement and the
Indenture. Each of the Originators also covenants not to pledge, assign or grant
any security interest to any third party in any Mortgage Loan conveyed to
Purchaser hereunder.
ARTICLE IV
Representations and Warranties
Section 4.01.Representations and Warranties of Originators.
Each of the Originators represents, warrants and covenants to Purchaser as of
the Closing Date that:
(a) Such Originator is duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation and is duly
authorized and qualified to transact any and all business contemplated by this
Agreement to be conducted by such Originator in any state in which a Mortgaged
Property is located to the
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extent necessary to ensure the enforceability of each Mortgage Loan in
accordance with the terms of this Agreement.
(b) Such Originator has the full corporate power and authority
to originate the Mortgage Loans conveyed by it hereunder and to execute, deliver
and perform, and to enter into and consummate the transactions contemplated by,
this Agreement; the execution, delivery and performance of this Agreement by
such Originator has been duly authorized by all necessary corporate action on
the part of such Originator; and this Agreement, assuming the due authorization,
execution and delivery thereof by Purchaser, constitutes a legal, valid and
binding obligation of such Originator, enforceable against such Originator in
accordance with its respective terms, except to the extent that (i) the
enforceability thereof may be limited by federal or state bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(c) The execution and delivery of this Agreement by such
Originator, the consummation by such Originator of the transactions herein
contemplated, and the fulfillment by such Originator of or compliance by such
Originator with the terms hereof will not (i) result in a breach of any term or
provision of the charter or by-laws of such Originator or (ii) conflict with,
result in a breach, violation or acceleration of, or result in a default under,
the terms of any other material agreement or instrument to which such Originator
is a party or by which it may be bound, or any statute, order or regulation
applicable to such Originator of any court, regulatory body, administrative
agency or governmental body having jurisdiction over such Originator, which
breach, violation, default or non-compliance would have a material adverse
effect on the business, operations, financial condition, properties or assets of
such Originator taken as a whole or the ability of such Originator to perform
its obligations under this Agreement; and such Originator is not a party to,
bound by, or in breach or violation of any material indenture or other material
agreement or instrument, or subject to or in violation of any statute, order or
regulation of any court, regulatory body, administrative agency or governmental
body having jurisdiction over it, which materially and adversely affects or, to
such Originator's knowledge, would in the future reasonably be expected to
materially and adversely affect, the ability of such Originator to perform its
obligations under this Agreement or the business, operations, financial
condition, properties or assets of such Originator taken as a whole.
(d) Such Originator is, and currently intends to remain, in
good standing and qualified to do business in each jurisdiction where failure to
be so qualified or licensed would have a material adverse effect on (i) the
business, operations, financial condition, properties or assets of such
Originator taken as a whole or (ii) the enforceability of any Mortgage Loan in
accordance with the terms of this Agreement.
(e) There is no litigation pending or, to such Originator's
actual knowledge, overtly threatened against such Originator that would
materially and adversely affect the execution, delivery or enforceability of
this Agreement or the ability
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of such Originator to perform any of its other obligations hereunder in
accordance with the terms hereof.
(f) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery and
performance by such Originator of, or compliance by such Originator with, this
Agreement or the consummation of the transactions contemplated hereby, or if any
such consent, approval, authorization or order is required, such Originator has
obtained the same.
(g) Such Originator has caused to be performed any and all
acts required to preserve the rights and remedies of Purchaser in any insurance
policies of such Originator applicable to the Mortgage Loans conveyed by such
Originator hereunder.
Section 4.02.Representations and Warranties Regarding Mortgage
Loans. Each Originator represents and warrants to Purchaser as of the Closing
Date that, with respect to each HELOC Mortgage Loan conveyed by such Originator
hereunder, each representation and warranty set forth in Exhibit A hereto is
true and correct. Each Originator further represents and warrants to Purchaser
as of the Closing Date that, with respect to each HLTV Mortgage Loan conveyed by
such Originator hereunder, each representation and warranty set forth in Exhibit
B hereto is true and correct.
Section 4.03. Representations and Warranties of Purchaser.
Purchaser hereby makes the following representations and warranties, each of
which representations and warranties (i) is material and being relied upon by
the Originators and (ii) is true in all respects as of the date of this
Agreement:
(a) Purchaser has been duly organized and is validly existing
as a corporation under the laws of the State of Delaware.
(b) Purchaser has the requisite power and authority and legal
right to execute and deliver, engage in the transactions contemplated by, and
perform and observe the terms and conditions of, this Agreement to be performed
by it.
(c) This Agreement has been duly authorized and executed by
Purchaser, is valid, binding and enforceable against Purchaser in accordance
with its terms, and the execution, delivery and performance by Purchaser of this
Agreement does not conflict with any material term or provision of any other
agreement to which Purchaser is a party or any term or provision of the
Certificate of Incorporation or the By-laws of Purchaser, or any law, rule,
regulation, order, judgment, writ, injunction or decree applicable to Purchaser
of any court, regulatory body, administrative agency or governmental body having
jurisdiction over Purchaser.
(d) No consent, approval, authorization or order of,
registration or filing with, or notice to any governmental authority or court is
required under applicable law in connection with the execution and delivery by
Purchaser of this Agreement.
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(e) To the best knowledge of Purchaser, there is no action,
proceeding or investigation pending or threatened against Purchaser before any
court, administrative agency or other tribunal (i) asserting the invalidity of
this Agreement, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement, or (iii) which is likely to
materially and adversely affect the performance by Purchaser of its obligations
under, or the validity or enforceability of, this Agreement.
(f) Each purchase of the Mortgage Loans hereunder shall
constitute a representation by Purchaser to Originator that Purchaser
understands, and that Purchaser has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of,
its investment in the relevant Mortgage Loans.
Section 4.04.Remedies for Breach of Representations and
Warranties; Repurchase Obligation. It is understood and agreed that the
representations and warranties set forth in Sections 4.01 and 4.02 shall survive
each sale of the Mortgage Loans to Purchaser and shall inure to the benefit of
Purchaser and its Assignees notwithstanding any restrictive or qualified
endorsement on any related Mortgage Note or Assignment of Mortgage or the
examination or failure to examine any Mortgage File. With respect to the
representations and warranties contained in Sections 4.01 and 4.02 which are
made to the best of an Originator's knowledge or to the actual knowledge of an
Originator, if it is discovered by such Originator or Purchaser that the
substance of such representation and warranty is inaccurate and such inaccuracy
materially and adversely affects the value of the related Mortgage Loan or
Purchaser's interest therein, then notwithstanding such Originator's lack of
knowledge with respect to the inaccuracy at the time the representation or
warranty was made, such Originator shall repurchase the related Mortgage Loan in
accordance with this Section 4.04 as if the applicable representation or
warranty was breached, subject to the terms and conditions of the Sale and
Servicing Agreement. Upon discovery by an Originator or Purchaser of a breach of
any of the foregoing representations and warranties which materially and
adversely affects the value of any Mortgage Loan or Purchaser's interest
therein, the party discovering such breach shall give prompt written notice to
the others.
Within 60 days of the earlier of either discovery by or notice
to an Originator of any breach of a representation or warranty by such
Originator which materially and adversely affects the value of any Mortgage Loan
or Purchaser's interest therein, such Originator shall use its best efforts
promptly to cure such breach in all material respects and, if such breach cannot
be cured or is not cured or is not being diligently pursued as evidenced by a
notice acceptable to Purchaser, as evidenced by Purchaser's agreement thereto,
at the end of such 60-day period, Originator shall, at Purchaser's option,
either (a) repurchase such Mortgage Loan at the Loan Purchase Price therefor or
(b) substitute in lieu thereof a Qualified Replacement Mortgage (provided that
the Originator has any such loans available for sale at the time) and deliver to
or upon the order of Purchaser the related Substitution Amount, all in
accordance with and subject to the applicable terms and conditions of the Sale
and Servicing Agreement.
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At the time of repurchase or substitution, Purchaser and such
Originator shall arrange for the assignment to such Originator of such Mortgage
Loan and the delivery to such Originator of the related Mortgage File.
Each Originator shall indemnify and hold harmless Purchaser
from and against any losses, damages, penalties, fines, forfeitures, reasonable
and necessary legal fees and related costs, judgments, and other costs and
expenses resulting from any claim, demand, defense or assertion based on or
grounded upon, or resulting from, a breach by such Originator of the
representations and warranties contained in this Article IV (notwithstanding any
limitation in such representation and warranty as to such Originator's
knowledge). It is understood and agreed that the obligations of each Originator
set forth in this Section 4.04 either to cure or to repurchase or substitute a
defective Mortgage Loan and to indemnify and hold harmless Purchaser as provided
in this Section 4.04 constitute the sole remedies of Purchaser respecting a
breach by such Originator of the foregoing representations and warranties.
Any cause of action against an Originator relating to or
arising out of the breach by such Originator of any representations and
warranties made in Sections 4.01 and 4.02 shall accrue as to any Mortgage Loan
upon (i) discovery of such breach by Purchaser or notice thereof by the
Originator to Purchaser, (ii) failure by the Originator to cure such breach or
to repurchase or substitute such Mortgage Loan as specified above, and (iii)
demand upon the Originator by Purchaser for compliance with the relevant
provisions of this Agreement.
ARTICLE V
Covenants and Warranties of Originators
So long as this Agreement remains in effect or any Originator
has obligations hereunder, each Originator hereby covenants and agrees with
Purchaser as follows:
Section 5.01 Affirmative Covenants.
(a) Such Originator shall do all things necessary to remain
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and to maintain all requisite authority to conduct
its business in each jurisdiction in which its business is conducted except
where failure to maintain such authority would not have a material adverse
effect on the ability of such Originator to conduct its business or to perform
its obligations under this Agreement.
(b) At all times during this Agreement, such Originator shall
possess sufficient net capital and liquid assets (or ability to access the same)
to satisfy its obligations as they become due in the normal course of business.
(c) Such Originator shall permit Purchaser or its accountants,
attorneys or other agents access to all of the books and records relating to the
Mortgage
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Loans purchased and retained by Purchaser for inspection and copying during
normal business hours at all places where such Originator conducts business.
Section 5.02. Negative Covenants
(a) Such Originator shall not assign or attempt to assign this
Agreement or any rights hereunder, without first obtaining the specific written
consent of Purchaser.
(b) Such Originator shall not amend its articles of
incorporation, articles of association or charter or its by-laws if such
amendment shall have or is likely to have an adverse effect upon Purchaser or
its interests under this Agreement, without the prior written consent of
Purchaser.
(c) Such Originator shall not (i) dissolve or terminate its
existence or (ii) transfer any assets to any affiliate except in the ordinary
course of its business or as otherwise expressly permitted or contemplated
hereby.
(d) Such Originator will not commit any act in violation of
applicable laws or regulations promulgated pursuant thereto that relate to the
Mortgage Loans or that materially and adversely affect the operations or
financial conditions of such Originator.
ARTICLE VI
Sale of Mortgage Loans by Purchaser
It is the intent of the parties hereto that (i) immediately
after the sale of the Mortgage Loans by the Originators to Purchaser as provided
herein, pursuant to the Sale and Servicing Agreement, Purchaser will sell,
assign, transfer, convey and set over to Holding all of Purchaser's right, title
and interest in and to the Mortgage Loans (including the other rights and
properties conveyed to it hereunder), (ii) immediately after the sale of the
Mortgage Loans by Purchaser to Holding, pursuant to the Sale and Servicing
Agreement, Holding will sell, assign, transfer, convey and set over to the Trust
all of Holding's right, title and interest in and to the Mortgage Loans, and
(iii) immediately after the sale of the Mortgage Loans by Holding to the Trust
as described above, pursuant to the Indenture, the Trust will Grant to the
Indenture Trustee all of the Trust's right, title and interest in and to the
Mortgage Loans.
With respect to each such sale or other transfer, each
Originator hereby agrees:
(a) to cooperate fully with Purchaser, Holding and the Trust
with respect to all reasonable requests and due diligence procedures, including
participating in meetings with rating agencies, insurers and such other parties
as Purchaser shall designate and participating in meetings with Holding and the
Trust and providing information reasonably requested by Holding and the Trust;
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(b) to execute all other necessary documents to effect the
transactions contemplated therein;
(c) to affirm the representations and warranties set forth
herein regarding such Originator and the Mortgage Loans as of the date of the
transfer to Holding and/or the Trust;
(d) to deliver to Purchaser for inclusion in any prospectus or
other offering material such publicly available information regarding such
Originator, its financial condition and the mortgage loan delinquency,
foreclosure and loss experience of its portfolio as is customarily set forth in
a prospectus supplement with respect to a comparable mortgage pool, the
underwriting of mortgage loans, the servicer, the servicing and collection of
mortgage loans, lending activities and loan sales of the servicer, regulatory
matters and delinquency and loss experience and any additional information
reasonably requested by Purchaser, or as is otherwise reasonably requested by
Purchaser and which such Originator is capable of providing without unreasonable
effort or expense, and to indemnify Purchaser and its Assignees for material
misstatements or omissions contained in such information;
(e) to deliver to Purchaser, and to any Person designated by
Purchaser, such legal documents and in-house opinions of counsel as are
customarily delivered by originators and reasonably determined by Purchaser to
be necessary in connection with the transactions contemplated by the Sale and
Servicing Agreement, it being understood that the cost of any opinions of
outside special counsel that may be required shall be the responsibility of such
Originator; and
(f) to cooperate fully with Purchaser and its Assignees with
respect to the preparation of Mortgage Loan documents and other documents and
with respect to servicing requirements reasonably requested by the rating
agencies and insurers.
ARTICLE VII
Additional Remedies
Upon the occurrence of an Event of Default under the Indenture
due to an act or omission of an Originator, Purchaser and any of its Assignees
shall have, in addition to all other rights and remedies under this Agreement or
otherwise, all other rights and remedies provided under the UCC of each
applicable jurisdiction and other applicable laws, which rights shall be
cumulative. Without limiting the foregoing, the occurrence of any such Event of
Default shall not deny to Purchaser or its Assignees any remedy to which
Purchaser or its Assignees may be otherwise appropriately entitled, whether by
statute or applicable law, at law or in equity.
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ARTICLE VIII
Term
This Agreement shall terminate on the date of termination of
the Trust as set forth in Article IX of the Trust Agreement.
ARTICLE IX
Exclusive Benefit of Parties; Assignment
This Agreement is for the exclusive benefit of the parties
hereto and their respective successors and assigns and shall not be deemed to
give any legal or equitable right to any other person except Holding, the Trust,
the Indenture Trustee, the Noteholders and the Insurer. Neither this Agreement
nor any rights hereunder may be assigned by any party hereto without the prior
written consent of the others except to Holding, the Trust and the Indenture
Trustee.
ARTICLE X
Amendment; Waivers
This Agreement may be amended from time to time only by
written agreement of the Originators and Purchaser with the prior written
consent of the Insurer, which consent shall not be unreasonably withheld. Any
forbearance, failure, or delay by a party in exercising any right, power, or
remedy hereunder shall not be deemed to be a waiver thereof, and any single or
partial exercise by a party of any right, power or remedy hereunder shall not
preclude the further exercise thereof. Every right, power and remedy of a party
shall continue in full force and effect until specifically waived by it in
writing. No right, power or remedy shall be exclusive, and each such right,
power or remedy shall be cumulative and in addition to any other right, power or
remedy, whether conferred hereby or hereafter available at law or in equity or
by statute or otherwise.
ARTICLE XI
Execution in Counterparts
This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument. Signatures may be exchanged by
facsimile, and each party hereto agrees to be bound by its own facsimile
signature and to accept the facsimile signature of the other party.
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ARTICLE XII
Effect of Invalidity of Provisions
In case any one or more of the provisions contained in this
Agreement should be or become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall in no way be affected, prejudiced or disturbed thereby.
ARTICLE XIII
Governing Law
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to its rules
regarding conflict of laws.
ARTICLE XIV
Notices
Any notices, consents, directions, demands and other
communications given under this Agreement (unless otherwise specified herein)
shall be in writing and shall be deemed to have been duly given when personally
delivered at or telecopied to the respective addresses or facsimile numbers, as
the case may be, set forth on the signature page hereof for the Originators and
Purchaser, or to such other address or facsimile number as either party shall
give notice to the other party pursuant to this Article XIV. Notices, consents,
and other communications may also be effected by first class mail, postage
prepaid sent to the foregoing addresses and will be effective upon receipt by
the intended recipient.
ARTICLE XV
Entire Agreement
This Agreement, including the Exhibits and Schedules hereto,
contains the entire agreement of the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements between
them, whether oral or written, of any nature whatsoever with respect to the
subject matter hereof.
ARTICLE XVI
Indemnities
Without limiting any other rights which Purchaser or each
Originator may have hereunder or under applicable law, and in addition to any
other indemnity provided hereunder, each Originator hereby agrees to indemnify
Purchaser and its respective
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officers, directors, agents and employees (each, an "Indemnified Party") from
and against any and all Losses incurred by any of them relating to or resulting
from:
(a) Any representation or warranty made by such Originator (or
any officers, employees or agents of such Originator) under or in connection
with this Agreement, any periodic report required to be furnished thereunder or
any other information or document delivered by such Originator pursuant hereto,
which shall have been false or incorrect in any material respect when made or
deemed made;
(b) The failure by such Originator to (i) comply with any
applicable law, rule or regulation with respect to any purchase and sale
hereunder or (ii) perform or observe any material obligation or covenant
hereunder; or (c) The failure by such Originator (if so requested by Purchaser)
to execute and properly file, or any delay in executing and properly filing,
financing statements or other similar instruments or documents under the UCC of
any applicable jurisdiction or other applicable laws with respect to the
Mortgage Loans.
Promptly after receipt by an Indemnified Party under this
Article XVI of notice of the commencement of any action or other proceeding,
such Indemnified Party will, if a claim in respect thereof is to be made against
the indemnifying party under this Article XVI, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability that it may have to
any Indemnified Party otherwise than under this Article XVI. In case any such
action is brought against any Indemnified Party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party will be entitled to
participate therein, and to the extent that it may elect by written notice
delivered to the Indemnified Party promptly after receiving the aforesaid notice
from such Indemnified Party, to assume the defense thereof, with counsel
satisfactory to such Indemnified Party; provided, however, that if the
defendants in any such action include both the Indemnified Party and the
indemnifying party and the Indemnified Party shall have reasonably concluded
that there may be legal defenses available to it and/or other Indemnified
Parties that are different from or additional to those available to the
indemnifying party, the Indemnified Party shall have the right to elect separate
counsel to assert such legal defenses and to otherwise participate in the
defense of such action on behalf of such Indemnified Party. Upon receipt of
notice from the indemnifying party to such Indemnified Party of its election so
to assume the defense of such action and approval by the Indemnified Party of
counsel, the indemnifying party will not be liable for any legal or other
expenses subsequently incurred by such Indemnified Party in connection with the
defense thereof, unless (i) the Indemnified Party shall have employed separate
counsel in connection with the assertion of legal defenses in accordance with
the proviso to the next preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the expenses of more than one
separate counsel representing the Indemnified Parties under this Article XVI who
are parties to such action), (ii) the indemnifying party shall not have employed
counsel satisfactory to the Indemnified Party to represent the Indemnified Party
within a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the
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employment of counsel for the Indemnified Party at the expense of the
indemnifying party; and except that, if clause (i) or (iii) is applicable, such
liability shall only be in respect of the counsel referred to in such clause (i)
or (iii).
ARTICLE XVII
RESPA Obligations
Each Originator agrees to discharge, on Purchaser's behalf,
all obligations, including all disclosure obligations, which Purchaser may have
under the Real Estate Settlement Procedures Act of 1974, as amended, in
connection with Purchaser's purchase from such Originator of the Mortgage Loans.
Purchaser agrees to provide the Originator with such information as is
reasonably necessary for the Originator to discharge such obligations and hereby
appoints the Originator as its agent in its name for the purposes of, and only
for the purposes of, performing such obligations. Each Originator hereby agrees
to indemnify Purchaser and its respective officers, directors, agents and
employees from any Losses suffered by any such party in connection with the
Originator's obligations under this provision.
ARTICLE XVIII
Survival
All indemnities and undertakings of Originator and Purchaser
hereunder shall survive the termination of this Agreement.
ARTICLE XIX
Consent to Service
Each party irrevocably consents to the service of process by
registered or certified mail, postage prepaid, to it at its address given
pursuant to Article XIV hereof.
ARTICLE XX
Submission to Jurisdiction; Waiver of Trial by Jury
With respect to any claim arising out of this Agreement each
party irrevocably submits to the exclusive jurisdiction of the courts of the
State of New York and the United States District Court located in the Borough of
Manhattan, City of New York, and each party irrevocably waives any objection
which it may have at any time to the laying of venue of any suit, action or
proceeding arising out of or relating hereto brought in any such court,
irrevocably waives any claim that any such suit, action or proceeding brought in
any such court has been brought in any inconvenient forum and further
irrevocably waives the right to object, with respect to such claim, suit, action
or proceeding brought in any such court, that such court does not have
jurisdiction over such
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party, provided that service of process is made as set forth in Article XIX
hereof or by any other lawful means. To the extent permitted by applicable law,
Purchaser and the Originators each irrevocably waive all right of trial by jury
in any action, proceeding or counterclaim arising out of or in connection with
this Agreement or any matter arising hereunder.
ARTICLE XXI
Construction
The headings in this Agreement are for convenience only and
are not intended to influence its construction. References to Articles,
Sections, Schedules and Exhibits in this Agreement are to the Articles, Sections
of and Schedules and Exhibits to this Agreement. The Schedules and Exhibits are
hereby incorporated into and form a part of this Agreement. As used in this
Agreement, any form of the word "include" shall be deemed to be followed by the
words "without limitation," the words "and" and "or" are used in the conjunctive
or disjunctive as the sense and circumstances may require, the singular includes
the plural and vice-versa, and terms such as "herein," "hereof," "hereby" and
"hereunder" refer to this Agreement as a whole and not to any particular
provision of this Agreement, unless the context clearly indicates otherwise.
Unless otherwise stated in this Agreement, in the computation of a period of
time from a specified date to a later specified date, the word "from" means
"from and including" and the words "to" and "until" each means "to but
excluding."
ARTICLE XXII
Further Assurances
Each party hereto agrees to execute, acknowledge and deliver
to the others such reasonable and appropriate additional documents, instruments
or agreements as any of the other parties may be necessary or appropriate to
effectuate the purposes of this Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused their names
to be signed hereto by their respective officers thereunto duly authorized, all
as of the date first written above.
ADVANTA MORTGAGE CONDUIT
SERVICES INC., as Purchaser
By:
--------------------------------------
Name:
Title:
ADVANTA NATIONAL BANK,
as an Originator
By:
--------------------------------------
Name:
Title:
ADVANTA FINANCE CORP.,
as Originator
By:
--------------------------------------
Name:
Title:
25
SCHEDULE I
SCHEDULE OF HELOC MORTGAGE LOANS
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SCHEDULE II
SCHEDULE OF HLTV MORTGAGE LOANS
II-1
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EXHIBIT A
HELOC MORTGAGE LOAN
REPRESENTATIONS AND WARRANTIES
Each Originator represents, warrants and covenants to
Purchaser that as of the Closing Day with respect to the HELOC Mortgage Loans:
(i) All of the original or certified documentation set forth
in Section 2.1 of the Sale and Servicing Agreement (including all material
documents related thereto) with respect to each HELOC Mortgage Loan has been or
will be delivered to Purchaser on the Closing Day. All such documentation is
true and accurate in all material respects. Each of the documents and
instruments specified to be included therein has been duly executed and in due
and proper form, and each such document or instrument is in a form generally
acceptable to prudent mortgage lenders that regularly originate or purchase
mortgage loans comparable to the HELOC Mortgage Loans for sale to prudent
investors in the secondary market that invest in mortgage loans such as the
HELOC Mortgage Loans;
(ii) As of the Closing Day with respect to the HELOC Mortgage
Loans and the applicable Transfer Date with respect to any Qualified Replacement
Mortgage and as of the date any Additional Balance is created, the information
set forth in the HELOC Mortgage Loan Schedule for such HELOC Mortgage Loans is
true and correct in all material respects;
(iii) As of the Closing Day, no more than [______%] of the
related Cut-Off Date Pool Balance of the Mortgage Loans is secured by Mortgaged
Properties located within any single zip code area. None of the HELOC Mortgage
Loans consists of Date-of-Payment Loans;
(iv) The HELOC Mortgages and Credit Line Agreements have not
been assigned or pledged, and Originator is the sole owner and holder of the
HELOC Mortgages and Credit Line Agreements free and clear of any and all liens,
claims, encumbrances, participation interests, equities, pledges, charges or
security interests of any nature, and has full right and authority, under all
governmental and regulatory bodies having jurisdiction over the Class A
Noteholder of the applicable HELOC Mortgage Loan, to sell, assign or transfer
the same;
(v) As of the Closing Day with respect to the HELOC Mortgage
Loans and the applicable Transfer Date with respect to any Qualified Replacement
Mortgage, there is no valid offset, defense or counterclaim of any obligor under
any Credit Line Agreement or HELOC Mortgage. Neither the operation of any of the
terms of each Credit Line Agreement and each HELOC Mortgage nor the exercise of
any right thereunder will render either the Credit Line Agreement or the HELOC
Mortgage unenforceable, in whole or in part, nor subject to any right of
rescission, set-off, claim, counterclaim or defense, including, without
limitation, the defense of usury and no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto;
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(vi) No Minimum Monthly Payment is more than 59 days
delinquent (measured on a contractual basis); and with respect to the HELOC
Mortgage Loans no more than [____%] (by Initial Cut-Off Date Pool Balance) were
30-59 days delinquent (measured on a contractual basis);
(vii) As of the related Cut-Off Date with respect to the
Mortgage Loans and the applicable Transfer Date with respect to any Qualified
Replacement Mortgage, each Credit Line Agreement and each HELOC Mortgage Loan is
an enforceable obligation of the related Mortgagor, except as the enforceability
thereof may be limited by the bankruptcy, insolvency or similar laws affecting
creditors' rights generally;
(viii) The weighted average remaining term to maturity of the
HELOC Mortgage Loans on a contractual basis as of the Initial Cut-Off Date for
the Mortgage Loans is approximately [____] months. On each date that the Loan
Rates have been adjusted, interest rate adjustments on the HELOC Mortgage Loans
were made in compliance with the related HELOC Mortgage and Credit Line
Agreement and applicable law. Over the term of each HELOC Mortgage Loan, the
Loan Rate may not exceed the related Loan Rate Cap, if any. The Loan Rate Caps
for the HELOC Mortgage Loans range between [______% and _____%]. The HELOC
Mortgage Loans' margins range between [______% and ____%] and the weighted
average margin is approximately [______%] as of the related Cut-Off Date for the
HELOC Mortgage Loans. The Loan Rates on such HELOC Mortgage Loans range between
[_____% and _____%] and the weighted average Loan Rate is approximately
[_____%];
(ix) The Credit Limits on the HELOC Mortgage Loans range
between [$_______ and $_______] with an average of [_______]. As of the Cut-Off
Date for the HELOC Mortgage Loans, no HELOC Mortgage Loan had a principal
balance in excess of approximately [$_______] and the average principal balance
of the HELOC Mortgage Loans is equal to approximately [$_______;]
(x) Each HELOC Mortgage Loan being transferred to the Trust is
a HELOC Mortgage;
(xi) Each Mortgaged Property is improved by a single
(one-to-four) family residential dwelling, which may include condominiums and
townhouses but shall not include cooperatives or mobile homes attached to a
foundation, or otherwise, or constitutes other than real property under
applicable state law;
(xii) No HELOC Mortgage Loan had a Combined Loan-to-Value
Ratio in excess of 125%;
(xiii) As of the Closing Day, each HELOC Mortgage is either a
valid and subsisting first or junior lien of record on the Mortgaged Property
[(subject in the case of any junior Mortgage Loan only to a Senior Lien on such
Mortgaged Property)] and subject in all cases to the exceptions to title set
forth in the title insurance policy, with respect to the related HELOC Mortgage
Loan, which exceptions are generally acceptable to banking institutions in
connection with their regular mortgage lending activities, and
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except for liens for (i) real estate taxes and special assessments not yet
delinquent, (ii) income taxes, (iii) any covenants, conditions and restrictions,
rights of way, easements, and other matters of public record and such other
exceptions to which similar properties are commonly subject and which do not
individually, or in the aggregate, materially and adversely affect the benefits
of the security intended to be provided by such HELOC Mortgage;
(xiv) Immediately prior to the transfer and assignment herein
contemplated, Originator held good and indefeasible title to, and was the sole
owner of, each HELOC Mortgage Loan conveyed by Originator (including its Cut-Off
Date Pool Balance), all monies due or to become due with respect thereto, and
all proceeds of such Cut-Off Date Pool Balances with respect thereto, free of
any liens, charges, mortgages, encumbrances or rights of others except liens
which will be released simultaneously with such transfer and assignment; and
immediately upon the transfer and assignment herein contemplated, Purchaser will
hold good and indefeasible title to, and be the sole owner of, each HELOC
Mortgage Loan, free of any liens, charges, mortgages, encumbrances or rights of
others except liens which will be released simultaneously with such transfer and
assignment;
(xv) There is no delinquent tax or assessment, lien or
mechanic's lien on any Mortgaged Property, and each Mortgaged Property is free
of substantial damage and is in good repair;
(xvi) Each HELOC Mortgage Loan at the time it was made
complied in all material respects with all applicable state and federal laws and
regulations, including, without limitation, the federal Truth-in-Lending Act and
other consumer protection laws, real estate settlement procedure, usury, equal
credit opportunity, disclosure and recording laws;
(xvii) With respect to each First Mortgage Loan, and, to the
best of Originator's knowledge, with respect to each junior Mortgage Loan, a
lender's title insurance policy issued in standard California Land Title
Association form or American Land Title Association form or other form
acceptable in a particular jurisdiction by a title insurance company authorized
to transact business in the state in which the related Mortgaged Property is
situated, was issued on the date of origination of the HELOC Mortgage Loan and
as of the Cut-Off Date, each such policy is valid and remains in full force and
effect, or a title search or guaranty of title customary in the relevant
jurisdiction was obtained with respect to a HELOC Mortgage Loan as to which no
title insurance policy or binder was issued.
(xviii) As of the Closing Day, each Credit Line Agreement is
the legal, valid, binding and enforceable obligation of the maker thereof and is
enforceable in accordance with its terms, except only as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in equity or
at law), and all parties to each HELOC Mortgage Loan had full legal capacity to
execute all documents relating to such HELOC Mortgage Loan and convey the estate
therein purported to be conveyed;
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(xix) The terms of each Credit Line Agreement and each HELOC
Mortgage have not been impaired, altered or modified in any respect, except by a
written instrument which has been recorded, if necessary, to protect the
interest of Purchaser. The substance of any such alteration or modification is
reflected on the related HELOC Schedule of Mortgage Loans and has been approved
by the primary mortgage guaranty insurer, if any;
(xx) Except as otherwise required by law, pursuant to the
statute under which the related HELOC Mortgage Loan was made, the related Credit
Line Agreement is not and has not been secured by any collateral, pledged
account or other security except the lien of the corresponding HELOC Mortgage;
(xxi) Each Mortgaged Property is located in the state
identified in the HELOC Schedule of Mortgage Loans and consists of one or more
parcels of real property with a residential dwelling erected thereon;
(xxii) There is no proceeding pending or threatened for the
total or partial condemnation of any Mortgaged Property, nor is such a
proceeding currently occurring, and each Mortgaged Property is undamaged by
waste, fire, earthquake or earth movement, flood, tornado or other casualty, so
as to affect adversely the value of the Mortgaged Property as security for the
HELOC Mortgage Loan or the use for which the premises were intended;
(xxiii) With respect to each junior Mortgage Loan, either (A)
consent for such HELOC Mortgage Loan was not required by the holder of the
related Senior Lien prior to the making of such HELOC Mortgage Loan or (B) such
consent has been obtained and is contained in the related Mortgage File;
(xxiv) Each HELOC Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof adequate
for the realization against the related Mortgaged Property of the benefits of
the security, including (A) in the case of a HELOC Mortgage designated as a deed
of trust, by Indenture Trustee's sale and (B) otherwise by judicial foreclosure.
There is no homestead or other exemption available which materially interferes
with the right to sell the related Mortgaged Property at a Indenture Trustee's
sale or the right to foreclose the related HELOC Mortgage;
(xxv) As of the Closing Day, there is no default, breach,
violation or event of acceleration existing under any HELOC Mortgage or the
related Credit Line Agreement and no event which, with the passage of time or
with notice and the expiration of any grace or cure period, would constitute a
default, breach, violation or event of acceleration; and the Sponsor has not
waived any default, breach, violation or event of acceleration;
(xxvi) To the best knowledge of Originator, all parties to the
Credit Line Agreement and the HELOC Mortgage had legal capacity to execute the
Credit Line Agreement and the HELOC Mortgage and each Credit Line Agreement and
HELOC Mortgage have been duly and properly executed by such parties;
A-4
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(xxvii) No selection procedures reasonably believed by
Originator to be adverse to the interests of Purchaser was utilized in selecting
the HELOC Mortgage Loans;
(xxviii) No Mortgagor has been released, in whole or in part,
except in connection with an assumption agreement which has been approved by the
applicable title insurer (to the extent required by such title insurer) and
which is part of the HELOC Mortgage File delivered to Purchaser;
(xxix) With respect to each HELOC Mortgage Loan that is not a
first mortgage loan, the related prior lien requires equal monthly payments. At
the time of origination of each HELOC Mortgage Loan that is not a first mortgage
loan, the related prior lien was not more than 30 days delinquent;
(xxx) All required inspections, licenses and certificates with
respect to the use and occupancy of all occupied portions of all property
securing the HELOC Mortgages have been made, obtained or issued, as applicable;
(xxxi) No more than _____% of the HELOC Mortgage Loans are
junior mortgage loans;
(xxxii) With respect to each HELOC Mortgage Loan that is not a
first mortgage loan, the related prior lien does not provide for negative
amortization;
(xxxiii) With respect to each HELOC Mortgage Loan that is not
a first mortgage loan, the maturity date of the HELOC Mortgage Loan is prior to
the maturity date of the related prior lien if such prior lien provides for a
balloon payment; and
(xxxiv) Each HELOC Mortgage Loan is secured by a property
having an appraised value of less than $1,500,000.
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EXHIBIT B
HLTV MORTGAGE LOAN
REPRESENTATIONS AND WARRANTIES
Each Originator represents, warrants and covenants to
Purchaser that as of the Closing Day with respect to the HLTV Mortgage Loans:
(xxxv) The information with respect to each HLTV Loan set
forth in the related HLTV Loan Schedule is true and correct as of the
Cut-Off Date.
(xxxvi) All of the original or certified documentation
required to be delivered on the Closing Date to the Indenture Trustee,
with respect to each HLTV Loan has been or will be delivered to the
Indenture Trustee. Each of the documents and instruments specified to
be included therein has been duly executed and in due and proper form,
and each such document or instrument is in a form generally acceptable
to prudent mortgage lenders that regularly originate or purchase
mortgage loans comparable to the HLTV Loans for sale to prudent
investors in the secondary market that invest in mortgage loans similar
to the HLTV Loans.
(xxxvii) Each HLTV Loan is a valid and existing lien of record
on the Mortgaged Property.
(xxxviii) Immediately prior to the transfer and assignment
herein contemplated, the Sponsor held good and indefeasible title to,
and was the sole owner of, each HLTV Loan conveyed by the Sponsor
subject to no liens, charges, mortgages, encumbrances or rights of
others except liens which will be released simultaneously with such
transfer and assignment and immediately upon receipt of each HLTV Loan,
the Indenture Trustee will hold good and indefeasible title to, and
will be the sole owner of each HLTV Loan, free and clear of any liens,
charges, mortgages, encumbrances, or rights of others except liens
which will be released immediately prior to such transfer or
assignment.
(xxxix) As of the related Cut-Off Date, no HLTV Loan is thirty
(30) or more days Delinquent, except for those loans the Buyer reviews
during due diligence and agrees to purchase with knowledge of
delinquency; there is no valid and enforceable offset, defense or
counterclaim to any Mortgage Note, including the obligation of the
related Mortgagor to pay the unpaid principal of or interest on such
Mortgage Note or the defense of usury, nor will the operation of any of
the terms of such Mortgage Note, or the exercise of any right
thereunder, render either the Mortgage Note unenforceable in whole or
in part, or subject to any right of rescission, set-off, counterclaim
or defense, including the defense of usury, and no such right of
rescission, set-off, counterclaim or defense has been asserted with
respect thereto.
(xl) There is no delinquent tax or assessment lien or
mechanic's lien, or claim for work, labor, or material on any Mortgaged
Property which is or may be a lien prior to, or equal with, the lien of
the related Mortgage except those which are insured
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against by any title insurance policy referred to in paragraph (viii)
below; there is no proceeding pending or threatened or currently
occurring for the total or partial condemnation of any Mortgaged
Property; each Mortgaged Property is free of substantial damage and is
in good repair, except for those items specifically mentioned in the
appraisal, or any applicable appraisal review of any mortgaged
property; each Mortgaged Property is undamaged by waste, fire,
earthquake or earth movement, flood, tornado or other casualty, so as
to affect adversely the value of the Mortgaged Property as security for
the HLTV Loan or the use for which the premises were intended.
(xli) Each HLTV Loan at the time it was made complied in all
material respects with all applicable state and federal laws and
regulations, including, without limitation, the federal
Truth-in-Lending Act, the Real Estate Settlement Procedures Act, and
other consumer protection laws, usury, equal credit opportunity,
disclosure and recording laws. Each HLTV Loan is a Qualifying HLTV Loan
and is a Non-REMICable Mortgage Loan.
(xlii) With respect to each HLTV Loan, a title policy, if any,
or evidence of a title search, in either case from a title company
authorized to transact business in the state in which the related
Mortgaged Property is situated, insuring or reflecting the mortgagee's
interest under the related HLTV Loan as the holder of a valid first or
second mortgage lien of record on the real property described in the
related Mortgage.
(xliii) Each Mortgaged Property is improved by a one- to four
family residential dwelling, which may include, condominiums and
townhouses but shall not include cooperatives; the improvements upon
each Mortgaged Property are covered by a valid and existing hazard
insurance policy with a generally acceptable carrier that provides for
fire and extended coverage representing coverage not less than the
least of (A) the outstanding principal balance of the related HLTV Loan
(together, in the case of a junior HLTV Loan, with the outstanding
principal balance of any Senior Lien), (B) the minimum amount required
to compensate for damage or loss on a replacement cost basis or (C) the
full insurable value of the Mortgaged Property.
(xliv) Each Mortgaged Property for an HLTV Loan is not
required to have a flood insurance policy maintained with respect to
it.
(xlv) Each Mortgage Note is the legal, valid and binding
obligation of the maker thereof and is enforceable in accordance with
its terms, except only as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by
general principles of equity (whether considered in a proceeding or
action in equity or at law). The maker of such Mortgage and Note had
the legal capacity to execute such Mortgage and Mortgage Note at the
time such Mortgage and Mortgage Note were executed.
(xlvi) With respect to any Senior Lien, Seller has caused and
will cause to be performed any and all acts required to be performed to
preserve the rights and remedies of the Master Servicer in any
Insurance Policies applicable to any HLTV Loans delivered by Seller,
including any necessary notifications of insurers, assignments of
policies or
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interests therein, and establishments of co-insured, joint loss payee
and mortgagee rights in favor of the Buyer and its assignees in care of
the Master Servicer.
(xlvii) Interest on each Mortgage Note is calculated in
accordance with the actuarial method; the terms of each Mortgage Note
and each Mortgage have not been impaired, altered or modified in any
respect, except by a written instrument which has been recorded, if
necessary, to protect the interest of the Indenture Trustee and which
has been included in the related Mortgage File to be delivered to the
Indenture Trustee. The substance of any such alteration or modification
is reflected on the related HLTV Loan Schedule and has been approved by
the primary mortgage guaranty insurer, if any.
(xlviii) Except as otherwise required by law or pursuant to
the statute under which the related HLTV Loan was made, the related
Mortgage Note will not be secured by any collateral, pledged account or
other security except the lien of the corresponding Mortgage.
(xlix) No HLTV Loan will be originated under a buydown plan;
no HLTV Loan provides for negative amortization, has a shared
appreciation feature, or other contingent interest feature; and as of
the related Cut-Off Date, no HLTV Loan had a Combined
Loan-to-Value-Ratio in excess of the maximum for the related product
type as set forth in the relevant Originator's applicable guidelines.
(l) Any advances made after the date of origination of an HLTV
Loan but prior to the Cut-Off Date, have been consolidated with the
outstanding principal amount secured by the related Mortgage, and the
secured principal amount, as consolidated, bears a single interest rate
and single repayment term reflected on the related HLTV Loan Schedule.
No Mortgage Note has been modified, except as reflected on the related
HLTV Loan Schedule, and evidence of any modification is in the related
Mortgage File and has been supplied to the Indenture Trustee. The
consolidated principal amount does not exceed the original principal
amount of the related HLTV Loan. No Mortgage Note permits or obligates
the Master Servicer, any Sub-Servicer or the relevant Originator or its
assignees to make future advances to the related Mortgagor at the
option of the Mortgagor.
(li) Any and all requirements as to completion of any on-site
or off-site improvements and as to disbursements of any escrow funds
therefor have been complied with, subject to any escrow hold-back for
improvements pending completion. All costs, fees and expenses incurred
in making, closing or recording the HLTV Loans were paid.
(lii) All of the improvements which were included for the
purposes of determining the Appraised Value of any Mortgaged Property
lie wholly within the boundaries and building restriction lines of such
Mortgaged Property and no improvements on adjoining properties encroach
upon such Mortgaged Properties and, if a title insurance policy exists
with respect to such Mortgaged Property, are stated in the title
insurance policy and affirmatively insured; no improvement located on
or being part of any 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
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occupied portions of each 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 and such Property is
lawfully occupied under the applicable law.
(liii) With respect to each Mortgage on an HLTV Loan
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 Indenture Trustee or its
assignees under the deed of trust, except in connection with a
trustee's sale after default by the related Mortgagor.
(liv) With respect to each junior HLTV Loan, either (A) no
consent for such HLTV Loan was required by the holder of the related
Senior Lien prior to the making of such HLTV Loan or (B) such consent
has been obtained and is contained in the related Mortgage File.
(lv) Each Mortgage on an HLTV Loan contains a provision for
the acceleration of the payment of the unpaid principal balance of the
related HLTV Loan in the event the related Mortgaged Property is sold
without the prior consent of the Mortgagee thereunder; each Mortgage
contains customary and enforceable provisions which render the rights
and remedies of the holder thereof adequate for the realization against
the related Mortgaged Property of the benefits of the security,
including (A) in the case of a Mortgage designated as a deed of trust,
by trustee's sale and (B) otherwise by judicial foreclosure. There is
no homestead or other exemption available to a Mortgagor which would
interfere with the right to sell the Mortgaged Property at a trustee's
sale or the right to foreclose on the Mortgaged Property.
(lvi) No instrument of release or waiver has been executed in
connection with any HLTV Loan, and no Mortgagor has been released, in
whole or in part, except in connection with an assumption agreement
which has been approved by the primary mortgage guaranty insurer, if
any, and which has been included in the related Mortgage File delivered
to the Indenture Trustee.
(lvii) If a senior HLTV Loan provides for a balloon payment
and has a "recast" feature, then the recast date of such senior HLTV
Loan must be at least 36 months after the maturity date of each HLTV
Loan which is a junior HLTV Loan.
(lviii) Each HLTV Loan has been originated in accordance with
all required provisions of the relevant Originator's applicable
guidelines; an appraisal was performed with respect to each HLTV Loan
in compliance with the applicable requirements set forth in such
applicable guidelines.
(lix) The Sponsor has no actual knowledge that there exist on
any Mortgaged Property any hazardous substances, hazardous wastes or
solid wastes, as such terms are defined in the Comprehensive
Environmental Response Compensation and
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Xxxxxxxxx Xxx, the Resource Conservation and Recovery Act of 1976, or
other federal, state or local environmental legislation.
(lx) No mortgage reconveyance, release, satisfaction or
trustee fees have been collected by the Sponsor or any Originator or
paid by any Mortgagor. In addition, if there is, in Buyer's reasonable
judgment, a documentation problem that would make reconveyance of
satisfaction difficult, cumbersome or expensive to the Buyer, then the
Sponsor shall at the Indenture Trustee's request complete the
reconveyance of satisfaction of the Mortgage, including the recordation
of the necessary documentation, at the Sponsor's sole cost and expense.
(lxi) The HLTV Loan is not in default, and all Monthly
Payments due prior to the related Cut-Off Date and all taxes,
governmental assessments, insurance premiums, water, sewer and
municipal charges, leasehold payments or ground rents have been paid.
The Sponsor has not advanced funds, or induced or solicited any advance
of funds by a party other than the Mortgagor directly or indirectly,
for the payment of any amount required by the HLTV Loan. The collection
practices used by each entity which has serviced the HLTV Loan have
been in all respects legal, proper, prudent and customary in the
mortgage servicing business. With respect to escrow deposits and
payments in those instances where such were required, there exist no
deficiencies in connection therewith for which customary arrangements
for repayment thereof have not been made and no escrow deposits or
payments or other charges or payments have been capitalized under any
Mortgage or the related Mortgage Note.
(lxii) Each original Mortgage was recorded or is in the
process of being recorded, and all subsequent Assignments of the
original Mortgage have been recorded in the appropriate jurisdictions
wherein such recordation is necessary to perfect the lien thereof.
(lxiii) Each Mortgaged Property is located in the state
identified in the HLTV Loan Schedule delivered to the Indenture Trustee
and consists of one or more parcels of real property with a residential
dwelling erected thereon.
(lxiv) There is no proceeding pending or threatened for the
total or partial condemnation of any Mortgaged Property, nor is such a
proceeding currently occurring, and each Mortgaged Property is
undamaged by waste, fire, earthquake or earth movement, flood, tornado
or other casualty, so as to affect adversely the value of the Mortgaged
Property as security for the HLTV Loan or the use for which the
premises were intended.
(lxv) There is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Note and no
event which, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute a default, breach,
violation or event of acceleration; and the Sponsor has not waived any
default, breach, violation or event of acceleration.
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(lxvi) The proceeds of each HLTV Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee to
make future advances thereunder.
(lxvii) There is no obligation on the part of the Sponsor or
any Originator to make payments in addition to those made by the
Mortgagor.
(lxviii) There is no HLTV Loan with an "open" escrow for
deferred maintenance. All escrows must be released. (lxix) No error,
omission, misrepresentation, negligence, fraud or similar occurrence
with respect to an HLTV Loan has taken place on the part of any person,
including the Mortgagor, or any party involved in the origination of
the HLTV Loan or in the application of any insurance in relation to
such HLTV Loan.
(lxx) On the Closing Date, with respect to the HTLV Mortgage
Loans, ____% or more (by aggregate principal balance) of the Mortgage
Loans do not constitute "real estate mortgages" for the purpose of
Treasury Regulations Section 301.7701. For this purpose a Mortgage Loan
does not constitute a "real estate mortgage" if:
(a) The Mortgage Loan is not secured by an interest in real
property, or
(b) The Mortgage Loan is not an "obligation principally
secured by an interest in real property." For this purpose an
"obligation is principally secured by an interest in real property" if
it satisfies either test set out in paragraph (1) or paragraph (2)
below.
(1) The 80-percent test. An obligation is principally secured by
an interest in real property if the fair market value of the
interest in real property securing the obligation
(A) was at least equal to 80 percent of the adjusted
issue price of the obligation at the time the
obligation was originated (or, if later, the time the
obligation was significantly modified); or
(B) is at least equal to 80 percent of the adjusted issue
price of the obligation on the Closing Date.
For purposes of this paragraph (1), the fair market value of
the real property interest must be first reduced by the amount
of any lien on the real property interest that is senior to
the obligation being tested, and must be further reduced by a
proportionate amount of any lien that is in parity with the
obligation being tested, in each case before the percentages
set forth in (1)(A) and (1)(B) are determined. The adjusted
issue price of an obligation is its issue price plus the
amount of accrued original issue discount, if any, as of the
date of determination.
(2) Alternative test. An obligation is principally secured by an
interest in real property if substantially all of the proceeds
of the obligation were used to acquire or to improve or
protect an interest in real property that, at the origination
date, is the only security for the obligation. For purposes of
this test, loan guarantees made by the United States or any
state (or any political subdivision, agency, or
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instrumentality of the United States or of any state), or
other third party credit enhancement are not viewed as
additional security for a loan. An obligation is not
considered to be secured by property other than real property
solely because the obligor is personally liable on the
obligation. For this purpose only, substantially all of the
proceeds of the obligations means 66-2/3% or more of the gross
proceeds.
(lxxi) None of the HLTV Loans have been originated through a
home improvement contractor.
(lxxii) None of the HLTV Loans is a retailment installment
contract for goods or services and none of the HLTV Loans made for
property improvement purposes was for goods and services which
constitute either a "consumer credit contract" or a "purchase money
loan" as such terms are defined in 16 C.F.R. Section 433.1.
(lxxiii) None of the Mortgage Notes constitutes "chattel
paper" as such term is defined in Section 9-105(b) of the Uniform
Commercial Code.
(lxxiv) The related Mortgage File for each Mortgage Loan
contains a title document with respect to such Mortgage Loan reflecting
that title to the related Mortgaged Property is vested at least 50% in
the Mortgagor under such Mortgage Loan.
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