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Exhibit 2.3
MORTGAGE LOAN PURCHASE AND SALE AGREEMENT
This Mortgage Loan Purchase and Sale Agreement (this "Loan Purchase
Agreement" or "MLPA") is made as of February 28, 2001, by and among CHASE
MANHATTAN BANK USA, NATIONAL ASSOCIATION (the "Purchaser" or "Chase"), CHASE
MANHATTAN MORTGAGE CORPORATION ("CMMC"), ADVANTA CORP. (the "Company"), and the
selling subsidiaries set forth on Exhibit E (collectively the "Selling
Subsidiaries" or the "Seller").
BACKGROUND
Purchaser wishes to purchase from the Selling Subsidiaries, and the Selling
Subsidiaries wish to sell to Purchaser, on the terms and conditions contained in
this Loan Purchase Agreement, the mortgage loans (including HELOCs) referred to
on Exhibit B, together with any Mortgage Loans originated (including "funded and
not boarded" Mortgage Loans, "loans in closing," "payment suspense accounts"
and, with respect to HELOCs, "draws in process") from and including January 31,
2001 (or earlier, to the extent not reflected on Exhibit B) (or, in the case of
Mortgage Loans serviced on the LSAM system, February 6, 2001 (or earlier, to the
extent not reflected on Exhibit B)) through and including the Cut-Off Date and
reflected on the Company's general ledger as of the Cut-Off Date. The Company
and Chase Manhattan Mortgage Corporation ("CMMC") are parties to a Purchase and
Sale Agreement (the "Purchase and Sale Agreement"), dated as of January 8, 2001,
providing for the sale by the Company and the Selling Subsidiaries (as defined
therein) to CMMC and certain affiliates of CMMC of the Assets and the Assumed
Liabilities.
In consideration of the mutual promises, covenants, and agreements
contained herein, the parties agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. All capitalized terms used in this Loan Purchase Agreement
but not otherwise defined herein shall have the same meanings ascribed to such
words in the Purchase and Sale Agreement. As used in this Loan Purchase
Agreement, the following capitalized terms shall have the following meanings,
unless the context requires otherwise:
"ACCEPTED SERVICING PRACTICES": With respect to any Mortgage Loan, those
mortgage servicing practices (including collection practices) of prudent
mortgage banking institutions which service mortgage loans of the same type as
such Mortgage Loan in the jurisdiction where the related Property is located.
"ASSIGNMENT OF MORTGAGE": An assignment of the Mortgage, notice of transfer
or equivalent instrument (which, in each jurisdiction where permitted under
applicable law, shall include a blanket assignment) sufficient under the laws of
the jurisdiction wherein the related collateral is located to reflect of record
the transfer of the Mortgage Loan to Chase or one of its affiliates "in blank."
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"CLOSED END PERFORMING LOANS": All closed end Mortgage Loans owned by the
Company and the Selling Subsidiaries that, as of the Cut-Off Date are not
Non-Performing Loans or Unsalable Loans.
"CREDIT FILE": All documentation required by Chase for underwriting review
as set forth in the Exhibit C hereto.
"CREDIT LINE AGREEMENT": With respect to any Mortgage Loan that is a HELOC,
the related home equity line of credit agreement or promissory note executed by
the related Mortgagor and any amendment or modification thereof.
"CUT-OFF DATE": The close of business on February 28, 2001 or such other
date as shall be mutually agreed upon by the parties hereto.
"ELECTRONIC DATA FILE": An electronic file that provides data on a loan
level basis with respect to the following fields: Loan Number, Alt Loan Number,
Pricing Category, Last Name, Current UPB, Credit Limit (for HELOCs), Original
CLTV, Current Note Rate, Product Type or Interest Method, Original Term,
Maturity Date, Lien, Funding Date or Note Date, Pre-Payment Penalty (Closed-end
only)(Y/N) (if applicable), Pre-Pay Code (Closed-end only), Life Cap (HELOC
only) (if applicable), Life Floor (if applicable), State, Maximum Rate (Closed
End), Minimum Rate (Closed End), Pricing Category, Margin (if applicable), Index
(if applicable), Draw Period (HELOC only) and such other fields as may be
reasonably requested by Chase.
"HELOC": A Mortgage Loan that is a home equity line of credit.
"HELOC PERFORMING LOANS": All HELOCs owned by the Company and the Selling
Subsidiaries that, as of the Cut-Off Date are not Non-Performing Loans or
Unsalable Loans.
"INVESTOR RIGHTS": Any and all rights and privileges associated with the
ownership of a Mortgage Loan, including but not limited to the right to receive
all payments of principal and interest paid by a Mortgagor.
"LOANS": The Performing Loans, the Unsalable Loans and the Non-Performing
Loans, referred to in Exhibit B, together with any Mortgage Loans originated
(including "funded and not boarded" Mortgage Loans, "loans in closing," "payment
suspense accounts" and, with respect to HELOCs, "draws in process") from and
including January 31, 2001 (or earlier, to the extent not reflected on Exhibit
B) (or, in the case of Mortgage Loans serviced on the LSAM system, February 6,
2001 (or earlier, to the extent not reflected on Exhibit B)) through and
including the Cut-Off Date as set forth in the Mortgage Loan Schedule, which
shall be provided by Chase and attached hereto as Exhibit A within ten Business
Days after the date hereof.
"LOAN FILE": All documentation required for a Mortgage Loan as set forth in
Exhibit D hereto.
"LOSSES": Any and all claims, losses, liabilities, costs, fines, expenses
(including reasonable
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expenses for attorneys or other expenses of litigation, arbitration or other
similar proceedings), damages, obligations to third parties, expenditures,
proceedings, judgements, awards, settlements or demands that are imposed upon or
otherwise incurred, suffered or sustained by the relevant party.
"MLPA CLOSING DATE": February 28, 2001 or such other date as shall be
mutually agreed upon by the parties hereto, but in no event shall the MLPA
Closing Date be a day other than the date on which the "Closing" occurs under
the Purchase and Sale Agreement.
"MORTGAGE": The mortgage, deed of trust or other security instrument
creating a first or junior lien on an interest in real property securing a Note
or, in the case of HELOCs, securing each Credit Line Agreement.
"MORTGAGE LOAN(S)": The Performing Loans, the Unsalable Loans and the
Non-Performing Loans, referred to in Exhibit B, together with any Mortgage Loans
originated (including "funded and not boarded" Mortgage Loans, "loans in
closing," "payment suspense accounts" and, with respect to HELOCs, "draws in
process") from and including January 31, 2001 (or earlier, to the extent not
reflected on Exhibit B) (or, in the case of Mortgage Loans serviced on the LSAM
system, February 6, 2001 (or earlier, to the extent not reflected on Exhibit B))
through and including the Cut-Off Date as set forth in the Mortgage Loan
Schedule, which shall be provided by Chase and attached hereto as Exhibit A
within ten Business Days after the date hereof.
"MORTGAGE LOAN SCHEDULE": The schedule of Mortgage Loans set forth in
Exhibit A hereto which shall be provided by Chase within ten Business Days of
the MLPA Closing Date; provided, however, with respect to "payment suspense
accounts" and HELOC "draws in process," Chase will provide information in a
mutually agreeable format. The Mortgage Loan Schedule will contain the following
information as to each Mortgage Loan: (i) the Mortgage Loan identifying number;
(ii) the street address of the Property including the city, state and zip code;
(iii) an indication of whether the Property is owner-occupied; (iv) the property
type of the Property; (v) the maturity date; (vi) the original loan-to-value
ratio or combined loan-to-value ratio, as applicable; (vii) the original
principal balance of the Mortgage Loan or in the case of a HELOC, the maximum
amount of the line of credit; (viii) the unpaid principal balance of the
Mortgage Loan as of the close of business on the Cut-Off Date; (ix) the current
mortgage rate; (x) the amount of the current monthly payment (or, in the case of
a HELOC, the amount of the most recent payment); (xi) the loan type, i.e., fixed
rate or adjustable rate; (xii) type of lien, i.e., first or second lien; (xiii)
whether such Mortgage Loan is a closed end loan or open end loan; (xiv) the next
due date; (xv) whether such Mortgage Loan is a "Section 32 loan;" and (xvi) a
designation as to which pricing category and subcategory identified in Column A
of Exhibit B applies to such Mortgage Loan.
"MORTGAGOR(S)": The maker(s), obligor(s) and/or guarantor(s) of a Note.
"NON-PERFORMING LOANS": All Mortgage Loans that, as of the Cut-Off Date (i)
are 61 days or more delinquent calculated by the number of days elapsed from the
last payment date to the Cut-Off Date, (ii) have been 61 days delinquent 2 or
more times in the 12 months immediately prior to the Cut-Off Date, (iii) have
been 91 days delinquent in the 12 months immediately prior
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to the Cut-Off Date and (iv) REO properties.
"NOTE" OR "MORTGAGE NOTE": The promissory note or, with respect to a HELOC,
the Credit Line Agreement, of a Mortgagor secured by a Mortgage.
"PERFORMING LOANS": All Closed End Performing Loans and HELOC Performing
Loans.
"PRICING CATEGORY": With respect to Closed End Loans and Open-end (HELOC)
Loans, each of the following pricing categories identified in Column A of
Exhibit B: Performing Loans; Unsalable Loans; and Non-Performing Loans, and each
of the subcategories relating to such categories .
"PRICING CATEGORY PRICE PERCENTAGE": As to each Pricing Category, the
percentage identified in Column B of Exhibit B.
"PRICING CUT-OFF DATE": February 28, 2001.
"PROPERTY": The underlying property securing a Mortgage Loan.
"PURCHASE AND SALE AGREEMENT": The Purchase and Sale Agreement between
Advanta Corp. and Chase Manhattan Mortgage Corporation, dated as of January 8,
2001.
"SECURITIZABLE LOANS": The Mortgage Loans that satisfy the representations
and warranties in Section 4.2(a), or other Mortgage Loans held on-balance sheet
that are similar to mortgage loans securitized by the Selling Subsidiaries in
recent Company-Sponsored Mortgage Loan Securitization Transactions or which meet
the criteria established by one or more independent rating agencies.
"SERVICING RIGHTS": All rights to service Mortgage Loans.
"UNSALABLE LOANS": All Mortgage Loans that are not Securitizable Loans or
Non-Performing Loans. Unsalable Loans shall include bankruptcies which do not
meet the definition of Non-Performing Loans (i.e., "current bankruptcies") and
Mortgage Loans that as of the Cut-Off Date have legal deficiencies or credit
deficiencies which prevent sale to a securitization and which deficiencies
remain uncorrected through the MLPA Closing Date.
ARTICLE 2
SALE OF LOANS; PRICING; DUE DILIGENCE
SECTION 2.1. SALE OF LOANS
(a) On the Purchase Date, or such other date as may be mutually agreed
upon by the parties hereto but in no event later than the Closing Date under the
Purchase and Sale Agreement (the "Settlement Date"), the Selling Subsidiaries
shall sell or cause to be sold, and Purchaser shall purchase, the Loans.
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(b) The aggregate amount of Mortgage Loans that will be purchased by
Purchaser will be the actual outstanding principal balance (as reflected on the
Company's general ledger) at the close of business on the Cut-Off Date, together
with accrued interest thereon as reflected on the Company's general ledger.
Purchaser shall be entitled to all collections of principal and interest on the
Mortgage Loans after the Cut-Off Date.
(c) Notwithstanding that the Mortgage Loans will appear on the Closing
Balance Sheet used in calculating the Purchase Price to be paid in connection
with the Closing under the Purchase and Sale Agreement, it is the intention of
the parties that the consideration paid by Chase to the Company for the Mortgage
Loans shall be paid only in connection with the purchase of the Mortgage Loans
under this Loan Purchase Agreement and not as part of the Purchase Price under
the Purchase and Sale Agreement.
SECTION 2.2. PRICING.
(a) The purchase price (the "MLPA Purchase Price") for the Mortgage
Loans shall be calculated as set forth on Schedule 1 attached hereto. There will
be a mutually agreed upon purchase price reconciliation within 20 Business Days
of the MLPA Closing Date. As specified on Schedule l, on the Business Day
immediately following the MLPA Closing Date, in addition to the MLPA Purchase
Price, Purchaser shall pay to Seller an amount of accrued interest, as reflected
on the Company's general ledger, together with the amount of the CF Holdback
plus accrued interest thereon as specified on Schedule 1. Within 20 Business
Days of the MLPA Closing Date, Purchaser shall provide to Seller a detailed
reconciliation of the calculation of accrued interest together with a
reconciliation (as further described on Schedule 1) of (A) the actual aggregate
unpaid principal balance of the Mortgage Loans reflected on Exhibit B as of the
Cut-Off Date, (B) any necessary reclassification of the Pricing Category (as
shown on Exhibit B) of any Mortgage Loans, (C) the actual unpaid principal
balance and purchase price for those Mortgage Loans (including "loans in
process") not reflected on Exhibit B and (D) the actual unpaid principal balance
for draws in process on HELOCs not owned by the Company as reflected on Exhibit
B-1. Upon such reconciliation, (i) Purchaser shall be reimbursed by Seller for
any payment made with respect to accrued interest on Non-Performing Loans and
(ii) Purchaser or Seller, as applicable, shall promptly remit, in immediately
available funds, any amounts due based upon such reconciliation. Seller
acknowledges that Purchaser has relied upon the Electronic Data File and other
supplementary materials relating to the Electronic Data File provided by or on
behalf of Seller with respect to the Mortgage Loans (the "Offering Materials")
in connection with the transactions contemplated hereby.
(b) If either Purchaser or Seller believes that the amount paid by
Purchaser to Seller on the MLPA Closing Date (after giving effect to the
reconciliations referred to in Sections 2.2(a) and 2.2(c) and further described
on Schedule 1) was calculated in error, any such discrepancy shall be resolved
in accordance with Section 1.05 of the Purchase and Sale Agreement, which
Section 1.05 is incorporated herein by reference for this purpose.
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(c) Within 45 days of the MLPA Closing Date, Purchaser shall provide to
Seller a Document Report (as defined in the Purchase and Sale Agreement)
identifying those Mortgage Loans which, in accordance with Schedule 2, are to be
"rebucketed" or which are subject to the Document Holdback to be remitted by the
Company to the Purchaser at the rate of $55 per missing document. Seller shall
have 10 days following receipt of the Document Report to determine the accuracy
of the information contained in the Document Report (during such 10 day period,
Purchaser shall reasonably cooperate with Seller to assist Seller in making such
determination). At the conclusion of such 10-day period, Purchaser or Seller, as
applicable, shall remit promptly all applicable amounts owed in accordance with
the Document Report and agreed to by Seller. Any amounts in dispute as to which
Purchaser and Seller cannot agree shall be subject to resolution as provided in
Section 2.2(b). The provisions of Section 1.05(m) of the Purchase and Sale
Agreement relating to the Document Holdback and the release of such holdback are
hereby incorporated by referenced herein.
(d) Notwithstanding anything to the contrary contained in this Loan
Purchase Agreement, the Company may, at its sole option, terminate this Loan
Purchase Agreement by written notice thereof given to CMMC at any time prior to
the Purchase Date, without any liability, if prior to such time the Purchase and
Sale Agreement has been terminated for any reason. It is expressly understood by
each party hereto that Chase shall have no obligation to purchase the Mortgage
Loans or otherwise perform any of its obligations hereunder unless and until the
Closing occurs under the Purchase and Sale Agreement.
ARTICLE III
DELIVERY AND PAYMENT
SECTION 3.1. DELIVERY OF MORTGAGE LOANS. On the MLPA Closing Date and upon
payment of the MLPA Purchase Price, ownership of the Mortgage Loans and the
related Loan Files shall transfer to Chase and Seller shall (a) with respect to
all Loan Files currently held by Bankers Trust Company of California, N.A., as
custodian, instruct the custodian (with a copy to Chase) of the Loan Files to
deliver or release such Loan Files to Chase whereupon the custodian shall hold
such Loan Files as custodian for Chase pursuant to a custodian agreement to be
entered into between Chase and the custodian of the Loan Files or assigned to
Chase in connection with the transactions contemplated by the Purchase and Sale
Agreement and (b) with respect to all other Loan Files, reasonably cooperate
with Chase to insure that arrangements for the delivery of such Loan Files to
Chase or its custodian are implemented as promptly as practicable.
SECTION 3.2. [Reserved]
SECTION 3.3. INVESTOR RIGHTS AND SERVICING RIGHTS. The purchase price of
each Mortgage Loan shall include all Investor Rights and Servicing Rights and
benefits pertaining to such Mortgage Loan accruing from and after the MLPA
Closing Date as well as the right to receive all collections of principal and
accrued interest (together with all accrued interest on any Non-Performing
Loans) on the Mortgage Loans after the Cut-Off Date; provided, however, with
respect to the Mortgage Loans listed on Schedule 3, the Company does not own the
Servicing Rights and therefore such Servicing Rights with respect to such
Mortgage Loans listed on
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Schedule 3 shall not be conveyed to the Purchaser hereunder. Seller shall
execute and deliver documentation (other than assignments and endorsements in
accordance with Section 3.6 hereof), as outlined herein, to transfer all
Investor Rights and Servicing Rights accruing from and after the MLPA Closing
Date from Seller to Chase free and clear of all claims, liens and encumbrances,
and to enable Chase (or its designated representative) to own, sell and service
such Mortgage Loan. Seller hereby covenants to provide to Chase any additional
documentation reasonably requested by Chase for such purposes.
SECTION 3.4. INSPECTION OF MORTGAGE LOAN FILES. Chase reserves the right to
inspect all Loan Files and Credit Files and satisfy itself that all Mortgage
Loans comply with Seller's representations concerning the Mortgage Loans;
however, no such inspection shall minimize any rights to recovery under the
terms of this Loan Purchase Agreement. All Mortgage Loans that are not Unsalable
Loans shall have a Loan File and Credit File that are complete in all material
respects, consistent with Industry Practice.
SECTION 3.5. [Reserved]
SECTION 3.6. RECORDATION OF ASSIGNMENTS OF MORTGAGE. All Assignments of
Mortgage and endorsements will be prepared by Purchaser in accordance with
commercially reasonable terms and conditions. Purchaser will record such
assignments in those jurisdictions where Purchaser deems appropriate. Seller
shall provide one or more powers of attorney, in the form of Exhibit E hereto,
to the Purchaser for the purpose of preparing and recording such Assignments of
Mortgage.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF SELLER
SECTION 4.1. REPRESENTATIONS AND WARRANTIES REGARDING THE SELLING
SUBSIDIARIES. Except as set forth in the Company Disclosure Schedule delivered
to CMMC prior to the execution of the Purchase and Sale Agreement, as such
Disclosure Schedule shall be updated in accordance with the requirements of the
Purchase and Sale Agreement, each of the Selling Subsidiaries represents and
warrants to Chase as of the date of execution of this Loan Purchase Agreement
through and as of the MLPA Closing Date, the following:
A. The Company and each Selling Subsidiary is a corporation, industrial
loan corporation or national banking association, as set forth in Section 4.01
of the Company Disclosure Schedule, duly organized and validly existing under
the laws of the jurisdiction of its formation or a banking organization duly
chartered by its chartering authority. Each of the Company and Selling
Subsidiaries is duly qualified as a foreign corporation to conduct its business
in the states of the United States and any foreign jurisdictions where it is
required to be so qualified other than those where the failure to be so
qualified is not material;
B. The Company and each Selling Subsidiary has the full power and
authority and legal right to hold, transfer and convey each Mortgage Loan, to
sell each Mortgage Loan, and to
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execute, deliver and perform, and to enter into and consummate all transactions
contemplated by this Loan Purchase Agreement. The execution and delivery of this
Loan Purchase Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Board and no other corporate
proceedings on the part of the Company or any Selling Subsidiary are necessary
to authorize the execution, delivery or performance of this Loan Purchase
Agreement. The Company and each Selling Subsidiary has the full power and
authority to conduct its business as presently conducted, has duly authorized
the execution, delivery and performance of this Loan Purchase Agreement and any
agreements contemplated hereby, has duly executed and delivered this Loan
Purchase Agreement, and any agreements contemplated hereby, and this Loan
Purchase Agreement and any agreements contemplated hereby constitutes a legal,
valid and binding obligation of the Company and each Selling Subsidiary,
enforceable against it in accordance with its terms, and all requisite corporate
action has been taken by the Company and each Selling Subsidiary to make this
Loan Purchase Agreement and all agreements contemplated hereby valid and binding
upon the Company and each Selling Subsidiary in accordance with their terms;
C. Neither the execution and delivery of this Loan Purchase Agreement
by the Company and each Selling Subsidiary, nor the origination of the Mortgage
Loans by the Company or the applicable Selling Subsidiary, the sale of the
Mortgage Loans to Chase, the consummation of the transactions contemplated
hereby, or the fulfillment of or compliance with the terms and conditions of
this Loan Purchase Agreement will conflict with or result in any breach or
violation of any of the terms, conditions or provisions of the Company or any
Selling Subsidiary's charter or by-laws or conflict with or result in a material
breach or violation of or a material default under (or require any consent of or
notice to any Person) or give rise to any lien, right of termination, unilateral
modification or amendment, or cancellation of any of the terms, conditions or
provisions of any legal restriction or any agreement or instrument to which the
Company or any Selling Subsidiary is now a party or by which they are bound, or
constitute a default or result in an acceleration under any of the foregoing, or
result in the material violation of any law, rule, regulation, statute,
ordinance, order, judgment or decree to which the Company or any Selling
Subsidiary or any of their properties are subject, or impair the ability of
Chase to realize on the Mortgage Loans;
D. There is no litigation, suit, action, arbitration proceeding or
investigation pending or threatened, or any order or decree outstanding, with
respect to the Company or any Selling Subsidiary which, either in any one
instance or in the aggregate, is reasonably likely to have a material adverse
effect on the execution, delivery, performance or enforceability of this Loan
Purchase Agreement, or which is reasonably likely to have a material adverse
effect on the Company's or any Selling Subsidiary's ability to perform its
obligations under this Loan Purchase Agreement or the Subservicer's obligations
under the Servicing Agreement;
E. No consent, approval, authorization or order of any court or
governmental or regulatory agency or body is required for the execution,
delivery and performance by the Company or any Selling Subsidiary of or
compliance by the Company or any Selling Subsidiary with this Loan Purchase
Agreement, or the sale of the Mortgage Loans and delivery of the Credit Files
and Loan Files to Chase or the consummation of the transactions contemplated by
this Loan Purchase Agreement, except for consents, approvals, authorizations and
orders which have been
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obtained;
F. The Subservicer is an approved servicer of residential mortgage
loans for FNMA and FHLMC, with such facilities, procedures and personnel
necessary for servicing of such mortgage loans in accordance with Accepted
Servicing Practices. The Subservicer has serviced the Mortgage Loans in
accordance with Accepted Servicing Practices;
G. The Offering Materials are true and correct in all material
respects; and
H. The representations and warranties in Exhibit A-1 hereto are in all
material respects similar to the representations and warranties which the
Company or any applicable Affiliate of the Company has made in recent
Company-Sponsored Mortgage Loan Securitization Transactions (except with respect
to representations and warranties relating to underwriting).
SECTION 4.2. REPRESENTATIONS AND WARRANTIES AS TO INDIVIDUAL MORTGAGE
LOANS.
(a) With respect to each Securitizable Loan originated or acquired by
such Selling Subsidiary, as identified in the Mortgage Loan Schedule, such
Selling Subsidiary shall provide the representations and warranties set forth in
Exhibit A-1 hereto.
(b) With respect to each Unsalable Loan and each Non-Performing Loan
originated or acquired by such Selling Subsidiary, as identified in the Mortgage
Loan Schedule, such Selling Subsidiary such Selling Subsidiary shall provide the
representations and warranties set forth in Exhibit A-2 hereto.
(c) All of the representations and warranties set forth in this Article
IV (including the representations and warranties set forth in Exhibit A-1 and
Exhibit A-2 hereto) shall survive and continue in full force for the remaining
life of the Mortgage Loan and are made for the benefit of Chase and its
successors and assigns.
SECTION 4.3. COVENANT OF SELLER. Seller covenants and agrees with Chase
that Seller shall notify Chase immediately if following the sale of any Mortgage
Loan to Chase, Seller becomes aware of any fact or circumstance regarding any
Mortgage Loan which would have caused any representation or warranty with
respect to any Mortgage Loan to be incorrect.
ARTICLE V
REMEDIES/INDEMNIFICATION
SECTION 5.1. BREACH OF REPRESENTATION OR WARRANTY. Except as set forth in
paragraph 5.1(b) below, each Selling Subsidiary shall provide indemnification of
Purchaser from and against any Losses suffered, incurred or sustained by
Purchaser resulting from any breach of any representation or warranty on the
part of such Selling Subsidiary under this Loan Purchase Agreement. Upon
sustaining a Loss, the Purchaser shall give written notice to the Selling
Subsidiary indicating that the Purchaser has sustained a Loss and specifying the
amount of such Loss. Upon receipt of such notice, the indemnifying Selling
Subsidiary shall have 30 days in which to investigate the cause of such Loss.
The indemnifying Selling Subsidiary shall pay such indemnification to the
Purchaser by wire transfer of immediately available funds as soon as such
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indemnifying Selling Subsidiary is satisfied as to the cause of such Loss and,
unless there is a reasonable disagreement as to the cause of such Loss, not
later than the tenth Business Day after the expiration of the 30 day period
referred to above. Except as set forth in paragraph 5.1(b) below, upon discovery
of a breach of any of the representations and warranties or of the covenants
contained in this Loan Purchase Agreement, the party discovering such breach
shall give written notice to the other. Pursuant to the provisions of Section
8.9 hereof, Chase shall reasonably cooperate with the Company's or the Selling
Subsidiary's attempt to cure any such breach.
With respect to those representations and warranties in Exhibit A-1 or A-2
which include a knowledge qualifier ("to the best knowledge of such Selling
Subsidiary" or similar language), Seller shall indemnify Purchaser for a breach
of the underlying representation and warranty pursuant to the indemnification
provisions as if the knowledge qualifier was omitted and did not apply.
SECTION 5.2. [Reserved]
SECTION 5.3. [Reserved]
SECTION 5.4. INDEMNIFICATION.
(a) Subject to the limitations set forth in Section 5.1, each of
Selling Subsidiary, on the one hand, and Chase on the other hand, hereby agree
to indemnify, save, and hold harmless the other, its successors and assigns,
from and against any and all Losses resulting or arising from its breach of any
representation or warranty, covenant or agreement. This indemnification shall
survive any termination or cancellation of this Loan Purchase Agreement.
(b) Any and all Losses referred to in this Article V shall be computed
on a net basis, after taking into account any amounts received by any party or
its affiliates under any insurance policies or other amounts received under
contracts, any tax deductions taken or other tax benefits received as a result
of such Losses. The indemnified party or its affiliates shall exercise
commercially reasonable good faith efforts to pursue all available insurance
recoveries or claims or other contractual benefits.
(c) If, under any circumstances, a Selling Subsidiary fails to fulfill
indemnification or other obligations pursuant to this Loan Purchase Agreement,
the Company shall be obligated to fulfill such indemnification and other
obligations on behalf of the Selling Subsidiary. If a Selling Subsidiary is
required by the terms of this Loan Purchase Agreement to fulfill an
indemnification or other obligation by or within a specific time period, and
such Selling Subsidiary fails to do so, the Company shall be obligated to
fulfill such indemnification or other obligation on behalf of such Selling
Subsidiary within two (2) business days of the expiration of such time period.
(d) If, under any circumstances, Chase fails to fulfill indemnification
or other obligations pursuant to this Loan Purchase Agreement, CMMC shall be
obligated to fulfill such indemnification and other obligations on behalf of
Chase. If Chase is required by the terms of this Loan Purchase Agreement to
fulfill an indemnification or other obligation by or within a
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specific time period, and Chase fails to do so, CMMC shall be obligated to
fulfill such indemnification or other obligation on behalf of CMMC within two
(2) Business Days of the expiration of such time period.
SECTION 5.5. REMEDIES NOT EXCLUSIVE. The remedies set forth in this Article
V and in other sections of this Loan Purchase Agreement are in addition to and
not to the exclusion of any and all rights and remedies available to Chase at
law or in equity including specific performance.
ARTICLE VI
[RESERVED]
ARTICLE VII
SERVICING
SECTION 7.1. SELLER TO ASSIGN SERVICING. Except with respect to the
Mortgage Loans listed on Schedule 3, Seller hereby assigns and releases all
Servicing Rights and responsibilities including without limitation, all rights
to receive servicing fees and other servicing-related income and benefits, with
respect to each Mortgage Loan purchased under this Loan Purchase Agreement to
and for the benefit of Chase, as of the MLPA Closing Date. Seller acknowledges
and agrees that Chase shall enjoy such Servicing Rights, all freely assignable,
with no residual, contingent or other claims thereon remaining in Seller. Chase
hereby agrees to assume the servicing obligations of the assigned Mortgage Loans
on the MLPA Closing Date; provided, however, that the obligations of the Company
and Seller set forth in this Loan Purchase Agreement shall survive such
assignment as obligations of the Company and Seller.
SECTION 7.2. NON-SOLICITATION. The Seller and the Company each hereby
agrees not to take any action or allow any action to be taken by any of its
affiliates to solicit prepayment by any borrower. This non-solicitation
provision shall be deemed to be on terms consistent with the non-solicitation
provisions of Section 6.14 of the Purchase and Sale Agreement.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 8.1. ASSIGNMENT. This Loan Purchase Agreement shall be binding upon
and inure to the benefit of the parties hereto and any permitted assignees.
Seller may not assign, or delegate any of its rights, duties, and/or obligations
hereunder without the written permission of Chase which may be withheld in its
sole discretion. Chase may assign this Loan Purchase Agreement to any affiliate
without consent; provided that such affiliate agrees in writing to be bound by
all of the terms, conditions and provisions contained in this Loan Purchase
Agreement.
SECTION 8.2. RELATIONSHIP BETWEEN PARTIES. No exclusive relationship
between Seller and Chase shall result from this agreement. Seller is an
independent contractor and nothing herein shall be construed to make Seller a
partner, joint venture, employee or agent of Chase. Seller shall not make any
statement which leads any third party to reasonably believe that it is an agent
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of Chase, and shall have no authority to bind or make any representations on
behalf of Chase. Seller shall not use or refer to Chase's name in any form of
advertising, written materials or circulars except as may be required by law.
SECTION 8.3. NO THIRD PARTY BENEFITS. This Loan Purchase Agreement is made
for the express benefit of Seller and Chase, not for the benefit or interest of
any other persons or entities, and accordingly, no third party shall obtain or
acquire any rights or interest in this Loan Purchase Agreement or by reason of
the performance or failure of performance of either of the parties hereto or of
their respective rights, privileges, duties or obligations arising hereunder.
SECTION 8.4. ENTIRE AGREEMENT. This Loan Purchase Agreement and the
Purchase and Sale Agreement, including all exhibits and schedules attached
hereto or thereto together with any addendum(s) attached hereto or thereto and
executed by all parties constitute the entire understanding of the parties
regarding the subject matter hereof and supersede all other prior disclosures,
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof. Any additions, changes, amendments or
modifications of this Loan Purchase Agreement must be in writing and executed by
all of the parties hereto. The invalidity of any portion of this Loan Purchase
Agreement shall not affect the remaining provisions.
SECTION 8.5. NOTICE. Any notice required to be given to a party hereto
under the provisions of this Loan Purchase Agreement must be in writing and
delivered either personally, by telecopy transmission, or by certified mail to
the other party at the following addresses, or such other address as may
hereafter be furnished to the other party by like notice:
If to Chase or CMMC:
c/o Chase Manhattan Mortgage Corporation
000 Xxxx Xxxxxxxxx
Xxxxxxxxx Xxxx, Xxx Xxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxx
If to the Company or Seller:
c/o Advanta Corp.
Welsh & XxXxxx Xxxxx
Xxxxxx Xxxxx, Xxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxx
Any such demand, notice or communication hereunder shall be deemed to have been
received on the date delivered to or received at the premises of the addressee
(as evidenced, in the case of registered or certified mail, by the date noted on
the return receipt).
SECTION 8.6. CAPTIONS. Paragraph or other headings contained in this Loan
Purchase Agreement are for reference purposes only and shall not affect in any
way the meaning or
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interpretation of this Loan Purchase Agreement.
SECTION 8.7. GOVERNING LAW. This Loan Purchase Agreement and the
interpretation of its terms shall be governed by the laws of the State of
Delaware without giving effect to its principles of conflicts of law. THE
PARTIES WAIVE THEIR RIGHTS TO A JURY TRIAL IN ANY ACTION UNDER THIS LOAN
PURCHASE AGREEMENT.
SECTION 8.8. COUNTERPARTS. This Loan Purchase Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original and
all of which, taken together, shall be deemed to be one Loan Purchase Agreement.
SECTION 8.9. COOPERATION IN CURING BREACHES OF REPRESENTATIONS AND
WARRANTIES; ACCESS TO INFORMATION. After the closing under the Purchase and Sale
Agreement Purchaser shall reasonably cooperate with the Company's or any Selling
Subsidiary's attempt to cure any breach of a representation or warranty with
respect to any Mortgage Loan. After the closing under the Purchase and Sale
Agreement, the parties hereto shall comply with the provisions of Section 6.15
of the Purchase and Sale Agreement.
SECTION 8.10. CONFIDENTIALITY. Seller shall not, at any time during or
following termination of this Loan Purchase Agreement, regardless of the manner,
reason, time or cause of such termination, directly or indirectly disclose or
furnish to any person not entitled to receive the same for the immediate benefit
of Chase (except to the extent actually required in connection with any
litigation between parties arising out of this Loan Purchase Agreement or by
applicable law), any trade secrets or confidential information including, but
not limited to, information related to Chase business operations, credit
policies, procedures and customers. This Section 8.10 shall be subject to
Section 6.14(d) of the Purchase and Sale Agreement which governs the use of
"Confidential Business Information" and such Section 6.14(d) is incorporated
herein by reference in its entirety.
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IN WITNESS WHEREOF, each of the parties below has Loan Purchase Agreement
to be executed as of the date and year first above written.
CHASE MANHATTAN BANK USA,
NATIONAL ASSOCIATION
BY: /s/ Xxxx Xxxxxx
-----------------------------
NAME: Xxxx Xxxxxx
TITLE: Vice President
CHASE MANHATTAN MORTGAGE CORPORATION
BY: /s/ Xxxx X. Xxxxxx
-----------------------------
NAME: Xxxx X. Xxxxxx
TITLE: Senior Vice President
ADVANTA CORP., FOR ITSELF AND ON BEHALF
OF THE SELLING SUBSIDIARIES
BY: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
NAME: Xxxxxxx X. Xxxxxx
TITLE: President
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Exhibit A-1
Representations and Warranties for Securitizable Loans
With respect to each Securitizable Loan originated or acquired by such
Selling Subsidiary, as identified in the Mortgage Loan Schedule, such Selling
Subsidiary hereby represents, warrants and covenants, as of the MLPA Closing
Date, as follows:
(i) the information with respect to each Mortgage Loan set
forth in the Mortgage Loan Schedule is true and correct in all material
respects;
(ii) all of the original or certified documentation required
to be delivered to Purchaser pursuant to this Loan Purchase Agreement
(including all material documents related thereto) with respect to each
Mortgage Loan has been or will be delivered to Purchaser in accordance
with the terms of the Loan Purchase Agreement; each of the documents
and instruments specified to be included therein has been duly executed
and is 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
Mortgage Loans for sale to prudent investors in the secondary market
that invest in mortgage loans such as the Mortgage Loans;
(iii) each Property is improved by a one-to-four family
residential dwelling, condominium or townhouse, which may include a
manufactured home which qualifies as eligible for inclusion in a REMIC;
provided, however, that no more than 10.0% by aggregate principal
balance of the Securitizable Loans as of the Cut-Off Date are leasehold
mortgages;
(iv) each Mortgage is either a valid and subsisting first,
second or third lien of record on the Property, as reflected on the
Mortgage Loan Schedule, (subject in the case of any Junior Mortgage
Loan only to a Senior Lien on such Property) and subject in all cases
to the exceptions to title set forth in the Mortgage Loan's title
insurance policy, which exceptions are generally acceptable to banking
institutions in connection with their regular mortgage lending
activities, 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 Mortgage;
(v) immediately prior to the transfer and assignment herein
contemplated, each Selling Subsidiary held good and indefeasible title
to, and was the owner of, each Mortgage Loan originated or acquired by
such Selling Subsidiary and conveyed by such Selling Subsidiary to
Purchaser; the Mortgage Loan was not subject to 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 Mortgage Loan subject to no liens, charges, mortgages,
encumbrances or rights of others except liens which will be released
simultaneously with such transfer and assignment;
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(vi) no Securitizable Loans are Non-Performing Loans as of the
Cut-Off Date;
(vii) to the best knowledge of such Selling Subsidiary, there
is no delinquent tax or assessment lien on any Property, and each
Property is free of substantial damage and is in good repair;
(viii) to the best knowledge of such Selling Subsidiary, there
is no valid and enforceable right of rescission, offset, defense or
counterclaim to any Note or Mortgage, including the obligation of the
related Mortgagor to pay the unpaid principal balance of or interest on
such Note or the defense of usury, nor will the operation of any of the
terms of the Note or the Mortgage, or the exercise of any right
thereunder, render either the Note or the Mortgage 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;
(ix) to the best knowledge of such Selling Subsidiary, there
is no mechanics' lien or claim for work, labor or material affecting
any Property which is or may be a lien prior to, or equal with, the
lien of the related Mortgage except those which are insured against by
any title insurance policy referred to in paragraph (xi) below;
(x) each 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;
(xi) with respect to each Mortgage Loan, a title search or 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 Property is situated, in an amount at least equal to the
original principal amount of such Securitizable Loan insuring the
mortgagee's interest under the related Securitizable Loan as the holder
of a valid first, second or third mortgage lien of record on the
Property described in the related Mortgage, as the case may be, subject
only to exceptions of the character referred to in paragraph (iv)
above, was effective on the date of the origination of such Mortgage
Loan, and, as of the Cut-Off Date such policy, if issued or upon its
issuance, will be valid and thereafter such policy shall continue in
full force and effect;
(xii) the improvements upon each Property are covered by a
valid and existing hazard insurance policy (which may be a blanket
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 Mortgage Loan
(together, in the case of a Junior Mortgage Loan, with the outstanding
principal balance of the 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 Property;
(xiii) each Mortgage and Note, including any Prepayment
Penalty, is the legal, valid and binding obligation of the maker
thereof and is enforceable in accordance with its terms,
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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 Mortgage Loan had full legal
capacity to execute all documents relating to such Mortgage Loan and
convey the estate therein purported to be conveyed and the Note and
Mortgage have been duly and properly executed by such parties;
(xiv) each original Mortgage was recorded or is in the process
of being recorded, and all subsequent assignments of the original
Mortgage have been or are in the process of being recorded in the
appropriate jurisdictions wherein such recordation is necessary to
perfect the lien thereof for the benefit of the applicable Selling
Subsidiary;
(xv) the terms of each 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 owners; the substance of each Note and/or Mortgage as
modified or altered, if applicable, is reflected on the Mortgage Loan
Schedule;
(xvi) the proceeds of each Mortgage Loan (other than HELOCs)
have been fully disbursed, and there is no obligation on the part of
the mortgagee to make future advances thereunder; 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; all costs, fees and expenses incurred in making or closing or
recording such Mortgage Loans were paid;
(xvii) except as otherwise required by law or pursuant to the
statute under which the related Mortgage Loan was made, the related
Note is not and has not been secured by any collateral, pledged account
or other security except the lien of the corresponding Mortgage;
(xviii) to the best knowledge of such Selling Subsidiary, no
Mortgage Loan was originated under a buydown plan;
(xix) to the best knowledge of such Selling Subsidiary, no
Mortgage Loan provides for negative amortization, has a shared
appreciation feature, or other contingent interest feature;
(xx) each Property is located in the state identified in the
Mortgage Loan Schedule and consists of one or more parcels of real
Property with a residential dwelling erected thereon;
(xxi) each Mortgage contains a provision for the acceleration
of the payment of the unpaid principal balance of the related Mortgage
Loan in the event the related Property is sold without the prior
consent of the mortgagee thereunder;
(xxii) any advances made after the date of origination of a
Mortgage Loan but prior to the Cut-Off Date, have been consolidated
with the outstanding principal amount secured by
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the related Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment term
reflected on the Mortgage Loan Schedule. No Note (other than Credit
Line Agreements for HELOCs) permits or obligates the Servicer or the
Sub-Servicer to make future advances to the related Mortgagor at the
option of the Mortgagor;
(xxiii) to the best knowledge of such Selling Subsidiary,
there is no proceeding pending or threatened for the total or partial
condemnation of any Property, nor is such a proceeding currently
occurring, and each Property is undamaged by waste, fire, earthquake or
earth movement, flood, tornado or other casualty, so as to affect
adversely the value of the Property as security for the Mortgage Loan
or the use for which the premises were intended;
(xxiv) all of the improvements which were included for the
purposes of determining the appraised value of any Property lie wholly
within the boundaries and building restriction lines of such Property,
and no improvements on adjoining properties encroach upon such
Property, and, if a title insurance policy exists or upon its issuance
with respect to such Property, are stated in such title insurance
policy and affirmatively insured;
(xxv) to the best knowledge of such Selling Subsidiary, no
improvement located on or being part of any Property is in violation of
any applicable zoning law or regulation; all inspections, licenses and
certificates required to be made or issued with respect to all occupied
portions of each 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;
(xxvi) with respect to each Junior Mortgage Loan, either (A)
no consent for such Mortgage Loan was required by the holder of the
related Senior Lien prior to the making of such Mortgage Loan or (B)
such consent has been obtained and is contained in the related Mortgage
File;
(xxvii) each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the related 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. To the best knowledge of such Selling Subsidiary,
there is no homestead or other exemption available which materially
interferes with the right to sell the related Property at a trustee's
sale or the right to foreclose the related Mortgage;
(xxviii) except as provided by paragraph (vi) above, 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 applicable Selling Subsidiary has not waived any default,
breach, violation or event of acceleration;
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(xxix) to the best knowledge of such Selling Subsidiary, no
instrument of release or waiver has been executed in connection with
any Mortgage Loan, and no Mortgagor has been released, in whole or in
part, except in connection with an assumption agreement and which has
been delivered to the Trustee;
(xxx) the related Selling Subsidiary has no actual knowledge
that there exist on any Property any hazardous substances, hazardous
wastes or solid wastes, as such terms are defined in the Comprehensive
Environmental Response Compensation and Liability Act, the Resource
Conservation and Recovery Act of 1976, or other federal, state or local
environmental legislation.
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Exhibit A-2
Representations and Warranties for Unsalable Loans and Non-Performing Loans
With respect to each Unsalable Loan and each Non-Performing Loan
originated or acquired by such Selling Subsidiary, as identified in the Mortgage
Loan Schedule, such Selling Subsidiary hereby represents, warrants and
covenants, as of the MLPA Closing Date, as follows:
(i) the information with respect to each Mortgage Loan set
forth in the Mortgage Loan Schedule is true and correct in all material
respects;
(ii) other than with respect to the Unsalable Loans, all of the
original or certified documentation required to be delivered to
Purchaser pursuant to this Loan Purchase Agreement (including all
material documents related thereto) with respect to each Mortgage Loan
has been or will be delivered to Purchaser in accordance with the terms
of this Loan Purchase Agreement; each of the documents and instruments
specified to be included therein has been duly executed and is 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 Mortgage Loans
for sale to prudent investors in the secondary market that invest in
mortgage loans such as the Mortgage Loans;
(iii) each Mortgage is either a valid and subsisting first, second
or third lien of record on the Property, as reflected on the Mortgage
Loan Schedule (subject in the case of any Junior Mortgage Loan only to
a Senior Lien on such Property) and subject in all cases to the
exceptions to title set forth in the Mortgage Loan's title insurance
policy, which exceptions are generally acceptable to banking
institutions in connection with their regular mortgage lending
activities, 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 Mortgage;
(iv) immediately prior to the transfer and assignment herein
contemplated, each Selling Subsidiary held good and indefeasible title
to, and was the owner of, each Mortgage Loan originated or acquired by
such Selling Subsidiary and conveyed by such Selling Subsidiary to
Purchaser; the Mortgage Loan was not subject to 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 Mortgage Loan subject to no liens, charges, mortgages,
encumbrances or rights of others except liens which will be released
simultaneously with such transfer and assignment;
(v) other than Non-Performing Loans, no Mortgage Loans is a
Non-Performing Loan as of the Cut-Off Date;
(vi) except as set forth in Sections 4.07-6(b) and 4.31 of the
Company Disclosure Schedule to the Purchase and Sale Agreement, to the
best knowledge of such Selling
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Subsidiary, there is no delinquent tax or assessment lien on any
Property, and each Property is free of substantial damage and is in
good repair;
(vii) to the best knowledge of such Selling Subsidiary, there is
no valid and enforceable right of rescission, offset, defense or
counterclaim to any Note or Mortgage, including the obligation of the
related Mortgagor to pay the unpaid principal balance of or interest on
such Note or the defense of usury, nor will the operation of any of the
terms of the Note or the Mortgage, or the exercise of any right
thereunder, render either the Note or the Mortgage 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;
(viii) to the best knowledge of such Selling Subsidiary, there is
no mechanics' lien or claim for work, labor or material affecting any
Property which is or may be a lien prior to, or equal with, the lien of
the related Mortgage except those which are insured against by any
title insurance policy referred to in paragraph (x) below;
(ix) each 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;
(x) with respect to each Mortgage Loan, a title search or 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 Property is situated, in an amount at least equal to the
original principal amount of such Mortgage Loan insuring the
mortgagee's interest under the related Unsalable Loan as the holder of
a valid first, second or third mortgage lien of record as set forth in
the Mortgage Loan Schedule on the Property described in the related
Mortgage, as the case may be, subject only to exceptions of the
character referred to in paragraph (iii) above, was effective on the
date of the origination of such Mortgage Loan, and, as of the Cut-Off
Date such policy, if issued or upon its issuance, will be valid and
thereafter such policy shall continue in full force and effect;
(xi) the improvements upon each Property are covered by a valid
and existing hazard insurance policy (which may be a blanket 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 Mortgage Loan (together,
in the case of a Junior Mortgage Loan, with the outstanding principal
balance of the 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 Property;
(xii) each Mortgage and Note, including any Prepayment Penalty, 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'
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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 Mortgage Loan had full legal capacity to execute all
documents relating to such Mortgage Loan and convey the estate therein
purported to be conveyed and the Note and Mortgage have been duly and
properly executed by such parties;
(xiii) each original Mortgage was recorded or is in the process of
being recorded, and all subsequent assignments of the original Mortgage
have been or are in the process of being recorded in the appropriate
jurisdictions wherein such recordation is necessary to perfect the lien
thereof for the benefit of the applicable Selling Subsidiary;
(xiv) the terms of each Note and each Mortgage have not been
materially impaired, altered or modified in any respect, except by a
written instrument which has been recorded, if necessary, to protect
the interest of the owners; the substance of each Note and/or Mortgage
as modified or altered, if applicable, is reflected on the Mortgage
Loan Schedule.
(xv) the proceeds of each Mortgage Loan (other than HELOCs) have
been fully disbursed, and there is no obligation on the part of the
mortgagee to make future advances thereunder; 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; all
costs, fees and expenses incurred in making or closing or recording
such Mortgage Loans were paid;
(xvi) except as otherwise required by law or pursuant to the
statute under which the related Mortgage Loan was made, the related
Note is not and has not been secured by any collateral, pledged account
or other security except the lien of the corresponding Mortgage;
(xvii) to the best knowledge of such Selling Subsidiary, no
Mortgage Loan was originated under a buydown plan;
(xviii) to the best knowledge of such Selling Subsidiary, no
Loan provides for negative amortization, has a shared appreciation
feature, or other contingent interest feature;
(xix) each Property is located in the state identified in the
Mortgage Loan Schedule and consists of one or more parcels of real
Property with a residential dwelling erected thereon;
(xx) each Mortgage contains a provision for the acceleration of
the payment of the unpaid principal balance of the related Mortgage
Loan in the event the related Property is sold without the prior
consent of the mortgagee thereunder;
(xxi) any advances made after the date of origination of a
Mortgage 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 Mortgage Loan
Schedule. No Note (other than Credit Line Agreements for HELOCs)
permits or obligates the
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Servicer or the Sub-Servicer to make future advances to the related
Mortgagor at the option of the Mortgagor;
(xxii) to the best knowledge of the Selling Subsidiary, there is
no proceeding pending or threatened for the total or partial
condemnation of any Property, nor is such a proceeding currently
occurring, and each Property is undamaged by waste, fire, earthquake or
earth movement, flood, tornado or other casualty, so as to affect
adversely the value of the Property as security for the Mortgage Loan
or the use for which the premises were intended;
(xxiii) all of the improvements which were included for the
purposes of determining the appraised value of any Property lie wholly
within the boundaries and building restriction lines of such Property,
and no improvements on adjoining properties encroach upon such
Property, and, if a title insurance policy exists or upon its issuance
with respect to such Property, are stated in such title insurance
policy and affirmatively insured;
(xxiv) to the best knowledge of such Selling Subsidiary, no
improvement located on or being part of any Property is in violation of
any applicable zoning law or regulation; all inspections, licenses and
certificates required to be made or issued with respect to all occupied
portions of each 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;
(xxv) with respect to each Junior Mortgage Loan, either (A) no
consent for such Unsalable Loan was required by the holder of the
related Senior Lien prior to the making of such Mortgage Loan or (B)
such consent has been obtained and is contained in the related Mortgage
File;
(xxvi) each Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for
the realization against the related 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.
To the best knowledge of such Selling Subsidiary, there is no homestead
or other exemption available which materially interferes with the right
to sell the related Property at a trustee's sale or the right to
foreclose the related Mortgage;
(xxvii) other than with respect to the Non-Performing Loans,
except as provided by paragraph (v) above, 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
applicable Selling Subsidiary has not waived any default, breach,
violation or event of acceleration;
(xxviii) to the best knowledge of such Selling Subsidiary, no
instrument of release or waiver has been executed in connection with
any Mortgage Loan, and no Mortgagor has been released, in whole or in
part, except in connection with an assumption agreement
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and which has been delivered to the Trustee;
(xxix) the related Selling Subsidiary has no actual knowledge that
there exist on any Property any hazardous substances, hazardous wastes
or solid wastes, as such terms are defined in the Comprehensive
Environmental Response Compensation and Liability Act, the Resource
Conservation and Recovery Act of 1976, or other federal, state or local
environmental legislation.
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SCHEDULE 1
MLPA PURCHASE PRICE
On the Business Day immediately following the MLPA Closing Date, the Purchaser
shall pay to the Seller a purchase price calculated as set forth in this
paragraph. Such purchase price shall be expressly subject to the two separate
purchase price reconciliations described in the second and third paragraphs of
this Schedule 1. With respect to the Mortgage Loans reflected on Exhibit B, on
the MLPA Closing Date, the purchase price for the Mortgage Loans within a
Pricing Category shall be equal to the product of (i) the Pricing Category Price
(as set forth in Column B under "Price" on Exhibit B) for the applicable Pricing
Category (as set forth under Column A of Exhibit B) and, (ii) the aggregate
unpaid principal balance as indicated on Exhibit B of all Mortgage Loans within
the applicable Pricing Category. With respect to the Mortgage Loans (including
"loans in process") reflected on the Company's general ledger as of the Cut-Off
Date but not reflected on Exhibit B (such Mortgage Loans being reflected on
Exhibit B-1), on the MLPA Closing Date, the purchase price for such Mortgage
Loans shall be equal to the sum of (A) the product of (i) 101.830% and (ii)
$59,035,772 (such amount being equal to the aggregate unpaid principal balance
of all such Mortgage Loans as reflected on the Company's general ledger as of
the Cut-Off Date as reflected on Exhibit B-1) and (B) an amount equal to the
amount of accrued interest on the Company's general ledger (general ledger
account number 154514) as of the Cut-Off Date as reflected, along with other
balance sheet accounts, on Exhibit B-1. The aggregate purchase price (subject to
adjustment following the reconciliations described in the following two
paragraphs) to be paid by Purchaser on the Business Day immediately following
the MLPA Closing Date (the "MLPA Purchase Price") for the Mortgage Loans shall
be the sum of (A) the sum of the products calculated in accordance with the
second preceding sentence and (B) the sum of the product calculated in
accordance with the immediately preceding sentence and the amount referred to in
such sentence. The MLPA Purchase Price plus the sum of (x) $6,465,737 (such
amount being equal to the CF Holdback) and (y) $5,927 (such amount being equal
to six days' interest at the "Fed Funds" rate on the amount specified in clause
(x), shall be payable by Chase to Selling Subsidiaries on the Business Day
immediately following the MLPA Closing Date, by wire transfer of immediately
available federal funds to such bank account or accounts as shall be designated
by the Seller in writing two (2) Business Days prior to the MLPA Closing Date.
The amount referred to in this paragraph includes the aggregate unpaid principal
balance of draws in process on HELOCs which are not owned by the Company.
Within 20 Business Days of the MLPA Closing Date, the Purchaser and the Company
shall (i) mutually reconcile the purchase price paid for the Mortgage Loans
reflected on Exhibit B to account for changes in the principal balance or
Pricing Category status of any such Mortgage Loans that occurred on or prior to
the Cut-Off Date, (ii) mutually reconcile the purchase price paid for the
Mortgage Loans (including "loans in process") reflected on the Company's general
ledger as of the Cut-Off Date but not reflected on Exhibit B (such Mortgage
Loans being reflected on Exhibit B-1) to account for (A) changes in the
principal balance or Pricing Category status of any such Mortgage Loans that
occurred on or prior to the Cut-Off Date and (B) the difference between the
premium over par (1.830%) paid for such Mortgage Loans and the premium over par
ultimately agreed to by the Purchaser and the Company (determined in a manner
consistent with the pricing methodology used to price the Mortgage Loans
reflected on
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Exhibit B), (iii) mutually reconcile accrued interest as reflected on Exhibit
B-1 and on the Company's general ledger as of the Cut-Off Date, (iv) mutually
reconcile the amount of the aggregate unpaid principal balance of draws in
process with respect to HELOCs not owned by the Company as reflected on Exhibit
B-1, (v) mutually reconcile all other accounts reflected on Exhibit B-1, and
(vi) mutually reconcile the number of Mortgage Loans purchased by the Purchaser
on the MLPA Closing Date against the number of Mortgage Loans owned by the
Company as of the Cut-Off Date. The amount of such reconciliation shall be
promptly remitted to the appropriate party in immediately available funds.
Within 45 days of the MLPA Closing Date, Purchaser shall provide to Seller a
Document Report (as defined in the Purchase and Sale Agreement) identifying
those Mortgage Loans which, in accordance with Schedule 2, are to be
"rebucketed" or which are subject to the Document Holdback to be remitted by the
Company to the Purchaser at the rate of $55 per missing document. Seller shall
have 10 days following receipt of the Document Report to determine the accuracy
of the information contained in the Document Report (during such 10 day period,
Purchaser shall reasonably cooperate with Seller to assist Seller in making such
determination). At the conclusion of such 10 day period, Purchaser or Seller, as
applicable, shall remit promptly all applicable amounts owed in accordance with
the Document Report and agreed to by Seller. Any amounts in dispute as to which
Purchaser and Seller cannot agree shall be subject to resolution as provided in
Section 2.2(b). The provisions of Section 1.05(m) of the Purchase and Sale
Agreement relating to the Document Holdback and the release of such holdback are
hereby incorporated by referenced herein.
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Copies of the following exhibits and schedules are omitted from filing herewith
in accordance with paragraph (b)(2) of Item 601 of Regulation S-K, but will be
furnished to the Securities and Exchange Commission upon request of the staff:
Exhibit A Mortgage Loan Schedule
Exhibit A-3 Limited Power of Attorney
Exhibit B Mortgage Loans
Exhibit B-1 Mortgage Loans
Exhibit C Credit File Documentation
Exhibit D Loan File Documentation
Exhibit E Selling Subsidiaries
Schedule 2 Legal File Exceptions
Schedule 3 Mortgage Loans
Company Disclosure Schedule
