EXECUTION COPY
ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
This is an Assignment, Assumption and Recognition Agreement (this "AAR
Agreement") made as of January 1, 2007, among HSBC Bank, National Association
(the "Assignor"), HSI Asset Securitization Corporation (the "Assignee"),
CitiMortgage, Inc. as master servicer (the "Master Servicer"), Deutsche Bank
National Trust Company (the "Trustee") not individually but solely as trustee on
behalf of the holders of the HSI Asset Loan Obligation Trust, Series 2007-AR1,
Asset-Backed Certificates and HSBC Mortgage Corporation (USA) (the "Company").
In consideration of the mutual promises contained herein the parties hereto
agree that the residential mortgage loans (the "Assigned Loans") listed on
Attachment 1 annexed hereto (the "Assigned Loan Schedule") purchased by Assignor
from Company pursuant to the Master Mortgage Loan Purchase and Servicing
Agreement, dated as of May 1, 2006, between Assignor and Company (the "Purchase
Agreement"), shall be subject to the terms of this AAR Agreement. Capitalized
terms used herein but not defined shall have the meanings ascribed to them in
the Purchase Agreement.
Assignment and Assumption
1. Assignor hereby grants, transfers and assigns to Assignee all of the
right, title interest and obligations of Assignor in the Assigned Loans and, as
they relate to the Assigned Loans, all of its right, title, interest and
obligations in, to and under the Purchase Agreement and Assigned hereby assumes
all rights and obligations with respect to the Assigned Loans under the Purchase
Agreement. Assignor specifically reserves and does not assign to Assignee any
right title and interest in, to or under any Mortgage Loans subject to the
Purchase Agreement other than those set forth on Attachment l. The Company shall
service the Assigned Loans in accordance with the Purchase Agreement as modified
by this AAR Agreement.
Recognition of the Company
2. From and after the date hereof, the Company shall and does hereby
recognize that the Assignee will transfer the Assigned Loans and assign its
rights under the Purchase Agreement (solely to the extent set forth herein) and
this AAR Agreement to HSI Asset Loan Obligation Trust 2007-AR1 (the "Trust")
created pursuant to a Pooling and Servicing Agreement, dated as of January 1,
2007 (the "Pooling Agreement"), among the Assignee as Depositor, the Trustee,
the Master Servicer, Citibank, N.A. as Securities Administrator (the "Securities
Administrator") and Xxxxx Fargo Bank, N.A. as custodian (the "Custodian"). The
Company hereby acknowledges and agrees that from and after the date hereof (i)
the Trust will be the owner of the Assigned Loans, (ii) the Company shall look
solely to the Trust for performance of any obligations of the Assignor insofar
as they relate to the enforcement of the representations, warranties and
covenants with respect to the Assigned Loans and the Trust hereby acknowledges
that it has assumed such representations, warranties and covenants and that any
claim by the Company with respect thereto shall be made by written notice to the
Trustee, (iii) the Trust shall have all the rights and remedies available to the
Assignor, insofar as they relate to the Assigned Loans, under the Purchase
Agreement, including, without limitation, the enforcement of the document
delivery requirements and remedies with respect to breaches of
representations and warranties set forth in the Purchase Agreement, and shall be
entitled to enforce all of the obligations of the Company thereunder insofar as
they relate to the Assigned Loans, and (iv) all references to the Purchaser
(insofar as they relate to the rights, title and interest and, with respect to
obligations of the Purchaser, only insofar as they relate to the enforcement of
the representations, warranties and covenants of the Company) under the Purchase
Agreement insofar as they relate to the Assigned Loans, shall be deemed to refer
to the Trust. Neither the Company nor the Assignor shall amend or agree to
amend, modify, waiver, or otherwise alter any of the terms or provisions of the
Purchase Agreement which amendment, modification, waiver or other alteration
would in any way affect the Assigned Loans or the Company's performance under
the Purchase Agreement with respect to the Assigned Loans without the prior
written consent of the Assignee, the Master Servicer and the Trustee. Any party
requesting such amendment shall provide to the Assignee, the Master Servicer and
the Trustee, at its own expense, an opinion of counsel stating that (i) such
amendment is permitted under the terms of the Purchase Agreement and (ii) such
amendment will not materially and adversely affect the interests of the holders
of any securities issued by the Trust. The Company acknowledges that
CitiMortgage, Inc. has been appointed as the Master Servicer of the Assigned
Loans pursuant to this AAR Agreement and therefore has the right to enforce all
obligations of the Company as they relate to the Assigned Loans under the
Purchase Agreement and this AAR Agreement.
Representations; Warranties and Covenants
3. Assignor warrants and represents to Assignee, the Master Servicer, the
Trust and Company as of the date hereof:
a. Attached hereto as Attachment 2 is a true and accurate copy of
the Purchase Agreement, which agreement is in full force and
effect as of the date hereof and the provisions of which have not
been waived, amended or modified in any respect, nor has any
notice of termination been given thereunder;
b. Assignor is the lawful owner of the Assigned Loans with full
right to transfer the Assigned Loans and any and all of its
interests, rights and obligations under the Purchase Agreement as
they relate to the Assigned Loans, free and clear of any and all
liens, claims and encumbrances; and upon the transfer of the
Assigned Loans to Assignee as contemplated herein, Assignee shall
have good title to each and every Assigned Loan, as well as any
and all of Assignor's interests, rights and obligations under the
Purchase Agreement as they relate to the Assigned Loans, free and
clear of any and all liens, claims and encumbrances;
c. Assignor has not received notice of, and has no knowledge of, any
offsets, counterclaims or other defenses available to Company
with respect to the Assigned Loans or the Purchase Agreement;
Assignment, Assumption and Recognition Agreement
(HSBC Mortgage Corporation (USA))
(Series 2007-AR1)
d. Assignor is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
formation, and has all requisite power and authority to acquire,
own and sell the Assigned Loans;
e. Assignor has full power and authority to execute, deliver and
perform its obligations under this AAR Agreement, and to
consummate the transactions set forth herein. The consummation of
the transactions contemplated by this AAR Agreement is in the
ordinary course of Assignor's business and will not conflict
with, or result in a breach of, any of the terms, conditions or
provisions of Assignor's charter or by-laws or any legal
restriction, or any material agreement or instrument to which
Assignor is now a party or by which it is bound, or result in the
violation of any law, rule, regulation, order, judgment or decree
to which Assignor or its property is subject. The execution,
delivery and performance by Assignor of this AAR Agreement and
the consummation by it of the transactions contemplated hereby,
have been duly authorized by all necessary action on the part of
Assignor. This AAR Agreement has been duly executed and delivered
by Assignor and, upon the due authorization, execution and
delivery by Assignee and Company, will constitute the valid and
legally binding obligation of Assignor enforceable against
Assignor in accordance with its terms except as enforceability
may be limited by bankruptcy, reorganization, insolvency,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and by general
principles of equity regardless of whether enforceability is
considered in a proceeding in equity or at law;
f. No material consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental entity
is required to be obtained or made by Assignor in connection with
the execution, delivery or performance by Assignor of this AAR
Agreement, or the consummation by it of the transactions
contemplated hereby; and
g. There is no action, suit, proceeding, investigation or litigation
pending or, to Assignor's knowledge, threatened, which either in
any instance or in the aggregate, if determined adversely to
Assignor, would adversely affect Assignor's execution or delivery
of, or the enforceability of, this AAR Agreement, or the
Assignor's ability to perform its obligations under this AAR
Agreement.
4. Assignee warrants and represents to, and covenants with, Assignor, the
Master Servicer, the Trust and Company as of the date hereof:
a. Assignee is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has
all requisite power and authority to acquire and own the Assigned
Loans;
Assignment, Assumption and Recognition Agreement
(HSBC Mortgage Corporation (USA))
(Series 2007-AR1)
b. Assignee has full power and authority to execute, deliver and
perform its obligations under this AAR Agreement, and to
consummate the transactions set forth herein. The consummation of
the transactions contemplated by this AAR Agreement is in the
ordinary course of Assignee's business and will not conflict
with, or result in a breach of, any of the terms, conditions or
provisions of Assignee's organizational documentation or any
legal restriction, or any material agreement or instrument to
which Assignee is now a party or by which it is bound, or result
in the violation of any law, rule, regulation, order, judgment or
decree to which Assignee or its property is subject. The
execution, delivery and performance by Assignee of this AAR
Agreement and the consummation by it of the transactions
contemplated hereby, have been duly authorized by all necessary
action on the part of Assignee. This AAR Agreement has been duly
executed and delivered by Assignee and, upon the due
authorization, execution and delivery by Assignor and Company,
will constitute the valid and legally binding obligation of
Assignee enforceable against Assignee in accordance with its
terms except as enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally,
and by general principles of equity regardless of whether
enforceability is considered in a proceeding in equity or at law;
c. No material consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental entity
is required to be obtained or made by Assignee in connection with
the execution, delivery or performance by Assignee of this AAR
Agreement, or the consummation by it of the transactions
contemplated hereby; and
d. There is no action, suit, proceeding, investigation or litigation
pending or, to Assignee's knowledge, threatened, which either in
any instance or in the aggregate, if determined adversely to
Assignee, would adversely affect Assignee's execution or delivery
of, or the enforceability of, this AAR Agreement, or the
Assignee's ability to perform its obligations under this AAR
Agreement.
5. Company warrants and represents to, and covenants with, Assignor, the
Trust and Assignee as of the date hereof:
a. Attached hereto as Attachment 2 is a true and accurate copy of
the Purchase Agreement, which agreement is in full force and
effect as of the date hereof and the provisions of which have not
been waived, amended or modified in any respect, nor has any
notice of termination been given thereunder;
Assignment, Assumption and Recognition Agreement
(HSBC Mortgage Corporation (USA))
(Series 2007-AR1)
b. Company is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, and has
all requisite power and authority to perform its obligations
under the Purchase Agreement;
c. Company has full corporate power and authority to execute,
deliver and perform its obligations under this AAR Agreement, and
to consummate the transactions set forth herein. The consummation
of the transactions contemplated by this AAR Agreement is in the
ordinary course of Company's business and will not conflict with,
or result in a breach of, any of the terms, conditions or
provisions of Company's organizational documentation or any legal
restriction, or any material agreement or instrument to which
Company is now a party or by which it is bound, or result in the
violation of any law, rule, regulation, order, judgment or decree
to which Company or its property is subject. The execution,
delivery and performance by Company of this AAR Agreement and the
consummation by it of the transactions contemplated hereby, have
been duly authorized by all necessary corporate action on the
part of Company. This AAR Agreement has been duly executed and
delivered by Company, and, upon the due authorization, execution
and delivery by Assignor and Assignee, will constitute the valid
and legally binding obligation of Company, enforceable against
Company in accordance with its terms except as enforceability may
be limited by bankruptcy, reorganization, insolvency, moratorium
or other similar laws now or hereafter in effect relating to
creditors' rights generally, and by general principles of equity
regardless of whether enforceability is considered in a
proceeding in equity or at law;
d. No consent, approval, order or authorization of, or declaration,
filing or registration with, any governmental entity is required
to be obtained or made by Company in connection with the
execution, delivery or performance by Company of this AAR
Agreement, or the consummation by it of the transactions
contemplated hereby;
e. There is no action, suit, proceeding, investigation or litigation
pending or, to Company's knowledge, threatened, which either in
any instance or in the aggregate, if determined adversely to
Company, would adversely affect Company's execution or delivery
of, or the enforceability of, this AAR Agreement, or the
Company's ability to perform its obligations under this AAR
Agreement; and
f. Pursuant to Section 12 of the Purchase Agreement, the Company
hereby represents and warrants, for the benefit of the Assignor,
the Assignee, the Master Servicer and the Trust, that the
representations and warranties set forth in Section 7.01 and 7.02
of the Purchase Agreement, are true and correct as of the date
hereof, except that the representation and warranty
Assignment, Assumption and Recognition Agreement
(HSBC Mortgage Corporation (USA))
(Series 2007-AR1)
set forth in Section 7.02(i) shall, for purposes of this AAR
Agreement, relate to the Mortgage Loan Schedule attached hereto.
6. The Company hereby acknowledges and agrees that the remedies available
to the Assignor, the Assignee and the Trust (including the Assignee and the
Company acting on the Trust's behalf) in connection with any breach of the
representations and warranties made by the Company set forth in Section 5 hereof
shall be as set forth in Subsection 7.03 of the Purchase Agreement as if they
were set forth herein (including without limitation the repurchase and indemnity
obligations set forth therein).
7. In connection with the transfer of the Assigned Loans hereunder, the
Company agrees that, from and after the date hereof, each Assigned Loan
transferred hereunder will be subject to, and serviced under, the Purchase
Agreement, provided that, solely with respect to the Assigned Loans, the
following modifications shall be made (all capitalized terms used below shall
have the meanings assigned to such terms by this AAR Agreement and such terms
shall be incorporated into the Purchase Agreement to the extent such terms are
not already defined therein):
(i) Section 1 shall be amended so that "[Seller]" as found in the
definition of "Custodial Account" shall be replaced with "HSBC Mortgage
Corporation (USA)";
(ii) Section 1 shall be amended so that "[Seller]" as found in the
definition of "Escrow Account" shall be replaced with "HSBC Mortgage
Corporation (USA)";
(iii) Section 13.04 shall be amended so that (a) the reference to the
"Purchaser" in the first sentence thereof will be changed to "the Master
Servicer, the Depositor and the Securities Administrator and with written
notice to the Trustee"; and (b) the reference to "Purchaser" in the second
sentence there of will be changed to "Depositor";
(iv) Section 13.05 shall be amended so that approval for any
transferring of servicing must be provided in writing by the Master
Servicer, the Depositor, the Securities Administrator and written notice
must be provided to the Trustee in order for such transfer to become
effective;
(v) Section 14.01 shall be amended so that all references to the
"Purchaser" shall be changed to "Master Servicer";
(vi) Sections 14.02, 15 and 16 shall be amended so that any references
to the "Purchaser" shall be changed to "Master Servicer"; and Section 16
shall be further amended so that the following is added at the end of the
second sentence in the first paragraph: "provided, however, that no such
compensation shall be in excess of that permitted by the Servicer under
this Agreement"
(vii) Section 11.01 of Exhibit 9 shall be amended so that (a) the
reference to "Purchaser" in the fifth line of the second paragraph thereof
shall be replaced with "the Trustee for the benefit of the holders of any
security issued by the Trust" and (b) the phrase "effect an exchange or
reissuance of such Mortgage Loan under Section 1001 of
Assignment, Assumption and Recognition Agreement
(HSBC Mortgage Corporation (USA))
(Series 2007-AR1)
the Code and cause either any REMIC designation made in connection with a
Pass-Through Transfer to fail to qualify as a REMIC under the Code or the
imposition of any tax on 'prohibited transactions' or 'contributions after
the startup day' under the REMIC provisions of the Code" shall be added
after the word "principal" in the ninth line of the second paragraph
thereof;
(viii) Section 11.03 of Exhibit 9 shall be amended so that the
following shall be added as the last paragraph thereof:
"In the event that a Mortgage Loan becomes part of a REMIC, and
becomes REO Property, such property shall be disposed of by the
Seller, with the consent of the trustee as required pursuant to this
Agreement, within two (2) years after becoming an REO Property, unless
the Seller provides to the trustee under such REMIC an opinion of
counsel to the effect that the holding of such REO Property subsequent
to two (2) years after its becoming REO Property, will not result in
the imposition of taxes on "prohibited transactions" as defined in
Section 860F of the Code, or cause the transaction to fail to qualify
as a REMIC at any time that certificates are outstanding. The Seller
shall manage, conserve, protect and operate each such REO Property for
the certificateholders solely for the purpose of its prompt
disposition and sale in a manner which does not cause such property to
fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code, or any "net income from foreclosure
property" which is subject to taxation under the REMIC provisions of
the Code. Pursuant to its efforts to sell such property, the Seller
shall either itself or through an agent selected by the Seller,
protect and conserve such property in the same manner and to such an
extent as is customary in the locality where such property is located.
Additionally, the Seller shall provide the Purchaser or any master
servicer with information sufficient to perform the tax withholding
and reporting related to Sections 1445 and 6050J of the Code."
(ix) Section 11.04 of Exhibit 9 shall be amended so that the last
paragraph thereof is deleted in its entirety and amend 11.04 (ii) by
deleting "including all Prepayment Charges" after the words Mortgage Loans;
(x) Section 11.05 of Exhibit 9 shall be amended so that the phrase "in
excess of the Purchase Price" shall be added after the word "thereon" in
the second line of subsection (iv);
(xi) Section 11.09 of Exhibit 9 shall be amended so that any consent
for the transfer of the Custodial Account or Escrow Account must be
obtained from the Master Servicer and the Depositor;
Assignment, Assumption and Recognition Agreement
(HSBC Mortgage Corporation (USA))
(Series 2007-AR1)
(xii) Section 11.13 of Exhibit 9 shall be amended as follows:
(a) the first paragraph shall be deleted in its entirety and
replaced with the following "This Section shall apply only to REO
Properties acquired for the account of the Trustee and shall not apply
to any REO Property relating to a Mortgage Loan which was purchase or
repurchased from the Trustee pursuant to any provision hereof. In the
event that title to any such REO Property is acquired, the deed or
certificate of sale shall be issued to the Trust, or if not permitted
by law, to the Trustee, or its nominee for the benefit of the holders
of any security issued by the Trust." and
(b) the following shall be added as the first sentence to second
paragraph, "the Servicer shall manage, conserve, protect and operate
each REO Property for the Trustee solely for the purpose of its prompt
disposition and sale."
(xii) Sections 11.14, 11.16, 11.17, 11.18 and 11.22 of Exhibit 9 shall
be amended so all references to "Purchaser" made in connection with the
provision of any notice, the disposition of any funds or the requirement of
any consent shall be changed to references to the "Master Servicer";
(xiv) Section 11.15 of Exhibit 9 shall not apply;
(xv) Section 11.23 and 11.24 of Exhibit 9 shall not apply;
(xvi) Section 11.25 shall be amended so that references to the
"Purchaser" in the last sentence thereof are changed to "the Depositor and
the Trustee".
8. Pursuant to Section11.05 of Exhibit 9 to the Purchase Agreement, the
Company shall establish a Custodial Account with respect to the Assigned Loans
which is separate and distinct from the Custodial Account previously established
under such provision.
9. Pursuant to Section11.06 of Exhibit 9 to the Purchase Agreement, the
Company shall establish an Escrow Account with respect to the Assigned Loans
which is separate and distinct from the Escrow Account previously established
under such provision.
10. Pursuant to Section 11.16 of Exhibit 9 to the Purchase Agreement, no
later than 10 calendar days, the Company shall furnish to the Master Servicer
(i)(a) monthly loan data in such format mutually agreed-upon between the Company
and the Master Servicer, (b) default loan data in such format mutually agreed
upon between the Company and the Master Servicer and (c) information regarding
the realized losses and gains as in such format mutually agreed upon between the
Company and the Master Servicer, in each case relating to the period ending on
the last day of the preceding calendar month, (ii) all such information required
pursuant to clause (i)(a) above on a magnetic tape, electronic mail, or other
similar media reasonably acceptable to the Master Servicer and the Company, and
(iii) all supporting documentation reasonably necessary and available with
respect to the information required above.
Assignment, Assumption and Recognition Agreement
(HSBC Mortgage Corporation (USA))
(Series 2007-AR1)
Notwithstanding the foregoing, the Company is not required to report data
relating to prepayment charges or penalties.
Miscellaneous
11. All demands, notices and communications related to the Assigned Loans,
the Agreements and this AAR Agreement shall be in writing and shall be deemed to
have been duly given if personally delivered or mailed by registered mail,
postage prepaid, as follows:
a. In the case of Company,
HSBC Mortgage Corporation (USA)
0000 Xxxxxx Xxxxxx
Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
b. In the case of Assignor,
HSBC Bank USA, National Association
Re: HALO 2007-AR1
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Head of MBS Principal Finance
c. In the case of Assignee,
HSI Asset Securitization Corporation
Re: HALO 2007-AR1
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Head MBS Principal Finance
d. In the case of Trustee (or the Trust),
Deutsche Bank National Trust Company
0000 Xx. Xxxxxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
e. In the case of the Master Servicer:
CitiMortgage Mortgage, Inc.
0000 Xxxxxx Xxxx.
Xxxxxx, XX 00000
Attention: Master Servicing Division,
Compliance Manager -- HALO 2007-AR1
Assignment, Assumption and Recognition Agreement
(HSBC Mortgage Corporation (USA))
(Series 2007-AR1)
f. In the case of the Securities Administrator:
Citbank, N.A.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Structured Finance Agency and Trust, HALO 2007-AR1
12. This AAR Agreement shall be construed in accordance with the laws of
the State of New York, without regard to conflicts of law principles, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
13. No term or provision of this AAR Agreement may be waived or modified
unless such waiver or modification is in writing and signed by the party against
whom such waiver or modification is sought to be enforced.
14. This AAR Agreement shall inure to the benefit of the successors and
assigns of the parties hereto. Any entity into which Assignor, Assignee or
Company may be merged or consolidated shall without the requirement for any
further writing, be deemed Assignor, Assignee or Company, respectively
hereunder.
15. This AAR Agreement shall survive the conveyance of the Assigned Loans
as contemplated in this AAR Agreement.
16. This AAR Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original and all such
counterparts shall constitute one and the same instrument.
17. In the event that any provision of this AAR Agreement conflicts with
any provision of the Purchase Agreement with respect to the Assigned Loans, the
terms of this AAR Agreement shall control.
Assignment, Assumption and Recognition Agreement
(HSBC Mortgage Corporation (USA))
(Series 2007-AR1)
IN WITNESS WHEREOF, the parties hereto have executed this AAR Agreement as
of the day and year first above written.
HSBC BANK USA, NATIONAL ASSOCIATION
Assignor
By:
---------------------------------
Name: Xxx X. Xxxxxxxx
Title: Officer #14311
HSI ASSET SECURITIZATION CORPORATION
By:
---------------------------------
Name: Xxxxxx Xxxxx
Title: Senior Vice President
HSBC MORTGAGE CORPORATION (USA)
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Trustee
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Assignment, Assumption and Recognition Agreement
(HSBC Mortgage Corporation (USA))
(Series 2007-AR1)
CITIMORTGAGE, INC., as Master Servicer
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Assignment, Assumption and Recognition Agreement
(HSBC Mortgage Corporation (USA))
(Series 2007-AR1)
ATTACHMENT 1
(form of Assigned Loan Tape)
Assignment, Assumption and Recognition Agreement
(HSBC Mortgage Corporation (USA))
(Series 2007-AR1)
ATTACHMENT 2
(Form of Purchase Agreement)
Assignment, Assumption and Recognition Agreement
(HSBC Mortgage Corporation (USA))
(Series 2007-AR1)
EXECUTION VERSION
MASTER MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT
HSBC MORTGAGE CORPORATION (USA)
Seller and Servicer
and
HSBC BANK USA, NATIONAL ASSOCIATION
Initial Purchaser
Dated as of May 1, 2006
First and Second Lien, Fixed and Adjustable Rate Mortgage Loans
TABLE OF CONTENTS
Page
----
SECTION 1. Definitions................................................... 2
SECTION 2. Agreement to Purchase......................................... 14
SECTION 3. Mortgage Loan Schedules....................................... 14
SECTION 4. Purchase Price................................................ 14
SECTION 5. Examination of Mortgage Files................................. 15
SECTION 6. Conveyance from Seller to Initial Purchaser................... 15
Subsection 6.01. Conveyance of Mortgage Loans; Possession of
Servicing Files................................... 15
Subsection 6.02. Books and Records.................................... 16
Subsection 6.03. Delivery of Mortgage Loan Documents.................. 16
SECTION 7. Representations, Warranties and Covenants of the Seller and
Servicer: Remedies for Breach.............................. 17
Subsection 7.01. Representations and Warranties Respecting the
Seller and the Servicer........................... 17
Subsection 7.02. Representations and Warranties Regarding
Individual Mortgage Loans......................... 20
Subsection 7.03. Remedies for Breach of Representations and
Warranties........................................ 32
Subsection 7.04. Repurchase of Certain Mortgage Loans................. 34
SECTION 8. Closing...................................................... 36
SECTION 9. Closing Documents............................................ 36
SECTION 10. Costs........................................................ 38
SECTION 11. Servicer's Servicing Obligations............................. 38
SECTION 12. Removal of Mortgage Loans from Inclusion under This
Agreement Upon a Whole Loan Transfer or a Pass-Through
Transfer on One or More Reconstitution Dates.............. 38
SECTION 13. The Seller and the Servicer.................................. 41
Subsection 13.01. Additional Indemnification by the Seller and the
Servicer......................................... 41
Subsection 13.02. Merger or Consolidation of the Seller and the
Servicer......................................... 41
Subsection 13.03. Limitation on Liability of the Seller, the
Servicer and Others.............................. 42
Subsection 13.04. Servicer Not to Resign.............................. 42
Subsection 13.05. No Transfer of Servicing............................ 42
i
SECTION 14. Default...................................................... 43
Subsection 14.01. Events of Default................................... 43
Subsection 14.02. Waiver of Defaults.................................. 44
SECTION 15. Termination.................................................. 44
SECTION 16. Successor to the Servicer.................................... 45
SECTION 17. Financial Statements......................................... 46
SECTION 18. Mandatory Delivery: Grant of Security Interest............... 46
SECTION 19. Notices...................................................... 46
SECTION 20. Severability Clause.......................................... 47
SECTION 21. Counterparts................................................. 47
SECTION 22. Governing Law................................................ 48
SECTION 23. Intention of the Parties..................................... 48
SECTION 24. Successors and Assigns....................................... 48
SECTION 25. Waivers...................................................... 49
SECTION 26. Exhibits..................................................... 49
SECTION 27. Nonsolicitation.............................................. 49
SECTION 28. General Interpretive Principles.............................. 49
SECTION 29. Reproduction of Documents.................................... 50
SECTION 30. Further Agreements........................................... 50
SECTION 31. Entire Agreement............................................. 50
ii
EXHIBITS
EXHIBIT 1 SELLER'S OFFICER'S CERTIFICATE
EXHIBIT 2 FORM OF OPINION OF COUNSEL TO THE SELLER
EXHIBIT 3 SECURITY RELEASE CERTIFICATION
EXHIBIT 4 ASSIGNMENT AND CONVEYANCE
EXHIBIT 5 CONTENTS OF EACH MORTGAGE FILE
EXHIBIT 6 CUSTODIAL AGREEMENT
EXHIBIT 7 FORM OF CUSTODIAL ACCOUNT LETTER AGREEMENT
EXHIBIT 8 FORM OF ESCROW ACCOUNT LETTER AGREEMENT
EXHIBIT 9 SERVICING ADDENDUM
EXHIBIT 10 FORM OF ASSIGNMENT AND RECOGNITION AGREEMENT
EXHIBIT 11 FORM OF INDEMNIFICATION AGREEMENT
EXHIBIT 12 MORTGAGE LOAN DOCUMENTS
EXHIBIT 13 UNDERWRITING GUIDELINES OF THE SELLER
SCHEDULE I MORTGAGE LOAN SCHEDULE
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MASTER MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT
This is a MASTER MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT (the
"Agreement"), dated as of May 1, 2006, by and between HSBC Bank USA, National
Association, having an office at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the
"Initial Purchaser", and the Initial Purchaser or the Person, if any, to which
the Initial Purchaser has assigned its rights and obligations hereunder as
Purchaser with respect to a Mortgage Loan, and each of their respective
successors and assigns, the "Purchaser"), and HSBC Mortgage Corporation (USA),
having an office at 0000 Xxxxxx Xxxxxx, Xxxxx, Xxx Xxxx 00000 (the "Seller" and
"Servicer").
WITNESSETH:
WHEREAS, the Seller desires to sell, from time to time, to the
Purchaser, and the Purchaser desires to purchase, from time to time, from the
Seller, certain conventional, fixed and adjustable rate residential first and
second lien mortgage loans, (the "Mortgage Loans") and certain fixed and
adjustable rate first and second lien Co-op Loans as described herein on a
servicing-retained basis, and which shall be delivered in groups of whole loans
or participation interests therein, as applicable, on various dates as provided
herein and in the related Commitment Letter (each, a "Closing Date");
WHEREAS, each Mortgage Loan is secured by a mortgage, deed of trust or
other security instrument creating a first or second lien on a residential
dwelling located in the jurisdiction indicated on the Mortgage Loan Schedule for
the related Mortgage Loan Package, which is to be annexed hereto on each Closing
Date as Schedule I;
WHEREAS, each of the Co-op Loans is secured by a pledge of shares of
stock issued by a Cooperative and the assignment of the appurtenant proprietary
lease, all relating to a specified dwelling unit in an apartment building owned
by the Cooperative and located in the states indicated on the related Mortgage
Loan Schedule; and
WHEREAS, the Purchaser and the Seller wish to prescribe the manner of
the conveyance, servicing and control of the Mortgage Loans; and
WHEREAS, following its purchase of the Mortgage Loans from the Seller,
the Purchaser desires to sell some or all of the Mortgage Loans to not more than
five purchasers as a whole loan transfer in a whole loan or participation format
or a public or private mortgage-backed securities transaction; and
WHEREAS, certain Mortgage Loans have been, or will be, registered on
the MERS(R) System (defined below) such that the mortgagee of record under each
such Mortgage Loan shall be identified as MERS.
NOW, THEREFORE, in consideration of the premises and mutual agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Purchaser and the Seller agree
as follows:
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SECTION 1. Definitions.
For purposes of this Agreement the following capitalized terms shall
have the respective meanings set forth below.
Accepted Servicing Practices: With respect to any Mortgage Loan, those
mortgage servicing practices (including collection procedures) of prudent
mortgage banking institutions which service mortgage loans of the same type as
such Mortgage Loan in the jurisdiction where the related Mortgaged Property is
located, which are in accordance with Xxxxxx Mae servicing practices and
procedures for MBS pool mortgages, as defined in the Xxxxxx Xxx Guides including
future updates, the terms of the Mortgage Loan Documents and all applicable
federal, state and local legal and regulatory requirements.
Adjustable Rate Mortgage Loan: A Mortgage Loan which provides for the
adjustment of the Mortgage Interest Rate payable in respect thereto.
Adjustment Date: With respect to each Adjustable Rate Mortgage Loan,
the date set forth in the related Mortgage Note on which the Mortgage Interest
Rate on such Adjustable Rate Mortgage Loan is adjusted in accordance with the
terms of the related Mortgage Note.
Agreement: This Master Mortgage Loan Purchase and Servicing Agreement
including all exhibits, schedules, amendments and supplements hereto.
Appraised Value: With respect to any Mortgaged Property, the lesser of
(i) the value thereof as determined by an appraisal made for the originator of
the Mortgage Loan at the time of origination of the Mortgage Loan by an
appraiser who met the minimum requirements of FNMA and FHLMC and the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989, and (ii) the
purchase price paid for the related Mortgaged Property by the Mortgagor with the
proceeds of the Mortgage Loan. In the case of a Refinanced Mortgage Loan, such
value of the Mortgaged Property is based solely upon the value determined by an
appraisal made for the originator of such Refinanced Mortgage Loan at the time
of origination of such Refinanced Mortgage Loan by an appraiser who met the
minimum requirements of FNMA and FHLMC and the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989, or such collateral assessment acceptable
per the Underwriting Guidelines and acceptable to FNMA and FHLMC. However in the
case of a mortgage made on property in New York State value will always be
determined by the appraisal for determining any requirement for primary mortgage
insurance only.
Assignment and Conveyance: An assignment and conveyance of the
Mortgage Loans purchased on a Closing Date in the form annexed hereto as Exhibit
4.
Assignment of Mortgage: With respect to each Mortgage Loan which is
not a MERS Loan, an individual assignment of the Mortgage, notice of transfer or
equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to give record
notice of the sale of the Mortgage to the Purchaser.
Balloon Mortgage Loan: A Mortgage Loan that provided on the date of
origination for an amortization schedule extending beyond its maturity date.
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Business Day: Any day other than a Saturday or Sunday, or a day on
which banking and savings and loan institutions in the State of [Seller's State
of doing business] or the State of New York are authorized or obligated by law
or executive order to be closed.
Cash-Out Refinancing: A Refinanced Mortgage Loan the proceeds of which
were in excess of the principal balance, as defined per the Underwriting
Guidelines.
Closing Date: The date or dates on which the Purchaser from time to
time shall purchase and the Seller from time to time shall sell to the
Purchaser, the Mortgage Loans listed on the related Mortgage Loan Schedule with
respect to the related Mortgage Loan Package.
Closing Documents: With respect to any Closing Date, the documents
required pursuant to Section 9.
Code: The Internal Revenue Code of 1986, as amended, or any successor
statute thereto.
Combined Loan-to-Value Ratio or CLTV: With respect to any Mortgage
Loan, the fraction, expressed as a percentage, the numerator of which is the sum
of (a) the original principal balance of the Mortgage Loan, plus (b) the unpaid
principal balance of any related subordinate mortgage loan or loans secured by
the Mortgaged Property plus (c) any approved home equity line amount whether in
use or not, and the denominator of which is the Appraised Value of the related
Mortgaged Property.
Commitment Letter: With respect to any Mortgage Loan Package purchased
and sold on any Closing Date, the letter agreement among the Purchaser, the
Servicer and the Seller (including any exhibits, schedules and attachments
thereto), setting forth the terms and conditions of such transaction and
describing the Mortgage Loans to be purchased by the Purchaser on such Closing
Date. A Commitment Letter may relate to more than one Mortgage Loan Package to
be purchased on one or more Closing Dates hereunder.
Condemnation Proceeds: All awards, compensation and settlements in
respect of a taking of all or part of a Mortgaged Property by exercise of the
power of condemnation or the right of eminent domain.
Convertible Mortgage Loan: A Mortgage Loan that by its terms and
subject to certain conditions contained in the related Mortgage or Mortgage Note
allows the Mortgagor to convert the adjustable Mortgage Interest Rate on such
Mortgage Loan to a fixed Mortgage Interest Rate.
Co-op Lease: With respect to a Co-op Loan, the proprietary lease with
respect to a dwelling unit occupied by the Mortgagor and relating to the stock
allocated to the related dwelling unit.
Co-op Loan: A Mortgage Loan that is secured by a first or second line
on a perfected security interest in Cooperative Shares and the related
proprietary lease granting exclusive rights to occupy the related Cooperative
Apartment in the building owned by the related Cooperative.
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Co-op Stock: With respect to a Co-op Loan, the single outstanding
class of stock, partnership interest or other ownership instrument in the
related residential cooperative housing corporation.
Cooperative: The private, non profit cooperative apartment corporation
which owns all of the real property that comprises the Project, including the
land, separate dwelling units and all common areas.
Cooperative Unit: With respect to any Co-op Loan, a specific unit in a
Project.
Cooperative Shares: With respect to any Co-op Loan, the shares of
stock issued by a Cooperative and allocated to a cooperative apartment and
represented by a stock certificate
Credit Score: The credit score of the Mortgagor provided by Fair,
Xxxxx & Company, Inc. or such other organization providing credit scores as per
HSBC underwriting/program guidelines in affect at the time of the origination of
a Mortgage Loan.
Custodial Account: The separate account or accounts, each of which
shall be an Eligible Account, created and maintained pursuant to this Agreement,
which shall be entitled "[SELLER], as servicer, in trust for the Purchaser and
various Mortgagors, Fixed and Adjustable Rate Mortgage Loans", established at a
financial institution acceptable to the Purchaser. Each Custodial Account shall
be an Eligible Account.
Custodial Agreement: The agreement governing the retention of the
originals of each Mortgage Note, Mortgage, Assignment of Mortgage and other
Mortgage Loan Documents, annexed hereto as Exhibit 6.
Custodian: The custodian under the Custodial Agreement, or its
successor in interest or assigns, or any successor to the Custodian under the
Custodial Agreement, as therein provided.
Cut-off Date: The first day of the month in which the related Closing
Date occurs or as otherwise set forth in the related Commitment Letter.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Qualified Substitute Mortgage Loan.
Determination Date: With respect to each Distribution Date, the
sixteenth (16th) day of the calendar month in which such Distribution Date
occurs or, if such sixteenth (16th) day is not a Business Day, the Business Day
immediately preceding such sixteenth (16th) day.
Distribution Date: The eighteenth (18th) day of each month, or if such
eighteenth (18th) day is not a Business Day, the first Business Day immediately
preceding such eighteenth (18th) day.
Due Date: With respect to each Distribution Date, the first day of the
calendar month in which such Distribution Date occurs, which is the day on which
the Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace.
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Due Period: With respect to each Distribution Date, the period
commencing on the second day of the month preceding the month of the
Distribution Date and ending on the first day of the month of the Distribution
Date.
Eligible Account: Either (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the short-term unsecured debt obligations of such holding company) are
rated A-1 by S&P if the amounts on deposit are to be held in the account for no
more than 365 days (or at least "A-2" if the amounts on deposit are to be held
in the account for no more than 30 days) or Prime-1 by Moody's (or a comparable
rating if another rating agency is specified by the Initial Purchaser by written
notice to the Seller and Servicer) at the time any amounts are held on deposit
therein, (ii) an account or accounts the deposits in which are fully insured by
the FDIC or (iii) a trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity. Eligible Accounts may bear interest.
Escrow Account: The separate trust account or accounts created and
maintained pursuant to this Agreement which shall be entitled "[SELLER], as
servicer, in trust for the Purchaser and various Mortgagors, Fixed and
Adjustable Rate Mortgage Loans," established at a financial institution
acceptable to the Purchaser. Each Escrow Account shall be an Eligible Account.
Escrow Payments: The amounts constituting ground rents, taxes,
assessments, water charges, sewer rents, Primary Insurance Policy premiums, fire
and hazard insurance premiums and other payments required to be escrowed by the
Mortgagor with the Mortgagee pursuant to the terms of any Mortgage Note or
Mortgage.
Event of Default: Any one of the events enumerated in Subsection
14.01.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FHLMC: Xxxxxxx Mac or any successor thereto.
Final Recovery Determination: With respect to any defaulted Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO Property purchased
by the Seller pursuant to this Agreement), a determination made by the Servicer
that all Insurance Proceeds, Liquidation Proceeds and other payments or
recoveries which the Servicer, in its reasonable good faith judgment, expects to
be finally recoverable in respect thereof have been so recovered. The Servicer
shall maintain records, prepared by a servicing officer of the Servicer, of each
Final Recovery Determination.
Fixed Rate Mortgage Loan: A Mortgage Loan with respect to which the
Mortgage Interest Rate set forth in the Mortgage Note is fixed for the term of
such Mortgage Loan.
Flood Zone Service Contract: A life of loan service contract
transferable to a nationally recognized flood service provider, maintained for
the Mortgaged Property for the purpose of monitoring the Federal Emergency
Management Agency (FEMA) map status relating to such Mortgaged Property.
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FNMA: Xxxxxx Xxx or any successor thereto.
FNMA Guides: The Xxxxxx Mae Seller's Guide and the Xxxxxx Xxx Services
Guide and all amendments or additions thereto.
Gross Margin: With respect to any Adjustable Rate Mortgage Loan, the
fixed percentage amount set forth in the related Mortgage Note and the related
Mortgage Loan Schedule that is added to the Index on each Adjustment Date in
accordance with the terms of the related Mortgage Note to determine the new
Mortgage Interest Rate for such Mortgage Loan.
High Cost Loan: A Mortgage Loan (a) subject to the provisions of the
Homeownership and Equity Protection Act of 1994 as amended ("HOEPA") or, (b) a
"high cost" mortgage loan, "covered" mortgage loan, "high risk home" mortgage
loan, or "predatory" mortgage loan or any other comparable term, no matter how
defined under any federal, state or local law applicable to the Mortgage Loan,
(c) subject to any comparable federal, state or local statutes or regulations,
or any other statute or regulation providing for heightened regulatory scrutiny
or assignee liability to holders of such mortgage loans, or (d) a High Cost Loan
or Covered Loan, as applicable (as such terms are defined in the current
Standard & Poor's LEVELS(R) Glossary Revised, Appendix E).
HUD: The United States Department of Housing and Urban Development or
any successor thereto.
Index: With respect to any Adjustable Rate Mortgage Loan, the index
identified on the Mortgage Loan Schedule and set forth in the related Mortgage
Note for the purpose of calculating the interest rate thereon.
Initial Closing Date: The Closing Date on which the Initial Purchaser
purchases and the Seller sells the first Mortgage Loan Package hereunder.
Initial Purchaser: HSBC Bank USA, National Association, or any
successor or assign.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Initial Rate Cap: With respect to each Adjustable Rate Mortgage Loan
and the initial Adjustment Date therefore, a number of percentage points per
annum that is set forth in the related Loan Schedule and in the related Mortgage
Note, which is the maximum amount by which the Mortgage Interest Rate for such
Adjustable Rate Mortgage Loan may increase or decrease on such Adjustment Date
from the Mortgage Interest Rate in effect immediately prior to such Adjustment
Date.
Interest Only Mortgage Loan: A Mortgage Loan that requires payment of
interest only for a period of time specified on the related Mortgage Note. The
interest-only period followed by full amortization of the remaining balance over
the remaining duration of the loan.
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Lender Paid Mortgage Insurance Policy or LPMI Policy: A policy of
mortgage guaranty insurance issued by a Qualified Insurer in which the owner or
servicer of the Mortgage Loan is responsible for the premiums associated with
such mortgage insurance policy.
Liquidation Proceeds: Amounts, other than Insurance Proceeds and
Condemnation Proceeds, received in connection with the liquidation of a
defaulted Mortgage Loan through trustee's sale, foreclosure sale or otherwise,
other than amounts received following the acquisition of REO Property.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan as of
any date of determination, the ratio on such date of the outstanding principal
amount of the Mortgage Loan, to the lower of the Appraised Value or the sale
price of the Mortgaged Property. However, in the case of a mortgage made on
property in New York State, value will always be determined by the appraisal for
determining any requirement for primary mortgage insurance only.
Maximum Mortgage Interest Rate: With respect to each Adjustable Rate
Mortgage Loan, a rate that is set forth on the related Mortgage Loan Schedule
and in the related Mortgage Note and is the maximum interest rate to which the
Mortgage Interest Rate on such Mortgage Loan may be increased on any Adjustment
Date.
MERS: Mortgage Electronic Registration System, Inc., a subsidiary of
MERSCORP, Inc.
MERS(R) System: The electronic mortgage registration system maintained
by MERS.
MIN: The Mortgage Identification Number of Mortgage Loans registered
with MERS on the MERS(R) System.
Minimum Mortgage Interest Rate: With respect to each Adjustable Rate
Mortgage Loan, a rate that is set forth on the related Mortgage Loan Schedule
and in the related Mortgage Note and is the minimum interest rate to which the
Mortgage Interest Rate on such Mortgage Loan may be decreased on any Adjustment
Date.
MOM Mortgage: A Mortgage Loan naming MERS as the original mortgagee on
the mortgage security instrument.
Monthly Advance: The aggregate of the advances made by the Seller on
any Distribution Date pursuant to Subsection 11.30 of the Servicing Addendum.
Monthly Payment: With respect to any Mortgage Loan, the scheduled
combined payment of principal (if applicable) and interest payable by a
Mortgagor under the related Mortgage Note on each Due Date. Moody's: Xxxxx'x
Investors Service, Inc. or its successor in interest.
Mortgage: (a) With respect to any Mortgage Loan that is not a Co-op
Loan, the mortgage, deed of trust or other instrument creating a first or second
lien on the Mortgaged
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Property securing the Mortgage Note and (b) with respect to a Co-op Loan, the
related Security Agreement.
Mortgage File: The items pertaining to a particular Mortgage Loan
referred to in Exhibit 5 annexed hereto, and any additional documents required
to be added to the Mortgage File pursuant to this Agreement or the related
Commitment Letter.
Mortgage Interest Rate: With respect to each Fixed Rate Mortgage Loan,
the fixed annual rate of interest provided for in the related Mortgage Note and,
with respect to each Adjustable Rate Mortgage Loan, the annual rate that
interest accrues on such Adjustable Rate Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note.
Mortgage Loan: Each residential mortgage loan or Co-op Loan, sold,
assigned and transferred to the Purchaser pursuant to this Agreement and the
related Commitment Letter and identified on the Mortgage Loan Schedule annexed
to this Agreement on the related Closing Date, which Mortgage Loan includes
without limitation the Mortgage File, the Monthly Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
REO Disposition proceeds, and all other rights, benefits, proceeds and
obligations arising from or in connection with such Mortgage Loan.
Mortgage Loan Documents: The documents listed in Exhibit 13 hereto
pertaining to any Mortgage Loan or Co-op Loan.
Mortgage Loan Package: The Mortgage Loans listed on a Mortgage Loan
Schedule, delivered to the Custodian and the Purchaser at least five (5)
Business Days prior to the related Closing Date and attached to the related
Assignment and Conveyance on the related Closing Date.
Mortgage Loan Schedule: With respect to each Mortgage Loan Package,
the schedule of Mortgage Loans to be annexed to the related Assignment and
Conveyance on the related Closing Date for the Mortgage Loan Package delivered
on such Closing Date in both hard copy and electronic form, such schedule
setting forth the following information with respect to each Mortgage Loan in
the Mortgage Loan Package: (1) the Seller's Mortgage Loan identifying number;
(2) the Mortgagor's first and last name; (3) the street address of the Mortgaged
Property including the state and zip code; (4) a code indicating whether the
Mortgaged Property is owner-occupied; (5) the type of Residential Dwelling
constituting the Mortgaged Property; (6) the original months to maturity; (7)
the original date of the Mortgage Loan and the remaining months to maturity from
the Cut-off Date, based on the original amortization schedule; (8) the
Loan-to-Value Ratio or Combined Loan-to-Value Ratio at origination; (9) the
Mortgage Interest Rate in effect immediately following the Cut-off Date; (10)
the date on which the first Monthly Payment was due on the Mortgage Loan; (11)
the stated maturity date; (12) the amount of the Monthly Payment at origination;
(13) the amount of the Monthly Payment as of the Cut-off Date; (14) the last Due
Date on which a Monthly Payment was actually applied to the unpaid Stated
Principal Balance; (15) the original principal amount of the Mortgage Loan; (16)
the Stated Principal Balance of the Mortgage Loan as of the close of business on
the Cut-off Date; (17) with respect to each Adjustable Rate Mortgage Loan, the
first Adjustment Date; (18) with respect to each Adjustable Rate Mortgage Loan,
the Gross Margin;
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(19) a code indicating the purpose of the loan (i.e., purchase financing,
Rate/Term Refinancing, Cash-Out Refinancing); (20) with respect to each
Adjustable Rate Mortgage Loan, the Maximum Mortgage Interest Rate under the
terms of the Mortgage Note; (21) with respect to each Adjustable Rate Mortgage
Loan, the Minimum Mortgage Interest Rate under the terms of the Mortgage Note;
(22) the Mortgage Interest Rate at origination; (23) with respect to each
Adjustable Rate Mortgage Loan, the Periodic Rate Cap; (24) with respect to each
Adjustable Rate Mortgage Loan, the first Adjustment Date immediately following
the Cut-off Date; (25) with respect to each Adjustable Rate Mortgage Loan, the
Index; (26) the date on which the first Monthly Payment was due on the Mortgage
Loan and, if such date is not consistent with the Due Date currently in effect,
such Due Date; (27) a code indicating whether the Mortgage Loan is an Adjustable
Rate Mortgage Loan or a Fixed Rate Mortgage Loan; (28) a code indicating the
documentation style (i.e., full, alternative or reduced); (29) a code indicating
if the Mortgage Loan is subject to a Primary Insurance Policy or LPMI Policy;
(30) the Appraised Value of the Mortgaged Property; (31) the sale price of the
Mortgaged Property, if applicable; (32) a code indicating whether the Mortgage
Loan is subject to a Prepayment Charge; (33) the amount and the term of any
Prepayment Charge or penalty; (34) a code indicating if the Mortgage Loan is an
interest-only Mortgage Loan and, if so, the term of the interest-only period of
such Mortgage Loan; (35) a code indicating whether the Mortgage Loan is a first
or second lien; (36) a code indicating the Mortgagor's debt to income ratio;
(37) the points and fees charged in connection with the origination of such
Mortgage Loan and (38) a code indicating if the Mortgage Loan is subject to
Primary Insurance Policy. With respect to the Mortgage Loan Package in the
aggregate, the Mortgage Loan Schedule shall set forth the following information,
as of the related Cut-off Date: (1) the number of Mortgage Loans; (2) the
current principal balance of the Mortgage Loans; (3) the weighted average
Mortgage Interest Rate of the Mortgage Loans; and (4) the weighted average
maturity of the Mortgage Loans. Schedule I hereto shall be supplemented as of
each Closing Date to reflect the addition of the Mortgage Loan Schedule with
respect to the related Mortgage Loan Package.
Mortgage Note: The original executed note or other evidence of the
Mortgage Loan indebtedness of a Mortgagor.
Mortgaged Property: (a) With respect to each Mortgage Loan which is
not a Co-op Loan, the Mortgagor's real property securing repayment of a related
Mortgage Note, consisting of a fee simple interest or leasehold in a single
parcel of real property improved by a Residential Dwelling and (b) with respect
to each Co-op Loan, the related cooperative apartment.
Mortgagee: The mortgagee or beneficiary named in the Mortgage and the
successors and assigns of such mortgagee or beneficiary.
Mortgagor: The obligor on a Mortgage Note, the owner of the Mortgaged
Property and the grantor or mortgagor named in the related Mortgage and such
grantor's or mortgagor's successor's in title to the Mortgaged Property.
Net Mortgage Interest Rate: With respect to any Mortgage Loan (or the
related REO Property), as of any date of determination, a per annum rate of
interest equal to the then applicable Mortgage Interest Rate for such Mortgage
Loan minus the Servicing Fee Rate.
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Nonrecoverable Monthly Advance: Any Monthly Advance previously made or
proposed to be made in respect of a Mortgage Loan or REO Property that, in the
good faith business judgment of the Seller, will not, or, in the case of a
proposed Monthly Advance, would not be, ultimately recoverable from related late
payments, Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan or
REO Property as provided herein.
Officer's Certificate: A certificate signed by the Chairman of the
Board or the Vice Chairman of the Board or a President or a Vice President and
by the Treasurer or the Secretary or one of the Assistant Treasurers or
Assistant Secretaries of the Person on behalf of whom such certificate is being
delivered.
Opinion of Counsel: A written opinion of counsel, who may be salaried
counsel for the Person on behalf of whom the opinion is being given, reasonably
acceptable to each Person to whom such opinion is addressed.
Pass-Through Transfer: Any transaction involving either (1) a sale or
transfer of some or all of the Mortgage Loans directly or indirectly to an
issuing entity in connection with an issuance of publicly offered or privately
placed, rated or unrated mortgage-backed securities or (2) an issuance of
publicly offered or privately placed, rated or unrated securities, the payments
on which are determined primarily by reference to one or more portfolios of
residential mortgage loans consisting, in whole or in part, of some or all of
the Mortgage Loans.
Periodic Rate Cap: With respect to each Adjustable Rate Mortgage Loan
and any Adjustment Date therefor, a number of percentage points per annum that
is set forth in the related Mortgage Loan Schedule and in the related Mortgage
Note, which is the maximum amount by which the Mortgage Interest Rate for such
Adjustable Rate Mortgage Loan may increase (without regard to the Maximum
Mortgage Interest Rate) or decrease (without regard to the Minimum Mortgage
Interest Rate) on such Adjustment Date from the Mortgage Interest Rate in effect
immediately prior to such Adjustment Date.
Person: An individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Preliminary Servicing Period: With respect to any Mortgage Loans, the
period commencing on the related Closing Date and ending on the date the Seller
enters into Reconstitution Agreements which amend or restate the servicing
provisions of this Agreement.
Prepayment Charge: With respect to any Mortgage Loan, any prepayment
penalty or premium thereon payable in connection with a Principal Prepayment on
such Mortgage Loan pursuant to the terms of the related Mortgage Note.
Primary Insurance Policy: A policy of primary mortgage guaranty
insurance issued by a Qualified Insurer.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date, excluding
any Prepayment Charge, which is not accompanied by an amount of interest
representing scheduled interest due on any date or dates in any month or months
subsequent to the month of prepayment.
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Project: All real property owned by the Cooperative including the
land, separate dwelling units and all common areas.
Purchase Price: The price paid on the related Closing Date by the
Purchaser to the Seller pursuant to the related Commitment Letter in exchange
for the Mortgage Loans purchased on such Closing Date as provided in Section 4.
Purchaser: The Initial Purchaser or the Person, if any, to which the
Initial Purchaser has assigned its rights and obligations thereunder as
Purchaser with respect to a Mortgage Loan, and each of their respective
successors and assigns.
Qualified Insurer: Any insurer which meets the requirements of FNMA
and FHLMC.
Qualified Substitute Mortgage Loan: A mortgage loan substituted for a
Deleted Mortgage Loan pursuant to the terms of this Agreement which must, on the
date of such substitution, (i) have an outstanding principal balance, after
application of all scheduled payments of principal and interest due during or
prior to the month of substitution, not in excess of the Stated Principal
Balance of the Deleted Mortgage Loan as of the Due Date in the calendar month
during which the substitution occurs, (ii) have a Mortgage Interest Rate not
less than (and not more than one percentage point in excess of) the Mortgage
Interest Rate of the Deleted Mortgage Loan, (iii) have a remaining term to
maturity not greater than (and not more than one year less than) that of the
Deleted Mortgage Loan, (iv) have the same Due Date as the Due Date on the
Deleted Mortgage Loan, (v) have a Loan-to-Value Ratio, and in the case of a
second lien Mortgage Loan, a Combined Loan-to-Value Ratio as of the date of
substitution equal to or lower than the Loan-to-Value Ratio or Combined
Loan-to-Value Ratio of the Deleted Mortgage Loan as of such date, (vi) conform
to each representation and warranty set forth in Subsection 7.02 of this
Agreement, and (vii) be the same type of mortgage loan (i.e. fixed or adjustable
rate with the same Gross Margin and Index as the Deleted Mortgage Loan). In the
event that one or more mortgage loans are substituted for one or more Deleted
Mortgage Loans, the amounts described in clause (i) hereof shall be determined
on the basis of aggregate principal balances, the Mortgage Interest Rates
described in clause (ii) hereof shall be determined on the basis of weighted
average Mortgage Interest Rates and shall be satisfied as to each such mortgage
loan, the terms described in clause (iii) shall be determined on the basis of
weighted average remaining terms to maturity, the Loan-to-Value Ratios, and in
the case of second lien Mortgage Loans the Combined Loan-to-Value Ratios
described in clause (v) hereof shall be satisfied as to each such mortgage loan
and, except to the extent otherwise provided in this sentence, the
representations and warranties described in clause (vii) hereof must be
satisfied as to each Qualified Substitute Mortgage Loan or in the aggregate, as
the case may be. In addition, the substitution of more than one Mortgage Loan
pursuant to the previous sentence shall be subject to the Purchaser's approval
in its sole discretion.
Rate/Term Refinancing: A Refinanced Mortgage Loan, the proceeds of
which are not in excess of the existing first mortgage, as outlined in the
Underwriting Guidelines in effect at the time or origination.
Reconstitution Agreement: The agreement or agreements entered into by
the Seller, the Servicer and the Purchaser and/or certain third parties on the
Reconstitution Date or
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Dates with respect to any or all of the Mortgage Loans serviced hereunder, in
connection with a Whole Loan Transfer or a Pass-Through Transfer as provided in
Section 12.
Reconstitution Date: The date or dates on which any or all of the
Mortgage Loans serviced under this Agreement shall be removed from this
Agreement and reconstituted as part of a Whole Loan Transfer or Pass-Through
Transfer pursuant to Section 12 hereof.
Record Date: With respect to each Distribution Date, the last Business
Day of the month immediately preceding the month in which such Distribution Date
occurs.
Refinanced Mortgage Loan: A Mortgage Loan the proceeds of which were
not used to purchase the related Mortgaged Property.
REMIC: A Areal estate mortgage investment conduit within the meaning
of Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating to
REMICs, which appear in Sections 860A through 860G of the Code, and related
provisions, and proposed, temporary and final regulations and published rulings,
notices and announcements promulgated thereunder, as the foregoing may be in
effect from time to time.
REO Account: The separate trust account or accounts created and
maintained pursuant to this Agreement which shall be entitled "[SELLER], in
trust for the Purchaser, as of [date of acquisition of title], Fixed and
Adjustable Rate Mortgage Loans".
REO Disposition: The final sale by the Servicer of any REO Property.
REO Property: A Mortgaged Property acquired as a result of the
liquidation of a Mortgage Loan.
Repurchase Price: The Repurchase Price for any Mortgage Loan that is
required to be repurchased pursuant to Section 7.04 shall be equal to (A) during
the first twelve (12) months following the related Closing Date, the sum of (i)
the product of the Stated Principal Balance of such Mortgage Loan times the
greater of (x) the Purchase Price percentage as stated in the related Commitment
Letter and (y) 100%, and (B) thereafter, the sum of (i) the Stated Principal
Balance of the Mortgage Loan so repurchased, in each case, plus (ii) interest on
such Stated Principal Balance at the Mortgage Interest Rate from and including
the last Due Date through which interest has been paid by or on behalf of the
Mortgagor to the day immediately prior to the date of repurchase (unless the
Mortgage Loan has been the subject of a Pass-Through Transfer, in which case the
measurement date for accrual of interest on such Stated Principal Balance shall
be the first day of the month following the date of repurchase), less amounts
received in respect of such repurchased Mortgage Loan which are being held in
the Custodial Account for distribution in connection with such Mortgage Loan and
plus (iii) any costs and expenses incurred by the Purchaser, the servicer,
master servicer or any trustee in respect of the breach or defect giving rise to
the repurchase obligation including, without limitation, any costs and damages
incurred by any such party in connection with any violation by any such Mortgage
Loan of any predatory or abusive lending law.
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Residential Dwelling: Any one of the following: (i) a one-to-four
family detached or attached dwelling , (ii) a one-family dwelling unit in an
eligible condominium or cooperative project, (iii) a Planned Unit Development
(PUD), as defined in the Underwriting Guidelines in effect at the time of
origination, none of which is mobile or manufactured home.
Securities Act: The Securities Act of 1933, as amended.
Servicing Addendum: The terms and conditions attached hereto as
Exhibit 9, which will govern the servicing of the Mortgage Loans, by Servicer
during the Preliminary Servicing Period.
Servicing Advances: All customary, reasonable and necessary
"out-of-pocket" costs and expenses incurred by the Servicer in the performance
of its servicing obligations, including, but not limited to, the cost of (i)
preservation, restoration and repair of a Mortgaged Property, (ii) any
enforcement or judicial proceedings with respect to a Mortgage Loan, including
foreclosure actions and (iii) the management and liquidation of REO Property.
Servicing Fee: With respect to each Mortgage Loan, the amount of the
annual servicing fee the Purchaser shall pay to the Seller, which shall, for
each month, be equal to one-twelfth of the product of (a) the Servicing Fee Rate
and (b) the Stated Principal Balance of the Mortgage Loan. Such fee shall be
payable monthly, computed on the basis of the same principal amount and period
respectively which any related interest payment on a Mortgage Loan is computed.
The obligation of the Purchaser to pay the Servicing Fee is limited to, and
payable solely from, the interest portion (including recoveries with respect to
interest from Liquidation Proceeds and other proceeds, to the extent permitted
by Section 11.05) of related Monthly Payments collected by the Seller, or as
otherwise provided under Section 11.05.
Servicing Fee Rate: The per annum rate set forth in the related
Commitment Letter at which the Servicing Fee accrues.
Servicing File: With respect to each Mortgage Loan, the file retained
by the Seller on an image platform consisting of copies or printable images of
all documents in the Mortgage File which are not delivered to the Purchaser or
the Custodian and the Mortgage Loan Documents set forth in Section 2 of the
Custodial Agreement.
S&P: Standard & Poor's, a division of the XxXxxx-Xxxx Companies, Inc.,
or its successor in interest.
Stated Principal Balance: As to each Mortgage Loan as of any date of
determination, (i) the principal balance of the Mortgage Loan as of the Cut-off
Date after giving effect to payments of principal due on or before such date,
whether or not collected from the Mortgagor on or before such date, minus (ii)
all amounts previously distributed to the Purchaser with respect to the related
Mortgage Loan representing payments or recoveries of principal.
Tax Service Contract: A life of loan service contract, transferable to
a nationally recognized tax service provider, maintained for the Mortgaged
Property for the purpose of obtaining current information from local taxing
authorities relating to such Mortgaged Property.
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Underwriting Guidelines: The Seller's underwriting guidelines attached
hereto as Exhibit 13 as in effect with respect to the Mortgage Loans purchased
by Purchaser on the Initial Closing Date, as may be amended, supplemented or
modified from time to time thereafter.
Whole Loan Transfer: Any sale or transfer of some or all of the
Mortgage Loans by the Purchaser to a third party, which sale or transfer is not
a Pass-Through Transfer.
SECTION 2. Agreement to Purchase.
The Seller agrees to sell, and the Purchaser agrees to purchase, from
time-to-time, Mortgage Loans having an aggregate principal balance on the
related Cut-off Date in an amount as set forth in the related Commitment Letter,
or in such other amount as agreed to by the Purchaser and the Seller as
evidenced by the actual aggregate principal balance of the Mortgage Loans
accepted by the Purchaser on the related Closing Date.
SECTION 3. Mortgage Loan Schedules.
The Seller shall deliver the Mortgage Loan Schedule for a Mortgage
Loan Package to be purchased on a particular Closing Date to the Purchaser at
least two (2) Business Days prior to the related Closing Date or as otherwise
set forth in the related Commitment Letter.
SECTION 4. Purchase Price.
The Purchase Price for each Mortgage Loan listed on the related
Mortgage Loan Schedule shall be the percentage of par as stated in the related
Commitment Letter (subject to adjustment as provided therein), multiplied by its
Stated Principal Balance as of the related Cut-off Date. If so provided in the
related Commitment Letter, portions of the Mortgage Loans shall be priced
separately.
In addition to the Purchase Price as described above, the Initial
Purchaser shall pay to the Seller, at closing, accrued interest on the Stated
Principal Balance of each Mortgage Loan as of the related Cut-off Date at its
Mortgage Interest Rate, net of the Servicing Fee, from the related Cut-off Date
through the day prior to the related Closing Date, both inclusive.
The Purchaser shall own and be entitled to receive with respect to
each Mortgage Loan purchased, (1) all scheduled principal due after the related
Cut off Date, (2) all other recoveries of principal collected after the related
Cut off Date (provided, however, that all scheduled payments of principal due on
or before the related Cut off Date and collected by the Seller after the related
Cut off Date shall belong to the Seller), and (3) all payments of interest on
the Mortgage Loans net of the Servicing Fee during the Preliminary Servicing
Period (minus that portion of any such interest payment that is allocable to the
period prior to the related Cut off Date). The Stated Principal Balance of each
Mortgage Loan as of the related Cut off Date is determined after application to
the reduction of principal of payments of principal due on or before the related
Cut off Date whether or not collected. Therefore, for the purposes of this
Agreement, payments of scheduled principal and interest prepaid for a Due Date
beyond the related Cut off Date shall not be applied to the principal balance as
of the related Cut off Date. Such prepaid amounts (minus the applicable
Servicing Fee) shall be the property of the Purchaser. The Seller shall deposit
any such prepaid amounts into the Custodial Account, which account is
established for the benefit of the Purchaser, for remittance by the Seller to
the
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Purchaser on the first related Distribution Date. All payments of principal and
interest, less the applicable Servicing Fee, due on a Due Date following the
related Cut off Date shall belong to the Purchaser.
SECTION 5. Examination of Mortgage Files.
In addition to the rights granted to the Initial Purchaser under the
related Commitment Letter to underwrite the Mortgage Loans and review the
Mortgage Files prior to the Closing Date, prior to the related Closing Date, the
Seller, or Servicer, as applicable, shall, at the Purchaser's option (a) deliver
to the Custodian or any other party specified by the Purchaser, in escrow, for
examination with respect to each Mortgage Loan to be purchased on such Closing
Date, the related Mortgage File, including the Assignment of Mortgage,
pertaining to each Mortgage Loan, or (b) make the related Mortgage File
available via image or printed copies of image (at the Seller's option) to the
Initial Purchaser for examination at the Seller's offices or such other location
as shall otherwise be agreed upon by the Initial Purchaser and the Seller. Such
examination may be made by the Initial Purchaser or its designee at any
reasonable time before or after the related Closing Date. Such examination shall
be during regular business hours and Purchaser shall give Seller seven days
prior written notice. If the Initial Purchaser makes such examination prior to
the related Closing Date and identifies any Mortgage Loans that do not conform
to the terms of the related Commitment Letter or the Underwriting Guidelines,
such Mortgage Loans may, at the Initial Purchaser's option, be rejected for
purchase by the Initial Purchaser. If not purchased by the Initial Purchaser,
such Mortgage Loans shall be deleted from the related Mortgage Loan Schedule and
any files should be returned within 48 hours. The Initial Purchaser may, at its
option and without notice to the Seller, purchase all or part of any Mortgage
Loan Package without conducting any partial or complete examination. The fact
that the Initial Purchaser has conducted or has determined not to conduct any
partial or complete examination of the Mortgage Files shall not affect the
Initial Purchaser's (or any of its successors') rights to demand repurchase or
other relief or remedy provided for in this Agreement.
SECTION 6. Conveyance from Seller to Initial Purchaser.
Subsection 6.01. Conveyance of Mortgage Loans; Possession of
Servicing Files.
The Seller, simultaneously with the payment of the Purchase Price,
shall execute and deliver to the Initial Purchaser an Assignment and Conveyance
with respect to the related Mortgage Loan Package in the form attached hereto as
Exhibit 4. No assignment is required if the Mortgage Loan is a MOM Mortgage, or
has been previously assigned to MERS, and will remain registered on the MERS(R)
System. The Servicing File retained by the Servicer with respect to each
Mortgage Loan pursuant to this Agreement shall be appropriately identified in
the Servicer's computer system to reflect clearly the sale of such related
Mortgage Loan to the Purchaser. The Servicer shall release from its custody the
contents of any Servicing File retained by it only in accordance with this
Agreement, except when such release is required in connection with a repurchase
of any such Mortgage Loan pursuant to Subsection 7.03 or 7.04.
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Subsection 6.02. Books and Records.
Record title to each Mortgage and the related Mortgage Note as of the
related Closing Date shall be in the name of the Seller, MERS, the Purchaser,
the Custodian or one or more designees of the Purchaser, as the Purchaser shall
designate. Notwithstanding the foregoing, beneficial ownership of each Mortgage
and the related Mortgage Note shall be vested solely in the Purchaser or the
appropriate designee of the Purchaser, as the case may be. All rights arising
out of the Mortgage Loans including, but not limited to, all funds received by
the Seller after the related Cut-off Date on or in connection with a Mortgage
Loan as provided in Section 4 shall be vested in the Purchaser or one or more
designees of the Purchaser; provided, however, that all such funds received on
or in connection with a Mortgage Loan as provided in Section 4 shall be received
and held by the Seller in trust for the benefit of the Purchaser or the assignee
of the Purchaser, as the case may be, as the owner of the Mortgage Loans
pursuant to the terms of this Agreement.
It is the express intention of the parties that the transactions
contemplated by this Agreement be, and be construed as, a sale of the Mortgage
Loans by the Seller and not a pledge of the Mortgage Loans by the Seller to the
Purchaser to secure a debt or other obligation of the Seller. Consequently, the
sale of each Mortgage Loan shall be reflected as a sale on the Seller's business
records, tax returns and financial statements. In the event, for any reason, any
transaction contemplated herein is construed by any court or regulatory
authority as a borrowing rather than as a sale, the Seller and the Purchaser
intend that the Purchaser or its assignee, as the case may be, shall have a
perfected first priority security interest in the Mortgage Loans which may be
held by MERS as the nominee for the Purchaser, the Custodial Account and the
proceeds of any and all of the foregoing (collectively, the "Collateral"), free
and clear of adverse claims. In such case, the Seller shall be deemed to have
hereby granted to the Purchaser or its assignee, as the case may be, a first
priority security interest in and lien upon the Collateral, free and clear of
adverse claims. In such event, the related Commitment Letter and this Agreement
shall constitute a security agreement, the Custodian shall be deemed to be an
independent custodian for purposes of perfection of the security interest
granted to the Purchaser or its assignee, as the case may be, and the Purchaser
or its assignee, as the case may be, shall have all of the rights of a secured
party under applicable law.
Subsection 6.03. Delivery of Mortgage Loan Documents.
Pursuant to the Custodial Agreement between the Custodian and the
Initial Purchaser, the Servicer, shall from time to time in connection with each
Closing Date, at least five (5) Business Days prior to such Closing Date,
deliver and release to the Custodian those Mortgage Loan Documents as required
by the Custodial Agreement with respect to each Mortgage Loan to be purchased
and sold on the related Closing Date and set forth on the related Mortgage Loan
Schedule delivered with such Mortgage Loan Documents.
The Servicer shall provide to each of the Purchaser and the Custodian
a notice containing a list of authorized servicing officers (each, an
"Authorized Representative") for the purpose of giving and receiving notices,
requests and instructions and delivering certificates and documents in
connection with this Agreement. Such notice shall contain the specimen signature
for each Authorized Representative. From time to time, the Servicer may, by
delivering to the others a revised notice, change the information previously
given pursuant to this Section, but
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each of the parties hereto shall be entitled to rely conclusively on the then
current notice until receipt of a superseding notice.
The Custodian shall certify its receipt of all such Mortgage Loan
Documents required to be delivered pursuant to the Custodial Agreement for the
related Closing Date, as evidenced by the Trust Receipt and Initial
Certification of the Custodian in the form annexed to the Custodial Agreement.
The Servicer shall be responsible for maintaining the Custodial Agreement during
the Preliminary Servicing Period.
The Servicer shall forward to the Custodian original documents
evidencing an assumption, modification, consolidation or extension of any
Mortgage Loan entered into in accordance with this Agreement within two weeks of
their execution, provided, however, that the Servicer shall provide the
Custodian with a certified true copy of any such document submitted for
recordation within two weeks of its execution, and shall provide the original of
any document submitted for recordation or a copy of such document certified by
the appropriate public recording office to be a true and complete copy of the
original within 240 days of its submission for recordation.
Subsection 6.04 Quality Control Procedures.
The Seller shall have an internal quality control program that
verifies, on a regular basis, the existence and accuracy of the legal documents,
credit documents, property appraisals, and underwriting decisions. The program
shall include evaluating and monitoring the overall quality of the Seller's loan
production and the servicing activities of the Seller. The program is to ensure
that the Mortgage Loans are originated and serviced in accordance with Accepted
Servicing Standards and the Underwriting Guidelines; guard against dishonest,
fraudulent, or negligent acts; and guard against errors and omissions by
officers, employees, or other authorized persons.
SECTION 7. Representations, Warranties and Covenants of the Seller:
Remedies for Breach.
Subsection 7.01. Representations and Warranties Respecting the Seller.
(a) The Seller represents, warrants and covenants to the Initial
Purchaser and to any subsequent Purchaser as of the Initial Closing Date and
each subsequent Closing Date or as of such date specifically provided herein or
in the applicable Assignment and Conveyance:
(i) The Seller is a corporation duly organized, validly existing
and in good standing under the laws of State of Delaware. The Seller has
all licenses necessary to carry out its business as now being conducted,
and is licensed and qualified to transact business in and is in good
standing under the laws of each state in which any Mortgaged Property is
located or is otherwise exempt under applicable law from such licensing or
qualification or is otherwise not required under applicable law to effect
such licensing or qualification and no demand for such licensing or
qualification has been made upon the Seller by any such state, and in any
event the Seller is in compliance with the laws of any such state to the
extent necessary to ensure the enforceability of each Mortgage Loan and the
servicing of the Mortgage Loans in accordance with the terms of this
Agreement. No
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licenses or approvals obtained by the Seller have been suspended or revoked
by any court, administrative agency, arbitrator or governmental body and no
proceedings are pending which might result in such suspension or
revocation;
(ii) The Seller has the full power and authority to hold each
Mortgage Loan, to sell each Mortgage Loan, and to execute, deliver and
perform, and to enter into and consummate, all transactions contemplated by
this Agreement. The Seller has duly authorized the execution, delivery and
performance of this Agreement, has duly executed and delivered this
Agreement, and this Agreement, assuming due authorization, execution and
delivery by the Purchaser, constitutes a legal, valid and binding
obligation of the Seller, enforceable against it in accordance with its
terms except as the enforceability thereof may be limited by bankruptcy,
insolvency or reorganization;
(iii) The execution and delivery of this Agreement by the Seller
and the performance of and compliance with the terms of this Agreement will
not violate the Seller's articles of incorporation or by-laws or constitute
a default under or result in a breach or acceleration of, any material
contract, agreement or other instrument to which the Seller is a party or
which may be applicable to the Seller or its assets;
(iv) The Seller is not in violation of, and the execution and
delivery of this Agreement by the Seller and its performance and compliance
with the terms of this Agreement will not constitute a violation with
respect to, any order or decree of any court or any order or regulation of
any federal, state, municipal or governmental agency having jurisdiction
over the Seller or its assets, which violation might have consequences that
would materially and adversely affect the condition (financial or
otherwise) or the operation of the Seller or its assets or might have
consequences that would materially and adversely affect the performance of
its obligations and duties hereunder;
(v) The Seller is an approved seller/servicer for FNMA and FHLMC
in good standing and is a HUD approved mortgagee pursuant to Section 203 of
the National Housing Act. No event has occurred, including but not limited
to a change in insurance coverage, which would make the Seller unable to
comply with FNMA, FHLMC or HUD eligibility requirements or which would
require notification to FNMA, FHLMC or HUD;
(vi) The Seller does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every covenant contained
in this Agreement;
(vii) The Mortgage Loan Documents and any other documents
required to be delivered with respect to each Mortgage Loan pursuant to
this Agreement, have been delivered to the Custodian all in compliance with
the specific requirements of this Agreement. With respect to each Mortgage
Loan, the Seller is in possession of a complete Mortgage File in compliance
with Exhibit 5, except for such documents as have been delivered to the
Custodian;
(viii) Immediately prior to the payment of the Purchase Price for
each Mortgage Loan, the Seller was the owner of record or had appointed
MERS as the Seller's nominee of the related Mortgage and the indebtedness
evidenced by the related
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Mortgage Note and upon the payment of the Purchase Price by the Purchaser,
in the event that the Seller or MERS as nominee for the Seller retains
record title, the Seller or MERS as nominee for the Seller shall retain
such record title to each Mortgage, each related Mortgage Note and the
related Mortgage Files with respect thereto in trust for the Purchaser as
the owner thereof and only for the purpose of servicing and/or supervising
the servicing of each Mortgage Loan;
(ix) There are no actions or proceedings against, or
investigations of, the Seller before any court, administrative agency or
other tribunal (A) that might prohibit its entering into this Agreement,
(B) seeking to prevent the sale of the Mortgage Loans or the consummation
of the transactions contemplated by this Agreement or (C) that might
prohibit or materially and adversely affect the performance by the Seller
of its obligations under, or the validity or enforceability of, this
Agreement;
(x) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of, or compliance by the Seller with, this
Agreement or the consummation of the transactions contemplated by this
Agreement, except for such consents, approvals, authorizations or orders,
if any, that have been obtained prior to the related Closing Date;
(xi) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Seller, and the
transfer, assignment and conveyance of the Mortgage Notes and the Mortgages
by the Seller pursuant to this Agreement are not subject to the bulk
transfer or any similar statutory provisions;
(xii) The transfer of the Mortgage Loans shall be treated as a
sale on the books and records of the Seller, and the Seller has determined
that, and will treat, the disposition of the Mortgage Loans pursuant to
this Agreement for tax and accounting purposes as a sale. The Seller shall
maintain a complete set of books and records for each Mortgage Loan which
shall be clearly marked to reflect the ownership of each Mortgage Loan by
the Purchaser;
(xiii) The consideration received by the Seller upon the sale of
the Mortgage Loans constitutes fair consideration and reasonably equivalent
value for such Mortgage Loans;
(xiv) The Seller is solvent and will not be rendered insolvent by
the consummation of the transactions contemplated hereby. The Seller is not
transferring any Mortgage Loan with any intent to hinder, delay or defraud
any of its creditors;
(xv) The information delivered by the Seller to the Purchaser
with respect to the Seller's loan loss, foreclosure and delinquency
experience for the twelve (12) months immediately preceding the Initial
Closing Date on mortgage loans underwritten to the same standards as the
Mortgage Loans and covering mortgaged properties similar to the Mortgaged
Properties, is true and correct in all material respects;
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(xvi) Neither this Agreement nor any written statement, report or
other document prepared and furnished or to be prepared and furnished by
the Seller pursuant to this Agreement or in connection with the
transactions contemplated hereby contains any untrue statement of material
fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading;
(xvii) The Seller will comply in all material respects with the
rules and procedures of MERS in connection with the servicing of the
Mortgage Loans that are registered with MERS; and
(xviii) The Seller has not dealt with any broker, investment
banker, agent or other person that may be entitled to any commission or
compensation in connection with the sale of the Mortgage Loans.
Subsection 7.02. Representations and Warranties Regarding Individual
Mortgage Loans.
The Seller hereby represents and warrants to the Purchaser that, as to
each Mortgage Loan, as of the related Closing Date for such Mortgage Loan:
(i) The information set forth in the related Mortgage Loan
Schedule and the Mortgage Loan data delivered to the Purchaser and the
Custodian is complete, true and correct;
(ii) The Mortgage Loan is in compliance with all requirements set
forth in the related Commitment Letter, and the characteristics of the
related Mortgage Loan Package as set forth in the related Commitment Letter
are true and correct;
(iii) All payments required to be made up to the close of
business on the related Closing Date for such Mortgage Loan under the terms
of the Mortgage Note have been made; the Seller has not advanced funds, or
induced, solicited or knowingly received any advance of funds from a party
other than the owner of the related Mortgaged Property, directly or
indirectly, for the payment of any amount required by the Mortgage Note or
Mortgage. No Mortgage Loan has been thirty (30) days or more delinquent in
any payment since the origination of such Mortgage Loan;
(iv) There are no delinquent taxes, ground rents, water charges,
sewer rents, assessments, insurance premiums, leasehold payments or other
outstanding charges affecting the related Mortgaged Property;
(v) The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments, recorded in the applicable public recording office if
necessary to maintain the lien priority of the Mortgage, and which have
been delivered to the Custodian; the substance of any such waiver,
alteration or modification has been approved by the insurer under the
Primary Insurance Policy, if any, and has been approved by the title
insurer, to the extent required by the related policy, and is reflected on
the related Mortgage Loan Schedule. No instrument of waiver, alteration or
modification has been executed, and no Mortgagor has been released, in
whole or in part, except in connection with an assumption
20
agreement approved by the insurer under the Primary Insurance Policy, if
any, and by the title insurer, to the extent required by the policy, and
the terms of which are reflected in the related Mortgage Loan Schedule;
(vi) The Mortgage Note and the Mortgage are not subject to any
right of rescission, set-off, counterclaim or defense, including the
defense of usury, nor will the operation of any of the terms of the
Mortgage Note and the Mortgage, or the exercise of any right thereunder,
render 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. Each Prepayment Charge or
penalty with respect to any Mortgage Loan is permissible, enforceable and
collectible under applicable federal, state and local law;
(vii) All buildings upon the Mortgaged Property are insured by an
insurer acceptable to FNMA and FHLMC against loss by fire, hazards of
extended coverage and such other hazards as are customary in the area where
the Mortgaged Property is located, pursuant to the Servicing Addendum. All
such insurance policies contain a standard mortgagee clause naming the
Servicer, its successors and assigns as mortgagee and all premiums thereon
have been paid. If the Mortgaged Property is in an area identified on a
Flood Hazard Map or Flood Insurance Rate Map issued by the Federal
Emergency Management Agency as having special flood hazards (and such flood
insurance has been made available) a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance
Administration is in effect which policy conforms to the requirements of
FNMA and FHLMC. The Mortgage obligates the Mortgagor thereunder to maintain
all such insurance at the Mortgagor's cost and expense, and on the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to
maintain such insurance at Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor;
(viii) Any and all requirements of any federal, state or local
law applicable to the Mortgage Loans including, without limitation, usury,
truth in lending, real estate settlement procedures, predatory and abusive
lending, consumer credit protection, equal credit opportunity, fair housing
or disclosure laws applicable to the origination and servicing of mortgage
loans of a type similar to the Mortgage Loans have been complied with;
(ix) The Mortgage has not been satisfied, cancelled, subordinated
or rescinded, in whole or in part, and the Mortgaged Property has not been
released from the lien of the Mortgage, in whole or in part, nor has any
instrument been executed that would effect any such satisfaction,
cancellation, subordination, rescission or release;
(x) Except with respect to each Co-op Loan, the related Mortgage
is properly recorded and is a valid, existing and enforceable (A) first
lien and first priority security interest with respect to each Mortgage
Loan which is indicated by the Seller on the Mortgage Loan Schedule on the
Mortgaged Property, including all improvements on the Mortgaged Property
subject only to (a) the lien of current real property taxes and assessments
not yet due and payable, (b) covenants, conditions and restrictions, rights
of way, easements and other matters of the public record as of the date of
recording being
21
acceptable to mortgage lending institutions generally and specifically
referred to in the lender's title insurance policy delivered to the
originator of the Mortgage Loan and which do not adversely affect the
Appraised Value of the Mortgaged Property, (c) other matters to which like
properties are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by the Mortgage or the
use, enjoyment, value or marketability of the related Mortgaged Property,
(d) with respect to each Second Lien Mortgage a prior mortgage lien on the
Mortgage Property. Except with respect to each Co-op Loan, any security
agreement, chattel mortgage or equivalent document related to and delivered
in connection with the Mortgage Loan establishes and creates a valid,
existing and enforceable (A) first lien and first priority security
interest with respect to each first lien Mortgage Loan, or (B) second lien
and second priority security interest with respect to each second lien
Mortgage Loan, in either case, on the property described therein and the
Seller has full right to sell and assign the same to the Purchaser. The
Mortgaged Property was not, as of the date of origination of the Mortgage
Loan, subject to a mortgage, deed of trust, deed to secure debt or other
security instrument creating a lien subordinate to the lien of the
Mortgage. With respect to each Co-op Loan, the related Mortgage is a valid,
enforceable and subsisting first or second security interest on the related
Cooperative Shares securing the related cooperative note, subject only to
(a) liens of the Cooperative for unpaid assessments representing the
Mortgagor's pro rata share of the Cooperative's payments for its blanket
mortgage, current and future real property taxes, insurance premiums,
maintenance fees and other assessments to which like collateral is commonly
subject and (b) other matters to which like collateral is commonly subject
which do not materially interfere with the benefits of the security
intended to be provided by the Security Agreement. There are no liens
against or security interest in the cooperative shares relating to each
Co-op Loan (except for unpaid maintenance, assessments and other amounts
owed to the related cooperative which individually or in the aggregate will
not have a material adverse effect on such Co-op Loan), which have priority
over the Seller's security interest in such Cooperative Shares;
(xi) The Mortgage Note and the related Mortgage are genuine and
each is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms;
(xii) All parties to the Mortgage Note and the Mortgage had legal
capacity to enter into the Mortgage Loan and to execute and deliver the
Mortgage Note and the Mortgage, and the Mortgage Note and the Mortgage have
been duly and properly executed by such parties. The Mortgagor is a natural
person or a qualified Living Trust (Revocable Trust) or a qualified Land
Trust as listed in the Underwriting Guidelines.
(xiii) The proceeds of the Mortgage Loan have been fully
disbursed (except where there is an established completion escrow) or for
the account of the Mortgagor and there is no obligation for the Mortgagee
to advance additional funds thereunder and any and all requirements as to
completion of any on-site or off-site improvement and as to disbursements
of any escrow funds therefor have been complied with. All costs, fees and
expenses incurred in making or closing the Mortgage Loan and the recording
of the Mortgage have been paid, and the Mortgagor is not entitled to any
refund of any amounts paid or due to the Mortgagee pursuant to the Mortgage
Note or Mortgage;
22
(xiv) The Seller is the sole legal, beneficial and equitable
owner of the Mortgage Note and the Mortgage and has full right to transfer
and sell the Mortgage Loan to the Purchaser free and clear of any
encumbrance, equity, lien, pledge, charge, claim or security interest;
(xv) All parties which have had any interest in the Mortgage
Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during
the period in which they held and disposed of such interest, were) in
compliance with any and all applicable "doing business" and licensing
requirements of the laws of the state wherein the Mortgaged Property is
located;
(xvi) Except with respect to each Co-op Loan, the Mortgage Loan,
that is a first lien, is covered by an American Land Title Association
("ALTA") lender's title insurance policy (which, in the case of an
Adjustable Rate Mortgage Loan has an adjustable rate mortgage endorsement
in the form of ALTA 6.0 or 6.1) acceptable to Xxxxxx Xxx and Xxxxxxx Mac,
issued by a title insurer acceptable to Xxxxxx Mae and Xxxxxxx Mac and
qualified to do business in the jurisdiction where the Mortgaged Property
is located, insuring (subject to the exceptions contained above in (x)(a)
(b) and (c) and with respect to each second lien Mortgage Loan, is covered
by an ALTA lender's title insurance policy per Seller's guidelines, clause
(x) (d) above) the Seller and/or MERS as nominee for the Seller, its
successors and assigns as to the first or second priority lien (as
indicated on the Mortgage Loan Schedule) of the Mortgage in the original
principal amount of the Mortgage Loan and, with respect to any Adjustable
Rate Mortgage Loan, against any loss by reason of the invalidity or
unenforceability of the lien resulting from the provisions of the Mortgage
providing for adjustment in the Mortgage Interest Rate and Monthly Payment.
Additionally, such lender's title insurance policy affirmatively insures
ingress and egress to and from the Mortgaged Property, and against
encroachments by or upon the Mortgaged Property or any interest therein.
The Seller and/or MERS as nominee for the Seller, its successors and
assigns, is the sole insured of such lender's title insurance policy, and
such lender's title insurance policy is in full force and effect and will
be in full force and effect upon the consummation of the transactions
contemplated by this Agreement. No claims have been made under such
lender's title insurance policy, and no prior holder of the related
Mortgage, including the Seller, has done, by act or omission, anything
which would impair the coverage of such lender's title insurance policy;
(xvii) There is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage 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 Seller has not waived any default, breach,
violation or event of acceleration. With respect to each second lien
Mortgage Loan (i) the first lien mortgage loan is in full force and effect
at the time of origination, (ii) there is no default, breach, violation or
event of acceleration existing under such first lien mortgage or the
related mortgage note at the time of origination, (iii) 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 thereunder, (iv) either (A) the first lien mortgage contains a
provision which allows or (B) applicable law requires, the mortgagee under
the second lien Mortgage Loan to
23
receive notice of foreclosure, and affords such mortgagee an opportunity to
cure any default by payment in full or otherwise under the first lien
mortgage and (v) either no consent for the Mortgage Loan is required by the
holder of the first lien or such consent has been obtained and is contained
in the Mortgage File;
(xviii) There are no mechanics' or similar liens or claims which
have been filed for work, labor or material (and no rights are outstanding
that under law could give rise to such lien) affecting the related
Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage;
(xix) All improvements which were considered in determining the
Appraised Value of the related Mortgaged Property lay wholly within the
boundaries and building restriction lines of the Mortgaged Property, and no
improvements on adjoining properties encroach upon the Mortgaged Property;
(xx) The Mortgage Loan was originated by the Seller or by a
savings and loan association, a savings bank, a commercial bank or similar
banking institution which is supervised and examined by a federal or state
authority, or by a mortgagee approved as such by the Secretary of HUD,
Xxxxxx Xxx or Xxxxxxx Mac or by a mortgage banker or broker licensed or
authorized to originate mortgage loans and do business in the jurisdiction
in which the related Mortgaged Property is located, applying substantially
the same underwriting standards used by the Seller and in a manner that in
all respects meets the requirements of the Secondary Mortgage Market
Enhancement Act of 1984, as amended;
(xxi) Principal payments on the Mortgage Loan, other than the
Interest Only Mortgage Loan, shall commence (with respect to any newly
originated Mortgage Loans) or commenced no more than sixty days after the
proceeds of the Mortgage Loan were disbursed. The Mortgage Loan bears
interest at the Mortgage Interest Rate. With respect to each Mortgage Loan,
the Mortgage Note is payable on the first day of each month in Monthly
Payments, which, (A) in the case of a Fixed Rate Mortgage Loan, are
sufficient to fully amortize the original principal balance over the
original term thereof and to pay interest at the related Mortgage Interest
Rate, (B) in the case of an Adjustable Rate Mortgage Loan, other than the
Interest Only Mortgage Loan, are changed on each Adjustment Date, and in
any case, are sufficient to fully amortize the original principal balance
over the original term thereof and to pay interest at the related Mortgage
Interest Rate and (C) in the case of a Balloon Loan, are based on a fifteen
(15) or thirty (30) year amortization schedule, as set forth in the related
Mortgage Note, and a final monthly payment substantially greater than the
preceding monthly payment which is sufficient to amortize the remaining
principal balance of the Balloon Loan and to pay interest at the related
Mortgage Interest Rate. The Index for each Adjustable Rate Mortgage Loan is
as defined in the related Commitment Letter and the Mortgage Loan Schedule.
The Mortgage Note does not permit negative amortization, unless otherwise
noted on the Mortgage Loan Schedule. No Mortgage Loan is a Convertible
Mortgage Loan; (D) in the case of an Interest Only Mortgage Loan, the
monthly payments on each Interest Only Mortgage Loan during the related
interest only period is equal to the product of the related Mortgage
Interest Rate and the principal balance of such Mortgage Loan on the first
day of each month and after such interest only period, except with respect
to Interest
24
Only Mortgage Loan that are Adjustable Rate Mortgage Loans, such Mortgage
Loan is payable in equal monthly installments of principal and interest. No
Mortgage Loan is a Balloon Mortgage Loan;
(xxii) The origination, servicing and collection practices used
with respect to each Mortgage Note and Mortgage including, without
limitation, the establishment, maintenance and servicing of the Escrow
Accounts and Escrow Payments, if any, since origination, have been in all
respects legal, proper, prudent and customary in the mortgage origination
and servicing industry. The Mortgage Loan has been serviced by the Seller
in accordance with the terms of the Mortgage Note and Accepted Servicing
Practices and any predecessor servicer in accordance with the terms of the
Mortgage Note. With respect to escrow deposits and Escrow Payments, if any,
all such payments are in the possession of, or under the control of, the
Seller and there exist no deficiencies in connection therewith for which
customary arrangements for repayment thereof have not been made. No escrow
deposits or Escrow Payments or other charges or payments due the Seller
have been capitalized under any Mortgage or the related Mortgage Note;
(xxiii) The Mortgaged Property is free of damage and waste and
there is no proceeding pending for the total or partial condemnation
thereof;
(xxiv) The Mortgage and related Mortgage Note contain customary
and enforceable provisions such as to render the rights and remedies of the
holder thereof adequate for the realization against the Mortgaged Property
of the benefits of the security provided thereby, including, (a) in the
case of a Mortgage designated as a deed of trust, by trustee's sale, and
(b) otherwise by judicial foreclosure. The Mortgaged Property has not been
subject to any bankruptcy proceeding or foreclosure proceeding and the
Mortgagor has not filed for protection under applicable bankruptcy laws.
There is no homestead or other exemption available to the Mortgagor which
would interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage. The Mortgagor has
not notified the Seller and the Seller has no knowledge of any relief
requested or allowed to the Mortgagor under the Servicemembers' Civil
Relief Act, or other similar statues;
(xxv) The Mortgage Loan was underwritten in accordance with the
Underwriting Guidelines in effect at the time the Mortgage Loan was
originated; and the Mortgage Note and Mortgage are on forms acceptable to
FNMA and FHLMC;
(xxvi) The Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage on the Mortgaged
Property and the security interest of any applicable security agreement or
chattel mortgage referred to in (x) above;
(xxvii) With respect to each First Lien Mortgage, the Mortgage
File contains an appraisal of the related Mortgaged Property which
satisfied the standards of FNMA and FHLMC, and was made and signed, prior
to the closing of the Mortgage Loan, by a qualified appraiser, duly
appointed by the Seller, who had no interest, direct or indirect in the
Mortgaged Property or in any loan made on the security thereof, whose
compensation is not affected by the approval or disapproval of the Mortgage
Loan and
25
who met the minimum qualifications of FNMA and FHLMC. Each appraisal of the
Mortgage Loan was made in accordance with the relevant provisions of the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989. For
Second Lien Mortgage Loans, the Mortgage File contains an assessment of the
collateral that meets the Underwriting Guidelines;
(xxviii) In the event the Mortgage constitutes 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 the Mortgage,
and no fees or expenses are or will become payable by the Purchaser to the
trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(xxix) The Mortgage Loan is not a graduated payment mortgage loan
and the Mortgage Loan does not have a shared appreciation or other
contingent interest feature;
(xxx) The Mortgagor has received all disclosure materials
required by applicable law with respect to the making of fixed rate
mortgage loans in the case of Fixed Rate Mortgage Loans, and adjustable
rate mortgage loans in the case of Adjustable Rate Mortgage Loans and
rescission materials with respect to Refinanced Mortgage Loans;
(xxxi) No Mortgage Loan was made in connection with (a) the
construction or rehabilitation of a Mortgaged Property (other than a
construction loan that has been converted pursuant to its respective terms)
or (b) facilitating the trade-in or exchange of a Mortgaged Property;
(xxxii) The Seller has no knowledge of any circumstances or
condition with respect to the Mortgage, the Mortgaged Property, the
Mortgagor or the Mortgagor's credit standing that can reasonably be
expected to cause the Mortgage Loan to be an unacceptable investment, cause
the Mortgage Loan to become delinquent, or adversely affect the value of
the Mortgage Loan;
(xxxiii) No Mortgage Loan had an LTV or CLTV at origination in
excess of 100%. With respect to any First Lien Mortgage Loan with an LTV at
origination in excess of 80%, the Mortgage Loan will be insured by Primary
Insurance Policy, issued by a Qualified Insurer, which insures that portion
of the Mortgage Loan in excess of the portion of the Appraised Value of the
Mortgaged Property as required by the Seller. All provisions of such
Primary Insurance Policy have been and are being complied with, such policy
is in full force and effect, and all premiums due thereunder have been
paid. Any Mortgage subject to any such Primary Insurance Policy obligates
the Mortgagor thereunder to maintain such insurance and to pay all premiums
and charges in connection therewith. The Mortgage Interest Rate for the
Mortgage Loan does not include any such insurance premium. For loans in New
York State, the appraisal will be used to determine the original
Loan-to-Value Ratio as it relates to Primary Mortgage Insurance.
(xxxiv) The Mortgaged Property is lawfully occupied under
applicable law; all inspections, licenses and certificates required to be
made or issued with respect to
26
all occupied portions of the Mortgaged Property and, with respect to the
use and occupancy of the same, including but not limited to certificates of
occupancy, have been made or obtained from the appropriate authorities;
(xxxv) No error, omission, misrepresentation, negligence, fraud
or similar occurrence with respect to a Mortgage Loan has taken place on
the part of the Mortgagor, any appraiser or any other party involved in the
origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan;
(xxxvi) The Assignment of Mortgage is in recordable form, except
for the name of the assignee which is blank, and is acceptable for
recording under the laws of the jurisdiction in which the Mortgaged
Property is located;
(xxxvii) Any principal advances made to the Mortgagor prior to
the Cut-off Date have been consolidated with the outstanding principal
amount secured by the Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment term. The
lien of the Mortgage securing the consolidated principal amount is
expressly insured as having first or second lien priority with respect to
each Mortgage Loan which is indicated by the Seller to be a First Lien or
Second Lien (as reflected on the Mortgage Loan Schedule), by a title
insurance policy, an endorsement to the policy insuring the mortgagee's
consolidated interest or by other title evidence acceptable to FNMA or
FHLMC and the Seller. The consolidated principal amount does not exceed the
original principal amount of the Mortgage Loan.
(xxxviii) If the Residential Dwelling on the Mortgaged Property
is a condominium unit, a unit in a planned unit development (other than a
de minimis planned unit development), or a unit in a cooperative, such
condominium, planned unit development project meets the eligibility
requirements of the Underwriting Guidelines;
(xxxix) Interest on each Mortgage Loan is calculated on the basis
of a 360-day year consisting of twelve 30-day months;
(xl) The Mortgaged Property is in material compliance with all
applicable environmental laws pertaining to environmental hazards
including, without limitation, asbestos, and neither the Seller nor the
related Mortgagor, has received any notice of any violation or potential
violation of such law;
(xli) Each Mortgage Loan is covered by a "life of loan" Tax
Service Contract which is transferable to a nationally recognized tax
service provider and is assignable to the Purchaser or its designee at no
cost to the Purchaser or its designee;
(xlii) Each Mortgage Loan is covered by a "life of loan" Flood
Zone Service Contract which is transferable to a nationally recognized
flood service provider and is assignable to the Purchaser or its designee
at no cost to the Purchaser or its designee;
(xliii) None of the Adjustable Rate Mortgage Loans include an
option to convert to a Fixed Rate Mortgage Loan;
27
(xliv) No Mortgage Loan is (a)(1) subject to the provisions of
the Homeownership and Equity Protection Act of 1994 as amended ("HOEPA") or
(2) has an APR or total points and fees that are equal to or exceeds the
HOEPA thresholds (as defined in 12 CFR 226.32 (a)(1)(i) and (ii)), (b) a
"high cost" mortgage loan, "covered" mortgage loan, "high risk home"
mortgage loan, or "predatory" mortgage loan or any other comparable term,
no matter how defined under any federal, state or local law applicable to
such Mortgage Loan, (c) subject to any comparable federal, state or local
statutes or regulations, or any other statute or regulation providing for
heightened regulatory scrutiny or assignee liability to holders of such
mortgage loan, or (d) a High Cost Loan or Covered Loan, as applicable (as
such terms are defined in the current Standard & Poor's LEVELS(R) Glossary
Revised, Appendix E, with respect to points, fees and or rate.
(xlv) No predatory, abusive, or deceptive lending practices,
including but not limited to, the extension of credit to a Mortgagor
without regard for the Mortgagor's ability to repay the Mortgage Loan and
the extension of credit to a Mortgagor which has no apparent benefit to the
Mortgagor, were employed in connection with the origination of the Mortgage
Loan;
(xlvi) No Mortgagor was required to purchase any single premium
credit insurance policy (e.g., life, mortgage, disability, accident,
unemployment, property or health insurance product) or debt cancellation
agreement as a condition of obtaining the extension of credit. No Mortgagor
obtained a prepaid single-premium credit insurance policy (e.g., life,
mortgage, disability, accident, unemployment, property or health insurance
product) or debt cancellation agreement in connection with the origination
of the Mortgage Loan. No proceeds from any Mortgage Loan were used to
finance single premium credit insurance policies (e.g., life, mortgage,
disability, accident, unemployment, property or health insurance product)
or debt cancellation agreements as part of the origination of or as a
condition to closing, such Mortgage Loan;
(xlvii) No selection procedures were used by the Seller that
identified the Mortgage Loans as being less desirable or valuable than
other comparable mortgage loans in the Seller's portfolio and the Mortgage
Loans were not selected in a manner so as to affect adversely the interests
of the Purchaser;
(xlviii) The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the Mortgage
Loan in the event that the Mortgaged Property is sold or transferred
without the prior written consent of the mortgagee thereunder;
(xlix) The Mortgage Loan complies with all applicable consumer
credit statutes and regulations, including, without limitation, the
respective Uniform Consumer Credit Code laws in effect in Alabama,
Colorado, Idaho, Indiana, Iowa, Kansas, Maine, Oklahoma, South Carolina,
Utah, West Virginia and Wyoming, has been originated by a properly licensed
entity or by an entity exempt from such licensing, and in all other
respects, complies with all of the material requirements of any such
applicable laws;
28
(l) The information set forth in the Mortgage Loan Schedule as to
Prepayment Charges is complete, true and correct in all material respects
and each Prepayment Charge is permissible, enforceable and collectable in
accordance with its terms upon the Mortgagor's full and voluntary principal
payment under applicable law;
(li) The Mortgage Loan was not prepaid in full prior to the
Closing Date and the Seller has not received notification from a Mortgagor
that a prepayment in full shall be made after the Closing Date;
(lii) No Mortgage Loan is secured by commercial property or mixed
use property;
(liii) Each Mortgage Loan is eligible for sale in the secondary
market or for inclusion in a Pass-Through Transfer without unreasonable
credit enhancement;
(liv) With respect to any Mortgage Loan that contains a provision
permitting imposition of a penalty upon a prepayment prior to maturity: (i)
the Mortgage Loan provides some benefit to the Mortgagor (e.g., a rate or
fee reduction) in exchange for accepting such prepayment penalty, (ii) the
Mortgage Loan's originator had a written policy of offering the Mortgagor,
or requiring third-party brokers to offer the Mortgagor, the option of
obtaining a mortgage loan that did not require payment of such a penalty,
(iii) the prepayment penalty was adequately disclosed to the Mortgagor in
the loan documents pursuant to applicable state and federal law, (iv) the
duration of the prepayment period shall not exceed three (3) years from the
date of the Mortgage Note, (v) such prepayment penalty shall not be imposed
in any instance where the Mortgage Loan is accelerated or paid off in
connection with the workout of a delinquent mortgage or due to the
Mortgagor's default., notwithstanding that the terms of the Mortgage Loan
or state or federal law might permit the imposition of such penalty and
(vi) such prepayment fee is permissible and enforceable in accordance with
its terms pursuant to the Underwriting Guidelines and federal, state or
local laws;
(lv) The Seller has complied with all applicable anti-money
laundering laws and regulations, including without limitation the USA
Patriot Act of 2001 (collectively, the "Anti-Money Laundering Laws"); the
Seller has established an anti-money laundering compliance program as
required by the Anti-Money Laundering Laws, has conducted the requisite due
diligence in connection with the origination of each Mortgage Loan for
purposes of the Anti-Money Laundering Laws, including with respect to the
legitimacy of the applicable Mortgagor and the origin of the assets used by
the said Mortgagor to purchase the Mortgaged Property, and maintains, and
will maintain, sufficient information to identify the applicable Mortgagor
for purposes of the Anti-Money Laundering Laws. No Mortgage Loan is subject
to nullification pursuant to Executive Order 13224 (the "Executive Order")
or the regulations promulgated by the Office of Foreign Assets Control of
the United States Department of the Treasury (the "OFAC Regulations") or in
violation of the Executive Order or the OFAC Regulations, and no Mortgagor
is subject to the provisions of such Executive Order or the OFAC
Regulations nor listed as a "blocked person" for purposes of the OFAC
Regulations;
29
(lvi) No Mortgagor was encouraged or required to select a
Mortgage Loan product offered by the Mortgage Loan's originator which is a
higher cost product designed for less creditworthy borrowers, unless at the
time of the Mortgage Loan's origination, such Mortgagor did not qualify
taking into account credit history and debt to income ratios for a lower
cost credit product then offered by the Mortgage Loan's originator or any
affiliate of the Mortgage Loan's originator. If, at the time of loan
application, the Mortgagor may have qualified for a for a lower cost credit
product then offered by any mortgage lending affiliate of the Mortgage
Loan's originator, the Mortgage Loan's originator referred the Mortgagor's
application to such affiliate for underwriting consideration. With respect
to any Mortgage Loan, the Mortgagor was assigned the highest credit grade
available with respect to a mortgage loan product offered by such Mortgage
Loan's originator, based on a comprehensive assessment of risk factors,
including the Mortgagor's credit history. Additionally, the Mortgage Loan's
originator offered the Mortgagor mortgage loan products offered by such
Mortgage Loan's originator, or any affiliate of such Mortgage Loan's
originator, for which the Mortgagor qualified;
(lvii) The methodology used in underwriting the extension of
credit for each Mortgage Loan employs objective mathematical principles
which relate the Mortgagor's income, assets, liabilities and/or credit
history to the proposed payment and such underwriting methodology does not
rely on the extent of the Mortgagor's equity in the collateral as the
principal determining factor in approving such credit extension. Such
underwriting methodology confirmed that at the time of origination
(application/approval) the Mortgagor had a reasonable ability to make
timely payments on the Mortgage Loan;
(lviii) With respect to each Mortgage Loan, the Seller has fully
and accurately furnished complete information (i.e., favorable and
unfavorable) on the related borrower credit files to Equifax, Experian and
Trans Union Credit Information Company, in accordance with the Fair Credit
Reporting Act and its implementing regulations, on a monthly basis and, for
each Mortgage Loan, the Seller will furnish, in accordance with the Fair
Credit Reporting Act and its implementing regulations, accurate and
complete information on its borrower credit files to Equifax, Experian, and
Trans Union Credit Information Company, on a monthly basis;
(lix) All points, fees and charges (including finance charges).
whether or not financed, assessed, collected or to be collected in
connection with the origination and servicing of each Mortgage Loan were
disclosed in writing to the related Mortgagor in accordance with applicable
state and federal laws and regulations. All points and fees related to each
Mortgage Loan are accurately described on the Mortgage Loan Schedule. All
points and fees related to each Mortgage Loan are accurately described on
the Mortgage Loan Schedule. For purposes of this representation, "points
and fees" (x) include origination, underwriting, broker and finder's fees
and charges that the lender imposed as a condition of making the Mortgage
Loan, whether they are paid to the lender or a third party; and (y) exclude
bona fide discount points, fees paid for actual services rendered in
connection with the origination of the Mortgage Loan (such as attorneys'
fees, notaries fees and fees paid for property appraisals, credit reports,
surveys, title examinations and extracts, flood and tax certifications, and
home inspections); the cost of
30
mortgage insurance or credit-risk price adjustments; the costs of title,
hazard, and flood insurance policies; state and local transfer taxes or
fees; escrow deposits for the future payment of taxes and insurance
premiums; and other miscellaneous fees and charges;
(lx) The Seller will transmit full-file credit reporting data for
each Mortgage Loan pursuant to Xxxxxx Xxx Guide Announcement 95-19 and for
each Mortgage Loan, Seller agrees it shall report one of the following
statuses each month as follows: new origination, current, delinquent (30-,
60-, 90-days, etc.), foreclosed, or charged-off;
(lxi) With respect to any Mortgage Loan which is secured by
manufactured housing, if such Mortgage Loans are permitted hereunder, such
Mortgage Loan satisfies the requirements for inclusion in residential
mortgage backed securities transactions rated by Standard & Poor's Ratings
Services and such manufactured housing will be the principal residence of
the Mortgagor upon the origination of the Mortgage Loan. With respect to
any second lien Mortgage Loan, such lien is on a one- to four-family
residence that is (or will be) the principal residence of the Mortgagor
upon the origination of the second lien Mortgage Loan;
(lxii) Each Mortgage Loan constitutes a "qualified mortgage"
under Section 860G(a)(3)(A) of the Code and Treasury Regulation Section
1.860G-2(a)(1);
(lxiii) No Mortgage Loan had an original term to maturity of more
than thirty (30) years;
(lxiv) No Mortgage Loan is secured by real property or secured by
a manufactured home located in the state of Georgia unless (x) such
Mortgage Loan was originated prior to October 1, 2002 or after March 6,
2003, or (y) the property securing the Mortgage Loan is not, nor will be,
occupied by the Mortgagor as the Mortgagor's principal dwelling. No
Mortgage Loan is a "High Cost Home Loan" as defined in the Georgia Fair
Lending Act, as amended (the "Georgia Act"). Each Mortgage Loan that is a
"Home Loan" under the Georgia Act complies with all applicable provisions
of the Georgia Act. No Mortgage Loan secured by owner occupied real
property or an owner occupied manufactured home located in the State of
Georgia was originated (or modified) on or after October 1, 2002 through
and including March 6, 2003;
(lxv) The Mortgagor has not made or caused to be made any payment
in the nature of an "overage" or "yield spread premium" to a mortgage
broker or a like Person which has not been fully disclosed to the
Mortgagor;
(lxvi) The sale or transfer of the Mortgage Loan by the Seller
complies with all applicable federal, state, and local laws, rules, and
regulations governing such sale or transfer, including, without limitation,
the Fair and Accurate Credit Transactions Act ("FACT Act") and the Fair
Credit Reporting Act, each as may be amended from time to time, and the
Seller has not received any actual or constructive notice of any identity
theft, fraud, or other misrepresentation in connection with such Mortgage
Loan or any party thereto;
31
(lxvii) With respect to each MOM Loan, a MIN has been assigned by
MERS and such MIN is accurately provided on the Mortgage Loan Schedule. The
related Assignment of Mortgage to MERS has been duly and properly recorded,
or has been delivered for recording to the applicable recording office;
(lxviii) No Mortgagor agreed to submit to arbitration to resolve
any dispute arising out of or relating in any way to the Mortgage Loan
transaction;
(lxix) No Mortgage Loan is subject to mandatory arbitration; and
(lxx) No Mortgage Loan is secured by a lien on a "condo hotel."
Subsection 7.03. Remedies for Breach of Representations and
Warranties.
It is understood and agreed that the representations and warranties
set forth in Subsections 7.01 and 7.02 shall survive the sale of the Mortgage
Loans to the Purchaser and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note or
Assignment of Mortgage or the examination or lack of examination of any Mortgage
File. Upon discovery by the Seller or the Purchaser of a breach of any of the
foregoing representations and warranties which materially and adversely affects
the value of the Mortgage Loans or the interest of the Purchaser (or which
materially and adversely affects the value of a Mortgage Loan or the interests
of the Purchaser in the related Mortgage Loan in the case of a representation
and warranty relating to a particular Mortgage Loan), or in the event that any
Mortgagor fails to make the first payment due to the Purchaser following the
Closing Date, the party discovering such breach shall give prompt written notice
to the other.
Within sixty (60) days of the earlier of either discovery by the
Seller, or notice to the Seller, of any breach of a representation or warranty
which materially and adversely affects the value of a Mortgage Loan or the
Mortgage Loans or the Purchaser's interest in a Mortgage Loan or the Mortgage
Loans, the Seller shall use its best efforts promptly to cure such breach in all
material respects and, if such breach cannot be cured, the Seller shall, at the
Purchaser's option, repurchase such Mortgage Loan at the Repurchase Price. In
the event that a breach shall involve any representation or warranty set forth
in Subsection 7.01 and such breach cannot be cured within 60 days of the earlier
of either discovery by or notice to the Seller of such breach, all of the
Mortgage Loans shall, at the Purchaser's option, be repurchased by the Seller at
the Repurchase Price. The Seller shall, at the request of the Purchaser and
assuming that Seller has a Qualified Substitute Mortgage Loan, rather than
repurchase the Mortgage Loan as provided above, remove such Mortgage Loan and
substitute in its place a Qualified Substitute Mortgage Loan or Loans; provided
that such substitution shall be effected not later than 120 days after the
related Closing Date. If the Seller has no Qualified Substitute Mortgage Loan,
it shall repurchase the deficient Mortgage Loan. Any repurchase of a Mortgage
Loan(s) pursuant to the foregoing provisions of this Subsection 7.03 shall occur
on a date designated by the Purchaser and shall be accomplished by deposit in
the Custodial Account of the amount of the Repurchase Price for distribution to
the Purchaser on the next scheduled Distribution Date. Notwithstanding anything
to the contrary contained herein, it is understood by the parties hereto that a
breach of the representations and warranties made in Subsections 7.02 (viii),
(xliv), (xlvi), (liv), (lvi), (lvii), (lix), (lviii), (lix), (lxii), (lxiv) or
(lxviii) will be deemed to materially and adversely affect the value of the
related Mortgage Loan or the interest of the Purchaser therein.
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At the time of repurchase of any deficient Mortgage Loan, the
Purchaser and the Seller shall arrange for the reassignment of the repurchased
Mortgage Loan to the Seller and the delivery to the Seller of any documents held
by the Custodian relating to the repurchased Mortgage Loan. In the event the
Repurchase Price is deposited in the Custodial Account, the Seller shall,
simultaneously with such deposit, give written notice to the Purchaser that such
deposit has taken place. Upon such repurchase the related Mortgage Loan Schedule
shall be amended to reflect the withdrawal of the repurchased Mortgage Loan from
this Agreement.
As to any Deleted Mortgage Loan for which the Seller substitutes a
Qualified Substitute Mortgage Loan or Loans, the Seller shall effect such
substitution by delivering to the Purchaser for such Qualified Substitute
Mortgage Loan or Loans the Mortgage Note, the Mortgage, the Assignment of
Mortgage, unless such Mortgage Loan is a MOM Mortgage or has previously been
assigned to MERS, and such other documents and agreements as are set forth in
Exhibit 13 hereto, with the Mortgage Note endorsed as required therein. The
Seller shall deposit in the Custodial Account the Monthly Payment less the
Servicing Fee due on such Qualified Substitute Mortgage Loan or Loans in the
month following the date of such substitution. Monthly Payments due with respect
to Qualified Substitute Mortgage Loans in the month of substitution will be
retained by the Seller. For the month of substitution, distributions to the
Purchaser will include the Monthly Payment due on such Deleted Mortgage Loan in
the month of substitution, and the Seller shall thereafter be entitled to retain
all amounts subsequently received by the Seller in respect of such Deleted
Mortgage Loan. The Seller shall give written notice to the Purchaser that such
substitution has taken place and shall amend the Mortgage Loan Schedule to
reflect the removal of such Deleted Mortgage Loan from the terms of this
Agreement and the substitution of the Qualified Substitute Mortgage Loan. Upon
such substitution, such Qualified Substitute Mortgage Loan or Loans shall be
subject to the terms of this Agreement in all respects, and the Seller shall be
deemed to have made with respect to such Qualified Substitute Mortgage Loan or
Loans, as of the date of substitution, the covenants, representations and
warranties set forth in Subsections 7.01 and 7.02.
For any month in which the Seller substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Seller
will determine the amount (if any) by which the aggregate principal balance of
all such Qualified Substitute Mortgage Loans as of the date of substitution is
less than the aggregate Stated Principal Balance of all such Deleted Mortgage
Loans (after application of scheduled principal payments due in the month of
substitution). An amount equal to the product of the amount of such shortfall
multiplied by the Repurchase Price shall be distributed by the Seller in the
month of substitution pursuant to the Servicing Addendum. Accordingly, on the
date of such substitution, the Seller will deposit from its own funds into the
Custodial Account an amount equal to such amount.
In addition to such cure, repurchase and substitution obligation, the
Seller shall indemnify the Purchaser and hold it harmless 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 of the Seller's representations and warranties, respectively, contained
in this Section 7. It is understood and agreed that the obligations of the
Seller set forth in this Subsection 7.03 to cure, substitute for or repurchase a
defective Mortgage Loan and to indemnify the Purchaser as provided in this
Subsection 7.03 constitute the sole remedies of the Purchaser respecting a
breach of the foregoing representations and warranties. The indemnification
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obligation of the Seller set forth herein shall survive the termination of this
Agreement notwithstanding any applicable statute of limitations, which the
Seller hereby expressly waives.
Any cause of action against the Seller relating to or arising out of
the breach of any representations and warranties made in Subsections 7.01 or
7.02 shall accrue as to any Mortgage Loan upon (i) discovery of such breach by
the Purchaser or notice thereof by the Seller to the Purchaser, (ii) failure by
the Seller to cure such breach or repurchase such Mortgage Loan as specified
above, and (iii) demand upon the Seller by the Purchaser for compliance with the
relevant provisions of this Agreement.
Subsection 7.04. Repurchase of Certain Mortgage Loans; Premium
Protection.
(a) In the event that (i) the first Due Date for a Mortgage Loan is
prior to the Cut-off Date and the initial Monthly Payment is not made by the
related Mortgagor within thirty (30) days of such Due Date or (ii) the first
Monthly Payment on any Mortgage Loan due following the Cut-off Date is not made
by the related Mortgagor within thirty (30) days of the related Due Date, then,
in each such case, the Seller shall repurchase the affected Mortgage Loans at
the Repurchase Price, which shall be paid as provided for in Subsection 7.03.
The Seller shall notify the Purchaser of any such default under this Subsection
7.04(a) within thirty (30) days of any such Mortgage Loan becoming thirty (30)
days delinquent.
(b) In the event that any Mortgage Loan prepays-in-full within three
(3) months following the related Closing Date, Seller shall remit to the Initial
Purchaser an amount equal to the product of (i) the excess of (A) the percentage
of par as stated in the related Commitment Letter as the purchase price
percentage (subject to adjustment as provided therein) over (B) 100%, times (ii)
the outstanding principal balance of such Mortgage Loan as of the Cut-off Date.
Such obligation to the Initial Purchaser shall survive any sale or assignment of
the Mortgage Loans by the Initial Purchaser to any third party and shall be
independently enforceable by the Initial Purchaser.
(c) In the event that any Mortgage Loan is repurchased pursuant to
Section 7.03 or 7.04(a), in addition to its obligations under Section 7.03 and
7.04(a), Seller shall remit to the Initial Purchaser an amount equal to the
Repurchase Price of such Mortgage Loan as of the date of repurchase. Such
obligation to the Initial Purchaser shall survive any sale or assignment of the
Mortgage Loans by the Initial Purchaser to any third party and shall be
independently enforceable by the Initial Purchaser.
Subsection 7.05. Representations of the Purchaser.
The Initial Purchaser hereby represents and warrants to the Seller, as
of the date hereof and as of each Closing Date, that:
(i) The Initial Purchaser is national banking association with
full power and authority to conduct its business as presently conducted by
it to the extent material to the consummation of the transactions
contemplated herein. This Agreement has been duly authorized, executed and
delivered by the Initial Purchaser acting through the New York branch. The
Initial Purchaser had the full corporate power and authority to
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own the Mortgage loans and has the full corporate power authority to
execute and deliver, engage in the transactions contemplated by, and
perform and observe the terms and conditions of the Agreement.
(ii) The Initial Purchaser has duly authorized the execution,
delivery and performance of the Agreement, has duly executed and delivered
this Agreement, and this Agreement, assuming due authorization, execution
and delivery by the Seller, constitutes a legal, valid and binding
obligation of the Seller, enforceable against it in accordance with its
terms except as the enforceability thereof may be limited by bankruptcy,
insolvency or reorganization or by general principles of equity;
(iii) The execution, delivery and performance of this Agreement
by the Initial Purchaser (x) does not conflict and will not conflict with,
does not breach and will not result in a breach of and does not constitute
and will not constitute a default (or an event, which with notice or lapse
of time or both, would constitute a default) under (A) any terms or
provision on the organizational documents of the Initial Purchaser, (B) any
term or provision of any material agreement, contract, instrument or
indenture, to which the Initial Purchaser is a party or by which the
Initial Purchaser or any of its property is bound, or (C) any law, rule,
regulation, order, judgment, writ, injunction or decree of any court or
governmental authority having jurisdiction over the Initial Purchaser or
any of its property and (y) does not create or impose and will not result
in the creation or imposition of any lien, charge or encumbrance which
would have a material adverse effect upon the Mortgage Loans or any
documents or instruments evidencing or securing the Mortgage Loan;
(iv) No consent, approval, authorization or order of,
registration or filing with, or notice on behalf of the Initial Purchaser
to any governmental authority or court is required, under federal or the
laws of the State of New York, for the execution, delivery and performance
by the Initial Purchaser of, or compliance by the Initial Purchaser with,
this Agreement or the consummation by the Initial Purchaser of any other
transaction contemplated hereby;
(v) The Initial Purchaser is not in violation of, and the
execution and delivery of this Agreement by the Initial Purchaser and its
performance and compliance with the terms of this Agreement will not
constitute a violation with respect to, any order or decree of New York
court or any order or regulation of any federal, state, municipal or
governmental agency having jurisdiction over the Initial Purchaser or its
assets, which violation might have consequences that would materially and
adversely affect the condition (financial or otherwise) or the operation of
the Initial Purchaser or its assets or might have consequences that would
materially and adversely affect the performance of its obligation and
duties hereunder;
(vi) There are no actions or proceedings against, or
investigations known to it of, the Initial Purchaser before any court,
administrative or other tribunal (A) that might prohibit its entering into
the Agreement, or (B) that might prohibit or materially and adversely
affect the performance by the Initial Purchaser of its obligations under,
or validity or enforceability of, this Agreement; and
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(vii) There is no litigation currently pending or, to the best of
the Initial Purchaser's knowledge without independent investigation,
threatened against the Initial Purchaser that would reasonably be expected
to materially and adversely affect the execution, delivery, performance or
enforceability of this Agreement, or that would result in a material
adverse change in the financial condition of the Initial Purchaser.
SECTION 8. Closing.
The closing for each Mortgage Loan Package shall take place on the
related Closing Date. At the Purchaser's option, the closing shall be either: by
telephone, confirmed by letter or wire as the parties shall agree, or conducted
in person, at such place as the parties shall agree.
The closing for the Mortgage Loans to be purchased on each Closing
Date shall be subject to each of the following conditions:
(a) all of the representations and warranties of the Seller under this
Agreement shall be true and correct as of the related Closing Date and no event
shall have occurred which, with reasonable notice to the Seller, or the passage
of time, would constitute a default under this Agreement;
(b) the Initial Purchaser shall have received, or the Initial
Purchaser's attorneys shall have received in escrow, all Closing Documents as
specified in Section 9, in such forms as are agreed upon and acceptable to the
Purchaser, duly executed by all signatories other than the Purchaser as required
pursuant to the terms hereof;
(c) the Seller shall have delivered and released to the Custodian all
documents required pursuant to this Agreement and the Custodial Agreement; and
(d) all other terms and conditions of this Agreement shall have been
complied with.
Subject to the foregoing conditions, the Initial Purchaser shall pay
to the Seller on the related Closing Date the Purchase Price, plus accrued
interest pursuant to Section 4, by wire transfer of immediately available funds
to the account designated by the Seller.
SECTION 9. Closing Documents.
(a) On or before the Initial Closing Date, the Seller or Servicer, as
applicable, shall submit to the Initial Purchaser fully executed originals of
the following documents:
1. this Agreement, in four counterparts;
2. a Custodial Account Letter Agreement in the form attached as
Exhibit 7 hereto;
3. as Escrow Account Letter Agreement in the form attached as
Exhibit 8 hereto;
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4. a Seller's Officer's Certificate, in the form of Exhibit 1-A
hereto, including all attachments thereto;
5. an Servicer's Officer's Certificate, in the form of Exhibit
1-B hereto, including all attachments thereto;
6. an Opinion of Counsel to the Seller and Servicer, in the form
of Exhibit 2 hereto; and
7. the Underwriting Guidelines.
(b) The Closing Documents for the Mortgage Loans to be purchased on
each Closing Date shall consist of fully executed originals of the following
documents:
1. the related Commitment Letter;
2. the related Mortgage Loan Schedule;
3. a Custodian's Trust Receipt and Initial Certification, as
required under the Custodial Agreement, in a form acceptable to the
Initial Purchaser;
4. an Officer's Certificate, in the form of Exhibit 1-A hereto,
including all attachments thereto;
5. an Servicer's Officer's Certificate, in the form of Exhibit
1-B hereto, including all attachments thereto;
6. if requested by the Initial Purchaser, an Opinion of Counsel
to the Seller, in the form of Exhibit 2 hereto;
7. a Security Release Certification, in the form of Exhibit 3
hereto executed by any Person, as requested by the Initial Purchaser,
if any of the Mortgage Loans has at any time been subject to any
security interest, pledge or hypothecation for the benefit of such
Person;
8. a certificate or other evidence of merger or change of name,
signed or stamped by the applicable regulatory authority, if any of
the Mortgage Loans were acquired by the Seller by merger or acquired
or originated by the Seller while conducting business under a name
other than its present name, if applicable;
9. the Underwriting Guidelines as modified, amended or
supplemented; and
10. an Assignment and Conveyance in the form of Exhibit 4 hereto.
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SECTION 10. Costs.
The Purchaser shall pay any commissions due its salesmen and the legal
fees and expenses of its attorneys. All other costs and expenses incurred in
connection with the transfer and delivery of the Mortgage Loans, including
without limitation recording fees, fees for title policy endorsements and
continuations, fees for recording Assignments of Mortgage and the Seller's
attorney's fees, shall be paid by the Seller. The Seller shall also pay those
expenses of the Custodian related to the preparation of Trust Receipts and
Certification in connection with the sale of the Mortgage Loans.
SECTION 11. Servicer's Servicing Obligations.
The Seller, as independent contract servicer, shall service and
administer the Mortgage Loans during the Preliminary Servicing Period, directly
or through one or more Subservicers, in accordance with the terms and provisions
set forth in the Servicing Addendum attached as Exhibit 9, which Servicing
Addendum is incorporated herein by reference. In addition, with respect to any
Mortgage Loan that is not subject to an assignable "life of loan" Flood Zone
Service Contract or Tax Servicer Contract as of the related Closing Date, the
Servicer shall pay the cost incurred by the Purchaser or its designee to obtain
such a contract.
The Prepayment Penalty Mortgage Loans. The penalty will be enforced as
per the Seller and as per the Mortgage Note and will be payable to the Seller.
SECTION 12. Removal of Mortgage Loans from Inclusion under This
Agreement Upon a Whole Loan Transfer or a Pass-Through Transfer on One or More
Reconstitution Dates. The Seller and the Initial Purchaser agree that with
respect to some or all of the Mortgage Loans, the Initial Purchaser may effect
either:
1. one or not more than five Whole Loan Transfers; and/or
2. one or not more than five Pass-Through Transfers.
The Purchaser shall not effect in excess of five (5) Whole Loan
Transfers or Pass-Through Transfers, as the case may be with respect to any Loan
Package. All notices of intent to exercise either option in Section 12 must be
received by the Seller no less than 10 business days prior to each Whole Loan
Transfer or Pass-Through Transfer.
All notices of this nature should be sent via e-mail to:
Xxxx Xxxxxx/HSBC - Investor Accounting
E-mail address: xxxx.xxxxxx@xx.xxxx.xxx
Phone number: 000-000-0000
With respect to each Whole Loan Transfer or Pass-Through Transfer, as
the case may be, entered into by the Initial Purchaser, the Seller agrees:
(1) to cooperate fully with the Purchaser and any prospective
purchaser with respect to all reasonable requests and due
diligence procedures including participating in meetings with
rating agencies, bond insurers and such
38
other parties as the Purchaser shall designate and participating
in meetings with prospective purchasers of the Mortgage Loans or
interests therein and providing information reasonably requested
by such purchasers;
(2) to execute all Reconstitution Agreements, including, without
limitation, an Assignment, Assumption and Recognition Agreement
in the form attached hereto as Exhibit 10 and an Indemnification
Agreement in the form attached hereto as Exhibit 11, provided
that each of the Seller and the Purchaser is given an opportunity
to review and reasonably negotiate in good faith the content of
such documents not specifically referenced or provided for
herein;
(3) with respect to any Whole Loan Transfer or Pass-Through Transfer,
the Seller shall make as of the Reconstitution Date the
representations and warranties contained in this Agreement
regarding the Seller and the Mortgage Loans, if such Whole Loan
Transfer or Pass-Through Transfer occurs within 12 months of the
related Closing Date or such later period as specified in the
related Commitment Letter, modified to the extent necessary to
accurately reflect the pool statistics of the Mortgage Loans as
of the date of such Whole Loan Transfer or Pass-Through Transfer
and any events or circumstances existing subsequent to the
related Closing Date(s);
(4) to deliver to the Purchaser for inclusion in any prospectus or
other offering material such publicly available information
regarding the Seller, its financial condition and its mortgage
loan delinquency, foreclosure and loss experience and any
additional information requested by the Purchaser, and to deliver
to the Purchaser any similar non-public, unaudited financial
information, in which case the Purchaser shall bear the cost of
having such information audited by certified public accountants
if the Purchaser desires such an audit, or as is otherwise
reasonably requested by the Purchaser and which the Seller is
capable of providing without unreasonable effort or expense, and
to indemnify the Purchaser and its affiliates for material
misstatements or omissions contained (i) in such information and
(ii) on the Mortgage Loan Schedule;
(5) to deliver to the Purchaser and to any Person designated by the
Purchaser, at the Purchaser's expense, such statements and audit
letters of reputable, certified public accountants pertaining to
information provided by the Seller pursuant to clause 4 above as
shall be reasonably requested by the Purchaser;
(6) to deliver to the Purchaser, and to any Person designated by the
Purchaser, such legal documents and in-house Opinions of Counsel
as are customarily delivered by originators or servicers, as the
case may be, and reasonably determined by the Purchaser to be
necessary in connection with Whole Loan Transfers or Pass-Through
Transfers, as the case may be, such in-house Opinions of Counsel
for a Pass-Through Transfer to be
39
in the form reasonably acceptable to the Purchaser, it being
understood that the cost of any opinions of outside special
counsel that may be required for a Whole Loan Transfer or
Pass-Through Transfer, as the case may be, shall be the
responsibility of the Purchaser;
(7) in the event that the Mortgage Loans become subject to a
Pass-Through Transfer prior to the termination of the Preliminary
Servicing Period, the Seller agrees to service the Mortgage Loans
on a scheduled/scheduled basis, or actual/actual basis as agreed
to by the Seller and Purchaser, until the end of the Preliminary
Servicing Period including, if applicable, making advances of
delinquent scheduled payments of principal and interest through
liquidation (unless deemed by Seller likely to be
non-recoverable) and paying compensating interest with respect to
prepayment interest shortfalls (to the extent of the monthly
servicing fee payable thereto).
(8) to negotiate and execute one or more subservicing agreements
between the Seller and any master servicer which is generally
considered to be a prudent master servicer in the secondary
mortgage market, designated by the Purchaser in its sole
discretion after consultation with the Seller and/or one or more
custodial and servicing agreements among the Purchaser, the
Seller and a third party custodian/trustee which is generally
considered to be a prudent custodian/trustee in the secondary
mortgage market designated by the Purchaser in its sole
discretion after consultation with the Seller, in either case for
the purpose of pooling the Mortgage Loans with other Mortgage
Loans for resale or securitization;
(9) in connection with any securitization of any Mortgage Loans, to
execute a pooling and servicing agreement, which pooling and
servicing agreement may, at the Purchaser's direction, contain
contractual provisions including, but not limited to, a 24-day
certificate payment delay (54-day total payment delay), servicer
advances of delinquent scheduled payments of principal and
interest through liquidation (unless deemed non-recoverable) and
prepayment interest shortfalls (to the extent of the monthly
servicing fee payable thereto), servicing and mortgage loan
representations and warranties which in form and substance
conform to the representations and warranties in this Agreement
and to secondary market standards for securities backed by
mortgage loans similar to the Mortgage Loans and such provisions
with regard to servicing responsibilities, investor reporting,
segregation and deposit of principal and interest payments,
custody of the Mortgage Loans, and other covenants as are
required by the Purchaser and one or more nationally recognized
rating agencies for "AAA" rated mortgage pass-through
transactions which are "mortgage related securities" for the
purposes of the Secondary Mortgage Market Enhancement Act of
1984, unless otherwise mutually agreed. At the option of the
Purchaser, the facilities of the Depository Trust Company ("DTC")
may be used in connection with any class of security issued
pursuant to any pooling agreement, subject only to the consent of
the
40
DTC. In addition, at the sole option of the Purchaser, any REMIC
residual class issued pursuant to any pooling agreement may be
transferred to the Seller. If the Purchaser deems it advisable at
any time to pool the Mortgage Loans with other mortgage loans for
the purpose of resale or securitization, the Seller agrees to
execute one or more subservicing agreements between itself (as
servicer) and a master servicer designated by the Purchaser at
its sole discretion, and/or one or more servicing agreements
among the Seller (as servicer), the Purchaser and a trustee
designated by the Purchaser at its sole discretion, such
agreements in each case incorporating terms and provisions
substantially identical to those described in the immediately
preceding paragraph; and
(10) to transfer the servicing rights to the Purchaser or its designee
as described in Section 15 upon the direction of the Purchaser.
All Mortgage Loans not sold or transferred pursuant to a Whole Loan
Transfer or Pass-Through Transfer shall be subject to this Agreement and shall
continue to be serviced for the remainder of the Preliminary Servicing Period in
accordance with the terms of this Agreement and with respect thereto this
Agreement shall remain in full force and effect.
SECTION 13. The Seller and the Servicer.
Subsection 13.01. Additional Indemnification by the Seller and the
Servicer.
In addition to the indemnification provided in Subsection 7.03, the
Seller and the Servicer shall indemnify the Purchaser and hold the Purchaser
harmless against any and all claims, losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments,
and any other costs, fees and expenses that the Purchaser may sustain in any way
related to the failure of the Seller or the Servicer to perform its obligations
under this Agreement including but not limited to its obligation to service and
administer the Mortgage Loans in strict compliance with the terms of this
Agreement or any Reconstitution Agreement entered into pursuant to Section 12.
Subsection 13.02. Merger or Consolidation of the Seller and the
Servicer.
The Seller and the Servicer shall each keep in full force and effect
its existence, rights and franchises as a corporation under the laws of the
state of its incorporation except as permitted herein, and shall obtain and
preserve its qualification to do business as a foreign entity in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement or any of the Mortgage Loans, and
to enable the Seller and the Servicer to perform its duties under this
Agreement.
Any Person into which the Seller or the Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Seller or the Servicer shall be a party, or any
Person succeeding to the business of the Seller or the Servicer, shall be the
successor of the Seller or the Servicer hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding; provided, however, that the
successor or surviving Person shall be
41
(i) an institution whose deposits are insured by FDIC or a company whose
business is the origination and servicing of mortgage loans, (ii) have a GAAP
net worth of not less than $25,000,000 and (iii) be a FNMA or FHLMC approved
seller/servicer and shall satisfy any requirements of Section 16 with respect to
the qualifications of a successor to the Seller.
Subsection 13.03. Limitation on Liability of the Seller, the Servicer
and Others.
Neither the Seller, the Servicer nor any of the officers, employees or
agents of the Seller or the Servicer shall be under any liability to the
Purchaser for any action taken or for refraining from the taking of any action
in good faith in connection with the servicing of the Mortgage Loans pursuant to
this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Seller or the Servicer or any such person
against any breach of warranties or representations made herein, or failure to
perform its obligations in strict compliance with any standard of care set forth
in this Agreement, or any liability which would otherwise be imposed by reason
of any breach of the terms and conditions of this Agreement. The Seller, the
Servicer and any officer, employee or agent of the Seller or the Servicer may
rely in good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder. The Seller and
the Servicer shall not be under any obligation to appear in, prosecute or defend
any legal action which is not incidental to its obligation to sell or duty to
service the Mortgage Loans in accordance with this Agreement and which in its
opinion may result in its incurring any expenses or liability; provided,
however, that the Seller or the Servicer may, with the consent of the Purchaser,
undertake any such action which it may deem necessary or desirable in respect to
this Agreement and the rights and duties of the parties hereto. In such event,
the legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities for which the Purchaser shall
be liable, the Seller and the Servicer shall be entitled to reimbursement
therefor from the Purchaser upon written demand except when such expenses, costs
and liabilities are subject to the Seller's or the Servicer's indemnification
under Subsections 7.03 or 13.01.
Subsection 13.04. Servicer Not to Resign.
The Servicer shall not assign this Agreement or resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Servicer and the Purchaser or upon the determination that its servicing duties
hereunder are no longer permissible under applicable law and such incapacity
cannot be cured by the Servicer in which event the Servicer may resign as
servicer. Any such determination permitting the resignation of the Servicer as
servicer shall be evidenced by an Opinion of Counsel to such effect delivered to
the Purchaser which Opinion of Counsel shall be in form and substance acceptable
to the Purchaser and which shall be provided at the cost of the Servicer. No
such resignation shall become effective until a successor shall have assumed the
Servicer's responsibilities and obligations hereunder in the manner provided in
Section 16.
Subsection 13.05. No Transfer of Servicing.
The Servicer acknowledges that the Purchaser has acted in reliance
upon the Servicer's independent status, the adequacy of its servicing
facilities, plan, personnel, records and procedures, its integrity, reputation
and financial standing and the continuance thereof.
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Without in any way limiting the generality of this Section, the Servicer shall
not either assign this Agreement or the servicing hereunder or delegate its
rights or duties hereunder or any portion thereof, or sell or otherwise dispose
of all or substantially all of its property or assets, without the prior written
approval of the Purchaser, which consent will not be unreasonably withheld. This
provision shall not prevent Seller from delegating certain servicing functions
to affiliates of Seller.
SECTION 14. Default.
Subsection 14.01. Events of Default.
In case one or more of the following Events of Default by the Servicer
shall occur and be continuing, that is to say:
(i) any failure by the Servicer to remit to the Purchaser any
payment required to be made under the terms of this Agreement which
continues unremedied for a period of two (2) Business Days after the date
upon which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Purchaser; or
(ii) failure on the part of the Seller or the Servicer duly to
observe or perform in any material respect any other of the covenants or
agreements on the part of the Seller or the Servicer set forth in this
Agreement which continues unremedied for a period of thirty days (except
that such number of days shall be fifteen in the case of a failure to pay
any premium for any insurance policy required to be maintained under this
Agreement) after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Seller or
the Servicer by the Purchaser or by the Custodian; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, bankruptcy, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding up or liquidation of its affairs, shall have been entered against
the Seller or the Servicer and such decree or order shall have remained in
force undischarged or unstayed for a period of sixty days; or
(iv) the Seller or the Servicer shall consent to the appointment
of a conservator or receiver or liquidator in any insolvency, bankruptcy,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Seller or the Servicer or of or relating
to all or substantially all of its property; or
(v) the Seller or the Servicer shall admit in writing its
inability to pay its debts generally as they become due, file a petition to
take advantage of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations; or
(vi) failure by the or the Servicer to be in compliance with the
"doing business" or licensing laws of any jurisdiction where a Mortgaged
Property is located; or
43
(vii) the Servicer ceases at any point to meet the qualifications
of either a FNMA or FHLMC seller/servicer, or the Servicer is not eligible
to act as servicer or master servicer for mortgage loans subject to
residential mortgage backed securities transactions rated by any nationally
recognized rating agency or is eligible to act as such only with enhanced
credit support; or
(viii) the Servicer attempts to assign its right to servicing
compensation hereunder or the Seller or the Servicer attempts, without the
consent of the Purchaser, to sell or otherwise dispose of all or
substantially all of its property or assets or to assign this Agreement or
the servicing responsibilities hereunder or to delegate its duties
hereunder or any portion thereof;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, the Purchaser, by notice in writing to the Seller or the
Servicer, as applicable, may, in addition to whatever rights the Purchaser may
have at law or equity to damages, including injunctive relief and specific
performance, terminate all the rights and obligations of the Servicer as
servicer under this Agreement. On or after the receipt by the Seller or the
Servicer , as applicable of such written notice, all authority and power of the
Servicer to service the Mortgage Loans under this Agreement shall on the date
set forth in such notice pass to and be vested in the successor appointed
pursuant to Section 16.
Subsection 14.02. Waiver of Defaults.
The Purchaser may waive any default by the Seller in the performance
of its obligations hereunder and its consequences. Upon any such waiver of a
past default, such default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereon except to the extent expressly so waived.
SECTION 15. Termination. The respective obligations and
responsibilities of the Seller, as servicer, shall terminate upon the
distribution of the Purchaser of the final payment or liquidation with respect
to the last Mortgage Loan (or advances of same by the Seller) or the disposition
of all property acquired upon foreclosure or deed in lieu of foreclosure with
respect to the last Mortgage Loan and the remittance of all funds due hereunder
unless terminated with respect to all or a portion of the Mortgage Loans on an
earlier date at the option of the Purchaser pursuant to this Section 15 or
pursuant to Section 14. In the event that the Seller is terminated pursuant to
this Section 15 without cause within one (1) year of the related Closing Date,
the Purchaser shall pay to the Seller a termination fee in an amount equal to
0.50% of the Stated Principal Balance, as of the date of such termination, of
the Mortgage Loans with respect to which the Seller is being terminated as
servicer. In the event that the Seller is terminated pursuant to this Section 15
without cause within the second year following the related Closing Date, the
Purchaser shall pay to the Seller a termination fee in an amount equal to 0.25%
of the Stated Principal Balance, as of the date of such termination, of the
Mortgage Loans with respect to which the Seller is being terminated as servicer.
The parties agree that there shall be no termination fee if the Seller, as
servicer, is terminated without cause at any time after the second anniversary
of the related Closing Date. Upon written request from the Purchaser in
connection with any such termination, the Servicer shall prepare, execute and
deliver, any and all documents
44
and other instruments, place in the Purchaser's possession all Mortgage Files,
and do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Mortgage Loans and related documents, or
otherwise, at the Servicer's sole expense. The Servicer agrees to cooperate with
the Purchaser and such successor in effecting the termination of the Servicer's
responsibilities and rights hereunder as servicer, including, without
limitation, the transfer to such successor for administration by it of all cash
amounts which shall at the time be credited by the Servicer to the Custodial
Account, REO Account or Escrow Account or thereafter received with respect to
the Mortgage Loans.
SECTION 16. Successor to the Servicer.
Prior to termination of Servicer's responsibilities and duties under
this Agreement pursuant to Section 12, 14 or 15, the Purchaser shall (i) succeed
to and assume all of the Servicer's responsibilities, rights, duties and
obligations under this Agreement, or (ii) appoint a successor which shall
succeed to all rights and assume all of the responsibilities, duties and
liabilities of the Servicer as servicer under this Agreement. In connection with
such appointment and assumption, the Purchaser may make such arrangements for
the reasonable compensation of such successor out of payments on Mortgage Loans
as it and such successor shall agree. In the event that the Servicer's duties,
responsibilities and liabilities as servicer under this Agreement should be
terminated pursuant to the aforementioned Sections, the Servicer shall discharge
such duties and responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof with the same
degree of diligence and prudence which it is obligated to exercise under this
Agreement, and shall take no action whatsoever that might impair or prejudice
the rights or financial condition of the Purchaser or such successor. The
termination of the Servicer as Servicer pursuant to the aforementioned Sections
shall not become effective until a successor shall be appointed pursuant to this
Section 16 and shall in no event relieve the Seller and the Servicer of the
representations and warranties made pursuant to Subsections 7.01 and 7.02 and
the remedies available to the Purchaser under Subsection 7.03 or 7.04, it being
understood and agreed that the provisions of such Subsections 7.01, 7.02 and
7.03 and 7.04 shall be applicable to the Seller and Servicer notwithstanding any
such resignation or termination of the Servicer, or the termination of this
Agreement.
Any successor appointed as provided herein shall execute, acknowledge
and deliver to the Servicer and to the Purchaser an instrument accepting such
appointment, whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer, with like effect as if originally named as a party to this Agreement
provided, however, that such successor shall not assume, and Servicer shall
indemnify such successor for, any and all liabilities arising out of the
Servicer's acts as servicer. Any termination of the Servicer as servicer
pursuant to Section 12, 14 or 15 shall not affect any claims that the Purchaser
may have against the Servicer arising prior to any such termination or
resignation or remedies with respect to such claims.
The Servicer shall timely deliver to the successor the funds in the
Custodial Account, REO Account and the Escrow Account and the Mortgage Files and
related documents and statements held by it hereunder and the Servicer shall
account for all funds. The Servicer shall execute and deliver such instruments
and do such other things all as may reasonably be required to more fully and
definitely vest and confirm in the successor all such rights, powers,
45
duties, responsibilities, obligations and liabilities of the Servicer as
servicer. The successor shall make arrangements as it may deem appropriate to
reimburse the Servicer for amounts the Servicer actually expended as servicer
pursuant to this Agreement which the successor is entitled to retain hereunder
and which would otherwise have been recovered by the Servicer pursuant to this
Agreement but for the appointment of the successor servicer.
SECTION 17. Financial Statements.
The Seller understands that in connection with the Purchaser's
marketing of the Mortgage Loans, the Purchaser shall make available to
prospective purchasers the Seller's financial statements for the most recently
completed three fiscal years respecting which such statements are available. The
Seller also shall make available any comparable interim statements to the extent
any such statements have been prepared by the Seller (and are available upon
request to members or stockholders of the Seller or the public at large). The
Seller, if it has not already done so, agrees to furnish promptly to the
Purchaser copies of the statements specified above. The Seller also shall make
available information on its servicing performance with respect to mortgage
loans serviced for others, including delinquency ratios.
The Seller also agrees to allow access to knowledgeable financial,
accounting, origination and servicing officers of the Seller for the purpose of
answering questions asked by any prospective purchaser regarding recent
developments affecting the Seller, its loan origination or servicing practices
or the financial statements of the Seller.
SECTION 18. Mandatory Delivery: Grant of Security Interest.
The sale and delivery of each Mortgage Loan on or before the related
Closing Date is mandatory from and after the date of the execution of the
related Commitment Letter, it being specifically understood and agreed that each
Mortgage Loan is unique and identifiable on the date hereof and that an award of
money damages would be insufficient to compensate the Initial Purchaser for the
losses and damages incurred by the Initial Purchaser (including damages to
prospective purchasers of the Mortgage Loans) in the event of the Seller's
failure to deliver each of the related Mortgage Loans or one or more Mortgage
Loans otherwise acceptable to the Initial Purchaser on or before the related
Closing Date. The Seller hereby grants to the Initial Purchaser a lien on and a
continuing security interest in each Mortgage Loan and each document and
instrument evidencing each such Mortgage Loan to secure the performance by the
Seller of its obligation hereunder, and the Seller agrees that it holds such
Mortgage Loans in custody for the Initial Purchaser subject to the Initial
Purchaser's (i) right to reject any Mortgage Loan under the terms of this
Agreement and the related Commitment Letter, and (ii) obligation to pay the
related Purchase Price for the Mortgage Loans. All rights and remedies of the
Purchaser under this Agreement are distinct from, and cumulative with, any other
rights or remedies under this Agreement or afforded by law or equity and all
such rights and remedies may be exercised concurrently, independently or
successively.
SECTION 19. Notices.
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if mailed, by registered or
certified mail, return receipt requested, or, if by other means, when received
by the other party at the address as follows:
46
(i) if to the Purchaser:
HSBC Bank USA, National Association
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxx Xxxxxxxxxx
(ii) if to the Seller or Servicer:
HSBC Mortgage Corporation (USA)
0000 Xxxxxx Xxxxxx
Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
if to MERS:
Attn: Secretary
0000 Xxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
or such other address as may hereafter be furnished to the other party by like
notice. 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 20. Severability Clause.
Any part, provision, representation or warranty of this Agreement
which is prohibited or which is held to be void or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any part, provision,
representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall
be ineffective, as to such jurisdiction, to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law which prohibits or renders void or unenforceable any
provision hereof. If the invalidity of any part, provision, representation or
warranty of this Agreement shall deprive any party of the economic benefit
intended to be conferred by this Agreement, the parties shall negotiate, in
good-faith, to develop a structure the economic effect of which is nearly as
possible the same as the economic effect of this Agreement without regard to
such invalidity.
SECTION 21. Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
47
SECTION 22. Governing Law.
The Agreement shall be construed in accordance with the laws of the
State of New York without regard to any conflicts of law provisions and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with the laws of the State of New York, except to the extent
preempted by Federal law.
SECTION 23. Intention of the Parties.
It is the intention of the parties that the Initial Purchaser is
purchasing, and the Seller is selling, the Mortgage Loans and not a debt
instrument of the Seller or another security. Accordingly, the parties hereto
each intend to treat the transaction for Federal income tax purposes as a sale
by the Seller, and a purchase by the Purchaser, of the Mortgage Loans. The
Initial Purchaser shall have the right to review the Mortgage Loans and the
related Mortgage Loan Files to determine the characteristics of the Mortgage
Loans which shall affect the Federal income tax consequences of owning the
Mortgage Loans and the Seller shall cooperate with all reasonable requests made
by the Initial Purchaser in the course of such review. In the event, for any
reason, any transaction contemplated herein is construed by any court or
regulatory authority as a borrowing rather than as a sale, the Seller and the
Purchaser intend that the Purchaser or its assignee, as the case may be, shall
have a perfected first priority security interest in the Mortgage Loans which
may be held by MERS as the nominee for the Purchaser, the Custodial Account and
the proceeds of any and all of the foregoing (collectively, the "Collateral"),
free and clear of adverse claims. In such case, the Seller shall be deemed to
have hereby granted to the Purchaser or its assignee, as the case may be, a
first priority security interest in and lien upon the Collateral, free and clear
of adverse claims. In such event, the related Commitment Letter and this
Agreement shall constitute a security agreement, the Custodian shall be deemed
to be an independent custodian for purposes of perfection of the security
interest granted to the Purchaser or its assignee, as the case may be, and the
Purchaser or its assignee, as the case may be, shall have all of the rights of a
secured party under applicable law.
SECTION 24. Successors and Assigns.
This Agreement shall bind and inure to the benefit of and be
enforceable by the Seller, the Servicer and the Purchaser and the respective
successors and assigns of the Seller, the Servicer and the Purchaser. The
Purchaser may assign this Agreement to any Person to whom any Mortgage Loan is
transferred whether pursuant to a sale or financing and to any Person to whom
the servicing or master servicing of any Mortgage Loan is sold or transferred.
Upon any such assignment, the Person to whom such assignment is made shall
succeed to all rights and obligations of the Purchaser under this Agreement to
the extent of the related Mortgage Loan or Mortgage Loans and this Agreement, to
the extent of the related Mortgage Loan or Loans, shall be deemed to be a
separate and distinct Agreement between the Seller, the Servicer and such
Purchaser, and a separate and distinct Agreement between the Seller, the
Servicer and each other Purchaser to the extent of the other related Mortgage
Loan or Loans. In the event that this Agreement is assigned to any Person to
whom the servicing or master servicing of any Mortgage Loan is sold or
transferred, the rights and benefits under this agreement which inure to the
Purchaser shall inure to the benefit of both the Person to whom such Mortgage
Loan is transferred and the Person to whom the servicing or master servicing of
the Mortgage Loan has been transferred; provided that, the right to require a
Mortgage Loan to be repurchased by the
48
Seller pursuant to Subsection 7.03 or 7.04 shall be retained solely by the
Purchaser. This Agreement shall not be assigned, pledged or hypothecated by the
Seller or the Servicer to a third party without the consent of the Purchaser,
which consent shall not be unreasonably withheld.
SECTION 25. Waivers.
No term or provision of this Agreement may be waived or modified
unless such waiver or modification is in writing and signed by the party against
whom such waiver or modification is sought to be enforced.
SECTION 26. Exhibits.
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
SECTION 27. Nonsolicitation.
The Seller and the Servicer covenant and agree that neither shall take
any action to solicit the refinancing of any Mortgage Loan following the date
hereof or provide information to any other entity to solicit the refinancing of
any Mortgage Loan; provided that, the foregoing shall not preclude the Seller or
the Servicer from engaging in solicitations to the general public by newspaper,
radio, television or other media which are not directed toward the Mortgagors or
from refinancing the Mortgage Loan of any Mortgagor who, without solicitation,
contacts the Seller or the Servicer to request the refinancing of the related
Mortgage Loan.
SECTION 28. General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to
include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting
principles;
(c) references herein to "Articles," "Sections," "Subsections,"
"Paragraphs," and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections,
Paragraphs and other subdivisions of this Agreement;
(d) reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same
Section in which the reference appears, and this rule shall also
apply to Paragraphs and other subdivisions;
49
(e) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular provision; and
(f) the term "include" or "including" shall mean without limitation
by reason of enumeration.
SECTION 29. Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by any party at the closing, and (c) financial
statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
SECTION 30. Further Agreements.
The Seller, the Servicer and the Purchaser each agree to execute and
deliver to the other such reasonable and appropriate additional documents,
instruments or agreements as may be necessary or appropriate to effectuate the
purposes of this Agreement.
SECTION 31. Entire Agreement.
This Agreement, the Commitment Letter and the exhibits and schedules
hereto constitute the entire agreement and understanding of the parties with
respect to the matters and transactions contemplated by this Agreement and,
except to the extent otherwise set forth in writing, supersedes any prior
agreement and understandings with respect to those matters and transactions. In
the event of any contradiction, conflict or inconsistency between the terms and
provisions of this Agreement and the terms and provisions of any Commitment
Letter, the terms and provisions of such Commitment Letter will govern.
50
IN WITNESS WHEREOF, the Seller, the Servicer and the Purchaser have
caused their names to be signed hereto by their respective officers thereunto
duly authorized as of the date first above written.
HSBC Mortgage Corporation (USA)
(Seller and Servicer)
By:
------------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Vice President
HSBC BANK USA, NATIONAL ASSOCIATION
(Initial Purchaser)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
51
EXHIBIT 1
SELLER'S OFFICER'S CERTIFICATE
I, ________________________, hereby certify that I am the duly elected
______________ of [HSBC Mortgage Corporation (USA)], a __________________ (the
"Seller"), and further certify, on behalf of the Seller as follows:
1. Attached hereto as Attachment I are a true and correct copy of
the Certificate of Incorporation and by-laws of the Seller as are
in full force and effect on the date hereof.
2. No proceedings looking toward merger, liquidation, dissolution or
bankruptcy of the Seller are pending or contemplated.
3. Each person who, as an officer or attorney-in-fact of the Seller,
signed (a) the Master Mortgage Loan Purchase and Servicing
Agreement (the "Purchase Agreement"), dated as of ____________,
2006, by and among the Seller, the Servicer and HSBC Bank USA,
National Association (the "Purchaser"); (b) the Commitment
Letter, dated _____________ 2006, between the Seller and the
Purchaser (the "Commitment Letter"); and (c) any other document
delivered prior hereto or on the date hereof in connection with
the sale and servicing of the Mortgage Loans in accordance with
the Purchase Agreement and the Commitment Letter was, at the
respective times of such signing and delivery, and is as of the
date hereof, duly elected or appointed, qualified and acting as
such officer or attorney-in-fact, and the signatures of such
persons appearing on such documents are their genuine signatures.
4. Attached hereto as Attachment II is a true and correct copy of
the resolutions duly adopted by the board of directors of the
Seller on ________________, 2006 (the "Resolutions") with respect
to the authorization and approval of the sale and servicing of
the Mortgage Loans; said Resolutions have not been amended,
modified, annulled or revoked and are in full force and effect on
the date hereof.
5. Attached hereto as Attachment III is a Certificate of Good
Standing of the Seller dated ______________, 2006. No event has
occurred since ___________________, 2006 which has affected the
good standing of the Seller under the laws of the State of
__________.
6. All of the representations and warranties of the Seller contained
in Subsections 7.01 and 7.02 of the Purchase Agreement were true
and correct in all material respects as of the date of the
Purchase Agreement and are true and correct in all material
respects as of the date hereof.
Exh 1-A-1
7. The Seller has performed all of its duties and has satisfied all
the material conditions on its part to be performed or satisfied
prior to the related Closing Date pursuant to the Purchase
Agreement and the related Commitment Letter.
All capitalized terms used herein and not otherwise defined shall have
the meaning assigned to them in the Purchase Agreement.
Exh 1-A-2
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Seller.
Dated: ________________________
[Seal]
HSBC Mortgage Corporation (USA)
(Seller)
By:
------------------------------------
Name:
----------------------------------
Title: Vice President
I, _______________________, Secretary of the Seller, hereby certify
that _________________________ is the duly elected, qualified and acting Vice
President of the Seller and that the signature appearing above is his genuine
signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: _________________________
[Seal]
HSBC Mortgage Corporation (USA)
(Seller)
By:
------------------------------------
Name:
----------------------------------
Title: [Assistant] Secretary
Exh 1-A-3
EXHIBIT 2
[FORM OF OPINION OF COUNSEL TO THE SELLER AND THE SERVICER]
_________________________
(Date)
HSBC Bank USA, National Association
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Master Mortgage Loan Purchase and Servicing Agreement, dated
as of [Month] 1, 2006
Gentlemen:
I have acted as counsel to HSBC Mortgage Corporation (USA), a Delaware
corporation (the "Seller"), in connection with the sale of certain mortgage
loans by the Seller to (the "Purchaser") pursuant to (i) a Master Mortgage Loan
Purchase and Servicing Agreement, dated as of _________ ____, 200__, by and
between the Seller and the Purchaser (the "Purchase Agreement"), [and the
Commitment Letter, dated _________ ____, 200__, between the Seller, and the
Purchaser (the "Commitment Letter")]. Capitalized terms not otherwise defined
herein have the meanings set forth in the Purchase Agreement.
In connection with rendering this opinion letter, I, or attorneys
working under my direction, have examined, among other things, originals,
certified copies or copies otherwise identified to my satisfaction as being true
copies of the following:
A. The Purchase Agreement;
B. [The Commitment Letter;]
C. The Seller's Certificate of Incorporation and By-Laws, as amended
to date;
D. Resolutions adopted by the board of directors of the Seller with
specific reference to actions relating to the transactions
covered by this opinion (the "Resolutions");
For the purpose of rendering this opinion, I have made such
documentary, factual and legal examinations as I deemed necessary under the
circumstances. As to factual matters, I have relied upon statements,
certificates and other assurances of public officials and of officers and other
representatives of the Seller, and upon such other certificates as I deemed
appropriate, which factual matters have not been independently established or
verified by me. I have also assumed, among other things, the genuineness of all
signatures, the legal capacity of all natural persons, the authenticity of all
documents submitted to me as originals, and the conformity to original documents
of all documents submitted to me as copies and the authenticity of the originals
of such copied documents.
Exh 2-1
On the basis of and subject to the foregoing examination, and in
reliance thereon, and subject to the assumptions, qualifications, exceptions and
limitations expressed herein, I am of the opinion that:
1. The Seller and the Servicer have been duly incorporated and are
validly existing and in good standing under the laws of the State of [ - ] with
corporate power and authority to own their properties and conduct their business
as presently conducted by them. The Seller and the Servicer have the corporate
power and authority to service the Mortgage Loans, and to execute, deliver, and
perform their obligations under the Purchase Agreement and the Commitment Letter
(sometimes collectively, the "Agreements").
2. The Purchase Agreement and the Commitment Letter have been duly and
validly authorized, executed and delivered by the Seller and the Servicer.
3. The Purchase Agreement and the Commitment Letter constitute valid,
legal and binding obligations of the Seller and the Servicer, enforceable
against the Seller and the Servicer in accordance with their respective terms.
4. No consent, approval, authorization or order of any state or
federal court or government agency or body is required for the execution,
delivery and performance by the Seller of the Purchase Agreement and the
Commitment Letter, or the consummation of the transactions contemplated by the
Purchase Agreement and the Commitment Letter, except for those consents,
approvals, authorizations or orders which previously have been obtained.
5. Neither the servicing of the Mortgage Loans by the Servicer as
provided in the Purchase Agreement and the Commitment Letter, nor the
fulfillment by the Seller or the Servicer of the terms of or the consummation of
any other transactions contemplated in the Purchase Agreement and the Commitment
Letter will result in a breach of any term or provision of the certificate of
incorporation or by-laws of the Seller or the Servicer, or, to my knowledge,
will conflict with, result in a breach or violation of, or constitute a default
under, (i) the terms of any indenture or other agreement or instrument known to
me to which the Seller or the Servicer are parties or by which they are bound,
(ii) any State of [ - ] or federal statute or regulation applicable to the
Seller or the Servicer, or (iii) any order of any State of [ - ] or federal
court, regulatory body, administrative agency or governmental body having
jurisdiction over the Seller or the Servicer, except in any such case where the
default, breach or violation would not have a material adverse effect on the
Seller or the Servicer or its ability to perform its obligations under the
Purchase Agreement.
6. There is no action, suit, proceeding or investigation pending or,
to my knowledge, threatened against the Seller or the Servicer which, in my
judgment, either in any one instance or in the aggregate, would draw into
question the validity of the Purchase Agreement or which would be likely to
impair materially the ability of the Seller or the Servicer to perform under the
terms of the Purchase Agreement.
7. The sale of each Mortgage Note and Mortgage as and in the manner
contemplated by the Purchase Agreement is sufficient fully to transfer to the
Purchaser all right, title and interest of the Seller thereto as noteholder and
mortgagee.
Exh 2-2
8. The Assignments of Mortgage, if applicable, are in recordable form
and upon completion will be acceptable for recording under the laws of the State
of ___________. When endorsed, as provided in the [related custodial agreement],
the Mortgage Notes will be duly endorsed under ______________ law.
The opinions above are subject to the following additional
assumptions, exceptions, qualifications and limitations:
A. I have assumed that all parties to the Agreements other than the
Seller and the Servicer have all requisite power and authority to execute,
deliver and perform their respective obligations under each of the Agreements,
and that the Agreements have been duly authorized by all necessary corporate
action on the part of such parties, have been executed and delivered by such
parties and constitute the legal, valid and binding obligations of such parties.
B. My opinion expressed in paragraphs 3 and 7 above is subject to the
qualifications that (i) the enforceability of the Agreements may be limited by
the effect of laws relating to (1) bankruptcy, reorganization, insolvency,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, including, without limitation, the effect of
statutory or other laws regarding fraudulent conveyances or preferential
transfers, and (2) general principles of equity upon the specific enforceability
of any of the remedies, covenants or other provisions of the Agreements and upon
the availability of injunctive relief or other equitable remedies and the
application of principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law) as such principles relate to,
limit or affect the enforcement of creditors' rights generally and the
discretion of the court before which any proceeding for such enforcement may be
brought; and (ii) I express no opinion herein with respect to the validity,
legality, binding effect or enforceability of (a) provisions for indemnification
in the Agreements to the extent such provisions may be held to be unenforceable
as contrary to public policy or (b) Section 18 of the Purchase Agreement.
C. I have assumed, without independent check or certification, that
there are no agreements or understandings among the Seller, the Servicer, the
Purchaser and any other party which would expand, modify or otherwise affect the
terms of the documents described herein or the respective rights or obligations
of the parties thereunder.
Exh 2-3
I am admitted to practice in the State of [State] and I render no
opinion herein as to matters involving the laws of any jurisdiction other than
the State of [ - ] and the Federal laws of the United States of America.
Very truly yours,
---------------------------------------
As Senior Counsel for [Seller and
Servicer]
Exh 2-4
EXHIBIT 3
SECURITY RELEASE CERTIFICATION
I. Release of Security Interest
___________________________, hereby relinquishes any and all right,
title and interest it may have in and to the Mortgage Loans described in Exhibit
A attached hereto upon purchase thereof by HSBC Bank USA, National Association
from the Seller named below pursuant to that certain Master Mortgage Loan
Purchase and Servicing Agreement, dated as of [Month] 1, 2006, as of the date
and time of receipt by ______________________________ of $__________ for such
Mortgage Loans (the "Date and Time of Sale"), and certifies that all notes,
mortgages, assignments and other documents in its possession relating to such
Mortgage Loans have been delivered and released to the Seller named below or its
designees as of the Date and Time of Sale.
Name and Address of Financial Institution
-------------------------------------
(Name)
-------------------------------------
(Address)
By:
---------------------------------
Exh 3-1
II. Certification of Release
The Seller named below hereby certifies to HSBC Bank USA, National
Association that, as of the Date and Time of Sale of the above mentioned
Mortgage Loans to HSBC Bank USA, National Association, the security interests in
the Mortgage Loans released by the above named corporation comprise all security
interests relating to or affecting any and all such Mortgage Loans. The Seller
warrants that, as of such time, there are and will be no other security
interests affecting any or all of such Mortgage Loans.
HSBC Mortgage Corporation
Seller
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Exh 3-2
EXHIBIT 4
ASSIGNMENT AND CONVEYANCE
On this _______ day of ________, 2006, [SELLER] ("Seller") as the
Seller under that certain Master Mortgage Loan Purchase and Servicing Agreement,
dated as of [Month] 1, 2006 (the "Agreement") does hereby sell, transfer,
assign, set over and convey to HSBC Bank USA, National Association as Purchaser
under the Agreement, without recourse, but subject to the terms of the
Agreement, all rights, title and interest of the Seller in and to the Mortgage
Loans listed on the Mortgage Loan Schedule attached hereto as Schedule One,
together with the related Mortgage Files and all rights and obligations arising
under the documents contained therein. Pursuant to Subsection 6.03 of the
Agreement, the Seller has delivered to the Custodian the documents for each
Mortgage Loan to be purchased and such other documents as set forth in Exhibit
12 and the Custodial Agreement. The contents of each related Servicing File
required to be retained by the Seller to service the Mortgage Loans pursuant to
the Agreement and thus not delivered to the Purchaser are and shall be held in
trust by the Seller for the benefit of the Purchaser as the owner thereof. The
Seller's possession of any portion of each such Servicing File is at the will of
the Purchaser for the sole purpose of facilitating servicing of the related
Mortgage Loan pursuant to the Agreement, and such retention and possession by
the Seller shall be in a custodial capacity only. The ownership of each Mortgage
Note, Mortgage, and the contents of the Mortgage File and Servicing File is
vested in the Purchaser and the ownership of all records and documents with
respect to the related Mortgage Loan prepared by or which come into the
possession of the Seller shall immediately vest in the Purchaser and shall be
retained and maintained, in trust, by the Seller at the will of the Purchaser in
such custodial capacity only.
The Seller confirms to the Purchaser that the representations and
warranties set forth in Subsections 7.01 and 7.02 of the Agreement are true and
correct with respect to the Seller and the Mortgage Loans listed on the Mortgage
Loan Schedule attached hereto as of the date hereof, and that all statements
made in the Seller's Officer's Certificates and all Attachments thereto remain
complete, true and correct in all respects as of the date hereof, and that the
Mortgage Loan characteristics identified on the attached Schedule are true and
correct as of the date hereof.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Agreement.
HSBC Mortgage Corporation (USA),
Seller
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Exh 4-1
EXHIBIT 5
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the imaged Mortgage File shall
include each of the following items, which shall be available for inspection by
the Purchaser and which shall be retained by the Seller in an electronic format:
1. Mortgage Loan Documents.
2. Residential loan application.
3. Mortgage Loan closing statement.
4. Verification of employment and income, if required pursuant to
the related Mortgage Loan's origination program.
5. Verification of acceptable evidence of source and amount of
downpayment, if required pursuant to the related Mortgage Loan's
origination program.
6. Credit report on Mortgagor.
7. Residential appraisal report or applicable collateral assessment
per the Underwriting Guidelines.
8. Photograph of the Mortgaged Property.
9. Survey of the Mortgaged Property.
10. Copy of each instrument necessary to complete identification of
any exception set forth in the exception schedule in the title
policy, i.e., map or plat, restrictions, easements, sewer
agreements, home association declarations, etc.
11. All required disclosure statements and statement of Mortgagor
confirming receipt thereof.
12. If available, termite report, structural engineer's report, water
portability and septic certification.
13. Sales Contract, if applicable.
14. Hazard insurance policy.
15. Tax receipts, insurance premium receipts, ledger sheets, payment
history from date of origination, insurance claim files,
correspondence, current and historical computerized data files,
and all other processing,
Exh 5-1
underwriting and closing papers and records which are customarily
contained in a mortgage loan file and which are required to
document the Mortgage Loan or to service the Mortgage Loan.
16. Amortization schedule, if available.
17. Payment history for Mortgage Loans that have been closed for more
than 90 days.
18. Flood insurance policy, if applicable.
19. Tax Service Contract.
20. Flood Service Contract.
Exh 5-2
EXHIBIT 6
CUSTODIAL AGREEMENT
Exh 6-1
EXHIBIT 7
FORM OF CUSTODIAL ACCOUNT LETTER AGREEMENT
________________________ __, 2006
To: __________________________________
(the "Depository")
As Seller under the Master Mortgage Loan Purchase and Servicing
Agreement, dated as of [Month] 1, 2006, we hereby authorize and request you to
establish an account, as a Custodial Account, to be designated as "[SELLER] in
trust for the Purchaser and various Mortgagors, Fixed and Adjustable Rate
Mortgage Loans." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Seller. You may refuse any deposit which would
result in violation of the requirement that the account be fully insured as
described below. This letter is submitted to you in duplicate. Please execute
and return one original to us.
HSBC Mortgage Corporation (USA)
(Seller)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
Exh 7-1
The undersigned, as Depository, hereby certifies that the
above-described account has been established under Account Number ___________ at
the office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above. The full amount deposited at any time in the
account will be insured by the Federal Deposit Insurance Corporation through the
Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund ("SAIF").
(Depository)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
Exh 7-2
EXHIBIT 8
FORM OF ESCROW ACCOUNT LETTER AGREEMENT
________________, 2006
To: __________________________________
(the "Depository")
As Seller under the Master Mortgage Loan Purchase and Servicing
Agreement, dated as of [Month] 1, 2006, we hereby authorize and request you to
establish an account, as an Escrow Account, to be designated as "[SELLER] in
trust for the Purchaser and various Mortgagors, Fixed and Adjustable Rate
Mortgage Loans." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Seller. You may refuse any deposit which would
result in violation of the requirement that the account be fully insured as
described below. This letter is submitted to you in duplicate. Please execute
and return one original to us.
HSBC Mortgage Corporation (USA)
(Seller)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
Exh 8-1
The undersigned, as Depository, hereby certifies that the
above-described account has been established under Account Number ___________ at
the office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above. The full amount deposited at any time in the
account will be insured by the Federal Deposit Insurance Corporation through the
Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund ("SAIF").
(Depository)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
Exh 8-2
EXHIBIT 9
SERVICING ADDENDUM
Subsection 11.01 Seller to Act as Servicer.
The Seller, as independent contract servicer, shall service and administer
the Mortgage Loans that the Seller sells to the Purchaser hereunder in
accordance with Accepted Servicing Practices and this Agreement and shall have
full power and authority, acting alone, to do or cause to be done any and all
things in connection with such servicing and administration which the Seller may
deem necessary or desirable and consistent with the terms of this Agreement. The
Seller shall be responsible for any and all acts of a Subservicer and a
Subcontractor, and the Seller's utilization of a Subservicer or a Subcontractor
shall in no way relieve the liability of the Seller under this Agreement.
Consistent with the terms of this Agreement, the Servicer may waive, modify
or vary any term of any Mortgage Loan or consent to the postponement of strict
compliance with any such term or in any manner grant indulgence to any Mortgagor
if in the Servicer's reasonable and prudent determination such waiver,
modification, postponement or indulgence is not materially adverse to the
Purchaser; provided, however, that the Servicer shall not permit any
modification with respect to any Mortgage Loan that would change the Mortgage
Interest Rate, defer or forgive the payment thereof or of any principal or
interest payments, reduce the outstanding principal amount (except for actual
payments of principal), make additional advances of additional principal or
extend the final maturity date on such Mortgage Loan. Without limiting the
generality of the foregoing, the Servicer shall continue, and is hereby
authorized and empowered, to execute and deliver on behalf of itself, and the
Purchaser, all instruments of satisfaction or cancellation, or of partial or
full release, discharge and all other comparable instruments, with respect to
the Mortgage Loans and with respect to the Mortgaged Property. If reasonably
required by the Servicer, the Purchaser shall furnish the Servicer with any
powers of attorney and other documents necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties under this
Agreement.
If applicable, the Servicer shall notify MERS of the ownership interest of
the Purchaser in each MOM Loan through the MORNET system or MIDANET system, as
applicable, or any other comparable system acceptable to MERS. At any time
during the term of this Agreement, the Purchaser may direct the Servicer to
cause any MOM Loan to be deactivated from the MERS System.
In servicing and administering the Mortgage Loans, the Servicer shall
employ procedures including collection procedures and exercise the same care
that it customarily employs and exercises in servicing and administering
mortgage loans for its own account giving due consideration to accepted mortgage
servicing practices of prudent lending institutions and the Purchaser's reliance
on the Servicer.
The Seller will furnish, with respect to each Mortgage Loan, in accordance
with the Fair Credit Reporting Act and its implementing regulations, accurate
and complete information on its
Exh 9-1
borrower credit files to Equifax, Experian, and Trans Union Credit Information
Company, on a monthly basis.
Subsection 11.02 Collection of Mortgage Loan Payments.
Continuously from the related Closing Date until the expiration of the
related Preliminary Servicing Period, the Servicer shall proceed diligently to
collect all payments due under each Mortgage Loan when the same shall become due
and payable and shall, to the extent such procedures shall be consistent with
this Agreement and the terms of any related Primary Insurance Policy or LPMI
Policy, follow such collection procedures as it follows with respect to mortgage
loans comparable to the Mortgage Loans and held for its own account. Further,
the Servicer shall take special care in ascertaining and estimating annual
ground rents, taxes, assessments, water rates, fire and hazard insurance
premiums, mortgage insurance premiums, and all other charges that, as provided
in the Mortgage, will become due and payable to the end that the installments
payable by the Mortgagors will be sufficient to pay such charges as and when
they become due and payable.
Subsection 11.03 Realization Upon Defaulted Mortgage Loans.
(a) The Servicer shall use its best efforts, consistent with the procedures
that the Servicer would use in servicing loans for its own account, to foreclose
upon or otherwise comparably convert the ownership of such Mortgaged Properties
as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments pursuant to
Subsection 11.01. The Servicer shall use its best efforts to realize upon
defaulted Mortgage Loans in such a manner as will maximize the receipt of
principal and interest by the Purchaser, taking into account, among other
things, the timing of foreclosure proceedings. The foregoing is subject to the
provisions that, in any case in which Mortgaged Property shall have suffered
damage, the Servicer shall not be required to expend its own funds toward the
restoration of such property in excess of $2,000 unless it shall determine in
its discretion (i) that such restoration will increase the proceeds of
liquidation of the related Mortgage Loan to Purchaser after reimbursement to
itself for such expenses, and (ii) that such expenses will be recoverable by the
Servicer through Insurance Proceeds or Liquidation Proceeds from the related
Mortgaged Property, as contemplated in Subsection 11.05. In the event that any
payment due under any Mortgage Loan is not paid when the same becomes due and
payable, or in the event the Mortgagor fails to perform any other covenant or
obligation under the Mortgage Loan and such failure continues beyond any
applicable grace period, the Servicer shall take such action as it shall deem to
be in the best interest of the Purchaser. In the event that any payment due
under any Mortgage Loan remains delinquent for a period of 90 days or more, the
Seller shall use Accepted Servicing Practices and refer to foreclosure by the
120th day of delinquency. The Seller will notify the Purchaser of foreclosure
referrals on a monthly basis, prior to the initiation of foreclosure
proceedings. When foreclosure sale is imminent, Seller shall notify the
Purchaser and obtain a property valuation and issue bidding instructions in
accordance with Accepted Servicing Practices and consistent with methods used
for the mortgage loans held for its own portfolio. In such connection, the
Servicer shall be responsible for all costs and expenses incurred by it in any
such proceedings; provided, however, that it shall be entitled to reimbursement
thereof from the related Mortgaged Property, as contemplated in Subsection
11.05.
Exh 9-2
(b) Notwithstanding the foregoing provisions of this Subsection 11.03, with
respect to any Mortgage Loan as to which the Servicer has received actual notice
of, or has actual knowledge of, the presence of any toxic or hazardous substance
on the related Mortgaged Property the Servicer shall not either (i) obtain title
to such Mortgaged Property as a result of or in lieu of foreclosure or
otherwise, or (ii) otherwise acquire possession of, or take any other action,
with respect to, such Mortgaged Property if, as a result of any such action, the
Purchaser would be considered to hold title to, to be a mortgagee-in-possession
of, or to be an owner or operator of such Mortgaged Property within the meaning
of the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended from time to time, or any comparable law, unless the Servicer
has also previously determined, based on its reasonable judgment and a prudent
report prepared by a Person who regularly conducts environmental audits using
customary industry standards, that:
(1) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic
interest of the Purchaser to take such actions as are necessary to
bring the Mortgaged Property into compliance therewith; and
(2) there are no circumstances present at such Mortgaged Property
relating to the use, management or disposal of any hazardous
substances, hazardous materials, hazardous wastes, or petroleum-based
materials for which investigation, testing, monitoring, containment,
clean-up or remediation could be required under any federal, state or
local law or regulation, or that if any such materials are present for
which such action could be required, that it would be in the best
economic interest of the Purchaser to take such actions with respect
to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by this Subsection
11.03 shall be advanced by the Servicer, subject to the Servicer's right to be
reimbursed therefor from the Custodial Account as provided in Subsection
11.05(v).
If the Servicer determines, as described above, that it is in the best
economic interest of the Purchaser to take such actions as are necessary to
bring any such Mortgaged Property into compliance with applicable environmental
laws, or to take such action with respect to the containment, clean-up or
remediation of hazardous substances, hazardous materials, hazardous wastes, or
petroleum-based materials affecting any such Mortgaged Property, then the
Servicer shall take such action as it deems to be in the best economic interest
of the Purchaser. The cost of any such compliance, containment, cleanup or
remediation shall be advanced by the Servicer, subject to the Servicer's right
to be reimbursed therefor from the Custodial Account as provided in Subsection
11.05(v).
(c) Proceeds received in connection with any Final Recovery Determination,
as well as any recovery resulting from a partial collection of Insurance
Proceeds or Liquidation Proceeds in respect of any Mortgage Loan, will be
applied in the following order of priority: first, to reimburse the Servicer for
any related unreimbursed Servicing Advances, pursuant to Subsection 11.05(iii);
second, to accrued and unpaid interest on the Mortgage Loan, to the date of the
Final Recovery Determination, or to the Due Date prior to the Distribution Date
on which such
Exh 9-3
amounts are to be distributed if not in connection with a Final Recovery
Determination; and third, as a recovery of principal of the Mortgage Loan. If
the amount of the recovery so allocated to interest is less than the full amount
of accrued and unpaid interest due on such Mortgage Loan, the amount of such
recovery will be allocated by the Servicer as follows: first, to unpaid
Servicing Fees; and second, to the balance of the interest then due and owing.
The portion of the recovery so allocated to unpaid Servicing Fees shall be
reimbursed to the Servicer pursuant to Subsection 11.05(iii).
Subsection 11.04 Establishment of Custodial Accounts; Deposits in Custodial
Accounts.
The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts,
in the form of time deposit or demand accounts. The creation of any Custodial
Account shall be evidenced by a Custodial Account Letter Agreement in the form
of Exhibit 7.
The Servicer shall deposit in the related Custodial Account on a daily
basis, and retain therein the following payments and collections received by it
subsequent to the Cut-off Date, or received by it prior to the Cut-off Date but
allocable to a period subsequent thereto, other than in respect of principal and
interest on the Mortgage Loans due on or before the Cut-off Date:
(i) all payments on account of principal on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans,
including all Prepayment Charges;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts required to be deposited
pursuant to Subsections 11.10 and 11.11, other than proceeds to be held in
the Escrow Account and applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with the
Servicer's normal servicing procedures, the loan documents or applicable
law;
(v) all Condemnation Proceeds affecting any Mortgaged Property which
are not released to the Mortgagor in accordance with the Servicer's normal
servicing procedures, the loan documents or applicable law;
(vi) all proceeds of any Mortgage Loan repurchased in accordance with
Subsections 7.03 and 7.04 and all amounts required to be deposited by the
Servicer in connection with shortfalls in principal amount of Qualified
Substitute Mortgage Loans pursuant to Subsection 7.03;
(vii) any amounts required to be deposited by the Servicer pursuant to
Subsection 11.11 in connection with the deductible clause in any blanket
hazard insurance policy. Such deposit shall be made from the Servicer's own
funds, without reimbursement therefor;
Exh 9-4
(viii) any amounts required to be deposited by the Servicer in
connection with any REO Property pursuant to Subsection 11.13; and
(ix) any amounts required to be deposited in the Custodial Account
pursuant to Subsections 11.19 or 11.20.
(x) all Monthly Advances; and
(xi) with respect to each Principal Prepayment in full, an amount (to
be paid by the Seller out of its own funds without reimbursement therefor)
which, when added to all amounts allocable to interest received in
connection with such Principal Prepayment, equals one month's interest on
the amount of principal so prepaid at the Mortgage Interest Rate, provided,
however, that in no event shall the aggregate of deposits made by the
Seller pursuant to this clause (xi) exceed the aggregate amount of the
Seller's servicing compensation in the calendar month in which such
deposits are required.
The foregoing requirements for deposit in the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges and assumption
fees, to the extent permitted by Subsection 11.01, need not be deposited by the
Servicer in the Custodial Account. Such Custodial Account shall be an Eligible
Account. Any interest or earnings on funds deposited in the Custodial Account by
the depository institution shall accrue to the benefit of the Servicer and the
Servicer shall be entitled to retain and withdraw such interest from the
Custodial Account pursuant to Subsection 11.05(iii). The Servicer shall give
notice to the Purchaser of the location of the Custodial Account when
established and prior to any change thereof.
If the balance on deposit in the Custodial Account exceeds $75,000 as of
the commencement of business on any Business Day and the Custodial Account
constitutes an Eligible Account solely pursuant to clause (ii) of the definition
of Eligible Account, the Servicer shall, on or before twelve o'clock noon
Eastern time on such Business Day, withdraw from the Custodial Account any and
all amounts payable to the Purchaser and remit such amounts to the Purchaser by
wire transfer of immediately available funds.
Subsection 11.05 Permitted Withdrawals From the Custodial Account.
The Servicer may, from time to time, withdraw from the Custodial Account
for the following purposes:
(i) to make distributions to the Purchaser in the amounts and in the
manner provided for in Subsection 11.14;
(ii) to reimburse itself for unreimbursed Servicing Advances, the
Servicer's right to reimburse itself pursuant to this subclause (ii) with
respect to any Mortgage Loan being limited to related Liquidation Proceeds,
Condemnation Proceeds, Insurance Proceeds and such other amounts as may be
collected by the Servicer from the Mortgagor or otherwise relating to the
Mortgage Loan, it being understood that, in the case of such reimbursement,
the Servicer's right thereto shall be prior to the rights of the Purchaser,
except that, where the Servicer is required to repurchase a Mortgage Loan,
pursuant to Subsection 7.03 or Subsection 7.04, the Servicer's right to
such reimbursement shall be subsequent to the payment to the Purchaser of
the Repurchase Price pursuant to
Exh 9-5
Subsection 7.03 or Subsection 7.04 and all other amounts required to be
paid to the Purchaser with respect to such Mortgage Loans;
(iii) to pay to itself pursuant to Subsection 11.21 as servicing
compensation (a) any interest earned on funds in the Custodial Account (all
such interest to be withdrawn monthly not later than each Distribution
Date), and (b) the Servicing Fee from that portion of any payment or
recovery as to interest on a particular Mortgage Loan;
(iv) to pay to itself with respect to each Mortgage Loan that has been
repurchased pursuant to Subsection 7.03 or Subsection 7.04 all amounts
received thereon and not distributed as of the date on which the related
Repurchase Price is determined;
(v) to pay, or to reimburse the Servicer for advances in respect of,
expenses incurred in connection with any Mortgage Loan pursuant to
Subsection 11.03(b), but only to the extent of amounts received in respect
of the Mortgage Loans to which such expense is attributable; and
(vi) to clear and terminate the Custodial Account on the termination
of this Agreement.
(vii) to reimburse itself for Monthly Advances, the Seller's right to
reimburse itself pursuant to this subclause (vii) being limited to amounts
received on the related Mortgage Loan which represent late collections (net
of the related Servicing Fees) respecting which any such advance was made
it being understood that, in the case of such reimbursement, the Seller's
right thereto shall be prior to the rights of Purchaser, except that, where
the Seller is required to repurchase a Mortgage Loan, pursuant to
Subsection 7.03, the Seller's right to such reimbursement shall be
subsequent to the payment to the Purchaser of the Repurchase Price pursuant
to Subsection 7.03, and all other amounts required to be paid to the
Purchaser with respect to such Mortgage Loans; and
(viii) to reimburse the Seller for any Monthly Advance previously made
which the Seller has determined to be a Nonrecoverable Monthly Advance.
(ix) to reimburse the Seller for funds deposited in a custodial
account in error.
The Seller shall keep and maintain separate accounting, on a Mortgage Loan
by Mortgage Loan basis, for the purpose of justifying any withdrawal from the
Custodial Account pursuant to such subclauses (ii) - (ix) above. The Seller
shall provide written notification in the form of an Officers' Certificate to
the Purchaser, on or prior to the next succeeding Distribution Date, upon making
any withdrawals from the Custodial Account pursuant to subclause (viii) above.
Subsection 11.06 Establishment of Escrow Accounts; Deposits in Escrow
Accounts.
The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan which constitute Escrow Payments separate and
apart from any of its own funds
Exh 9-6
and general assets and shall establish and maintain one or more Escrow Accounts,
in the form of time deposit or demand accounts. The creation of any Escrow
Account shall be evidenced by an Escrow Account Letter Agreement in the form of
Exhibit 8.
The Servicer shall deposit in the Escrow Account or Accounts on a daily
basis, and retain therein, (i) all Escrow Payments collected on account of the
Mortgage Loans, for the purpose of effecting timely payment of any such items as
required under the terms of this Agreement, and (ii) all Insurance Proceeds
which are to be applied to the restoration or repair of any Mortgaged Property.
The Servicer shall make withdrawals therefrom only to effect such payments as
are required under this Agreement, and for such other purposes as shall be as
set forth or in accordance with Subsection 11.08. The Servicer shall be entitled
to retain any interest paid on funds deposited in the related Escrow Account by
the depository institution other than interest on escrowed funds required by law
to be paid to the Mortgagor and, to the extent required by law, the Servicer
shall pay interest on escrowed funds to the Mortgagor notwithstanding that the
Escrow Account is non-interest bearing or that interest paid thereon is
insufficient for such purposes.
Subsection 11.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account may be made by the Servicer (i) to
effect timely payments of ground rents, taxes, assessments, water rates, hazard
insurance premiums, Primary Insurance Policy premiums, if applicable, and
comparable items, (ii) to reimburse the Servicer for any Servicing Advance made
by the Servicer with respect to a related Mortgage Loan but only from amounts
received on the related Mortgage Loan which represent late payments or
collections of Escrow Payments thereunder, (iii) to refund to the Mortgagor any
funds as may be determined to be overages, (iv) for transfer to the Custodial
Account in accordance with the terms of this Agreement, (v) for application to
restoration or repair of the Mortgaged Property, (vi) to pay to the Servicer, or
to the Mortgagor to the extent required by law, any interest paid on the funds
deposited in the Escrow Account, or (vii) to clear and terminate the Escrow
Account on the termination of this Agreement.
Subsection 11.08 Payment of Taxes, Insurance and Other Charges.
With respect to each Mortgage Loan, the Servicer shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water rates
and other charges which are or may become a lien upon the Mortgaged Property and
the status of Primary Insurance Policy and LPMI Policy premiums and fire and
hazard insurance coverage and shall obtain, from time to time, all bills for the
payment of such charges, including insurance renewal premiums and shall effect
payment thereof prior to the applicable penalty or termination date and at a
time appropriate for securing maximum discounts allowable, employing for such
purpose deposits of the Mortgagor in the Escrow Account which shall have been
estimated and accumulated by the Servicer in amounts sufficient for such
purposes, as allowed under the terms of the Mortgage and applicable law. To the
extent that the Mortgage does not provide for Escrow Payments, the Servicer
shall upon notice of default ensure that any such payments are made by the
Mortgagor or by the Seller. The Servicer assumes full responsibility for the
timely payment of all such bills and shall effect timely payments of all such
bills irrespective of the Mortgagor's faithful
Exh 9-7
performance in the payment of same or the making of the Escrow Payments and
shall make advances from its own funds to effect such payments.
The Seller shall maintain in full force and effect, a Primary Insurance
Policy, issued by a Qualified Insurer, with respect to each Mortgage Loan for
which such coverage is required. Such coverage shall be maintained until the
Loan-to-Value Ratio of the related Mortgage Loan is reduced to that amount for
which the Home Owners Protection Act no longer requires such insurance to be
maintained. The Seller will not cancel or refuse to renew any Primary Insurance
Policy in effect on the Closing Date that is required to be kept in force under
this Agreement unless a replacement Primary Insurance Policy or LPMI Policy for
such cancelled or non- renewed policy is obtained from and maintained with a
Qualified Insurer. The Seller shall not take any action which would result in
non-coverage under any applicable Primary Insurance Policy or LPMI Policy of any
loss which, but for the actions of the Seller, would have been covered
thereunder. In connection with any assumption or substitution agreement entered
into or to be entered into pursuant to Subsection 11.19, the Seller shall
promptly notify the insurer under the related Primary Insurance Policy, if any,
of such assumption or substitution of liability in accordance with the terms of
such policy and shall take all actions which may be required by such insurer as
a condition to the continuation of coverage under the Primary Insurance Policy
or LPMI Policy. If such Primary Insurance Policy is terminated as a result of
such assumption or substitution of liability, the Seller shall obtain a
replacement Primary Insurance Policy as provided above.
In connection with its activities as servicer, the Seller agrees to prepare
and present, on behalf of itself, and the Purchaser, claims to the insurer under
any Primary Insurance Policy or LPMI Policy in a timely fashion in accordance
with the terms of such policies and, in this regard, to take such action as
shall be necessary to permit recovery under any Primary Insurance Policy or LPMI
Policy respecting a defaulted Mortgage Loan. Pursuant to Subsection 11.04, any
amounts collected by the Seller under any Primary Insurance Policy or LPMI
Policy shall be deposited in the Custodial Account, subject to withdrawal
pursuant to Subsection 11.05.
Subsection 11.09 Transfer of Accounts.
The Servicer may transfer the related Custodial Account or the related
Escrow Account to a different depository institution from time to time. Such
transfer shall be made only upon obtaining the consent of the Purchaser, which
consent shall not be unreasonably withheld. In any case, the Custodial Account
and Escrow Account shall be Eligible Accounts.
Subsection 11.10 Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained for each Mortgage Loan fire and
hazard insurance with extended coverage as is customary in the area where the
Mortgaged Property is located in an amount which is at least equal to the lesser
of (i) the amount necessary to fully compensate for any damage or loss to the
improvements which are a part of such property on a replacement cost basis or
(ii) the outstanding principal balance of the Mortgage Loan plus with respect to
any second lien Mortgage Loan, the outstanding principal balance of the related
first lien mortgage loan, in each case in an amount not less than such amount as
is necessary to prevent the Mortgagor and/or the Mortgagee from becoming a
co-insurer. If the Mortgaged
Exh 9-8
Property is in an area identified on a Flood Hazard Boundary Map or Flood
Insurance Rate Map issued by the Flood Emergency Management Agency as having
special flood hazards and such flood insurance has been made available, the
Servicer will cause to be maintained a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
with a generally acceptable insurance carrier, in an amount representing
coverage not less than the lesser of (i) the outstanding principal balance of
the Mortgage Loan or (ii) the maximum amount of insurance which is available
under the National Flood Insurance Act of 1968 or the Flood Disaster Protection
Act of 1973, as amended. The Servicer also shall maintain on any REO Property,
fire and hazard insurance with extended coverage in an amount which is at least
equal to the lesser of (i) the maximum insurable value of the improvements which
are a part of such property and (ii) the outstanding principal balance of the
related Mortgage Loan at the time it became an REO Property plus accrued
interest at the Mortgage Interest Rate and related Servicing Advances, liability
insurance and, to the extent required and available under the National Flood
Insurance Act of 1968 or the Flood Disaster Protection Act of 1973, as amended,
flood insurance in an amount as provided above. Pursuant to Subsection 11.04,
any amounts collected by the Servicer under any such policies other than amounts
to be deposited in the Escrow Account and applied to the restoration or repair
of the Mortgaged Property or REO Property, or released to the Mortgagor in
accordance with the Servicer's normal servicing procedures, shall be deposited
in the Custodial Account, subject to withdrawal pursuant to Subsection 11.05.
Any cost incurred by the Servicer in maintaining any such insurance shall not,
for the purpose of calculating distributions to the Purchaser, be added to the
unpaid principal balance of the related Mortgage Loan, notwithstanding that the
terms of such Mortgage Loan so permit. It is understood and agreed that no
earthquake or other additional insurance need be required by the Servicer of the
Mortgagor or maintained on property acquired in respect of the Mortgage Loan,
other than pursuant to such applicable laws and regulations as shall at any time
be in force and as shall require such additional insurance. All such policies
shall be endorsed with standard mortgagee clauses with loss payable to the
Servicer, or upon request to the Purchaser, and shall provide for at least
thirty days prior written notice of any cancellation, reduction in the amount
of, or material change in, coverage to the Servicer. The Servicer shall not
interfere with the Mortgagor's freedom of choice in selecting either his
insurance carrier or agent, provided, however, that the Servicer shall not
accept any such insurance policies from insurance companies unless such
companies currently reflect a General Policy Rating of A:VI or better in Best's
Key Rating Guide and are licensed to do business in the state wherein the
property subject to the policy is located.
Subsection 11.11 Maintenance of Mortgage Impairment Insurance Policy.
In the event that the Servicer shall obtain and maintain a mortgage
impairment or blanket policy issued by an issuer that has a Best rating of A:VI
insuring against hazard losses on all of Mortgaged Properties securing the
Mortgage Loans, then, to the extent such policy provides coverage in an amount
equal to the amount required pursuant to Subsection 11.10 and otherwise complies
with all other requirements of Subsection 11.10, the Servicer shall conclusively
be deemed to have satisfied its obligations as set forth in Subsection 11.10, it
being understood and agreed that such policy may contain a deductible clause, in
which case the Servicer shall, in the event that there shall not have been
maintained on the related Mortgaged Property or REO Property a policy complying
with Subsection 11.10, and there shall have been one or more losses which would
have been covered by such policy, deposit in the Custodial Account the amount
not
Exh 9-9
otherwise payable under the blanket policy because of such deductible clause. In
connection with its activities as servicer of the Mortgage Loans, the Servicer
agrees to prepare and present, on behalf of the Purchaser, claims under any such
blanket policy in a timely fashion in accordance with the terms of such policy.
Upon request of the Purchaser, the Servicer shall cause to be delivered to the
Purchaser a certified true copy of such policy and a statement from the insurer
thereunder that such policy shall in no event be terminated or materially
modified without thirty days prior written notice to the Purchaser.
Subsection 11.12 Fidelity Bond, Errors and Omissions Insurance.
The Servicer shall maintain, at its own expense, a blanket fidelity bond
and an errors and omissions insurance policy, with broad coverage with
responsible companies that would meet the requirements of FNMA or FHLMC on all
officers, employees or other persons acting in any capacity with regard to the
Mortgage Loans to handle funds, money, documents and papers relating to the
Mortgage Loans. The fidelity bond and errors and omissions insurance shall be in
the form of the Mortgage Banker's Blanket Bond and shall protect and insure the
Servicer against losses, including forgery, theft, embezzlement, fraud, errors
and omissions and negligent acts of such persons. Such fidelity bond shall also
protect and insure the Servicer against losses in connection with the failure to
maintain any insurance policies required pursuant to this Agreement and the
release and satisfaction of a Mortgage Loan without having obtained payment in
full of the indebtedness secured thereby. No provision of this Subsection 11.12
requiring the fidelity bond and errors and omissions insurance shall diminish or
relieve the Servicer from its duties and obligations as set forth in this
Agreement. The minimum coverage under any such bond and insurance policy shall
be at least equal to the corresponding amounts required by FNMA in the FNMA
Servicing Guide or by FHLMC in the FHLMC Servicers' and Servicers' Guide. The
Servicer shall deliver to the Purchaser a certified true copy of the fidelity
bond and insurance policy and a statement from the surety and the insurer that
such fidelity bond or insurance policy shall in no event be terminated or
materially modified without thirty days' prior written notice to the Purchaser.
Subsection 11.13 Title, Management and Disposition of REO Property.
In the event that title to the Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the person designated by the Purchaser, or in the
event such person is not authorized or permitted to hold title to real property
in the state where the REO Property is located, or would be adversely affected
under the "doing business" or tax laws of such state by so holding title, the
deed or certificate of sale shall be taken in the name of such Person or Persons
as shall be consistent with an opinion of counsel obtained by the Servicer from
an attorney duly licensed to practice law in the state where the REO Property is
located. Any Person or Persons holding such title other than the Purchaser shall
acknowledge in writing that such title is being held as nominee for the benefit
of the Purchaser.
The Seller shall either itself or through an agent selected by the Seller,
manage, conserve, protect and operate each REO Property (and may temporarily
rent the same) in the same manner that it manages, conserves, protects and
operates other foreclosed property for its own account, and in the same manner
that similar property in the same locality as the REO Property is
Exh 9-10
managed. If a REMIC election is or is to be made with respect to the arrangement
under which the Mortgage Loans and any REO Property are held, the Seller shall
manage, conserve, protect and operate each REO Property in a manner which does
not cause such REO Property to fail to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code or result in the receipt by such
REMIC of any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code or any "net income from foreclosure property" within
the meaning of Section 860G(c)(2) of the Code. The Seller shall cause each REO
Property to be inspected promptly upon the acquisition of title thereto and
shall cause each REO Property to be inspected at least annually thereafter. The
Seller shall make or cause to be made a written report of each such inspection.
Such reports shall be retained in the Mortgage File and copies thereof shall be
forwarded by the Seller to the Purchaser upon request. The Seller shall use its
best efforts to dispose of the REO Property as soon as possible and shall sell
such REO Property in any event within two years after title has been taken to
such REO Property, unless the Seller determines, and gives appropriate notice to
the Purchaser, that a longer period is necessary for the orderly liquidation of
such REO Property. Notwithstanding the foregoing, if a REMIC election is made
with respect to the arrangement under which the Mortgage Loans and the REO
Property are held, such REO Property shall be disposed of within three years or
such other period as may be permitted under Section 860G(a)(8) of the Code.
With respect to each REO Property, the Seller shall segregate and hold all
funds collected and received in connection with the operation of the REO
Property separate and apart from its own funds or general assets and shall
establish and maintain a separate REO Account for each REO Property in the form
of a non-interest bearing demand account, unless an Opinion of Counsel is
obtained by the Seller to the effect that the classification as a grantor trust
or REMIC for federal income tax purposes of the arrangement under which the
Mortgage Loans and the REO Property is held will not be adversely affected by
holding such funds in another manner. Each REO Account shall be established with
the Seller or, with the prior consent of the Purchaser, with a commercial bank,
a mutual savings bank or a savings association. The creation of any REO Account
shall be evidenced by a letter agreement substantially in the form of the
Custodial Account Letter Agreement attached as Exhibit 7 hereto. An original of
such letter agreement shall be furnished to any Purchaser upon request.
The Seller shall deposit or cause to be deposited, on a daily basis in each
REO Account all revenues received with respect to the related REO Property and
shall withdraw therefrom funds necessary for the proper operation, management
and maintenance of the REO Property, including the cost of maintaining any
hazard insurance pursuant to Subsection 11.10 hereof and the fees of any
managing agent acting on behalf of the Seller. The Seller shall not be entitled
to retain interest paid or other earnings, if any, on funds deposited in such
REO Account. On or before each Determination Date, the Seller shall withdraw
from each REO Account and deposit into the Custodial Account the net income from
the REO Property on deposit in the REO Account.
The Seller shall furnish to the Purchaser on each Distribution Date, an
operating statement for each REO Property covering the operation of each REO
Property. Such operating statement shall be accompanied by such other
information as the Purchaser shall reasonably request. Together with such
statement, the Seller shall furnish to the Purchaser a statement
Exh 9-11
covering the Seller's efforts in connection with the sale of such REO Property
and any rental of such REO Property incidental to the sale thereof for the
previous month.
Each REO Disposition shall be carried out by the Seller at such price and
upon such terms and conditions as the Seller deems to be in the best interest of
the Purchaser only with the prior written notice to Purchaser. If as of the date
title to any REO Property was acquired by the Seller there were outstanding
unreimbursed Servicing Advances with respect to the REO Property, the Servicer,
upon an REO Disposition of such REO Property, shall be entitled to reimbursement
for any related unreimbursed Servicing Advances from proceeds received in
connection with such REO Disposition. The proceeds from the REO Disposition, net
of any payment to the Seller as provided above, shall be deposited in the REO
Account and shall be transferred to the Custodial Account on the Determination
Date in the month following receipt thereof for distribution on the succeeding
Distribution Date in accordance with Subsection 11.14.
Subsection 11.14 Distributions.
On each Distribution Date, the Seller shall distribute to the Purchaser (A)
(i) all amounts credited to the related Custodial Account as of the close of
business on the preceding Determination Date, net of charges against or
withdrawals from the Custodial Account pursuant to Subsection 11.05., plus (ii)
all Monthly Advances, if any, which the Seller is obligated to distribute
pursuant to Subsection 11.21; minus (B) (x) any amounts attributable to
Principal Prepayments received after the last day of the calendar month
immediately preceding the related Distribution Date and (y) any amounts
attributable to Principal Prepayments collected but due on a Due Date or Dates
subsequent to the preceding Determination Date.
All distributions made to the Purchaser on each Distribution Date will be
made to the Purchaser of record, and shall be based on the Mortgage Loans owned
and held by the Purchaser as of the preceding Record Date. All remittances will
be made by wire transfer of immediately available funds to the account of the
Purchaser at a bank or other entity having appropriate facilities therefor, if
the Purchaser shall have so notified the Servicer or by check mailed to the
address of the Purchaser.
With respect to any remittance received by the Purchaser on or after the
second Business Day following the Business Day on which such payment was due,
the Servicer shall pay to the Purchaser interest on any such late payment at an
annual rate equal to the rate of interest as is publicly announced from time to
time at its principal office by HSBC Bank, N.A., New York, New York, as its
prime lending rate, adjusted as of the date of each change, plus three
percentage points, but in no event greater than the maximum amount permitted by
applicable law. Such interest shall be paid by the Servicer to the Purchaser on
the date such late payment is made and shall cover the period commencing with
the day following such second Business Day and ending with the Business Day on
which such payment is made, both inclusive. Such interest shall be remitted
along with such late payment. The payment by the Servicer of any such interest
shall not be deemed an extension of time for payment or a waiver of any Event of
Default by the Servicer.
Exh 9-12
Subsection 11.15 Remittance Reports.
No later than the fifth Business Day of each month, the Servicer shall
furnish to the Purchaser or its designee the monthly data in an acceptable
electronic format in which the electronic data will be sent to a secured website
approved by HSBC for retrieval by the Purchaser or on hard copy, together with
such other information with respect to the Mortgage Loans as the Purchaser may
reasonably require to allocate distributions made pursuant to this Agreement and
provide appropriate statements with respect to such distribution.
Subsection 11.16 Statements to the Purchaser.
Upon Purchaser's request, the Servicer shall forward to the Purchaser or
its designee a statement prepared by the Servicer setting forth the status of
the Custodial Account as of the close of business on such Distribution Date and
showing, for the period covered by such statement, the aggregate amount of
deposits into and withdrawals from the Custodial Account of each category of
deposit specified in Subsection 11.04 and each category of withdrawal specified
in Subsection 11.05, and such statement shall also include the following:
In addition, not more than sixty days after the end of each calendar year,
the Servicer shall furnish to each Person who was the Purchaser at any time
during such calendar year, (i) as to the aggregate of remittances for the
applicable portion of such year, an annual statement in accordance with the
requirements of applicable federal income tax law, and (ii) listing of the
principal balances of the Mortgage Loans outstanding at the end of such calendar
year.
The Servicer shall prepare and file any and all tax returns, information
statements or other filings required to be delivered to any governmental taxing
authority or to any Purchaser pursuant to any applicable law with respect to the
Mortgage Loans and the transactions contemplated hereby. In addition, the
Servicer shall provide the Purchaser with such information concerning the
Mortgage Loans as is necessary for the Purchaser to prepare its federal income
tax return as any Purchaser may reasonably request from time to time.
Subsection 11.17 Real Estate Owned Reports.
The Servicer shall furnish to the Purchaser a statement covering the
Servicer's efforts in connection with the sale of such REO Property and any
rental of such REO Property incidental to the sale thereof for the previous
month, together with the operating statement. Such statement shall be
accompanied by such other information as the Purchaser shall reasonably request.
Subsection 11.18 Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Purchaser pursuant to a deed-in-lieu of foreclosure, the Servicer
shall submit to the Purchaser a liquidation report with respect to such
Mortgaged Property.
Subsection 11.19 Assumption Agreements.
The Servicer shall, to the extent it has knowledge of any conveyance or
prospective conveyance by any Mortgagor of the Mortgaged Property (whether by
absolute conveyance or
Exh 9-13
by contract of sale, and whether or not the Mortgagor remains or is to remain
liable under the Mortgage Note and/or the Mortgage), exercise its rights to
accelerate the maturity of such Mortgage Loan under any "due-on-sale" clause
applicable thereto; provided, however, that the Servicer shall not exercise any
such rights if prohibited by law from doing so or if the exercise of such rights
would impair or threaten to impair any recovery under the related Primary
Insurance Policy or LPMI Policy, if any. If the Servicer reasonably believes it
is unable under applicable law to enforce such "due-on-sale" clause, the
Servicer shall enter into an assumption agreement with the person to whom the
Mortgaged Property has been conveyed or is proposed to be conveyed, pursuant to
which such person becomes liable under the Mortgage Note and, to the extent
permitted by applicable state law, the Mortgagor remains liable thereon. Where
an assumption is allowed pursuant to this Subsection 11.19, the Servicer, with
the prior written consent of the insurer under the Primary Insurance Policy or
LPMI Policy, if any, is authorized to enter into a substitution of liability
agreement with the person to whom the Mortgaged Property has been conveyed or is
proposed to be conveyed pursuant to which the original Mortgagor is released
from liability and such Person is substituted as Mortgagor and becomes liable
under the related Mortgage Note. Any such substitution of liability agreement
shall be in lieu of an assumption agreement.
In connection with any such assumption or substitution of liability, the
Servicer shall follow the underwriting practices and procedures of prudent
mortgage lenders in the state in which the related Mortgaged Property is
located. With respect to an assumption or substitution of liability, the
Mortgage Interest Rate, the amount of the Monthly Payment, and the final
maturity date of such Mortgage Note may not be changed. The Servicer shall
notify the Purchaser that any such substitution of liability or assumption
agreement has been completed by forwarding to the Purchaser the original of any
such substitution of liability or assumption agreement, which document shall be
added to the related Mortgage File and shall, for all purposes, be considered a
part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. Any fee collected by the Servicer for
entering into an assumption or substitution of liability agreement in excess of
1% of the outstanding principal balance of the Mortgage Loan shall be deposited
in the Custodial Account pursuant to Subsection 11.04.
Notwithstanding the foregoing paragraphs of this Subsection or any other
provision of this Agreement, the Servicer shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or any assumption which the
Servicer may be restricted by law from preventing, for any reason whatsoever.
For purposes of this Subsection 11.19, the term "assumption" is deemed to also
include a sale of the Mortgaged Property subject to the Mortgage that is not
accompanied by an assumption or substitution of liability agreement.
Subsection 11.20 Satisfaction of Mortgages and Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will immediately notify the Purchaser
by a certification of a servicing officer of the Servicer (a "Servicing
Officer"), which certification shall include a statement to the effect that all
amounts received or to be received in connection with such payment which are
required to be
Exh 9-14
deposited in the Custodial Account pursuant to Subsection 11.04 have been or
will be so deposited, and shall request execution of any document necessary to
satisfy the Mortgage Loan and delivery to it of the portion of the Mortgage File
held by the Purchaser or the Purchaser's designee. Upon receipt of such
certification and request, the Purchaser, shall promptly release the related
mortgage documents to the Servicer and the Servicer shall prepare and process
any satisfaction or release. No expense incurred in connection with any
instrument of satisfaction or deed of reconveyance shall be chargeable to the
Custodial Account or the Purchaser.
In the event the Servicer satisfies or releases a Mortgage without having
obtained payment in full of the indebtedness secured by the Mortgage or should
it otherwise prejudice any right the Purchaser may have under the mortgage
instruments, the Servicer, upon written demand, shall remit to the Purchaser the
then outstanding principal balance of the related Mortgage Loan by deposit
thereof in the Custodial Account. The Servicer shall maintain the fidelity bond
insuring the Servicer against any loss it may sustain with respect to any
Mortgage Loan not satisfied in accordance with the procedures set forth herein.
From time to time and as appropriate for the servicing or foreclosure of
the Mortgage Loan, including, for this purpose, collection under any Primary
Insurance Policy or LPMI Policy, the Purchaser shall, upon request of the
Servicer and delivery to the Purchaser of a servicing receipt signed by a
Servicing Officer, release the requested portion of the Mortgage File held by
the Purchaser to the Servicer. Such servicing receipt shall obligate the
Servicer to return the related Mortgage documents to the Purchaser when the need
therefor by the Servicer no longer exists, unless the Mortgage Loan has been
liquidated and the Liquidation Proceeds relating to the Mortgage Loan have been
deposited in the Custodial Account or the Mortgage File or such document has
been delivered to an attorney, or to a public trustee or other public official
as required by law, for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Mortgaged Property either judicially or
non-judicially, and the Servicer has delivered to the Purchaser a certificate of
a Servicing Officer certifying as to the name and address of the Person to which
such Mortgage File or such document was delivered and the purpose or purposes of
such delivery. Upon receipt of a certificate of a Servicing Officer stating that
such Mortgage Loan was liquidated, the servicing receipt shall be released by
the Purchaser to the Servicer.
Subsection 11.21 Servicing Compensation.
As compensation for its services hereunder, the Servicer shall be entitled
to withdraw from the Custodial Account or to retain from interest payments on
the Mortgage Loans the amounts provided for as the Servicer's Servicing Fee.
Additional servicing compensation in the form of assumption fees, as provided in
Subsection 11.19, and late payment charges or otherwise shall be retained by the
Servicer to the extent not required to be deposited in the Custodial Account.
The Servicer shall be required to pay all expenses incurred by it in connection
with its servicing activities hereunder and shall not be entitled to
reimbursement therefor except as specifically provided for.
Exh 9-15
Subsection 11.22 Notification of Adjustments.
On each Adjustment Date, the Servicer shall make interest rate adjustments
for each Adjustable Rate Mortgage Loan in compliance with the requirements of
the related Mortgage and Mortgage Note. The Servicer shall execute and deliver
the notices required by each Mortgage and Mortgage Note regarding interest rate
adjustments. The Servicer also shall provide timely notification to the
Purchaser of all applicable data and information regarding such interest rate
adjustments and the Servicer's methods of implementing such interest rate
adjustments. Upon the discovery by the Servicer or the Purchaser that the
Servicer has failed to adjust a Mortgage Interest Rate or a Monthly Payment
pursuant to the terms of the related Mortgage Note and Mortgage, the Servicer
shall immediately deposit in the Custodial Account from its own funds the amount
of any interest loss caused thereby without reimbursement therefor.
Subsection 11.23 Statement as to Compliance.
The Servicer will deliver to the Purchaser not later than 90 days following
the end of each fiscal year of the Seller, which as of each Closing Date ends on
the last day in December in each calendar year, an Officers' Certificate
stating, as to each signatory thereof, that (i) a review of the activities of
the Servicer during the preceding year and of performance under this Agreement
has been made under such officers' supervision and (ii) to the best of such
officers' knowledge, based on such review, the Servicer has fulfilled all of its
obligations under this Agreement throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officer and the nature and status thereof. Copies of such
statement shall be provided by the Purchaser to any Person identified as a
prospective purchaser of the Mortgage Loans. The Purchaser shall notify the
Servicer prior to providing any such copies. In the event that the Servicer has
delegated any servicing responsibilities with respect to the Mortgage Loans to a
Subservicer, the Servicer shall deliver an officer's certificate of the
Subservicer as described above as to each Subservicer as and when required with
respect to the Servicer.
Subsection 11.24 Annual Independent Certified Public Accountants' Servicing
Report.
Not later than 90 days following the end of each fiscal year of the Seller,
the Seller at its expense shall cause a firm of independent public accountants
(which may also render other services to the Seller) which is a member of the
American Institute of Certified Public Accountants to furnish a statement to the
Purchaser or its designee to the effect that such firm has examined certain
documents and records relating to the servicing of the Mortgage Loans under this
Agreement or of mortgage loans under pooling and servicing agreements (including
the Mortgage Loans and this Agreement) substantially similar one to another
(such statement to have attached thereto a schedule setting forth the pooling
and servicing agreements covered thereby) and that, on the basis of such
examination conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers, such firm confirms that such servicing
has been conducted in compliance with such pooling and servicing agreements
except for such significant exceptions or errors in records that, in the opinion
of such firm, the Uniform Single Attestation Program for Mortgage Bankers
requires it to report. Copies of such statement
Exh 9-16
shall be provided by the Purchaser to any Person identified as a prospective
purchaser of the Mortgage Loans.
In the event that the Servicer has delegated any servicing responsibilities
with respect to the Mortgage Loans to a Subservicer, the Servicer shall provide
such statement of the Subservicer as described above as to each Subservicer as
and when required with respect to the Servicer.
Subsection 11.25 Access to Certain Documentation.
The Servicer shall provide to the Office of Thrift Supervision, the FDIC
and any other federal or state banking or insurance regulatory authority that
may exercise authority over the Purchaser access to the documentation regarding
the Mortgage Loans serviced by the Servicer required by applicable laws and
regulations. Such access shall be afforded without charge, but only upon
reasonable request and during normal business hours at the offices of the
Servicer. In addition, access to the documentation will be provided to the
Purchaser and any Person identified to the Servicer by the Purchaser without
charge, upon reasonable request during normal business hours at the offices of
the Servicer.
Subsection 11.26 Reserved.
Subsection 11.27 Reports and Returns to be Filed by the Servicer.
During the Preliminary Servicing Period, the Servicer shall file
information reports with respect to the receipt of mortgage interest received in
a trade or business, reports of foreclosures and abandonments of any Mortgaged
Property and information returns relating to cancellation of indebtedness income
with respect to any Mortgaged Property as required by Sections 6050H, 6050J and
6050P of the Code. Such reports shall be in form and substance sufficient to
meet the reporting requirements imposed by such Sections 6050H, 6050J and 6050P
of the Code.
Subsection 11.28 Superior Liens.
With respect to each second lien Mortgage Loan, the Servicer shall use
reasonable efforts, consistent with Accepted Servicing Practices and the
practices employed by the Servicer in servicing mortgage loans for its own
portfolio, to notify any known superior lienholder in writing of the existence
of the Mortgage Loan and request notification of any action to be taken against
the Mortgagor or the Mortgaged Property by the superior lienholder, and take all
other action required by Accepted Servicing Practices.
If the Seller is notified that any superior lienholder has accelerated or
intends to accelerate the obligations secured by the superior lien, or has
declared or intends to declare a default under the superior mortgage or the
promissory note secured thereby, or has filed or intends to file an election to
have the Mortgaged Property sold or foreclosed, the Seller shall take whatever
actions are necessary to protect the interests of the Purchaser, and/or to
preserve the security of the related Mortgage Loan, subject to any requirements
applicable to real estate mortgage investment conduits pursuant to the Internal
Revenue Code. The Seller shall make a Servicing Advance of the funds necessary
to cure the default or reinstate the superior lien if the Seller determines that
such Servicing Advance is in the best interests of the Purchaser. The
Exh 9-17
Seller shall not make such a Servicing Advance except to the extent that it
determines that such advance would not be a Nonrecoverable Servicing Advance
from Liquidation Proceeds on the related Mortgage Loan. The Seller shall
thereafter take such action as is necessary to recover the amount so advanced.
Subsection 11.29 Compliance with REMIC Provisions.
If a REMIC election has been made with respect to the arrangement under
which the Mortgage Loans and REO Property are held, the Seller shall not take
any action, cause the REMIC to take any action or fail to take (or fail to cause
to be taken) any action that, under the REMIC Provisions, if taken or not taken,
as the case may be, could (i) endanger the status of the REMIC as a REMIC or
(ii) result in the imposition of a tax upon the REMIC (including but not limited
to the tax on "prohibited transactions" as defined in Section 860F(a)(2) of the
Code and the tax on "contributions" to a REMIC set forth in Section 860G(d) of
the Code) unless the Seller has received an Opinion of Counsel (at the expense
of the party seeking to take such action) to the effect that the contemplated
action will not endanger such REMIC status or result in the imposition of any
such tax.
Subsection 11.30 Monthly Advances by the Seller.
(a) Not later than the close of business on the Business Day preceding
each Distribution Date, the Seller shall deposit in the Custodial Account an
amount equal to all payments not previously advanced by the Seller, whether or
not deferred pursuant to Section 11.01, of principal (due after the Cut-off
Date) and interest not allocable to the period prior to the Cut-off Date, at the
Mortgage Interest Rate net of the Servicing Fee, which were due on a Mortgage
Loan and delinquent at the close of business on the related Determination Date.
(b) The obligation of the Seller to make such Monthly Advances is
mandatory, notwithstanding any other provision of this Agreement, and, with
respect to any Mortgage Loan or REO Property, shall continue until a Final
Recovery Determination in connection therewith; provided that, notwithstanding
anything herein to the contrary, no Monthly Advance shall be required to be made
hereunder by the Seller if such Monthly Advance would, if made, constitute a
Nonrecoverable Monthly Advance. The determination by the Seller that it has made
a Nonrecoverable Monthly Advance or that any proposed Monthly Advance, if made,
would constitute a Nonrecoverable Monthly Advance, shall be evidenced by an
Officers' Certificate delivered to the Purchaser.
Exh 9-18
EXHIBIT 10
FORM OF
FORM OF ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
This is an Assignment, Assumption and Recognition Agreement (this "AAR
Agreement") made as of _____, 200_, among HSBC Bank, National Association (the
"Assignor"), ____________________ (the "Assignee") [not individually but solely
as trustee on behalf of the holders of the ___________, Series ____,
Asset-Backed Certificates] and _______________ (the "Company").
In consideration of the mutual promises contained herein the parties hereto
agree that the residential mortgage loans (the "Assigned Loans") listed on
Attachment 1 annexed hereto (the "Assigned Loan Schedule") purchased by Assignor
from Company pursuant to (a) the Master Mortgage Loan Purchase and Servicing
Agreement, dated as of _____, 200_, between Assignor and Company (the "Purchase
Agreement"), shall be subject to the terms of this AAR Agreement. Capitalized
terms used herein but not defined shall have the meanings ascribed to them in
the Purchase Agreement.
Assignment and Assumption
1. Assignor hereby grants, transfers and assigns to Assignee all of the
right, title and interest of Assignor in the Assigned Loans and, as they relate
to the Assigned Loans, all of its right, title and interest in, to and under the
Purchase Agreement. Assignor specifically reserves and does not assign to
Assignee any right title and interest in, to or under any Mortgage Loans subject
to the Agreements other than those set forth on Attachment 1.
Recognition of the Company
2. [For Securitization Transactions include this sentence: From and after
the date hereof, the Company shall and does hereby recognize that the Assignee
will transfer the Mortgage Loans and assign its rights under the Purchase
Agreement (solely to the extent set forth herein) and this AAR Agreement to
______________________________ (the "Trust") created pursuant to a Pooling and
Servicing Agreement, dated as of _______________, 200__ (the "Pooling
Agreement"), among the Assignee as trustee (including its successors in interest
and any successor trustees under the Pooling Agreement), the Assignor and
_________________________, as servicer (including its successors in interest and
any successor servicer under the Pooling Agreement, the "Servicer").] The
Company hereby acknowledges and agrees that from and after the date hereof (i)
the [Trust][Assignee] will be the owner of the Mortgage Loans, (ii) the Company
shall look solely to the [Trust][Assignee] for performance of any obligations of
the Assignor insofar as they relate to the enforcement of the representations,
warranties and covenants with respect to the Mortgage Loans, (iii) the
[Assignee][Trust (including the Assignee and the Servicer acting on the Trust's
behalf)] shall have all the rights and remedies available to the Assignor,
insofar as they relate to the Mortgage Loans, under the Purchase Agreement,
including, without limitation, the enforcement of the document delivery
requirements and remedies with respect to breaches of representations and
warranties set forth in
Exh 10-1
the Purchase Agreement, and shall be entitled to enforce all of the obligations
of the Company thereunder insofar as they relate to the Mortgage Loans, and (iv)
all references to the Purchaser (insofar as they relate to the rights, title and
interest and, with respect to obligations of the Purchaser, only insofar as they
relate to the enforcement of the representations, warranties and covenants of
the Company) under the Purchase Agreement insofar as they relate to the Mortgage
Loans, shall be deemed to refer to the [Assignee] [Trust (including the Assignee
and the Servicer acting on the Trust's behalf)]. Neither the Company nor the
Assignor shall amend or agree to amend, modify, waiver, or otherwise alter any
of the terms or provisions of the Purchase Agreement which amendment,
modification, waiver or other alteration would in any way affect the Mortgage
Loans or the Company's performance under the Purchase Agreement with respect to
the Mortgage Loans without the prior written consent of the Assignee.
Representations; Warranties and Covenants
3. Assignor warrants and represents to Assignee and Company as of the date
hereof:
a. Attached hereto as Attachment 2 is a true and accurate copy of
the Purchase Agreement, which agreement is in full force and
effect as of the date hereof and the provisions of which have not
been waived, amended or modified in any respect, nor has any
notice of termination been given thereunder;
b. Assignor is the lawful owner of the Assigned Loans with full
right to transfer the Assigned Loans and any and all of its
interests, rights and obligations under the Purchase Agreement as
they relate to the Assigned Loans, free and clear of any and all
liens, claims and encumbrances; and upon the transfer of the
Assigned Loans to Assignee as contemplated herein, Assignee shall
have good title to each and every Assigned Loan, as well as any
and all of Assignor's interests, rights and obligations under the
Purchase Agreement as they relate to the Assigned Loans, free and
clear of any and all liens, claims and encumbrances;
c. Assignor has not received notice of, and has no knowledge of, any
offsets, counterclaims or other defenses available to Company
with respect to the Assigned Loans or the Purchase Agreement;
d. Assignor is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
formation, and has all requisite power and authority to acquire,
own and sell the Assigned Loans;
e. Assignor has full power and authority to execute, deliver and
perform its obligations under this AAR Agreement, and to
consummate the transactions set forth herein. The consummation of
the transactions contemplated by this AAR Agreement is in the
ordinary course of Assignor's business and will not conflict
with, or result in a breach of, any
Exh 10-2
of the terms, conditions or provisions of Assignor's charter or
by-laws or any legal restriction, or any material agreement or
instrument to which Assignor is now a party or by which it is
bound, or result in the violation of any law, rule, regulation,
order, judgment or decree to which Assignor or its property is
subject. The execution, delivery and performance by Assignor of
this AAR Agreement and the consummation by it of the transactions
contemplated hereby, have been duly authorized by all necessary
action on the part of Assignor. This AAR Agreement has been duly
executed and delivered by Assignor and, upon the due
authorization, execution and delivery by Assignee and Company,
will constitute the valid and legally binding obligation of
Assignor enforceable against Assignor in accordance with its
terms except as enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally,
and by general principles of equity regardless of whether
enforceability is considered in a proceeding in equity or at law;
f. No material consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental entity
is required to be obtained or made by Assignor in connection with
the execution, delivery or performance by Assignor of this AAR
Agreement, or the consummation by it of the transactions
contemplated hereby; and
g. There is no action, suit, proceeding, investigation or litigation
pending or, to Assignor's knowledge, threatened, which either in
any instance or in the aggregate, if determined adversely to
Assignor, would adversely affect Assignee's execution or delivery
of, or the enforceability of, this AAR Agreement, or the
Assignor's ability to perform its obligations under this AAR
Agreement.
4. Assignee warrants and represents to, and covenants with, Assignor and
Company as of the date hereof:
a. Assignee is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has
all requisite power and authority to acquire and [own] [hold] the
Assigned Loans [as trustee on behalf of the Trust];
b. Assignee has full power and authority to execute, deliver and
perform its obligations under this AAR Agreement, and to
consummate the transactions set forth herein. The consummation of
the transactions contemplated by this AAR Agreement is in the
ordinary course of Assignee's business and will not conflict
with, or result in a breach of, any of the terms, conditions or
provisions of Assignee's organizational documentation or any
legal restriction, or any material agreement or instrument to
which Assignee is now a party or by which it is bound, or
Exh 10-3
result in the violation of any law, rule, regulation, order,
judgment or decree to which Assignee or its property is subject.
The execution, delivery and performance by Assignee of this AAR
Agreement and the consummation by it of the transactions
contemplated hereby, have been duly authorized by all necessary
action on the part of Assignee. This AAR Agreement has been duly
executed and delivered by Assignee and, upon the due
authorization, execution and delivery by Assignor and Company,
will constitute the valid and legally binding obligation of
Assignee enforceable against Assignee in accordance with its
terms except as enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally,
and by general principles of equity regardless of whether
enforceability is considered in a proceeding in equity or at law;
c. No material consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental entity
is required to be obtained or made by Assignee in connection with
the execution, delivery or performance by Assignee of this AAR
Agreement, or the consummation by it of the transactions
contemplated hereby; and
d. There is no action, suit, proceeding, investigation or litigation
pending or, to Assignee's knowledge, threatened, which either in
any instance or in the aggregate, if determined adversely to
Assignee, would adversely affect Assignee's execution or delivery
of, or the enforceability of, this AAR Agreement, or the
Assignee's ability to perform its obligations under this AAR
Agreement.
5. Company warrants and represents to, and covenants with, Assignor and
Assignee as of the date hereof:
a. Attached hereto as Attachment 2 is a true and accurate copy of
the Purchase Agreement, which agreement is in full force and
effect as of the date hereof and the provisions of which have not
been waived, amended or modified in any respect, nor has any
notice of termination been given thereunder;
b. Company is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, and has
all requisite power and authority to perform its obligations
under the Purchase Agreement;
c. Company has full corporate power and authority to execute,
deliver and perform its obligations under this AAR Agreement, and
to consummate the transactions set forth herein. The consummation
of the transactions contemplated by this AAR Agreement is in the
ordinary course of Company's business and will not conflict with,
or result in a breach of, any of the terms, conditions or
provisions of Company's organizational documentation or any legal
restriction, or any material agreement or
Exh 10-4
instrument to which Company is now a party or by which it is
bound, or result in the violation of any law, rule, regulation,
order, judgment or decree to which Company or its property is
subject. The execution, delivery and performance by Company of
this AAR Agreement and the consummation by it of the transactions
contemplated hereby, have been duly authorized by all necessary
corporate action on the part of Company. This AAR Agreement has
been duly executed and delivered by Company, and, upon the due
authorization, execution and delivery by Assignor and Assignee,
will constitute the valid and legally binding obligation of
Company, enforceable against Company in accordance with its terms
except as enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally,
and by general principles of equity regardless of whether
enforceability is considered in a proceeding in equity or at law;
d. No consent, approval, order or authorization of, or declaration,
filing or registration with, any governmental entity is required
to be obtained or made by Company in connection with the
execution, delivery or performance by Company of this AAR
Agreement, or the consummation by it of the transactions
contemplated hereby;
e. There is no action, suit, proceeding, investigation or litigation
pending or, to Company's knowledge, threatened, which either in
any instance or in the aggregate, if determined adversely to
Company, would adversely affect Company's execution or delivery
of, or the enforceability of, this AAR Agreement, or the
Company's ability to perform its obligations under this AAR
Agreement; and
f. Pursuant to Section 12 of the Purchase Agreement, the Company
hereby represents and warrants, for the benefit of the Assignor,
the Assignee [and the Trust,] that the representations and
warranties set forth in Section 7.01 and 7.02 of the Purchase
Agreement, are true and correct as of the date hereof, except
that the representation and warranty set forth in Section 7.02(i)
shall, for purposes of this AAR Agreement, relate to the Mortgage
Loan Schedule attached hereto.
[Additional Representations and Warranties Necessary for
Securitization]
6. The Company hereby acknowledges and agrees that the remedies available
to the Assignor, the Assignee [and the Trust (including the Assignee and the
Servicer acting on the Trust's behalf)] in connection with any breach of the
representations and warranties made by the Company set forth in Section 4 hereof
shall be as set forth in Subsection 7.03 of the Purchase Agreement as if they
were set forth herein (including without limitation the repurchase and indemnity
obligations set forth therein).
Exh 10-5
7. [Notwithstanding any term hereof to the contrary, the execution and
delivery of this AAR Agreement by the Assignee is solely in its capacity as
trustee for the Trust and not individually, and any recourse against the
Assignee in respect of any obligations it may have under or pursuant to the
terms of this AAR Agreement shall be limited solely to the assets it may hold as
trustee of the Trust.]
Miscellaneous
8. All demands, notices and communications related to the Assigned Loans,
the Agreements and this AAR Agreement shall be in writing and shall be deemed to
have been duly given if personally delivered or mailed by registered mail,
postage prepaid, as follows:
a. In the case of Company,
[Company]
________________
_________________, ______________ ______
Attn: _____________
b. In the case of Assignor,
HSBC Bank USA, National Association
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: [__________]
c. In the case of Assignee,
[Assignee]
________________
_________________, ______________ ______
Attn: _____________
9. This AAR Agreement shall be construed in accordance with the laws of the
State of New York, without regard to conflicts of law principles, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
10. No term or provision of this AAR Agreement may be waived or modified
unless such waiver or modification is in writing and signed by the party against
whom such waiver or modification is sought to be enforced.
11. This AAR Agreement shall inure to the benefit of the successors and
assigns of the parties hereto. Any entity into which Assignor, Assignee or
Company may be merged or consolidated shall without the requirement for any
further writing, be deemed Assignor, Assignee or Company, respectively
hereunder.
Exh 10-6
12. This AAR Agreement shall survive the conveyance of the Assigned Loans
as contemplated in this AAR Agreement.
13. This AAR Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original and all such
counterparts shall constitute one and the same instrument.
14. In the event that any provision of this AAR Agreement conflicts with
any provision of the Purchase Agreement with respect to the Assigned Loans, the
terms of this AAR Agreement shall control.
Exh 10-7
IN WITNESS WHEREOF, the parties hereto have executed this AAR Agreement as
of the day and year first above written.
HSBC BANK USA, NATIONAL ASSOCIATION
Assignor
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
[ASSIGNEE]
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
[COMPANY]
Company
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Exh 10-8
ATTACHMENT 1
ASSIGNED LOAN SCHEDULE
Xxx 00-0
XXXXXXXXXX 0
XXXXXXXX XXXXXXXXX
Xxx 10-10
EXHIBIT 11
FORM OF INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement"), dated as of _____, 200_
(the "Settlement Date"), by and between HSBC Asset Securitization Corp., a
Delaware corporation (such entity, and its successors and assigns, being
referred to herein as the "Depositor") and [COMPANY] (the "Company").
The Depositor and the Company hereby recite and agree as follows:
RECITALS
1. HSBC Bank USA, National Association (the "Seller") has purchased certain
[adjustable]-rate, [first] lien mortgage loans (the "Mortgage Loans") from the
Company and intends to transfer all of its right, title and interest in and to
the Mortgage Loans to the _______________ (the "Trust") pursuant to the terms of
a Pooling and Servicing Agreement, dated as of _____, 200_ (the "Pooling and
Servicing Agreement"), by and among the Seller, the Depositor, _________ as
[master] servicer and ___________, as trustee of the Trust (the "Trustee").
2. In exchange for the Mortgage Loans, the Trust shall issue to the Seller
___________________________, Series _____, Asset-Backed Certificates (the
"Certificates") pursuant to the terms of the Pooling and Servicing Agreement.
3. In accordance with an Underwriting Agreement, dated _____, 200_ (the
"Underwriting Agreement"), the Depositor will sell to HSBC Securities (USA),
Inc. (the "Underwriter") the Certificates.
4. The Certificates will be offered and sold by the Underwriter pursuant to
the terms and conditions of the Underwriting Agreement, through the use of a
prospectus supplement to be dated as of the date of its printing but not later
than the Settlement Date (the "Prospectus Supplement") and a related prospectus
dated _____, 200_, (the "Base Prospectus" and together with the Prospectus
Supplement, the "Prospectus").
AGREEMENT
NOW THEREFORE, in consideration of the mutual promises herein made and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Representations and Warranties.
(a) The Company hereby represents and warrants to the Depositor, as of
the date of this Agreement, that:
Exh 11-11
(i) the Company has been duly organized and is validly existing
and in good standing as a [corporation] under the laws of the State of
__________, with full power and authority to enter into and perform
its obligations under this Agreement; and
(ii) this Agreement has been duly authorized, executed and
delivered by the Company and constitutes a legal, valid and binding
agreement of the Company, enforceable against it in accordance with
its terms, subject to (A) bankruptcy, insolvency, receivership,
conservatorship or other similar laws affecting creditors' rights
generally, (B) general principles of equity regardless of whether
enforcement is sought in a proceeding in equity or at law, and (C)
public policy considerations limiting the enforceability of provisions
of this Agreement that purport to provide indemnification from
liabilities under applicable securities laws.
(b) The Company represents and warrants to the Depositor that as of
the Settlement Date:
(i) the information set forth in the Prospectus Supplement under
[TO BE DETERMINED], (such information, the "Company Information") does
not contain an untrue statement of a material fact; and
(ii) the Company Information does not omit or fail to state any
material fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
(c) The Depositor hereby represents and warrants to the Company that
as of the date of this Agreement:
(ii) it is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has full
corporate power and authority to enter into and perform its
obligations under this Agreement; and
(iii) this Agreement has been duly authorized, executed and
delivered by the Depositor and constitutes the legal, valid and
binding agreement of the Depositor enforceable against the Depositor
in accordance with its terms, subject to (A) bankruptcy, insolvency,
receivership, conservatorship, reorganization, moratorium or other
similar laws affecting creditors' rights generally, (B) general
principals of equity regardless of whether enforcement is sought in a
proceeding in equity or at law, and (C) public policy considerations
limiting the enforceability of provisions of this Agreement that
purport to provide indemnification from penalties under applicable
securities laws.
2. Indemnification.
Exh 11-12
(a) Company (also referred to herein as the "Indemnifying Party")
agrees to indemnify and hold harmless the Depositor and each of its directors
and officers and affiliates and each person, if any, who controls the Depositor
within the meaning of Section 15 of the Securities Act of 1933, as amended (the
"Securities Act"), or Section 20 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (the "Indemnified Party") and any assignee
thereof, against any and all actual losses, claims, expenses, damages or
liabilities to which the Depositor or any such director, officer or controlling
person may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (x) any untrue statement of any material fact
contained in the Company Information or omission to state therein, a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which such statements were made,
not misleading (in each case, regardless of whether a final judgment has been
entered by a finder of fact) or (y) any material misstatement or omission
contained in the Prospectus Supplement regarding information or statistics
therein regarding the Mortgage Loans based on information correctly derived by
the Depositor or its affiliates and included in the Prospectus Supplement which
results or arises from information actually provided in writing to the Depositor
or its affiliates by Company; and will promptly upon request reimburse any such
reasonable legal or other expenses reasonably incurred by the Depositor or any
such director, officer or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action. This indemnity
agreement will be in addition to any liability which Company may otherwise have.
(b) Promptly after receipt by the Indemnified Party under this Section
2 of notice of the commencement of any action described therein, the Indemnified
Party will, if a claim in respect thereof is to be made against the Indemnifying
Party under this Section 2, notify the Indemnifying Party of the commencement
thereof, but the omission so to notify the Indemnifying Party will not relieve
the Indemnifying Party from any liability that it may have to the Indemnified
Party under this Agreement, except to the extent that such failure or delay in
notification materially prejudices the Indemnifying Party's defense of such
action or proceeding, and shall in no event relieve the Indemnifying Party from
any other obligation or liability which it may have to any Indemnified Person
otherwise than under this Agreement or with respect to any other action or
proceeding. In case any such action is brought against the 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 wish to do so, jointly with any other Indemnifying Party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
the Indemnified Party, and, after notice from the Indemnifying Party to the
Indemnified Party under this Section 2, the Indemnifying Party shall not be
liable for any legal or other expenses subsequently incurred by the Indemnified
Party in connection with the defense thereof other than reasonable out-of-pocket
costs of investigation.
(c) The Indemnified Party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of the Indemnified
Party unless: (i) the employment thereof has been specifically authorized by the
Indemnifying Party; (ii) the Indemnifying Party shall have been advised by such
counsel that there may be one or more legal defenses available to the
Indemnified Party which are different from or additional to those available to
the Indemnifying
Exh 11-13
Party and in the reasonable judgment of such counsel it is advisable for the
Indemnified Party to employ separate counsel (iii) a conflict exists between the
Indemnified Party and the Indemnifying Party (in which case the Indemnifying
Party will not have the right to direct the defense of such action on behalf of
the Indemnified Party) or (iv) the Indemnifying Party has failed to assume the
defense of such action and employ counsel reasonably satisfactory to the
Indemnified Party, in which case, if the Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense of such action on behalf of the Indemnified Party,
it being understood, however, the Indemnifying Party shall not, in connection
with any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to local counsel) at any time for the
Indemnified Party, which firm shall be designated in writing by the Depositor or
any of the Depositor's directors, officers or controlling persons.
(d) The Indemnified Party, as a condition of the indemnity agreements
contained herein, shall use its best efforts to cooperate with the Indemnifying
Party in the defense of any such action or claim. The Indemnifying Party shall
not be liable for any settlement of any such action effected without its written
consent (which consent shall not be unreasonably withheld), but if settled with
its written consent or if there be a final judgment for the plaintiff in any
such action, the Indemnifying Party agrees to indemnify and hold harmless the
Indemnified Party from and against any loss or liability (to the extent set
forth herein as applicable) by reason of such settlement or judgment.
3. Successors and Assigns, Additional Information. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. No party hereto may assign either this Agreement or any
of its rights, interests or obligations hereunder without the prior written
approval of the other parties hereto.
4. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, covenants, indemnities and other statements of the
Depositor and the Company and their respective officers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of the Depositor or the Company and will
survive delivery of and payment for the Certificates. The provisions of Section
4 hereof shall survive the termination or cancellation of this Agreement.
5. Notices. All demands, notices and communications hereunder shall be in
writing, shall be effective only upon receipt and shall, if sent to the
Depositor, be addressed to it at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: President, with a copy to General Counsel; or, if sent to the
Company, be addressed to it at, [ADDRESS], Attn: [_________].
6. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Neither this Agreement nor
any term hereof may be changed, waived, discharged or terminated except by a
writing signed by the party against whom enforcement of such change, waiver,
discharge or termination is sought. This Agreement may be signed in any number
of counterparts, each of which shall be deemed an
Exh 11-14
original, which taken together shall constitute one and the same instrument.
This Agreement supersedes all prior or contemporaneous agreements and
understandings relating to the subject matter hereof.
7. Severability of Provisions. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
Exh 11-15
IN WITNESS WHEREOF, the Depositor and the Company have caused this
Agreement to be duly executed by their respective officers as of the day and
year first above written.
HSBC ASSET SECURITIZATION CORP.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
[COMPANY]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Exh 11-16
EXHIBIT 12
MORTGAGE LOAN DOCUMENTS
(a) the original Mortgage Note bearing all intervening endorsements
necessary to show a complete chain of endorsements from the
original payee, endorsed in blank, "Pay to the order of
_____________, without recourse", and, if previously endorsed,
signed in the name of the last endorsee by a duly qualified
officer of the last endorsee. If the Mortgage Loan was acquired
by the last endorsee in a merger, the endorsement must be by
"[name of last endorsee], successor by merger to [name of
predecessor]". If the Mortgage Loan was acquired or originated by
the last endorsee while doing business under another name, the
endorsement must be by "[name of last endorsee], formerly known
as [previous name]";
(b) the original Assignment of Mortgage for each Mortgage Loan, in
form and substance acceptable for recording. The Mortgage shall
be assigned, with assignee's name left blank. If the Mortgage
Loan was acquired by the last assignee in a merger, the
Assignment of Mortgage must be made by "[name of last assignee],
successor by merger to [name of predecessor]". If the Mortgage
Loan was acquired or originated by the last assignee while doing
business under another name, the Assignment of Mortgage must be
by "[name of last assignee], formerly known as [previous name];
(c) the original of each guarantee executed in connection with the
Mortgage Note, if any;
(d) the original recorded Mortgage, with evidence of recording
thereon. If in connection with any Mortgage Loan, the Seller has
not delivered or caused to be delivered the original Mortgage
with evidence of recording thereon on or prior to the related
Closing Date because of a delay caused by the public recording
office where such Mortgage has been delivered for recordation or
because such Mortgage has been lost or because such public
recording office retains the original recorded Mortgage, the
Seller shall deliver or cause to be delivered to the Custodian,
(i) in the case of a delay caused by the public recording office,
a copy of such Mortgage certified by the Seller, escrow agent,
title insurer or closing attorney to be a true and complete copy
of the original recorded Mortgage and (ii) in the case where a
public recording office retains the original recorded Mortgage or
in the case where a Mortgage is lost after recordation in a
public recording office, a
Exh 12-1
copy of such Mortgage certified by such public recording office
to be a true and complete copy of the original recorded Mortgage;
(e) originals or a certified copy of each modification agreement, if
any;
(f) the originals of all intervening assignments of mortgage with
evidence of recording thereon evidencing a complete chain of
ownership from the originator of the Mortgage Loan to the last
assignee, or if any such intervening assignment of mortgage has
not been returned from the applicable public recording office or
has been lost or if such public recording office retains the
original recorded intervening assignments of mortgage, a
photocopy of such intervening assignment of mortgage, together
with (i) in the case of a delay caused by the public recording
office, an Officer's Certificate of the Seller, escrow agent,
closing attorney or the title insurer insuring the Mortgage
stating that such intervening assignment of mortgage has been
delivered to the appropriate public recording office for
recordation and that such original recorded intervening
assignment of mortgage or a copy of such intervening assignment
of mortgage certified by the appropriate public recording office
to be a true and complete copy of the original recorded
intervening assignment of mortgage will be promptly delivered to
the Custodian upon receipt thereof by the party delivering the
Officer's Certificate or by the Seller; or (ii) in the case of an
intervening assignment of mortgage where a public recording
office retains the original recorded intervening assignment of
mortgage or in the case where an intervening assignment of
mortgage is lost after recordation in a public recording office,
a copy of such intervening assignment of mortgage with recording
information thereon certified by such public recording office to
be a true and complete copy of the original recorded intervening
assignment of mortgage;
(g) if the Mortgage Note, the Mortgage, any Assignment of Mortgage or
any other related document has been signed by a Person on behalf
of the Mortgagor, the copy of the power of attorney or other
instrument that authorized and empowered such Person to sign;
(h) the original lender's title insurance policy (or a marked title
insurance commitment, in the event that an original lender's
title insurance policy has not yet been issued) in the form of an
ALTA mortgage title insurance policy, containing each of the
endorsements required by FNMA and insuring the Purchaser and its
successors and assigns as to the first priority lien of the
Mortgage in the original principal amount of the Mortgage Loan;
Exh 12-2
(i) original of any security agreement, chattel mortgage or
equivalent document executed in connection with the Mortgage, if
any; and
(j) with respect to any Co-op Loan: (i) the Co-op Lease and the
assignment of such Co-op Lease, with all intervening assignments
showing a complete chain of title and an assignment thereof by
Seller; (ii) the stock certificate together with an undated stock
power relating to such stock certificate executed in blank; (iii)
the recognition agreement of the interests of the mortgagee with
respect to the Co-op Loan by the residential cooperative housing
corporation, the stock of which was pledged by the related
Mortgagor to the originator of such Co-op Loan; and (iv) copies
of the financial statement filed by the originator as secured
party and, if applicable, a filed UCC-3 assignment of the subject
security interest showing a complete chain of title, together
with an executed UCC-3 assignment of such security interest by
the Seller in a form sufficient for filing.
Exh 12-3
EXHIBIT 13
UNDERWRITING GUIDELINES
Exh 13-1
