MORTGAGE LOAN PURCHASE AGREEMENT
This is a Mortgage Loan Purchase Agreement (this "Agreement"), dated June
28, 2006, among FREMONT INVESTMENT & LOAN, a California state-chartered
industrial bank (the "Responsible Party"), XXXXXXXXXX SECURITIES, LP, a Delaware
limited partnership (the "Seller") and STANWICH ASSET ACCEPTANCE COMPANY,
L.L.C., a Delaware limited liability company (the "Purchaser").
Preliminary Statement
The Seller intends to sell the Mortgage Loans (as hereinafter identified)
to the Purchaser on the terms and subject to the conditions set forth in this
Agreement. The Purchaser intends to deposit the Mortgage Loans into a mortgage
pool comprising the Trust Fund. The Trust Fund will be evidenced by a single
series of mortgage pass-through certificates designated as Xxxxxxxxxx Mortgage
Loan Trust, Series 2006-FRE1 Asset-Backed Pass-Through Certificates (the
"Certificates"). The Certificates will consist of eighteen classes of
certificates and will be issued pursuant to a Pooling and Servicing Agreement,
dated as of June 1, 2006 (the "Pooling and Servicing Agreement"), among the
Depositor as depositor, Fremont Investment & Loan as servicer (the "Servicer")
and Xxxxx Fargo Bank, N.A. as trustee (the "Trustee"). Capitalized terms used
but not defined herein shall have the meanings set forth in the Pooling and
Servicing Agreement.
The parties hereto agree as follows:
SECTION 1 Agreement to Purchase. The Seller agrees to sell and the
Purchaser agrees to purchase, on or before June 28, 2006 (the "Closing Date"),
certain adjustable-rate and fixed-rate, interest-only, balloon and
fully-amortizing, first lien and second lien, closed-end, subprime residential
mortgage loans purchased by the Seller from the Responsible Party (the "Mortgage
Loans"), having a scheduled principal balance as of the close of business on
June 1, 2006 (the "Cut-off Date") of $1,171,839,227.32 (the "Closing Balance"),
after giving effect to all payments due on the Mortgage Loans on or before the
Cut-off Date, whether or not received including the right to any Prepayment
Charges payable by the related Mortgagors in connection with any Principal
Prepayments on the Mortgage Loans, on an Originator servicing-retained basis.
SECTION 2 Mortgage Loan Schedule. The Purchaser and the Seller have
agreed upon which of the Mortgage Loans are to be purchased by the Purchaser
pursuant to this Agreement and the Seller will prepare or cause to be prepared
on or prior to the Closing Date a final schedule (the "Closing Schedule") that
shall describe such Mortgage Loans and set forth all of the Mortgage Loans to be
purchased under this Agreement, including the Prepayment Charges. The Closing
Schedule will conform to the requirements set forth in this Agreement and, with
respect to the Mortgage Loans subject to this Agreement, to the definition of
"Mortgage Loan Schedule" under the Pooling and Servicing Agreement. The Closing
Schedule shall be used as part of the Mortgage Loan Schedule under the Pooling
and Servicing Agreement and shall be based on information provided by the
Originator.
SECTION 3 Consideration.
(a) In consideration for the Mortgage Loans to be purchased hereunder
the Purchaser shall, as described in Section 8, pay to or upon the order of the
Seller in immediately available funds an amount (the "Aggregate Purchase Price")
equal to (i) the net sale proceeds of the Class A Certificates and the Mezzanine
Certificates and (ii) the Class CE Certificates and the Class P Certificates.
(b) The Purchaser or any assignee, transferee or designee of the
Purchaser shall be entitled to all scheduled payments of principal due after the
Cut-off Date, all other payments of principal due and collected after the
Cut-off Date, and all payments of interest on the Mortgage Loans allocable to
the period after the Cut-off Date. All scheduled payments of principal and
interest due on or before the Cut-off Date and collected after the Cut-off Date
shall belong to the Seller.
(c) Pursuant to the Pooling and Servicing Agreement, the Purchaser
will assign all of its right, title and interest in and to the Mortgage Loans,
together with its rights under this Agreement, to the Trustee for the benefit of
the Certificateholders.
SECTION 4 Transfer of the Mortgage Loans.
(a) Possession of Mortgage Files. The Seller does hereby sell, and in
connection therewith hereby assigns, to the Purchaser, effective as of the
Closing Date, without recourse but subject to the terms of this Agreement, all
of its right, title and interest in, to and under the Mortgage Loans, including
the related Prepayment Charges. The contents of each Mortgage File not delivered
to the Purchaser or to any assignee, transferee or designee of the Purchaser on
or prior to the Closing Date are and shall be held in trust by the Seller for
the benefit of the Purchaser or any assignee, transferee or designee of the
Purchaser. Upon the sale of the Mortgage Loans, the ownership of each Mortgage
Note, the related Mortgage and the other contents of the related Mortgage File
is vested in the Purchaser and the ownership of all records and documents with
respect to the related Mortgage Loan prepared by or that come into the
possession of the Seller on or after the Closing Date shall immediately vest in
the Purchaser and shall be delivered immediately to the Purchaser or as
otherwise directed by the Purchaser.
(b) Delivery of Mortgage Loan Documents. The Seller will, on or prior
to the Closing Date, deliver or cause to be delivered to the Purchaser or any
assignee, transferee or designee of the Purchaser each of the following
documents for each Mortgage Loan:
(i) the original Mortgage Note, endorsed in blank or in the following
form "Pay to the order of Xxxxx Fargo Bank, N.A., as Trustee under the
applicable agreement, without recourse," with all prior and intervening
endorsements showing a complete chain of endorsement from the originator to
the Person so endorsing to the Trustee;
(ii) the original Mortgage with evidence of recording thereon, and the
original recorded power of attorney, if the Mortgage was executed pursuant
to a power of attorney, with evidence of recording thereon;
(iii) an original Assignment in blank;
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(iv) the original recorded Assignment or Assignments showing a
complete chain of assignment from the originator to the Person assigning
the Mortgage to the Trustee as contemplated by the immediately preceding
clause (iii);
(v) the original or copies of each assumption, modification or
substitution agreement, if any; and
(vi) the original lender's title insurance policy or certified copy
thereof or, if the original title policy has not been issued, the
irrevocable commitment to issue the same.
With respect to a maximum of approximately 2.0% of the Original Mortgage
Loans, by outstanding principal balance of the Original Mortgage Loans as of the
Cut-off Date, if any original Mortgage Note referred to in Section 4(b)(i) above
cannot be located, the obligations of the Seller to deliver such documents shall
be deemed to be satisfied upon delivery to the Purchaser of a photocopy of such
Mortgage Note, if available, with a lost note affidavit substantially in the
form of Exhibit H attached to the Pooling and Servicing Agreement. If any of the
original Mortgage Notes for which a lost note affidavit was delivered to the
Purchaser is subsequently located, such original Mortgage Note shall be
delivered to the Purchaser within three Business Days.
If any of the documents referred to in Sections 4(b)(ii), (iii) or (iv)
above has, as of the Closing Date, been submitted for recording but either (x)
has not been returned from the applicable public recording office or (y) has
been lost or such public recording office has retained the original of such
document, the obligations of the Seller to deliver such documents shall be
deemed to be satisfied upon (1) delivery to the Purchaser of a copy of each such
document certified by the Originator in the case of (x) above or the applicable
public recording office in the case of (y) above to be a true and complete copy
of the original that was submitted for recording and (2) if such copy is
certified by the Originator, delivery to the Purchaser promptly upon receipt
thereof of either the original or a copy of such document certified by the
applicable public recording office to be a true and complete copy of the
original. Notice shall be provided to the Purchaser, the Trustee and the Rating
Agencies by the Seller if delivery pursuant to clause (2) above will be made
more than 180 days after the Closing Date. If a certified copy or the original
lender's title insurance policy was not delivered pursuant to Section 4(b)(vi)
above, the Seller shall deliver or cause to be delivered to the Purchaser,
promptly after receipt thereof, a certified copy or the original lender's title
insurance policy. The Seller shall deliver or cause to be delivered to the
Purchaser promptly upon receipt thereof any other original documents
constituting a part of a Mortgage File received with respect to any Mortgage
Loan, including, but not limited to, any original documents evidencing an
assumption or modification of any Mortgage Loan.
The Seller shall (at the expense of the Responsible Party) promptly (within
sixty Business Days following the later of the Closing Date and the date of
receipt by the Seller of the recording information for a Mortgage, but in no
event later than ninety days following the Closing Date) submit or cause to be
submitted for recording, at no expense to the Trust Fund, the Trustee or the
Purchaser, in the appropriate public office for real property records, each
Assignment referred to in Sections 4(b)(iii) and (iv) above and the Seller shall
execute each original Assignment or cause each original Assignment to be
executed in the following form: "Xxxxx Fargo Bank, N.A.,
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as Trustee under the applicable agreement." In the event that any such
Assignment is lost or returned unrecorded because of a defect therein, the
Seller shall promptly prepare or cause to be prepared a substitute Assignment or
cure or cause to be cured such defect, as the case may be, and thereafter cause
each such Assignment to be duly recorded.
Notwithstanding the foregoing, however, for administrative convenience and
facilitation of servicing and to reduce closing costs, the Assignments shall not
be required to be submitted for recording (except with respect to any Mortgage
Loan located in Maryland) unless the Trustee or the Purchaser receives notice
that such failure to record would result in a withdrawal or a downgrading by any
Rating Agency of the rating on any Class of Certificates; provided, however, the
Seller shall submit or cause to be submitted each Assignment for recording in
the manner described above, at the expense of the Responsible Party and at no
expense to the Trust Fund or the Trustee, upon the earliest to occur of: (i)
written direction by Holders of Certificates entitled to at least 25% of the
Voting Rights, (ii) the occurrence of a Servicer Event of Default, (iii) the
occurrence of a bankruptcy, insolvency or foreclosure relating to the Servicer,
(iv) the occurrence of a servicing transfer as described in Section 7.02 of the
Pooling and Servicing Agreement, (v) with respect to any one Assignment, the
occurrence of a bankruptcy, insolvency or foreclosure relating to the Mortgagor
under the related Mortgage and (vi) any Mortgage Loan that is 90 days or more
delinquent. Upon receipt of written notice that recording of the Assignments is
required pursuant to one or more of the conditions set forth in the preceding
sentence, the Seller shall be required to deliver such Assignments or shall
cause such Assignments to be delivered within 30 days following receipt of such
notice.
Each original document relating to a Mortgage Loan which is not delivered
to the Purchaser or its assignee, transferee or designee, if held by the Seller,
shall be so held for the benefit of the Purchaser, its assignee, transferee or
designee.
(c) Acceptance of Mortgage Loans. The documents delivered pursuant to
Section 4(b) hereof shall be reviewed by the Purchaser or any assignee,
transferee or designee of the Purchaser at any time before or after the Closing
Date (and with respect to each document permitted to be delivered after the
Closing Date, within seven days of its delivery) to ascertain that all required
documents have been executed and received and that such documents relate to the
Mortgage Loans identified on the Mortgage Loan Schedule.
(d) Transfer of Interest in Agreements. The Purchaser has the right to
assign its interest under this Agreement, in whole or in part, to the Trustee,
as may be required to effect the purposes of the Pooling and Servicing
Agreement, without the consent of the Seller or the Responsible Party, and the
assignee shall succeed to the rights and obligations hereunder of the Purchaser.
Any expense reasonably incurred by or on behalf of the Purchaser or the Trustee
in connection with enforcing any obligations of the Seller or the Responsible
Party under this Agreement will be promptly reimbursed by the Seller or the
Responsible Party, as applicable.
(e) Examination of Mortgage Files. Prior to the Closing Date, the
Seller shall either (i) deliver in escrow to the Purchaser, or to any assignee,
transferee or designee of the Purchaser for examination, the Mortgage File
pertaining to each Mortgage Loan or (ii) make such Mortgage Files available to
the Purchaser or to any assignee, transferee or designee of the Purchaser for
examination. Such examination may be made by the Purchaser or the Trustee, and
their respective designees, upon reasonable notice to the Seller during normal
business hours
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before the Closing Date and within 60 days after the Closing Date. If any such
person makes such examination prior to the Closing Date and identifies any
Mortgage Loans that do not conform to the requirements of the Purchaser as
described in this Agreement, such Mortgage Loans shall be deleted from the
Closing Schedule. The Purchaser may, at its option and without notice to the
Seller, purchase all or part of the Mortgage Loans without conducting any
partial or complete examination. The fact that the Purchaser or any person has
conducted or has failed to conduct any partial or complete examination of the
Mortgage Files shall not affect the rights of the Purchaser or any assignee,
transferee or designee of the Purchaser to demand repurchase or other relief as
provided herein or under the Pooling and Servicing Agreement.
SECTION 5 Representations, Warranties and Covenants of the Responsible
Party and the Seller.
(a) The Responsible Party hereby represents, warrants and covenants,
to the Seller and the Purchaser, as of the date hereof and as of the Closing
Date, that:
(i) The Responsible Party is duly organized, validly existing and in
good standing under the laws of the state of California and is and will
remain in compliance with the laws of each state in which any Mortgaged
Property is located to the extent necessary to ensure the enforceability of
each Mortgage Loan;
(ii) The Responsible Party has the full power and authority to
execute, deliver and perform, and to enter into and consummate, all
transactions contemplated by this Agreement. The Responsible Party 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 Seller and the Purchaser,
constitutes a legal, valid and binding obligation of the Responsible Party,
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 Responsible
Party and the performance of and compliance with the terms of this
Agreement which are applicable to the Responsible Party will not violate
the Responsible Party's articles of incorporation or bylaws or constitute a
default under or result in a breach or acceleration of, any material
contract, agreement or other instrument to which the Responsible Party is a
party or which may be applicable to the Responsible Party or its assets;
(iv) The Responsible Party is not in violation of, and the execution
and delivery of this Agreement by the Responsible Party 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 Responsible Party or its assets, which violation will
likely have consequences that would materially and adversely affect the
condition (financial or otherwise) or the operation of the Responsible
Party or its assets or might have consequences that would materially and
adversely affect the enforceability of the Mortgage Loans or this Agreement
or the performance of its obligations and duties hereunder;
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(v) The Responsible Party does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant
of the Responsible Party contained in this Agreement;
(vi) There are no actions or proceedings against, or investigations
of, pending or, to the best of its knowledge, threatened the Responsible
Party before any court, administrative or other tribunal (A) that might
prohibit its entering into this Agreement, (B) seeking to prevent the
consummation of the transactions contemplated by this Agreement or (C) that
is likely to prohibit or materially and adversely affect the performance by
the Responsible Party of its obligations under, or the validity or
enforceability of, this Agreement
(vii) No consent, approval, authorization or order of or registration
or filing with, or notice to any court or governmental agency or body is
required for the execution, delivery and performance by the Responsible
Party of, or compliance by the Responsible Party 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 Closing Date;
(viii) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Responsible Party;
and
(ix) Neither this Agreement nor any written statement, report, tape,
diskette, form or other document prepared and furnished or to be furnished
by the Responsible Party pursuant to this Agreement or in connection with
the transactions contemplated hereby contains any untrue statement of
material fact.
(b) The Seller hereby represents and warrants to the Responsible Party
and the Purchaser, as of the date hereof and as of the Closing Date, and
covenants, that:
(i) The Seller is duly organized, validly existing and in good
standing as a limited partnership under the laws of the State of Delaware
with full limited partnership power and authority to conduct its business
as presently conducted by it to the extent material to the consummation of
the transactions contemplated herein. The Seller has the full limited
partnership power and authority to own the Mortgage Loans and to transfer
and convey the Mortgage Loans to the Purchaser and has the full limited
partnership power and authority to execute and deliver, engage in the
transactions contemplated by, and perform and observe the terms and
conditions of this Agreement.
(ii) 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 Responsible Party and 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, delivery and performance of this Agreement by the
Seller (x) does not conflict and will not conflict with, does not breach
and will not result in a
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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 provisions of the certificate of formation
or limited partnership agreement of the Seller, (B) any term or provision
of any material agreement, contract, instrument or indenture, to which the
Seller is a party or by which the Seller 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 Seller
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 Loans.
(iv) No consent, approval, authorization or order of, registration or
filing with, or notice on behalf of the Seller to any governmental
authority or court is required, under federal laws or the laws of the State
of Delaware, for the execution, delivery and performance by the Seller of,
or compliance by the Seller with, this Agreement or the consummation by the
Seller of any other transaction contemplated hereby; provided, however,
that the Seller makes no representation or warranty regarding federal or
state securities laws in connection with the sale or distribution of the
Certificates.
(v) This Agreement does not contain any untrue statement of material
fact or omit to state a material fact necessary to make the statements
contained herein not misleading. The written statements, reports and other
documents furnished by the Seller pursuant to this Agreement or in
connection with the transactions contemplated hereby taken in the aggregate
do not contain any untrue statement of material fact or omit to state a
material fact necessary to make the statements contained therein not
misleading.
(vi) 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.
(vii) 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.
(viii) Immediately prior to the sale of the Mortgage Loans to the
Purchaser as herein contemplated, the Seller will be the owner of the
related Mortgage and the indebtedness evidenced by the related Mortgage
Note, and, upon the payment to the Seller of the Aggregate Purchase Price,
in the event that the Seller retains or has retained record title, 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 from and after the date hereof.
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(ix) There are no actions or proceedings against, or investigations
known to it of, the Seller before any court, administrative or other
tribunal (A) that might prohibit its entering into this Agreement, (B)
seeking to prevent the sale of the Mortgage Loans by the Seller 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 validity or enforceability of, this
Agreement.
(x) 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 are not subject to the bulk transfer or any similar statutory
provisions.
(xi) The Seller has not dealt with any broker, investment banker,
agent or other person, except for the Purchaser or any of its affiliates,
that may be entitled to any commission or compensation in connection with
the sale of the Mortgage Loans.
(xii) There is no litigation currently pending or, to the best of the
Seller's knowledge without independent investigation, threatened against
the Seller that would reasonably be expected to adversely affect the
transfer of the Mortgage Loans, the issuance of the Certificates or the
execution, delivery, performance or enforceability of this Agreement, or
that would result in a material adverse change in the financial condition
of the Seller.
(xiii) 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.
(xiv) The Seller makes each of the additional representations and
warranties set forth on Schedule I hereto.
SECTION 6 Representations and Warranties of the Responsible Party
Relating to the Mortgage Loans.
The Responsible Party hereby represents and warrants to the Seller and the
Purchaser that as to each Mortgage Loan as of the Closing Date or as of such
other date as specified herein:
(1) The information set forth in the Mortgage Loan Schedule, the
historical delinquency information described in Item 1100(b) of Regulation AB
and the Prepayment Charge Schedule with respect to the Mortgage Loans is
complete, true and correct as of the Cut-off Date;
(2) Each document or instrument in the related Mortgage File is in a
form generally acceptable to prudent mortgage lenders that regularly originate
or purchase mortgage loans comparable to the Mortgage Loans for sale to prudent
investors in the secondary market that invest in mortgage loans such as the
Mortgage Loans;
(3) None of the Mortgage Loans have ever been 30 or more days
delinquent in the payment of principal and/or interest on the Business Day prior
to the Cut-off Date for each
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Mortgage Loan under the terms of the Mortgage Note. Except for payments in the
nature of Escrow Payments, including without limitation, taxes and insurance
payments, the Originator 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, except for interest accruing
from the date of the Mortgage Note or the date of disbursement of the Mortgage
proceeds, whichever is greater, to the day which precedes by one month the Due
Date of the first installment of principal and interest. No payment under the
Mortgage Loan has ever been thirty (30) days past due, nor has any payment under
the Mortgage Loan been more than thirty (30) days past due at any time since
origination. The first Monthly Payment was or shall be made with respect to the
Mortgage Loan on its Due Date or within the grace period, all in accordance with
the terms of the related Mortgage Note;
(4) There are no delinquent taxes, ground rents, water and municipal
charges, sewer rents, assessments, fire and hazard insurance premiums, leasehold
payments, including assessments payable in future installments or other
outstanding charges affecting the related Mortgaged Property;
(5) 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, or in the process of being recorded, in the applicable
public recording office if necessary to maintain the lien priority of the
Mortgage, and which have been delivered or will be delivered to the Trustee on
behalf of the Purchaser; the substance of any such waiver, alteration or
modification has been approved by the title insurer, to the extent required by
the related policy, and is reflected on the 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 agreement approved by the title insurer, to the extent required by
the policy, and which assumption agreement has been delivered to the Purchaser
and the terms of which are reflected in the Mortgage Loan Schedule;
(6) The Mortgage Note and the Mortgage are not subject to any right of
rescission, set-off, counterclaim or defense, including, without limitation, the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note and/or the Mortgage, or the exercise of any right thereunder, render the
Mortgage Note or the Mortgage unenforceable, in whole or in part, or subject to
any right of rescission, set-off, counterclaim or defense, including the defense
of usury and no such right of rescission, set-off, counterclaim or defense has
been asserted with respect thereto and no Mortgagor was a debtor in any state or
federal bankruptcy or insolvency proceeding at the time the Mortgage Loan was
originated;
(7) All buildings or other improvements upon the Mortgaged Property
are insured by an insurer acceptable to prudent lenders in the secondary
mortgage market 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 insurance policies conforming to the requirements of the
Pooling and Servicing Agreement. All such insurance policies contain a standard
mortgagee clause naming Fremont Investment & Loan, 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
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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 with a generally
acceptable insurance carrier, in the amount described in the Pooling and
Servicing Agreement (and to the extent required in the Pooling and Servicing
Agreement) is in effect. The Mortgage obligates the Mortgagor thereunder to
obtain and 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
obtain and maintain such insurance at Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor. The hazard insurance policy is the
valid and binding obligation of the insurer, is in full force and effect, and
will be in full force and effect and inure to the benefit of the Servicer upon
the consummation of the transactions contemplated by this Agreement. The
Originator has not engaged in, and has no knowledge of the Mortgagor's having
engaged in, any act or omission which would impair the coverage of any such
policy, the benefits of the endorsement provided for herein, or the validity and
binding effect of either, including, without limitation, no unlawful fee,
commission, kickback or other unlawful compensation or value of any kind has
been or will be received, retained or realized by any attorney, firm or other
person or entity, and no such unlawful items have been received, retained or
realized by the Originator;
(8) Any and all requirements of any federal, state or local law
including, without limitation, all applicable predatory and abusive lending
laws, usury, truth in lending, real estate settlement procedures, 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 and the consummation of the
transactions contemplated hereby will not involve the violation of any such laws
or regulations, and the Originator shall maintain in its possession, available
for the Purchaser's inspection, and shall deliver to the Purchaser upon demand,
evidence of compliance with all such requirements;
(9) 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. Neither the Originator nor the Servicer has waived the
performance by the Mortgagor of any action, if the Mortgagor's failure to
perform such action would cause the Mortgage Loan to be in default, nor has the
Originator or the Servicer waived any default resulting from any action or
inaction by the Mortgagor;
(10) 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 to be a first lien (as
reflected on the Mortgage Loan Schedule), or (B) second lien and second priority
security interest with respect to each Mortgage Loan which is indicated by the
Servicer to be a second lien Mortgage Loan (as reflected on the Mortgage Loan
Schedule), in either case, on the Mortgaged Property, including all buildings
and improvements on the Mortgaged Property and all installations and mechanical,
electrical, plumbing, heating and air conditioning systems located in or annexed
to such buildings, and all additions, alterations and replacements made at any
time with respect to the foregoing. The lien of the Mortgage is 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
acceptable to prudent mortgage lending
-10-
institutions generally and specifically referred to in the lender's title
insurance policy delivered to the Responsible Party by the Originator and which
do not adversely affect the 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 and (d)
a first lien on the Mortgaged Property with respect to each Mortgage Loan which
is indicated by the Servicer to be a first lien (as reflected on the Mortgage
Loan Schedule) or a second lien on the Mortgaged Property with respect to each
Mortgage Loan which is indicated by the Servicer to be a second lien (as
reflected on the Mortgage Loan Schedule). 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 Mortgage
Loan which is indicated to be a first lien (as reflected on the Mortgage Loan
Schedule), or (B) second lien and second priority security interest with respect
to each Mortgage Loan which is indicated by the Servicer to be a second lien
Mortgage Loan (as reflected on the Mortgage Loan Schedule), in either case, on
the property described therein and the Responsible Party had full right to sell
and assign the same to the Seller. 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 (other than subordinate loans originated concurrently
therewith);
(11) The Mortgage Note and the related Mortgage are genuine and each
is the legal, valid and binding obligation of the Mortgagor and enforceable by
the Purchaser against such Mortgagor in accordance with its terms, except only
as such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by law;
(12) All parties to the Mortgage Note, the Mortgage and any other
related agreement had legal capacity to enter into the Mortgage Loan, to execute
and deliver the Mortgage Note, the Mortgage and any other related agreement and
to pledge, grant or convey the interest therein purported to be conveyed, and
the Mortgage Note, the Mortgage and any other related agreement have been duly
and properly executed by such parties. The Mortgagor is a natural person;
(13) The proceeds of the Mortgage Loan have been fully disbursed to 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;
(14) No proceeds from any Mortgage Loan were used to purchase
single-premium credit insurance policies;
(15) All parties which have had any interest in the Mortgage Loan,
whether as originator, mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they
-11-
held and disposed of such interest, were): (A) organized under the laws of such
state, or (B) qualified to do business in such state, or (C) federal savings and
loan associations or national banks having principal offices in such state, or
(D) not doing business in such state so as to require qualification or
licensing, or (E) not otherwise required to be licensed in such state. All
parties which have had any interest in the Mortgage Loan 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 or were not required to
be licensed in such state;
(16) On the date of its origination and on the Closing Date, the
Mortgage Loan was and 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) issued by a title insurer acceptable to prudent lenders in the
secondary mortgage market and qualified to do business in the jurisdiction where
the Mortgaged Property is located, insuring (subject to the exceptions contained
above in Section (10)(a), (b) and (d)) the Servicer, its successors and assigns
as to the first priority lien or second priority lien, as the case may be, 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 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 Servicer is the sole
insured of such lender's title insurance policy, and such lender's title
insurance policy is valid and remains 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 Originator,
has done, by act or omission, anything which would impair the coverage of such
lender's title insurance policy including, without limitation, no unlawful fee,
commission, kickback or other unlawful compensation or value of any kind has
been or will be received, retained or realized by any attorney, firm or other
person or entity, and no such unlawful items have been received, retained or
realized by the Originator;
(17) There is no default, breach, violation or event of acceleration
existing under the Mortgage or the Mortgage Note and, except with respect to a
payment under a Mortgage Loan that is less than thirty (30) days past due, 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 neither the Originator nor the Servicer nor any other entity
involved in originating or servicing a Mortgage Loan has waived any default,
breach, violation or event of acceleration. With respect to each Mortgage Loan
which is indicated by the Servicer to be a second lien Mortgage Loan (as
reflected on the Mortgage Loan Schedule) (i) the first lien is in full force and
effect, (ii) there is no default, breach, violation or event of acceleration
existing under such first lien mortgage or the related mortgage note, (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, and 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 receive notice of and affords such mortgagee an
opportunity to cure any default by payment in full or otherwise under the first
lien mortgage;
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(18) 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;
(19) As of the date of origination of the Mortgage Loan, all
improvements which were considered in determining the 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;
(20) The Mortgage Loan was originated by Fremont Investment & Loan 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. The
documents, instruments and agreements submitted for loan underwriting were not
falsified and contain no untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the information
and statements therein not misleading;
(21) Except with regards to interest only loans, principal payments on
the 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 Rate. With
respect to each Mortgage Loan, the Mortgage Note is payable on the first day of
each month in Monthly Payments, which, in the case of a Fixed-Rate Mortgage
Loans, are sufficient to fully amortize the original principal balance over the
original term thereof, of not more than 30 years, and to pay interest at the
related Mortgage Rate, and, in the case of an Adjustable-Rate 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 Rate. The Index for each Adjustable-Rate
Mortgage Loan is as defined in the Mortgage Loan Schedule. The Mortgage Note
does not permit negative amortization. No Mortgage Loan is a convertible
Mortgage Loan;
(22) The origination practices used by the Originator and collection
practices used by the Servicer with respect to each Mortgage Note and Mortgage
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
Servicer and any predecessor servicer in accordance with the terms of the
Mortgage Note. With respect to escrow deposits and Escrow Payments (other than
with respect to each Mortgage Loan which is indicated by the Servicer to be a
second lien Mortgage Loan and of which the mortgagee under the first lien is
collecting Escrow Payments (as reflected on the Mortgage Loan Schedule)), if
any, all such payments are in the possession of, or under the control of, the
Servicer and there exist no deficiencies in connection therewith for which
customary arrangements for repayment thereof have not been made. An escrow of
funds is not prohibited by applicable law with respect to any Mortgage Loan for
which such escrow of funds has been established. All Mortgage Rate adjustments
have been made in strict compliance with state and federal law and the terms of
the related Mortgage Note. If, pursuant to the terms of the Mortgage Note,
another index was selected for determining the Mortgage Rate, the same index was
used with respect to each Mortgage Note which required a
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new index to be selected, and such selection did not conflict with the terms of
the related Mortgage Note. The Originator or an Affiliate executed and delivered
any and all notices required under applicable law and the terms of the related
Mortgage Note and Mortgage regarding the Mortgage Rate and the monthly payment
adjustments. Any interest required to be paid pursuant to state, federal and
local law has been properly paid and credited. No escrow deposits or Escrow
Payments or other charges or payments due the Servicer have been capitalized
under any Mortgage or the related Mortgage Note and no such escrow deposits or
Escrow Payments are being held by the Servicer for any work on a Mortgaged
Property which has not been completed;
(23) The Mortgaged Property is undamaged by waste, earthquake or earth
movement, windstorm, flood, tornado or other casualty, so as to affect adversely
the value of the Mortgaged Property as security for the Mortgage Loan or the use
for which the premises were intended and there is no proceeding pending or
threatened for the total or partial condemnation thereof nor is such a
proceeding currently occurring;
(24) 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 or non-judicial foreclosure. Upon default by a Mortgagor on a Mortgage
Loan and foreclosure on, or trustee's sale of, the Mortgaged Property pursuant
to the proper procedures, the holder of the Mortgage Loan will be able to
deliver good and merchantable title to the Mortgaged Property. 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 materially interfere with the right to sell the Mortgaged
Property at a trustee's sale or the right to foreclose the Mortgage subject to
applicable federal and state laws and judicial precedent with respect to
bankruptcy and rights of redemption. The Mortgagor has not notified the
Originator or the Servicer and neither the Originator nor the Servicer has any
knowledge of any relief requested or allowed to the Mortgagor under the
Servicemembers Civil Relief Act;
(25) The Mortgage Loan was underwritten in accordance with the
underwriting guidelines of Fremont Investment & Loan in effect at the time the
Mortgage Loan was originated; and the Mortgage Note and Mortgage are on forms
acceptable to prudent mortgage lending institutions in the secondary market;
(26) 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 interest or
chattel mortgage referred to in (10) above;
(27) The Mortgage Note is comprised of one original promissory note
and each such promissory note constitutes an "instrument" for purposes of
Section 102(a)(47) of the Uniform Commercial Code;
-14-
(28) The Mortgage File contains an appraisal of the related Mortgaged
Property which (A) satisfied the standards of prudent mortgage lending
institutions, (B) was conducted generally in accordance with the Fremont
Investment & Loan's underwriting guidelines and included an assessment of the
fair market value of the related Mortgaged Property at the time of such
appraisal, and (C) was made and signed, prior to the approval of the Mortgage
Loan application, by a qualified appraiser, duly appointed by the Originator or
the Servicer, 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 who met the minimum
qualifications of prudent mortgage lending institutions. 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;
(29) 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;
(30) No Mortgage Loan contains provisions pursuant to which Monthly
Payments are (a) paid or partially paid with funds deposited in any separate
account established by the Originator, the Servicer, the Mortgagor, or anyone on
behalf of the Mortgagor, (b) paid by any source other than the Mortgagor or (c)
contains any other similar provisions which may constitute a "buydown"
provision. 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;
(31) The Mortgagor has executed a statement to the effect that the
Mortgagor has received all disclosure materials required by and the Originator
has complied with all 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, and such statement is and
will remain in the Mortgage File;
(32) No Mortgage Loan was made in connection with (a) the construction
or rehabilitation of a Mortgaged Property or (b) facilitating the trade-in or
exchange of a Mortgaged Property;
(33) The Mortgaged Property is lawfully occupied under applicable law;
all inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of the Mortgaged Property and, with respect to
the use and occupancy of the same, including but not limited to certificates of
occupancy and fire underwriting certificates, have been made or obtained from
the appropriate authorities. No improvement located on or being part of any
Mortgaged Property is in violation of any applicable zoning law or regulation;
(34) No error, omission, misrepresentation, negligence, fraud or
similar occurrence with respect to the origination, modification or amendment of
any Mortgage Loan has taken place on the part of any person, including without
limitation the Mortgagor, any
-15-
appraiser, any builder or developer, 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; provided, however, that the Responsible Party
shall not be responsible for facts or circumstances pursuant to this subsection
in the event that the Purchaser does not notify the Responsible Party of such
instance within five (5) years of the Closing Date. The Originator has reviewed
all of the documents constituting the Mortgage File and has made such inquiries
as it deems necessary to make and confirm the accuracy of the representations
set forth herein;
(35) Each original Mortgage was recorded and all subsequent
assignments of the original Mortgage (other than the assignment to the Purchaser
or the Purchaser's designee) have been recorded, or are in the process of being
recorded, in the appropriate jurisdictions wherein such recordation is necessary
to perfect the lien thereof as against creditors of the Originator. The
Assignment of Mortgage is in recordable form and is acceptable for recording
under the laws of the jurisdiction in which the Mortgaged Property is located;
(36) Any principal advances made to the Mortgagor after the date of
origination of a Mortgage Loan but prior to the Cut-off Date have been
consolidated with the outstanding principal amount secured by the Mortgage, and
the secured principal amount, as consolidated, bears a single interest rate and
single repayment term reflected on the Mortgage Loan Schedule. The lien of the
Mortgage securing the consolidated principal amount is expressly insured as
having (A) first lien priority with respect to each Mortgage Loan which is
indicated to be a first lien Mortgage Loan (as reflected on the Mortgage Loan
Schedule) or (B) second lien priority with respect to each Mortgage Loan which
is indicated by the Servicer to be a second lien Mortgage Loan (as reflected on
the Mortgage Loan Schedule), in either case, by a title insurance policy, an
endorsement to the policy insuring the mortgagee's consolidated interest or by
other title evidence acceptable to prudent mortgage lending institutions. The
consolidated principal amount does not exceed the original principal amount of
the related Mortgage Loan;
(37) [Reserved];
(38) Each Mortgaged Property consists of a fee simple interest in a
single parcel of real property improved by a Residential Dwelling. If the
Residential Dwelling on the Mortgaged Property is a condominium unit or a unit
in a planned unit development (other than a de minimis planned unit development)
such condominium or planned unit development project meets the eligibility
requirements of the Underwriting Guidelines;
(39) With respect to each Mortgage Loan secured by a manufactured
home: (A) the manufactured home is permanently affixed to a foundation which is
suitable for the soil conditions of the site; (B) all foundations, both
perimeter and interior, have footings that are located below the frost line; (C)
any wheels, axles and trailer hitches are removed from such manufactured home;
and (D) the related Mortgage Loan is covered under a standard real estate title
insurance policy that identifies the manufactured home as part of the real
property and insures or indemnifies against any loss if the manufactured home is
determined not to be part of the real property;
-16-
(40) Each Mortgage Loan originated in the state of Texas pursuant to
Article XVI, Section 50(a)(6) of the Texas Constitution (a "Texas Refinance
Loan") has been originated in compliance with the provisions of Article XVI,
Section 50(a)(6) of the Texas Constitution, Texas Civil Statutes and the Texas
Finance Code. With respect to each Texas Refinance Loan that is a Cash-Out
Refinancing, the related Mortgage Loan Documents state that the Mortgagor may
prepay such Texas Refinance Loan in whole or in part without incurring a
Prepayment Charge. The Originator does not collect any such Prepayment Charges
in connection with any such Texas Refinance Loan;
(41) Interest on each Mortgage Loan is calculated on the basis of a
360-day year consisting of twelve 30-day months;
(42) There is no pending action or proceeding directly involving the
Mortgaged Property in which compliance with any environmental law, rule or
regulation is an issue; there is no violation of any environmental law, rule or
regulation with respect to the Mortgaged Property; and nothing further remains
to be done to satisfy in full all requirements of each such law, rule or
regulation constituting a prerequisite to use and enjoyment of said property;
(43) The Originator shall, at its own expense, cause each Mortgage
Loan to be covered by a "life of loan" tax service contract which is assignable
to the Purchaser or its designee at no cost to the Purchaser or its designee;
provided, however, that if the Originator fails to purchase such tax service
contract, the Originator shall be required to reimburse the Purchaser for all
costs and expenses incurred by the Purchaser in connection with the purchase of
any such tax service contract;
(44) Each Mortgage Loan is covered by a "life of loan" flood zone
service contract which is assignable to the Purchaser or its designee at no cost
to the Purchaser or its designee or, for each Mortgage Loan not covered by such
flood zone service contract, the Originator has agreed to purchase such flood
zone service contract;
(45) None of the Mortgage Loans are classified as (a) "high cost"
loans under the Home Ownership and Equity Protection Act of 1994 or (b) "high
cost," "threshold," "covered" or "predatory" loans under any other applicable
federal, state or local law (including without limitation any regulation or
ordinance) (or a similarly classified loan using different terminology under a
law imposing heightened regulatory scrutiny or additional legal liability for
residential mortgage loans having high interest rates, points and/or fees);
(46) The Responsible Party 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, adversely affect the value of the Mortgage Loan or to cause
any Mortgage Loan to prepay during any period materially faster or slower than
similar mortgage loans held by the Responsible Party generally secured by
properties in the same geographic area as the related Mortgaged Property;
(47) The Servicer and any predecessor servicer with respect to a
Mortgage Loan has fully furnished, in accordance with the Fair Credit Reporting
Act and its implementing
-17-
regulations, accurate and complete information (e.g., favorable and unfavorable)
on its borrower credit files to Equifax, Experian and Trans Union Credit
Information Company (three of the credit repositories), on a monthly basis;
(48) None of the Mortgage Loans is subject to a primary mortgage
insurance policy;
(49) The source of the down payment with respect to each Mortgage Loan
has been fully verified by the Company to the extent set forth in the
Underwriting Guidelines;
(50) With respect to any first lien Mortgage Loan, the Loan-to-Value
Ratio of such Mortgage Loan at origination was not more than 100% and with
respect to any Mortgage Loan, the combined Loan-to-Value Ratio of such Mortgage
Loan at origination was not more than 100%;
(51) 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);
(52) Each Mortgage Loan has a valid and original credit score of not
less than 500;
(53) No Mortgage Loan had an original term to maturity of more than
thirty (30) years, unless otherwise set forth in the Mortgage Loan Schedule;
(54) No Mortgagor is the obligor on more than two Mortgage Notes;
(55) Each Mortgagor has a debt-to-income ratio of less than or equal
to 60%, unless otherwise set forth in the Mortgage Loan Schedule;
(56) Each Mortgage contains a provision for the acceleration of the
payment of the unpaid principal balance of the related Mortgage Loan in the
event the related Mortgaged Property is sold without the prior consent of the
mortgagee thereunder and to the best of the Responsible Party's knowledge, such
provision is enforceable;
(57) With respect to each Mortgage Loan which is a second lien, (i)
the related first lien does not provide for negative amortization and (ii)
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;
(58) No Mortgage Loan is a "Specifically Designated National and
Blocked Person" as designated by the Office of Foreign Assets Control or as a
person designated in Presidential Executive Order 13224 as a person who commits,
threatens to commit, or supports terrorism;
(59) No Mortgage Loan has a prepayment penalty longer than three years
after its origination. Any prepayment penalty is in an amount equal to or less
than the maximum amount permitted under applicable state law;
-18-
(60) The Mortgage Loan documents with respect to each Mortgage Loan
subject to Prepayment Charges specifically authorizes such Prepayment Charges to
be collected and such Prepayment Charges are permissible and enforceable in
accordance with the terms of the related Mortgage Loan documents and applicable
law (except to the extent that the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws relating
to creditors' rights generally or the collectability thereof may be limited due
to acceleration in connection with a foreclosure);
(61) The representations and warranties in this Section 6 are
applicable to such second lien Mortgage Loans to the extent that the Fremont
Investment & Loan's underwriting guidelines and/or procedures related to such
representations and warranties;
(62) The Mortgaged Property is located in the state identified in the
Mortgage Loan Schedule and consists of a single parcel of real property with a
detached single family residence erected thereon, or a two- to four-family
dwelling, or an individual condominium unit in a low rise condominium project,
or an individual unit in a planned unit development or a de minimis planned unit
development which is in each case four stories or less; provided, however, that
any condominium unit, planned unit development, mobile home (double wide only)
or manufactured dwelling shall conform with the applicable requirements in the
Underwriting Guidelines regarding such dwellings and that no Mortgage Loan is
secured by a single parcel of real property with a cooperative housing
corporation, a log home or, except as specified on the Mortgage Loan Schedule, a
mobile home erected thereon or by a mixed use property, a property in excess of
10 acres or other unique property types. As of the date of origination, no
portion of the Mortgaged Property was used for commercial purposes, and since
the date of origination, no portion of the Mortgaged Property has been used for
commercial purposes; provided, that Mortgaged Properties which contain a home
office shall not be considered as being used for commercial purposes as long as
the Mortgaged Property has not been altered for commercial purposes and is not
storing any chemicals or raw materials other than those commonly used for
homeowner repair, maintenance and/or household purposes;
(63) With respect to Adjustable-Rate Mortgage Loans, the Index set
forth in the Mortgage Note is one-month or six-month LIBOR, unless otherwise set
forth in the Mortgage Loan Schedule;
(64) With respect to each Adjustable-Rate Mortgage Loan, the Mortgage
Loan documents provide that after the related first Adjustment Date, a related
Mortgage Loan may only be assumed if the party assuming such Mortgage Loan meets
certain credit requirements stated in the Mortgage Loan documents;
(65) To the best of the Responsible Party's knowledge, no action,
inaction or event has occurred and no state of facts exists or has existed that
has resulted or will result in the exclusion from, denial of, or defense to
coverage under any insurance policy or bankruptcy bond related to the Mortgage
Loans, irrespective of the cause of such failure of coverage. In connection with
the placement of any such insurance, no commission, fee, or other compensation
has been or will be received by the Originator or by any officer, director, or
employee of the Originator or any designee of the Originator or any corporation
in which the Originator or any officer, director, or employee had a financial
interest at the time of placement of such insurance;
-19-
(66) With respect to each Mortgage, the Originator or its Affiliate
has within the last twelve months (unless such Mortgage was originated within
such twelve month period) analyzed the required Escrow Payments for each
Mortgage and adjusted the amount of such payments so that, assuming all required
payments are timely made, any deficiency will be eliminated on or before the
first anniversary of such analysis, or any overage will be refunded to the
Mortgagor, in accordance with RESPA and any other applicable law;
(67) As to each consumer report (as defined in the Fair Credit
Reporting Act, Public Law 91-508) or other credit information furnished by the
Originator to the Purchaser, that the Originator has full right and authority
and is not precluded by law or contract from furnishing such information to the
Purchaser;
(68) If the Mortgage Loan is secured by a long-term residential lease,
(1) the lessor under the lease holds a fee simple interest in the land; (2) the
terms of such lease expressly permit the mortgaging of the leasehold estate, the
assignment of the lease without the lessor's consent and the acquisition by the
holder of the Mortgage of the rights of the lessee upon foreclosure or
assignment in lieu of foreclosure or provide the holder of the Mortgage with
substantially similar protections; (3) the terms of such lease do not (a) allow
the termination thereof upon the lessee's default without the holder of the
Mortgage being entitled to receive written notice of, and opportunity to cure,
such default, (b) allow the termination of the lease in the event of damage or
destruction as long as the Mortgage is in existence, (c) prohibit the holder of
the Mortgage from being insured (or receiving proceeds of insurance) under the
hazard insurance policy or policies relating to the Mortgaged Property or (d)
permit any increase in rent other than pre-established increases set forth in
the lease; (4) the original term of such lease is not less than 15 years; (5)
the term of such lease does not terminate earlier than five years after the
maturity date of the Mortgage Note; and (6) the Mortgaged Property is located in
a jurisdiction in which the use of leasehold estates in transferring ownership
in residential properties is a generally accepted practice;
(69) The Mortgage Note and Mortgage are on forms acceptable to prudent
mortgage lending institutions, if available, and neither the Originator nor any
Affiliate has made any representations to a Mortgagor that are inconsistent with
the mortgage instruments used;
(70) Each of the Originator and its Affiliates has complied with all
applicable anti-money laundering laws and regulations, including, without
limitation, the USA Patriot Act of 2001;
(71) No Mortgage Loan is a High Cost Loan or Covered Loan, as
applicable (as such terms are defined in the then current Standard & Poor's
LEVELS(R) Glossary which is now Version 5.6c Revised, Appendix E attached hereto
as Exhibit 1);
(72) No mortgage loan originated on or after October 1, 2002 through
March 6, 2003 is governed by the Georgia Fair Lending Act.
SECTION 7 Repurchase Obligation for Defective Documentation and for
Breach of Representation and Warranty.
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(a) The representations and warranties contained in Section 6 shall
not be impaired by any review and examination of Mortgage Files or any failure
on the part of the Seller or the Purchaser to review or examine such documents
and shall inure to the benefit of any assignee, transferee or designee of the
Purchaser, including the Trustee for the benefit of holders of the Certificates.
With respect to the representations and warranties contained herein that are
made to the knowledge or the best knowledge of the Responsible Party or as to
which the Responsible Party has no knowledge, if it is discovered that the
substance of any such representation and warranty is inaccurate and the
inaccuracy materially and adversely affects the value of the related Mortgage
Loan, or the interest therein of the Purchaser or the Purchaser's assignee,
designee or transferee, then notwithstanding the Responsible Party's lack of
knowledge with respect to the substance of such representation and warranty
being inaccurate at the time the representation and warranty was made, such
inaccuracy shall be deemed a breach of the applicable representation and
warranty and the Responsible Party shall take such action described in the
following paragraphs in respect of such Mortgage Loan.
Upon discovery by the Seller, the Purchaser or any assignee, transferee or
designee of the Purchaser of any materially defective document in, or that any
material document was not transferred by or at the direction of the Seller (as
listed on the Trustee's Preliminary Exception Report) as part of any Mortgage
File, or of a breach of any of the representations and warranties contained in
Section 6 that materially and adversely affects the value of any Mortgage Loan
or the interest therein of the Purchaser or the Purchaser's assignee, transferee
or designee, the party discovering such breach shall give prompt written notice
to the Seller (in the case of a missing document) or the Responsible Party and
the Seller (in the case of a breach of any of the representations and warranties
contained in Section 6). Within sixty (60) days of its discovery or its receipt
of notice of any such missing documentation that was not transferred to the
Purchaser as described above, or of materially defective documentation, or of
any such breach of a representation and warranty, the Responsible Party or the
Seller (or their related designee), as applicable, promptly shall deliver such
missing document or cure such defect or breach in all material respects or, in
the event the Responsible Party or the Seller (or their related designee) cannot
deliver such missing document or cannot cure such defect or breach, the
Responsible Party or the Seller, as applicable, shall, within ninety (90) days
of its discovery or receipt of notice, either (i) repurchase the affected
Mortgage Loan at the Purchase Price or (ii) pursuant to the provisions of the
Pooling and Servicing Agreement, cause the removal of such Mortgage Loan from
the Trust Fund and substitute one or more Qualified Substitute Mortgage Loans.
The Responsible Party or the Seller, as applicable, shall amend the Closing
Schedule to reflect the withdrawal of such Mortgage Loan from the terms of this
Agreement and the Pooling and Servicing Agreement. The Responsible Party or the
Seller, as applicable, shall deliver to the Purchaser such amended Closing
Schedule and shall deliver such other documents as are required by this
Agreement or the Pooling and Servicing Agreement within five (5) days of any
such amendment. Any repurchase pursuant to this Section 7(a) shall be
accomplished by transfer to an account designated by the Purchaser of the amount
of the Purchase Price in accordance with Section 2.03 of the Pooling and
Servicing Agreement. Any repurchase required by this Section shall be made in a
manner consistent with Section 2.03 of the Pooling and Servicing Agreement.
Notwithstanding the foregoing, within 90 days of the earlier of discovery
by the Responsible Party or receipt of notice by the Responsible Party of the
breach of the representation of the
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Responsible Party set forth in Section 6(59) above which materially and
adversely affects the interests of the Holders of the Class P Certificates in
any Prepayment Charge, the Responsible Party shall pay the amount of the
scheduled Prepayment Charge, for the benefit of the Holders of the Class P
Certificates by remitting such amount to the Servicer for deposit into the
Custodial Account, net of any amount previously collected by the Servicer or
paid by the Servicer, for the benefit of the Holders of the Class P Certificates
in respect of such Prepayment Charge.
(b) Notwithstanding the foregoing, with respect to an alleged breach
of a representation and warranty which breach is covered by a title insurance
policy, the Purchaser shall use reasonable efforts to enforce the provisions of
any related title insurance policy prior to seeking a remedy against the
Responsible Party or the Seller hereunder.
(c) It is understood and agreed that the obligations of the
Responsible Party or the Seller set forth in this Section 7 to cure or
repurchase a defective Mortgage Loan constitute the sole remedies of the
Purchaser against the Responsible Party or the Seller respecting a missing
document or a breach of the representations and warranties contained in Section
6.
SECTION 8 Closing; Payment for the Mortgage Loans. The closing of the
purchase and sale of the Mortgage Loans shall be held at the New York City
office of Mayer, Brown, Xxxx & Maw LLP at 10:00 a.m. New York City time on the
Closing Date.
The closing shall be subject to each of the following conditions:
(a) All of the representations and warranties of the Seller and the
Responsible Party under this Agreement shall be true and correct in all material
respects as of the date as of which they are made and no event shall have
occurred which, with notice or the passage of time, would constitute a default
under this Agreement;
(b) The Purchaser shall have received, or the attorneys of the
Purchaser shall have received in escrow (to be released from escrow at the time
of closing), all Closing Documents as specified in Section 9 of this Agreement,
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
respective terms thereof;
(c) The Seller shall have delivered or caused to be delivered and
released to the Purchaser or to its designee, all documents (including without
limitation, the Mortgage Loans) required to be so delivered by the Purchaser
pursuant to Section 2.01 of the Pooling and Servicing Agreement; and
(d) All other terms and conditions of this Agreement and the Pooling
and Servicing Agreement shall have been complied with.
Subject to the foregoing conditions, the Purchaser shall deliver or cause
to be delivered to the Seller on the Closing Date, against delivery and release
by the Seller to the Trustee of all documents required pursuant to the Pooling
and Servicing Agreement, the consideration for the Mortgage Loans as specified
in Section 3 of this Agreement, by delivery to the Seller of the Aggregate
Purchase Price.
-22-
SECTION 9 Closing Documents. Without limiting the generality of
Section 8 hereof, the closing shall be subject to delivery of each of the
following documents:
(a) An Officer's Certificate of the Seller, dated the Closing Date, in
form satisfactory to and upon which the Purchaser and Barclays Capital Inc. (the
"Representative") may rely, and attached thereto copies of the certificate of
formation, limited liability company agreement and certificate of good standing
of the Seller;
(b) An Opinion of Counsel of the Seller, dated the Closing Date, in
form satisfactory to and addressed to the Purchaser and the Representative;
(c) An Officer's Certificate of the Responsible Party, dated the
Closing Date, in form satisfactory to and upon which the Purchaser and the
Representative may rely, and attached thereto copies of the certificate of
incorporation, by-laws and certificate of good standing of the Responsible
Party;
(d) An Opinion of Counsel of the Responsible Party, dated the Closing
Date, in form satisfactory to and addressed to the Purchaser and the
Representative;
(e) Such opinions of counsel as the Rating Agencies or the Trustee may
request in connection with the sale of the Mortgage Loans by the Seller to the
Purchaser or the Seller's execution and delivery of, or performance under, this
Agreement;
(f) A letter from Deloitte & Touche LLP, certified public accountants,
to the effect that they have performed certain specified procedures as a result
of which they determined that certain information of an accounting, financial or
statistical nature set forth in the Purchaser's prospectus supplement for Series
2006-FRE1, dated June 23, 2006 (the "Prospectus Supplement") relating to the
Offered Certificates contained under the captions "Summary--The Mortgage Pool,"
"Legal Proceedings," "Risk Factors," (to the extent of information concerning
the Mortgage Loans contained therein) and "Description of the Mortgage Pool"
agrees with the records of the Originator; and
(g) Such further information, certificates, opinions and documents as
the Purchaser or the Representative may reasonably request.
SECTION 10 Costs. The Seller shall pay (or shall reimburse the
Purchaser or any other Person to the extent that the Purchaser or such other
Person shall pay) all 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 and, except
as set forth in Section 4(b), the fees for recording Assignments.
The Seller shall pay (or shall reimburse the Purchaser or any other Person
to the extent that the Purchaser or such other Person shall pay) the fees and
expenses of the Seller's accountants and attorneys, the costs and expenses
incurred in connection with producing the Servicer's or any Subservicer's loan
loss, foreclosure and delinquency experience, the costs and expenses incurred in
connection with obtaining the documents referred to in Section 9, the costs and
expenses of printing (or otherwise reproducing) and delivering this Agreement,
the Pooling and Servicing Agreement, the Certificates, the prospectus and
Prospectus Supplement, and any private
-23-
placement memorandum relating to the Certificates and other related documents,
the initial fees, costs and expenses of the Trustee, the fees and expenses of
the Purchaser's counsel in connection with the preparation of all documents
relating to the securitization of the Mortgage Loans, the filing fee charged by
the Securities and Exchange Commission for registration of the Certificates, the
cost of outside special counsel that may be required by the Originator and the
fees charged by any rating agency to rate the Certificates. All other costs and
expenses in connection with the transactions contemplated hereunder shall be
borne by the party incurring such expense.
SECTION 11 [Reserved].
SECTION 12 Indemnification. The Responsible Party shall indemnify and
hold harmless each of (i) the Purchaser, (ii) the Underwriters, (iii) the
Person, if any, to which the Purchaser assigns its rights in and to a Mortgage
Loan and each of their respective successors and assigns and (iv) each person,
if any, who controls the Purchaser within the meaning of Section 15 of the
Securities Act of 1933, as amended (the "1933 Act") ((i) through (iv)
collectively, the "Indemnified Party") against any and all losses, claims,
expenses, damages or liabilities to which the Indemnified Party may become
subject, under the 1933 Act or otherwise, insofar as such losses, claims,
expenses, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (a) any untrue statement or alleged untrue statement of any
material fact contained in the Prospectus Supplement or any private placement
memorandum relating to the offering by the Purchaser or an affiliate thereof, of
the Class M-10 Certificates, Class CE Certificates or the Class P Certificates,
or the omission or the alleged omission to state therein the material fact
necessary in order to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and
in conformity with (i) information furnished in writing to the Purchaser or any
of its affiliates by the Responsible Party or any of its affiliates specifically
for use therein, which shall include, with respect to the Prospectus Supplement,
the information set forth under the captions "Summary--The Mortgage Pool,"
"Legal Proceedings," "Risk Factors" (to the extent of information concerning the
Mortgage Loans contained therein), "Description of The Mortgage Pool--The
Originator" and "Pooling and Servicing Agreement--The Servicer" and, with
respect to any private placement memorandum, any information of a comparable
nature, or (ii) the data tape dated June 7, 2006 or any modifications,
corrections or revisions thereto, containing information with respect to the
Mortgage Loans as transmitted by modem to the Purchaser by the Responsible Party
or any of its affiliates (as such transmitted information may have been amended
in writing by the Responsible Party or any of its affiliates with the written
consent of the Purchaser subsequent to such transmission), (b) any
representation, warranty or covenant made by the Responsible Party or any
affiliate of the Responsible Party herein or in the Pooling and Servicing
Agreement, on which the Purchaser has relied, being, or alleged to be, untrue or
incorrect or (c) any updated collateral information provided by any Underwriter
to a purchaser of the Certificates derived from the data contained in clause
(ii) and the Remittance Report or a current collateral tape obtained from the
Responsible Party or an affiliate of the Responsible Party, including the
current Stated Principal Balances of the Mortgage Loans; provided, however, that
to the extent that any such losses, claims, expenses, damages or liabilities to
which the Indemnified Party may become subject arise out of or are based upon
both (1) statements, omissions, representations, warranties or covenants of the
Seller described in clause (a), (b) or (c) above and (2) any other
-24-
factual basis, the Seller shall indemnify and hold harmless the Indemnified
Party only to the extent that the losses, claims, expenses, damages, or
liabilities of the person or persons asserting the claim are determined to rise
from or be based upon matters set forth in clause (1) above and do not result
from the gross negligence or willful misconduct of such Indemnified Party. This
indemnity shall be in addition to any liability that the Seller may otherwise
have.
SECTION 13 Intent of the Parties, Mandatory Delivery; Grant of
Security Interest. The sale of the Mortgage Loans as contemplated hereby is
absolute and is intended by both the Seller and the Purchaser to constitute a
sale of the such Mortgage Loans by the Seller to the Purchaser. The sale and
delivery on the Closing Date of the Mortgage Loans described on the Mortgage
Loan Schedule in accordance with the terms and conditions of this Agreement is
mandatory. It is 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 Purchaser for the losses and damages
incurred by the Purchaser in the event of the Seller's failure to deliver the
Mortgage Loans on or before the Closing Date. The Seller hereby grants to the
Purchaser a lien on and a continuing security interest in the Seller's 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 Purchaser, subject to the Purchaser's (i) right, prior to the Closing
Date, to reject any Mortgage Loan to the extent permitted by this Agreement, and
(ii) obligation to deliver or cause to be delivered the consideration for the
Mortgage Loans pursuant to Section 8 hereof. Any Mortgage Loans rejected by the
Purchaser shall concurrently therewith be released from the security interest
created hereby. 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.
Notwithstanding the foregoing, if on the Closing Date, each of the
conditions set forth in Section 8 hereof shall have been satisfied and the
Purchaser shall not have paid or caused to be paid the Aggregate Purchase Price,
or any such condition shall not have been waived or satisfied and the Purchaser
determines not to pay or cause to be paid the Aggregate Purchase Price, the
Purchaser shall immediately effect the re-delivery of the Mortgage Loans, if
delivery to the Purchaser has occurred, and the security interest created by
this Section 13 shall be deemed to have been released.
SECTION 14 Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered to or mailed by registered mail, postage prepaid, or transmitted by
fax and, receipt of which is confirmed by telephone, if to the Purchaser,
addressed to Stanwich Asset Acceptance Company, L.L.C., Seven Greenwich Office
Park, 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000 (Telecopy:
(212-272-7206)), Attention: Xxxxxx Xxxxx; or such other address as may hereafter
be furnished to the Responsible Party and the Seller in writing by the
Purchaser; if to the Responsible Party, addressed to the Responsible Party at
0000 Xxxx Xxxxxxxx Xxxxxxx, Xxxx, Xxxxxxxxxx 00000, or such other address as may
hereafter be furnished to the Seller and the Purchaser in writing by the
Responsible Party; if to the Seller, addressed to the Seller at Xxxxxxxxxx
Securities, LP, Seven Greenwich Office Park, 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx,
-00-
Xxxxxxxxxxx 00000 (Telecopy: (212-272-7206)), Attention: Xxxxx X. Xxxx, or to
such other address as the Seller may designate in writing to the Purchaser and
the Responsible Party.
SECTION 15 Severability of Provisions. Any part, provision,
representation or warranty of this Agreement that is prohibited or that 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 that
is prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective 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.
SECTION 16 Agreement of Parties. The Seller, the Responsible Party and
the Purchaser each agree to execute and deliver such instruments and take such
actions as either of the others may, from time to time, reasonably request in
order to effectuate the purpose and to carry out the terms of this Agreement and
the Pooling and Servicing Agreement.
SECTION 17 Survival. (a) The Seller agrees that the representations,
warranties and agreements made by it herein and in any certificate or other
instrument delivered pursuant hereto shall be deemed to be relied upon by the
Purchaser, notwithstanding any investigation heretofore or hereafter made by the
Purchaser or on its behalf, and that the representations, warranties and
agreements made by the Seller herein or in any such certificate or other
instrument shall survive the delivery of and payment for the Mortgage Loans and
shall continue in full force and effect, notwithstanding any restrictive or
qualified endorsement on the Mortgage Notes and notwithstanding subsequent
termination of this Agreement, the Pooling and Servicing Agreement or the Trust
Fund.
(b) The Responsible Party agrees that the representations, warranties
and agreements made by it herein and in any certificate or other instrument
delivered pursuant hereto shall be deemed to be relied upon by the Seller and
the Purchaser, notwithstanding any investigation heretofore or hereafter made by
the Seller or the Purchaser or on the behalf of either of them, and that the
representations, warranties and agreements made by the Responsible Party herein
or in any such certificate or other instrument shall continue in full force and
effect, notwithstanding subsequent termination of this Agreement, the Pooling
and Servicing Agreement or the Trust Fund.
SECTION 18 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW).
SECTION 19 Miscellaneous. This Agreement may be executed in two or
more counterparts, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one and the same
instrument. This Agreement shall inure to the benefit
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of and be binding upon the parties hereto and their respective successors and
assigns. This Agreement supersedes all prior agreements and understandings
relating to the subject matter hereof. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought. The headings in this
Agreement are for purposes of reference only and shall not limit or otherwise
affect the meaning hereof.
It is the express intent of the parties hereto that the conveyance of the
Mortgage Loans by the Seller to the Purchaser as provided in Section 4 hereof
be, and be construed as, a sale of the Mortgage Loans by the Seller to the
Purchaser and not as a pledge of the Mortgage Loans by the Seller to the
Purchaser to secure a debt or other obligation of the Seller. However, in the
event that, notwithstanding the aforementioned intent of the parties, the
Mortgage Loans are held to be property of the Seller, then (a) it is the express
intent of the parties that such conveyance be deemed a pledge of the Mortgage
Loans by the Seller to the Purchaser to secure a debt or other obligation of the
Seller and (b) (1) this Agreement shall also be deemed to be a security
agreement within the meaning of Articles 8 and 9 of the New York Uniform
Commercial Code; (2) the conveyance provided for in Section 4 hereof shall be
deemed to be a grant by the Seller to the Purchaser of a security interest in
all of the Seller's right, title and interest in and to the Mortgage Loans and
all amounts payable to the holders of the Mortgage Loans in accordance with the
terms thereof and all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, instruments, securities or other property, including
without limitation all amounts, other than investment earnings, from time to
time held or invested in the Custodial Account whether in the form of cash,
instruments, securities or other property; (3) the possession by the Purchaser
or its agent of Mortgage Notes, the related Mortgages and such other items of
property that constitute instruments, money, negotiable documents or chattel
paper shall be deemed to be "possession" by the secured party for purposes of
perfecting the security interest pursuant to the New York Uniform Commercial
Code; and (4) notifications to persons holding such property and
acknowledgments, receipts or confirmations from persons holding such property
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the
Purchaser for the purpose of perfecting such security interest under applicable
law. Any assignment of the interest of the Purchaser pursuant to Section 4(d)
hereof shall also be deemed to be an assignment of any security interest created
hereby. The Seller and the Purchaser shall, to the extent consistent with this
Agreement, take such actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the Mortgage Loans, such
security interest would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the term
of this Agreement and the Pooling and Servicing Agreement.
[Signatures follow]
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IN WITNESS WHEREOF, the Purchaser, the Seller and the Responsible Party
have caused their names to be signed by their respective officers thereunto duly
authorized as of the date first above written.
STANWICH ASSET ACCEPTANCE COMPANY,
L.L.C., as Purchaser
By: /s/ Xxxxx X. Xxxx
------------------------------------
Name: Xxxxx X. Xxxx
Title: President
XXXXXXXXXX SECURITIES, LP, as Seller
By: Xxxxxxxxxx Capital Management, LLC,
as its general partner
By: /s/ Xxxxx X. Xxxx
------------------------------------
Name: Xxxxx X. Xxxx
Title: President
FREMONT INVESTMENT & LOAN, as
Responsible Party
By: /s/ Xxxx Xxxxxxxxxxx
------------------------------------
Name: Xxxx Xxxxxxxxxxx
Title: Senior Vice President
Mortgage Loan Purchase Agreement
S-1
Schedule I
The Seller hereby represents, warrants, and covenants to the Purchaser as
follows on the Closing Date and on each Distribution Date thereafter:
General
1. This Agreement creates a valid and continuing security interest (as
defined in the applicable Uniform Commercial Code ("UCC")) in the Mortgage Loans
in favor of the Purchaser which security interest is prior to all other liens,
and is enforceable as such as against creditors of and purchasers from the
Seller.
2. The Mortgage Loans constitute "general intangibles" or
"instruments" within the meaning of the applicable UCC.
3. The Custodial Account and all subaccounts thereof constitute either
a deposit account or a securities account.
4. To the extent that payments and collections received or made with
respect to the Mortgage Loans constitute securities entitlements, such payments
and collections have been and will have been credited to the Custodial Account.
The securities intermediary for the Custodial Account has agreed to treat all
assets credited to the Custodial Account as "financial assets" within the
meaning of the applicable UCC.
Creation
5. The Seller owns and has good and marketable title to the Mortgage
Loans free and clear of any lien, claim or encumbrance of any Person, excepting
only liens for taxes, assessments or similar governmental charges or levies
incurred in the ordinary course of business that are not yet due and payable or
as to which any applicable grace period shall not have expired, or that are
being contested in good faith by proper proceedings and for which adequate
reserves have been established, but only so long as foreclosure with respect to
such a lien is not imminent and the use and value of the property to which the
lien attaches is not impaired during the pendency of such proceeding.
6. The Seller has received all consents and approvals to the sale of
the Mortgage Loans hereunder to the Purchaser required by the terms of the
Mortgage Loans that constitute instruments.
7. To the extent the Custodial Account or subaccounts thereof
constitute securities entitlements, certificated securities or uncertificated
securities, the Seller has received all consents and approvals required to
transfer to the Purchaser its interest and rights in the Custodial Account
hereunder.
Perfection
8. The Seller has caused or will have caused, within ten days after
the effective date of this Agreement, the filing of all appropriate financing
statements in the proper filing office in the appropriate jurisdictions under
applicable law in order to perfect the sale of
Mortgage Loan Purchase Agreement
the Mortgage Loans from the Seller to the Purchaser and the security interest in
the Mortgage Loans granted to the Purchaser hereunder.
9. With respect to the Custodial Account and all subaccounts that
constitute deposit accounts, either:
(i) the Seller has delivered to the Purchaser a fully-executed
agreement pursuant to which the bank maintaining the deposit accounts has
agreed to comply with all instructions originated by the Purchaser
directing disposition of the funds in the Custodial Account without further
consent by the Seller; or
(ii) the Seller has taken all steps necessary to cause the Purchaser
to become the account holder of the Custodial Account.
10. With respect to the Custodial Account or subaccounts thereof that
constitute securities accounts or securities entitlements, either:
(i) the Seller has caused or will have caused, within ten days after
the effective date of this Agreement, the filing of all appropriate
financing statements in the proper filing office in the appropriate
jurisdictions under applicable law in order to perfect the security
interest in the Custodial Account granted by the Seller to the Purchaser;
or
(ii) the Seller has delivered to the Purchaser a fully-executed
agreement pursuant to which the securities intermediary has agreed to
comply with all instructions originated by the Purchaser relating to the
Custodial Account without further consent by the Purchaser; or
(iii) the Seller has taken all steps necessary to cause the securities
intermediary to identify in its records the Purchaser as the person having
a security entitlement against the securities intermediary in the Custodial
Account.
Priority
11. Other than the transfer of the Mortgage Loans to the Purchaser
pursuant to this Agreement, the Seller has not pledged, assigned, sold, granted
a security interest in, or otherwise conveyed any of the Mortgage Loans. The
Seller has not authorized the filing of, or is not aware of any financing
statements against the Seller that include a description of collateral covering
the Mortgage Loans other than any financing statement relating to the security
interest granted to the Purchaser hereunder or that has been terminated.
12. The Seller is not aware of any judgment, ERISA or tax lien filings
against the Seller.
13. The Trustee has in its possession all original copies of the
Mortgage Notes that constitute or evidence the Mortgage Loans. To the Seller's
knowledge, none of the instruments that constitute or evidence the Mortgage
Loans has any marks or notations indicating that they have been pledged,
assigned or otherwise conveyed to any Person other than the
Mortgage Loan Purchase Agreement
Purchaser or its designee. All financing statements filed or to be filed against
the Seller in favor of the Purchaser in connection herewith describing the
Mortgage Loans contain a statement to the following effect: "A purchase of or
security interest in any collateral described in this financing statement will
violate the rights of the Purchaser."
14. Neither the Custodial Account nor any subaccount thereof is in the
name of any person other than the Seller or the Purchaser or in the name of its
nominee. The Seller has not consented for the securities intermediary of the
Custodial Account to comply with entitlement orders of any person other than the
Purchaser or its designee.
15. Survival of Perfection Representations. Notwithstanding any other
provision of this Agreement or any other transaction document, the Perfection
Representations contained in this Schedule shall be continuing, and remain in
full force and effect (notwithstanding any replacement of the Servicer or
termination of the Servicer's rights to act as such) until such time as all
obligations under this Agreement have been finally and fully paid and performed.
16. No Waiver. The parties to this Agreement (i) shall not, without
obtaining a confirmation of the then-current rating of the Certificates waive
any of the Perfection Representations, and (ii) shall provide the Rating
Agencies with prompt written notice of any breach of the Perfection
Representations, and shall not, without obtaining a confirmation of the
then-current rating of the Certificates (as determined after any adjustment or
withdrawal of the ratings following notice of such breach) waive a breach of any
of the Perfection Representations.
17. Seller to Maintain Perfection and Priority. The Seller covenants
that, in order to evidence the interests of the Seller and the Purchaser under
this Agreement, the Seller shall take such action, or execute and deliver such
instruments (other than effecting a Filing (as defined below), unless such
Filing is effected in accordance with this paragraph) as may be necessary or
advisable (including, without limitation, such actions as are requested by the
Purchaser) to maintain and perfect, as a first priority interest, the
Purchaser's security interest in the Mortgage Loans. The Seller shall, from time
to time and within the time limits established by law, prepare and present to
the Purchaser or its designee to authorize (based in reliance on the Opinion of
Counsel hereinafter provided for) the Seller to file, all financing statements,
amendments, continuations, initial financing statements in lieu of a
continuation statement, terminations, partial terminations, releases or partial
releases, or any other filings necessary or advisable to continue, maintain and
perfect the Purchaser's security interest in the Mortgage Loans as a
first-priority interest (each a "Filing"). The Seller shall present each such
Filing to the Purchaser or its designee together with (x) an Opinion of Counsel
to the effect that such Filing is (i) consistent with the grant of the security
interest to the Purchaser pursuant to Section 19 of this Agreement, (ii)
satisfies all requirements and conditions to such Filing in this Agreement and
(iii) satisfies the requirements for a Filing of such type under the Uniform
Commercial Code in the applicable jurisdiction (or if the Uniform Commercial
Code does not apply, the applicable statute governing the perfection of security
interests), and (y) a form of authorization for the Purchaser's signature. Upon
receipt of such Opinion of Counsel and form of authorization, the Purchaser
shall promptly authorize in writing the Seller to, and the Seller shall, effect
such Filing under the UCC without the signature of the Seller or the Purchaser
where allowed by applicable law. Notwithstanding anything else in the
transaction documents to the
Mortgage Loan Purchase Agreement
contrary, the Seller shall not have any authority to effect a Filing without
obtaining written authorization from the Purchaser or its designee.
Mortgage Loan Purchase Agreement
Exhibit 1
APPENDIX E - Standard & Poor's Anti-Predatory Lending Categorization
REVISED February 07, 2005
Standard & Poor's has categorized loans governed by anti-predatory lending laws
in the Jurisdictions listed below into three categories based upon a combination
of factors that include (a) the risk exposure associated with the assignee
liability and (b) the tests and thresholds set forth in those laws. Note that
certain loans classified by the relevant statute as Covered are included in
Standard & Poor's High Cost Loan Category because they included thresholds and
tests that are typical of what is generally considered High Cost by the
industry.
STANDARD & POOR'S HIGH COST LOAN CATEGORIZATION
Name of Anti-Predatory Lending Category under Applicable
State/Jurisdiction Law/Effective Date Anti-Predatory Lending Law
--------------------- ---------------------------------------------- ---------------------------
Arkansas Arkansas Home Loan Protection Act, Ark. Code High Cost Home Loan
Xxx. Sections 00-00-000 et seq.
Effective July 16, 0000
Xxxxxxxxx Xxxxxxx, XX Ordinance No. 72-2003 (PSH), Mun. Code Covered Loan
Sections 757.01 et seq.
Effective June 2, 2003
Colorado Consumer Equity Protection, Colo. Stat. Xxx. Covered Loan
Sections 5-3.5-101 et seq.
Effective for covered loans offered or entered
into on or after January 1, 2003. Other
provisions of the Act took effect on June 7,
0000
Xxxxxxxxxxx Xxxxxxxxxxx Abusive Home Loan Lending High Cost Home Loan
Practices Act, Conn. Gen. Stat. Sections
36a-746 et seq.
Effective October 1, 0000
Xxxxxxxx xx Xxxxxxxx Home Loan Protection Act, D.C. Code Sections Covered Loan
26-1151.01 et seq.
Effective for loans closed on or after January
28, 2003
Florida Fair Lending Act, Fla. Stat. Xxx. Sections High Cost Home Loan
494.0078 et seq.
Effective October 2, 2002
STANDARD & POOR'S HIGH COST LOAN CATEGORIZATION
Name of Anti-Predatory Lending Category under Applicable
State/Jurisdiction Law/Effective Date Anti-Predatory Lending Law
--------------------- ---------------------------------------------- ---------------------------
Georgia (Oct. 1, 0000 Xxxxxxx Xxxx Xxxxxxx Xxx, Xx. Code Xxx. High Cost Home Loan
- Mar. 6, 2003) Sections 7-6A-1 et seq.
Effective October 1, 2002 - March 6, 2003
Georgia as amended Georgia Fair Lending Act, Ga. Code Xxx. High Cost Home Loan
(Mar. 7, 2003 - Sections 7-6A-1 et seq.
current)
Effective for loans closed on or after Xxxxx
0, 0000
XXXXX Section 32 Home Ownership and Equity Protection Act of High Cost Loan
1994, 15 U.S.C. Section 1639, 12 C.F.R.
Sections 226.32 and 226.34
Effective October 1, 1995, amendments October
1, 2002
Illinois High Risk Home Loan Act, Ill. Comp. Stat. tit. High Risk Home Loan
815, Sections 137/5 et seq.
Effective January 1, 2004 (prior to this date,
regulations under Residential Mortgage License
Act effective from May 14, 2001)
Indiana Indiana Home Loan Practices Act, Ind. Code High Cost Home Loan
Xxx. Sections 24-9-1-1 et seq.
Effective for loans originated on or after
January 1, 2005.
Kansas Consumer Credit Code, Kan. Stat. Xxx. Sections High Loan to Value Consumer
16a-1-101 et seq. Loan (id. Section
16a-3-207) and;
Sections 16a-1-301 and 16a-3-207 became
effective April 14, 1999; Section 16a-3-308a High APR Consumer Loan (id.
became effective July 1, 1999 Section 16a-3-308a)
Kentucky 2003 KY H.B. 287 - High Cost Home Loan Act, High Cost Home Loan
Ky. Rev. Stat. Sections 360.100 et seq.
Effective June 24, 2003
STANDARD & POOR'S HIGH COST LOAN CATEGORIZATION
Name of Anti-Predatory Lending Category under Applicable
State/Jurisdiction Law/Effective Date Anti-Predatory Lending Law
--------------------- ---------------------------------------------- ---------------------------
Maine Truth in Lending, Me. Rev. Stat. tit. 9-A, High Rate High Fee Mortgage
Sections 8-101 et seq.
Effective September 29, 1995 and as amended
from time to time
Massachusetts Part 40 and Part 32, 209 C.M.R. Sections 32.00 High Cost Home Loan
et seq. and 209 C.M.R. Sections 40.01 et seq.
Effective March 22, 2001 and amended from time
to time
Massachusetts Predatory Home Loan Practices High Cost Home Mortgage
Act Mass. Gen. Laws ch. 183C, Sections 1 et Loan
seq.
Effective November 7, 2004
Nevada Assembly Xxxx No. 284, Nev. Rev. Stat. Home Loan
Sections 598D.010 et seq.
Effective October 1, 2003
New Jersey New Jersey Home Ownership Security Act of High Cost Home Loan
2002, N.J. Rev. Stat. Sections 46:10B-22 et
seq.
Effective for loans closed on or after
November 27, 2003
New Mexico Home Loan Protection Act, N.M. Rev. Stat. High Cost Home Loan
Sections 58-21A-1 et seq.
Effective as of January 1, 2004; Revised as of
February 26, 2004
New York N.Y. Banking Law Article 6-l High Cost Home Loan
Effective for applications made on or after
April 1, 2003
North Carolina Restrictions and Limitations on High Cost Home High Cost Home Loan
Loans, N.C. Gen. Stat. Sections 24-1.1E et
seq.
Effective July 1, 2000; amended October 1,
2003 (adding open-end lines of credit)
STANDARD & POOR'S HIGH COST LOAN CATEGORIZATION
Name of Anti-Predatory Lending Category under Applicable
State/Jurisdiction Law/Effective Date Anti-Predatory Lending Law
--------------------- ---------------------------------------------- ---------------------------
Ohio H.B. 386 (codified in various sections of the Covered Loan
Ohio Code), Ohio Rev. Code Xxx. Sections
1349.25 et seq.
Effective May 24, 2002
Oklahoma Consumer Credit Code (codified in various Subsection 10 Mortgage
sections of Title 14A)
Effective July 1, 2000; amended effective
January 1, 2004
South Carolina South Carolina High Cost and Consumer Home High Cost Home Loan
Loans Act, S.C. Code Xxx. Sections 37-23-10 et
seq.
Effective for loans taken on or after January
1, 0000
Xxxx Xxxxxxxx Xxxx Xxxxxxxx Residential Mortgage Lender, West Virginia Mortgage Loan
Broker and Servicer Act, W. Va. Code Xxx. Act Loan
Sections 31-17-1 et seq.
Effective June 5, 2002
STANDARD & POOR'S COVERED LOAN CATEGORIZATION
Name of Anti-Predatory Lending Category under Applicable
State/Jurisdiction Law/Effective Date Anti-Predatory Lending Law
--------------------- ---------------------------------------------- ---------------------------
Georgia (Oct. 1, 0000 Xxxxxxx Xxxx Xxxxxxx Xxx, Xx. Code Xxx. Covered Loan
- Mar. 6, 2003) Sections 7-6A-1 et seq.
Effective October 1, 2002 - March 6, 0000
Xxx Xxxxxx Xxx Xxxxxx Home Ownership Security Act of Covered Home Loan
2002, N.J. Rev. Stat. Sections 46:10B-22 et
seq.
Effective November 27, 2003 - July 5, 2004
STANDARD & POOR'S HOME LOAN CATEGORIZATION
Name of Anti-Predatory Lending Category under Applicable
State/Jurisdiction Law/Effective Date Anti-Predatory Lending Law
--------------------- ---------------------------------------------- ---------------------------
Georgia (Oct. 1, 0000 Xxxxxxx Xxxx Xxxxxxx Xxx, Xx. Code Xxx. Home Loan
- Mar. 6, 2003) Sections 7-6A-1 et seq.
Effective October 1, 2002 - March 6, 0000
Xxx Xxxxxx Xxx Xxxxxx Home Ownership Security Act of Home Loan
2002, N.J. Rev. Stat. Sections 46:10B-22 et
seq.
Effective for loans closed on or after
November 27, 2003
New Mexico Home Loan Protection Act, N.M. Rev. Stat. Home Loan
Sections 58-21A-1 et seq.
Effective as of January 1, 2004; Revised as of
February 26, 2004
North Carolina Restrictions and Limitations on High Cost Home Consumer Home Loan
Loans, N.C. Gen. Stat. Sections 24-1.1E et
seq.
Effective July 1, 2000; amended October 1,
2003 (adding open-end lines of credit)
South Carolina South Carolina High Cost and Consumer Home Consumer Home Loan
Loans Act, S.C. Code Xxx. Sections 37-23-10 et
seq.
Effective for loans taken on or after January
1, 2004
