EXECUTION COPY
RESIDENTIAL FUNDING MORTGAGE SECURITIES II, INC.
as Purchaser,
and
RESIDENTIAL FUNDING CORPORATION
as Seller
HOME EQUITY LOAN PURCHASE AGREEMENT
Dated as of December 29, 2005
Home Equity Loans
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS...............................................................1
Section 1.1 Definitions.......................................................1
ARTICLE II SALE OF HOME EQUITY LOANS AND RELATED PROVISIONS..........................2
Section 2.1 Sale of Home Equity Loans.........................................2
Section 2.2 Payment of Purchase Price.........................................5
Section 2.3 Reserved..........................................................6
Section 2.4 Variable Funding Notes on or after the Closing Date...............6
Section 2.5 Draws After an Amortization Event.................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH.......................7
Section 3.1 Seller Representations and Warranties.............................7
ARTICLE IV SELLER'S COVENANTS.......................................................20
Section 4.1 Covenants of the Seller..........................................20
ARTICLE V SERVICING................................................................20
Section 5.1 Servicing........................................................20
ARTICLE VI INDEMNIFICATION BY THE SELLER WITH RESPECT TO THE HOME EQUITY LOANS......20
Section 6.1 Limitation on Liability of the Seller............................20
ARTICLE VII TERMINATION..............................................................21
Section 7.1 Termination......................................................21
ARTICLE VIII MISCELLANEOUS PROVISIONS.................................................21
Section 8.1 Amendment........................................................21
Section 8.2 GOVERNING LAW....................................................21
Section 8.3 Notices..........................................................21
Section 8.4 Severability of Provisions.......................................22
Section 8.5 Relationship of Parties..........................................22
Section 8.6 Counterparts.....................................................22
Section 8.7 Further Agreements...............................................22
Section 8.8 Intention of the Parties.........................................22
Section 8.9 Successors and Assigns; Assignment of This Agreement.............22
Section 8.10 Survival.........................................................23
Section 8.11 Credit Enhancer as Third-Party Beneficiary.......................23
EXHIBITS
Exhibit 1...... Group I Loan Schedule
Exhibit 2...... Group II Loan Schedule
Exhibit 3...... Standard & Poor's Predatory Lending Categories
This HOME EQUITY LOAN PURCHASE AGREEMENT (this "Agreement"),
dated as of December 29, 2005, is made between Residential Funding Corporation
(the "Seller") and Residential Funding Mortgage Securities II, Inc. (the
"Purchaser").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Seller owns Cut-off Date Loan Balances and the
Related Documents for the fixed-rate, closed-end home equity mortgage loans (the
"Group I Loans") indicated on the Group I Loan schedule, attached as Exhibit 1
hereto (the "Group I Loan Schedule"), the adjustable rate, revolving credit
loans (the "Group II Loans" and, together with the Group I Loans, the "Home
Equity Loans") indicated on the Group II Loan schedule, attached as Exhibit 2
hereto (the "Group II Loan Schedule"), including rights to (a) any property
acquired by foreclosure or deed in lieu of foreclosure or otherwise, and (b) the
proceeds of any insurance policies covering the Home Equity Loans;
WHEREAS, the parties hereto desire that the Seller sell the
Cut-off Date Loan Balances of the Home Equity Loans to the Purchaser pursuant to
the terms of this Agreement together with the Related Documents on the Closing
Date, and thereafter all Additional Balances created on or after the Cut-off
Date;
WHEREAS, pursuant to the terms of the Servicing Agreement, the
Master Servicer will service the Home Equity Loans directly or through one or
more Subservicers;
WHEREAS, pursuant to the terms of the Trust Agreement, the
Purchaser will sell the Home Equity Loans to the Issuer in exchange for the cash
proceeds of the Securities;
WHEREAS, pursuant to the terms of the Trust Agreement, the Issuer
will issue and transfer to or at the direction of the Purchaser, the
Certificates; and
WHEREAS, pursuant to the terms of the Indenture, the Issuer will
issue and transfer to or at the direction of the Purchaser, the Notes, secured
by the Home Equity Loans.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1....Definitions. For all purposes of this Home Equity Loan Purchase
Agreement, except as otherwise expressly provided herein or unless the context
otherwise requires, capitalized terms not otherwise defined herein shall have
the meanings assigned to such terms in the Definitions contained in Appendix A
to the Indenture dated as of the date hereof (the "Indenture"), between Home
Equity Loan Trust 2005-HSA1, as Issuer and JPMorgan Chase Bank, N.A., as
Indenture Trustee, which is incorporated by reference herein. All other
capitalized terms used herein shall have the meanings specified herein.
ARTICLE II
SALE OF HOME EQUITY LOANS AND RELATED PROVISIONS
Section 2.1....Sale of Home Equity Loans.
(a) The Seller, by the execution and delivery of this Agreement, does hereby
sell, assign, set over, and otherwise convey to the Purchaser, without recourse,
all of its right, title and interest in, to and under the following, and
wherever located: (i) the Home Equity Loans (including without limitation the
Cut-off Date Loan Balances and all Additional Balances created on and after the
Cut-off Date; provided, however, that following the occurrence of an
Amortization Event, any subsequent loan balance represented by each Draw and
interest thereon will not be deemed transferred to the Issuer, and the Seller
(in such event) shall retain ownership of each loan balance represented by each
such Draw made thereafter and interest thereon), all interest accruing thereon
and all collections in respect thereof received on or after the Cut-off Date;
(ii) property which secured a Home Equity Loan and which has been acquired by
foreclosure or deed in lieu of foreclosure; (iii) the interest of the Seller in
any insurance policies in respect of the Home Equity Loans; and (iv) all
proceeds of the foregoing; provided, however, that the Purchaser does not assume
the obligation under each Loan Agreement relating to a Group II Loan to fund
Draws to the Mortgagor thereunder, and the Purchaser shall not be obligated or
permitted to fund any such Draws, it being agreed that the Seller will retain
the obligation to fund future Draws. Such conveyance shall be deemed to be made:
(1) with respect to the Cut-off Date Loan Balances, as of the Closing Date; and
(2) with respect to the amount of each Additional Balance created on or after
the Cut-off Date, as of the later of the Closing Date and the date that the
corresponding Draw was made pursuant to the related Loan Agreement, subject to
the receipt by the Seller of consideration therefor as provided herein under
clause (b) of Section 2.2.
(b) In connection with such conveyance, the Seller further agrees, at its own
expense, on or prior to the Closing Date with respect to the Loan Balance of the
Home Equity Loans to indicate in its books and records that the Home Equity
Loans have been sold to the Purchaser pursuant to this Agreement and to deliver
to the Purchaser the Group I Loan Schedule, and the Group II Loan Schedule. Such
Group I Loan Schedule and Group II Loan Schedule shall be marked as Exhibit 1
and Exhibit 2, respectively, to this Agreement and are hereby incorporated into
and made a part of this Agreement.
(c) In connection with such conveyance by the Seller, the Seller shall on behalf
of the Purchaser deliver to, and deposit with the respective Custodian, on or
before the Closing Date, the following documents or instruments with respect to
each Home Equity Loan:
(i) the original Mortgage Note, including the related Loan Agreement, endorsed
without recourse to the Indenture Trustee and showing an unbroken chain of
endorsement from the originator thereof to the Person endorsing it or, with
respect to any Home Equity Loan as to which the original Mortgage Note has been
permanently lost, misplaced or destroyed and has not been replaced, a Lost Note
Affidavit from the Program Seller or the Seller stating that the original
Mortgage Note was lost, misplaced or destroyed, together with a copy of the
related Mortgage Note;
(ii) the original Mortgage, noting the presence of the MIN of the Home Equity
Loan and language indicating that the Home Equity Loan is a MOM Loan if the Home
Equity Loan is a MOM Loan, with evidence of recording thereon, or, if the
original Mortgage has not yet been returned from the public recording office, a
copy of such Mortgage with evidence of recording indicated thereon in the event
the recording office keeps the original or if the original is lost, or if the
original or a copy of the original Mortgage has not yet been returned from the
public recording office, a copy of the original Mortgage;
(iii) unless the Home Equity Loan is registered on the MERS(R) System,
assignments (which may be included in one or more blanket assignments if
permitted by applicable law) of the Mortgage recorded to "JPMorgan Chase Bank,
N.A. as indenture trustee" c/o the Seller (or to MERS, if the Home Equity Loan
is registered on the MERS(R) System and noting the presence of a MIN) at an
address specified by the Seller;
(iv) originals of any intervening assignments of the Mortgage, with evidence of
recording thereon, or a copy of such intervening assignment, with evidence of
recording thereon, or, if the original of any such intervening assignment has
not yet been returned from the public recording office, a copy of such original
intervening assignment; and
(v) a copy of each assumption, modification, consolidation or substitution
agreement, if any, relating to the Home Equity Loan.
Within the time period for the review of each Mortgage File set
forth in Section 2.3 of the Custodial Agreement, the Custodian shall notify the
Master Servicer of any document or documents constituting a part of a Mortgage
File which are missing or defective in respect of the items reviewed as
described in Section 2.3(b) of the Custodial Agreement; provided, that if the
defect or missing item with respect to a Home Equity Loan related to such
Mortgage File is listed on Schedule A of Exhibit 1 of the Custodial Agreement,
no notification shall be necessary. As set forth in Section 2.3 of the Custodial
Agreement, the Custodian shall deliver to the Indenture Trustee and the Credit
Enhancer a certificate (the "Interim Certification") to the effect that all
documents required to be delivered pursuant to this Subsection 2.1(c) have been
executed and received and that such documents relate to the Home Equity Loans
identified on the Group I Loan Schedule or Group II Loan Schedule, except for
any exceptions listed on such Interim Certification. If such omission or defect
materially and adversely affects the interests in the related Home Equity Loan
of the Noteholders or the Credit Enhancer, the Master Servicer shall promptly
notify the Seller (provided that a Mortgage File will not be deemed to contain a
defect for an unrecorded assignment under clause (iii) above if the Seller has
submitted such assignment for recording or if such assignment is not required to
be recorded pursuant to the terms of the following paragraph), the Seller shall
cure such defect, repurchase the related Home Equity Loan at the Repurchase
Price or substitute an Eligible Substitute Loan for the related Home Equity Loan
upon the same terms and conditions set forth in Section 3.1(d) hereof for
breaches of representations and warranties as to the Home Equity Loans. With
respect to any missing Mortgage Notes or Loan Agreements referred to in
Subsections 3.1(b)(xxxi) or 3.1(c)(xxxiv), the Seller shall have 60 days from
the Closing Date to deliver the documents referred to in this Subsection 2.1(c).
If such documents have not been delivered within 60 days, the Seller shall
repurchase the related Home Equity Loan or substitute an Eligible Substitute
Loan for the related Home Equity Loan upon the same terms and conditions set
forth in Section 3.1(d) hereof for breaches of representations and warranties as
to the Home Equity Loans.
Within 60 days after the receipt by the Master Servicer of the
recording information necessary to complete the recording of each of the
assignments referred to in clause (iii) above, the Seller at its own expense
shall complete, or cause to be completed, in the name of the Indenture Trustee,
and shall submit each such assignment for recording in the appropriate public
office for real property records each of the assignments referred to in clause
(iii) above. While such assignment to be recorded is being recorded, the
Custodian shall retain a photocopy of such assignment. If any assignment is lost
or returned unrecorded to the Custodian because of any defect therein, the
Seller is required to prepare a substitute assignment or cure such defect, as
the case may be, and the Seller shall cause such assignment to be recorded in
accordance with this paragraph. Notwithstanding the foregoing, as to any Home
Equity Loan where the Seller is the assignee of record of the Mortgage, the
assignment referred to in clause (iii) above shall not be required to be
completed and submitted for recording (a) if an Opinion of Counsel is provided
in form and substance satisfactory to the Credit Enhancer and to each Rating
Agency, to the effect that such recordation of the assignment referred to in
clause (iii) above (completed in the name of the Indenture Trustee) is not
required (i) to effect the sale and conveyance of the Home Equity Loan by the
Seller to the Depositor and by the Depositor to the Issuer, or the granting and
perfecting of the security interest in the Home Equity Loan to the Indenture
Trustee as provided in the Indenture or (ii) to defeat any ownership, security
interest or other adverse claim to the Home Equity Loan by any creditor of the
Seller or the Depositor by any purported transferee of such Home Equity Loan in
a purported transfer thereof by the Seller or the Depositor subsequent to such
sale and conveyance or (b) if MERS is identified on the Mortgage or on a
properly recorded assignment of the Mortgage as the mortgagee of record solely
as nominee for the Seller and its successors and assigns.
In instances where an original Mortgage or any original
intervening assignment of Mortgage was not, in accordance with clause (ii) or
(iv) above, delivered by the Seller to the Custodian prior to or concurrently
with the execution and delivery of this Agreement, the Seller will deliver or
cause to be delivered the originals of such documents to such Custodian promptly
upon receipt thereof.
In connection with the assignment of any Home Equity Loan
registered on the MERS(R) System, the Purchaser further agrees that it will
cause, at the Purchaser's own expense, within 30 Business Days after the Closing
Date, the MERS(R) System to indicate that such Home Equity Loan has been
assigned by the Purchaser to the Indenture Trustee in accordance with this
Agreement for the benefit of the Noteholders by including (or deleting, in the
case of Home Equity Loans which are repurchased in accordance with this
Agreement) in such computer files (a) the code in the field which identifies the
specific Indenture Trustee and (b) the code in the field "Pool Field" which
identifies the series of the Notes issued in connection with such Home Equity
Loans. The Purchaser further agrees that it will not, and will not permit the
Master Servicer to, and the Master Servicer agrees that it will not, alter the
codes referenced in this paragraph with respect to any Home Equity Loan during
the term of this Agreement unless and until such Home Equity Loan is repurchased
in accordance with the terms of this Agreement.
The Purchaser hereby acknowledges its acceptance of all right,
title and interest to the property, conveyed to it pursuant to this Section 2.1.
(d) The parties hereto intend that the transactions set forth herein constitute
a sale by the Seller to the Purchaser of all the Seller's right, title and
interest in and to the Home Equity Loans and other property as and to the extent
described above. In the event the transactions set forth herein are deemed not
to be a sale, the Seller hereby grants to the Purchaser a security interest in
all of the Seller's right, title and interest in, to and under the Home Equity
Loans and all accounts, chattel papers, general intangibles, payment
intangibles, contract rights, certificates of deposit, deposit accounts,
instruments, documents, letters of credit, money, advices of credit, investment
property, goods and other property consisting of, arising under or related to
the Home Equity Loans and such other property, to secure all of the Seller's
obligations hereunder, and this Agreement shall constitute a security agreement
under applicable law. The Seller agrees to take or cause to be taken such
actions and to execute such documents, including without limitation the filing
of all necessary UCC-1 financing statements filed in the State of Minnesota or
Delaware (which shall have been submitted for filing as of the Closing Date),
any continuation statements with respect thereto and any amendments thereto
required to reflect a change in the name or corporate structure of the Seller or
the filing of any additional UCC-1 financing statements due to the change in the
principal office of the Seller, as are necessary to perfect and protect the
Purchaser's interests in each Home Equity Loan and the proceeds thereof.
Section 2.2....Payment of Purchase Price.
(a) The "Purchase Price" for the Home Equity Loans (including the Additional
Balances) shall be (1) an amount equal to $278,404,323.36 for the Home Equity
Loans, in immediately available funds, together with the Certificates, in
respect of the Cut-off Date Loan Balances thereof and (2) in the case of each
Additional Balance transferred hereunder created on or after the Cut-off Date,
the principal amount of the related Draw under the Loan Agreement on the later
of the Closing Date and the date of the creation of such Additional Balance.
(b) In consideration of the sale of the Home Equity Loans from the Seller to the
Purchaser on the Closing Date, the Purchaser shall pay to the Seller on the
Closing Date by wire transfer of immediately available funds to a bank account
designated by the Seller, the amount specified above in clause (a)(1) for each
Home Equity Loan; provided, that such payment may be on a net funding basis if
agreed by the Seller and the Purchaser. With respect to each Additional Balance
transferred hereunder with respect to any Group II Loan, the Issuer as assignee
of the Purchaser shall pay or cause to be paid to the Seller or its designee the
portion of the Purchase Price specified above in clause (a)(2) for such
Additional Balance in one of the following ways, as applicable: (i) for any
Collection Period prior to the Collection Period during which the Revolving
Period ends, so long as an Amortization Event has not occurred, (a) a cash
payment pursuant to Section 3.03(b) of the Servicing Agreement and Section
2.2(a)(2) hereof in an amount equal to the related Draw, if then available from
Principal Collections during the related Collection Period on the Home Equity
Loans, and (b) to the extent aggregate Draws exceed Principal Collections for
such Collection Period, an increase in the aggregate principal amount of the
Variable Funding Notes or an issuance of new Variable Funding Notes, as of the
Payment Date corresponding to the Collection Period in which such Additional
Balances were created, equal to the amount by which Additional Balances exceeded
Principal Collections for such Collection Period, and (ii) for the Collection
Period during which the Revolving Period ends, and any Collection Period
thereafter, so long as an Amortization Event has not occurred, an increase in
the aggregate principal amount of Variable Funding Notes or an issuance of new
Variable Funding Notes as of each Payment Date in an aggregate amount equal to
the total of the related Draws for the corresponding Collection Period.
Section 2.3....Reserved.
Section 2.4....Variable Funding Notes on or after the Closing Date.
Subject to Section 4.02 of the Indenture, if at any time, the
Seller holds Variable Funding Notes that have reached the Maximum Variable
Funding Balance, as applicable, and to the extent that the same are exchanged
for Capped Funding Notes in accordance with Section 4.01(d) of the Indenture,
the Purchaser agrees that, upon written request made by the Seller at any time,
the Purchaser shall use its best reasonable efforts to cause such Capped Funding
Notes held by the Seller to be registered for resale by the Seller pursuant to
an effective registration statement filed by the Purchaser in accordance with,
and meeting all requirements of, the Securities Act. The Purchaser shall use its
best reasonable efforts to cause such registration statement to become effective
with respect to such Capped Funding Notes as soon as practicable within a
mutually agreed reasonable time period after the Seller's request. It is
contemplated that such registration statement will be the shelf registration
statement pursuant to which the Term Notes issued on the Closing Date are to be
offered, or one substantially similar thereto. In connection with such
registration statement and offering, the Seller shall reimburse the Purchaser
for costs related thereto including registration fees, printing fees, rating
fees, legal fees, accountant's fees, blue sky registration fees and expenses (if
any), related expenses of the Credit Enhancer and other out-of-pocket costs, if
any. In connection with such registration statement and related prospectus, the
Seller shall provide the Purchaser with an updated Group I Loan Schedule or
Group II Loan Schedule and all other information reasonably necessary to assure
that the statements in the prospectus with respect to the Home Equity Loans and
the Seller (including in its capacity as servicer of the Home Equity Loans) are
complete and correct in all material respects as of the date of sale of such
Capped Funding Notes by the Seller. In addition, the Seller shall provide, or
arrange to be provided, to the Purchaser such additional agreements, opinions
and certifications as may be reasonably requested by the Credit Enhancer. The
registration statement shall not include any information with respect to the
Credit Enhancer, except for information approved by the Credit Enhancer for use
therein.
Section 2.5....Draws After an Amortization Event.
In the event that an Amortization Event occurs, any Draws made on
the Group II Loans thereafter shall not be deemed to be "Additional Balances"
hereunder, and the ownership of the related balances shall be retained by the
Seller. Following an Amortization Event, on any Payment Date, with respect to
the related Collection Period, all Interest Collections and Principal
Collections in respect of each individual Group II Loan shall be allocated on a
pro rata basis as between the Issuer and the Seller, based on the relative
proportions of the Loan Balance and the Excluded Amount, respectively, as of the
end of the calendar month immediately prior to such Collection Period. Any
losses incurred with respect to any individual Group II Loan following an
Amortization Event shall be allocated on a pro rata basis between the Issuer and
the Seller, based on the Loan Balance and the Excluded Amount thereof as of the
date of liquidation of such Group II Loan. Notwithstanding any other provision
hereof or of the Servicing Agreement, the payments and collections allocable to
the Excluded Amount need not be deposited in the Custodial Account and shall not
be deposited in the Certificate Distribution Account or the Payment Account, and
shall be distributed by the Master Servicer to the Seller not less frequently
than monthly in accordance with reasonable instructions provided by the Seller.
ARTICLE III....
REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH
Section 3.1....Seller Representations and Warranties. The Seller represents and
warrants to the Purchaser and to the Credit Enhancer, as of the Closing Date (or
if otherwise specified below, as of the date so specified):
(a) As to the Seller:
(i) The Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power to
own its assets and to transact the business in which it is currently engaged.
The Seller is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it requires such qualification
and in which the failure to so qualify would have a material adverse effect on
the business, properties, assets or condition (financial or other) of the
Seller;
(ii) The Seller has the power and authority to make, execute, deliver and
perform its obligations under this Agreement and all of the transactions
contemplated under this Agreement, and has taken all necessary corporate action
to authorize the execution, delivery and performance of this Agreement. When
executed and delivered, this Agreement will constitute the legal, valid and
binding obligation of the Seller enforceable in accordance with its terms,
except as enforcement of such terms may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally and by the
availability of equitable remedies;
(iii) The Seller is not required to obtain the consent of any other Person or
any consent, license, approval or authorization from, or registration or
declaration with, any governmental authority, bureau or agency in connection
with the execution, delivery, performance, validity or enforceability of this
Agreement, except for such consents, license, approvals or authorization, or
registration or declaration, as shall have been obtained or filed, as the case
may be;
(iv) The execution and delivery of this Agreement and the performance of the
transactions contemplated hereby by the Seller will not violate any provision of
any existing law or regulation or any order or decree of any court applicable to
the Seller or any provision of the Certificate of Incorporation or Bylaws of the
Seller, or constitute a material breach of any mortgage, indenture, contract or
other agreement to which the Seller is a party or by which the Seller may be
bound;
(v) No litigation or administrative proceeding of or before any court, tribunal
or governmental body is currently pending, or to the knowledge of the Seller
threatened, against the Seller or any of its properties or with respect to this
Agreement or the Certificates which in the opinion of the Seller has a
reasonable likelihood of resulting in a material adverse effect on the
transactions contemplated by this Agreement;
(vi) This Agreement constitutes a legal, valid and binding obligation of the
Seller, enforceable against the Seller in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights in general and except as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity);
(vii) This Agreement constitutes a valid transfer and assignment to the
Purchaser of all right, title and interest of the Seller in and to the Cut-off
Date Loan Balances with respect to the Home Equity Loans, all monies due or to
become due with respect thereto, and all proceeds of such Cut-off Date Loan
Balances with respect to the Home Equity Loans and such funds as are from time
to time deposited in the Custodial Account (excluding any investment earnings
thereon) as assets of the Trust and all other property specified in the
definition of "Trust" as being part of the corpus of the Trust conveyed to the
Purchaser by the Seller, and upon payment for the Additional Balances, will
constitute a valid transfer and assignment to the Purchaser of all right, title
and interest of the Seller in and to the Additional Balances, all monies due or
to become due with respect thereto, and all proceeds of such Additional Balances
and all other property specified in the definition of "Trust" relating to the
Additional Balances;
(viii) The Seller is not in default with respect to any order or decree of any
court or any order, regulation or demand or any federal, state, municipal or
governmental agency, which default might have consequences that would materially
and adversely affect the condition (financial or other) or operations of the
Master Servicer or its properties or might have consequences that would
materially adversely affect its performance hereunder; and
(ix) The Seller is a member of MERS in good standing, and will comply in all
material respects with the rules and procedures of MERS in connection with the
servicing of the Mortgage Loans that are registered with MERS.
(b) As to the Group I Loans (unless otherwise specified, all percentages in this
Section 3.1(b) are by Cut-off Date Principal Balance):
(i) As of the Cut-off Date, no Group I Loan is 30 days or more Delinquent in
payment of principal and interest;
(ii) The information set forth in the Group I Loan Schedule with respect to each
Group I Loan or the Group I Loans, as the case may be, is true and correct in
all material respects at the date or dates respecting which such information is
furnished;
(iii) There is no right of rescission, valid offset, defense, claim or
counterclaim of any obligor under any Mortgage Note or Mortgage except as may be
provided under the Servicemembers Civil Relief Act, as amended;
(iv) There is no delinquent recording or other tax or fee or assessment lien
against any related Mortgaged Property;
(v) There is no proceeding pending or threatened for the total or partial
condemnation of the related Mortgaged Property;
(vi) There are no mechanics' or similar liens or claims which have been filed
for work, labor or material affecting the related Mortgaged Property which are,
or may be liens prior or equal to, or subordinate with, the lien of the related
Mortgage;
(vii) For each Group I Loan, the related Mortgage File contains or will contain
each of the documents and instruments specified to be included therein;
(viii) The related Mortgage Note and the related Mortgage at the time it was
made complied in all material respects with applicable local, state and federal
laws, including, but not limited to, all applicable anti-predatory lending laws
and the Constitution of the State of Texas;
(ix) A policy of title insurance in the form and amount required by the Program
Guide was effective as of the closing of each Group I Loan and each such policy
is valid and remains in full force and effect, unless the Mortgaged Property is
located in the State of Iowa and an attorney's certificate has been provided in
accordance with the Program Guide, and a title search or other assurance of
title customary in the relevant jurisdiction was obtained with respect to each
Mortgage Loan as to which no title insurance policy or binder was issued;
(x) With respect to each Group I Loan, the ratio, expressed as a percentage, of
(A) the sum of (i) the Cut-off Date Principal Balance of such Group I Loan and
(ii) any outstanding principal balance, as of the Cut-off Date, of all other
mortgage loans, if any, secured by senior or subordinate liens on the related
Mortgaged Property, to (B) the Appraised Value, or, to the extent permitted by
the Program Guide, the Stated Value of such Mortgaged Property, was not in
excess of 100% (except due to rounding);
(xi) To the best of the Seller's knowledge, the physical property subject to
each Mortgage is free of material damage and is in good repair;
(xii) The Seller has not received a notice of default of any senior mortgage
loan related to a Mortgaged Property which has not been cured by a party other
than the related Subservicer;
(xiii) The Loan Rate on each Group I Loan will be fixed. No Group I Loan is
subject to negative amortization;
(xiv) No more than 24.3% and 16.5% of the Group I Loans are secured by Mortgaged
Properties located in California and Texas, respectively;
(xv) Immediately prior to the assignment of the Group I Loans to the Indenture
Trustee, the Seller had good title to, and was the sole owner of, each Group I
Loan free and clear of any pledge, lien, encumbrance or security interest (other
than a first lien on such Mortgaged Property and the rights to servicing and
related compensation) and such assignment validly transfers ownership of the
Group I Loans to the Indenture Trustee free and clear of any pledge, lien,
encumbrance or security interest (other than a first lien on such Mortgaged
Property and the rights to servicing and related compensation);
(xvi) Approximately 73.7% of the Group I Loans are balloon loans;
(xvii) No Group I Loan will have a remaining term to stated maturity as of the
Cut-off Date of less than 60 months. The weighted average remaining term to
stated maturity of the Group I Loans as of the Cut-off Date will be
approximately 195 months. The weighted average original term to maturity of the
Group I Loans as of the Cut-off Date will be approximately 197 months.
Approximately 0.2% of the Group I Loans are fully-amortizing and will have
original terms to maturity of approximately ten years, with a weighted average
remaining term to stated maturity of such Group I Loans of approximately 119
months. Approximately 9.8% of the Group I Loans are fully-amortizing and will
have original terms to maturity of approximately fifteen years, with a weighted
average remaining term to stated maturity of such Group I Loans of approximately
178 months. Approximately 3.5% of the Group I Loans are fully-amortizing and
will have original terms to maturity of approximately twenty years, with a
weighted average remaining term to stated maturity of such Group I Loans of
approximately 238 months. Approximately 1.9% of the Group I Loans are
fully-amortizing and will have original terms to maturity of approximately
twenty-five years, with a weighted average remaining term to stated maturity of
such Group I Loans of approximately 342 months. Approximately 73.7% of the Group
I Loans are balloon loans will have original terms to maturity of approximately
fifteen years based on 30-year amortization schedules, with a weighted average
remaining term to stated maturity of 178 months;
(xviii) [Reserved];
(xix) Other than with respect to a payment default, there is no material
default, breach, violation or event of acceleration existing under the terms of
any Mortgage Note or Mortgage and no event which, with notice and expiration of
any grace or cure period, would constitute a material default, breach, violation
or event of acceleration under the terms of any Mortgage Note or Mortgage, and
no such material default, breach, violation or event of acceleration has been
waived by the Seller or by any other entity involved in originating or servicing
a Group I Loan;
(xx) For each Group I Loan, hazard insurance and flood insurance has been
obtained which meets all applicable requirements of Section 3.04 of the
Servicing Agreement, or the Master Servicer will obtain blanket coverage in
respect thereof as contemplated in the Servicing Agreement;
(xxi) Each Mortgage Note and each Mortgage is an enforceable obligation of the
related Mortgagor;
(xxii) No instrument of release or waiver has been executed in connection with
the Group I Loans, and no Mortgagor has been released, in whole or in part from
its obligations in connection with a Group I Loan;
(xxiii) With respect to each Group I Loan that is a second lien, either (i) no
consent for the Group I Loan was required by the holder of the related prior
lien or (ii) such consent has been obtained and is contained in the Mortgage
File;
(xxiv) None of the Mortgaged Properties is a mobile home or a manufactured
housing unit that is not permanently attached to its foundation;
(xxv) Each Group I Loan constitutes a qualified mortgage under Section
860G(a)(3)(A) of the Code and Treasury Regulations Section 1.860G-2(a)(1), (2),
(4), (5) and (6), without reliance on the provisions of Treasury Regulation
Section 1.860G-2(a)(3) or Treasury Regulation Section 1.860G-2(f)(2) or any
other provision that would allow a Group I Loan to be treated as a "qualified
mortgage" notwithstanding its failure to meet the requirements of Section
860G(a)(3)(A) of the Code and Treasury Regulation Section 1.860G-2(a)(1), (2),
(4), (5) and (6);
(xxvi) 84.9% of the Group I Loans are actuarial mortgage loans, on which 30 days
of interest is owed each month irrespective of the day on which the payment is
received;
(xxvii) As of the Cut-off Date, the Loan Rates of the Group I Loans range
between 5.990% per annum and 15.000% per annum, with a weighted average Loan
Rate of approximately 9.2065% per annum;
(xxviii).......99.66% of the Group I Loans are secured by second liens and the
remainder are secured by first liens;
(xxix) [Reserved];
(xxx) (A) Each Mortgaged Property with respect to the Group I Loans consists of
a single parcel of real property with a single family residence erected thereon,
a two-to-four family residence erected thereon, or improved by an individual
condominium unit, planned unit development, townhouse or manufactured home; (B)
with respect to the Group I Loans, (i) approximately 40.24% of the Group I Loans
are secured by real property improved by individual condominium units, planned
unit developments (attached and detached), townhouses/rowhouses or manufactured
homes, (ii) approximately 55.89% of the Group I Loans are secured by real
property with a single family residence erected thereon and (iii) approximately
3.87% of the Group I Loans are secured by real property with a two-to-four
family residence;
(xxxi) 23 of the Mortgage Notes of the Group I Loans are missing from the
Mortgage File;
(xxxii) None of the Group I Loans are secured by a leasehold interest;
(xxxiii).......None of the proceeds of the Group I Loans were used to finance
the purchase of single premium credit insurance policies and none of the Group I
Loans contain prepayment penalties that extend beyond five years after the date
of origination;
(xxxiv) None of the Group I Loans are loans that, under applicable state or
local law in effect at the time of origination of such loan, are referred to as
(1) "high cost" or "covered" loans or (2) any other similar designation if the
law imposes greater restrictions or additional legal liability for residential
mortgage loans with high interest rates, points and/or fees;
(xxxv) The Seller has not transferred the Group I Loans to the Purchaser with
any intent to hinder, delay or defraud creditors;
(xxxvi) Each Subservicer meets all applicable requirements under the Servicing
Agreement, is properly qualified to service the Group I Loans and has been
servicing the Group I Loans prior to the Cut-off Date in accordance with the
terms of the Subservicing Agreement;
(xxxvii) All of the Group I Loans have been underwritten in substantial
compliance with the criteria set forth in the Program Guide;
(xxxviii) The proceeds of each Group I Loan have been fully disbursed and there
is no requirement for future advances thereunder;
(xxxix) The Mortgage contains a customary provision for the acceleration of the
payment of the unpaid principal balance of the Group I Loan in the event the
related Mortgaged Property is sold without the prior consent of the mortgagee
thereunder;
(xl) With respect to Group I Loans originated more than 12 months prior to the
Cut-off Date (A) none of the obligors under such Group I Loans were the subject
of a bankruptcy proceeding and (B) no such Group I Loan has been 30 or more days
delinquent more than once within 12 months of the Cut-off Date;
(xli) No Group I 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 5.6 Revised, Appendix E (attached hereto as Exhibit 3));
provided that no representation and warranty is made in this clause 3.1(b)(xli)
with respect to 0.31% of the Group I Loans (by outstanding principal balance as
of the Cut-off Date) secured by property located in the State of Kansas, and
with respect to 0.03% of the Group I Loans (by outstanding principal balance as
of the Cut-off Date) secured by property located in the State of West Virginia;
and
(xlii) No Group I Loan originated on or after October 1, 2002 through March 6,
2003 is governed by the Georgia Fair Lending Act.
(c) As to the Group II Loans (unless otherwise specified, all percentages in
this Section 3.1(c) are by Cut-off Date Principal Balance):
(i) The information set forth in the Group II Loan Schedule with respect to each
Group II Loan or the Group II Loans, as the case may be, is true and correct in
all material respects as of the date or dates respecting which such information
is furnished;
(ii) The Cut-off Date Loan Balances have not been assigned or pledged, the
Seller has good and marketable title thereto and the Seller is the sole owner
and holder of such Cut-off Date Loan Balances free and clear of any and all
liens, claims, encumbrances, participation interests, equities, pledges, charges
of security interests of any nature and has full right and authority, under all
governmental and regulatory bodies having jurisdiction over the ownership of the
applicable Group II Loans to sell and assign the same pursuant to this
Agreement;
(iii) The related Mortgage Note and the Mortgage have not been assigned or
pledged, the Seller has good and marketable title thereto and the Seller is the
sole owner and holder of the Group II Loan free and clear of any and all liens,
claims, encumbrances, participation interests, equities, pledges, charges of
security interests of any nature and has full right and authority, under all
governmental and regulatory bodies having jurisdiction over the ownership of the
applicable Group II Loans to sell and assign the same pursuant to this
Agreement;
(iv) There is no right of rescission, valid offset, defense, claim or
counterclaim of any obligor under any Loan Agreement or Mortgage except as may
be provided under the Servicemembers Civil Relief Act, as amended;
(v) There is no delinquent tax or assessment lien against any related Mortgaged
Property;
(vi) There is no proceeding pending or threatened for the total or partial
condemnation of the related Mortgaged Property;
(vii) There are no mechanics' or similar liens or claims which have been filed
for work, labor or material affecting the related Mortgaged Property which are,
or may be liens prior or equal to, or subordinate with, the lien of the related
Mortgage, except liens which are fully insured against by the title insurance
policy referred to in clause (xi);
(viii) As of the Cut-off Date, no Group II Loan was 30 days or more Delinquent
in payment of principal and interest;
(ix) For each Group II Loan, the related Mortgage File contains each of the
documents and instruments specified to be included therein;
(x) The related Loan Agreement and the related Mortgage at the time it was made
complied in all material respects with applicable local, state and federal laws,
including, but not limited to, all applicable anti-predatory lending laws and
the Constitution of the State of Texas;
(xi) A policy of title insurance in the form and amount required by the Program
Guide was effective as of the closing of each Group II Loan and each such policy
is valid and remains in full force and effect, unless the Mortgaged Property is
located in the State of Iowa and an attorney's certificate has been provided in
accordance with the Program Guide, except that with respect to each Group II
Loan with a Cut-off Date Loan Balance of less than $100,000 as to which no title
insurance policy or binder or attorney's certificate was issued there are no
intervening liens affecting the Mortgaged Property;
(xii) None of the Mortgaged Properties is a mobile home or a manufactured
housing unit that is not permanently attached to its foundation;
(xiii) No more than 47.5% and 8.5% of the Group II Loans are secured by
Mortgaged Properties located in California and Florida, respectively;
(xiv) As of the Cut-off Date the Combined Loan-to-Value Ratio for each Group II
Loan was not in excess of 100%;
(xv) Immediately prior to the assignment of the Group II Loans to the Indenture
Trustee, the Seller had good title to, and was the sole owner of, each Group II
Loan free and clear of any pledge, lien, encumbrance or security interest (other
than a first lien on such Mortgaged Property and the rights to servicing and
related compensation) and such assignment validly transfers ownership of the
Group II Loans to the Indenture Trustee free and clear of any pledge, lien,
encumbrance or security interest (other than a first lien on such Mortgaged
Property and the rights to servicing and related compensation);
(xvi) The Seller has not transferred the Group II Loans to the Purchaser with
any intent to hinder, delay or defraud any of its creditors;
(xvii) The minimum monthly payment with respect to any Group II Loan is not less
than the interest accrued at the applicable Loan Rate on the average daily Loan
Balance during the interest period relating to the date on which such minimum
monthly payment is due;
(xviii) The Seller will submit for filing or cause to be submitted for filing
UCC-1 financing statements in accordance with the terms of this Agreement;
(xix) Each Loan Agreement and each Mortgage constitutes a legal, valid and
binding obligation of the Mortgagor enforceable in accordance with its terms
except as limited by bankruptcy, insolvency or other similar laws affecting
generally the enforcement of creditors' rights;
(xx) To the best of Seller's knowledge, the physical property subject to each
Mortgage is free of material damage and is in good repair;
(xxi) The Seller has not received a notice of default of any senior mortgage
loan related to a Mortgaged Property which has not been cured by a party other
than the related Subservicer;
(xxii) Each of the Mortgage Notes has a substantially similar definition of
Prime as the Index applicable to the Loan Rate; (xxiii) None of the Group II
Loans are reverse mortgage loans;
(xxiv) (A) No Group II Loan has an original term to maturity in excess of 360
months. On each date that the Loan Rates have been adjusted prior to the Cut-off
Date interest rate adjustments on the Group II Loans were made in compliance
with the related Mortgage and Mortgage Note and applicable law. Over the term of
any Group II Loan, the Loan Rate may not exceed the related maximum Loan Rate,
if any. (B) The Group II Loans have maximum Loan Rates which range between
14.00% and 25.00%. The Gross Margins for the Group II Loans range between 0.000%
and 6.000%, and the weighted average Gross Margin for the Group II Loans is
approximately 2.62% as of the Cut-off Date. As of the Cut-off Date, the Loan
Rates on the Group II Loans range between 5.250% and 13.000% and the weighted
average Loan Rate is approximately 7.6874%. The weighted average remaining term
to stated maturity of the Group II Loans on a contractual basis as of the
Cut-off Date is approximately 246 months;
(xxv) (A) Each Mortgaged Property with respect to the Group II Loans consists of
a single parcel of real property with a single family residence erected thereon,
a two-to-four family residence erected thereon, or improved by an individual
condominium unit, planned unit development, townhouse or manufactured home. (B)
With respect to the Group II Loans (i) approximately 38.88% of the Group II
Loans are secured by real property improved by individual condominium units,
planned unit developments (attached and detached), townhouses/rowhouses or
manufactured homes, (ii) approximately 59.31% of the Group II Loans are secured
by real property with a single family residence erected thereon and (iii)
approximately 1.81% of the Group II Loans are secured by real property with a
two-to-four family residence;
(xxvi) As of the Cut-off Date, the Credit Limits on the Group II Loans range
between approximately $10,000 and $266,500 with an average of $61,291. As of the
Cut-off Date, no Group II Loan had a principal balance in excess of $266,500 and
the weighted average Credit Limit Utilization Rate, based on the Credit Limits
of the Group II Loans is equal to approximately 91.68%;
(xxvii) 99.58% of the Group II Loans are secured by second liens and the
remainder are secured by first liens;
(xxviii) Each Subservicer meets all applicable requirements under the Servicing
Agreement, is properly qualified to service the Group II Loans and has been
servicing the Group II Loans prior to the Cut-off Date in accordance with the
terms of the respective Subservicing Agreement;
(xxix) For each Group II Loan, hazard insurance and flood insurance has been
obtained which meets all applicable requirements of Section 3.04 of the
Servicing Agreement or the Master Servicer will obtain blanket coverage in
respect thereof as contemplated in the Servicing Agreement;
(xxx) Other than with respect to a payment default, there is no material
default, breach, violation or event of acceleration existing under the terms of
any Mortgage Note or Mortgage and no event which, with notice and expiration of
any grace or cure period, would constitute a material default, breach, violation
or event of acceleration under the terms of any Mortgage Note or Mortgage, and
no such material default, breach, violation or event of acceleration has been
waived by the Seller or by any other entity involved in originating or servicing
a Group II Loan;
(xxxi) No instrument of release or waiver has been executed in connection with
the Group II Loans, and no Mortgagor has been released, in whole or in part from
its obligations in connection with a Group II Loan;
(xxxii) With respect to each Group II Loan that is a second lien, either (i) no
consent for the Group II Loan was required by the holder of the related prior
lien or (ii) such consent has been obtained and is contained in the Mortgage
File;
(xxxiii) The Mortgage contains a customary provision for the acceleration of the
payment of the unpaid principal balance of the Group II Loan in the event the
related Mortgaged Property is sold without the prior consent of the mortgagee
thereunder;
(xxxiv) Four of the Loan Agreements of the Group II Loans are missing from the
Mortgage File;
(xxxv) With respect to each Group II Loan, the ratio, expressed as a percentage,
of (A) the sum of (i) the Cut-off Date Principal Balance of such Group II Loan
and (ii) any outstanding principal balance, as of the Cut-off Date, of all other
mortgage loans, if any, secured by senior or subordinate liens on the related
Mortgaged Property, to (B) the Appraised Value, or, to the extent permitted by
the Program Guide, the Stated Value of such Mortgaged Property, was not in
excess of 100% (except due to rounding);
(xxxvi) Approximately 43.3% of the Group II Loans are balloon loans;
(xxxvii) None of the proceeds of the Group II Loans were used to finance the
purchase of single premium credit insurance policies and none of the Group II
Loans contain prepayment penalties that extend beyond five years after the date
of origination;
(xxxviii) None of the Group II Loans are secured by a leasehold interest;
(xxxix) None of the Group II Loans are loans that, under applicable state or
local law in effect at the time of origination of such loan, are referred to as
(1) "high cost" or "covered" loans or (2) any other similar designation if the
law imposes greater restrictions or additional legal liability for residential
mortgage loans with high interest rates, points and/or fees;
(xl) With respect to Group II Loans originated more than 12 months prior to the
Cut-off Date (A) none of the obligors under such Group II Loans were the subject
of a bankruptcy proceeding and (B) no such Group II Loan has been 30 or more
days delinquent more than once within 12 months of the Cut-off Date;
(xli) All of the Group II Loans have been underwritten in substantial compliance
with the criteria set forth in the Program Guide;
(xlii) No Group II 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 5.6 Revised, Appendix E (attached hereto as Exhibit 3));
provided that no representation and warranty is made in this clause 3.1(c)(xlii)
with respect to 0.35% of the Group II Loans (by outstanding principal balance as
of the Cut-off Date) secured by property located in the State of Kansas; and
(xliii) No Group II Loan originated on or after October 1, 2002 through March 6,
2003 is governed by the Georgia Fair Lending Act.
(d) Upon discovery by Seller or upon notice from the
Purchaser, the Credit Enhancer, the Issuer, the Owner Trustee, the Indenture
Trustee or any Custodian, as applicable, of a breach of any representation or
warranty in clause (a) above which materially and adversely affects the
interests of the Securityholders or the Credit Enhancer, as applicable, in any
Home Equity Loan, the Seller shall, within 45 days of its discovery or its
receipt of notice of such breach, either (i) cure such breach in all material
respects or (ii) to the extent that such breach is with respect to a Home Equity
Loan or a Related Document, either (A) repurchase such Home Equity Loan from the
Issuer at the Repurchase Price, or (B) substitute one or more Eligible
Substitute Loans for such Home Equity Loan, in each case in the manner and
subject to the conditions and limitations set forth below; provided that the
Seller shall have the option to substitute an Eligible Substitute Loan or Loans
for a Group I Loan only if such substitution occurs within two years following
the Closing Date.
Upon discovery by the Seller or upon notice from the Purchaser,
the Credit Enhancer, the Issuer, the Owner Trustee, the Indenture Trustee or any
Custodian, as applicable, of a breach of any representation or warranty in
clause (b) or (c) above with respect to any Home Equity Loan, or upon the
occurrence of a Repurchase Event, which materially and adversely affects the
interests of any Securityholders or the Credit Enhancer, as applicable, or of
the Purchaser in such Home Equity Loan (notice of which shall be given to the
Purchaser by the Seller, if it discovers the same), notwithstanding the Seller's
lack of knowledge with respect to the substance of such representation and
warranty, the Seller shall, within 90 days of its discovery or its receipt of
notice of such breach, or, if such breach would cause a Group I Loan to be other
than a "qualified mortgage" as defined in Section 860G(a)(3) of the Code, within
90 days after the breach was discovered, either (i) cure such breach in all
material respects or (ii) to the extent that such breach is with respect to a
Home Equity Loan or a Related Document, either (A) repurchase such Home Equity
Loan from the Issuer at the Repurchase Price, or (B) substitute one or more
Eligible Substitute Loans for such Home Equity Loan, in each case in the manner
and subject to the conditions and limitations set forth below; provided that the
Seller shall have the option to substitute an Eligible Substitute Loan or Loans
for a Group I Loan only if such substitution occurs within two years following
the Closing Date. If the breach of representation and warranty that gave rise to
the obligation to repurchase or substitute a Home Equity Loan pursuant to this
Section 3.1 was the representation and warranty set forth in clauses (b)(viii)
or (c)(x) of this Section 3.1, then the Seller shall pay to the Trust,
concurrently with and in addition to the remedies provided in the preceding
sentence, an amount equal to any liability, penalty or expense that was actually
incurred and paid out of or on behalf of the Trust, and that directly resulted
from such breach, or if incurred and paid by the Trust thereafter, concurrently
with such payment. The Repurchase Price plus any amount described in the
preceding sentence for any such Home Equity Loan repurchased by the Seller shall
be deposited or caused to be deposited by the Master Servicer in the Custodial
Account maintained by it pursuant to Section 3.02 of the Servicing Agreement.
In the event that the Seller elects to substitute an Eligible
Substitute Loan or Loans for a Deleted Loan pursuant to this Section 3.1(d), the
Seller shall deliver to the Custodian on behalf of the Issuer, with respect to
such Eligible Substitute Loan or Loans, the original Mortgage Note (or, in the
case of a Home Equity Loan as to which the original Mortgage Note has been
permanently lost or destroyed and has not been replaced, a Lost Note Affidavit,
together with a copy of such Note) and all other documents and agreements as are
required by Section 2.1(c), with the Mortgage Note endorsed as required by
Section 2.1(c). No substitution will be made in any calendar month after the
Determination Date for such month. Monthly payments due with respect to Eligible
Substitute Loans in the month of substitution shall not be part of the Trust
Estate and will be retained by the Master Servicer and remitted by the Master
Servicer to the Seller on the next succeeding Payment Date, provided that a
payment at least equal to the applicable Minimum Monthly Payment for such month
in respect of the Deleted Loan has been received by the Trust. For the month of
substitution, distributions to the Payment Account pursuant to the Servicing
Agreement will include the monthly payment due on a Deleted Loan for such month
and thereafter the Seller shall be entitled to retain all amounts received in
respect of such Deleted Loan. The Master Servicer shall amend or cause to be
amended the Home Equity Loan Schedule to reflect the removal of such Deleted
Loan and the substitution of the Eligible Substitute Loan or Loans and the
Master Servicer shall deliver the amended Group I Loan Schedule or Group II Loan
Schedule, as the case may be, to the Owner Trustee. Upon such substitution, the
Eligible Substitute Loan or Loans shall be subject to the terms of this
Agreement and the Servicing Agreement in all respects, the Seller shall be
deemed to have made the representations and warranties with respect to the
Eligible Substitute Loan contained herein set forth in Section 3.1(b) (other
than clauses (xiv), (xvi), (xvii), (xxvi), (xxvii), (xxviii), (xxx)(B) and
(xxxi) thereof), if such Deleted Loan is a Group I Loan, or Section 3.1(c)
(other than clauses (xiii), (xxiv)(B), (xxv)(B), (xxvi), (xxvii), (xxxiv) and
(xxxvi) thereof), if such Deleted Loan is a Group II Loan, as of the date of
substitution, and the Seller shall be obligated to repurchase or substitute for
any Eligible Substitute Loan as to which a Repurchase Event has occurred as
provided herein. In connection with the substitution of one or more Eligible
Substitute Loans for one or more Deleted Loans, the Master Servicer will
determine the amount (such amount, a "Substitution Adjustment Amount"), if any,
by which the aggregate principal balance of all such Eligible Substitute Loans
as of the date of substitution is less than the aggregate principal balance of
all such Deleted Loans (after application of the principal portion of the
monthly payments due in the month of substitution that are to be distributed to
the Payment Account in the month of substitution). The Seller shall deposit the
amount of such shortfall into the Custodial Account on the day of substitution,
without any reimbursement therefor. The Seller shall give notice in writing to
the Indenture Trustee and the Credit Enhancer of such event, which notice shall
be accompanied by an Officers' Certificate as to the calculation of such
shortfall and by an Opinion of Counsel to the effect that such substitution will
not cause (a) any federal tax to be imposed on the Issuer, including without
limitation in the case of a Group I Loan, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the startup date" under Section 860G(d)(1) of the Code or (b) any portion of
REMIC I or REMIC II to fail to qualify as a REMIC at any time that any Term Note
is outstanding.
Upon receipt by the Indenture Trustee on behalf of the Issuer and
the Custodian of written notification, signed by a Servicing Officer, of the
deposit of such Repurchase Price or of such substitution of an Eligible
Substitute Loan (together with the complete related Mortgage File) and deposit
of any applicable Substitution Adjustment Amount as provided above, the
Custodian, on behalf of the Indenture Trustee, shall release to the Seller the
related Mortgage File for the Home Equity Loan being repurchased or substituted
for and the Indenture Trustee on behalf of the Issuer shall execute and deliver
such instruments of transfer or assignment prepared by the Master Servicer, in
each case without recourse, representation or warranty as shall be necessary to
vest in the Seller or its designee such Home Equity Loan released pursuant
hereto and thereafter such Home Equity Loan shall not be an asset of the Issuer.
It is understood and agreed that the obligation of the Seller to
cure any breach, or to repurchase or substitute for, any Home Equity Loan as to
which such a breach has occurred and is continuing, shall constitute the sole
remedy respecting such breach available to the Purchaser, the Issuer, the
Certificateholders (or the Owner Trustee on behalf of the Certificateholders)
and the Noteholders (or the Indenture Trustee on behalf of the Noteholders)
against the Seller.
It is understood and agreed that the representations and
warranties set forth in this Section 3.1 shall survive delivery of the
respective Mortgage Files to the Issuer, or the Custodian.
ARTICLE IV
SELLER'S COVENANTS
Section 4.1 Covenants of the Seller. The Seller hereby covenants that, except
for the transfer hereunder, the Seller will not sell, pledge, assign or transfer
to any other Person, or grant, create, incur or assume any Lien on any Home
Equity Loan, or any interest therein, except with respect to any Excluded
Amount; the Seller will notify the Issuer, as assignee of the Purchaser, of the
existence of any Lien (other than as provided above) on any Home Equity Loan
immediately upon discovery thereof; and the Seller will defend the right, title
and interest of the Issuer, as assignee of the Purchaser, in, to and under the
Home Equity Loans against all claims of third parties claiming through or under
the Seller; provided, however, that nothing in this Section 4.1 shall be deemed
to apply to any Liens for municipal or other local taxes and other governmental
charges if such taxes or governmental charges shall not at the time be due and
payable or if the Seller shall currently be contesting the validity thereof in
good faith by appropriate Proceedings.
ARTICLE V
SERVICING
Section 5.1 Servicing. The Seller will service the Home Equity Loans pursuant to
the terms and conditions of the Servicing Agreement and will service the Home
Equity Loans directly or through one or more sub-servicers in accordance
therewith.
ARTICLE VI
INDEMNIFICATION BY THE SELLER WITH RESPECT TO THE HOME EQUITY LOANS
Section 6.1 Limitation on Liability of the Seller. None of the directors,
officers, employees or agents of the Seller shall be under any liability to the
Purchaser, it being expressly understood that all such liability is expressly
waived and released as a condition of, and as consideration for, the execution
of this Agreement. Except as and to the extent expressly provided in the
Servicing Agreement, the Seller shall not be under any liability to the Trust,
the Owner Trustee, the Indenture Trustee or the Securityholders. The Seller and
any director, officer, employee or agent of the Seller may rely in good faith on
any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder.
ARTICLE VII
TERMINATION
Section 7.1 Termination. The respective obligations and responsibilities of the
Seller and the Purchaser created hereby shall terminate upon the termination of
the Trust pursuant to the terms of the Trust Agreement.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1 Amendment. This Agreement may be amended from time to time by the
Seller and the Purchaser by written agreement signed by the Seller and the
Purchaser, with the consent of the Credit Enhancer (which consent shall not be
unreasonably withheld).
Section 8.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 8.3 Notices. All demands, notices and communications hereunder shall be
in writing and shall be deemed to have been duly given if personally delivered
at or mailed by registered mail, postage prepaid, addressed as follows:
(i) if to the Seller:
Residential Funding Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Home Equity Loan Trust 2005-HSA1
or, such other address as may hereafter be furnished to the Purchaser in writing
by the Seller.
(ii) if to the Purchaser:
Residential Funding Mortgage Securities II, Inc.
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Home Equity Loan Trust 2005-HSA1
or such other address as may hereafter be furnished to the Seller in writing by
the Purchaser.
Section 8.4 Severability of Provisions. If any one or more of the covenants,
agreements, provisions of terms of this Agreement shall be held invalid for any
reason whatsoever, then such covenants, agreements, provisions or terms shall be
deemed severable from the remaining covenants, agreements, provisions or terms
of this Agreement and shall in no way affect the validity of enforceability of
the other provisions of this Agreement.
Section 8.5 Relationship of Parties. Nothing herein contained shall be deemed or
construed to create a partnership or joint venture between the parties hereto,
and the services of the Seller shall be rendered as an independent contractor
and not as agent for the Purchaser.
Section 8.6 Counterparts. This Agreement may be executed in one or more
counterparts and by the different parties hereto on separate counterparts, each
of which, when so executed, shall be deemed to be an original and such
counterparts, together, shall constitute one and the same agreement.
Section 8.7 Further Agreements. The Purchaser and the Seller each agree to
execute and deliver to the other such additional documents, instruments or
agreements as may be necessary or appropriate to effectuate the purposes of this
Agreement.
Section 8.8 Intention of the Parties. It is the intention of the parties that
the Purchaser is purchasing, and the Seller is selling, the Home Equity Loans,
rather than a loan by the Purchaser to the Seller secured by the Home Equity
Loans. Accordingly, the parties hereto each intend to treat the transaction for
Federal income tax purposes as a sale by the Seller, and a purchase by the
Purchaser, of the Home Equity Loans. The Purchaser will have the right to review
the Home Equity Loans and the Related Documents to determine the characteristics
of the Home Equity Loans which will affect the Federal income tax consequences
of owning the Home Equity Loans and the Seller will cooperate with all
reasonable requests made by the Purchaser in the course of such review.
Section 8.9 Successors and Assigns; Assignment of This Agreement. This Agreement
shall bind and inure to the benefit of and be enforceable by the Seller,
Purchaser and their respective successors and assigns. The obligations of the
Seller under this Agreement cannot be assigned or delegated to a third party
without the consent of the Credit Enhancer and the Purchaser, which consent
shall be at the Credit Enhancer's and the Purchaser's sole discretion, except
that the Purchaser and the Credit Enhancer acknowledge and agree that the Seller
may assign its obligations hereunder to any Affiliate of the Seller, to any
Person succeeding to the business of the Seller, to any Person into which the
Seller is merged and to any Person resulting from any merger, conversion or
consolidation to which the Seller is a party. The parties hereto acknowledge
that the Purchaser is acquiring the Home Equity Loans for the purpose of
contributing them to the Issuer. Pursuant to the terms of the Trust Agreement,
the Issuer will issue and transfer to or at the direction of the Purchaser, the
Certificates and pursuant to the terms of the Indenture, the Issuer will issue
and transfer to or at the direction of the Purchaser, the Notes secured by the
Home Equity Loans. As an inducement to the Purchaser to purchase the Home Equity
Loans, the Seller acknowledges and consents to (i) the assignment by the
Purchaser to the Issuer of all of the Purchaser's rights against the Seller
pursuant to this Agreement insofar as such rights relate to Home Equity Loans
transferred to the Issuer, (ii) the enforcement or exercise of any right or
remedy against the Seller pursuant to this Agreement by or on behalf of the
Issuer and (iii) the Issuer's pledge of its interest in this Agreement to the
Indenture Trustee and the enforcement by the Indenture Trustee of any such right
or remedy against the Seller following an Event of Default under the Indenture.
Such enforcement of a right or remedy by the Issuer or the Indenture Trustee, as
applicable, shall have the same force and effect as if the right or remedy had
been enforced or exercised by the Purchaser directly.
Section 8.10 Survival. The representations and warranties made herein by the
Seller and the provisions of Article VI hereof shall survive the purchase of the
Home Equity Loans hereunder.
Section 8.11 Credit Enhancer as Third-Party Beneficiary.
------------------------------------------
The Credit Enhancer is an express third-party beneficiary under this
Agreement.
IN WITNESS WHEREOF, the Seller and the Purchaser have caused
their names to be signed to this Home Equity Loan Purchase Agreement by their
respective officers thereunto duly authorized as of the day and year first above
written.
RESIDENTIAL FUNDING MORTGAGE SECURITIES II, INC.,
as Purchaser
By: /s/ Xxxxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Vice President
RESIDENTIAL FUNDING CORPORATION,
as Seller
By: /s/ Xxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxx
Title: Associate
EXHIBIT 1
GROUP I LOAN SCHEDULE
TO BE PROVIDED UPON REQUEST
EXHIBIT 2
Group II Loan Schedule
TO BE PROVIDED UPON REQUEST
EXHIBIT 3
REVISED July 11, 0000
XXXXXXXX X - STANDARD & POOR'S PREDATORY LENDING CATEGORIES
Standard & Poor's has categorized loans governed by anti-predatory lending laws
in the Jurisdictions listed below into three categories based upon a combination
of factors that include (a) the risk exposure associated with the assignee
liability and (b) the tests and thresholds set forth in those laws. Note that
certain loans classified by the relevant statute as Covered are included in
Standard & Poor's High Cost Loan Category because they included thresholds and
tests that are typical of what is generally considered High Cost by the
industry.
STANDARD & POOR'S HIGH COST LOAN CATEGORIZATION
------------------------------------------------------------------------------------------------
State/Jurisdiction Name of Anti-Predatory Lending Category under
Applicable
Anti-Predatory Lending
Law/Effective Date Law
---------------------------- ---------------------------------------- --------------------------
Arkansas Arkansas Home Loan Protection Act, High Cost Home Loan
Ark. Code Xxx. xx.xx. 00-00-000 et seq.
Effective July 16, 2003
---------------------------- ---------------------------------------- --------------------------
Cleveland Heights, OH Ordinance No. 72-2003 (PSH), Mun. Code Covered Loan
xx.xx. 757.01 et seq.
Effective June 2, 2003
---------------------------- ---------------------------------------- --------------------------
Colorado Consumer Equity Protection, Colo. Covered Loan
Stat. Xxx. xx.xx. 5-3.5-101 et seq.
Effective for covered loans offered
or entered into on or after
January 1, 2003. Other provisions of
the Act took effect on June 7, 2002
---------------------------- ---------------------------------------- --------------------------
Connecticut Connecticut Abusive Home Loan Lending High Cost Home Loan
Practices Act, Conn. Gen. Stat. xx.xx.
36a-746 et seq.
Effective October 1, 2001
---------------------------- ---------------------------------------- --------------------------
District of Columbia Home Loan Protection Act, D.C. Code xx.xx. Covered Loan
26-1151.01 et seq.
Effective for loans closed on or after
January 28, 2003
---------------------------- ---------------------------------------- --------------------------
Florida Fair Lending Act, Fla. Stat. Xxx. xx.xx. High Cost Home Loan
494.0078 et seq.
Effective October 2, 2002
---------------------------- ---------------------------------------- --------------------------
Georgia (Oct. 1, 0000 - Xxxxxxx Xxxx Xxxxxxx Xxx, Xx. Code High Cost Home Loan
Mar. 6, 2003) Xxx. xx.xx. 7-6A-1 et seq.
Effective October 1, 2002 - March 6,
2003
---------------------------- ---------------------------------------- --------------------------
Georgia as amended (Mar. Georgia Fair Lending Act, Ga. Code High Cost Home Loan
7, 2003 - current) Xxx. xx.xx. 7-6A-1 et seq.
Effective for loans closed on or after
March 7, 2003
---------------------------- ---------------------------------------- --------------------------
HOEPA Section 32 Home Ownership and Equity Protection High Cost Loan
Act of 1994, 15 U.S.C. ss. 1639, 12
C.F.R. xx.xx. 226.32 and 226.34
Effective October 1, 1995, amendments
October 1, 2002
---------------------------- ---------------------------------------- --------------------------
Illinois High Risk Home Loan Act, Ill. Comp. High Risk Home Loan
Stat. tit. 815, xx.xx. 137/5 et seq.
Effective January 1, 2004
(prior to this date,
regulations under Residential
Mortgage License Act
effective from May 14, 2001)
---------------------------- ---------------------------------------- --------------------------
Kansas Consumer Credit Code, Kan. Stat. Xxx. High Loan to Value
xx.xx. 16a-1-101 et seq. Consumer Loan (id. ss.
16a-3-207)
and;
Sections 16a-1-301 and 16a-3-207
became effective April 14, 1999;
Section 16a-3-308a became effective
July 1, 1999
---------------------------- ---------------------------------------- --------------------------
High APR Consumer Loan
(id. ss. 16a-3-308a)
---------------------------- ---------------------------------------- --------------------------
Kentucky 2003 KY H.B. 287 - High Cost Home Loan High Cost Home Loan
Act, Ky. Rev. Stat. xx.xx. 360.100
et seq.
Effective June 24, 2003
---------------------------- ---------------------------------------- --------------------------
Maine Truth in Lending, Me. Rev. Stat. tit. High Rate High Fee
9-A, xx.xx. 8-101 et seq. Mortgage
Effective September 29, 1995 and as
amended from time to time
---------------------------- ---------------------------------------- --------------------------
Massachusetts Part 40 and Part 32, 209 C.M.R. xx.xx. High Cost Home Loan
32.00 et seq. and 209 C.M.R. xx.xx.
40.01 et seq.
Effective March 22, 2001 and amended
from time to time
---------------------------- ---------------------------------------- --------------------------
Nevada Assembly Xxxx No. 284, Nev. Rev. Stat. Home Loan
xx.xx. 598D.010 et seq.
Effective October 1, 2003
---------------------------- ---------------------------------------- --------------------------
New Jersey New Jersey Home Ownership Security Act High Cost Home Loan
of 2002, N.J. Rev. Stat. xx.xx.
46:10B-22 et seq.
Effective for loans closed on or after
November 27, 2003
---------------------------- ---------------------------------------- --------------------------
New Mexico Home Loan Protection Act, N.M. Rev. High Cost Home Loan
Stat. xx.xx. 58-21A-1 et seq.
Effective as of January 1, 2004;
Revised as of February 26, 2004
---------------------------- ---------------------------------------- --------------------------
New York N.Y. Banking Law Article 6-l High Cost Home Loan
Effective for applications made on or
after April 1, 2003
---------------------------- ---------------------------------------- --------------------------
North Carolina Restrictions and Limitations on High High Cost Home Loan
Cost Home Loans, N.C. Gen. Stat. xx.xx.
24-1.1E et seq.
Effective July 1, 2000; amended
October 1, 2003 (adding open-end lines
of credit)
---------------------------- ---------------------------------------- --------------------------
Ohio H.B. 386 (codified in various sections Covered Loan
of the Ohio Code), Ohio Rev. Code Xxx.
xx.xx. 1349.25 et seq.
Effective May 24, 2002
---------------------------- ---------------------------------------- --------------------------
Oklahoma Consumer Credit Code (codified in Subsection 10 Mortgage
various sections of Title 14A)
Effective July 1, 2000; amended
effective January 1, 2004
---------------------------- ---------------------------------------- --------------------------
South Carolina South Carolina High Cost and Consumer High Cost Home Loan
Home Loans Act, S.C. Code Xxx. xx.xx.
37-23-10 et seq.
Effective for loans taken on or after
January 1, 2004
---------------------------- ---------------------------------------- --------------------------
West Virginia West Virginia Residential Mortgage West Virginia Mortgage
Lender, Broker and Servicer Act, W. Loan Act Loan
Va. Code Xxx. xx.xx. 31-17-1 et seq.
Effective June 5, 2002
---------------------------- ---------------------------------------- --------------------------
STANDARD & POOR'S COVERED LOAN CATEGORIZATION
---------------------------- ---------------------------------------- --------------------------
State/Jurisdiction Name of Anti-Predatory Lending Category under
Applicable
Anti-Predatory Lending
Law/Effective Date Law
---------------------------- ---------------------------------------- --------------------------
Georgia (Oct. 1, 2002 - Georgia Fair Lending Act, Ga. Code Covered Loan
Mar. 6, 2003) Xxx. xx.xx. 7-6A-1 et seq.
Effective October 1, 2002 - March 6,
2003
---------------------------- ---------------------------------------- --------------------------
New Jersey New Jersey Home Ownership Security Act Covered Home Loan
of 2002, N.J. Rev. Stat. xx.xx. 46:10B-22
et seq.
Effective November 27, 2003 - July 5,
2004
---------------------------- ---------------------------------------- --------------------------
STANDARD & POOR'S HOME LOAN CATEGORIZATION
------------------------------------------------------------------------------------------------
State/Jurisdiction Name of Anti-Predatory Lending Category under
Applicable
Anti-Predatory Lending
Law/Effective Date Law
---------------------------- ---------------------------------------- --------------------------
Georgia (Oct. 1, 2002 - Georgia Fair Lending Act, Ga. Code Home Loan
Mar. 6, 2003) Xxx. xx.xx. 7-6A-1 et seq.
Effective October 1, 2002 - March 6,
2003
---------------------------- ---------------------------------------- --------------------------
New Jersey New Jersey Home Ownership Security Act Home Loan
of 2002, N.J. Rev. Stat. xx.xx. 46:10B-22
et seq.
Effective for loans closed on or after
November 27, 2003
---------------------------- ---------------------------------------- --------------------------
New Mexico Home Loan Protection Act, N.M. Rev. Home Loan
Stat. xx.xx. 58-21A-1 et seq.
Effective as of January 1, 2004;
Revised as of February 26, 2004
---------------------------- ---------------------------------------- --------------------------
North Carolina Restrictions and Limitations on High Consumer Home Loan
Cost Home Loans, N.C. Gen. Stat. xx.xx.
24-1.1E et seq.
Effective July 1, 2000; amended
October 1, 2003 (adding open-end lines
of credit)
---------------------------- ---------------------------------------- --------------------------
South Carolina South Carolina High Cost and Consumer Consumer Home Loan
Home Loans Act, S.C. Code Xxx. xx.xx.
37-23-10 et seq.
Effective for loans taken on or after
January 1, 2004
---------------------------- ---------------------------------------- --------------------------
