EXECUTION COPY
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of October 27, 2006,
between Residential Funding Company, LLC, a Delaware limited liability
company ("RFC") and Residential Asset Securities Corporation, a Delaware
corporation (the "Company").
Recitals
A. RFC has entered into seller contracts ("Seller Contracts") with
certain sellers and servicers.
B. The Company wishes to purchase from RFC certain Mortgage Loans
(as hereinafter defined) originated pursuant to the Seller Contracts.
C. The Company, RFC, as master servicer (in such capacity, the
"Master Servicer"), and U.S. Bank National Association, as trustee (the
"Trustee"), are entering into a Pooling and Servicing Agreement dated as of
October 27, 2006 (the "Pooling and Servicing Agreement"), pursuant to which
the Trust proposes to issue Home Equity Mortgage Asset-Backed Pass-Through
Certificates, Series 2006-EMX9 (the "Certificates") consisting of seventeen
classes designated as Class A-I-1, Class A-I-2, Class A-I-3, Class A-I-4,
Class A-II, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6,
Class M-7, Class M-8, Class M-9, Class M-10, Class SB and Class R
representing beneficial ownership interests solely in a trust fund consisting
primarily of a pool that will be divided into (i) the adjustable and fixed
rate one-to four-family mortgage loans identified on Exhibit F-1 to the
Pooling and Servicing Agreement (the "Group I Loans") and (ii) the adjustable
and fixed rate one- to four-family mortgage loans identified on Exhibit F-2
to the Pooling and Servicing Agreement (the "Group II Loans," and together
with the Group I Loans, the "Mortgage Loans").
D. In connection with the purchase of the Mortgage Loans, the
Company will assign to RFC the Class SB and Class R Certificates (the
"Retained Certificates"). The Class A-I-1, Class A-I-2, Class A-I-3, Class
A-I-4, Class A-II, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5,
Class M-6, Class M-7, Class M-8, Class M-9 and Class M-10 Certificates were
offered to investors pursuant to a Prospectus Supplement dated
October 25, 2006 (the "Prospectus Supplement").
E. In connection with the purchase of the Mortgage Loans and the
issuance of the Certificates, RFC wishes to make certain representations and
warranties to the Company and to assign certain of its rights under the
Seller Contracts to the Company, and the Company wishes to assume certain of
RFC's obligations under the Seller Contracts.
F. The Company and RFC intend that the conveyance by RFC to the
Company of all its right, title and interest in and to the Mortgage Loans
pursuant to this Agreement shall constitute a purchase and sale and not a
loan.
NOW THEREFORE, in consideration of the recitals and the mutual promises
herein and other good and valuable consideration, the parties agree as
follows:
1. All capitalized terms used but not defined herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.
2. Concurrently with the execution and delivery hereof, RFC hereby assigns
to the Company without recourse all of its right, title and interest in and
to the Mortgage Loans, including all interest and principal received on or
with respect to the Mortgage Loans after the Cut-off Date (other than
payments of principal and interest due on the Mortgage Loans in
October 2006). In consideration of such assignment, RFC will receive from
the Company, in immediately available funds, an amount equal to
$716,819,049.08 and the Retained Certificates. In connection with such
assignment and at the Company's direction, RFC has in respect of each
Mortgage Loan endorsed the related Mortgage Note (other than any Destroyed
Mortgage Note, hereinafter defined) to the order of the Trustee and delivered
an assignment of mortgage in recordable form to the Trustee or its agent. A
"Destroyed Mortgage Note" means a Mortgage Note the original of which was
permanently lost or destroyed.
The Company and RFC intend that the conveyance by RFC to the Company of
all its right, title and interest in and to the Mortgage Loans pursuant to
this Section 2 shall be, and be construed as, a sale of the Mortgage Loans by
RFC to the Company. It is, further, not intended that such conveyance be
deemed to be a pledge of the Mortgage Loans by RFC to the Company to secure a
debt or other obligation of RFC. Nonetheless (a) this Agreement is intended
to be and hereby is deemed to be a security agreement within the meaning of
Articles 8 and 9 of the Minnesota Uniform Commercial Code and the Uniform
Commercial Code of any other applicable jurisdiction; (b) the conveyance
provided for in this Section shall be deemed to be a grant by RFC to the
Company of a security interest in all of RFC's right (including the power to
convey title thereto), title and interest, whether now owned or hereafter
acquired, in and to (A) the Mortgage Loans, including the Mortgage Notes, the
Mortgages, any related insurance policies and all other documents in the
related Mortgage Files, (B) all amounts payable pursuant to the Mortgage
Loans in accordance with the terms thereof and (C) any and all general
intangibles consisting of, arising from or relating to any of the foregoing,
and all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, instruments, securities or other property, including,
without limitation, all amounts from time to time held or invested in the
Certificate Account or the Custodial Account, whether in the form of cash,
instruments, securities or other property; (c) the possession by the Trustee,
the Custodian or any other agent of the Trustee of Mortgage Notes or such
other items of property as constitute instruments, money, payment
intangibles, negotiable documents, goods, deposit accounts, letters of
credit, advices of credit, investment property, certificated securities or
chattel paper shall be deemed to be "possession by the secured party," or
possession by a purchaser or a person designated by such secured party, for
purposes of perfecting the security interest pursuant to the Minnesota
Uniform Commercial Code and the Uniform Commercial Code of any other
applicable jurisdiction (including without limitation, Sections 8-106, 9-313
and 9-106 thereof); and (d) 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 Trustee for the purpose of perfecting such security
interest under applicable law. RFC shall, to the extent consistent with this
Agreement, take such reasonable actions as may be necessary to ensure that,
if this Agreement were deemed to create a security interest in the Mortgage
Loans and the other property described above, 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.
Without limiting the generality of the foregoing, RFC shall prepare and
deliver to the Company not less than 15 days prior to any filing date, and
the Company shall file, or shall cause to be filed, at the expense of RFC,
all filings necessary to maintain the effectiveness of any original filings
necessary under the Uniform Commercial Code as in effect in any jurisdiction
to perfect the Company's security interest in or lien on the Mortgage Loans
including without limitation (x) continuation statements, and (y) such other
statements as may be occasioned by (1) any change of name of RFC or the
Company, (2) any change of location of the state of formation, place of
business or the chief executive office of RFC, or (3) any transfer of any
interest of RFC in any Mortgage Loan.
3. Concurrently with the execution and delivery hereof, the Company hereby
assigns to RFC without recourse all of its right, title and interest in and
to the Retained Certificates as part of the consideration payable to RFC by
the Company pursuant to this Agreement.
4. RFC represents and warrants to the Company, with respect to each
Mortgage Loan that on the date of execution hereof (or, if otherwise
specified below, as of the date so specified and provided that all
percentages of the Mortgage Loans described in this Section 4 are approximate
percentages by outstanding principal balance determined as of the Cut-off
Date after deducting payments due during the month of the Cut-off Date):
(i) Immediately prior to the delivery of the Mortgage Loans to the Company,
RFC had good title to, and was the sole owner of, each Mortgage Loan free and
clear of any pledge, lien or security interest (other than (a) rights to
servicing and related compensation, and (b) any senior lien relating to a
Mortgage Loan listed on Exhibit A attached hereto (the "Junior Lien Mortgage
Loans")) and had full right and authority to sell and assign the Mortgage
Loans pursuant to this Agreement.
(ii) The proceeds of the Mortgage Loan have been fully disbursed, there is
no requirement for future advances thereunder and any and all requirements as
to completion of any on-site or off-site improvements and as to disbursements
of any escrow funds therefor (including any escrow funds held to make Monthly
Payments pending completion of such improvements) have been complied with.
All costs, fees and expenses incurred in making, closing or recording the
Mortgage Loans were paid.
(iii) The Mortgagor (including any party secondarily liable under the
Mortgage File) has no right of set-off, defense, counterclaim or right of
rescission as to any document in the Mortgage File except as may be provided
under the Relief Act.
(iv) RFC and any other originator, servicer or other previous owner of each
Mortgage Loan has obtained all licenses and effected all registrations
required under all applicable local, state and federal laws, regulations and
orders, including without limitation truth in lending and disclosure laws,
necessary to own or originate the Mortgage Loans (the failure to obtain such
licenses or to comply with such laws, regulations and orders would make such
Mortgage Loans void or voidable).
(v) A policy of title insurance, in the form and amount that is in material
compliance with the Program Guide, was effective as of the closing of each
Mortgage Loan, is valid and binding, and remains in full force and effect
except for Mortgaged Properties located in the State of Iowa where an
attorney's certificate has been provided in accordance with the Program
Guide. No claims have been made under such title insurance policy and no
holder of the related mortgage, including RFC, has done or omitted to do
anything which would impair the coverage of such title insurance policy.
(vi) Each Mortgage Loan is a valid and enforceable first lien (or in the
case of the Junior Lien Mortgage Loans, junior lien) on the Mortgaged
Property subject only to (1) the lien of nondelinquent current real property
taxes and assessments, (2) covenants, conditions and restrictions, rights of
way, easements and other matters of public record as of the date of recording
of such Mortgage, such exceptions appearing of record being acceptable to
mortgage lending institutions generally or specifically reflected in the
appraisal made in connection with the origination of the related Mortgage
Loan, and (3) other matters to which like properties are commonly subject
that do not materially interfere with the benefits of the security intended
to be provided by such Mortgage.
(vii) All improvements which were considered in determining the Appraised
Value of the Mortgaged Property lie wholly within the boundaries and the
building restriction lines of the Mortgaged Premises, or the policy of title
insurance affirmatively insures against loss or damage by reason of any
violation, variation, encroachment or adverse circumstance that either is
disclosed or would have been disclosed by an accurate survey.
(viii) There are no delinquent tax or delinquent assessment liens
against the related Mortgaged Property, and there are no mechanic's liens or
claims for work, labor or material or any other liens affecting such
Mortgaged Property which are or may be a lien prior to, or equal with, the
lien of the Mortgage assigned to RFC, except those liens that are insured
against by the policy of title insurance and described in (v) above.
(ix) Each Mortgaged Property is free of material damage and is in good
repair and no notice of condemnation has been given with respect thereto.
(x) The improvements upon the Mortgaged Property are insured against loss
by fire and other hazards as required by the Program Guide, including flood
insurance if required under the National Flood Insurance Act of 1968, as
amended. The Mortgage requires the Mortgagor to maintain such casualty
insurance at the Mortgagor's expense, and on the Mortgagor's failure to do
so, authorizes the holder of the Mortgage to obtain and maintain such
insurance at the Mortgagor's expense and to seek reimbursement therefore from
the Mortgagor.
(xi) The appraisal was made by an appraiser who meets the minimum
qualifications for appraisers as specified in the Program Guide.
(xii) Each Mortgage Note and 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.
(xiii) Each Mortgage Loan is covered by a standard hazard insurance
policy.
(xiv) None of the Mortgage Loans are secured by a leasehold estate.
(xv) The information set forth on the Mortgage Loan Schedule with respect to
each Mortgage Loan is true and correct in all material respects as of the
date or dates which such information is furnished.
(xvi) None of the Group I Loans are 30 to 59 days Delinquent in payment of
principal or interest. No more than approximately 0.1% of the Group I Loans
have been a maximum of 30 to 59 days Delinquent in payment of principal or
interest in the last 12 months. None of the Group I Loans are 60 or more
days Delinquent in payment of principal or interest. None of the Group I
Loans have been a maximum of 60 or more days Delinquent in payment of
principal or interest in the last 12 months. None of the Group II Loans are
30 or more days Delinquent in payment of principal or interest. No more than
approximately 0.1% of the Group II Loans have been a maximum of 30 or more
days Delinquent in payment of principal or interest in the last 12 months.
For the purposes of this representation a Mortgage Loan is considered
Delinquent if a Subservicer or the Master Servicer has made any advances on
the Mortgage Loan that have not been reimbursed out of payments by the
mortgagor or on the mortgagor's behalf from a source other than a
Subservicer, a Seller, the Master Servicer or an affiliated entity of either.
(xvii) None of the Mortgage Loans with Loan-to-Value Ratios, or combined
Loan-to-Value Ratios with respect to Junior Lien Loans, at origination in
excess of 80% are insured by a borrower-paid, primary mortgage insurance
policy.
(xviii) The weighted average Loan-to-Value Ratios with respect to the
Group I Loans, and the Group II Loans, in each case by outstanding principal
balance at origination, are 86.3% and 86.7%, respectively.
(xix) No more than approximately 0.5% of the Group I Loans are located in any
one zip code area in Maryland and no more than approximately 0.5% of the
Group I Loans are located in any one zip code area outside of Maryland. No
more than approximately 0.6% of the Group II Loans are located in any one zip
code area outside of Massachusetts and no more than approximately 0.4% of the
Group II Loans are located in any one zip code area outside of
Massachusetts.
(xx) All of the Mortgage Loans that are adjustable-rate loans will adjust
semi-annually based on Six-Month LIBOR. Each of the Mortgage Loans that are
adjustable-rate loans will adjust on the Adjustment Date specified in the
related Mortgage Note to a rate equal to the sum (rounded as described in the
related Mortgage Note) of the related Index described in the Prospectus
Supplement and the Note Margin set forth in the related Mortgage Note,
subject to the limitations described in the Prospectus Supplement, and each
Mortgage Loan has an original term to maturity from the date on which the
first monthly payment is due of not more than approximately 30 years. On
each Adjustment Date, the Mortgage Rate on each Mortgage Loan that is an
adjustable-rate loan will be adjusted to equal the related Index plus the
related Gross Margin, subject in each case to the Periodic Rate Cap, the
Mortgage Rate and the Minimum Mortgage Rate. The amount of the monthly
payment on each Mortgage Loan that is an adjustable-rate loan will be
adjusted on the first day of the month following the month in which the
Adjustment Date occurs to equal the amount necessary to pay interest at the
then-applicable Mortgage Rate to fully amortize the outstanding principal
balance of such Mortgage Loan over its remaining term to stated maturity. No
Mortgage Loan is subject to negative amortization.
(xxi) With respect to each Mortgage constituting a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no fees
or expenses are or will become payable by the holder of the Mortgage Loan to
the trustee under the deed of trust, except in connection with a trustee's
sale after default by the Mortgagor.
(xxii) Approximately 15.1% and 11.1% of the Mortgaged Properties related
to the Group I Loans and the Group II Loans, respectively, are units in
detached planned unit developments. Approximately 2.4% and 1.9% of the
Mortgaged Properties related to the Group I Loans and the Group II Loans,
respectively, are units in attached planned unit developments. Approximately
1.6% and 1.2% of the Mortgaged Properties related to the Group I Loans and
the Group II Loans, respectively, are units in townhouses. Approximately
7.0% and 7.3% of the Mortgaged Properties related to the Group I Loans and
the Group II Loans, respectively, are condominium units. Each Mortgaged
Property is suitable for year-round occupancy.
(xxiii) Approximately 94.0% and all of the Mortgaged Properties related
to the Group I Loans and the Group II Loans, respectively, are secured by the
owner's primary residence. Approximately 2.1% and none of the Mortgaged
Properties related to the Group I Loans and the Group II Loans, respectively,
are secured by the owner's second or vacation residence. Approximately 3.9%
and none of the Mortgaged Properties related to the Group I Loans and the
Group II Loans, respectively, are secured by a non-owner occupied residence.
(xxiv) Approximately 62.7% and 69.7% of the Mortgaged Properties related
to the Group I Loans and the Group II Loans, respectively, are secured by
detached one-family dwelling units. Approximately 11.1% and 9.0% of the
Mortgaged Properties related to the Group I Loans and the Group II Loans,
respectively, are secured by two- to four-family dwelling units.
(xxv) The average outstanding principal balance of the Group I Loans at
origination was approximately $191,469. The average outstanding principal
balance of the Group II Loans at origination was approximately $177,209. No
Group I Loan at origination had a principal balance of less than $13,000 or
more than $1,000,000. No Group II Loan at origination had a principal
balance of less than $15,400 or more than $416,800.
(xxvi) As of the Cut-off Date, all Mortgage Rate adjustments on the
Mortgage Loans that have reached an Adjustment Date have been done in
accordance with the terms of the related Mortgage Note.
(xxvii) Any escrow arrangements established with respect to any Mortgage
Loan are in compliance with all applicable local, state and federal laws and
are in compliance with the terms of the related Mortgage Note.
(xxviii) Except as otherwise specifically set forth herein, there is no
default, breach, violation or event of acceleration existing under any
Mortgage Note or Mortgage and no event which, with notice and expiration of
any grace or cure period, would constitute a default, breach, violation or
event of acceleration, and no such default, breach, violation or event of
acceleration has been waived by RFC or by any other entity involved in
originating or servicing a Mortgage Loan.
(xxix) 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), (2), (4), (5), (6), (7) and (9), 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 Mortgage 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), (6), (7) and (9).
(xxx) No more than 45.2% of the Group I Loans have been classified by RFC as
Credit Grade A4 Mortgage Loans, no more than 33.9% of the Group I Loans have
been classified by RFC as Credit Grade A5 Mortgage Loans, no more than 10.6%
of the Group I Loans have been classified by RFC as Credit Grade AX Mortgage
Loans, no more than 5.8% of the Group I Loans have been classified by RFC as
Credit Grade AM Mortgage Loans, no more than 2.7% of the Group I Loans have
been classified by RFC as Credit Grade B Mortgage Loans and no more than 2.1%
of the Group I Loans have been classified by RFC as Credit Grade C Mortgage
Loans, in each case as described generally in the Prospectus Supplement.
(xxxi) No more than 42.9% of the Group II Loans have been classified by
RFC as Credit Grade A4 Mortgage Loans, no more than 34.2% of the Group II
Loans have been classified by RFC as Credit Grade A5 Mortgage Loans, no more
than 11.2% of the Group II Loans have been classified by RFC as Credit Grade
AX Mortgage Loans, no more than 6.2% of the Group II Loans have been
classified by RFC as Credit Grade AM Mortgage Loans, no more than 2.8% of the
Group II Loans have been classified by RFC as Credit Grade B Mortgage Loans
and no more than 3.0% of the Group II Loans have been classified by RFC as
Credit Grade C Mortgage Loans, in each case as described generally in the
Prospectus Supplement.
(xxxii) No Mortgage Loan is a graduated payment loan or has a shared
appreciation or contingent interest feature.
(xxxiii) With respect to each Mortgage Loan, either (i) each Mortgage Loan
contains a customary provision for the acceleration of the payment of the
unpaid principal balance of the Mortgage Loan in the event the related
Mortgaged Property is sold without the prior consent of the mortgagee
thereunder or (ii) the Mortgage Loan is assumable pursuant to the terms of
the Mortgage Note.
(xxxiv) No Mortgage Loan provides for deferred interest or negative
amortization.
(xxxv) None of the Mortgage Loans are buydown Mortgage Loans.
(xxxvi) Each Mortgaged Property is a single parcel of real estate with a
one- to four-unit single family residence thereon, a condominium unit, a
manufactured housing unit, a unit in a townhouse, a planned unit development,
a leasehold or a modular home; and no Mortgage Property consists of a mobile
home or a manufactured housing unit that is not permanently affixed to its
foundation.
(xxxvii) No more than approximately 31.9% and 37.8% of the Group I Loans
and Group II Loans, respectively, were made to Mortgagors with credit scores
as described generally in the Prospectus Supplement of less than 600,
excluding Mortgagors whose credit scores are not available to RFC. The
weighted average of the credit scores for the Group I Loans and the Group II
Loans for which Credit Scores are available to RFC was approximately 629 and
615, respectively, as of the Cut-off Date.
(xxxviii) No instrument of release or waiver has been executed in
connection with the Mortgage Loans, and no Mortgagor has been released, in
whole or in part from its obligations in connection with a Mortgage Loan.
(xxxix) The weighted average remaining term to stated maturity of the
Group I Loans and the Group II Loans, as of the cut-off date, will be
approximately 361 months and 362 months, respectively. The weighted average
original term to maturity of the Group I Loans and the Group II Loans, as of
the cut-off date, will be approximately 345 months and 349 months,
respectively.
(xl) No Group I Loan has a prepayment penalty term that extends beyond five
years after the date of origination.
(xli) Approximately 64.7% of the Group I Loans and 65.8% of the Group II
Loans are Balloon Mortgage Loans.
(xlii) None of the Mortgage Loans are loans that, under applicable state
or local law in effect at the time of origination of such Mortgage 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.
(xliii) Each Mortgage Loan as of the time of its origination complied in
all material respects with all applicable local, state and federal laws,
including, but not limited to, all applicable predatory, abusive and fair
lending laws.
(xliv) None of the Mortgage Loans are subject to the Home Ownership and
Equity Protection Act of 1994 ("HOEPA").
(xlv) None of the Mortgaged Properties are units in manufactured housing
developments.
(xlvi) There is no Mortgage Loan in the trust that was originated on or
after October 1, 2002 and before March 7, 2003, which is secured by property
located in the State of Georgia.
(xlvii) No Mortgage Loan is a High Cost Loan or Covered Loan, as
applicable (as such terms are defined in the current version of Appendix E of
the Standard & Poor's Glossary For File Format For LEVELS(R)Version 5.7
(attached hereto as Exhibit B); and there is no mortgage loan in the trust
that was originated on or after January 1, 2005, which is a "high cost home
loan" as defined under the Indiana Home Practices Act (I.C. 2409); provided
that no representation and warranty is made in this clause (xlvii) with
respect to 0.2% and 0.1% of the Group I Loans and Group II Loans,
respectively, secured by property located in the State of Kansas or with
respect to 0.2% and 0.1% of the Group I Loans and the Group II Loans,
respectively, secured by property located in the State of West Virginia.
(xlviii) With respect to each Group II Loan, no borrower obtained a
prepaid single-premium credit-life, credit disability, credit unemployment or
credit property insurance policy in connection with the origination of the
Mortgage Loan.
(xlix) The related Subservicer or the Master Servicer for each Mortgage
Loan has fully furnished, in accordance with the Fair Credit Reporting Act
and its implementing regulations, accurate and complete information (i.e.,
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.
(l) The Subservicer for each Mortgage Loan or the Master Servicer will
fully furnish, in accordance with the Fair Credit Reporting Act and its
implementing regulations, accurate and complete information (i.e., 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.
(li) With respect to any Group II Loan that contains a provision permitting
imposition of a penalty upon a prepayment prior to maturity:
(i) the Seller's pricing methods include mortgage loans with and
without prepayment premiums;
(ii) borrowers selecting Group II Loans which include such prepayment
premiums receive some benefit, (e.g. a rate or fee reduction), in exchange
for selecting a Group II Loan with a prepayment premium;
(iii) the originator of the Group II Loans had a verifiable policy of
offering the borrower, or requiring third-party brokers to offer the
borrower an array of mortgage loan products that included mortage loan
products with prepayment premiums and mortgage loan products that did not
require payment of such a premium;
(iv) the prepayment premium is disclosed to the borrower in the loan
documents pursuant to applicable state and federal law;
(v) notwithstanding ay state or federal law to the contrary, the
Master Servicer shall not impose such prepayment premium in any instance
when the mortgage debt is accelerated as the result of the borrower's
default in making the loan payments; and
(vi) no Group II Loan has a prepayment penalty term that extends
beyond three years after the date of origination.
(lii) The originator of each Group II Loan offered the related borrower
mortgage loan products for which the borrower qualified and we are not aware
that the originator encouraged or required the borrower to select a mortgage
loan product that is a higher cost product designed for less creditworthy
borrowers.
(liii) The originator of the Group II Loans adequately considered the
borrower's ability to make payments by employing underwriting techniques that
considered a variety of factors, such as: the borrower's income, assets and
liabilities, and not solely the collateral value, in deciding to extend the
credit at the time of origination.
(liv) No borrower under a Group II Loan in the trust was charged "points and
fees" in an amount greater than (a) $1,000 or (b) 5% of the principal amount
of such Mortgage Loan, whichever is greater. For purposes of this
representation, "points and fees" (x) include origination, underwriting,
broker and finder's fees and charges that the lender imposed as a condition
of making the Mortgage Loan, whether they are paid to the lender or a third
party; and (y) exclude bona fide discount points, fees paid for actual
services rendered in connection with the origination of the mortgage (such as
attorney's fees, notaries fees and fees paid for property appraisals, credit
reports, surveys, title examinations and extracts, flood and tax
certifications, and home inspections); the cost of mortgage insurance or
credit-risk price adjustments; the costs of title, hazard, and flood
insurance policies; state and local transfer taxes or fees; escrow deposits
for the future payment of taxes and insurance premiums; and other
miscellaneous fees and charges, which miscellaneous fee and charges, in total
do not exceed 0.25 percent of the loan amount.
(lv) With respect to any Group II Loan originated on or after August 1,
2004, neither the related Mortgage nor the related Mortgage Note requires the
borrower to submit to arbitration to resolve any dispute arising out of or
relating in any way to the Mortgage Loan transaction.
(lvi) The principal balance at origination for each Group II Mortgage Loan
that is secured by a single family property located in any state other than
the States of Hawaii or Alaska did not exceed $417,000. The principal
balance at origination for each Group II Mortgage Loan that is secured by a
single family property located in the States of Hawaii or Alaska or the
Territories of Guam or the Virgin Islands did not exceed $625,500. The
principal balance at origination for each Group II Mortgage Loan that is
secured by a two-, three- or four-family property located in any state other
than the States of Hawaii or Alaska did not exceed $553,850, $645,300 or
$801,950, respectively. The principal balance at origination for each Group
II Mortgage Loan that is secured by a two-, three- or four-family property
located in the States of Hawaii or Alaska or the Territories of Guam or the
Virgin Islands did not exceed $800,775, $967,950 and $1,202,925, respectively.
(lvii) With respect to any Group II Loan that is a subordinate lien
mortgage loan:
(i) such lien is on a one- to four-family residence that is the principal
residence of the borrower;
(ii) no subordinate lien mortgage loan has an original principal balance
that exceeds one-half of the one-unit limitation for first lien mortgage
loans, i.e. $208,500 (in Alaska, Guam, Hawaii or Virgin Islands:
$312,750), without regard to the number of units; and
(iii) the original principal balance of the first lien mortgage loan plus
the original principal balance of any subordinate lien mortgage loans
relating to the same mortgaged property does not exceed the applicable
Xxxxxxx Mac loan limit for first lien mortgage loans for that property
type (as set out in Section 4(lvi) above).
(lviii) No Group II Loan is "seasoned" (a seasoned mortgage loan is one
where the date of the mortgage note is more than 1 year before the date of
issuance of the related security).
Upon discovery by RFC or upon notice from the Company or the Trustee of
a breach of the foregoing representations and warranties in respect of any
Mortgage Loan, or upon the occurrence of a Repurchase Event (as described in
Section 5 below), which materially and adversely affects the interests of any
holders of the Certificates, the Certificate Insurer or the Company in such
Mortgage Loan (notice of which breach or occurrence shall be given to the
Company by RFC, if it discovers the same), RFC shall, within 90 days after
the earlier of its discovery or receipt of notice thereof, either cure such
breach or Repurchase Event in all material respects or, except as otherwise
provided in Section 2.04 of the Pooling and Servicing Agreement, either
(i) purchase such Mortgage Loan from the Trustee or the Company, as the case
may be, at a price equal to the Purchase Price for such Mortgage Loan or (ii)
substitute a Qualified Substitute Mortgage Loan or Loans for such Mortgage
Loan in the manner and subject to the limitations set forth in Section 2.04
of the Pooling and Servicing Agreement. Notwithstanding the foregoing, it is
understood by the parties hereto that a breach of the representations and
warranties made in any of clauses (xliii) through (lviii) of this Section 4
with respect to any Group II Loan will be deemed to materially and adversely
affect the interests of the Holders of the Certificates in the related
Mortgage Loan. Notwithstanding the foregoing, RFC shall not be required to
cure breaches, Repurchase Events or purchase or substitute for Mortgage Loans
as provided above if the substance of such breach or Repurchase Event also
constitutes fraud in the origination of the Mortgage Loan. If the breach of
representation and warranty that gave rise to the obligation to repurchase or
substitute a Mortgage Loan pursuant to this Section 4 was the representation
set forth in clause (xliii) of this Section 4, then RFC shall pay to the
Trust Fund, 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 Fund, and
that directly resulted from such breach, or if incurred and paid by the Trust
Fund thereafter, concurrently with such payment.
5. With respect to the Mortgage Loans, a repurchase event ("Repurchase
Event") shall have occurred if it is discovered that, as of the date hereof,
the related Mortgage Loan was not a valid first lien or junior lien in the
case of a Junior Lien Loan on the related Mortgaged Property subject only to
(i) the lien of real property taxes and assessments not yet due and payable,
(ii) covenants, conditions, and restrictions, rights of way, easements and
other matters of public record as of the date of recording of such Mortgage
and such other permissible title exceptions as are listed in the Program
Guide and (iii) other matters to which like properties are commonly subject
which do not materially adversely affect the value, use, enjoyment or
marketability of the Mortgaged Property.
6. Concurrently with the execution and delivery hereof, RFC hereby assigns
to the Company, and the Company hereby assumes, all of RFC's rights and
obligations under the Seller Contracts with respect to the Mortgage Loans to
be serviced under the Pooling and Servicing Agreement, insofar as such rights
and obligations relate to (a) any representations and warranties regarding a
Mortgage Loan made by a Seller under any Seller Contract and any remedies
available under the Seller Contract for a breach of any such representations
and warranties if (i) the substance of such breach also constitutes fraud in
the origination of the Mortgage Loan or (ii) the representation and warranty
relates to the absence of toxic materials or other environmental hazards that
could affect the Mortgaged Property, or (b) the Seller's obligation to
deliver to RFC the documents required to be contained in the Mortgage File
and any rights and remedies available to RFC under the Seller Contract in
respect of such obligation or in the event of a breach of such obligation;
provided that, notwithstanding the assignment and assumption hereunder, RFC
shall have the concurrent right to exercise remedies and pursue
indemnification upon a breach by a Seller under any Seller Contract of any of
its representations and warranties. If the Company or RFC asserts that it is
not required to cure breaches or to purchase or substitute for Mortgage Loans
under the Pooling and Servicing Agreement because the substance of the breach
also constitutes fraud in the origination of any Mortgage Loan, then the
substance of the related breach shall automatically be deemed to constitute
fraud in the origination of a Mortgage Loan for purposes of clause (i) of
this Section 6.
7. RFC hereby represents and warrants to the Company that with respect to
each Mortgage Loan, the REMIC's tax basis in each Mortgage Loan as of the
Closing Date is equal to or greater than 100% of the Stated Principal Balance
thereof.
8. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns, and no other
person shall have any right or obligation hereunder.
9. RFC, as master servicer under the Pooling and Servicing Agreement (the
"Master Servicer"), shall not waive (or permit a sub-servicer to waive) any
Prepayment Charge unless: (i) the enforceability thereof shall have been
limited by bankruptcy, insolvency, moratorium, receivership and other similar
laws relating to creditors' rights generally, (ii) the enforcement thereof is
illegal, or any local, state or federal agency has threatened legal action if
the prepayment penalty is enforced, (iii) the collectability thereof shall
have been limited due to acceleration in connection with a foreclosure or
other involuntary payment or (iv) such waiver is standard and customary in
servicing similar Mortgage Loans and relates to a default or a reasonably
foreseeable default and would, in the reasonable judgment of the Master
Servicer, maximize recovery of total proceeds taking into account the value
of such Prepayment Charge and the related Mortgage Loan. In no event will the
Master Servicer waive a Prepayment Charge in connection with a refinancing of
a Mortgage Loan that is not related to a default or a reasonably foreseeable
default. If a Prepayment Charge is waived, but does not meet the standards
described above, then the Master Servicer is required to pay the amount of
such waived Prepayment Charge to the holder of the Class SB Certificates at
the time that the amount prepaid on the related Mortgage Loan is required to
be deposited into the Custodial Account. Notwithstanding any other provisions
of this Agreement, any payments made by the Master Servicer in respect of any
waived Prepayment Charges pursuant to this Section shall be deemed to be paid
outside of the Trust Fund and not part of any REMIC.
[Signatures begin on following page.]
OHS West:260112741.3
IN WITNESS WHEREOF, the parties have entered into this Assignment and
Assumption Agreement as of the date first above written.
RESIDENTIAL FUNDING COMPANY, LLC
By:________________________________
Name:
Title:
RESIDENTIAL ASSET SECURITIES CORPORATION
By:________________________________
Name:
Title:
EXHIBIT A
LIST OF JUNIOR LIEN MORTGAGE LOANS
[ON FILE WITH THE TRUSTEE]
EXHIBIT B
APPENDIX E OF THE STANDARD & POOR'S GLOSSARY FOR
FILE FORMAT FOR LEVELS(R)VERSION 5.7
REVISED April 18, 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
--------------------------------------------------------------------------------
CATEGORY UNDER
NAME OF ANTI-PREDATORY LENDING APPLICABLE ANTI-
STATE/JURISDICTION LAW/EFFECTIVE DATE PREDATORY LENDING LAW
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Arkansas Arkansas Home Loan Protection High Cost Home Loan
Act,
Ark. Code Xxx.ss.ss.00-00-000 et
seq.
Effective July 16, 2003
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cleveland Heights, OH Ordinance No. 72-2003 (PSH), Mun. Covered Loan
Codess.ss.757.01 et seq.
Effective June 2, 2003
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Colorado Consumer Equity Protection, Covered Loan
Colo. Stat.
Xxx.ss.ss.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 High Cost Home Loan
Lending Practices Act, Conn.
Gen. Stat.
ss.ss.36a-746 et seq.
Effective October 1, 2001
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
District of Columbia Home Loan Protection Act, D.C. Covered Loan
Code
ss.ss.26-1151.01 et seq.
Effective for loans closed on or
after January 28, 2003
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Florida Fair Lending Act, Fla. Stat. High Cost Home Loan
Xxx.xx.xx.
494.0078 et seq.
Effective October 2, 2002
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
STATE/JURISDICTION NAME OF ANTI-PREDATORY LENDING CATEGORY UNDER
LAW/EFFECTIVE DATE APPLICABLE ANTI-
PREDATORY LENDING LAW
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Georgia (Oct. 1, 2002 - Georgia Fair Lending Act, Ga. High Cost Home Loan
Mar. 6, 2003) Code
Xxx.ss.ss.7-6A-1 et seq.
Effective October 1, 2002 -
March 6 2003
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Georgia as amended Georgia Fair Lending Act, Ga. High Cost Home Loan
(Mar. 7, 2003 - Code
current) Xxx.ss.ss.7-6A-1 et seq.
Effective for loans closed on or
after
March 7, 2003
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
HOEPA Section 32 Home Ownership and Equity High Cost Loan
Protection
Act of 1994, 15 U.S.C.ss.1639, 12
C.F.R.ss.ss.226.32 and 226.34
Effective October 1, 1995,
amendments
October 1, 2002
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Illinois High Risk Home Loan Act, Ill. High Risk Home Loan
Comp.
Stat. tit. 815,ss.ss.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. High Loan to Value
Xxx. Consumer Loan (xx.xx.
ss.ss.16a-1-101 et seq. 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 (xx.xx.
16a-3-308a)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Kentucky 2003 KY H.B. 287 - High Cost Home High Cost Home Loan
Loan Act, Ky. Rev. Xxxx.xx.xx.
360.100 et seq.
Effective June 24, 2003
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Maine Truth in Lending, Me. Rev. Stat. High Rate High Fee
tit. 9- Mortgage
A,ss.ss.8-101 et seq.
Effective September 29, 1995 and
as amended from time to time
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
STATE/JURISDICTION NAME OF ANTI-PREDATORY LENDING CATEGORY UNDER
LAW/EFFECTIVE DATE APPLICABLE ANTI-
PREDATORY LENDING LAW
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Massachusetts Part 40 and Part 32, 209 C.M.R. High Cost Home Loan
xx.xx.
32.00 et seq. and 209 X.X.X.xx.xx.
40.01 et seq.
Effective March 22, 2001 and
amended from time to time
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Nevada Assembly Xxxx No. 284, Nev. Rev. Home Loan
Stat.
ss.ss.598D.010 et seq.
Effective October 1, 2003
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
New Jersey New Jersey Home Ownership High Cost Home Loan
Security
Act of 2002, N.J. Rev. Xxxx.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. High Cost Home Loan
Rev.
Stat.ss.ss.58-21A-1 et seq.
Effective as of January 1, 2004;
Revised
as of February 26, 2004
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
New York N.Y. Banking Law Article 6-1 High Cost Home Loan
Effective for applications made
on or after April 1, 2003
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
North Carolina Restrictions and Limitations on High Cost Home Loan
High
Cost Home Loans, N.C. Gen. Stat.
ss.ss.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 Covered Loan
sections of the Ohio Code), Ohio
Rev. Code Xxx.ss.ss.1349.25 et seq.
Effective May 24, 2002
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Oklahoma Consumer Credit Code (codified Subsection 10 Mortgage
in various sections of Title 14A)
Effective July 1, 2000; amended
effective January 1, 2004
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
STATE/JURISDICTION NAME OF ANTI-PREDATORY LENDING CATEGORY UNDER
LAW/EFFECTIVE DATE APPLICABLE ANTI-
PREDATORY LENDING LAW
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
South Carolina South Carolina High Cost and High Cost Home Loan
Consumer Home Loans Act, S.C.
Code
Xxx.ss.ss.37-23-10 et seq.
Effective for loans taken on or
after January 1, 2004
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
West Virginia West Virginia Residential West Virginia
Mortgage Lender, Broker and Mortgage Loan Act Loan
Servicer Act, W.
Va. Code Xxx.ss.ss.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-
LAW/EFFECTIVE DATE PREDATORY LENDING LAW
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Georgia (Oct. 1, 2002 - Georgia Fair Lending Act, Ga. Covered Loan
Mar. 6, 2003) Code
Xxx.ss.ss.7-6A-1 et seq.
Effective October 1, 2002 -
March 6, 2003
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
New Jersey New Jersey Home Ownership Covered Home Loan
Security
Act of 2002, N.J. Rev. Xxxx.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-
LAW/EFFECTIVE DATE PREDATORY LENDING LAW
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Georgia (Oct. 1, 2002 - Georgia Fair Lending Act, Ga. Home Loan
Mar. 6, 2003) Code
Xxx.ss.ss.7-6A-1 et seq.
Effective October 1, 2002 -
March 6, 2003
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
New Jersey New Jersey Home Ownership Home Loan
Security
Act of 2002, N.J. Rev. Xxxx.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. Home Loan
Rev. Stat.ss.ss.58-21A-1 et seq.
Effective as of January 1, 2004;
Revised as of February 26, 2004
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
North Carolina Restrictions and Limitations on Consumer Home Loan
High Cost Home Loans, N.C. Gen.
Xxxx.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 Home Loan
Consumer Home Loans Act, S.C.
Code Xxx.ss.ss.37-23-10 et seq.
Effective for loans taken on or
after January 1, 2004
--------------------------------------------------------------------------------
