Exhibit 99.4
ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
This is an Assignment, Assumption and Recognition Agreement (this "AAR
Agreement") made as of January 1, 2007, among HSBC Bank, National Association
(the "Assignor"), HSI Asset Securitization Corporation (the "Assignee"),
CitiMortgage Inc. as Master Servicer (the "Master Servicer"), Deutsche Bank
National Trust Company (the "Trustee") not individually but solely as trustee on
behalf of the holders of the HSI Asset Loan Obligation Trust, Series 2007-AR1,
Asset-Backed Certificates, American Home Mortgage Corp. (the "Company") and
American Home Mortgage Servicing, Inc.
In consideration of the mutual promises contained herein the parties hereto
agree that the residential mortgage loans (the "Assigned Loans") listed on
Attachment 1 annexed hereto (the "Assigned Loan Schedule") purchased by Assignor
from Company pursuant to (a) the Master Mortgage Loan Purchase and Servicing
Agreement, dated as of June 21, 2006, between Assignor, Servicer and Company
(the "Purchase Agreement"), shall be subject to the terms of this AAR Agreement.
Capitalized terms used herein but not defined shall have the meanings ascribed
to them in the Purchase Agreement.
Assignment and Assumption
1. Assignor hereby grants, transfers and assigns to Assignee all of the
right, title, interest and obligations of Assignor in the Assigned Loans and, as
they relate to the Assigned Loans, all of its right, title, interest and
obligations in, to and under the Purchase Agreement and Assigned hereby assumes
all rights and obligations with respect to the Assigned Loans under the Purchase
Agreement. Assignor specifically reserves and does not assign to Assignee any
right title and interest in, to or under any Mortgage Loans subject to the
Purchase Agreement other than those set forth on Attachment l. The Company shall
service the Assigned Loans in accordance with the Purchase Agreement as modified
by this AAR Agreement.
Recognition of the Company
2. From and after the date hereof, the Company shall and does hereby
recognize that the Assignee will transfer the Assigned Loans and assign its
rights under the Purchase Agreement (solely to the extent set forth herein) and
this AAR Agreement to HSI Asset Loan Obligation Trust 2007-AR1 (the "Trust")
created pursuant to a Pooling and Servicing Agreement, dated as of January 1,
2007 (the "Pooling Agreement"), among the Assignee as Depositor, the Trustee,
the Master Servicer, Citibank, N.A. as Securities Administrator (the "Securities
Administrator") and Xxxxx Fargo Bank, N.A. as custodian (the "Custodian"). The
Company hereby acknowledges and agrees that from and after the date hereof (i)
the Trust will be the owner of the Assigned Loans, (ii) the Company shall look
solely to the Trust for performance of any obligations of the Assignor insofar
as they relate to the enforcement of the representations, warranties and
covenants with respect to the Assigned Loans, and the Trust hereby acknowledges
that it has assumed such representations, warranties and covenants and that any
claim by the Company with respect thereto shall be made by written notice to the
Trustee, (iii) the Trust shall have all the rights and remedies available to the
Assignor, insofar as they relate to the Assigned Loans, under the Purchase
Agreement, including, without limitation, the enforcement of the document
delivery requirements and remedies with respect to breaches of
Assignment, Assumption and Recognition Agreement
(American Home Mortgage Corp.)
representations and warranties set forth in the Purchase Agreement, and shall be
entitled to enforce all of the obligations of the Company thereunder insofar as
they relate to the Assigned Loans, and (iv) all references to the Purchaser
(insofar as they relate to the rights, title and interest and, with respect to
obligations of the Purchaser, only insofar as they relate to the enforcement of
the representations, warranties and covenants of the Company) under the Purchase
Agreement insofar as they relate to the Assigned Loans, shall be deemed to refer
to the Trust. Neither the Company nor the Assignor shall amend or agree to
amend, modify, waiver, or otherwise alter any of the terms or provisions of the
Purchase Agreement which amendment, modification, waiver or other alteration
would in any way affect the Assigned Loans or the Company's performance under
the Purchase Agreement with respect to the Assigned Loans without the prior
written consent of the Assignee, the Master Servicer and the Trustee. Any party
requesting such amendment shall provide to the Assignee, the Master Servicer and
the Trustee, at its own expense, an opinion of counsel stating that (i) such
amendment is permitted under the terms of the Purchase Agreement and (ii) such
amendment will not materially and adversely affect the interests of the holders
of any securities issued by the Trust. The Company acknowledges that
CitiMortgage, Inc. has been appointed as the Master Servicer of the Assigned
Loans pursuant to this AAR Agreement and therefore has the right to enforce all
obligations of the Company as they relate to the Assigned Loans under the
Purchase Agreement and this AAR Agreement.
Representations; Warranties and Covenants
3. Assignor warrants and represents to Assignee, the Master Servicer, the
Trust and Company as of the date hereof:
a. Attached hereto as Attachment 2 is a true and accurate copy of
the Purchase Agreement, which agreement is in full force and
effect as of the date hereof and the provisions of which have not
been waived, amended or modified in any respect, nor has any
notice of termination been given thereunder;
b. Assignor is the lawful owner of the Assigned Loans with full
right to transfer the Assigned Loans and any and all of its
interests, rights and obligations under the Purchase Agreement as
they relate to the Assigned Loans, free and clear of any and all
liens, claims and encumbrances; and upon the transfer of the
Assigned Loans to Assignee as contemplated herein, Assignee shall
have good title to each and every Assigned Loan, as well as any
and all of Assignor's interests, rights and obligations under the
Purchase Agreement as they relate to the Assigned Loans, free and
clear of any and all liens, claims and encumbrances;
c. Assignor has not received notice of, and has no knowledge of, any
offsets, counterclaims or other defenses available to Company
with respect to the Assigned Loans or the Purchase Agreement;
Assignment, Assumption and Recognition Agreement
(American Home Mortgage Corp.)
d. Assignor is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
formation, and has all requisite power and authority to acquire,
own and sell the Assigned Loans;
e. Assignor has full power and authority to execute, deliver and
perform its obligations under this AAR Agreement, and to
consummate the transactions set forth herein. The consummation of
the transactions contemplated by this AAR Agreement is in the
ordinary course of Assignor's business and will not conflict
with, or result in a breach of, any of the terms, conditions or
provisions of Assignor's charter or by-laws or any legal
restriction, or any material agreement or instrument to which
Assignor is now a party or by which it is bound, or result in the
violation of any law, rule, regulation, order, judgment or decree
to which Assignor or its property is subject. The execution,
delivery and performance by Assignor of this AAR Agreement and
the consummation by it of the transactions contemplated hereby,
have been duly authorized by all necessary action on the part of
Assignor. This AAR Agreement has been duly executed and delivered
by Assignor and, upon the due authorization, execution and
delivery by Assignee and Company, will constitute the valid and
legally binding obligation of Assignor enforceable against
Assignor in accordance with its terms except as enforceability
may be limited by bankruptcy, reorganization, insolvency,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and by general
principles of equity regardless of whether enforceability is
considered in a proceeding in equity or at law;
f. No material consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental entity
is required to be obtained or made by Assignor in connection with
the execution, delivery or performance by Assignor of this AAR
Agreement, or the consummation by it of the transactions
contemplated hereby; and
g. There is no action, suit, proceeding, investigation or litigation
pending or, to Assignor's knowledge, threatened, which either in
any instance or in the aggregate, if determined adversely to
Assignor, would adversely affect Assignor's execution or delivery
of, or the enforceability of, this AAR Agreement, or the
Assignor's ability to perform its obligations under this AAR
Agreement.
4. Assignee warrants and represents to, and covenants with, Assignor, the
Master Servicer, the Trust and Company as of the date hereof:
a. Assignee is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has
all requisite power and authority to acquire and own the Assigned
Loans;
Assignment, Assumption and Recognition Agreement
(American Home Mortgage Corp.)
b. Assignee has full power and authority to execute, deliver and
perform its obligations under this AAR Agreement, and to
consummate the transactions set forth herein. The consummation of
the transactions contemplated by this AAR Agreement is in the
ordinary course of Assignee's business and will not conflict
with, or result in a breach of, any of the terms, conditions or
provisions of Assignee's organizational documentation or any
legal restriction, or any material agreement or instrument to
which Assignee is now a party or by which it is bound, or result
in the violation of any law, rule, regulation, order, judgment or
decree to which Assignee or its property is subject. The
execution, delivery and performance by Assignee of this AAR
Agreement and the consummation by it of the transactions
contemplated hereby, have been duly authorized by all necessary
action on the part of Assignee. This AAR Agreement has been duly
executed and delivered by Assignee and, upon the due
authorization, execution and delivery by Assignor and Company,
will constitute the valid and legally binding obligation of
Assignee enforceable against Assignee in accordance with its
terms except as enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally,
and by general principles of equity regardless of whether
enforceability is considered in a proceeding in equity or at law;
c. No material consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental entity
is required to be obtained or made by Assignee in connection with
the execution, delivery or performance by Assignee of this AAR
Agreement, or the consummation by it of the transactions
contemplated hereby; and
d. There is no action, suit, proceeding, investigation or litigation
pending or, to Assignee's knowledge, threatened, which either in
any instance or in the aggregate, if determined adversely to
Assignee, would adversely affect Assignee's execution or delivery
of, or the enforceability of, this AAR Agreement, or the
Assignee's ability to perform its obligations under this AAR
Agreement.
5. Company warrants and represents to, and covenants with, Assignor, the
Trust and Assignee as of the date hereof:
a. Attached hereto as Attachment 2 is a true and accurate copy of
the Purchase Agreement, which agreement is in full force and
effect as of the date hereof and the provisions of which have not
been waived, amended or modified in any respect, nor has any
notice of termination been given thereunder;
b. Company is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, and has
all requisite power and authority to perform its obligations
under the Purchase Agreement;
Assignment, Assumption and Recognition Agreement
(American Home Mortgage Corp.)
c. Company has full corporate power and authority to execute,
deliver and perform its obligations under this AAR Agreement, and
to consummate the transactions set forth herein. The consummation
of the transactions contemplated by this AAR Agreement is in the
ordinary course of Company's business and will not conflict with,
or result in a breach of, any of the terms, conditions or
provisions of Company's organizational documentation or any legal
restriction, or any material agreement or instrument to which
Company is now a party or by which it is bound, or result in the
violation of any law, rule, regulation, order, judgment or decree
to which Company or its property is subject, except in such case
where the conflict, breach or violation would not have a material
adverse effect on the Company or its ability to perform its
obligations under this AAR Agreement. The execution, delivery and
performance by Company of this AAR Agreement and the consummation
by it of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of
Company. This AAR Agreement has been duly executed and delivered
by Company, and, upon the due authorization, execution and
delivery by Assignor and Assignee, will constitute the valid and
legally binding obligation of Company, enforceable against
Company in accordance with its terms except as enforceability may
be limited by bankruptcy, reorganization, insolvency, moratorium
or other similar laws now or hereafter in effect relating to
creditors' rights generally, and by general principles of equity
regardless of whether enforceability is considered in a
proceeding in equity or at law;
d. No consent, approval, order or authorization of, or declaration,
filing or registration with, any governmental entity is required
to be obtained or made by Company in connection with the
execution, delivery or performance by Company of this AAR
Agreement, or the consummation by it of the transactions
contemplated hereby;
e. There is no action, suit, proceeding, investigation or litigation
pending or, to Company's knowledge, threatened, which either in
any instance or in the aggregate, if determined adversely to
Company, would adversely affect Company's execution or delivery
of, or the enforceability of, this AAR Agreement, or the
Company's ability to perform its obligations under this AAR
Agreement; and
f. Pursuant to Section 12 of the Purchase Agreement, the Company
hereby represents and warrants, for the benefit of the Assignor,
the Assignee, the Master Servicer and the Trust, that the
representations and warranties set forth in Section 7.01 and 7.02
of the Purchase Agreement, are true and correct as of the date
hereof in all material respects, except that the representation
and warranty set forth in Section 7.02(i) shall, for purposes of
this AAR Agreement, relate to the Mortgage Loan Schedule attached
hereto.
Assignment, Assumption and Recognition Agreement
(American Home Mortgage Corp.)
6. The Company hereby acknowledges and agrees that the remedies available
to the Assignor, the Assignee and the Trust (including the Assignee and the
Company acting on the Trust's behalf) in connection with any breach of the
representations and warranties made by the Company set forth in Section 5 hereof
shall be as set forth in Subsection 7.03 of the Purchase Agreement as if they
were set forth herein (including without limitation the repurchase and indemnity
obligations set forth therein).
7. In connection with the transfer of the Assigned Loans hereunder, the
Company and the Servicer agree that, solely with respect to the Assigned Loans,
the following modifications shall be made (all capitalized terms used below
shall have the meanings assigned to such terms by this AAR Agreement and such
terms shall be incorporated into the Purchase Agreement):
(i) Section 11.30 shall be amended so that the references to the
"Purchaser" therein shall be replaced with references to "the Master
Servicer, the Depositor, the Trustee or any other party required to
file the reports referred to in this Section 11.30".
8. Pursuant to Section 11.15 of Exhibit 9 to the Purchase Agreement, no
later than 10 calendar days, the Company shall furnish to the Master Servicer
(i)(a) monthly loan data in such format mutually agreed-upon between the Company
and the Master Servicer, (b) default loan data in such format mutually agreed
upon between the Company and the Master Servicer and (c) information regarding
the realized losses and gains as in such format mutually agreed upon between the
Company and the Master Servicer, in each case relating to the period ending on
the last day of the preceding calendar month, (ii) all such information required
pursuant to clause (i)(a) above on a magnetic tape, electronic mail, or other
similar media reasonably acceptable to the Master Servicer and the Company, and
(iii) all supporting documentation reasonably necessary and available with
respect to the information required above. Notwithstanding the foregoing, the
Company is not required to report data relating to prepayment charges or
penalties.
Miscellaneous
9. All demands, notices and communications related to the Assigned Loans,
the Purchase Agreements and this AAR Agreement shall be in writing and shall be
deemed to have been duly given if personally delivered or mailed by registered
mail, postage prepaid, as follows:
a. In the case of Company,
American Home Mortgage Corp.
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Xx.
With copies to:
Assignment, Assumption and Recognition Agreement
(American Home Mortgage Corp.)
American Home Mortgage Corp.
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxx, General Counsel
b. In the case of Assignor,
HSBC Bank USA, National Association
Re: HALO 2007-AR2
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Head of MBS Principal Finance
c. In the case of Assignee,
HSI Asset Securitization Corporation
000 Xxxxx Xxxxxx, 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Head MBS Principal Finance
c. In the case of Trustee,
Deutsche Bank National Trust Company
0000 Xx. Xxxxxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Attn: Trust Administration-[__________]
d. In the case of the Master Servicer:
CitiMortgage Mortgage, Inc.
0000 Xxxxxx Xxxx.
Xxxxxx, XX 00000
Attention: Master Servicing Division,
Compliance Manager - HALO 2007-AR1
e. In the case of the Securities Administrator:
Citbank, N.A.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Structured Finance Agency and Trust, HALO 2007-AR1
10. This AAR Agreement shall be construed in accordance with the laws of
the State of New York, without regard to conflicts of law principles, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
Assignment, Assumption and Recognition Agreement
(American Home Mortgage Corp.)
11. No term or provision of this AAR Agreement may be waived or modified
unless such waiver or modification is in writing and signed by the party against
whom such waiver or modification is sought to be enforced.
12. This AAR Agreement shall inure to the benefit of the successors and
assigns of the parties hereto. Any entity into which Assignor, Assignee or
Company may be merged or consolidated shall without the requirement for any
further writing, be deemed Assignor, Assignee or Company, respectively
hereunder.
13. This AAR Agreement shall survive the conveyance of the Assigned Loans
as contemplated in this AAR Agreement.
14. This AAR Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original and all such
counterparts shall constitute one and the same instrument.
15. In the event that any provision of this AAR Agreement conflicts with
any provision of the Purchase Agreement with respect to the Assigned Loans, the
terms of this AAR Agreement shall control.
Assignment, Assumption and Recognition Agreement
(American Home Mortgage Corp.)
IN WITNESS WHEREOF, the parties hereto have executed this AAR Agreement as
of the day and year first above written.
HSBC BANK USA, NATIONAL ASSOCIATION
Assignor
By:
---------------------------------
Name: Xxx X. Xxxxxxxx
Title: Managing Director #14311
HSI Asset Securitization Corporation
By:
---------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
American Home Mortgage Corp.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
American Home Mortgage Servicing,
Inc.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Deutsche Bank National Trust Company,
as Trustee
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Assignment, Assumption and Recognition Agreement
(American Home Mortgage Corp.)
CitiMortgage, Inc., as Master
Servicer
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Assignment, Assumption and Recognition Agreement
(American Home Mortgage Corp.)
ATTACHMENT 1
(form of Assigned Loan Tape)
Assignment, Assumption and Recognition Agreement
(American Home Mortgage Corp.)
ATTACHMENT 2
(Form of Purchase Agreement)
Assignment, Assumption and Recognition Agreement
(American Home Mortgage Corp.)
Exhibit 99.4
EXECUTION VERSION
MASTER MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT
AMERICAN HOME MORTGAGE CORP.
Seller
AMERICAN HOME MORTGAGE SERVICING, INC.
Servicer
HSBC BANK USA, NATIONAL ASSOCIATION
Initial Purchaser
Dated as of June 21, 2006
First and Second Lien, Fixed and Adjustable Rate Mortgage Loans
TABLE OF CONTENTS
Page
----
SECTION 1. Definitions ................................................. 1
SECTION 2. Agreement to Purchase ....................................... 14
SECTION 3. Mortgage Loan Schedules ..................................... 14
SECTION 4. Purchase Price .............................................. 14
SECTION 5. Examination of Mortgage Files ............................... 15
SECTION 6. Conveyance from Seller to Initial Purchaser ................. 15
Subsection 6.01. Conveyance of Mortgage Loans; Possession of
Servicing Files .................................... 15
Subsection 6.02. Books and Records .................................. 16
Subsection 6.03. Delivery of Mortgage Loan Documents ................ 16
SECTION 7. Representations, Warranties and Covenants of the
Seller and the Servicer: Remedies for Breach ................ 17
Subsection 7.01. Representations and Warranties Respecting
the Seller and the Servicer ........................ 17
Subsection 7.02. Representations and Warranties Regarding
Individual Mortgage Loans .......................... 22
Subsection 7.03. Remedies for Breach of Representations and
Warranties ......................................... 36
Subsection 7.04. Repurchase of Certain Mortgage Loans;
Premium Protection ................................. 38
SECTION 8. Closing ..................................................... 38
SECTION 9. Closing Documents ........................................... 39
SECTION 10. Costs ....................................................... 40
SECTION 11. Servicer's Servicing Obligations ............................ 40
SECTION 12. Removal of Mortgage Loans from Inclusion under
This Agreement Upon a Whole Loan Transfer or a
Pass-Through Transfer on One or More Reconstitution
Dates ....................................................... 41
SECTION 13. The Seller and the Servicer ................................. 48
Subsection 13.01. Additional Indemnification by the Seller
and the Servicer ................................... 48
Subsection 13.02. Merger or Consolidation of the Seller and
the Servicer ....................................... 48
Subsection 13.03. Limitation on Liability of the Seller, the
Servicer and Others ................................ 48
Subsection 13.04. Servicer Not to Resign ............................. 49
Subsection 13.05. No Transfer of Servicing ........................... 49
SECTION 14. Default ..................................................... 49
Subsection 14.01. Events of Default .................................. 49
Subsection 14.02. Waiver of Defaults ................................. 51
i
SECTION 15. Termination ................................................. 51
SECTION 16. Successor to the Servicer ................................... 52
SECTION 17. Financial Statements ........................................ 53
SECTION 18. Mandatory Delivery: Grant of Security Interest. ............. 53
SECTION 19. Notices ..................................................... 53
SECTION 20. Severability Clause ......................................... 54
SECTION 21. Counterparts ................................................ 55
SECTION 22. Governing Law ............................................... 55
SECTION 23. Intention of the Parties .................................... 55
SECTION 24. Successors and Assigns ...................................... 56
SECTION 25. Waivers ..................................................... 56
SECTION 26. Exhibits .................................................... 56
SECTION 27. Nonsolicitation ............................................. 56
SECTION 28. General Interpretive Principles ............................. 57
SECTION 29. Reproduction of Documents .................................. 57
SECTION 30. Further Agreements .......................................... 58
SECTION 31. Third-Party Beneficiary ..................................... 58
SECTION 32. Entire Agreement ............................................ 58
ii
EXHIBITS
EXHIBIT 1A SELLER'S OFFICER'S CERTIFICATE
EXHIBIT 1B SERVICER'S OFFICER'S CERTIFICATE
EXHIBIT 2 FORM OF OPINION OF COUNSEL TO THE SELLER
EXHIBIT 3 SECURITY RELEASE CERTIFICATION
EXHIBIT 4 ASSIGNMENT AND CONVEYANCE
EXHIBIT 5 CONTENTS OF EACH MORTGAGE FILE
EXHIBIT 6 CUSTODIAL AGREEMENT
EXHIBIT 7 FORM OF CUSTODIAL ACCOUNT LETTER AGREEMENT
EXHIBIT 8 FORM OF ESCROW ACCOUNT LETTER AGREEMENT
EXHIBIT 9 SERVICING ADDENDUM
EXHIBIT 10 FORM OF ASSIGNMENT AND RECOGNITION AGREEMENT
EXHIBIT 11 FORM OF INDEMNIFICATION AGREEMENT
EXHIBIT 12 FORM OF ANNUAL CERTIFICATION
EXHIBIT 13 MORTGAGE LOAN DOCUMENTS
EXHIBIT 14 UNDERWRITING GUIDELINES OF THE SELLER
EXHIBIT 15 SUMMARY OF REGULATION AB SERVICING CRITERIA
EXHIBIT 16 SUMMARY OF APPLICABLE REGULATION AB REQUIREMENTS
EXHIBIT 17 SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
EXHIBIT 18 FORM OF REMITTANCE REPORT
SCHEDULE I MORTGAGE LOAN SCHEDULE
iii
MASTER MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT
This is an MASTER MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT (the
"Agreement"), dated as of June 21, 2006, by and between HSBC Bank USA, National
Association, having an office at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the
"Initial Purchaser", and the Initial Purchaser or the Person, if any, to which
the Initial Purchaser has assigned its rights and obligations hereunder as
Purchaser with respect to a Mortgage Loan, and each of their respective
successors and assigns, the "Purchaser"), AMERICAN HOME MORTGAGE CORP., having
an office at 000 Xxxxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 (the "Seller") and
AMERICAN HOME MORTGAGE SERVICING, INC., having an office at 0000 Xxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000 (the "Servicer").
WITNESSETH:
WHEREAS, the Seller desires to sell, from time to time, to the
Purchaser, and the Purchaser desires to purchase, from time to time, from the
Seller, certain conventional, fixed and adjustable rate residential first and
second lien mortgage loans, including, where specifically provided in the
related Confirmation, the right to any Prepayment Charges payable by the related
Mortgagors as described herein, (the "Mortgage Loans") as described herein on a
servicing-retained basis, and which shall be delivered in groups of whole loans
on various dates as provided herein and in the related Confirmation (each, a
"Closing Date");
WHEREAS, each Mortgage Loan is secured by a mortgage, deed of trust or
other security instrument creating a first or second lien on a residential
dwelling located in the jurisdiction indicated on the Mortgage Loan Schedule for
the related Mortgage Loan Package, which is to be annexed hereto on each Closing
Date as Schedule I;
WHEREAS, the Initial Purchaser, the Seller and the Servicer wish to
prescribe the manner of the conveyance, servicing and control of the Mortgage
Loans; and
WHEREAS, following its purchase of the Mortgage Loans from the Seller,
the Purchaser desires to sell some or all of the Mortgage Loans to one or more
purchasers as a whole loan transfer in a whole loan or participation format or a
public or private mortgage-backed securities transaction;
NOW, THEREFORE, in consideration of the premises and mutual agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Purchaser, the Seller and the
Servicer agree as follows:
SECTION 1. Definitions.
For purposes of this Agreement the following capitalized terms shall
have the respective meanings set forth below.
Accepted Servicing Practices: With respect to any Mortgage Loan, those
mortgage servicing practices (including collection procedures) of prudent
mortgage banking institutions which service mortgage loans of the same type as
such Mortgage Loan in the jurisdiction where the related Mortgaged Property is
located, which are in accordance with Xxxxxx Xxx servicing practices and
procedures for MBS pool mortgages, as defined in the
1
Xxxxxx Mae Guides including future updates, the terms of the Mortgage Loan
Documents and all applicable federal, state and local legal and regulatory
requirements.
Adjustable Rate Mortgage Loan: A Mortgage Loan which provides for the
adjustment of the Mortgage Interest Rate payable in respect thereto.
Adjustment Date: With respect to each Adjustable Rate Mortgage Loan,
the date set forth in the related Mortgage Note on which the Mortgage Interest
Rate on such Adjustable Rate Mortgage Loan is adjusted in accordance with the
terms of the related Mortgage Note.
Agreement: This Master Mortgage Loan Purchase and Servicing Agreement
including all exhibits, schedules, amendments and supplements hereto.
Appraised Value: With respect to any Mortgaged Property, the lesser of
(i) the value thereof as determined by an appraisal made for the originator of
the Mortgage Loan at the time of origination of the Mortgage Loan by an
appraiser who met the minimum requirements of FNMA and FHLMC and the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989, and (ii) the
purchase price paid for the related Mortgaged Property by the Mortgagor with the
proceeds of the Mortgage Loan, provided, however, in the case of a Refinanced
Mortgage Loan, such value of the Mortgaged Property is based solely upon the
value determined by an appraisal made for the originator of such Refinanced
Mortgage Loan at the time of origination of such Refinanced Mortgage Loan by an
appraiser who met the minimum requirements of FNMA and FHLMC and the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989.
Assignment and Conveyance: An assignment and conveyance of the
Mortgage Loans purchased on a Closing Date in the form annexed hereto as Exhibit
4.
Assignment of Mortgage: With respect to each Mortgage Loan which is
not a MERS Loan, an individual assignment of the Mortgage, notice of transfer or
equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to give record
notice of the sale of the Mortgage to the Purchaser.
Balloon Mortgage Loan: A Mortgage Loan that provided on the date of
origination for an amortization schedule extending beyond its maturity date.
Balloon Payment: With respect to any Balloon Mortgage Loan as of any
date of determination, the Monthly Payment payable on the maturity of such
Mortgage Loan.
Business Day: Any day other than a Saturday or Sunday, or a day on
which banking and savings and loan institutions in the State of New York are
authorized or obligated by law or executive order to be closed.
Cash-Out Refinancing: A Refinanced Mortgage Loan the proceeds of which
were in excess of the principal balance of any existing first mortgage on the
related Mortgaged Property and related closing costs, and were used to pay any
such existing first mortgage, related closing costs and subordinate mortgages on
the related Mortgaged Property.
Closing Date: The date or dates on which the Initial Purchaser from
time to time shall purchase and the Seller from time to time shall sell to the
Initial Purchaser, the Mortgage
2
Loans listed on the related Mortgage Loan Schedule with respect to the related
Mortgage Loan Package.
Closing Documents: With respect to any Closing Date, the documents
required pursuant to Section 9.
Code: The Internal Revenue Code of 1986, or any successor statute
thereto.
Combined Loan-to-Value Ratio or CLTV: With respect to any Mortgage
Loan as of any date of determination, the ratio on such date of the outstanding
principal amount of the Mortgage Loan and any other mortgage loan which is
secured by a lien on the related Mortgaged Property to the Appraised Value of
the Mortgaged Property.
Commission or SEC: The United States Securities and Exchange
Commission.
Condemnation Proceeds: All awards, compensation and settlements in
respect of a taking of all or part of a Mortgaged Property by exercise of the
power of condemnation or the right of eminent domain.
Confirmation: With respect to any Mortgage Loan Package purchased and
sold on any Closing Date, the letter agreement among the Initial Purchaser and
the Seller (including any exhibits, schedules and attachments thereto), setting
forth the terms and conditions of such transaction and describing the Mortgage
Loans to be purchased by the Initial Purchaser on such Closing Date. A
Confirmation may relate to more than one Mortgage Loan Package to be purchased
on one or more Closing Dates hereunder.
Convertible Mortgage Loan: A Mortgage Loan that by its terms and
subject to certain conditions contained in the related Mortgage or Mortgage Note
allows the Mortgagor to convert the adjustable Mortgage Interest Rate on such
Mortgage Loan to a fixed Mortgage Interest Rate.
Custodial Account: The separate account or accounts, each of which
shall be an Eligible Account, created and maintained pursuant to this Agreement,
which shall be entitled "American Home Mortgage Servicing, Inc., as servicer, in
trust for the Purchaser, Fixed and Adjustable Rate Mortgage Loans", established
at a financial institution acceptable to the Purchaser. Each Custodial Account
shall be an Eligible Account.
Custodial Agreement: The agreement governing the retention of the
originals of each Mortgage Note, Mortgage, Assignment of Mortgage and other
Mortgage Loan Documents, annexed hereto as Exhibit 6.
Custodian: The custodian under the Custodial Agreement, or its
successor in interest or assigns, or any successor to the Custodian under the
Custodial Agreement, as therein provided.
Cut-off Date: The first day of the month in which the related Closing
Date occurs.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Qualified Substitute Mortgage Loan.
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Depositor: The depositor, as such term is defined in Regulation AB,
with respect to any Pass-Through Transfer.
Determination Date: With respect to each Distribution Date, the
fifteenth (15th) day of the calendar month in which such Distribution Date
occurs or, if such fifteenth (15th) day is not a Business Day, the Business Day
immediately preceding such fifteenth (15th) day.
Distribution Date: The eighteenth (18th) day of each month, commencing
on the eighteenth day of the month next following the month in which the related
Cut-off Date occurs, or if such eighteenth (18th) day is not a Business Day, the
first Business Day immediately preceding such eighteenth (18th) day.
Due Date: With respect to each Mortgage Loan, the day of the calendar
month on which each Monthly Payment is due on such Mortgage Loan (including the
Balloon Payment with respect to a Balloon Mortgage Loan), exclusive of any days
of grace.
Eligible Account: Either (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the short-term unsecured debt obligations of such holding company) are
rated A-1 by S&P or Prime-1 by Moody's (or a comparable rating if another rating
agency is specified by the Initial Purchaser by written notice to the Seller and
Servicer) at the time any amounts are held on deposit therein, (ii) an account
or accounts the deposits in which are fully insured by the FDIC or (iii) a trust
account or accounts maintained with a federal or state chartered depository
institution or trust company acting in its fiduciary capacity. Eligible Accounts
may bear interest.
Escrow Account: The separate trust account or accounts created and
maintained pursuant to this Agreement which shall be entitled "American Home
Mortgage Servicing, Inc., as servicer, in trust for the Purchaser and various
Mortgagors, Fixed and Adjustable Rate Mortgage Loans," established at a
financial institution acceptable to the Purchaser. Each Escrow Account shall be
an Eligible Account.
Escrow Payments: The amounts constituting ground rents, taxes,
assessments, water charges, sewer rents, Primary Insurance Policy premiums, fire
and hazard insurance premiums and other payments required to be escrowed by the
Mortgagor with the Mortgagee pursuant to the terms of any Mortgage Note or
Mortgage.
Event of Default: Any one of the events enumerated in Subsection
14.01.
Exchange Act: The Securities Exchange Act of 1934, as amended.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FHLMC: Xxxxxxx Mac or any successor thereto.
Final Recovery Determination: With respect to any defaulted Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO Property repurchased
by the Seller pursuant to this Agreement), a determination made by the Servicer
that all Insurance Proceeds,
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Liquidation Proceeds and other payments or recoveries which the Servicer, in its
reasonable good faith judgment, expects to be finally recoverable in respect
thereof have been so recovered. The Servicer shall maintain records, prepared by
a servicing officer of the Servicer, of each Final Recovery Determination.
Fixed Rate Mortgage Loan: A Mortgage Loan with respect to which the
Mortgage Interest Rate set forth in the Mortgage Note is fixed for the term of
such Mortgage Loan.
Flood Zone Service Contract: A transferable contract maintained for
the Mortgaged Property with a nationally recognized flood zone service provider
for the purpose of obtaining the current flood zone status relating to such
Mortgaged Property.
FNMA: Xxxxxx Xxx or any successor thereto.
Gross Margin: With respect to any Adjustable Rate Mortgage Loan, the
fixed percentage amount set forth in the related Mortgage Note and the related
Mortgage Loan Schedule that is added to the Index on each Adjustment Date in
accordance with the terms of the related Mortgage Note to determine the new
Mortgage Interest Rate for such Mortgage Loan.
HUD: The United States Department of Housing and Urban Development or
any successor thereto.
Index: With respect to any Adjustable Rate Mortgage Loan, the index
identified on the Mortgage Loan Schedule and set forth in the related Mortgage
Note for the purpose of calculating the interest rate thereon.
Initial Closing Date: The Closing Date on which the Initial Purchaser
purchases and the Seller sells the first Mortgage Loan Package hereunder.
Initial Purchaser: HSBC Bank USA, National Association, or any
successor or assign.
Issuing Entity: The issuing entity, as such term is defined in
Regulation AB, with respect to any Pass-Through Transfer.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Liquidation Proceeds: Amounts, other than Insurance Proceeds and
Condemnation Proceeds, received in connection with the liquidation of a
defaulted Mortgage Loan through trustee's sale, foreclosure sale or otherwise,
other than amounts received following the acquisition of REO Property.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan as of
any date of determination, the ratio on such date of the outstanding principal
amount of the Mortgage Loan, to the Appraised Value of the Mortgaged Property.
Master Servicer: With respect to any Pass-Through Transfer, the
"master servicer", if any, specified by the Purchaser and identified in the
related transaction documents.
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Maximum Mortgage Interest Rate: With respect to each Adjustable Rate
Mortgage Loan, a rate that is set forth on the related Mortgage Loan Schedule
and in the related Mortgage Note and is the maximum interest rate to which the
Mortgage Interest Rate on such Mortgage Loan may be increased on any Adjustment
Date.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
MERS(R) System: The system of recording transfers of Mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number of Mortgage Loans registered
with MERS on the MERS(R) System.
Minimum Mortgage Interest Rate: With respect to each Adjustable Rate
Mortgage Loan, a rate that is set forth on the related Mortgage Loan Schedule
and in the related Mortgage Note and is the minimum interest rate to which the
Mortgage Interest Rate on such Mortgage Loan may be decreased on any Adjustment
Date.
MOM Loan: Any Mortgage Loan where MERS acts as the mortgagee of record
of such Mortgage Loan, solely as nominee for the originator of such Mortgage
Loan and its successors and assigns, at the origination thereof.
Monthly Advance: The aggregate of the advances made by the Servicer on
any Distribution Date pursuant to Subsection 11.21 of the Servicing Addendum.
Monthly Payment: With respect to any Mortgage Loan, the scheduled
combined payment (including any Balloon Payment) of principal and interest
payable by a Mortgagor under the related Mortgage Note on each Due Date.
Moody's: Xxxxx'x Investors Service, Inc. or its successor in interest.
Mortgage: The mortgage, deed of trust or other instrument creating a
first lien on Mortgaged Property securing the Mortgage Note.
Mortgage File: The items pertaining to a particular Mortgage Loan
referred to in Exhibit 5 annexed hereto, and any additional documents required
to be added to the Mortgage File pursuant to this Agreement or the related
Confirmation.
Mortgage Interest Rate: With respect to each Fixed Rate Mortgage Loan,
the fixed annual rate of interest provided for in the related Mortgage Note and,
with respect to each Adjustable Rate Mortgage Loan, the annual rate that
interest accrues on such Adjustable Rate Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note.
Mortgage Loan: Each first or second lien, residential mortgage loan,
sold, assigned and transferred to the Purchaser pursuant to this Agreement and
the related
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Confirmation and identified on the Mortgage Loan Schedule annexed to this
Agreement on such Closing Date, which Mortgage Loan includes without limitation
the Mortgage File, the Monthly Payments, Prepayment Charges (where specifically
provided in the related Confirmation), Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds, REO Disposition proceeds, and all other rights,
benefits, proceeds and obligations arising from or in connection with such
Mortgage Loan.
Mortgage Loan Documents: The documents listed in Exhibit 13 hereto
pertaining to any Mortgage Loan.
Mortgage Loan Package: The Mortgage Loans listed on a Mortgage Loan
Schedule, delivered to the Custodian and the Purchaser at least five (5)
Business Days prior to the related Closing Date and attached to the related
Assignment and Conveyance on the related Closing Date.
Mortgage Loan Schedule: With respect to each Mortgage Loan Package,
the schedule of Mortgage Loans to be annexed to the related Assignment and
Conveyance on the related Closing Date for the Mortgage Loan Package delivered
on such Closing Date in electronic form, such schedule setting forth the
following information with respect to each Mortgage Loan in the Mortgage Loan
Package: (1) the Seller's Mortgage Loan identifying number; (2) the Mortgagor's
first and last name; (3) the street address of the Mortgaged Property including
the state and zip code; (4) a code indicating whether the Mortgaged Property is
owner-occupied; (5) the type of Residential Dwelling constituting the Mortgaged
Property; (6) the original months to maturity; (7) the original date of the
Mortgage Loan; (8) the Loan-to-Value Ratio or Combined Loan-to-Value Ratio at
origination; (9) the Mortgage Interest Rate in effect immediately following the
Cut-off Date; (10) the date on which the first Monthly Payment was due on the
Mortgage Loan; (11) the stated maturity date; (12) the amount of the Monthly
Payment at origination; (13) the amount of the Monthly Payment as of the Cut-off
Date; (14) the last Due Date on which a Monthly Payment was actually applied to
the unpaid Stated Principal Balance; (15) the original principal amount of the
Mortgage Loan; (16) the Stated Principal Balance of the Mortgage Loan; as of the
close of business on the Cut-off Date; (17) with respect to each Adjustable Rate
Mortgage Loan, the first Adjustment Date; (18) with respect to each Adjustable
Rate Mortgage Loan, the Gross Margin; (19) a code indicating the purpose of the
loan (i.e., purchase financing, Rate/Term Refinancing, Cash-Out Refinancing);
(20) with respect to each Adjustable Rate Mortgage Loan, the Maximum Mortgage
Interest Rate under the terms of the Mortgage Note; (21) with respect to each
Adjustable Rate Mortgage Loan, the Minimum Mortgage Interest Rate under the
terms of the Mortgage Note; (22) the Mortgage Interest Rate at origination; (23)
with respect to each Adjustable Rate Mortgage Loan, the Periodic Rate Cap; (24)
with respect to each Adjustable Rate Mortgage Loan, the first Adjustment Date
immediately following the Cut-off Date; (25) with respect to each Adjustable
Rate Mortgage Loan, the Index; (26) the date on which the first Monthly Payment
was due on the Mortgage Loan and, if such date is not consistent with the Due
Date currently in effect, such Due Date; (27) a code indicating the
documentation style (i.e., full (providing two years employment verification - 2
years W-2's and current pay stub or 2 years 1040's for self employed borrowers),
alternative or reduced); (28) a code indicating whether the Mortgage Loan is an
Adjustable Rate Mortgage Loan or a Fixed Rate Mortgage Loan; (29) the Appraised
Value of the Mortgaged Property; (30) the sale price of the Mortgaged Property,
if applicable; (31) a code indicating whether the Mortgage Loan is subject to a
Prepayment Charge or penalty; (32) the term of any Prepayment Charge or penalty;
7
(33) with respect to each MERS Mortgage Loan, the related MIN; (34) reserved;
(35) a code indicating if the Mortgage Loan is an interest-only Mortgage Loan
and, if so, the term of the interest-only period of such Mortgage Loan; (36) a
code indicating whether the Mortgage Loan is a first or second lien; and (37) a
code indicating whether the Mortgage Loan is a Balloon Mortgage Loan and, if so,
the term of the Balloon Mortgage Loan; (38) reserved; (39) reserved; (40) the
points and fees charged in connection with the origination of such Mortgage
Loan; and (41) a code indicating if the Mortgage Loan is subject to a Primary
Insurance Policy, and if so, the insurer. With respect to the Mortgage Loan
Package in the aggregate, the Mortgage Loan Schedule shall set forth the
following information, as of the related Cut-off Date: (1) the number of
Mortgage Loans; (2) the current principal balance of the Mortgage Loans; (3) the
weighted average Mortgage Interest Rate of the Mortgage Loans; and (4) the
weighted average maturity of the Mortgage Loans. Schedule I hereto shall be
supplemented as of each Closing Date to reflect the addition of the Mortgage
Loan Schedule with respect to the related Mortgage Loan Package.
Mortgage Note: The original executed note or other evidence of the
Mortgage Loan indebtedness of a Mortgagor.
Mortgaged Property: The Mortgagor's real property securing repayment
of a related Mortgage Note, consisting of a fee simple interest in a single
parcel of real property improved by a Residential Dwelling.
Mortgagee: The mortgagee or beneficiary named in the Mortgage and the
successors and assigns of such mortgagee or beneficiary.
Mortgagor: The obligor on a Mortgage Note, the owner of the Mortgaged
Property and the grantor or mortgagor named in the related Mortgage and such
grantor's or mortgagor's successor's in title to the Mortgaged Property.
Negative Amortization: With respect to each Negative Amortization
Mortgage Loan, that portion of interest accrued at the Mortgage Interest Rate in
any month that exceeds the Monthly Payment on the related Mortgage Loan for such
month and which, pursuant to the terms of the Mortgage Note, is added to the
principal balance of the Mortgage Loan.
Negative Amortization Mortgage Loan: Each Mortgage Loan that is
identified on the Mortgage Loan Schedule as a Mortgage Loan that may be subject
to Negative Amortization.
Net Mortgage Rate: With respect to any Mortgage Loan (or the related
REO Property), as of any date of determination, a per annum rate of interest
equal to the then applicable Mortgage Interest Rate for such Mortgage Loan minus
the Servicing Fee Rate.
Nonrecoverable Advance: Any Monthly Advance or Servicing Advance
previously made or proposed to be made in respect of a Mortgage Loan or REO
Property that, in the good faith business judgment of the Servicer, will not,
or, in the case of a proposed Monthly Advance or Servicing Advance, would not
be, ultimately recoverable from related late payments, Insurance Proceeds or
Liquidation Proceeds on such Mortgage Loan or REO Property as provided herein.
Officer's Certificate: A certificate signed by the Chairman of the
Board or the Vice Chairman of the Board or a President or a Vice President and
by the Treasurer or the
8
Secretary or one of the Assistant Treasurers or Assistant Secretaries of the
Person on behalf of whom such certificate is being delivered.
Opinion of Counsel: A written opinion of counsel, who may be salaried
counsel for the Person on behalf of whom the opinion is being given, reasonably
acceptable to each Person to whom such opinion is addressed.
Pass-Through Transfer: Any transaction involving either (1) a sale or
transfer of some or all of the Mortgage Loans directly or indirectly to an
issuing entity in connection with an issuance of publicly offered or privately
placed, rated or unrated mortgage-backed securities or (2) an issuance of
publicly offered or privately placed, rated or unrated securities, the payments
on which are determined primarily by reference to one or more portfolios of
residential mortgage loans consisting, in whole or in part, of some or all of
the Mortgage Loans.
Periodic Rate Cap: With respect to each Adjustable Rate Mortgage Loan
and any Adjustment Date therefor, a number of percentage points per annum that
is set forth in the related Mortgage Loan Schedule and in the related Mortgage
Note, which is the maximum amount by which the Mortgage Interest Rate for such
Adjustable Rate Mortgage Loan may increase (without regard to the Maximum
Mortgage Interest Rate) or decrease (without regard to the Minimum Mortgage
Interest Rate) on such Adjustment Date from the Mortgage Interest Rate in effect
immediately prior to such Adjustment Date.
Person: An individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Prepayment Charge: With respect to any Mortgage Loan, any prepayment
penalty or premium thereon payable in connection with a Principal Prepayment on
such Mortgage Loan pursuant to the terms of the related Mortgage Note.
Primary Insurance Policy: A policy of primary mortgage guaranty
insurance issued by a Qualified Insurer.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date, including
any Prepayment Charge, which is not accompanied by an amount of interest
representing scheduled interest due on any date or dates in any month or months
subsequent to the month of prepayment.
Purchase Price: The price paid on the related Closing Date by the
Purchaser to the Seller pursuant to the related Confirmation in exchange for the
Mortgage Loans purchased on such Closing Date as calculated as provided in
Section 4.
Purchaser: The Initial Purchaser or the Person, if any, to which the
Initial Purchaser has assigned its rights and obligations thereunder as
Purchaser with respect to a Mortgage Loan, and each of their respective
successors and assigns.
Qualified Correspondent: Any Person from which the Seller purchased
Mortgage Loans, provided that the following conditions are satisfied: (i) such
Mortgage Loans were originated pursuant to an agreement between the Seller and
such Person that contemplated that
9
such Person would underwrite mortgage loans from time to time, for sale to the
Seller, in accordance with underwriting guidelines designated by the Seller
("Designated Guidelines") or guidelines that do not vary materially from such
Designated Guidelines; (ii) such Mortgage Loans were in fact underwritten as
described in clause (i) above and were acquired by the Seller within 180 days
after origination; (iii) either (x) the Designated Guidelines were, at the time
such Mortgage Loans were originated, used by the Seller in origination of
mortgage loans of the same type as the Mortgage Loans for the Seller's own
account or (y) the Designated Guidelines were, at the time such Mortgage Loans
were underwritten, designated by the Seller on a consistent basis for use by
lenders in originating mortgage loans to be purchased by the Seller; and (iv)
the Seller employed, at the time such Mortgage Loans were acquired by the
Seller, pre-purchase or post-purchase quality assurance procedures (which may
involve, among other things, review of a sample of mortgage loans purchased
during a particular time period or through particular channels) designed to
ensure that Persons from which it purchased mortgage loans properly applied the
underwriting criteria designated by the Seller.
Qualified Insurer: An insurance company duly qualified as such under
the laws of the states in which the Mortgaged Property is located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided, and approved as an insurer by FNMA
and FHLMC and whose claims paying ability is rated in the two highest rating
categories by the nationally recognized rating agencies with respect to primary
mortgage insurance and in the two highest rating categories by Best's with
respect to hazard and flood insurance.
Qualified Substitute Mortgage Loan: A mortgage loan substituted for a
Deleted Mortgage Loan pursuant to the terms of this Agreement which must, on the
date of such substitution, (i) have an outstanding principal balance, after
application of all scheduled payments of principal and interest due during or
prior to the month of substitution, not in excess of the Stated Principal
Balance of the Deleted Mortgage Loan as of the Due Date in the calendar month
during which the substitution occurs, (ii) have a Mortgage Interest Rate not
less than (and not more than one percentage point in excess of) the Mortgage
Interest Rate of the Deleted Mortgage Loan, (iii) have a remaining term to
maturity not greater than (and not more than one year less than) that of the
Deleted Mortgage Loan, (iv) have the same Due Date as the Due Date on the
Deleted Mortgage Loan, (v) have a Loan-to-Value Ratio, and in the case of a
second lien Mortgage Loan, a Combined Loan-to-Value Ratio as of the date of
substitution equal to or lower than the Loan-to-Value Ratio or Combined
Loan-to-Value Ratio of the Deleted Mortgage Loan as of such date, (vi) conform
to each representation and warranty set forth in Subsection 7.02 of this
Agreement, (vii) be the same type of mortgage loan (i.e. fixed or adjustable
rate with the same Gross Margin and Index as the Deleted Mortgage Loan) and
(viii) be covered under a Primary Insurance Policy if such Qualified Substitute
Mortgage Loan has a Loan-to-Value Ratio in excess of 80%. In the event that one
or more mortgage loans are substituted for one or more Deleted Mortgage Loans,
the amounts described in clause (i) hereof shall be determined on the basis of
aggregate principal balances, the Mortgage Interest Rates described in clause
(ii) hereof shall be determined on the basis of weighted average Mortgage
Interest Rates and shall be satisfied as to each such mortgage loan, the terms
described in clause (iii) shall be determined on the basis of weighted average
remaining terms to maturity, the Loan-to-Value Ratios, and in the case of second
lien Mortgage Loans the Combined Loan-to-Value Ratios described in clause (v)
hereof shall be satisfied as to each such mortgage loan and, except to the
extent otherwise provided in this sentence, the representations and warranties
described in clause (vii) hereof must
10
be satisfied as to each Qualified Substitute Mortgage Loan or in the aggregate,
as the case may be.
Rate/Term Refinancing: A Refinanced Mortgage Loan, the proceeds of
which are not in excess of the existing first mortgage loan on the related
Mortgaged Property and related closing costs, and were used exclusively to
satisfy the then existing first mortgage loan of the Mortgagor on the related
Mortgaged Property and to pay related closing costs.
Reconstitution: Any Pass-Through Transfer or Whole Loan Transfer.
Reconstitution Agreement: The agreement or agreements entered into by
the Seller, the Servicer and the Purchaser and/or certain third parties on the
Reconstitution Date or Dates with respect to any or all of the Mortgage Loans
serviced hereunder, in connection with a Whole Loan Transfer or a Pass-Through
Transfer as provided in Section 12.
Reconstitution Date: The date or dates on which any or all of the
Mortgage Loans serviced under this Agreement shall be removed from this
Agreement and reconstituted as part of a Whole Loan Transfer or Pass-Through
Transfer pursuant to Section 12 hereof.
Record Date: With respect to each Distribution Date, the last Business
Day of the month immediately preceding the month in which such Distribution Date
occurs.
Refinanced Mortgage Loan: A Mortgage Loan the proceeds of which were
not used to purchase the related Mortgaged Property.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation
AB), 17 C.F.R. Sections 229.1100-229.1123, as such may be amended from time to
time, and subject to such clarification and interpretation as have been provided
by the Commission in the adopting release (Asset-Backed Securities, Securities
Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the
staff of the Commission, or as may be provided by the Commission or its staff
from time to time.
REMIC: A real estate mortgage investment conduit within the meaning of
Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating to
REMICs, which appear in Sections 860A through 860G of the Code, and related
provisions, and proposed, temporary and final regulations and published rulings,
notices and announcements promulgated thereunder, as the foregoing may be in
effect from time to time.
REO Account: The separate trust account or accounts created and
maintained pursuant to this Agreement which shall be entitled "American Home
Mortgage Servicing, Inc., in trust for the Purchaser, as of [date of acquisition
of title], Fixed and Adjustable Rate Mortgage Loans".
REO Disposition: The final sale by the Servicer of any REO Property.
REO Property: A Mortgaged Property acquired as a result of the
liquidation of a Mortgage Loan.
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Repurchase Price: The Repurchase Price for any Mortgage Loan that is
required to be repurchased pursuant to Section 7.04 shall be equal to the sum of
(i) the product of the Stated Principal Balance of such Mortgage Loan times the
greater of (x) the Purchase Price percentage as stated in the related
Confirmation and (y) 100%, plus (ii) interest on such Stated Principal Balance
at the Mortgage Interest Rate from and including the last Due Date through which
interest has been paid by or on behalf of the Mortgagor to the day immediately
prior to the date of repurchase (unless the Mortgage Loan has been the subject
of a Pass-Through Transfer, in which case the measurement date for accrual of
interest on such Stated Principal Balance shall be the first day of the month
following the date of repurchase), less amounts received in respect of such
repurchased Mortgage Loan which are being held in the Custodial Account for
distribution in connection with such Mortgage Loan, plus (iii) any unreimbursed
servicing advances and monthly advances (including nonrecoverable monthly
advances) and any unpaid servicing fees allocable to such Mortgage Loan paid by
any party other than the Servicer, plus (iv) any costs and expenses incurred by
the Purchaser, any master servicer or any trustee in respect of the breach or
defect giving rise to the repurchase obligation including, without limitation,
any costs and damages incurred by any such party in connection with any
violation by any such Mortgage Loan of any predatory or abusive lending law.
Residential Dwelling: Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
one-family dwelling unit in a FNMA eligible condominium project, or (iv) a
detached one-family dwelling in a planned unit development, none of which is a
co-operative, mobile or manufactured home.
Securities Act: The Securities Act of 1933, as amended.
Servicing Addendum: The terms and conditions attached hereto as
Exhibit 9, which will govern the servicing of the Mortgage Loans.
Servicing Advances: All customary, reasonable and necessary
"out-of-pocket" costs and expenses incurred by the Servicer in the performance
of its servicing obligations, including, but not limited to, the cost of (i)
preservation, restoration and repair of a Mortgaged Property, (ii) any
enforcement or judicial proceedings with respect to a Mortgage Loan, including
foreclosure actions and (iii) the management and liquidation of REO Property.
Servicing Criteria: As of any date of determination, the "servicing
criteria" set forth in Item 1122(d) of Regulation AB, or any amendments thereto,
a summary of the requirements of which as of the date hereof is attached hereto
as Exhibit 15 for convenience of reference only. In the event of a conflict or
inconsistency between the terms of Exhibit 15 and the text of Item 1122(d) of
Regulation AB, the text of Item 1122(d) of Regulation AB shall control.
Servicing Fee: With respect to each Mortgage Loan, the amount of the
annual servicing fee the Purchaser shall pay to the Servicer, which shall, for
each month, be equal to one-twelfth of the product of (a) the Servicing Fee Rate
and (b) the unpaid principal balance of the Mortgage Loan. Such fee shall be
payable monthly, computed on the basis of the same principal amount and period
respectively which any related interest payment on a Mortgage Loan is computed.
The obligation of the Purchaser to pay the Servicing Fee is limited to, and
payable solely from, the interest portion (including recoveries with respect to
interest from
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Liquidation Proceeds and other proceeds, to the extent permitted by Section
11.05) of related Monthly Payment collected by the Servicer, or as otherwise
proved under Section 11.05.
Servicing Fee Rate: The per annum rate at which the Servicing Fee
accrues, which rate shall be equal to thirty-seven and one-half (37.5) basis
points (0.375%).
Servicing File: With respect to each Mortgage Loan, the file retained
by the Servicer consisting of originals of all documents in the Mortgage File,
which are not delivered to the Purchaser, or the Custodian and copies of the
Mortgage Loan Documents set forth in Exhibit 13 hereto.
S&P: Standard & Poor's Ratings Group or its successor in interest.
Sponsor: The sponsor, as such term is defined in Regulation AB, with
respect to any Pass-Through Transfer.
Stated Principal Balance: As to each Mortgage Loan as of any date of
determination, (i) the principal balance of the Mortgage Loan as of the Cut-off
Date after giving effect to payments of principal due on or before such date,
whether or not collected from the Mortgagor on or before such date, minus (ii)
all amounts previously distributed to the Purchaser with respect to the related
Mortgage Loan representing payments or recoveries of principal, plus (iii) the
cumulative amount of any Negative Amortization.
Static Pool Information: Static pool information as described in Item
1105(a)(1)- (3) and 1105(c) of Regulation AB.
Subcontractor: Any vendor, subcontractor or other Person that is not
responsible for the overall servicing (as "servicing" is commonly understood by
participants in the mortgage-backed securities market) of Mortgage Loans but
performs one or more discrete functions identified in Item 1122(d) of Regulation
AB with respect to Mortgage Loans under the direction or authority of the
Servicer or a Subservicer.
Subservicer: Any Person that services Mortgage Loans on behalf of the
Servicer or any Subservicer and is responsible for the performance (whether
directly or through Subservicers or Subcontractors) of a substantial portion of
the material servicing functions required to be performed by the Servicer under
this Agreement or any Reconstitution Agreement that are identified in Item
1122(d) of Regulation AB.
Sub-Servicing Agreement: The written contract between the Servicer and
a Subservicer relating to servicing and administration of certain Mortgage Loans
as provided in Section 11.31 of this Agreement.
Tax Service Contract: A transferable contract maintained for the
Mortgaged Property with a tax service provider for the purpose of obtaining
current information from local taxing authorities relating to such Mortgaged
Property.
Third-Party Originator: Each Person, other than a Qualified
Correspondent, that originated Mortgage Loans acquired by the Seller.
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Underwriting Guidelines: The Seller's underwriting guidelines attached
hereto as Exhibit 14 as in effect with respect to the Mortgage Loans purchased
by Purchaser on the Initial Closing Date, as may be amended, supplemented or
modified from time to time thereafter with prior written notice to the Initial
Purchaser.
Whole Loan Transfer: Any sale or transfer of some or all of the
Mortgage Loans, other than a Pass-Through Transfer.
SECTION 2. Agreement to Purchase.
The Seller agrees to sell, and the Purchaser agrees to purchase, from
time-to-time, Mortgage Loans having an aggregate principal balance on the
related Cut-off Date in an amount as set forth in the related Confirmation, or
in such other amount as agreed by the Purchaser and the Seller as evidenced by
the actual aggregate principal balance of the Mortgage Loans accepted by the
Purchaser on the related Closing Date.
SECTION 3. Mortgage Loan Schedules.
The Seller shall deliver the Mortgage Loan Schedule for a Mortgage
Loan Package to be purchased on a particular Closing Date to the Purchaser at
least five (5) Business Days prior to the related Closing Date.
SECTION 4. Purchase Price.
The Purchase Price for each Mortgage Loan listed on the related
Mortgage Loan Schedule shall be the percentage of par as stated in the related
Confirmation (subject to adjustment as provided therein), multiplied by its
Stated Principal Balance as of the related Cut-off Date. If so provided in the
related Confirmation, portions of the Mortgage Loans shall be priced separately.
In addition to the Purchase Price as described above, the Initial
Purchaser shall pay to the Seller, at closing, accrued interest on the Stated
Principal Balance of each Mortgage Loan as of the related Cut-off Date at its
Mortgage Interest Rate, net of the Servicing Fee, from the related Cut-off Date
through the day prior to the related Closing Date, both inclusive.
The Purchaser shall own and be entitled to receive with respect to
each Mortgage Loan purchased, (1) all scheduled principal due after the related
Cut-off Date, (2) all other recoveries of principal and any Prepayment Charges
(unless otherwise specified in the related Confirmation) collected after the
related Cut-off Date (provided, however, that all scheduled payments of interest
and principal due on or before the related Cut-off Date and collected by the
Purchaser or Servicer after the related Cut-off Date shall belong to the
Seller), and (3) all payments of interest on the Mortgage Loans at the Net
Mortgage Rate (minus that portion of any such interest payment that is allocable
to the period prior to the related Cut-off Date). The Stated Principal Balance
of each Mortgage Loan as of the related Cut-off Date is determined after
application to the reduction of principal of payments of principal due on or
before the related Cut-off Date whether or not collected. Therefore, for the
purposes of this Agreement, payments of scheduled principal and interest prepaid
for a Due Date beyond the related Cut-off Date shall not be applied to the
principal balance as of the related Cut-off Date. Such prepaid amounts (minus
the applicable Servicing Fee) shall be the property of the Purchaser. The
Servicer shall
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deposit any such prepaid amounts into the Custodial Account, which account is
established for the benefit of the Purchaser, for remittance by the Servicer to
the Purchaser on the first related Distribution Date. All payments of principal
and interest, whenever received, relating to a Due Date prior to the related
Cut-off Date shall belong to the Seller and all payments of principal and
interest less the applicable Servicing Fee, or any Monthly Advance or Servicing
Advance, due on a Due Date following the related Cut-off Date shall belong to
the Purchaser.
SECTION 5. Examination of Mortgage Files.
In addition to the rights granted to the Initial Purchaser under the
related Confirmation to underwrite the Mortgage Loans and review the Mortgage
Files prior to the Closing Date, prior to the related Closing Date, the Seller,
or Servicer, as applicable, shall, at the Purchaser's option (a) deliver to the
Custodian in escrow, for examination with respect to each Mortgage Loan to be
purchased on such Closing Date, the related Mortgage File, including the
Assignment of Mortgage, pertaining to each Mortgage Loan, or (b) make the
related Mortgage File available to the Initial Purchaser for examination at the
Seller's offices or such other location as shall otherwise be agreed upon by the
Initial Purchaser and the Seller. Such examination may be made by the Initial
Purchaser or its designee at any reasonable time before or after the related
Closing Date. If the Initial Purchaser makes such examination prior to the
related Closing Date and identifies any Mortgage Loans that do not conform to
the terms of the related Confirmation or the Underwriting Guidelines, such
Mortgage Loans may, at the Initial Purchaser's option, be rejected for purchase
by the Initial Purchaser. If not purchased by the Initial Purchaser, such
Mortgage Loans shall be deleted from the related Mortgage Loan Schedule. The
Initial Purchaser may, at its option and without notice to the Seller, purchase
all or part of any Mortgage Loan Package without conducting any partial or
complete examination. The fact that the Initial Purchaser has conducted or has
determined not to conduct any partial or complete examination of the Mortgage
Files shall not affect the Initial Purchaser's (or any of its successors')
rights to demand repurchase or other relief or remedy provided for in this
Agreement.
SECTION 6. Conveyance from Seller to Initial Purchaser.
Subsection 6.01. Conveyance of Mortgage Loans; Possession of Servicing
Files.
The Seller, simultaneously with the payment of the Purchase Price,
shall execute and deliver to the Initial Purchaser an Assignment and Conveyance
with respect to the related Mortgage Loan Package in the form attached hereto as
Exhibit 4. The Servicing File retained by the Servicer with respect to each
Mortgage Loan pursuant to this Agreement shall be appropriately identified in
the Servicer's computer system to reflect clearly the sale of such related
Mortgage Loan to the Purchaser. Where specifically provided in the related
Confirmation, the Purchaser shall be entitled to receive all Prepayment Charges
required to be paid by a Mortgagor under the terms of any Mortgage Loan that are
collected after the related Cut-off Date. The Servicer shall release from its
custody the contents of any Servicing File retained by it only in accordance
with this Agreement, except when such release is required in connection with a
repurchase of any such Mortgage Loan pursuant to Subsection 7.03 or 7.04.
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Subsection 6.02. Books and Records.
Record title to each Mortgage and the related Mortgage Note as of the
related Closing Date shall be in the name of the Seller, the Servicer, the
Purchaser, the Custodian or one or more designees of the Purchaser, as the
Purchaser shall designate. Notwithstanding the foregoing, beneficial ownership
of each Mortgage and the related Mortgage Note shall be vested solely in the
Purchaser or the appropriate designee of the Purchaser, as the case may be. All
rights arising out of the Mortgage Loans including, but not limited to, all
funds received by the Seller after the related Cut-off Date on or in connection
with a Mortgage Loan as provided in Section 4 shall be vested in the Purchaser
or one or more designees of the Purchaser; provided, however, that all such
funds received on or in connection with a Mortgage Loan as provided in Section 4
shall be received and held by the Seller in trust for the benefit of the
Purchaser or the assignee of the Purchaser, as the case may be, as the owner of
the Mortgage Loans pursuant to the terms of this Agreement.
It is the express intention of the parties that the transactions
contemplated by this Agreement be, and be construed as, a sale of the Mortgage
Loans by the Seller and not a pledge of the Mortgage Loans by the Seller to the
Purchaser to secure a debt or other obligation of the Seller. Consequently, the
sale of each Mortgage Loan shall be reflected as a sale on the Seller's business
records, tax returns and financial statements.
Subsection 6.03. Delivery of Mortgage Loan Documents.
The Seller or Servicer, as applicable, shall from time to time in
connection with each Closing Date, at least five (5) Business Days prior to such
Closing Date, deliver and release to the Custodian those Mortgage Loan Documents
set forth on Exhibit 13 hereto with respect to each Mortgage Loan to be
purchased and sold on the related Closing Date and set forth on the related
Mortgage Loan Schedule delivered with such Mortgage Loan Documents.
The Seller or Servicer, as applicable, shall provide the Purchaser, or
its designee, with a copy, certified by the Seller or Servicer, as applicable,
to be a true and complete copy of any original document submitted for
recordation on or before the fifth Business Day prior to the related Closing
Date. If the original or copy of any document submitted for recordation to the
appropriate recording office is not delivered to the Purchaser or its designee
within 180 days following the related Closing Date due to a delay at the
applicable recording office, the Seller, or Servicer, as applicable, shall
deliver to the Purchaser an officer's written certification certifying that the
delay in delivering the original recorded document to the Purchaser is due to
delays at the applicable recording office and that the Seller or Servicer shall
deliver the original recorded documents no later than twelve (12) months after
the related Closing Date.
The Servicer shall provide to each of the Purchaser and the Custodian
a notice containing a list of authorized servicing officers (each, an
"Authorized Representative") for the purpose of giving and receiving notices,
requests and instructions and delivering certificates and documents in
connection with this Agreement. Such notice shall contain the specimen signature
for each Authorized Representative. From time to time, the Servicer may, by
delivering to the others a revised notice, change the information previously
given pursuant to this Section, but each of the parties hereto shall be entitled
to rely conclusively on the then current notice until receipt of a superseding
notice.
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The Custodian shall certify its receipt of all such Mortgage Loan
Documents required to be delivered pursuant to this Agreement for the related
Closing Date, as evidenced by the Trust Receipt and Initial Certification of the
Custodian in the form annexed to the Custodial Agreement.
The Servicer shall forward to the Custodian original documents
evidencing an assumption, modification, consolidation or extension of any
Mortgage Loan entered into in accordance with this Agreement within two weeks of
their execution, provided, however, that the Servicer shall provide the
Custodian with a certified true copy of any such document submitted for
recordation within two weeks of its execution, and shall provide the original of
any document submitted for recordation or a copy of such document certified by
the appropriate public recording office to be a true and complete copy of the
original within ninety days of its submission for recordation.
In the event the Seller or Servicer, as applicable, does not comply
with the delivery requirements set forth in this Subsection 6.03 and such
noncompliance materially and adversely affects the Purchaser's interest in the
Mortgage Loan, the Purchaser shall notify the Seller or Servicer, as applicable,
of such noncompliance, and the Seller or Servicer, as applicable, shall correct
or cure the related omission or defect within thirty (30) days of the receipt of
such notice. If the Seller or Servicer, as applicable, does not correct or cure
such material and adverse omission or defect within such period, then the Seller
or Servicer, as applicable, shall repurchase such Mortgage Loan from the
Purchaser within two (2) Business Days after the expiration of such thirty (30)
day period at the Repurchase Price.
Subsection 6.04 Quality Control Procedures.
The Seller shall have an internal quality control program that
verifies, on a regular basis, the existence and accuracy of the legal documents,
credit documents, property appraisals, and underwriting decisions. The program
shall include evaluating and monitoring the overall quality of the Seller's loan
production and the servicing activities of the Seller. The program is to ensure
that the Mortgage Loans are originated and serviced in accordance with Accepted
Servicing Standards and the Underwriting Guidelines; guard against dishonest,
fraudulent, or negligent acts; and guard against errors and omissions by
officers, employees, or other authorized persons.
SECTION 7. Representations, Warranties and Covenants of the Seller and the
Servicer: Remedies for Breach.
Subsection 7.01. Representations and Warranties Respecting the Seller
and the Servicer.
(a) The Seller represents, warrants and covenants to the Initial
Purchaser and to any subsequent Purchaser as of the Initial Closing Date and
each subsequent Closing Date or as of such date specifically provided herein or
in the applicable Assignment and Conveyance:
(i) The Seller is a corporation duly organized, validly existing
and in good standing under the laws of New York. The Seller has all
licenses necessary to carry out its business as now being conducted, and is
licensed and qualified to transact business
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in and is in good standing under the laws of each state in which any
Mortgaged Property is located, except where the failure to be so licensed
would not have a material adverse effect on the Seller's business or
operations or the enforceability of any Mortgage Loan or the transactions
contemplated by this Agreement, or is otherwise exempt under applicable law
from such licensing or qualification or is otherwise not required under
applicable law to effect such licensing or qualification and no demand for
such licensing or qualification has been made upon the Seller by any such
state, and in any event the Seller is in compliance with the laws of any
such state to the extent necessary to ensure the enforceability of each
Mortgage Loan and the servicing of the Mortgage Loans in accordance with
the terms of this Agreement. No licenses or approvals obtained by the
Seller have been suspended or revoked by any court, administrative agency,
arbitrator or governmental body and no proceedings are pending which might
result in such suspension or revocation;
(ii) The Seller has the full corporate power and authority to
hold each Mortgage Loan, to sell each Mortgage Loan, and to execute,
deliver and perform, and to enter into and consummate, all transactions
contemplated by this Agreement. The Seller has duly authorized the
execution, delivery and performance of this Agreement, has duly executed
and delivered this Agreement, and this Agreement, assuming due
authorization, execution and delivery by the Purchaser, constitutes a
legal, valid and binding obligation of the Seller, enforceable against it
in accordance with its terms except as the enforceability thereof may be
limited by (a) bankruptcy, insolvency, liquidation, receivership,
moratorium, reorganization or other similar laws affecting the enforcement
of the rights of creditors and (b) general principles of equity, whether
enforcement is sought in a proceeding in equity or at law;
(iii) The execution and delivery of this Agreement by the Seller
and the performance of and compliance with the terms of this Agreement will
not violate the Seller's articles of incorporation or by-laws or constitute
a default under or result in a breach or acceleration of, any material
contract, agreement or other instrument to which the Seller is a party or
which may be applicable to the Seller or its assets;
(iv) The Seller is not in violation of, and the execution and
delivery of this Agreement by the Seller and its performance and compliance
with the terms of this Agreement will not constitute a violation with
respect to, any order or decree of any court or any order or regulation of
any federal, state, municipal or governmental agency having jurisdiction
over the Seller or its assets, which violation might have consequences that
would materially and adversely affect the condition (financial or
otherwise) or the operation of the Seller or its assets or might have
consequences that would materially and adversely affect the performance of
its obligations and duties hereunder;
(v) The Seller is an approved seller for FNMA and FHLMC in good
standing and is a HUD approved mortgagee pursuant to Section 203 of the
National Housing Act. No event has occurred, including but not limited to a
change in insurance coverage, which would make the Seller unable to comply
with FNMA, FHLMC or HUD eligibility requirements or which would require
notification to FNMA, FHLMC or HUD;
(vi) The Seller does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every covenant contained
in this Agreement;
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(vii) Except for such documents which have been delivered for
recording, the Mortgage Note, the Mortgage, the Assignment of Mortgage and
any other documents required to be delivered with respect to each Mortgage
Loan pursuant to this Agreement, have been delivered to the Custodian all
in compliance with the specific requirements of this Agreement. With
respect to each Mortgage Loan, the Seller is in possession of a complete
Mortgage File in compliance with Exhibit 5, except for such documents as
have been delivered to the Custodian or delivered for recording;
(viii) Immediately prior to the payment of the Purchase Price for
each Mortgage Loan, the Seller was the owner of record of the related
Mortgage and the indebtedness evidenced by the related Mortgage Note and
upon the payment of the Purchase Price by the Purchaser, in the event that
the Seller retains record title, the Seller shall retain such record title
to each Mortgage, each related Mortgage Note and the related Mortgage Files
with respect thereto in trust for the Purchaser as the owner thereof and
only for the purpose of servicing and/or supervising the servicing of each
Mortgage Loan;
(ix) There are no actions or proceedings against, or
investigations of, the Seller before any court, administrative agency or
other tribunal (A) that might prohibit its entering into this Agreement,
(B) seeking to prevent the sale of the Mortgage Loans or the consummation
of the transactions contemplated by this Agreement or (C) that might
prohibit or materially and adversely affect the performance by the Seller
of its obligations under, or the validity or enforceability of, this
Agreement;
(x) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of, or compliance by the Seller with, this
Agreement or the consummation of the transactions contemplated by this
Agreement, except for such consents, approvals, authorizations or orders,
if any, that have been obtained prior to the related Closing Date;
(xi) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Seller, and the
transfer, assignment and conveyance of the Mortgage Notes and the Mortgages
by the Seller pursuant to this Agreement are not subject to the bulk
transfer or any similar statutory provisions;
(xii) The transfer of the Mortgage Loans shall be treated as a
sale on the books and records of the Seller, and the Seller has determined
that, and will treat, the disposition of the Mortgage Loans pursuant to
this Agreement for tax and accounting purposes as a sale. The Seller shall
maintain a complete set of books and records for each Mortgage Loan which
shall be clearly marked to reflect the ownership of each Mortgage Loan by
the Purchaser;
(xiii) The consideration received by the Seller upon the sale of
the Mortgage Loans constitutes fair consideration and reasonably equivalent
value for such Mortgage Loans;
(xiv) The Seller is solvent and will not be rendered insolvent by
the consummation of the transactions contemplated hereby. The Seller is not
transferring any Mortgage Loan with any intent to hinder, delay or defraud
any of its creditors;
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(xv) Reserved;
(xvi) Neither this Agreement nor any written statement, report or
other document prepared and furnished or to be prepared and furnished by
the Seller pursuant to this Agreement or in connection with the
transactions contemplated hereby contains any untrue statement of material
fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading;
(xvii) At such time that the Seller becomes a member of MERS, the
Seller will comply in all material respects with the rules and procedures
of MERS in connection with the servicing of the Mortgage Loans that are
registered with MERS; and
(xviii) The Seller has not dealt with any broker, investment
banker, agent or other person that may be entitled to any commission or
compensation in connection with the sale of the Mortgage Loans.
(b) The Servicer represents, warrants and covenants to the Initial
Purchaser and to any subsequent Purchaser as of the Initial Closing Date and
each subsequent Closing Date or as of such date specifically provided herein or
in the applicable Assignment and Conveyance:
(i) The Servicer is a corporation duly organized, validly
existing and in good standing under the laws of Maryland. The Servicer has
all licenses necessary to carry out its business as now being conducted,
and is licensed and qualified to transact business in and is in good
standing under the laws of each state in which any Mortgaged Property is
located, except where the failure to be so licensed would not have a
material adverse effect on the Servicer's business or operations or the
enforceability of any Mortgage Loan or the transactions contemplated by
this Agreement, or is otherwise exempt under applicable law from such
licensing or qualification or is otherwise not required under applicable
law to effect such licensing or qualification and no demand for such
licensing or qualification has been made upon the Servicer by any such
state, and in any event the Servicer is in compliance with the laws of any
such state to the extent necessary to ensure the enforceability of each
Mortgage Loan and the servicing of the Mortgage Loans in accordance with
the terms of this Agreement. No licenses or approvals obtained by the
Servicer have been suspended or revoked by any court, administrative
agency, arbitrator or governmental body and no proceedings are pending
which might result in such suspension or revocation;
(ii) The Servicer has the full corporate power and authority to
execute, deliver and perform, and to enter into and consummate, all
transactions contemplated by this Agreement. The Servicer has duly
authorized the execution, delivery and performance of this Agreement, has
duly executed and delivered this Agreement, and this Agreement, assuming
due authorization, execution and delivery by the Purchaser, constitutes a
legal, valid and binding obligation of the Servicer, enforceable against it
in accordance with its terms except as the enforceability thereof may be
limited by (a) bankruptcy, insolvency, liquidation, receivership,
moratorium, reorganization or other similar laws affecting the enforcement
of the rights of creditors and (b) general principles of equity, whether
enforcement is sought in a proceeding in equity or at law;
20
(iii) The execution and delivery of this Agreement by the
Servicer and the performance of and compliance with the terms of this
Agreement will not violate the Servicer's articles of incorporation or
by-laws or constitute a default under or result in a breach or acceleration
of, any material contract, agreement or other instrument to which the
Servicer is a party or which may be applicable to the Seller or its assets;
(iv) The Servicer is not in violation of, and the execution and
delivery of this Agreement by the Servicer and its performance and
compliance with the terms of this Agreement will not constitute a violation
with respect to, any order or decree of any court or any order or
regulation of any federal, state, municipal or governmental agency having
jurisdiction over the Servicer or its assets, which violation might have
consequences that would materially and adversely affect the condition
(financial or otherwise) or the operation of the Servicer or its assets or
might have consequences that would materially and adversely affect the
performance of its obligations and duties hereunder;
(v) The Servicer is an approved servicer for FNMA and FHLMC in
good standing and is a HUD approved mortgagee pursuant to Section 203 of
the National Housing Act. No event has occurred, including but not limited
to a change in insurance coverage, which would make the Servicer unable to
comply with FNMA, FHLMC or HUD eligibility requirements or which would
require notification to FNMA, FHLMC or HUD;
(vi) The Servicer does not believe, nor does it have any reason
or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
(vii) Reserved;
(viii) Reserved;
(ix) There are no actions or proceedings against, or
investigations of, the Servicer before any court, administrative agency or
other tribunal (A) that might prohibit its entering into this Agreement,
(B) seeking to prevent the sale of the Mortgage Loans or the consummation
of the transactions contemplated by this Agreement or (C) that might
prohibit or materially and adversely affect the performance by the Servicer
of its obligations under, or the validity or enforceability of, this
Agreement;
(x) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Servicer of, or compliance by the Servicer with, this
Agreement or the consummation of the transactions contemplated by this
Agreement, except for such consents, approvals, authorizations or orders,
if any, that have been obtained prior to the related Closing Date;
(xi) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Servicer;
(xii) Reserved;
21
(xiii) Neither this Agreement nor any written statement, report
or other document prepared and furnished or to be prepared and furnished by
the Servicer pursuant to this Agreement or in connection with the
transactions contemplated hereby contains any untrue statement of material
fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading;
(xiv) At such time that the Servicer becomes a member of MERS,
the Servicer will comply in all material respects with the rules and
procedures of MERS in connection with the servicing of the Mortgage Loans
that are registered with MERS; and
Subsection 7.02. Representations and Warranties Regarding Individual
Mortgage Loans.
The Seller hereby represents and warrants to the Initial Purchaser and
to any subsequent Purchaser that, as to each Mortgage Loan, as of the related
Closing Date for such Mortgage Loan:
(i) The information set forth in the related Mortgage Loan
Schedule and the related Mortgage File delivered to the Purchaser is
complete, true and correct;
(ii) The Mortgage Loan is in compliance with all requirements set
forth in the related Confirmation, and the characteristics of the related
Mortgage Loan Package as set forth in the related Confirmation are true and
correct;
(iii) All payments required to be made up to the close of
business on the Cut-off Date for such Mortgage Loan under the terms of the
Mortgage Note have been made; the Seller has not advanced funds, or
induced, solicited or knowingly received any advance of funds from a party
other than the owner of the related Mortgaged Property, directly or
indirectly, for the payment of any amount required by the Mortgage Note or
Mortgage; no Mortgage Loan is thirty (30) or more days delinquent as of the
Closing Date and there has been no delinquency, exclusive of any period of
grace, in any payment by the Mortgagor thereunder since the origination of
the Mortgage Loan;
(iv) There are no delinquent taxes, ground rents, water charges,
sewer rents, assessments, insurance premiums, leasehold payments, including
assessments payable in future installments or other outstanding charges
affecting the related Mortgaged Property;
(v) The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments, recorded in the applicable public recording office if
necessary to maintain the lien priority of the Mortgage, and which have
been delivered to the Custodian; the substance of any such waiver,
alteration or modification has been approved by the insurer under the
Primary Insurance Policy, if any, and has been approved by the title
insurer, to the extent required by the related policy, and is reflected on
the related Mortgage Loan Schedule. No instrument of waiver, alteration or
modification has been executed, and no Mortgagor has been released, in
whole or in part, except in connection with an assumption agreement
approved by the insurer under the Primary Insurance Policy, if any, and by
the title insurer,
22
to the extent required by the policy, and which assumption agreement has
been delivered to the Custodian and the terms of which are reflected in the
related Mortgage Loan Schedule;
(vi) The Mortgage Note and the Mortgage are not subject to any
right of rescission, set-off, counterclaim or defense, including the
defense of usury, nor will the operation of any of the terms of the
Mortgage Note and the Mortgage, or the exercise of any right thereunder,
render the Mortgage unenforceable, in whole or in part, or subject to any
right of rescission, set-off, counterclaim or defense, including the
defense of usury and no such right of rescission, set-off, counterclaim or
defense has been asserted with respect thereto. Each Prepayment Charge or
penalty with respect to any Mortgage Loan is permissible, enforceable and
collectible under applicable federal, state and local law;
(vii) All buildings upon the Mortgaged Property are insured by an
insurer acceptable to FNMA and FHLMC against loss by fire, hazards of
extended coverage and such other hazards as are customary in the area where
the Mortgaged Property is located, pursuant to insurance polices conforming
to the requirements of the Servicing Addendum. All such insurance policies
contain a standard mortgagee clause naming the Servicer, its successors and
assigns as mortgagee and all premiums thereon have been paid. If the
Mortgaged Property is in an area identified on a Flood Hazard Map or Flood
Insurance Rate Map issued by the Federal Emergency Management Agency as
having special flood hazards (and such flood insurance has been made
available) a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration is in effect which
policy conforms to the requirements of FNMA an FHLMC. The Mortgage
obligates the Mortgagor thereunder to maintain all such insurance at the
Mortgagor's cost and expense, and on the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to maintain such insurance at
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor;
(viii) Any and all requirements of any federal, state or local
law including, without limitation, usury, truth in lending, real estate
settlement procedures, predatory and abusive lending, consumer credit
protection, equal credit opportunity, fair housing or disclosure laws
applicable to the origination and servicing of mortgage loans of a type
similar to the Mortgage Loans and applicable to any prepayment penalty
associated with the Mortgage Loans at origination have been complied with
[in all material respects];
(ix) The Mortgage has not been satisfied, cancelled, subordinated
or rescinded, in whole or in part, and the Mortgaged Property has not been
released from the lien of the Mortgage, in whole or in part, nor has any
instrument been executed that would effect any such satisfaction,
cancellation, subordination, rescission or release;
(x) The Mortgage (including any Negative Amortization which may
arise thereunder) is a valid, existing and enforceable (A) first lien and
first priority security interest with respect to each Mortgage Loan which
is indicated by the Seller to be a first lien (as reflected on the Mortgage
Loan Schedule), or (B) second lien and second priority security interest
with respect to each Mortgage Loan which is indicated by the Seller to be a
second lien (as reflected on the Mortgage Loan Schedule), in either case,
on the Mortgaged Property, including all improvements on the Mortgaged
Property subject only
23
to (a) the lien of current real property taxes and assessments not yet due
and payable, (b) covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the date of
recording being acceptable to mortgage lending institutions generally and
specifically referred to in the lender's title insurance policy delivered
to the originator of the Mortgage Loan and which do not adversely affect
the Appraised Value of the Mortgaged Property, (c) with respect to each
Mortgage Loan which is indicated by the Seller to be a second lien Mortgage
Loan (as reflected on the Mortgage Loan Schedule), a first lien on the
Mortgaged Property; and (d) other matters to which like properties are
commonly subject which do not materially interfere with the benefits of the
security intended to be provided by the Mortgage or the use, enjoyment,
value or marketability of the related Mortgaged Property. Any security
agreement, chattel mortgage or equivalent document related to and delivered
in connection with the Mortgage Loan establishes and creates a valid,
existing and enforceable first or second lien and first or second priority
security interest (in each case, as indicated on the Mortgage Loan
Schedule) on the property described therein and the Seller has full right
to sell and assign the same to the Purchaser. The Mortgaged Property was
not, as of the date of origination of the Mortgage Loan, subject to a
mortgage, deed of trust, deed to secure debt or other security instrument
creating a lien subordinate to the lien of the Mortgage;
(xi) The Mortgage Note and the related Mortgage are genuine and
each is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms;
(xii) All parties to the Mortgage Note and the Mortgage had legal
capacity to enter into the Mortgage Loan and to execute and deliver the
Mortgage Note and the Mortgage, and the Mortgage Note and the Mortgage have
been duly and properly executed by such parties. The Mortgagor is a natural
person;
(xiii) The proceeds of the Mortgage Loan have been fully
disbursed to or for the account of the Mortgagor and there is no obligation
for the Mortgagee to advance additional funds thereunder and any and all
requirements as to completion of any on-site or off-site improvement and as
to disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making or closing the Mortgage Loan
and the recording of the Mortgage have been paid, and the Mortgagor is not
entitled to any refund of any amounts paid or due to the Mortgagee pursuant
to the Mortgage Note or Mortgage;
(xiv) The Seller is the sole legal, beneficial and equitable
owner of the Mortgage Note and the Mortgage and has full right to transfer
and sell the Mortgage Loan to the Purchaser free and clear of any
encumbrance, equity, lien, pledge, charge, claim or security interest;
(xv) All parties which have had any legal, beneficial or
equitable interest in the Mortgage Loan, whether as mortgagee, assignee,
pledgee or otherwise, are (or, during the period in which they held and
disposed of such interest, were) in compliance with any and all applicable
"doing business" and licensing requirements of the laws of the state
wherein the Mortgaged Property is located;
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(xvi) The Mortgage Loan is covered by an American Land Title
Association ("ALTA") lender's title insurance policy (which, in the case of
an Adjustable Rate Mortgage Loan has an adjustable rate mortgage
endorsement in the form of ALTA 6.0 or 6.1) acceptable to Xxxxxx Xxx and
Xxxxxxx Mac, issued by a title insurer acceptable to Xxxxxx Xxx and Xxxxxxx
Mac and qualified to do business in the jurisdiction where the Mortgaged
Property is located, insuring (subject to the exceptions contained in
(x)(a) and (b), and with respect to any second lien Mortgage Loan (c),
above) the Seller, its successors and assigns as to the first or second
priority lien (as indicated on the Mortgage Loan Schedule) of the Mortgage
in the original principal amount of the Mortgage Loan (including, if the
Mortgage Loan provides for Negative Amortization, the maximum amount of
Negative Amortization in accordance with the Mortgage) and, with respect to
any Adjustable Rate Mortgage Loan, against any loss by reason of the
invalidity or unenforceability of the lien resulting from the provisions of
the Mortgage providing for adjustment in the Mortgage Interest Rate and
Monthly Payment and Negative Amortization provisions of the Mortgage Note.
Additionally, such lender's title insurance policy affirmatively insures
ingress and egress to and from the Mortgaged Property, and against
encroachments by or upon the Mortgaged Property or any interest therein.
The Seller is the sole insured of such lender's title insurance policy, and
such lender's title insurance policy is in full force and effect and will
be in full force and effect upon the consummation of the transactions
contemplated by this Agreement. No claims have been made under such
lender's title insurance policy, and no prior holder of the related
Mortgage, including the Seller, has done, by act or omission, anything
which would impair the coverage of such lender's title insurance policy;
(xvii) There is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note and no event
which, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation or
event of acceleration, and the Seller has not waived any default, breach,
violation or event of acceleration. With respect to each second lien
Mortgage Loan (i) the first lien mortgage loan is in full force and effect,
(ii) there is no default, breach, violation or event of acceleration
existing under such first lien mortgage or the related mortgage note, (iii)
no event which, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute a default, breach, violation
or event of acceleration thereunder, (iv) either (A) the first lien
mortgage contains a provision which allows or (B) applicable law requires,
the mortgagee under the second lien Mortgage Loan to receive notice of, and
affords such mortgagee an opportunity to cure any default by payment in
full or otherwise under the first lien mortgage, (v) the related first lien
does not provide for or permit negative amortization under such first lien
Mortgage Loan, and (vi) either no consent for the Mortgage Loan is required
by the holder of the first lien or such consent has been obtained and is
contained in the Mortgage File;
(xviii) There are no mechanics' or similar liens or claims which
have been filed for work, labor or material (and no rights are outstanding
that under law could give rise to such lien) affecting the related
Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage;
(xix) All improvements which were considered in determining the
Appraised Value of the related Mortgaged Property lay wholly within the
boundaries and
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building restriction lines of the Mortgaged Property, and no improvements
on adjoining properties encroach upon the Mortgaged Property unless
otherwise disclosed and are affirmatively insured by the title insurance
policy referred to in (xvi) above;
(xx) The Mortgage Loan was originated by the Seller or by a
savings and loan association, a savings bank, a commercial bank or similar
banking institution which is supervised and examined by a federal or state
authority, or by a mortgagee approved as such by the Secretary of HUD;
(xxi) Principal payments on the Mortgage Loan commenced no more
than sixty (60) days after the proceeds of the Mortgage Loan were
disbursed. The Mortgage Loan bears interest at the Mortgage Interest Rate.
With respect to each Mortgage Loan the Mortgage Note is payable on the
first day of each month in Monthly Payments, which, in the case of a Fixed
Rate Mortgage Loan, are sufficient to fully amortize the original principal
balance over the original term thereof (other than with respect to a
Mortgage Loan identified on the related Mortgage Loan Schedule as an
interest-only Mortgage Loan during the interest-only period or a Mortgage
Loan which is identified on the related Mortgage Loan Schedule as a Balloon
Mortgage Loan) and to pay interest at the related Mortgage Interest Rate,
and, in the case of an Adjustable Rate Mortgage Loan, are changed on each
Adjustment Date, and in any case, are sufficient to fully amortize the
original principal balance over the original term thereof (other than with
respect to a Mortgage Loan identified on the related Mortgage Loan Schedule
as an interest-only Mortgage Loan during the interest-only period or a
Mortgage Loan which is identified on the related Mortgage Loan Schedule as
a Balloon Mortgage Loan) and to pay interest at the related Mortgage
Interest Rate. With respect to each Mortgage Loan identified on the
Mortgage Loan Schedule as an interest-only Mortgage Loan, the interest-
only period shall not exceed ten (10) years (or such other period specified
on the Mortgage Loan Schedule) and following the expiration of such
interest-only period, the remaining Monthly Payments shall be sufficient to
fully amortize the original principal balance over the remaining term of
the Mortgage Loan and to pay interest at the related Mortgage Interest
Rate. With respect to each Balloon Mortgage Loan, the Mortgage Note
requires a monthly payment which is sufficient to fully amortize the
original principal balance over the original term thereof and to pay
interest at the related Mortgage Interest Rate and requires a final Monthly
Payment substantially greater than the preceding monthly payment which is
sufficient to repay the remaining unpaid principal balance of the Balloon
Mortgage Loan at the Due Date of such monthly payment. The Index for each
Adjustable Rate Mortgage Loan is as set forth on the Mortgage Loan
Schedule. No Mortgage Loan is a Convertible Mortgage Loan. No Balloon
Mortgage Loan has an original stated maturity of less than seven (7) years;
(xxii) The origination, servicing and collection practices used
with respect to each Mortgage Note and Mortgage including, without
limitation, the establishment, maintenance and servicing of the Escrow
Accounts and Escrow Payments, if any, since origination, have been in all
respects legal, proper, prudent and customary in the mortgage origination
and servicing industry. The Mortgage Loan has been serviced by the Seller
and any predecessor servicer in accordance with the terms of the Mortgage
Note and Accepted Servicing Practices. With respect to escrow deposits and
Escrow Payments, if any, all such payments are in the possession of, or
under the control of, the Seller and
26
there exist no deficiencies in connection therewith for which customary
arrangements for repayment thereof have not been made. No escrow deposits
or Escrow Payments or other charges or payments due the Seller have been
capitalized under any Mortgage or the related Mortgage Note and no such
escrow deposits or Escrow Payments are being held by the Seller for any
work on a Mortgaged Property which has not been completed;
(xxiii) The Mortgaged Property is free of damage and waste and
there is no proceeding pending for the total or partial condemnation
thereof;
(xxiv) The Mortgage and related Mortgage Note contain customary
and enforceable provisions such as to render the rights and remedies of the
holder thereof adequate for the realization against the Mortgaged Property
of the benefits of the security provided thereby, including, (a) in the
case of a Mortgage designated as a deed of trust, by trustee's sale, and
(b) otherwise by judicial foreclosure. The Mortgaged Property has not been
subject to any bankruptcy proceeding or foreclosure proceeding and the
Mortgagor has not filed for protection under applicable bankruptcy laws.
There is no homestead or other exemption available to the Mortgagor which
would interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage. The Mortgagor has
not notified the Seller and the Seller has no knowledge of any relief
requested or allowed to the Mortgagor under the Servicemembers' Civil
Relief Act;
(xxv) The Mortgage Loan was underwritten in accordance with the
Underwriting Guidelines in effect at the time the Mortgage Loan was
originated which underwriting standards satisfy the standards of FNMA and
FHLMC; and the Mortgage Note and Mortgage are on forms acceptable to FNMA
and FHLMC;
(xxvi) The Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage on the Mortgaged
Property and the security interest of any applicable security agreement or
chattel mortgage referred to in (x) above;
(xxvii) The Mortgage File contains an appraisal of the related
Mortgaged Property which satisfied the standards of FNMA and FHLMC, was on
appraisal form 1004 or form 2055 with an interior inspection and was made
and signed, prior to the approval of the Mortgage Loan application, by a
qualified appraiser, duly appointed by the Seller, who had no interest,
direct or indirect in the Mortgaged Property or in any loan made on the
security thereof, whose compensation is not affected by the approval or
disapproval of the Mortgage Loan and who met the minimum qualifications of
FNMA and FHLMC. Each appraisal of the Mortgage Loan was made in accordance
with the relevant provisions of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989;
(xxviii) In the event the Mortgage constitutes a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in the Mortgage,
and no fees or expenses are or will become payable by the Purchaser to the
trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
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(xxix) No Mortgage Loan contains provisions pursuant to which
Monthly Payments are (a) paid or partially paid with funds deposited in any
separate account established by the Seller, the Mortgagor, or anyone on
behalf of the Mortgagor, (b) paid by any source other than the Mortgagor or
(c) contains any other similar provisions which may constitute a "buydown"
provision. The Mortgage Loan is not a graduated payment mortgage loan and
the Mortgage Loan does not have a shared appreciation or other contingent
interest feature;
(xxx) The Mortgagor has executed a statement to the effect that
the Mortgagor has received all disclosure materials required by applicable
law with respect to the making of fixed rate mortgage loans in the case of
Fixed Rate Mortgage Loans, and adjustable rate mortgage loans in the case
of Adjustable Rate Mortgage Loans and rescission materials with respect to
Refinanced Mortgage Loans, and such statement is and will remain in the
Mortgage File;
(xxxi) No Mortgage Loan was made in connection with (a) the
construction or rehabilitation of a Mortgaged Property or (b) facilitating
the trade-in or exchange of a Mortgaged Property;
(xxxii) The Seller has no knowledge of any circumstances or
condition with respect to the Mortgage, the Mortgaged Property, the
Mortgagor or the Mortgagor's credit standing that can reasonably be
expected to cause the Mortgage Loan to be an unacceptable investment, or
cause the Mortgage Loan to become delinquent or adversely affect the value
of the Mortgage Loan;
(xxxiii) No Mortgage Loan had an LTV or CLTV at origination in
excess of 100%. Each Mortgage Loan with an LTV at origination in excess of
80% is and will be subject to a Primary Insurance Policy, issued by a
Qualified Insurer, which insures that portion of the Mortgage Loan in
excess of the portion of the Appraised Value of the Mortgaged Property as
required by Xxxxxx Xxx. All provisions of such Primary Insurance Policy
have been and are being complied with, such policy is in full force and
effect, and all premiums due thereunder have been paid. Any Mortgage
subject to any such Primary Insurance Policy obligates the Mortgagor
thereunder to maintain such insurance and to pay all premiums and charges
in connection therewith. The Mortgage Interest Rate for the Mortgage Loan
does not include any such insurance premium. No Mortgage Loan is subject to
a lender paid primary mortgage insurance policy;
(xxxiv) The Mortgaged Property is lawfully occupied under
applicable law; all inspections, licenses and certificates required to be
made or issued with respect to all occupied portions of the Mortgaged
Property and, with respect to the use and occupancy of the same, including
but not limited to certificates of occupancy, have been made or obtained
from the appropriate authorities;
(xxxv) No error, omission, misrepresentation, negligence, fraud
or similar occurrence with respect to a Mortgage Loan has taken place on
the part of any person, including without limitation the Mortgagor, any
appraiser, any builder or developer, or any other party involved in the
origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan;
28
(xxxvi) The Assignment of Mortgage is in recordable form, except
for the name of the assignee which is blank, and is acceptable for
recording under the laws of the jurisdiction in which the Mortgaged
Property is located;
(xxxvii) Any principal advances made to the Mortgagor prior to
the Cut-off Date have been consolidated with the outstanding principal
amount secured by the Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment term. The
lien of the Mortgage securing the consolidated principal amount is
expressly insured as having first or second (as indicated on the Mortgage
Loan Schedule) lien priority by a title insurance policy, an endorsement to
the policy insuring the mortgagee's consolidated interest or by other title
evidence acceptable to FNMA or FHLMC. The consolidated principal amount
does not exceed the original principal amount of the Mortgage Loan plus any
Negative Amortization;
(xxxviii)If the Residential Dwelling on the Mortgaged Property is
a condominium unit or a unit in a planned unit development (other than a de
minimis planned unit development) such condominium or planned unit
development project meets the eligibility requirements of the Underwriting
Guidelines, FNMA and FHLMC;
(xxxix) The source of the down payment with respect to each
Mortgage Loan has been fully verified by the Seller;
(xl) Interest on each Mortgage Loan is calculated on the basis of
a 360-day year consisting of twelve 30-day months;
(xli) The Mortgaged Property is in material compliance with all
applicable environmental laws pertaining to environmental hazards
including, without limitation, asbestos, and neither the Seller nor, to the
best of the Seller's and the Servicer's knowledge, the related Mortgagor,
has received any notice of any violation or potential violation of such
law;
(xlii) The Seller shall, at its own expense, cause each Mortgage
Loan to be covered by a Tax Service Contract which is assignable to the
Purchaser or its designee; provided however, that if the Seller fails to
purchase such Tax Service Contract, the Seller shall be required to
reimburse the Purchaser for all costs and expenses incurred by the
Purchaser in connection with the purchase of any such Tax Service Contract;
(xliii) Each Mortgage Loan is covered by a Flood Zone Service
Contract which is assignable to the Purchaser or its designee or, for each
Mortgage Loan not covered by such Flood Zone Service Contract, the Seller
agrees to purchase such Flood Zone Service Contract;
(xliv) No Mortgage Loan is (a)(1) subject to the provisions of
the Homeownership and Equity Protection Act of 1994 as amended ("HOEPA") or
(2) has an APR or total points and fees that are equal to or exceeds the
HOEPA thresholds (as defined in 12 CFR 226.32 (a)(1)(i) and (ii)), (b) a
"high cost" mortgage loan, "covered" mortgage loan, "high risk home"
mortgage loan, or "predatory" mortgage loan or any other comparable term,
no matter how defined under any federal, state or local law, (c)
29
subject to any comparable federal, state or local statutes or regulations,
or any other statute or regulation providing for heightened regulatory
scrutiny or assignee liability to holders of such mortgage loans, or (d) a
High Cost Loan or Covered Loan, as applicable (as such terms are defined in
the current Standard & Poor's LEVELS(R) Glossary Revised, Appendix E);
(xlv) No predatory, abusive, or deceptive lending practices,
including but not limited to, the extension of credit to a Mortgagor
without regard for the Mortgagor's ability to repay the Mortgage Loan and
the extension of credit to a Mortgagor which has no apparent benefit to the
Mortgagor, were employed in connection with the origination of the Mortgage
Loan. Each Mortgage Loan is in compliance with the anti- predatory lending
eligibility for purchase requirements of the Xxxxxx Xxx Guides;
(xlvi) Unless otherwise specified in the related Confirmation or
the related Mortgage Loan Schedule, the debt-to-income ratio of the related
Mortgagor was not greater than 60% at the origination of the related
Mortgage Loan;
(xlvii) No Mortgagor was required to purchase any credit
insurance product (e.g., life, mortgage, disability, accident, unemployment
or health insurance product) or debt cancellation agreement as a condition
of obtaining the extension of credit. No Mortgagor obtained a prepaid
single premium credit insurance policy (e.g., life, mortgage, disability,
accident, unemployment or health insurance product) or debt cancellation
agreement in connection with the origination of the Mortgage Loan. No
proceeds from any Mortgage Loan were used to purchase single premium credit
insurance policies or debt cancellation agreements as part of the
origination of, or as a condition to closing, such Mortgage Loan;
(xlviii) The Mortgage Loans were not selected from the
outstanding one- to four-family mortgage loans in the Seller's portfolio as
to which the representations and warranties set forth in this Agreement
could be made at the related Closing Date in a manner so as to affect
adversely the interests of the Purchaser;
(xlix) The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the Mortgage
Loan in the event that the Mortgaged Property is sold or transferred
without the prior written consent of the mortgagee thereunder;
(l) The Mortgage Loan complies with all applicable consumer
credit statutes and regulations, including, without limitation, the
respective Uniform Consumer Credit Code laws in effect in Alabama,
Colorado, Idaho, Indiana, Iowa, Kansas, Maine, Oklahoma, South Carolina,
Utah, West Virginia and Wyoming, has been originated by a properly licensed
entity, and in all other respects, complies with all of the material
requirements of any such applicable laws;
(li) The information set forth in the Mortgage Loan Schedule as
to Prepayment Charges is complete, true and correct in all material
respects and each Prepayment Charge is permissible and enforceable in
accordance with its terms upon the Mortgagor's full and voluntary principal
payment under applicable law, except to the
30
extent that: (1) enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights; (2) the collectability thereof may be limited due to
acceleration in connection with a foreclosure or other involuntary
prepayment; or (3) subsequent changes in applicable law may limit or
prohibit enforceability thereof under applicable law;
(lii) The Mortgage Loan was not prepaid in full prior to the
Closing Date and the Seller has not received notification from a Mortgagor
that a prepayment in full shall be made after the Closing Date;
(liii) No Mortgage Loan is secured by cooperative housing,
commercial property or mixed use property;
(liv) Reserved;
(lv) Except as set forth on the related Mortgage Loan Schedule,
none of the Mortgage Loans are subject to a Prepayment Charge. For any
Mortgage Loan originated prior to October 1, 2002 that is subject to a
Prepayment Charge, such Prepayment Charge does not extend beyond five (5)
years after the date of origination. For any Mortgage Loan originated on or
following October 1, 2002 that is subject to a Prepayment Charge, such
Prepayment Charge does not extend beyond three (3) years after the date of
origination. With respect to any Mortgage Loan that contains a provision
permitting imposition of a premium upon a prepayment prior to maturity: (i)
prior to the Mortgage Loan's origination, the Mortgagor agreed to such
premium in exchange for a monetary benefit, including but not limited to a
rate or fee reduction, (ii) prior to the Mortgage Loan's origination, the
Mortgagor was offered the option of obtaining a Mortgage Loan that did not
require payment of such a premium, (iii) the prepayment premium is
disclosed to the Mortgagor in the loan documents pursuant to applicable
state and federal law, and (iv) notwithstanding any state or federal law to
the contrary, the Seller shall not impose such Prepayment Charge in any
instance when the mortgage loan is accelerated or paid off in connection
with the workout of a delinquent Mortgage Loan or as the result of the
Mortgagor's default in making the loan payments;
(lvi) The Seller has complied with all applicable anti-money
laundering laws and regulations, including without limitation the USA
Patriot Act of 2001 (collectively, the "Anti-Money Laundering Laws"); the
Seller has established an anti- money laundering compliance program as
required by the Anti-Money Laundering Laws, has conducted the requisite due
diligence in connection with the origination of each Mortgage Loan for
purposes of the Anti-Money Laundering Laws, including with respect to the
legitimacy of the applicable Mortgagor and the origin of the assets used by
the said Mortgagor to purchase the Mortgaged Property, and maintains, and
will maintain, sufficient information to identify the applicable Mortgagor
for purposes of the Anti-Money Laundering Laws. No Mortgage Loan is subject
to nullification pursuant to Executive Order 13224 (the "Executive Order")
or the regulations promulgated by the Office of Foreign Assets Control of
the United States Department of the Treasury (the "OFAC Regulations") or in
violation of the Executive Order or the OFAC Regulations, and no Mortgagor
is subject to the provisions of such Executive Order or the OFAC
Regulations nor listed as a "blocked person" for purposes of the OFAC
Regulations;
31
(lvii) No Mortgagor was encouraged or required to select a
Mortgage Loan product offered by the Mortgage Loan's originator which is a
higher cost product designed for less creditworthy borrowers, unless at the
time of the Mortgage Loan's origination, such Mortgagor did not qualify
taking into account credit history and debt to income ratios for a lower
cost credit product then offered by the Mortgage Loan's originator or any
affiliate of the Mortgage Loan's originator. If, at the time of loan
application, the Mortgagor may have qualified for a for a lower cost credit
product then offered by any mortgage lending affiliate of the Mortgage
Loan's originator, the Mortgage Loan's originator referred the Mortgagor's
application to such affiliate for underwriting consideration. With respect
to any Mortgage Loan, the Mortgagor was assigned the highest credit grade
available with respect to a mortgage loan product offered by such Mortgage
Loan's originator, based on a comprehensive assessment of risk factors,
including the Mortgagor's credit history;
(lviii) The methodology used in underwriting the extension of
credit for each Mortgage Loan employs objective mathematical principles
which relate the Mortgagor's income, assets, liabilities and/or credit
history to the proposed payment and such underwriting methodology does not
rely on the extent of the Mortgagor's equity in the collateral as the
principal determining factor in approving such credit extension. Such
underwriting methodology confirmed that at the time of origination
(application/approval) the Mortgagor had a reasonable ability to make
timely payments on the Mortgage Loan;
(lix) With respect to each Mortgage Loan, the Seller has fully
and accurately furnished complete information (i.e., favorable and
unfavorable) on the related borrower credit files to Equifax, Experian and
Trans Union Credit Information Company, in accordance with the Fair Credit
Reporting Act and its implementing regulations, on a monthly basis and, for
each Mortgage Loan, the Seller will furnish, in accordance with the Fair
Credit Reporting Act and its implementing regulations, accurate and
complete information on its borrower credit files to Equifax, Experian, and
Trans Union Credit Information Company, on a monthly basis;
(lx) All points and fees related to each Mortgage Loan were
disclosed in writing to the related Borrower in accordance with applicable
state and federal laws and regulations. No related Borrower was charged
"points and fees" (whether or not financed) in an amount greater than (a)
$1,000 or (b) 5% of the principal amount of such loan, whichever is
greater, such 5% limitation is calculated in accordance with Xxxxxx Mae's
anti-predatory lending requirements as set forth in the Xxxxxx Mae Guides.
For purposes of this representation, "points and fees" (a) include
origination, underwriting, broker and finder's fees and other charges that
the lender imposed as a condition of making the loan, whether they are paid
to the lender or a third party, and (b) exclude bona fide discount points,
fees paid for actual services rendered in connection with the origination
of the mortgage (such as attorneys' fees, notaries fees and fees paid for
property appraisals, credit reports, surveys, title examinations and
extracts, flood and tax certifications, and home inspections); the cost of
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 that, in total, do not
exceed 0.25 percent of the loan amount. All points, fees and charges
(including finance charges) and whether or not
32
financed, assessed, collected or to be collected in connection with the
origination and servicing of each Mortgage Loan were disclosed in writing
to the related Mortgagor in accordance with applicable state and federal
laws and regulations;
(lxi) The Seller or the Servicer will transmit full-file credit
reporting data for each Mortgage Loan pursuant to Xxxxxx Xxx Guide
Announcement 95-19 and for each Mortgage Loan, Seller and Servicer agree
that either Seller or Servicer shall report one of the following statuses
each month as follows: new origination, current, delinquent (30-, 60-,
90-days, etc.), foreclosed, or charged-off;
(lxii) With respect to any Mortgage Loan which is secured by
manufactured housing, if such Mortgage Loans are permitted hereunder, such
Mortgage Loan satisfies the requirements for inclusion in residential
mortgage backed securities transactions rated by Standard & Poor's Ratings
Services and such manufactured housing will be the principal residence of
the Mortgagor upon the origination of the Mortgage Loan. With respect to
any second lien Mortgage Loan, such lien is on a one- to four- family
residence that is (or will be) the principal residence of the Mortgagor
upon the origination of the second lien Mortgage Loan; (lxiii) 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);
(lxiv) No Mortgage Loan is secured by real property or secured by
a manufactured home located in the state of Georgia unless (x) such
Mortgage Loan was originated prior to October 1, 2002 or after March 6,
2003, or (y) the property securing the Mortgage Loan is not, nor will be,
occupied by the Mortgagor as the Mortgagor's principal dwelling. No
Mortgage Loan is a "High Cost Home Loan" as defined in the Georgia Fair
Lending Act, as amended (the "Georgia Act"). Each Mortgage Loan that is a
"Home Loan" under the Georgia Act complies with all applicable provisions
of the Georgia Act. No Mortgage Loan secured by owner occupied real
property or an owner occupied manufactured home located in the State of
Georgia was originated (or modified) on or after October 1, 2002 through
and including March 6, 2003;
(lxv) No Mortgage Loan is a "High-Cost" loan as defined under the
New York Banking Law Section 6-1, effective as of April 1, 2003;
(lxvi) No Mortgage Loan (a) is secured by property located in the
State of New York; (b) had an unpaid principal balance at origination of
$300,000 or less, and (c) has an application date on or after April 1,
2003, the terms of which Mortgage Loan equal or exceed either the APR or
the points and fees threshold for "high-cost home loans", as defined in
Section 6-1 of the New York State Banking Law;
(lxvii) No Mortgage Loan is a "High Cost Home Loan" as defined in
the Arkansas Home Loan Protection Act effective July 16, 2003 (Act 1340 or
2003);
(lxviii) No Mortgage Loan is a "High Cost Home Loan" as defined
in the Kentucky high-cost loan statute effective June 24, 2003 (Ky. Rev.
Stat. Section 360.100);
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(lxix) No Mortgage Loan secured by property located in the State
of Nevada is a "home loan" as defined in the Nevada Assembly Xxxx No. 284;
(lxx) No Mortgage Loan is a "manufactured housing loan" or "home
improvement home loan" pursuant to the New Jersey Home Ownership Act. No
Mortgage Loan is a "High-Cost Home Loan" or a refinanced "Covered Home
Loan," in each case, as defined in the New Jersey Home Ownership Act
effective November 27, 2003 (N.J.S.A. 46; 10B-22 et seq.);
(lxxi) No Mortgage Loan is a subsection 10 mortgage under the
Oklahoma Home Ownership and Equity protection Act;
(lxxii) No Mortgage Loan is a "High-Cost Home Loan" as defined in
the New Mexico Home Loan Protection Act effective January 1, 2004 (N.M.
Stat. Xxx. Sections 58- 21A-1 et seq.);
(lxxiii) No Mortgage Loan is a "High-Risk Home Loan" as defined
in the Illinois High-Risk Home Loan Act effective January 1, 2004 (815 Ill.
Comp. Stat. 137/1 et seq.);
(lxxiv) No Loan that is secured by property located within the
State of Maine meets the definition of a (i) "high-rate, high-fee" mortgage
loan under Article VIII, Title 9-A of the Maine Consumer Credit Code or
(ii) "High-Cost Home Loan" as defined under the Maine House Xxxx 383 X.X.
494, effective as of September 13, 2003;
(lxxv) With respect to any Loan for which a mortgage loan
application was submitted by the Mortgagor after April 1, 2004, no such
Loan secured by Mortgaged Property in the State of Illinois which has a
Loan Interest Rate in excess of 8.0% per annum has lender-imposed fees (or
other charges) in excess of 3.0% of the original principal balance of the
Loan;
(lxxvi) No Mortgage Loan is a "High Cost Home Mortgage Loan" as
defined in the Massachusetts Predatory Home Loan Practices Act, effective
November 7, 2004 (Mass. Xxx. Laws Ch. 183C). No Mortgage Loan secured by a
Mortgaged Property located in the Commonwealth of Massachusetts was made to
pay off or refinance an existing loan or other debt of the related borrower
(as the term "borrower" is defined in the regulations promulgated by the
Massachusetts Secretary of State in connection with Massachusetts House
Xxxx 4880 (2004)) unless either (1) (a) the related Mortgage Interest Rate
(that would be effective once the introductory rate expires, with respect
to Adjustable Rate Mortgage Loans) did or would not exceed by more than
2.25% the yield on United States Treasury securities having comparable
periods of maturity to the maturity of the related Mortgage Loan as of the
fifteenth day of the month immediately preceding the month in which the
application for the extension of credit was received by the related lender
or (b) the Mortgage Loan is an "open-end home loan" (as such term is used
in the Massachusetts House Xxxx 4880 (2004)) and the related Mortgage Note
provides that the related Mortgage Interest Rate may not exceed at any time
the Prime rate index as published in The Wall Street Journal plus a margin
of one percent, or (2) such Mortgage Loan is in the "borrower's interest,"
as documented by a "borrower's interest worksheet"
34
for the particular Mortgage Loan, which worksheet incorporates the factors
set forth in Massachusetts House Xxxx 4880 (2004) and the regulations
promulgated thereunder for determining "borrower's interest," and otherwise
complies in all material respects with the laws of the Commonwealth of
Massachusetts;
(lxxvii) No Loan is a "High Cost Home Loan" as defined by the
Indiana Home Loan Practices Act, effective January 1, 2005 (Ind. Code Xxx.
Sections 24-9-1 et seq.);
(lxxviii) The Mortgagor has not made or caused to be made any
payment in the nature of an "average" or "yield spread premium" to a
mortgage broker or a like Person which has not been fully disclosed to the
Mortgagor;
(lxxix) The sale or transfer of the Mortgage Loan by the Seller
complies with all applicable federal, state, and local laws, rules, and
regulations governing such sale or transfer, including, without limitation,
the Fair and Accurate Credit Transactions Act ("FACT Act") and the Fair
Credit Reporting Act, each as may be amended from time to time, and the
Seller has not received any actual or constructive notice of any identity
theft, fraud, or other misrepresentation in connection with such Mortgage
Loan or any party thereto;
(lxxx) With respect to each MOM Loan, a MIN has been assigned by
MERS and such MIN is accurately provided on the Mortgage Loan Schedule. The
related Assignment of Mortgage to MERS has been duly and properly recorded,
or has been delivered for recording to the applicable recording office;
(lxxxi) With respect to each MOM Loan, Seller has not received
any notice of liens or legal actions with respect to such Mortgage Loan and
no such notices have been electronically posted by MERS;
(lxxxii) With respect to each second lien Mortgage Loan, (i) if
the related first lien provides for negative amortization, the CLTV was
calculated at the maximum principal balance of such first lien that could
result upon application of such negative amortization feature, and (ii)
either no consent for the Mortgage Loan is required by the holder of the
first lien or such consent has been obtained and is contained in the
Mortgage File; and
(lxxxiii) No Mortgagor agreed to submit to arbitration to resolve
any dispute arising out of or relating in any way to the Mortgage Loan
transaction.
(lxxxiv) No Mortgage Loan is subject to mandatory arbitration;
(lxxxv) No Mortgage Loan is secured by a lien on a "condo hotel;"
(lxxxvi) Reserved.
(lxxxvii) No Mortgage Loan is subject to Negative Amortization.
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Subsection 7.03. Remedies for Breach of Representations and
Warranties.
It is understood and agreed that the representations and warranties
set forth in Subsections 7.01 and 7.02 shall survive the sale of the Mortgage
Loans to the Purchaser and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note or
Assignment of Mortgage or the examination or lack of examination of any Mortgage
File. Upon discovery by the Seller, the Servicer or the Purchaser of a breach of
any of the foregoing representations and warranties which materially and
adversely affects the value of the Mortgage Loans or the interest of the
Purchaser (or which materially and adversely affects the value of a Mortgage
Loan or the interests of the Purchaser in the related Mortgage Loan in the case
of a representation and warranty relating to a particular Mortgage Loan), or in
the event that any Mortgagor fails to make the first payment due to the
Purchaser following the Closing Date, the party discovering such breach shall
give prompt written notice to the other parties.
Within sixty (60) days of the earlier of either discovery by, or
notice to the Seller or the Servicer, of any breach of a representation or
warranty which materially and adversely affects the value of a Mortgage Loan or
the Mortgage Loans or the Purchaser's interest in a Mortgage Loan or the
Mortgage Loans, the Seller or the Servicer, as applicable, shall use its best
efforts promptly to cure such breach in all material respects and, if such
breach cannot be cured, the Seller shall, at the Purchaser's option, (i)
repurchase such Mortgage Loan at the Repurchase Price, or (ii) substitute a
Qualified Substitute Mortgage Loan for such Mortgage Loan as provided below. In
the event that a breach shall involve any representation or warranty set forth
in Subsection 7.01 and such breach cannot be cured within 60 days of the earlier
of either discovery by or notice to the Seller of such breach, all of the
Mortgage Loans shall, at the Purchaser's option, be repurchased by the Seller at
the Repurchase Price. The Seller shall, at the request of the Purchaser and
assuming that Seller has a Qualified Substitute Mortgage Loan, rather than
repurchase the Mortgage Loan as provided above, remove such Mortgage Loan and
substitute in its place a Qualified Substitute Mortgage Loan or Loans; provided
that such substitution shall be effected not later than 120 days after the
related Closing Date. If the Seller has no Qualified Substitute Mortgage Loan,
it shall repurchase the deficient Mortgage Loan. Any repurchase of a Mortgage
Loan(s) pursuant to the foregoing provisions of this Subsection 7.03 shall occur
on a date designated by the Purchaser and shall be accomplished by deposit in
the Custodial Account of the amount of the Repurchase Price for distribution to
the Purchaser on the next scheduled Distribution Date. Notwithstanding anything
to the contrary contained herein, it is understood by the parties hereto that a
breach of the representations and warranties made in Subsections 7.02(viii),
(xliv), (xlvii), (lv), (lvii), (lviii), (lix), (lx), (lxii), (lxiii), (lxiv) or
(lxxxiii) will be deemed to materially and adversely affect the value of the
related Mortgage Loan or the interest of the Purchaser therein.
At the time of repurchase of any deficient Mortgage Loan, the
Purchaser, the Seller and the Servicer shall arrange for the reassignment of the
repurchased Mortgage Loan to the Seller and the delivery to the Seller of any
documents held by the Custodian relating to the repurchased Mortgage Loan. In
the event the Repurchase Price is deposited in the Custodial Account, the Seller
shall, simultaneously with such deposit, give written notice to the Purchaser
that such deposit has taken place. Upon such repurchase the related Mortgage
Loan Schedule shall be amended to reflect the withdrawal of the repurchased
Mortgage Loan from this Agreement.
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As to any Deleted Mortgage Loan for which the Seller substitutes a
Qualified Substitute Mortgage Loan or Loans, the Seller shall effect such
substitution by delivering to the Purchaser for such Qualified Substitute
Mortgage Loan or Loans the Mortgage Note, the Mortgage, the Assignment of
Mortgage and such other documents and agreements as are set forth in Exhibit 13
hereto, with the Mortgage Note endorsed as required therein. The Seller shall
deposit in the Custodial Account the Monthly Payment less the Servicing Fee due
on such Qualified Substitute Mortgage Loan or Loans in the month following the
date of such substitution. Monthly Payments due with respect to Qualified
Substitute Mortgage Loans in the month of substitution will be retained by the
Seller. For the month of substitution, distributions to the Purchaser will
include the Monthly Payment due on such Deleted Mortgage Loan in the month of
substitution, and the Seller shall thereafter be entitled to retain all amounts
subsequently received by the Seller in respect of such Deleted Mortgage Loan.
The Seller shall give written notice to the Purchaser that such substitution has
taken place and shall amend the Mortgage Loan Schedule to reflect the removal of
such Deleted Mortgage Loan from the terms of this Agreement and the substitution
of the Qualified Substitute Mortgage Loan. Upon such substitution, such
Qualified Substitute Mortgage Loan or Loans shall be subject to the terms of
this Agreement in all respects, and the Seller shall be deemed to have made with
respect to such Qualified Substitute Mortgage Loan or Loans, as of the date of
substitution, the covenants, representations and warranties set forth in
Subsections 7.01 and 7.02.
For any month in which the Seller substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Seller
will determine the amount (if any) by which the aggregate principal balance of
all such Qualified Substitute Mortgage Loans as of the date of substitution is
less than the aggregate Stated Principal Balance of all such Deleted Mortgage
Loans (after application of scheduled principal payments due in the month of
substitution). An amount equal to the sum of (x) the product of (i) the amount
of such shortfall and (ii) the greater of, the Purchase Price Percentage used to
calculate the Purchase Price, as stated in the related Confirmation, and 100%,
and (y) accrued interest on the amount of such shortfall to the last day of the
month such substitution occurs, shall be distributed by the Seller in the month
of substitution pursuant to the Servicing Addendum. Accordingly, on the date of
such substitution, the Seller will deposit from its own funds into the Custodial
Account an amount equal to such amount.
In addition to such cure, repurchase and substitution obligation, the
Seller shall indemnify the Initial Purchaser and any subsequent Purchaser and
hold them harmless against any losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments, and other
costs and expenses resulting from any claim, demand, defense or assertion based
on or grounded upon, or resulting from, a breach of the Seller's representations
and warranties, respectively, contained in this Section 7, including, without
limitation, any loss incurred by the Purchaser of any Prepayment Charge to which
the Purchaser would otherwise be entitled pursuant to this Agreement. It is
understood and agreed that the obligations of the Seller set forth in this
Subsection 7.03 to cure, substitute for or repurchase a defective Mortgage Loan
and to indemnify the Initial Purchaser and any subsequent Purchaser as provided
in this Subsection 7.03 constitute the sole remedies of the Initial Purchaser
and any subsequent Purchaser respecting a breach of the foregoing
representations and warranties. The indemnification obligation of the Seller set
forth herein shall survive the termination of this Agreement.
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Any cause of action against the Seller or the Servicer relating to or
arising out of the breach of any representations and warranties made in
Subsections 7.01 or 7.02 shall accrue as to any Mortgage Loan upon (i) discovery
of such breach by the Purchaser or notice thereof by the Seller or the Servicer
to the Purchaser, and (ii) demand upon the Seller or the Servicer by the
Purchaser for compliance with the relevant provisions of this Agreement.
In addition to the foregoing, in the event that a breach of any
representation of the Seller materially and adversely affects the interests of
the Purchaser in any Prepayment Charge or the collectability of such Prepayment
Charge, the Seller shall pay the amount of the scheduled Prepayment Charge to
the Purchaser upon the payoff of any related Mortgage Loan.
Subsection 7.04. Repurchase of Certain Mortgage Loans; Premium
Protection.
(a) In the event that (i) the first Due Date for a Mortgage Loan is
prior to the Cut-off Date and the initial Monthly Payment is not made by the
related Mortgagor within thirty (30) days of such Due Date or (ii) any of the
first, second or third Monthly Payments on any Mortgage Loan due following the
Cut-off Date is not made by the related Mortgagor within thirty (30) days of the
related Due Date, then, in each such case, the Seller shall repurchase the
affected Mortgage Loans at the Repurchase Price, which shall be paid as provided
for in Subsection 7.03. The Seller shall notify the Purchaser of any such
default under this Subsection 7.04(a) within thirty (30) days of any such
Mortgage Loan becoming thirty (30) days delinquent.
(b) In the event that any Mortgage Loan prepays-in-full within ninety
(90) days following the related Closing Date, Seller shall remit to the Initial
Purchaser an amount equal to the product of (i) the excess of (A) the percentage
of par as stated in the related Confirmation as the purchase price percentage
(subject to adjustment as provided therein) over (B) 100%, times (ii) the
outstanding principal balance of such Mortgage Loan as of the Cut-off Date. Such
obligation to the Initial Purchaser shall survive any sale or assignment of the
Mortgage Loans by the Initial Purchaser to any third party and shall be
independently enforceable by the Initial Purchaser.
(c) In the event that any Mortgage Loan is repurchased pursuant to
Section 7.03 or 7.04(a), in addition to its obligations under Section 7.03 and
7.04(a), Seller shall remit to the Initial Purchaser an amount equal to the
product of (i) the excess of (A) the percentage of par as stated in the related
Confirmation as the purchase price percentage (subject to adjustment as provided
therein) over (B) 100%, times (ii) the outstanding principal balance of such
Mortgage Loan as of the date of repurchase. Upon any assignment of a Mortgage
Loan and/or this Agreement, the Initial Purchaser may at its option retain its
rights under this Section 7.04(c) notwithstanding such assignment.
SECTION 8. Closing.
The closing for each Mortgage Loan Package shall take place on the
related Closing Date. At the Purchaser's option, the closing shall be either: by
telephone, confirmed by letter or wire as the parties shall agree, or conducted
in person, at such place as the parties shall agree.
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The closing for the Mortgage Loans to be purchased on each Closing
Date shall be subject to each of the following conditions:
(a) all of the representations and warranties of the Seller under this
Agreement shall be true and correct in all material respects as of the related
Closing Date and no event shall have occurred which, with reasonable notice to
the Seller, or the passage of time, would constitute a default under this
Agreement;
(b) the Initial Purchaser shall have received, or the Initial
Purchaser's attorneys shall have received in escrow, all Closing Documents as
specified in Section 9, in such forms as are agreed upon and acceptable to the
Purchaser, duly executed by all signatories other than the Purchaser as required
pursuant to the terms hereof;
(c) the Seller and the Serciver shall have delivered and released to
the Custodian all documents required pursuant to this Agreement; and
(d) all other terms and conditions of this Agreement shall have been
complied with.
Subject to the foregoing conditions, the Initial Purchaser shall pay
to the Seller on the related Closing Date the Purchase Price, plus accrued
interest pursuant to Section 4, by wire transfer of immediately available funds
to the account designated by the Seller.
SECTION 9. Closing Documents.
(a) On or before the Initial Closing Date, the Seller or Servicer, as
applicable, shall submit to the Initial Purchaser fully executed originals of
the following documents:
1. this Agreement, in four counterparts;
2. a Custodial Account Letter Agreement in the form attached
as Exhibit 7 hereto;
3. as Escrow Account Letter Agreement in the form attached
as Exhibit 8 hereto;
4. a Seller's Officer's Certificate, in the form of Exhibit
1-A hereto, including all attachments thereto;
5. an Servicer's Officer's Certificate, in the form of
Exhibit 1- B hereto, including all attachments thereto;
6. an Opinion of Counsel to the Seller and Servicer, in the
form of Exhibit 2 hereto; and
7. the Underwriting Guidelines.
(b) The Closing Documents for the Mortgage Loans to be purchased on
each Closing Date shall consist of fully executed originals of the following
documents:
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1. the related Confirmation;
2. the related Mortgage Loan Schedule;
3. a Custodian's Trust Receipt and Initial Certification, as
required under the Custodial Agreement, in a form acceptable to the
Initial Purchaser;
4. an Officer's Certificate, in the form of Exhibit 1-A
hereto, including all attachments thereto;
5. an Servicer's Officer's Certificate, in the form of
Exhibit 1-B hereto, including all attachments thereto;
6. if requested by the Initial Purchaser, an Opinion of
Counsel to the Seller, in the form of Exhibit 2 hereto;
7. a Security Release Certification, in the form of Exhibit
3 hereto executed by any Person, as requested by the Initial
Purchaser, if any of the Mortgage Loans has at any time been subject
to any security interest, pledge or hypothecation for the benefit of
such Person;
8. a certificate or other evidence of merger or change of
name, signed or stamped by the applicable regulatory authority, if any
of the Mortgage Loans were acquired by the Seller by merger or
acquired or originated by the Seller while conducting business under a
name other than its present name, if applicable;
9. any modifications, amendments or supplements to the
Underwriting Guidelines following the Initial Closing Date;
10. an Assignment and Conveyance in the form of Exhibit 4
hereto; and
11. Reserved.
SECTION 10. Costs.
The Purchaser shall pay any commissions due its salesmen, recording
fees and the legal fees and expenses of its attorneys. All other costs and
expenses incurred in connection with the transfer and delivery of the Mortgage
Loans, including without limitation, fees for title policy endorsements and
continuations and the Seller's attorney's fees, shall be paid by the Seller. The
Seller shall also pay those expenses of the Custodian related to the preparation
of Trust Receipts and Certification in connection with the sale of the Mortgage
Loans.
SECTION 11. Servicer's Servicing Obligations.
The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans directly or through one or more Subservicers, in
accordance with the terms and
40
provisions set forth in the Servicing Addendum attached as Exhibit 9, which
Servicing Addendum is incorporated herein by reference. In addition, with
respect to any Mortgage Loan that is not subject to an assignable "life of loan"
Flood Zone Service Contract or Tax Servicer Contract as of the related Closing
Date, the Servicer shall pay the cost incurred by the Purchaser or its designee
to obtain such a contract.
SECTION 12. Removal of Mortgage Loans from Inclusion under This Agreement
Upon a Whole Loan Transfer or a Pass-Through Transfer on One or
More Reconstitution Dates.
The Seller, the Servicer and the Initial Purchaser agree that with
respect to some or all of the Mortgage Loans, the Initial Purchaser may effect
either:
(1) one or more Whole Loan Transfers; and/or
(2) one or more Pass-Through Transfers;
provided, that no single Whole Loan Transfer or Pass-Through Transfer shall
involve the sale or other transfer by the Initial Purchaser of Mortgage Loans
having an aggregate principal balance of less than $25 million.
A. Whole Loan Transfers or Pass-Through Transfers. With respect to
each Whole Loan Transfer or Pass-Through Transfer, as the case may be, entered
into by the Initial Purchaser, the Seller agrees:
(1) to cooperate fully with the Purchaser and any prospective
purchaser with respect to all reasonable requests and due
diligence procedures including participating in meetings with
rating agencies, bond insurers and such other parties as the
Purchaser shall designate and participating in meetings with
prospective purchasers of the Mortgage Loans or interests therein
and providing information reasonably requested by such
purchasers;
(2) to negotiate and execute all Reconstitution Agreements,
including, without limitation, an Assignment, Assumption and
Recognition Agreement in the form attached hereto as Exhibit 10
and an Indemnification Agreement in the form attached hereto as
Exhibit 11, provided that each of the Seller and the Purchaser is
given an opportunity to review and reasonably negotiate in good
faith the content of such documents not specifically referenced
or provided for herein;
(3) with respect to any Whole Loan Transfer or Pass-Through Transfer,
the Seller shall make as of the Reconstitution Date (i) the
representations and warranties contained in this Agreement
regarding the Seller and the Mortgage Loans, (ii) such other
reasonable and mutually agreeable representations, warranties and
covenants which in form and substance conform to the
representations and warranties in this Agreement and to secondary
market standards for securities backed by mortgage loans similar
to the Mortgage Loans, (iii) such reasonable and mutually
agreeable provisions with regard to servicing responsibilities,
investor
41
reporting, segregation and deposit of principal and interest
payments, custody of the Mortgage Loans, (iv) such other mutually
agreeable covenants as may reasonably be required by the
Purchaser and (v) such other representations and warranties and
covenants as may be required by one or more nationally recognized
rating agencies for "AAA" rated mortgage pass-through
transactions, modified to the extent necessary to accurately
reflect the pool statistics of the Mortgage Loans as of the date
of such Whole Loan Transfer or Pass-Through Transfer and any
events or circumstances existing subsequent to the related
Closing Date(s);
(4) to deliver to the Purchaser, and to any Person designated by the
Purchaser, such legal documents and in-house Opinions of Counsel
as are customarily delivered by originators or servicers, as the
case may be, and reasonably determined by the Purchaser to be
necessary in connection with Whole Loan Transfers or Pass-Through
Transfers, as the case may be, such in-house Opinions of Counsel
for a Pass-Through Transfer to be in the form reasonably
acceptable to the Purchaser, it being understood that the cost of
any opinions of outside special counsel that may be required for
a Whole Loan Transfer or Pass-Through Transfer, as the case may
be, shall be the responsibility of the Purchaser;
(5) reserved;
(6) in connection with any Pass-Through Transfer, to deliver to the
Purchaser within 5 Business Days after request by the Purchaser,
the information with respect to the Seller (as originator) and
each Third-Party Originator of the Mortgage Loans as required
under Item 1110(a) and (b) of Regulation AB, a summary of the
requirements of which has of the date hereof is attached hereto
as Exhibit 16 for convenience of reference only, as determined by
Purchaser in its sole discretion. If requested by the Purchaser,
this will include information about the applicable credit-
granting or underwriting criteria;
(7) within 5 business days after request by the Purchaser, the Seller
shall provide (or, as applicable, cause each Third-Party
Originator to provide) Static Pool Information with respect to
the mortgage loans (of a similar type as the Mortgage Loans, as
reasonably identified by the Purchaser as provided below)
originated by (i) the Seller, if the Seller is an originator of
Mortgage Loans (including as an acquirer of Mortgage Loans from a
Qualified Correspondent), and/or (ii) each Third-Party
Originator. Such Static Pool Information shall be prepared by the
Seller (or Third-Party Originator) on the basis of its
reasonable, good faith interpretation of the requirements of Item
1105(a)(1)-(3) and (c) of Regulation AB. To the extent that there
is reasonably available to the Seller (or Third-Party Originator)
Static Pool Information with respect to more than one mortgage
loan type, the Purchaser or any Depositor shall be entitled to
specify whether some or all of such information shall be provided
pursuant to this paragraph. The content of such Static Pool
Information
42
may be in the form customarily provided by the Seller, and need
not be customized for the Purchaser or any Depositor. Such Static
Pool Information for each vintage origination year or prior
securitized pool, as applicable, shall be presented in increments
no less frequently than quarterly over the life of the mortgage
loans included in the vintage origination year or prior
securitized pool. The most recent periodic increment must be as
of a date no later than 135 days prior to the date of the
prospectus or other offering document in which the Static Pool
Information is to be included or incorporated by reference. The
Static Pool Information shall be provided in an electronic format
that provides a permanent record of the information provided,
such as a portable document format (pdf) file, or other such
electronic format reasonably required by the Purchaser or the
Depositor, as applicable. Promptly following notice or discovery
of a material error in Static Pool Information provided pursuant
to this clause (7) (including an omission to include therein
information required to be provided pursuant to this clause (7)),
the Seller shall provide corrected Static Pool Information to the
Purchaser or any Depositor, as applicable, in the same format in
which Static Pool Information was previously provided to such
party by the Seller.
(8) to deliver to the Purchaser within 5 Business Days after request
by the Purchaser, information with respect to the Servicer (as
servicer) as required by Item 1108(b) and (c) of the Regulation
AB as determined by the Purchaser in its reasonable discretion.
In the event that the Servicer has delegated any servicing
responsibilities with respect to the Mortgage Loans to a
subservicer, the Servicer shall provide the information required
pursuant to this clause with respect to the subservicer. In
connection with any financial or statistical/numerical
information provided to the Purchaser pursuant to Item 1108(b)(2)
and (4), if reasonably requested by the Purchaser, the Servicer
shall provide, at the Purchaser's expense (to the extent of any
additional incremental expense associated with delivery pursuant
to this Agreement), such statements and agreed-upon procedures
letters of certified public accounts reasonably acceptable to the
Purchaser or Depositor, as applicable;
(9) in connection with any Pass-Through Transfer, to deliver to the
Purchaser within 5 Business Days after request by the Purchaser,
(a) information regarding any legal proceedings pending (or known
to be contemplated) against the Seller and Servicer and each other originator of
the Mortgage Loans and each Subservicer as required by Item 1117 of Regulation
AB, a summary of the requirements of which as of the date hereof is attached
hereto as Exhibit 16 for convenience of reference only, as determined by
Purchaser in its sole discretion,
(b) information regarding affiliations with respect to the Seller
and Servicer and each other originator of the Mortgage Loans and each
Subservicer as required by Item 1119(a) of Regulation AB, a summary of the
requirements of which as of the date hereof is
43
attached hereto as Exhibit 16 for convenience of reference only, as determined
by Purchaser in its sole discretion, and
(c) information regarding relationships and transactions with
respect to the Seller and Servicer and each other originator of the Mortgage
Loans and each Subservicer as required by Item 1119(b) and (c) of Regulation AB,
a summary of the requirements of which as of the date hereof is attached hereto
as Exhibit 16 for convenience of reference only, as determined by Purchaser in
its sole discretion;
(10) if so requested by the Purchaser, the Seller shall provide (or,
as applicable, cause each Third-Party Originator to provide), at
the expense of the requesting party (to the extent of any
additional incremental expense associated with delivery pursuant
to this Agreement), such statements and agreed-upon procedures
letters of certified public accountants reasonably acceptable to
the Purchaser or Depositor, as applicable, pertaining to Static
Pool Information relating to prior securitized pools for
securitizations closed on or after January 1, 2006 or, in the
case of Static Pool Information with respect to the Seller's or
Third-Party Originator's originations or purchases, to calendar
months commencing January 1, 2006, as the Purchaser or such
Depositor shall reasonably request. Such statements and letters
shall be addressed to and be for the benefit of such parties as
the Purchaser or such Depositor shall designate, which may
include, by way of example, any Sponsor, any Depositor and any
broker dealer acting as underwriter, placement agent or initial
purchaser with respect to a Pass-Through Transfer. Any such
statement or letter may take the form of a standard, generally
applicable document accompanied by a reliance letter authorizing
reliance by the addressees designated by the Purchaser or such
Depositor;
(11) in the event the Servicer acts as servicer in connection with any
Pass- Through Transfer of the Mortgage Loans, to deliver to the
Purchaser or its designee on or before March 10th (with a five
(5) day grace period and no later than March 15th) of each fiscal
year beginning in 2007 (a) a report (an "Assessment of
Compliance") reasonably satisfactory to the Purchaser regarding
the Servicer's, or any subservicer's, if applicable, assessment
of compliance with the Servicing Criteria during the preceding
fiscal year as required by Rules 13a-18 and 15d-18 of the
Exchange Act and Item 1122 of Regulation AB and (b) a report (an
"Attestation Report") by a registered public accounting firm that
attests to, and reports on, the Assessment of Compliance made by
Servicer or any subservicer, if applicable, as required by Rules
13a-18 and 15d-18 of the Exchange Act and Item 1122(b) of
Regulation AB, which Attestation Report must be made in
accordance with standards for attestation reports issued or
adopted by the Public Company Accounting Oversight Board;
(12) The Servicer will deliver to the Purchaser, not later than March
5th (with a five (5) day grace period and no later than March
10th) of each fiscal year, beginning in 2007, an Officers'
Certificate (an "Annual Statement of
44
Compliance") stating, as to each signatory thereof, that (i) a
review of the activities of the Servicer during the preceding
year and of performance under this Agreement or other applicable
servicing agreement has been made under such officer's
supervision and (ii) to the best of such officer's knowledge,
based on such review, the Servicer has fulfilled all of its
obligations under this Agreement or other applicable servicing
agreement in all material respects throughout such year, or, if
there has been a failure to fulfill any such obligation in any
material respect, specifying each such failure known to such
officer and the nature and status thereof. The Purchaser,
Depositor, Sponsor, Master Servicer and Issuing Entity shall be
entitled to rely on such Annual Statement of Compliance. The
Purchaser shall notify the Servicer prior to providing any copies
to prospective purchasers of the Mortgage Loans. In the event
that the Servicer has delegated any servicing responsibilities
with respect to the Mortgage Loans to a Subservicer, the Servicer
shall deliver an officer's certificate of the Subservicer as
described above as to each Subservicer as and when required with
respect to the Servicer;
(13) With respect to any Mortgage Loans that are subject to a
Pass-Through Transfer or other securitization transaction, by
March 10th (with a five (5) day grace period and no later than
March 15th) of each calendar year, beginning in 2007, an officer
of the Servicer shall execute and deliver an Officer's
Certificate (a "Sarbanes Certification") to the Purchaser, any
master servicer which is master servicing loans in connection
with such transaction (a "Master Servicer") and any related
depositor (a "Depositor") for the benefit of each such entity and
such entity's affiliates and the officers, directors and agents
of any such entity and such entity's affiliates, in the form
attached hereto as Exhibit 12. Such Sarbanes Certificate shall
not be provided to any other Person unless the Purchaser first
notifies the Servicer of its intention to do so. In the event
that the Servicer has delegated any servicing responsibilities
with respect to the Mortgage Loans to a Subservicer, the Servicer
shall deliver an officers' certificate of the Subservicer as
described above as to each Subservicer as and when required with
respect to the Servicer;
(14) As of the date of each Pass-Through Transfer, and except as has
been otherwise disclosed to the Purchaser, any Master Servicer or
any Depositor, the Seller or the Servicer, as applicable,
represents, warrants and covenants to the Purchaser, any Master
Servicer or any Depositor that: (1) the Servicer is not aware and
has not received notice of any default or servicing related
performance trigger has occurred as to any other securitization
due to any act or failure to act of the Servicer; (2) no material
noncompliance with applicable servicing criteria as to any other
securitization has been disclosed or reported by the Servicer;
(3) the Servicer has not been terminated as servicer in a
residential mortgage loan securitization, either due to a
servicing default or to application of a servicing performance
test or trigger; (4) no material changes to the Servicer's
servicing policies and procedures for similar loans has occurred
45
in the preceding three years; (5) there are no aspects of the
Servicer's financial condition that could have a material adverse
impact on the performance by the Servicer of its obligations
hereunder; (6) there are no legal proceedings pending, or known
to be contemplated by governmental authorities, against the
Servicer that could be material to investors in the securities
issued in such Pass-Through Transfer; and (7) there are no
affiliations, relationships or transactions relating to the
Servicer of a type that are described under Item 1119 of
Regulation AB;
(15) If so requested by the Purchaser, Depositor or any Master
Servicer on any date following the date on which information is
first provided to the Purchaser, any Depositor or any Master
Servicer, the Seller or the Servicer, as applicable, shall,
within five Business Days following such request, confirm in
writing the accuracy of the representations and warranties set
forth in clause (14) above or, if any such representation and
warranty is not accurate as of the date of such request, provide
reasonably adequate disclosure of the pertinent facts, in
writing, to the requesting party; and
If so requested by the Purchaser or any Depositor for the purpose of
satisfying its reporting obligation under the Exchange Act with respect to any
class of asset-backed securities, the Seller or Servicer shall (or shall cause
each Subservicer and Third-Party Originator to: (i) notify the Purchaser and any
Depositor in writing of (A) any material litigation or governmental proceedings
pending against the Seller, Servicer, any Subservicer or any Third-Party
Originator and (B) any affiliations or relationships that develop following the
closing date of a Pass-Through Transfer between the Seller, Servicer, any
Subservicer or any Third-Party Originator and any of the parties specified in
clause (7) of Section 12A(14) and any other parties identified in writing by the
requesting party) with respect to such Pass-Through Transfer, and (ii) provide
to the Purchaser and any Depositor a description of such proceedings,
affiliations or relationships.
As a condition to the succession to the Servicer or any Subservicer as
servicer or subservicer under this Agreement or any Reconstitution Agreement by
any Person (i) into which the Servicer or such Subservicer may be merged or
consolidated, or (ii) which may be appointed as a successor to the Servicer or
any Subservicer, the Servicer shall provide to the Purchaser and any Depositor,
at least 15 calendar days prior to the effective date of such succession or
appointment, (x) written notice to the Purchaser and any Depositor of such
succession or appointment and (y) in writing and in form and substance
reasonably satisfactory to the Purchaser and such Depositor, all information
reasonably requested by the Purchaser or any Depositor in order to comply with
its reporting obligation under Item 6.02 of Form 8-K with respect to any class
of asset-backed securities.
In the event of a conflict or inconsistency between the terms of
Exhibit 16 and the text of the applicable Item of Regulation AB as cited in this
Section 12, the text of Regulation AB, its adopting release and other public
statements of the SEC shall control.
B. Indemnification with Respect to Regulation AB. The Seller or the
Servicer, as applicable, shall indemnify the Purchaser, each affiliate of the
Purchaser, and each of the
46
following parties participating in a Pass-Through Transfer: each sponsor and
issuing entity; each Person responsible for the preparation, execution or filing
of any report required to be filed with the Commission with respect to such
Pass-Through Transfer, or for execution of a certification pursuant to Rule
13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect to such Pass-
Through Transfer; each broker dealer acting as underwriter, placement agent or
initial purchaser, each Person who controls any of such parties or the Depositor
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act); and the respective present and former directors, officers,
employees and agents of each of the foregoing and of the Depositor, and shall
hold each of them harmless from and against any losses, damages, penalties,
fines, forfeitures, reasonable legal fees and expenses and related costs,
judgments, and any other costs, fees and expenses that any of them may sustain
arising out of or based upon:
(i) (A) any untrue statement of a material fact contained in any
information, report, certification, accountants' letter or other material
provided under this Section 12 by or on behalf of the Seller or Servicer,
or provided under this Section 12 by or on behalf of any Subservicer,
Subcontractor or Third-Party Originator (collectively, the "Seller/Servicer
Information"), or (B) the omission to state in the Seller/Servicer
Information a material fact required to be stated in the Seller/Servicer
Information or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, by way of clarification, that clause (B) of this paragraph shall
be construed solely by reference to the Seller/Servicer Information and not
to any other information communicated in connection with a sale or purchase
of securities, without regard to whether the Seller/Servicer Information or
any portion thereof is presented together with or separately from such
other information;
(ii) any failure by the Seller, Servicer, any Subservicer, any
Subcontractor or any Third-Party Originator to deliver any information,
report, certification, accountants' letter or other material when and as
required under this Section 12, including any failure by the Servicer to
identify pursuant to Section 11.31 any Subcontractor "participating in the
servicing function" within the meaning of Item 1122 of Regulation AB; or
(iii) any breach by the Servicer of a representation or warranty
set forth in Section 12A(14) or in a writing furnished pursuant to Section
12A(15) and made as of a date prior to the closing date of the related
Pass-Through Transfer, to the extent that such breach is not cured by such
closing date, or any breach by the Servicer of a representation or warranty
in a writing furnished pursuant to Section 12A(15) to the extent made as of
a date subsequent to such closing date.
In the case of any failure of performance described in clause (ii) of
this Subsection, the Seller or the Servicer, as applicable, shall promptly
reimburse the Purchaser, any Depositor, as applicable, and each Person
responsible for the preparation, execution or filing of any report required to
be filed with the Commission with respect to such Pass-Through Transfer, or for
execution of a certification pursuant to Rule 13a-14(d) or Rule 15d-14(d) under
the Exchange Act with respect to such Pass-Through Transfer, for all costs
reasonably incurred by each such party in order to obtain the information,
report, certification, accountants' letter or other material not delivered as
required by the Seller, the Servicer, any Subservicer, any Subcontractor or any
Third-Party Originator.
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SECTION 13. The Seller and the Servicer.
Subsection 13.01. Additional Indemnification by the Seller and the
Servicer.
In addition to the indemnification provided in Subsection 7.03, the
Seller or the Servicer, as applicable, shall indemnify the Initial Purchaser and
any subsequent Purchaser and hold them harmless against any and all claims,
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments, and any other costs, fees and expenses that
the Initial Purchaser and any subsequent Purchaser may sustain arising out of or
based upon the failure of the Seller or the Servicer, as applicable, to perform
its obligations under this Agreement including but not limited to the Servicer's
obligation to service and administer the Mortgage Loans in strict compliance
with the terms of this Agreement or any Reconstitution Agreement entered into
pursuant to Section 12.
Subsection 13.02. Merger or Consolidation of the Seller and the
Servicer.
The Seller and the Servicer shall each keep in full force and effect
its existence, rights and franchises as a corporation under the laws of the
state of its incorporation except as permitted herein, and shall obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement or any of the Mortgage Loans, and
to enable the Seller and the Servicer to perform its duties under this
Agreement.
Any Person into which the Seller or the Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Seller or the Servicer shall be a party, or any
Person succeeding to the business of the Seller or the Servicer, shall be the
successor of the Seller or the Servicer hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding; provided, however, that the
successor or surviving Person shall be (i) an institution whose deposits are
insured by FDIC or a company whose business is the origination or servicing, as
applicable, of mortgage loans, (ii) have a GAAP net worth of not less than
$25,000,000 and (iii) be a FNMA or FHLMC approved seller or servicer, as
applicable, and, where applicable, shall satisfy any requirements of Section 16
with respect to the qualifications of a successor to the Seller.
Subsection 13.03. Limitation on Liability of the Seller, the Servicer
and Others.
Neither the Seller, the Servicer nor any of the officers, employees or
agents of the Seller or the Servicer shall be under any liability to the
Purchaser for any action taken or for refraining from the taking of any action
in good faith in connection with the servicing of the Mortgage Loans pursuant to
this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Seller or the Servicer or any such person
against any breach of warranties or representations made herein, or failure to
perform its obligations in strict compliance with any standard of care set forth
in this Agreement, or any liability which would otherwise be imposed by reason
of any breach of the terms and conditions of this Agreement. The Seller, the
Servicer and any officer, employee or agent of the Seller or the Servicer may
rely in good faith on any document of any kind prima facie properly executed and
submitted by any
48
Person respecting any matters arising hereunder. The Seller and the Servicer
shall not be under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its obligation to sell or duty to service the
Mortgage Loans in accordance with this Agreement and which in its opinion may
result in its incurring any expenses or liability; provided, however, that the
Seller or the Servicer may, with the consent of the Purchaser, undertake any
such action which it may deem necessary or desirable in respect to this
Agreement and the rights and duties of the parties hereto. In such event, the
legal expenses and costs of such action and any liability resulting therefrom
shall be expenses, costs and liabilities for which the Purchaser shall be
liable, the Seller and the Servicer shall be entitled to reimbursement therefor
from the Purchaser upon written demand except when such expenses, costs and
liabilities are subject to the Seller's or the Servicer's indemnification under
Subsections 7.03 or 13.01.
Subsection 13.04. Servicer Not to Resign.
The Servicer shall not assign this Agreement or resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Servicer and the Purchaser or upon the determination that its servicing duties
hereunder are no longer permissible under applicable law and such incapacity
cannot be cured by the Servicer in which event the Servicer may resign as
servicer. Any such determination permitting the resignation of the Servicer as
servicer shall be evidenced by an Opinion of Counsel to such effect delivered to
the Purchaser which Opinion of Counsel shall be in form and substance reasonably
acceptable to the Purchaser and which shall be provided at the cost of the
Servicer. No such resignation shall become effective until a successor shall
have assumed the Servicer's responsibilities and obligations hereunder in the
manner provided in Section 16.
Subsection 13.05. No Transfer of Servicing.
The Servicer acknowledges that the Purchaser has acted in reliance
upon the Servicer's independent status, the adequacy of its servicing
facilities, plan, personnel, records and procedures, its integrity, reputation
and financial standing and the continuance thereof. Without in any way limiting
the generality of this Section, the Servicer shall not either assign this
Agreement or the servicing hereunder or delegate its rights or duties hereunder
or any portion thereof, or sell or otherwise dispose of all or substantially all
of its property or assets, without the prior written approval of the Purchaser,
which consent will not be unreasonably withheld.
SECTION 14. Default.
Subsection 14.01. Events of Default.
In case one or more of the following Events of Default by the Servicer
shall occur and be continuing, that is to say:
(i) any failure by the Servicer to remit to the Purchaser any
payment required to be made under the terms of this Agreement which
continues unremedied for a period of two (2) Business Days after the date
upon which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Purchaser; or
49
(ii) failure on the part of the Seller or the Servicer duly to
observe or perform in any material respect any other of the covenants or
agreements on the part of the Seller or the Servicer set forth in this
Agreement which continues unremedied for a period of thirty days (except
that such number of days shall be fifteen in the case of a failure to pay
any premium for any insurance policy required to be maintained under this
Agreement) after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Seller or
the Servicer by the Purchaser or by the Custodian; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, bankruptcy, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding up or liquidation of its affairs, shall have been entered against
the Seller or the Servicer and such decree or order shall have remained in
force undischarged or unstayed for a period of sixty days; or
(iv) the Seller or the Servicer shall consent to the appointment
of a conservator or receiver or liquidator in any insolvency, bankruptcy,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Seller or the Servicer or of or relating
to all or substantially all of its property; or
(v) the Seller or the Servicer shall admit in writing its
inability to pay its debts generally as they become due, file a petition to
take advantage of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations; or
(vi) failure by the Seller or the Servicer to be in compliance
with the "doing business" or licensing laws of any jurisdiction where a
Mortgaged Property is located but only to the extent that such failure
materially and adversely affects the enforceability of the Mortgage Loans
or the Seller's or the Servicer's ability to perform its obligation
thereunder; or
(vii) the Servicer ceases at any point to meet the qualifications
of either a FNMA or FHLMC servicer, or the Servicer is not eligible to act
as servicer or master servicer for mortgage loans subject to residential
mortgage backed securities transactions rated by any nationally recognized
rating agency or is eligible to act as such only with enhanced credit
support, or the Servicer's servicer rating is reduced to below average by
any nationally recognized rating agency below its rating on the Initial
Closing Date; or
(viii) the Servicer attempts to assign its right to servicing
compensation hereunder or the Seller or the Servicer attempts, without the
consent of the Purchaser, to sell or otherwise dispose of all or
substantially all of its property or assets or to assign this Agreement or
the servicing responsibilities hereunder or to delegate its duties
hereunder or any portion thereof; or
(ix) the Servicer fails to duly perform, within the required time
period, its obligations under Sections 11.24, 11.30 or 11.31 of the
Servicing Addendum, which failure continues unremedied for a period of
three (3) days after the date on which written
50
notice of such failure, requiring the same to be remedied, shall have been
given to the Servicer by any party to this Agreement or by any master
servicer responsible for master servicing the Mortgage Loans pursuant to a
securitization of such Mortgage Loans.
then, and in each and every such case, so long as an Event of Default shall not
have been remedied within the applicable time period, the Purchaser, by notice
in writing to the Seller or the Servicer, as applicable, may, in addition to
whatever rights the Purchaser may have at law or equity to damages, including
injunctive relief and specific performance, terminate all the rights and
obligations of the Servicer as servicer under this Agreement. On or after the
receipt by the Seller or the Servicer, as applicable, of such written notice,
all authority and power of the Servicer to service the Mortgage Loans under this
Agreement shall on the date set forth in such notice pass to and be vested in
the successor appointed pursuant to Section 16.
Subsection 14.02. Waiver of Defaults.
The Purchaser may waive any default by the Seller or the Servicer in
the performance of its obligations hereunder and its consequences. Upon any such
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
SECTION 15. Termination.
The respective obligations and responsibilities of the Servicer, as
servicer, shall terminate upon the distribution to the Purchaser of the final
payment or liquidation with respect to the last Mortgage Loan (or advances of
same by the Servicer) or the disposition of property acquired upon foreclosure
or deed in lieu of foreclosure with respect to the last Mortgage Loan and the
remittance of all funds due hereunder unless terminated with respect to all or a
portion of the Mortgage Loans on an earlier date (i) without cause, at the
option of the Purchaser or (ii) pursuant to Section 14. In the event that the
Servicer is terminated pursuant to this Section 15 without cause, the Purchaser
shall pay to the Servicer a fair market value termination fee in an exact amount
to be mutually acceptable to the Servicer and the Purchaser on or prior to the
effective date of such termination. Upon written request from the Purchaser in
connection with any such termination, the Servicer shall prepare, execute and
deliver, any and all documents and other instruments, place in the Purchaser's
possession all Mortgage Files, and do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement or assignment of the Mortgage
Loans and related documents, or otherwise, at the Servicer's sole expense. The
Servicer agrees to cooperate with the Purchaser and such successor in effecting
the termination of the Servicer's responsibilities and rights hereunder as
servicer, including, without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited by
the Servicer to the Custodial Account, REO Account or Escrow Account or
thereafter received with respect to the Mortgage Loans.
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SECTION 16. Successor to the Servicer.
Prior to termination of Servicer's responsibilities and duties under
this Agreement pursuant to Section 14 or 15, the Purchaser shall (i) succeed to
and assume all of the Servicer's responsibilities, rights, duties and
obligations under this Agreement, or (ii) appoint a successor which shall
succeed to all rights and assume all of the responsibilities, duties and
liabilities of the Servicer as servicer under this Agreement. In connection with
such appointment and assumption, the Purchaser may make such arrangements for
the reasonable compensation of such successor out of payments on Mortgage Loans
as it and such successor shall agree. In the event that the Servicer's duties,
responsibilities and liabilities as servicer under this Agreement should be
terminated pursuant to the aforementioned Sections, the Servicer shall discharge
such duties and responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof with the same
degree of diligence and prudence which it is obligated to exercise under this
Agreement, and shall take no action whatsoever that might impair or prejudice
the rights or financial condition of the Purchaser or such successor. The
termination of the Servicer as Servicer pursuant to the aforementioned Sections
shall not become effective until a successor shall be appointed pursuant to this
Section 16 and shall in no event relieve the Seller and the Servicer of the
representations and warranties made pursuant to Subsections 7.01 and 7.02 and
the remedies available to the Purchaser under Subsection 7.03 or 7.04, it being
understood and agreed that the provisions of such Subsections 7.01, 7.02 and
7.03 and 7.04 shall be applicable to the Seller and Servicer notwithstanding any
such resignation or termination of the Servicer, or the termination of this
Agreement.
Any successor appointed as provided herein shall execute, acknowledge
and deliver to the Servicer and to the Purchaser an instrument accepting such
appointment, whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer, with like effect as if originally named as a party to this Agreement
provided, however, that such successor shall not assume, and Servicer shall
indemnify such successor for, any and all liabilities arising out of the
Servicer's acts as servicer taken prior to the appointment of such successor
servicer as servicer. Any termination of the Servicer as servicer pursuant to
Section 12, 14 or 15 shall not affect any claims that the Purchaser may have
against the Servicer arising prior to any such termination or resignation or
remedies with respect to such claims.
The Servicer shall timely deliver to the successor the funds in the
Custodial Account, REO Account and the Escrow Account and the Mortgage Files and
related documents and statements held by it hereunder and the Servicer shall
account for all funds. The Servicer shall execute and deliver such instruments
and do such other things all as may reasonably be required to more fully and
definitely vest and confirm in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer as servicer. The
successor shall reimburse the Servicer for amounts the Servicer actually
expended as servicer pursuant to this Agreement which the successor is entitled
to retain hereunder and which would otherwise have been recovered by the
Servicer pursuant to this Agreement but for the appointment of the successor
servicer.
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SECTION 17. Financial Statements.
The Seller understands that in connection with the Purchaser's
marketing of the Mortgage Loans, the Purchaser shall make available to
prospective purchasers the Seller's financial statements for the most recently
completed three fiscal years respecting which such statements are available. The
Seller also shall make available any comparable interim statements to the extent
any such statements have been prepared by the Seller (and are available upon
request to members or stockholders of the Seller or the public at large). The
Seller, if it has not already done so, agrees to furnish promptly to the
Purchaser copies of the statements specified above. The Seller also shall make
available information as is reasonably requested on its servicing performance
with respect to mortgage loans serviced for others, including delinquency
ratios.
The Seller also agrees to allow access to knowledgeable financial,
accounting, origination and servicing officers of the Seller for the purpose of
answering questions asked by any prospective purchaser regarding recent
developments affecting the Seller, its loan origination or servicing practices
or the financial statements of the Seller.
SECTION 18. Mandatory Delivery: Grant of Security Interest.
The sale and delivery of each Mortgage Loan on or before the related
Closing Date is mandatory from and after the date of the execution of the
related Confirmation, it being specifically understood and agreed that each
Mortgage Loan is unique and identifiable on the date hereof and that an award of
money damages would be insufficient to compensate the Initial Purchaser for the
losses and damages incurred by the Initial Purchaser (including damages to
prospective purchasers of the Mortgage Loans) in the event of the Seller's
failure to deliver each of the related Mortgage Loans or one or more Mortgage
Loans otherwise acceptable to the Initial Purchaser on or before the related
Closing Date. The Seller hereby grants to the Initial Purchaser a lien on and a
continuing security interest in each Mortgage Loan and each document and
instrument evidencing each such Mortgage Loan to secure the performance by the
Seller of its obligation hereunder, and the Seller agrees that it holds such
Mortgage Loans in custody for the Initial Purchaser subject to the Initial
Purchaser's (i) right to reject any Mortgage Loan under the terms of this
Agreement and the related Confirmation, and (ii) obligation to pay the related
Purchase Price for the Mortgage Loans. All rights and remedies of the Purchaser
under this Agreement are distinct from, and cumulative with, any other rights or
remedies under this Agreement or afforded by law or equity and all such rights
and remedies may be exercised concurrently, independently or successively.
SECTION 19. Notices.
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if mailed, by registered or
certified mail, return receipt requested, or, if by other means, when received
by the other party at the address as follows:
(i) if to the Purchaser:
HSBC Bank USA, National Association
000 Xxxxx Xxxxxx
00
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxx Xxxxxxxxxx
(ii) if to the Seller:
American Home Mortgage Corp.
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Xx.
With copies to:
American Home Mortgage Corp.
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxx, General Counsel
(iii) if to the Servicer:
American Home Mortgage Servicing, Inc.
0000 Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxxxx
With copies to:
American Home Mortgage Servicing, Inc.
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxx, General Counsel
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
SECTION 20. Severability Clause.
Any part, provision, representation or warranty of this Agreement that
is prohibited or which is held to be void or unenforceable shall be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any part, provision, representation or warranty of
this Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall be ineffective, as to such jurisdiction,
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of
54
law that prohibits or renders void or unenforceable any provision hereof. If the
invalidity of any part, provision, representation or warranty of this Agreement
shall deprive any party of the economic benefit intended to be conferred by this
Agreement, the parties shall negotiate, in good-faith, to develop a structure
the economic effect of which is nearly as possible the same as the economic
effect of this Agreement without regard to such invalidity.
SECTION 21. Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
SECTION 22. Governing Law.
The Agreement shall be construed in accordance with the laws of the
State of New York without regard to any conflicts of law provisions and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with the laws of the State of New York, except to the extent
preempted by Federal law.
SECTION 23. Intention of the Parties.
It is the intention of the parties that the Initial Purchaser is
purchasing, and the Seller is selling, the Mortgage Loans and not a debt
instrument of the Seller or another security. Accordingly, the parties hereto
each intend to treat the transaction for Federal income tax purposes as a sale
by the Seller, and a purchase by the Purchaser, of the Mortgage Loans. The
Initial Purchaser shall have the right to review the Mortgage Loans and the
related Mortgage Loan Files to determine the characteristics of the Mortgage
Loans which shall affect the Federal income tax consequences of owning the
Mortgage Loans and the Seller shall cooperate with all reasonable requests made
by the Initial Purchaser in the course of such review.
In addition, the Purchaser, Seller and Servicer acknowledge and agree
that the purpose of Subsections 11.30, 11.31 and 12(6)-(16) of this Agreement is
to facilitate compliance by the Purchaser and any Depositor with the provisions
of Regulation AB and related rules and regulations of the Commission. Although
Regulation AB is applicable by its terms only to offerings of asset-backed
securities that are registered under the Securities Act, the Seller and Servicer
acknowledge that investors in privately offered securities may require that the
Purchaser or any Depositor provide comparable disclosure in unregistered
offerings. References in this Agreement to compliance with Regulation AB include
provision of comparable disclosure in private offerings. Neither the Purchaser
nor any Depositor shall exercise its right to request delivery of information or
other performance under these provisions other than in good faith, or for
purposes other than compliance with the Securities Act, the Exchange Act and, in
each case, the rules and regulations of the Commission thereunder (or the
provision in a private offering of disclosure comparable to that required under
the Securities Act) and the Xxxxxxxx-Xxxxx Act. The Seller and Servicer
acknowledges that interpretations of the requirements of Regulation AB may
change over time, whether due to interpretive guidance provided by the
Commission or its staff, consensus among participants in the asset-backed
securities markets, advice of counsel, or otherwise, and agrees to comply with
requests made by the Purchaser, any Master Servicer or any Depositor in good
faith for delivery of information under these provisions on the basis of
55
established and evolving interpretations of Regulation AB. In connection with
any Pass-Through Transfer, the Seller and Servicer shall cooperate fully with
the Purchaser and any Master Servicer to deliver to the Purchaser (including any
of its assignees or designees), any Master Servicer and any Depositor, any and
all statements, reports, certifications, records and any other information
necessary in the good faith determination of the Purchaser, the Master Servicer
or any Depositor to permit the Purchaser, such Master Servicer or such Depositor
to comply with the provisions of Regulation AB, together with such disclosures
relating to the Seller, Servicer, any Subservicer, any Third-Party Originator
and the Mortgage Loans, or the servicing of the Mortgage Loans, reasonably
believed by the Purchaser or any Depositor to be necessary in order to effect
such compliance.
SECTION 24. Successors and Assigns.
This Agreement shall bind and inure to the benefit of and be
enforceable by the Seller, the Servicer and the Purchaser and the respective
successors and assigns of the Seller, the Servicer and the Purchaser. The
Purchaser may assign this Agreement to any Person to whom any Mortgage Loan is
transferred whether pursuant to a sale or financing and to any Person to whom
the servicing or master servicing of any Mortgage Loan is sold or transferred.
Upon any such assignment, the Person to whom such assignment is made shall
succeed to all rights and obligations of the Purchaser under this Agreement to
the extent of the related Mortgage Loan or Mortgage Loans and this Agreement, to
the extent of the related Mortgage Loan or Loans, shall be deemed to be a
separate and distinct Agreement between the Seller, the Servicer and such
Purchaser, and a separate and distinct Agreement between the Seller, the
Servicer and each other Purchaser to the extent of the other related Mortgage
Loan or Loans. In the event that this Agreement is assigned to any Person to
whom the servicing or master servicing of any Mortgage Loan is sold or
transferred, the rights and benefits under this agreement which inure to the
Purchaser shall inure to the benefit of both the Person to whom such Mortgage
Loan is transferred and the Person to whom the servicing or master servicing of
the Mortgage Loan has been transferred; provided that, the right to require a
Mortgage Loan to be repurchased by the Seller pursuant to Subsection 7.03 or
7.04 shall be retained solely by the Purchaser. This Agreement shall not be
assigned, pledged or hypothecated by the Seller or the Servicer to a third party
without the consent of the Purchaser, which consent shall not be unreasonably
withheld.
SECTION 25. Waivers.
No term or provision of this Agreement may be waived or modified
unless such waiver or modification is in writing and signed by the party against
whom such waiver or modification is sought to be enforced.
SECTION 26. Exhibits.
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
SECTION 27. Nonsolicitation.
The Seller and the Servicer covenant and agree that neither shall take
any action to solicit the refinancing of any Mortgage Loan following the date
hereof or provide information
56
to any other entity to solicit the refinancing of any Mortgage Loan; provided
that, the foregoing shall not preclude the Seller or the Servicer or its or
their respective affiliates, from engaging in solicitations to the general
public by newspaper, radio, television or other media or which are not
specifically directed toward the Mortgagors or from refinancing the Mortgage
Loan of any Mortgagor who, without solicitation, contacts the Seller or the
Servicer to request the refinancing of the related Mortgage Loan. This Section
27 shall not be deemed to preclude the Seller or the Servicer or any of their
respective affiliates from soliciting any Mortgagor for any other financial
products or services.
SECTION 28. General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to
include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting
principles;
(c) references herein to "Articles," "Sections," "Subsections,"
"Paragraphs," and other Subdivisions without reference to a
document are to designated Articles, Sections, Subsections,
Paragraphs and other subdivisions of this Agreement;
(d) reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same
Section in which the reference appears, and this rule shall also
apply to Paragraphs and other subdivisions;
(e) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular provision; and
(f) the term "include" or "including" shall mean without limitation
by reason of enumeration.
SECTION 29. Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by any party at the closing, and (c) financial
statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any
57
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
SECTION 30. Further Agreements.
The Seller, the Servicer and the Purchaser each agree to execute and
deliver to the other such reasonable and appropriate additional documents,
instruments or agreements as may be necessary or appropriate to effectuate the
purposes of this Agreement.
SECTION 31. Third-Party Beneficiary.
Each Master Servicer shall be considered a third-party beneficiary of
this Agreement, entitled to all the rights and benefits hereunder as if it were
a direct party to this Agreement.
SECTION 32. Entire Agreement.
This Agreement, the Confirmation and the exhibits and schedules hereto
constitute the entire agreement and understanding of the parties with respect to
the matters and transactions contemplated by this Agreement and, except to the
extent otherwise set forth in writing, supersedes any prior agreement and
understandings with respect to those matters and transactions. In the event of
any contradiction, conflict or inconsistency between the terms and provisions of
this Agreement and the terms and provisions of any Confirmation, the terms and
provisions of such Confirmation will govern.
58
IN WITNESS WHEREOF, the Seller, the Servicer and the Purchaser have
caused their names to be signed hereto by their respective officers thereunto
duly authorized as of the date first above written.
AMERICAN HOME MORTGAGE CORP.
(Seller)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
AMERICAN HOME MORTGAGE SERVICING, INC.
(Servicer)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
HSBC BANK USA, NATIONAL ASSOCIATION
(Initial Purchaser)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
59
EXHIBIT 1A
SELLER'S OFFICER'S CERTIFICATE
I, ________________________, hereby certify that I am the duly elected
______________ of [Seller], a __________________ (the "Seller"), and further
certify, on behalf of the Seller as follows:
1. Attached hereto as Attachment I are a true and correct copy of
the Certificate of Incorporation and by-laws of the Seller as are
in full force and effect on the date hereof.
2. No proceedings looking toward merger, liquidation, dissolution or
bankruptcy of the Seller are pending or contemplated.
3. Each person who, as an officer or attorney-in-fact of the Seller,
signed (a) the Master Mortgage Loan Purchase and Servicing
Agreement (the "Purchase Agreement"), dated as of ____________,
2006, by and among the Seller, the Servicer and HSBC Bank USA,
National Association (the "Purchaser"); (b) the Confirmation,
dated _____________ 2006, between the Seller and the Purchaser
(the "Confirmation"); and (c) any other document delivered prior
hereto or on the date hereof in connection with the sale and
servicing of the Mortgage Loans in accordance with the Purchase
Agreement and the Confirmation was, at the respective times of
such signing and delivery, and is as of the date hereof, duly
elected or appointed, qualified and acting as such officer or
attorney-in-fact, and the signatures of such persons appearing on
such documents are their genuine signatures.
4. Attached hereto as Attachment II is a true and correct copy of
the resolutions duly adopted by the board of directors of the
Seller on ________________, 2006 (the "Resolutions") with respect
to the authorization and approval of the sale and servicing of
the Mortgage Loans; said Resolutions have not been amended,
modified, annulled or revoked and are in full force and effect on
the date hereof.
5. Attached hereto as Attachment III is a Certificate of Good
Standing of the Seller dated ______________, 2006. No event has
occurred since ___________________, 2006 which has affected the
good standing of the Seller under the laws of the State of
___________.
6. All of the representations and warranties of the Seller contained
in Subsections 7.01 and 7.02 of the Purchase Agreement were true
and correct in all material respects as of the date of the
Purchase Agreement and are true and correct in all material
respects as of the date hereof.
Exh 1-A-1
7. The Seller has performed all of its duties and has satisfied all
the material conditions on its part to be performed or satisfied
prior to the related Closing Date pursuant to the Purchase
Agreement and the related Confirmation.
All capitalized terms used herein and not otherwise defined shall have
the meaning assigned to them in the Purchase Agreement.
Exh 1-A-2
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Seller.
Dated:
------------------------------
[Seal]
[SELLER]
(Seller)
By:
------------------------------------
Name:
----------------------------------
Title: Vice President
I, _______________________, Secretary of the Seller, hereby certify
that _________________________ is the duly elected, qualified and acting Vice
President of the Seller and that the signature appearing above is his genuine
signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:
------------------------------
[Seal]
[SELLER]
(Seller)
By:
------------------------------------
Name:
----------------------------------
Title: [Assistant] Secretary
Exh 1-A-3
EXHIBIT 1B
SERVICER'S OFFICER'S CERTIFICATE
I, ________________________, hereby certify that I am the duly elected
______________ of [Servicer], a __________________ (the "Servicer"), and further
certify, on behalf of the Servicer as follows:
1. Attached hereto as Attachment I are a true and correct copy of
the Certificate of Incorporation and by-laws of the Servicer as
are in full force and effect on the date hereof.
2. No proceedings looking toward merger, liquidation, dissolution or
bankruptcy of the Servicer are pending or contemplated.
3. Each person who, as an officer or attorney-in-fact of the
Servicer, signed (a) the Master Mortgage Loan Purchase and
Servicing Agreement (the "Purchase Agreement"), dated as of
____________, 2006, by and among the Servicer, the Servicer and
HSBC Bank USA, National Association (the "Purchaser"); (b) the
Confirmation, dated _____________ 2006, between the Servicer and
the Purchaser (the "Confirmation"); and (c) any other document
delivered prior hereto or on the date hereof in connection with
the sale and servicing of the Mortgage Loans in accordance with
the Purchase Agreement and the Confirmation was, at the
respective times of such signing and delivery, and is as of the
date hereof, duly elected or appointed, qualified and acting as
such officer or attorney-in-fact, and the signatures of such
persons appearing on such documents are their genuine signatures.
4. Attached hereto as Attachment II is a true and correct copy of
the resolutions duly adopted by the board of directors of the
Servicer on ________________, 2006 (the "Resolutions") with
respect to the authorization and approval of the sale and
servicing of the Mortgage Loans; said Resolutions have not been
amended, modified, annulled or revoked and are in full force and
effect on the date hereof.
5. Attached hereto as Attachment III is a Certificate of Good
Standing of the Servicer dated ______________, 2006. No event has
occurred since ___________________, 2006 which has affected the
good standing of the Servicer under the laws of the State of
___________.
6. All of the representations and warranties of the Servicer
contained in Subsections 7.01 and 7.02 of the Purchase Agreement
were true and correct in all material respects as of the date of
the Purchase Agreement and are true and correct in all material
respects as of the date hereof.
Exh 1-B-1
7. The Servicer has performed all of its duties and has satisfied
all the material conditions on its part to be performed or
satisfied prior to the related Closing Date pursuant to the
Purchase Agreement and the related Confirmation.
All capitalized terms used herein and not otherwise defined shall have
the meaning assigned to them in the Purchase Agreement.
Exh 1-B-2
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Seller.
Dated:
------------------------------
[Seal]
[SERVICER]
(Servicer)
By:
------------------------------------
Name:
----------------------------------
Title: Vice President
I, _______________________, Secretary of the Servicer, hereby certify
that _________________________ is the duly elected, qualified and acting Vice
President of the Servicer and that the signature appearing above is his genuine
signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:
------------------------------
[Seal]
[SERVICER]
(Servicer)
By:
------------------------------------
Name:
----------------------------------
Title: [Assistant] Xxxxxxxxx
Xxx 0-X-0
EXHIBIT 2
[FORM OF OPINION OF COUNSEL TO THE SELLER AND THE SERVICER]
________________________
(Date)
HSBC Bank USA, National Association
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Master Mortgage Loan Purchase and Servicing Agreement, dated
as of [Month] 1, 2006
Gentlemen:
I am Senior Counsel to [SELLER], a __________________ (the "Seller"
and "Servicer"), and I am delivering this opinion in my capacity as Senior
Counsel to Seller and Servicer in connection with the sale of certain mortgage
loans by the Seller to HSBC Bank USA, National Association (the "Purchaser")
pursuant to (i) a Master Mortgage Loan Purchase and Servicing Agreement, dated
as of [Month] 1, 2006, among the Seller, the Servicer and the Purchaser (the
"Purchase Agreement") and the Confirmation, dated [Month], 2006, among the
Seller, the Servicer and the Purchaser (the "Confirmation"). Capitalized terms
not otherwise defined herein have the meanings set forth in the Purchase
Agreement.
In connection with rendering this opinion letter, I, or attorneys
working under my direction, have examined, among other things, originals,
certified copies or copies otherwise identified to my satisfaction as being true
copies of the following:
A. The Purchase Agreement;
B. The Confirmation;
C. The Seller's Articles of Incorporation and By-Laws, as amended to
date;
D. The Servicer's Articles of Incorporation and By-Laws, as amended
to date;
E. Resolutions adopted by the board of directors of the Seller
relating to the transactions covered by this opinion (the
"Seller's Board Resolutions"); and
F. Resolutions adopted by the board of directors of the Servicer
relating to the transactions covered by this opinion (the
"Servicer's Board Resolutions").
For the purpose of rendering this opinion, I have made such
documentary, factual and legal examinations as I deemed necessary under the
circumstances. As to factual matters, I have relied upon statements,
certificates and other assurances of public officials and of officers
Exh 2-1
and other representatives of the Seller, and upon such other certificates as I
deemed appropriate, which factual matters have not been independently
established or verified by me. I have also assumed, among other things, the
genuineness of all signatures, the legal capacity of all natural persons, the
authenticity of all documents submitted to me as originals, and the conformity
to original documents of all documents submitted to me as copies and the
authenticity of the originals of such copied documents.
On the basis of and subject to the foregoing examination, and in
reliance thereon, and subject to the assumptions, qualifications, exceptions and
limitations expressed herein, I am of the opinion that:
1. The Seller and the Servicer have been duly incorporated and are
validly existing and in good standing under the laws of the State of [ - ] with
corporate power and authority to own their properties and conduct their business
as presently conducted by them. The Servicer has the corporate power and
authority to service the Mortgage Loans, and to execute, deliver, and perform
their obligations under the Purchase Agreement and the Confirmation (sometimes
collectively, the "Agreements").
2. The Purchase Agreement and the Confirmation have been duly and
validly authorized, executed and delivered by the Seller and the Servicer.
3. The Purchase Agreement and the Confirmation constitute valid, legal
and binding obligations of the Seller and the Servicer, enforceable against the
Seller and the Servicer in accordance with their respective terms.
4. No consent, approval, authorization or order of any state or
federal court or government agency or body is required for the execution,
delivery and performance by the Seller of the Purchase Agreement and the
Confirmation, or the consummation of the transactions contemplated by the
Purchase Agreement and the Confirmation, except for those consents, approvals,
authorizations or orders which previously have been obtained.
5. Neither the servicing of the Mortgage Loans by the Servicer as
provided in the Purchase Agreement and the Confirmation, nor the fulfillment by
the Seller or the Servicer of the terms of or the consummation of any other
transactions contemplated in the Purchase Agreement and the Confirmation will
result in a breach of any term or provision of the certificate of incorporation
or by-laws of the Seller or the Servicer, or, to my knowledge, will conflict
with, result in a breach or violation of, or constitute a default under, (i) the
terms of any indenture or other agreement or instrument known to me to which the
Seller or the Servicer are parties or by which they are bound, (ii) any State of
[ - ] or federal statute or regulation applicable to the Seller or the Servicer,
or (iii) any order of any State of [ - ] or federal court, regulatory body,
administrative agency or governmental body having jurisdiction over the Seller
or the Servicer, except in any such case where the default, breach or violation
would not have a material adverse effect on the Seller or the Servicer or
either's ability to perform its obligations under the Purchase Agreement.
6. There is no action, suit, proceeding or investigation pending or,
to my knowledge, threatened against the Seller or the Servicer which, in my
judgment, either in any
Exh 2-2
one instance or in the aggregate, would draw into question the validity of the
Purchase Agreement or which would be likely to impair materially the ability of
the Seller or the Servicer to perform under the terms of the Purchase Agreement.
7. The sale of each Mortgage Note and Mortgage as and in the manner
contemplated by the Purchase Agreement is sufficient fully to transfer to the
Purchaser all right, title and interest of the Seller thereto as noteholder and
mortgagee.
The opinions above are subject to the following additional
assumptions, exceptions, qualifications and limitations:
A. I have assumed that all parties to the Agreements other than the
Seller and the Servicer have all requisite power and authority to execute,
deliver and perform their respective obligations under each of the Agreements,
and that the Agreements have been duly authorized by all necessary corporate
action on the part of such parties, have been executed and delivered by such
parties and constitute the legal, valid and binding obligations of such parties.
B. My opinion expressed in paragraphs 3 and 7 above is subject to the
qualifications that (i) the enforceability of the Agreements may be limited by
the effect of laws relating to (1) bankruptcy, reorganization, insolvency,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, including, without limitation, the effect of
statutory or other laws regarding fraudulent conveyances or preferential
transfers, and (2) general principles of equity upon the specific enforceability
of any of the remedies, covenants or other provisions of the Agreements and upon
the availability of injunctive relief or other equitable remedies and the
application of principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law) as such principles relate to,
limit or affect the enforcement of creditors' rights generally and the
discretion of the court before which any proceeding for such enforcement may be
brought; and (ii) I express no opinion herein with respect to the validity,
legality, binding effect or enforceability of (a) provisions for indemnification
in the Agreements to the extent such provisions may be held to be unenforceable
as contrary to public policy or (b) Section 18 of the Purchase Agreement.
C. I have assumed, without independent check or certification, that
there are no agreements or understandings among the Seller, the Servicer, the
Purchaser and any other party which would expand, modify or otherwise affect the
terms of the documents described herein or the respective rights or obligations
of the parties thereunder.
Exh 2-3
I am admitted to practice in the State of [State] and I render no
opinion herein as to matters involving the laws of any jurisdiction other than
the State of [_______] and the Federal laws of the United States of America.
This letter is rendered to you as Purchaser under the Purchase
Agreement, solely for your benefit in connection with the transactions referred
to herein. Without my prior written consent, this letter is not to be relied
upon, used, circulated, quoted or otherwise referred to by, or assigned to, any
other person (including any person that seeks to assert your rights in respect
of this letter) or for any other purpose. In addition, I disclaim any obligation
to update this letter for changes in fact or law, or otherwise.
Very truly yours,
----------------------------------------
As Senior Counsel for [Seller and
Servicer]
Exh 2-4
EXHIBIT 3
SECURITY RELEASE CERTIFICATION
I. Release of Security Interest
___________________________, hereby relinquishes any and all right,
title and interest it may have in and to the Mortgage Loans described in Exhibit
A attached hereto upon purchase thereof by HSBC Bank USA, National Association
from the Seller named below pursuant to that certain Master Mortgage Loan
Purchase and Servicing Agreement, dated as of [Month] 1, 2006, as of the date
and time of receipt by ______________________________ of $__________ for such
Mortgage Loans (the "Date and Time of Sale"), and certifies that all notes,
mortgages, assignments and other documents in its possession relating to such
Mortgage Loans have been delivered and released to the Seller named below or its
designees as of the Date and Time of Sale.
Name and Address of Financial Institution
-------------------------------------
(Name)
-------------------------------------
(Address)
By:
---------------------------------
Exh 3-1
II. Certification of Release
The Seller named below hereby certifies to HSBC Bank USA, National
Association that, as of the Date and Time of Sale of the above mentioned
Mortgage Loans to HSBC Bank USA, National Association, the security interests in
the Mortgage Loans released by the above named corporation comprise all security
interests relating to or affecting any and all such Mortgage Loans. The Seller
warrants that, as of such time, there are and will be no other security
interests affecting any or all of such Mortgage Loans.
[SELLER]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Exh 3-2
EXHIBIT 4
ASSIGNMENT AND CONVEYANCE
On this _______ day of ________, 2006, [SELLER] ("Seller") as the
Seller under that certain Master Mortgage Loan Purchase and Servicing Agreement,
dated as of [Month] 1, 2006 (the "Agreement") does hereby sell, transfer,
assign, set over and convey to HSBC Bank USA, National Association as Purchaser
under the Agreement, without recourse, but subject to the terms of the
Agreement, all rights, title and interest of the Seller in and to the Mortgage
Loans listed on the Mortgage Loan Schedule attached hereto, Mortgage Files and
all rights and obligations arising under the documents contained therein
including, subject to the terms of the Agreement and the related Confirmation,
the right to any Prepayment Charges payable with respect thereto. Pursuant to
Subsection 6.03 of the Agreement, the Seller has delivered to the Custodian the
documents for each Mortgage Loan to be purchased as set forth in Exhibit 13 to
the Agreement. The contents of each related Servicing File required to be
retained by the Servicer to service the Mortgage Loans pursuant to the Agreement
and thus not delivered to the Purchaser are and shall be held in trust by the
Servicer for the benefit of the Purchaser as the owner thereof. The Servicer's
possession of any portion of each such Servicing File is at the will of the
Purchaser for the sole purpose of facilitating servicing of the related Mortgage
Loan pursuant to the Agreement, and such retention and possession by the
Servicer shall be in a custodial capacity only. The ownership of each Mortgage
Note, Mortgage, and the contents of the Mortgage File and Servicing File is
vested in the Purchaser and the ownership of all records and documents with
respect to the related Mortgage Loan prepared by or which come into the
possession of the Seller shall immediately vest in the Purchaser and shall be
retained and maintained, in trust, by the Seller at the will of the Purchaser in
such custodial capacity only.
The Seller confirms to the Purchaser that the representation and
warranties set forth in Subsections 7.01 and 7.02 of the Agreement are true and
correct in all material respects with respect to the Seller and the Mortgage
Loans listed on the Mortgage Loan Schedule attached hereto as of the date
hereof, and that all statements made in the Seller's Officer's Certificates and
all Attachments thereto remain complete, true and correct in all material
respects as of the date hereof, and that the Mortgage Loan characteristics
identified on the attached Schedule are true and correct as of the date hereof.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Agreement.
[SELLER],
Seller
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Exh 4-1
EXHIBIT 5
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, which shall be available for inspection by the
Purchaser and which shall be retained by the Seller or delivered to the
Custodian:
1. Mortgage Loan Documents.
2. Residential loan application.
3. Mortgage Loan closing statement.
4. Verification of employment and income.
5. Verification of acceptable evidence of source and amount of
downpayment.
6. Credit report on Mortgagor.
7. Residential appraisal report.
8. Photograph of the Mortgaged Property.
9. Survey of the Mortgaged Property.
10. Copy of each instrument necessary to complete identification of
any exception set forth in the exception schedule in the title
policy, i.e., map or plat, restrictions, easements, sewer
agreements, home association declarations, etc.
11. All required disclosure statements and statement of Mortgagor
confirming receipt thereof.
12. If available, termite report, structural engineer's report, water
potability and septic certification.
13. Sales Contract, if applicable.
14. Hazard insurance policy.
15. Tax receipts, insurance premium receipts, ledger sheets, payment
history from date of origination, insurance claim files,
correspondence, current and historical computerized data files,
and all other processing, underwriting and closing papers and
records which are customarily contained in a mortgage loan file
and which are required to document the Mortgage Loan or to
service the Mortgage Loan.
Exh 5-1
16. Amortization schedule, if available.
17. Payment history for Mortgage Loans that have been closed for more
than 90 days.
18. Flood insurance policy, if applicable.
19. Flood Service Contract.
Exh 5-2
EXHIBIT 6
CUSTODIAL AGREEMENT
Exh 6-1
EXHIBIT 7
CUSTODIAL ACCOUNT LETTER AGREEMENT
________________________ __, 2006
To: __________________________________
(the "Depository")
As Seller under the Master Mortgage Loan Purchase and Servicing
Agreement, dated as of [Month] 1, 2006, we hereby authorize and request you to
establish an account, as a Custodial Account, to be designated as "[SELLER] in
trust for the Purchaser and various Mortgagors, Fixed and Adjustable Rate
Mortgage Loans." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Seller. You may refuse any deposit which would
result in violation of the requirement that the account be fully insured as
described below. This letter is submitted to you in duplicate. Please execute
and return one original to us.
[SELLER]
(Seller)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
Exh 7-1
The undersigned, as Depository, hereby certifies that the
above-described account has been established under Account Number ___________ at
the office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above. The full amount deposited at any time in the
account will be insured by the Federal Deposit Insurance Corporation through the
Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund ("SAIF").
(Depository)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
Exh 7-2
EXHIBIT 8
ESCROW ACCOUNT LETTER AGREEMENT
________________, 2006
To: __________________________________
(the "Depository")
As Seller under the Master Mortgage Loan Purchase and Servicing
Agreement, dated as of [Month] 1, 2006, we hereby authorize and request you to
establish an account, as an Escrow Account, to be designated as "[SELLER] in
trust for the Purchaser and various Mortgagors, Fixed and Adjustable Rate
Mortgage Loans." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Seller. You may refuse any deposit which would
result in violation of the requirement that the account be fully insured as
described below. This letter is submitted to you in duplicate. Please execute
and return one original to us.
[SELLER]
(Seller)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
Exh 8-1
The undersigned, as Depository, hereby certifies that the
above-described account has been established under Account Number ___________ at
the office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above. The full amount deposited at any time in the
account will be insured by the Federal Deposit Insurance Corporation through the
Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund ("SAIF").
(Depository)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
Exh 8-2
EXHIBIT 9
SERVICING ADDENDUM
Subsection 11.01 Servicer to Act as Servicer.
The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans in accordance with Accepted Servicing Practices
and this Agreement and shall have full power and authority, acting alone, to do
or cause to be done any and all things in connection with such servicing and
administration which the Servicer may deem necessary or desirable and consistent
with the terms of this Agreement. The Servicer shall be responsible for any and
all acts of a Subservicer and a Subcontractor, and the Servicer's utilization of
a Subservicer or a Subcontractor shall in no way relieve the liability of the
Servicer under this Agreement.
Consistent with the terms of this Agreement, the Servicer may waive, modify
or vary any term of any Mortgage Loan or consent to the postponement of strict
compliance with any such term or in any manner grant indulgence to any Mortgagor
if in the Servicer's reasonable and prudent determination such waiver,
modification, postponement or indulgence is not materially adverse to the
Purchaser; provided, however, that the Servicer shall not permit any
modification with respect to any Mortgage Loan that would change the Mortgage
Interest Rate, defer or forgive the payment thereof or of any principal or
interest payments, reduce the outstanding principal amount (except for actual
payments of principal), make additional advances of additional principal or
extend the final maturity date on such Mortgage Loan. Without limiting the
generality of the foregoing, the Servicer shall continue, and is hereby
authorized and empowered, to execute and deliver on behalf of itself, and the
Purchaser, all instruments of satisfaction or cancellation, or of partial or
full release, discharge and all other comparable instruments, with respect to
the Mortgage Loans and with respect to the Mortgaged Property. If reasonably
required by the Servicer, the Purchaser shall furnish the Servicer with any
powers of attorney and other documents necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties under this
Agreement.
If applicable, the Servicer shall notify MERS of the ownership interest of
the Purchaser in each MOM Loan through the MORNET system or MIDANET system, as
applicable, or any other comparable system acceptable to MERS. At any time
during the term of this Agreement, the Purchaser may direct the Servicer to
cause any MOM Loan to be deactivated from the MERS System.
In servicing and administering the Mortgage Loans, the Servicer shall
employ procedures including collection procedures and exercise the same care
that it customarily employs and exercises in servicing and administering
mortgage loans for its own account giving due consideration to accepted mortgage
servicing practices of prudent lending institutions and the Purchaser's reliance
on the Servicer.
The Servicer will furnish, with respect to each Mortgage Loan, in
accordance with the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information on its borrower credit files to Equifax,
Experian, and Trans Union Credit Information Company, on a monthly basis.
Exh 9-1
Subsection 11.02 Collection of Mortgage Loan Payments.
Continuously from the related Closing Date until the principal and interest
on all Mortgage Loans are paid in full, the Servicer shall proceed diligently to
collect all payments due under each Mortgage Loan when the same shall become due
and payable and shall, to the extent such procedures shall be consistent with
this Agreement and the terms and provisions of any related Primary Insurance
Policy, follow such collection procedures as it follows with respect to mortgage
loans comparable to the Mortgage Loans and held for its own account. Further,
the Servicer shall take special care in ascertaining and estimating annual
ground rents, taxes, assessments, water rates, fire and hazard insurance
premiums, mortgage insurance premiums, and all other charges that, as provided
in the Mortgage, will become due and payable to the end that the installments
payable by the Mortgagors will be sufficient to pay such charges as and when
they become due and payable.
The Servicer shall not waive any Prepayment Charge with respect to any
Mortgage Loan which contains a Prepayment Charge which prepays during the term
of the charge. If the Servicer fails to collect the Prepayment Charge to which
the Purchaser is entitled pursuant to the terms of this Agreement and the
related Confirmation upon any prepayment of any Mortgage Loan which contains a
Prepayment Charge, the Servicer shall pay the Purchaser at such time (by deposit
to the Custodial Account) an amount equal to amount of the Prepayment Charge
which was not collected. Notwithstanding the above, the Servicer may waive (and
shall waive, in the case of (v) below) a Prepayment Charge without paying the
Purchaser the amount of the Prepayment Charge (i) if the Mortgage Loan is in
default (defined as 61 days or more delinquent) and such waiver would maximize
recovery of total proceeds taking into account the value of such Prepayment
Charge and the related Mortgage Loan, (ii) if the prepayment is not a result of
a refinancing by the Servicer or any of its affiliates and the Mortgage Loan is
foreseen to be in default and such waiver would maximize recovery of total
proceeds taking into account the value of such Prepayment Charge and the related
Mortgage Loan, (iii) if the collection of the Prepayment Charge would be in
violation of applicable laws, (iv) if the collection of such Prepayment Charge
would be considered "predatory" pursuant to written guidance published or issued
by any applicable federal, state or local regulatory authority acting in its
official capacity and having jurisdiction over such matters and (v)
notwithstanding any state or federal law to the contrary, any instance when a
Mortgage Loan is in foreclosure. The Servicer hereby acknowledges that for the
purposes of the preceding sentence, (i) the law applicable to the enforcement of
prepayment penalties and charges is the law applicable to the related originator
of the Mortgage Loans and (ii) state laws prohibiting or limiting prepayment
penalties or charges are preempted and thereby inapplicable if the related
originator of the mortgage loans is a federal association or federal bank or an
operating subsidiary of such institution. In the event the Servicer determines
that (i) the foregoing acknowledgement is no longer accurate and (ii) applicable
state law would prevent it from fully enforcing prepayment penalties or charges,
the Servicer shall (i) provide prompt notice to such effect to the Purchaser and
(ii) provide a written opinion of counsel from a nationally recognized law firm
experienced in regulatory matters concluding that fully enforcing prepayment
penalties or charges would violate applicable law.
Exh 9-2
Subsection 11.03 Realization Upon Defaulted Mortgage Loans.
(a) The Servicer shall use its best efforts, consistent with the procedures
that the Servicer would use in servicing loans for its own account, to foreclose
upon or otherwise comparably convert the ownership of such Mortgaged Properties
as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments pursuant to
Subsection 11.01. The Servicer shall use its best efforts to realize upon
defaulted Mortgage Loans in such a manner as will maximize the receipt of
principal and interest by the Purchaser, taking into account, among other
things, the timing of foreclosure proceedings. The foregoing is subject to the
provisions that, in any case in which Mortgaged Property shall have suffered
damage, the Servicer shall not be required to expend its own funds toward the
restoration of such property in excess of $2,000 unless it shall determine in
its discretion (i) that such restoration will increase the proceeds of
liquidation of the related Mortgage Loan to Purchaser after reimbursement to
itself for such expenses, and (ii) that such expenses will be recoverable by the
Servicer through Insurance Proceeds or Liquidation Proceeds from the related
Mortgaged Property, as contemplated in Subsection 11.05. In the event that any
payment due under any Mortgage Loan is not paid when the same becomes due and
payable, or in the event the Mortgagor fails to perform any other covenant or
obligation under the Mortgage Loan and such failure continues beyond any
applicable grace period, the Servicer shall take such action as it shall deem to
be in the best interest of the Purchaser. In the event that any payment due
under any Mortgage Loan remains delinquent for a period of 90 days or more, the
Servicer shall commence foreclosure proceedings and promptly notify the
Purchaser in writing of the commencement of such foreclosure proceedings. In
such connection, the Servicer shall be responsible for all costs and expenses
incurred by it in any such proceedings; provided, however, that it shall be
entitled to reimbursement thereof from the related Mortgaged Property, as
contemplated in Subsection 11.05.
(b) Notwithstanding the foregoing provisions of this Subsection 11.03, with
respect to any Mortgage Loan as to which the Servicer has received actual notice
of, or has actual knowledge of, the presence of any toxic or hazardous substance
on the related Mortgaged Property the Servicer shall not either (i) obtain title
to such Mortgaged Property as a result of or in lieu of foreclosure or
otherwise, or (ii) otherwise acquire possession of, or take any other action,
with respect to, such Mortgaged Property if, as a result of any such action, the
Purchaser would be considered to hold title to, to be a mortgagee-in-possession
of, or to be an owner or operator of such Mortgaged Property within the meaning
of the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended from time to time, or any comparable law, unless the Servicer
has also previously determined, based on its reasonable judgment and a prudent
report prepared by a Person who regularly conducts environmental audits using
customary industry standards, that:
(1) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic
interest of the Purchaser to take such actions as are necessary to
bring the Mortgaged Property into compliance therewith; and
(2) there are no circumstances present at such Mortgaged Property
relating to the use, management or disposal of any hazardous
substances,
Exh 9-3
hazardous materials, hazardous wastes, or petroleum-based materials
for which investigation, testing, monitoring, containment, clean-up or
remediation could be required under any federal, state or local law or
regulation, or that if any such materials are present for which such
action could be required, that it would be in the best economic
interest of the Purchaser to take such actions with respect to the
affected Mortgaged Property.
The cost of the environmental audit report contemplated by this Subsection
11.03 shall be advanced by the Servicer, subject to the Servicer's right to be
reimbursed therefor from the Custodial Account as provided in Subsection
11.05(v).
If the Servicer determines, as described above, that it is in the best
economic interest of the Purchaser to take such actions as are necessary to
bring any such Mortgaged Property into compliance with applicable environmental
laws, or to take such action with respect to the containment, clean-up or
remediation of hazardous substances, hazardous materials, hazardous wastes, or
petroleum-based materials affecting any such Mortgaged Property, then the
Servicer shall take such action as it deems to be in the best economic interest
of the Purchaser. The cost of any such compliance, containment, cleanup or
remediation shall be advanced by the Servicer, subject to the Servicer's right
to be reimbursed therefor from the Custodial Account as provided in Subsection
11.05(v).
(c) Proceeds received in connection with any Final Recovery Determination,
as well as any recovery resulting from a partial collection of Insurance
Proceeds or Liquidation Proceeds in respect of any Mortgage Loan, will be
applied in the following order of priority: first, to reimburse the Servicer for
any related unreimbursed Servicing Advances, pursuant to Subsection 11.05(iii);
second, to accrued and unpaid interest on the Mortgage Loan, to the date of the
Final Recovery Determination, or to the Due Date prior to the Distribution Date
on which such amounts are to be distributed if not in connection with a Final
Recovery Determination; and third, as a recovery of principal of the Mortgage
Loan. If the amount of the recovery so allocated to interest is less than the
full amount of accrued and unpaid interest due on such Mortgage Loan, the amount
of such recovery will be allocated by the Servicer as follows: first, to unpaid
Servicing Fees; and second, to the balance of the interest then due and owing.
The portion of the recovery so allocated to unpaid Servicing Fees shall be
reimbursed to the Servicer pursuant to Subsection 11.05(iii).
Subsection 11.04 Establishment of Custodial Accounts; Deposits in Custodial
Accounts.
The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts,
in the form of time deposit or demand accounts. The creation of any Custodial
Account shall be evidenced by a Custodial Account Letter Agreement in the form
of Exhibit 7.
The Servicer shall deposit in the Custodial Account on a daily basis,
subject to a two (2) Business Day ACH lag, and retain therein the following
payments and collections received by it subsequent to the Cut-off Date, or
received by it prior to the Cut-off Date but allocable to a
Exh 9-4
period subsequent thereto, other than in respect of principal and interest on
the Mortgage Loans due on or before the Cut-off Date:
(i) all payments on account of principal on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts required to be deposited
pursuant to Subsections 11.10 and 11.11, other than proceeds to be held in
the Escrow Account and applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with the
Servicer's normal servicing procedures, the loan documents or applicable
law;
(v) all Condemnation Proceeds affecting any Mortgaged Property which
are not released to the Mortgagor in accordance with the Servicer's normal
servicing procedures, the loan documents or applicable law;
(vi) all proceeds of any Mortgage Loan repurchased in accordance with
Subsections 7.03 and 7.04 and all amounts required to be deposited by the
Servicer in connection with shortfalls in principal amount of Qualified
Substitute Mortgage Loans pursuant to Subsection 7.03;
(vii) any amounts required to be deposited by the Servicer pursuant to
Subsection 11.11 in connection with the deductible clause in any blanket
hazard insurance policy. Such deposit shall be made from the Servicer's own
funds, without reimbursement therefor;
(viii) any amounts required to be deposited by the Servicer in
connection with any REO Property pursuant to Subsection 11.13; and
(ix) any amounts required to be deposited in the Custodial Account
pursuant to Subsections 11.19 or 11.20.
The foregoing requirements for deposit in the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges and assumption
fees, to the extent permitted by Subsection 11.01, need not be deposited by the
Servicer in the Custodial Account. Such Custodial Account shall be an Eligible
Account. Any interest or earnings on funds deposited in the Custodial Account by
the depository institution shall accrue to the benefit of the Servicer and the
Servicer shall be entitled to retain and withdraw such interest from the
Custodial Account pursuant to Subsection 11.05(iii). The Servicer shall give
notice to the Purchaser of the location of the Custodial Account when
established and prior to any change thereof.
If the balance on deposit in the Custodial Account exceeds $75,000 as of
the commencement of business on any Business Day and the Custodial Account
constitutes an Eligible Account solely pursuant to clause (ii) of the definition
of Eligible Account, the Servicer
Exh 9-5
shall, on or before twelve o'clock noon Eastern time on such Business Day,
withdraw from the Custodial Account any and all amounts payable to the Purchaser
and remit such amounts to the Purchaser by wire transfer of immediately
available funds.
Subsection 11.05 Permitted Withdrawals From the Custodial Account.
The Servicer may, from time to time, withdraw from the Custodial Account
for the following purposes:
(i) to make distributions to the Purchaser in the amounts and in the
manner provided for in Subsection 11.14;
(ii) to reimburse itself for unreimbursed Servicing Advances, the
Servicer's right to reimburse itself pursuant to this subclause (ii) with
respect to any Mortgage Loan being limited to related Liquidation Proceeds,
Condemnation Proceeds, Insurance Proceeds and such other amounts as may be
collected by the Servicer from the Mortgagor or otherwise relating to the
Mortgage Loan, it being understood that, in the case of such reimbursement,
the Servicer's right thereto shall be prior to the rights of the Purchaser,
except that, where the Servicer is required to repurchase a Mortgage Loan,
pursuant to Subsection 7.03 or Subsection 7.04, the Servicer's right to
such reimbursement shall be subsequent to the payment to the Purchaser of
the Repurchase Price pursuant to Subsection 7.03 or Subsection 7.04 and all
other amounts required to be paid to the Purchaser with respect to such
Mortgage Loans;
(iii) to pay to itself pursuant to Subsection 11.22 as servicing
compensation (a) any interest earned on funds in the Custodial Account (all
such interest to be withdrawn monthly not later than each Distribution
Date), and (b) the Servicing Fee from that portion of any payment or
recovery as to interest on a particular Mortgage Loan;
(iv) to pay to itself with respect to each Mortgage Loan that has been
repurchased pursuant to Subsection 7.03 or Subsection 7.04 all amounts
received thereon and not distributed as of the date on which the related
Repurchase Price is determined;
(v) to pay, or to reimburse the Servicer for advances in respect of,
expenses incurred in connection with any Mortgage Loan pursuant to
Subsection 11.03(b), but only to the extent of amounts received in respect
of the Mortgage Loans to which such expense is attributable; and
(vi) to clear and terminate the Custodial Account on the termination
of this Agreement.
The Servicer shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the Custodial Account pursuant to such subclauses (ii), (iii), (iv) and (v)
above.
Exh 9-6
Subsection 11.06 Establishment of Escrow Accounts; Deposits in Escrow
Accounts.
The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan which constitute Escrow Payments separate and
apart from any of its own funds and general assets and shall establish and
maintain one or more Escrow Accounts, in the form of time deposit or demand
accounts. The creation of any Escrow Account shall be evidenced by Escrow
Account Letter Agreement in the form of Exhibit 8.
The Servicer shall deposit in the Escrow Account or Accounts on a daily
basis, subject to a two (2) Business Day ACH lag, and retain therein, (i) all
Escrow Payments collected on account of the Mortgage Loans, for the purpose of
effecting timely payment of any such items as required under the terms of this
Agreement, and (ii) all Insurance Proceeds which are to be applied to the
restoration or repair of any Mortgaged Property. The Servicer shall make
withdrawals therefrom only to effect such payments as are required under this
Agreement, and for such other purposes as shall be as set forth or in accordance
with Subsection 11.08. The Servicer shall be entitled to retain any interest
paid on funds deposited in the Escrow Account by the depository institution
other than interest on escrowed funds required by law to be paid to the
Mortgagor and, to the extent required by law, the Servicer shall pay interest on
escrowed funds to the Mortgagor notwithstanding that the Escrow Account is
non-interest bearing or that interest paid thereon is insufficient for such
purposes.
Subsection 11.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account may be made by the Servicer (i) to
effect timely payments of ground rents, taxes, assessments, water rates, hazard
insurance premiums, Primary Insurance Policy premiums, if applicable, and
comparable items, (ii) to reimburse the Servicer for any Servicing Advance made
by the Servicer with respect to a related Mortgage Loan but only from amounts
received on the related Mortgage Loan which represent late payments or
collections of Escrow Payments thereunder, (iii) to refund to the Mortgagor any
funds as may be determined to be overages, (iv) for transfer to the Custodial
Account in accordance with the terms of this Agreement, (v) for application to
restoration or repair of the Mortgaged Property, (vi) to pay to the Servicer, or
to the Mortgagor to the extent required by law, any interest paid on the funds
deposited in the Escrow Account, or (vii) to clear and terminate the Escrow
Account on the termination of this Agreement.
Subsection 11.08 Payment of Taxes, Insurance and Other Charges; Maintenance
of Primary Insurance Policies; Collections Thereunder.
With respect to each Mortgage Loan, the Servicer shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water rates
and other charges which are or may become a lien upon the Mortgaged Property and
the status of Primary Insurance Policy and fire and hazard insurance coverage
and shall obtain, from time to time, all bills for the payment of such charges,
including insurance renewal premiums and shall effect payment thereof prior to
the applicable penalty or termination date and at a time appropriate for
securing maximum discounts allowable, employing for such purpose deposits of the
Mortgagor in the Escrow Account which shall have been estimated and accumulated
by the Servicer in amounts sufficient for such purposes, as allowed under the
terms of the Mortgage and applicable law. To
Exh 9-7
the extent that the Mortgage does not provide for Escrow Payments, the Servicer
shall determine that any such payments are made by the Mortgagor at the time
they first become due. The Servicer assumes full responsibility for the timely
payment of all such bills and shall effect timely payments of all such bills
irrespective of the Mortgagor's faithful performance in the payment of same or
the making of the Escrow Payments and shall make advances from its own funds to
effect such payments. Notwithstanding anything else contained herein, it is
agreed that the Servicer will not be required to pay any such bills for ground
rents, taxes, assessments, water rates and other charges if the Mortgage does
not provide for Escrow Payments until such time at which such unpaid amounts
would be considered delinquent or result in a superior lien being imposed on the
Mortgaged Property or otherwise impair Purchaser's interest in the Mortgaged
Property.
The Servicer shall maintain in full force and effect, a Primary Insurance
Policy, issued by a Qualified Insurer, with respect to each Mortgage Loan for
which such coverage is required. Such coverage shall be maintained until the
Loan-to-Value Ratio of the related Mortgage Loan is reduced to that amount for
which Xxxxxx Xxx no longer requires such insurance to be maintained. The
Servicer will not cancel or refuse to renew any Primary Insurance Policy in
effect on the Closing Date that is required to be kept in force under this
Agreement unless a replacement Primary Insurance Policy for such cancelled or
non- renewed policy is obtained from and maintained with a Qualified Insurer.
The Servicer shall not take any action which would result in non-coverage under
any applicable Primary Insurance Policy of any loss which, but for the actions
of the Servicer, would have been covered thereunder. In connection with any
assumption or substitution agreement entered into or to be entered into pursuant
to Subsection 11.19, the Servicer shall promptly notify the insurer under the
related Primary Insurance Policy, if any, of such assumption or substitution of
liability in accordance with the terms of such policy and shall take all actions
which may be required by such insurer as a condition to the continuation of
coverage under the Primary Insurance Policy. If such Primary Insurance Policy is
terminated as a result of such assumption or substitution of liability, the
Servicer shall obtain a replacement Primary Insurance Policy as provided above.
In connection with its activities as servicer, the Servicer agrees to
prepare and present, on behalf of itself, and the Purchaser, claims to the
insurer under any Primary Insurance Policy in a timely fashion in accordance
with the terms of such policies and, in this regard, to take such action as
shall be necessary to permit recovery under any Primary Insurance Policy
respecting a defaulted Mortgage Loan. Pursuant to Subsection 11.04, any amounts
collected by the Servicer under any Primary Insurance Policy shall be deposited
in the Custodial Account, subject to withdrawal pursuant to Subsection 11.05.
Subsection 11.09 Transfer of Accounts.
The Servicer may transfer the Custodial Account or the Escrow Account to a
different depository institution from time to time. Such transfer shall be made
only upon obtaining the consent of the Purchaser, which consent shall not be
unreasonably withheld. In any case, the Custodial Account and Escrow Account
shall be Eligible Accounts.
Exh 9-8
Subsection 11.10 Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained for each Mortgage Loan fire and
hazard insurance with extended coverage as is customary in the area where the
Mortgaged Property is located in an amount which is at least equal to the lesser
of (i) the amount necessary to fully compensate for any damage or loss to the
improvements which are a part of such property on a replacement cost basis or
(ii) the outstanding principal balance of the Mortgage Loan plus with respect to
any second lien Mortgage Loan, the outstanding principal balance of the related
first lien mortgage loan, in each case in an amount not less than such amount as
is necessary to prevent the Mortgagor and/or the Mortgagee from becoming a
co-insurer. If the Mortgaged Property is in an area identified on a Flood Hazard
Boundary Map or Flood Insurance Rate Map issued by the Flood Emergency
Management Agency as having special flood hazards and such flood insurance has
been made available, the Servicer will cause to be maintained a flood insurance
policy meeting the requirements of the current guidelines of the Federal
Insurance Administration with a generally acceptable insurance carrier, in an
amount representing coverage not less than the lesser of (i) the outstanding
principal balance of the Mortgage Loan or (ii) the maximum amount of insurance
which is available under the National Flood Insurance Act of 1968 or the Flood
Disaster Protection Act of 1973, as amended. The Servicer also shall maintain on
any REO Property, fire and hazard insurance with extended coverage in an amount
which is at least equal to the lesser of (i) the maximum insurable value of the
improvements which are a part of such property and (ii) the outstanding
principal balance of the related Mortgage Loan at the time it became an REO
Property plus accrued interest at the Mortgage Interest Rate and related
Servicing Advances, liability insurance and, to the extent required and
available under the National Flood Insurance Act of 1968 or the Flood Disaster
Protection Act of 1973, as amended, flood insurance in an amount as provided
above. Pursuant to Subsection 11.04, any amounts collected by the Servicer under
any such policies other than amounts to be deposited in the Escrow Account and
applied to the restoration or repair of the Mortgaged Property or REO Property,
or released to the Mortgagor in accordance with the Servicer's normal servicing
procedures, shall be deposited in the Custodial Account, subject to withdrawal
pursuant to Subsection 11.05. Any cost incurred by the Servicer in maintaining
any such insurance shall not, for the purpose of calculating distributions to
the Purchaser, be added to the unpaid principal balance of the related Mortgage
Loan, notwithstanding that the terms of such Mortgage Loan so permit. It is
understood and agreed that no earthquake or other additional insurance need be
required by the Servicer of the Mortgagor or maintained on property acquired in
respect of the Mortgage Loan, other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. All such policies shall be endorsed with standard
mortgagee clauses with loss payable to the Servicer, or upon request to the
Purchaser, and shall provide for at least thirty days prior written notice of
any cancellation, reduction in the amount of, or material change in, coverage to
the Servicer. The Servicer shall not interfere with the Mortgagor's freedom of
choice in selecting either his insurance carrier or agent, provided, however,
that the Servicer shall not accept any such insurance policies from insurance
companies unless such companies currently reflect a General Policy Rating of
A:VI or better in Best's Key Rating Guide and are licensed to do business in the
state wherein the property subject to the policy is located.
Exh 9-9
Subsection 11.11 Maintenance of Mortgage Impairment Insurance Policy.
In the event that the Servicer shall obtain and maintain a mortgage
impairment or blanket policy issued by an issuer that has a Best rating of A:VI
insuring against hazard losses on all of Mortgaged Properties securing the
Mortgage Loans, then, to the extent such policy provides coverage in an amount
equal to the amount required pursuant to Subsection 11.10 and otherwise complies
with all other requirements of Subsection 11.10, the Servicer shall conclusively
be deemed to have satisfied its obligations as set forth in Subsection 11.10, it
being understood and agreed that such policy may contain a deductible clause, in
which case the Servicer shall, in the event that there shall not have been
maintained on the related Mortgaged Property or REO Property a policy complying
with Subsection 11.10, and there shall have been one or more losses which would
have been covered by such policy, deposit in the Custodial Account the amount
not otherwise payable under the blanket policy because of such deductible
clause. In connection with its activities as servicer of the Mortgage Loans, the
Servicer agrees to prepare and present, on behalf of the Purchaser, claims under
any such blanket policy in a timely fashion in accordance with the terms of such
policy. Upon request of the Purchaser, the Servicer shall cause to be delivered
to the Purchaser a certified true copy of such policy and a statement from the
insurer thereunder that such policy shall in no event be terminated or
materially modified without thirty days prior written notice to the Purchaser.
Subsection 11.12 Fidelity Bond, Errors and Omissions Insurance.
The Servicer shall maintain, at its own expense, a blanket fidelity bond
and an errors and omissions insurance policy, with broad coverage with
responsible companies that would meet the requirements of FNMA or FHLMC on all
officers, employees or other persons acting in any capacity with regard to the
Mortgage Loans to handle funds, money, documents and papers relating to the
Mortgage Loans. The fidelity bond and errors and omissions insurance shall be in
the form of the Mortgage Banker's Blanket Bond and shall protect and insure the
Servicer against losses, including forgery, theft, embezzlement, fraud, errors
and omissions and negligent acts of such persons. Such fidelity bond shall also
protect and insure the Servicer against losses in connection with the failure to
maintain any insurance policies required pursuant to this Agreement and the
release and satisfaction of a Mortgage Loan without having obtained payment in
full of the indebtedness secured thereby. No provision of this Subsection 11.12
requiring the fidelity bond and errors and omissions insurance shall diminish or
relieve the Servicer from its duties and obligations as set forth in this
Agreement. The minimum coverage under any such bond and insurance policy shall
be at least equal to the corresponding amounts required by FNMA in the FNMA
Servicing Guide or by FHLMC in the FHLMC Servicers' and Servicers' Guide. Upon
request of the Purchaser, the Servicer shall cause to be delivered to the
Purchaser a certified true copy of the fidelity bond and insurance policy and a
statement from the surety and the insurer that such fidelity bond or insurance
policy shall in no event be terminated or materially modified without thirty
days' prior written notice to the Purchaser.
Subsection 11.13 Title, Management and Disposition of REO Property.
In the event that title to the Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the person designated by the Purchaser, or in the
event such person is not authorized or permitted to hold
Exh 9-10
title to real property in the state where the REO Property is located, or would
be adversely affected under the "doing business" or tax laws of such state by so
holding title, the deed or certificate of sale shall be taken in the name of
such Person or Persons as shall be consistent with an opinion of counsel
obtained by the Servicer from an attorney duly licensed to practice law in the
state where the REO Property is located. Any Person or Persons holding such
title other than the Purchaser shall acknowledge in writing that such title is
being held as nominee for the benefit of the Purchaser.
The Servicer shall either itself or through an agent selected by the
Servicer, manage, conserve, protect and operate each REO Property (and may
temporarily rent the same) in the same manner that it manages, conserves,
protects and operates other foreclosed property for its own account, and in the
same manner that similar property in the same locality as the REO Property is
managed. If a REMIC election is or is to be made with respect to the arrangement
under which the Mortgage Loans and any REO Property are held, the Servicer shall
manage, conserve, protect and operate each REO Property in a manner which does
not cause such REO Property to fail to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code or result in the receipt by such
REMIC of any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code or any "net income from foreclosure property" within
the meaning of Section 860G(c)(2) of the Code. The Servicer shall cause each REO
Property to be inspected promptly upon the acquisition of title thereto and
shall cause each REO Property to be inspected at least monthly thereafter. The
Servicer shall make or cause to be made a written report of each such
inspection. Such reports shall be retained in the Mortgage File and copies
thereof shall be forwarded, upon reasonable request, by the Servicer to the
Purchaser. The Servicer shall use its best efforts to dispose of the REO
Property as soon as possible and shall sell such REO Property in any event
within one year after title has been taken to such REO Property, unless the
Servicer determines, and gives appropriate notice to the Purchaser, that a
longer period is necessary for the orderly liquidation of such REO Property. If
a period longer than one year is necessary to sell any REO property, (i) the
Servicer shall report monthly to the Purchaser as to the progress being made in
selling such REO Property and (ii) if, with the written consent of the
Purchaser, a purchase money mortgage is taken in connection with such sale, such
purchase money mortgage shall name the Servicer as mortgagee, and a separate
servicing agreement between the Servicer and the Purchaser shall be entered into
with respect to such purchase money mortgage. Notwithstanding the foregoing, if
a REMIC election is made with respect to the arrangement under which the
Mortgage Loans and the REO Property are held, such REO Property shall be
disposed of before the close of the third taxable year following the taxable
year in which the Mortgage Loan became an REO Property, unless the Servicer
provides to the trustee under such REMIC an opinion of counsel to the effect
that the holding of such REO Property subsequent to the close of the third
taxable year following the taxable year in which the Mortgage Loan became an REO
Property, will not result in the imposition of taxes on "prohibited
transactions" as defined in Section 860F of the Code, or cause the transaction
to fail to qualify as a REMIC at any time that certificates are outstanding.
Servicer shall manage, conserve, protect and operate each such REO Property for
the certificateholders solely for the purpose of its prompt disposition and sale
in a manner which does not cause such property to fail to qualify as
"foreclosure property" within the meaning of Section 860F(a)(2)(E) of the Code,
or any "net income from foreclosure property" which is subject to taxation under
the REMIC provisions of the Code. Pursuant to its efforts to sell such property,
the Servicer shall either itself or through an agent selected by Servicer,
protect and
Exh 9-11
conserve such property in the same manner and to such an extent as is customary
in the locality where such property is located. Additionally, Servicer shall
perform the tax withholding and reporting related to Sections 1445 and 6050J of
the Code.
With respect to each REO Property, the Servicer shall segregate and hold
all funds collected and received in connection with the operation of the REO
Property, to the extent such REO Property produces income, separate and apart
from its own funds or general assets and shall establish and maintain a separate
REO Account for each REO Property in the form of a non-interest bearing demand
account, unless an Opinion of Counsel is obtained by the Servicer to the effect
that the classification as a grantor trust or REMIC for federal income tax
purposes of the arrangement under which the Mortgage Loans and the REO Property
is held will not be adversely affected by holding such funds in another manner.
Each REO Account shall be established with the Servicer or, with the prior
consent of the Purchaser, with a commercial bank, a mutual savings bank or a
savings association. The creation of any REO Account shall be evidenced by a
letter agreement substantially in the form of the Custodial Account Letter
Agreement attached as Exhibit 7 hereto. An original of such letter agreement
shall be furnished to any Purchaser upon request.
The Servicer shall deposit or cause to be deposited, on a daily basis in
each REO Account all revenues received with respect to the related REO Property
and shall withdraw therefrom funds necessary for the proper operation,
management and maintenance of the REO Property, including the cost of
maintaining any hazard insurance pursuant to Subsection 11.10 hereof and the
fees of any managing agent acting on behalf of the Servicer. The Servicer shall
not be entitled to retain interest paid or other earnings, if any, on funds
deposited in such REO Account. On or before each Determination Date, the
Servicer shall withdraw from each REO Account and deposit into the Custodial
Account the net income from the REO Property on deposit in the REO Account.
The Servicer shall furnish to the Purchaser on each Distribution Date, an
operating statement for each REO Property covering the operation of each REO
Property. Such operating statement shall be accompanied by such other
information as the Purchaser shall reasonably request. Together with such
statement, the Servicer shall furnish to the Purchaser a statement covering the
Servicer's efforts in connection with the sale of such REO Property and any
rental of such REO Property incidental to the sale thereof for the previous
month.
Each REO Disposition shall be carried out by the Servicer at such price and
upon such terms and conditions as the Servicer deems to be in the best interest
of the Purchaser. If as of the date title to any REO Property was acquired by
the Servicer there were outstanding unreimbursed Servicing Advances with respect
to the REO Property, the Servicer, upon an REO Disposition of such REO Property,
shall be entitled to reimbursement for any related unreimbursed Servicing
Advances from proceeds received in connection with such REO Disposition. The
proceeds from the REO Disposition, net of any payment to the Servicer as
provided above, shall be deposited in the REO Account and shall be transferred
to the Custodial Account on the Determination Date in the month following
receipt thereof for distribution on the succeeding Distribution Date in
accordance with Subsection 11.14.
Exh 9-12
Subsection 11.14 Distributions.
On each Distribution Date, the Servicer shall distribute to the Purchaser
all amounts due to the Custodial Account as of the close of business on the
preceding Determination Date, net of charges against or withdrawals from the
Custodial Account pursuant to Subsection 11.05.
All distributions made to the Purchaser on each Distribution Date will be
made to the Purchaser of record on the preceding Record Date, and shall be based
on the Mortgage Loans owned and held by the Purchaser, and shall be made by wire
transfer of immediately available funds to the account of the Purchaser at a
bank or other entity having appropriate facilities therefor, if the Purchaser
shall have so notified the Servicer or by check mailed to the address of the
Purchaser.
With respect to any remittance received by the Purchaser on or after the
second Business Day following the Business Day on which such payment was due,
the Servicer shall pay to the Purchaser interest on any such late payment at an
annual rate equal to the rate of interest as is publicly announced from time to
time at its principal office by JPMorgan Chase Bank, New York, New York, as its
prime lending rate, adjusted as of the date of each change, plus three
percentage points, but in no event greater than the maximum amount permitted by
applicable law. Such interest shall be paid by the Servicer to the Purchaser on
the date such late payment is made and shall cover the period commencing with
the day following such second Business Day and ending with the Business Day on
which such payment is made, both inclusive. Such interest shall be remitted
along with such late payment. The payment by the Servicer of any such interest
shall not be deemed an extension of time for payment or a waiver of any Event of
Default by the Servicer.
Subsection 11.15 Remittance Reports.
No later than the tenth (10th) calendar day, or if such tenth (10th)
calendar day is not a Business Day, the first Business Day following such tenth
(10th) calendar day of each month, the Servicer shall furnish to the Purchaser
or its designee an electronic file containing, and a hard copy of, the monthly
data in the form annexed hereto as Exhibit 18 (the "Remittance Report"). On the
Business Day following each Determination Date, the Servicer shall deliver to
the Purchaser or its designee by telecopy (or by such other means as the
Servicer and the Purchaser may agree from time to time) an electronic file
containing, and a hard copy of, the determination data with respect to the
related Distribution Date, together with such other information with respect to
the Mortgage Loans as the Purchaser may reasonably require to allocate
distributions made pursuant to this Agreement and provide appropriate statements
with respect to such distributions. On the same date, the Servicer shall forward
to the Purchaser by overnight mail a computer readable magnetic tape containing
the information set forth in the Remittance Report with respect to the related
Distribution Date. To the extent that the Mortgage Loans are the subject of a
Pass-Through Transfer, the electronic file must include all information known or
available to the Servicer that is necessary in order to provide the distribution
and pool performance information as required under Item 1121 of Regulation AB as
determined by Purchaser in its sole discretion. The Servicer shall modify the
electronic file as requested by the Purchaser from time to time to comply with
the preceding sentence.
Exh 9-13
Subsection 11.16 Reserved.
Subsection 11.17 Real Estate Owned Reports.
Together with the statement furnished pursuant to Subsection 11.02, with
respect to any REO Property, the Servicer shall furnish to the Purchaser a
statement covering the Servicer's efforts in connection with the sale of such
REO Property and any rental of such REO Property incidental to the sale thereof
for the previous month, together with the operating statement. Such statement
shall be accompanied by such other information as the Purchaser shall reasonably
request.
Subsection 11.18 Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Purchaser pursuant to a deed-in-lieu of foreclosure, the Servicer
shall submit to the Purchaser a liquidation report with respect to such
Mortgaged Property.
Subsection 11.19 Assumption Agreements.
The Servicer shall, to the extent it has knowledge of any conveyance or
prospective conveyance by any Mortgagor of the Mortgaged Property (whether by
absolute conveyance or by contract of sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the maturity of such Mortgage Loan under any
"due-on-sale" clause applicable thereto; provided, however, that the Servicer
shall not exercise any such rights if prohibited by law from doing so or if the
exercise of such rights would impair or threaten to impair any recovery under
the related Primary Insurance Policy, if any. If the Servicer reasonably
believes it is unable under applicable law to enforce such "due-on-sale" clause,
the Servicer shall enter into an assumption agreement with the person to whom
the Mortgaged Property has been conveyed or is proposed to be conveyed, pursuant
to which such person becomes liable under the Mortgage Note and, to the extent
permitted by applicable state law, the Mortgagor remains liable thereon. Where
an assumption is allowed pursuant to this Subsection 11.19, the Servicer, with
the prior written consent of the insurer under the Primary Insurance Policy, if
any, is authorized to enter into a substitution of liability agreement with the
person to whom the Mortgaged Property has been conveyed or is proposed to be
conveyed pursuant to which the original Mortgagor is released from liability and
such Person is substituted as Mortgagor and becomes liable under the related
Mortgage Note. Any such substitution of liability agreement shall be in lieu of
an assumption agreement.
In connection with any such assumption or substitution of liability, the
Servicer shall follow the underwriting practices and procedures of prudent
mortgage lenders in the state in which the related Mortgaged Property is
located. With respect to an assumption or substitution of liability, Mortgage
Interest Rate, the amount of the Monthly Payment, and the final maturity date of
such Mortgage Note may not be changed. The Servicer shall notify the Purchaser
that any such substitution of liability or assumption agreement has been
completed by forwarding to the Purchaser the original of any such substitution
of liability or assumption agreement, which document shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting
Exh 9-14
a part thereof. Any fee collected by the Servicer for entering into an
assumption or substitution of liability agreement in excess of 1% of the
outstanding principal balance of the Mortgage Loan shall be deposited in the
Custodial Account pursuant to Subsection 11.04.
Notwithstanding the foregoing paragraphs of this Subsection or any other
provision of this Agreement, the Servicer shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or any assumption which the
Servicer may be restricted by law from preventing, for any reason whatsoever.
For purposes of this Subsection 11.19, the term "assumption" is deemed to also
include a sale of the Mortgaged Property subject to the Mortgage that is not
accompanied by an assumption or substitution of liability agreement.
Subsection 11.20 Satisfaction of Mortgages and Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will immediately notify the Purchaser
by a certification of a servicing officer of the Servicer (a "Servicing
Officer"), which certification shall include a statement to the effect that all
amounts received or to be received in connection with such payment which are
required to be deposited in the Custodial Account pursuant to Subsection 11.04
have been or will be so deposited, and shall request execution of any document
necessary to satisfy the Mortgage Loan and delivery to it of the portion of the
Mortgage File held by the Purchaser or the Purchaser's designee. Upon receipt of
such certification and request, the Purchaser, shall promptly release the
related mortgage documents to the Servicer and the Servicer shall prepare and
process any satisfaction or release. No expense incurred in connection with any
instrument of satisfaction or deed of reconveyance shall be chargeable to the
Custodial Account or the Purchaser.
In the event the Servicer satisfies or releases a Mortgage without having
obtained payment in full of the indebtedness secured by the Mortgage, and such
inadvertent satisfaction or release of such Mortgage remains uncured or
uncorrected for more than (5) Business Days after the date of such inadvertent
satisfaction or release, or should it otherwise prejudice any right the
Purchaser may have under the mortgage instruments, the Servicer, upon written
demand, shall remit to the Purchaser the then outstanding principal balance of
the related Mortgage Loan by deposit thereof in the Custodial Account. The
Servicer shall maintain the fidelity bond insuring the Servicer against any loss
it may sustain with respect to any Mortgage Loan not satisfied in accordance
with the procedures set forth herein.
From time to time and as appropriate for the servicing or foreclosure of
the Mortgage Loan, including, for this purpose, collection under any Primary
Insurance Policy, the Purchaser shall, upon request of the Servicer and delivery
to the Purchaser of a servicing receipt signed by a Servicing Officer, release
the requested portion of the Mortgage File held by the Purchaser to the
Servicer. Such servicing receipt shall obligate the Servicer to return the
related Mortgage documents to the Purchaser when the need therefor by the
Servicer no longer exists, unless the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Custodial Account or the Mortgage File or such document has been delivered to an
attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the
Exh 9-15
Mortgaged Property either judicially or non-judicially, and the Servicer has
delivered to the Purchaser a certificate of a Servicing Officer certifying as to
the name and address of the Person to which such Mortgage File or such document
was delivered and the purpose or purposes of such delivery. Upon receipt of a
certificate of a Servicing Officer stating that such Mortgage Loan was
liquidated, the servicing receipt shall be released by the Purchaser to the
Servicer.
Subsection 11.21 Monthly Advances by the Servicer.
(a) Not later than the close of business on the Business Day preceding
each Distribution Date, the Servicer shall deposit in the Custodial Account an
amount equal to all payments not previously advanced by the Servicer, whether or
not deferred pursuant to Subsection 11.01, of principal (due after the Cut-off
Date) and interest not allocable to the period prior to the Cut-off Date, at the
Mortgage Interest Rate net of the Servicing Fee, which were due on a Mortgage
Loan and delinquent at the close of business on the related Determination Date.
(b) The obligation of the Seller to make such Monthly Advances is
mandatory, notwithstanding any other provision of this Agreement, and, with
respect to any Mortgage Loan or REO Property, shall continue until a Final
Recovery Determination in connection therewith; provided that, notwithstanding
anything herein to the contrary, no Monthly Advance shall be required to be made
hereunder by the Seller if such Monthly Advance would, if made, constitute a
Nonrecoverable Advance. The determination by the Seller that it has made a
Nonrecoverable Advance or that any proposed Monthly Advance, if made, would
constitute a Nonrecoverable Advance, shall be evidenced by an Officers'
Certificate delivered to the Purchaser.
Subsection 11.22 Servicing Compensation.
As compensation for its services hereunder, the Servicer shall be entitled to
withdraw from the Custodial Account or to retain from interest payments on the
Mortgage Loans the amounts provided for as the Servicer's Servicing Fee.
Additional servicing compensation in the form of assumption fees, as provided in
Subsection 11.19, and late payment charges and similar ancillary servicing
compensation shall be retained by the Servicer to the extent not required to be
deposited in the Custodial Account. The Servicer shall not be permitted to
retain any portion of the Prepayment Charges collected on the Mortgage Loans,
which Prepayment Charges, where specifically provided in the related
Confirmation, shall be remitted to the Purchaser. The Servicer shall be required
to pay all expenses incurred by it in connection with its servicing activities
hereunder and shall not be entitled to reimbursement therefor except as
specifically provided for.
Subsection 11.23 Notification of Adjustments.
On each Adjustment Date, the Servicer shall make interest rate adjustments
for each Adjustable Rate Mortgage Loan in compliance with the requirements of
the related Mortgage and Mortgage Note. The Servicer shall execute and deliver
the notices required by each Mortgage and Mortgage Note regarding interest rate
adjustments. The Servicer also shall provide timely notification to the
Purchaser of all applicable data and information regarding such interest rate
adjustments. Upon the discovery by the Servicer or the Purchaser that the
Servicer
Exh 9-16
has failed to adjust a Mortgage Interest Rate or a Monthly Payment pursuant to
the terms of the related Mortgage Note and Mortgage, the Servicer shall
immediately deposit in the Custodial Account from its own funds the amount of
any interest loss caused thereby without reimbursement therefor.
Subsection 11.24 Annual Statement as to Compliance; Annual Certification.
(a) The Servicer will deliver to the Purchaser, not later than March 10th
(with a five (5) day grace period and not later than March 15th) of each fiscal
year, beginning in 2007, an Officers' Certificate (an "Annual Statement of
Compliance") stating, as to each signatory thereof, that (i) a review of the
activities of the Servicer during the preceding year and of performance under
this Agreement or other applicable servicing agreement has been made under such
officer's supervision and (ii) to the best of such officer's knowledge, based on
such review, the Servicer has fulfilled all of its obligations under this
Agreement or other applicable servicing agreement throughout such year, or, if
there has been a failure to fulfill any such obligation, specifying each such
failure known to such officer and the nature and status thereof. Copies of such
statement shall be provided by the Purchaser to any Person identified as a
prospective purchaser of the Mortgage Loans. The Purchaser shall notify the
Servicer prior to providing any such copies. In the event that the Servicer has
delegated any servicing responsibilities with respect to the Mortgage Loans to a
Subservicer, the Servicer shall deliver an officer's certificate of the
Subservicer as described above as to each Subservicer as and when required with
respect to the Servicer.
(b) With respect to any Mortgage Loans that are subject to a Pass-Through
Transfer or other securitization transaction, by March 10th (with a five (5) day
grace period and not later than March 15th) of each calendar year, beginning in
2007, an officer of the Servicer shall execute an Officer's Certificate (an
"Sarbanes Certification") and deliver it to the Purchaser, any master servicer
which is master servicing loans in connection with such transaction (a "Master
Servicer") and any related depositor (a "Depositor") for the benefit of each
such entity and such entity's affiliates and the officers, directors and agents
of any such entity and such entity's affiliates, in the form attached hereto as
Exhibit 12. Such Officer's Certificate shall not be provided to any other Person
unless the Purchaser first notifies the Servicer of its intention to do so. In
the event that the Servicer has delegated any servicing responsibilities with
respect to the Mortgage Loans to a Subservicer, the Servicer shall deliver an
officers' certificate of the Subservicer as described above as to each
Subservicer as and when required with respect to the Servicer.
(c) The Servicer shall indemnify and hold harmless the Master Servicer, the
Depositor, the Purchaser (and if this Agreement has been assigned in whole or in
part by the Purchaser, any and all Persons previously acting as "Purchaser"
hereunder), and their respective officers, directors, agents and affiliates, and
such affiliates' officers, directors and agents (any such person, an
"Indemnified Party") from and against any losses, damages, penalties, fines,
forfeitures, reasonable legal fees and related costs, judgments and other costs
and expenses arising out of or based upon a breach by the Servicer or any of its
officers, directors, agents or affiliates of its obligations under this Section
11.24 or Section 11.25, or the negligence, bad faith or willful misconduct of
the Servicer in connection therewith. If the indemnification provided for herein
is unavailable or insufficient to hold harmless any Indemnified Party, then the
Servicer
Exh 9-17
agrees that it shall contribute to the amount paid or payable by the Indemnified
Party as a result of the losses, claims, damages or liabilities of the
Indemnified Party in such proportion as is appropriate to reflect the relative
fault of the Indemnified Party on the one hand and the Servicer in the other in
connection with a breach of the Servicer's obligations under this Section 11.24
or Section 11.25, or the Servicer's negligence, bad faith or willful misconduct
in connection therewith.
Subsection 11.25 Reserved.
Subsection 11.26 Access to Certain Documentation.
The Servicer shall provide to the Office of Thrift Supervision, the FDIC
and any other federal or state banking or insurance regulatory authority that
may exercise authority over the Purchaser access to the documentation regarding
the Mortgage Loans serviced by the Servicer required by applicable laws and
regulations. Such access shall be afforded without charge, but only upon
reasonable request and during normal business hours at the offices of the
Servicer. In addition, access to the documentation will be provided to the
Purchaser and any Person identified to the Servicer by the Purchaser without
charge, upon reasonable request during normal business hours at the offices of
the Servicer.
Subsection 11.27 Reserved.
Subsection 11.28 Reports and Returns to be Filed by the Servicer.
The Servicer shall file information reports with respect to the receipt of
mortgage interest received in a trade or business, reports of foreclosures and
abandonments of any Mortgaged Property and information returns relating to
cancellation of indebtedness income with respect to any Mortgaged Property as
required by Sections 6050H, 6050J and 6050P of the Code. Such reports shall be
in form and substance sufficient to meet the reporting requirements imposed by
such Sections 6050H, 6050J and 6050P of the Code.
Subsection 11.29 Superior Liens.
With respect to each second lien Mortgage, the Servicer shall, for the
protection of the Purchaser's interest, file (or cause to be filed) of record a
request for notice of any action by a superior lienholder where permitted by
local law and whenever applicable state law does not require that a junior
lienholder be named as a party defendant in foreclosure proceedings in order to
foreclose such junior lienholder's equity of redemption. The Servicer shall also
notify any superior lienholder in writing of the existence of the Mortgage Loan
and request notification of any action (as described below) to be taken against
the Borrower or the Mortgaged Property by the superior lienholder.
If the Servicer is notified that any superior lienholder has accelerated or
intends to accelerate the obligations secured by the superior lien, or has
declared or intends to declare a default under the superior mortgage or the
promissory note secured thereby, or has filed or intends to file an election to
have the Mortgaged Property sold or foreclosed, the Servicer shall take whatever
actions are necessary to protect the interests of the Purchaser, and/or to
preserve the security of the related Mortgage Loan, subject to any requirements
applicable to real estate
Exh 9-18
mortgage investment conduits pursuant to the Internal Revenue Code. The Servicer
shall make a Servicing Advance of the funds necessary to cure the default or
reinstate the superior lien if the Servicer determines that such Servicing
Advance is in the best interests of the Purchaser. The Servicer shall not make
such a Servicing Advance except to the extent that it determines that such
advance would not be a Nonrecoverable Servicing Advance from Liquidation
Proceeds on the related Mortgage Loan. The Servicer shall thereafter take such
action as is necessary to recover the amount so advanced.
Subsection 11.30 Assessment of Compliance with Servicing Criteria.
On and after January 1, 2006, the Servicer shall service and administer,
and shall cause each subservicer to service or administer, the Mortgage Loans in
accordance with all applicable requirements of the Servicing Criteria.
With respect to any Mortgage Loans that are the subject of a Pass-Through
Transfer, the Servicer shall deliver to the Purchaser or its designee on or
before March 10th (with a five (5) day grace period and not later than March
15th) of each fiscal year beginning in 2007, a report (an "Assessment of
Compliance") reasonably satisfactory to the Purchaser regarding the Servicer's
assessment of compliance with the Servicing Criteria during the preceding fiscal
year as required by Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of
Regulation AB, which as of the date hereof, require a report by an authorized
officer of the Servicer that contains the following:
(a) A statement by such officer of its responsibility for assessing
compliance with the Servicing Criteria applicable to the Servicer;
(b) A statement by such officer that such officer used the Servicing
Criteria to assess compliance with the Servicing Criteria applicable to the
Servicer;
(c) An assessment by such officer of the Servicer's compliance with the
applicable Servicing Criteria for the period consisting of the preceding fiscal
year, including disclosure of any material instance of noncompliance with
respect thereto during such period, which assessment shall be based on the
activities it performs with respect to asset-backed securities transactions
taken as a whole involving the Servicer, that are backed by the same asset type
as the Mortgage Loans;
(d) A statement that a registered public accounting firm has issued an
attestation report on the Servicer's Assessment of Compliance for the period
consisting of the preceding fiscal year; and
(e) A statement as to which of the Servicing Criteria, if any, are not
applicable to the Servicer, which statement shall be based on the activities it
performs with respect to asset-backed securities transactions taken as a whole
involving the Servicer, that are backed by the same asset type as the Mortgage
Loans.
Such report at a minimum shall address each of the Servicing Criteria
specified on a certification substantially in the form of Exhibit 17 hereto
delivered to the Purchaser concurrently with the execution of this Agreement.
Exh 9-19
With respect to any Mortgage Loans that are the subject of a Pass-Through
Transfer, on or before March 10th (with a five (5) day grace period and not
later than March 15th) of each fiscal year beginning in 2007, the Servicer shall
furnish to the Purchaser or its designee a report (an "Attestation Report") by a
registered public accounting firm that attests to, and reports on, the
Assessment of Compliance made by the Servicer, as required by Rules 13a-18 and
15d-18 of the Exchange Act and Item 1122(b) of Regulation AB, which Attestation
Report must be made in accordance with standards for attestation reports issued
or adopted by the Public Company Accounting Oversight Board.
The Servicer shall cause each Subservicer, and each Subcontractor
determined by the Servicer pursuant to Subsection 11.31(c) to be "participating
in the servicing function" within the meaning of Item 1122 of Regulation AB, to
deliver to the Purchaser and any Depositor an assessment of compliance and
accountants' attestation as and when provided in clause (11) of Section 12.
Subsection 11.31. Use of Subservicers and Subcontractors.
(a) The Servicer shall not hire or otherwise utilize the services of any
Subservicer to fulfill any of the obligations of the Servicer as servicer under
this Agreement or any Reconstitution Agreement unless the Servicer complies with
the provisions of paragraph (b) of this Section. The Servicer shall not hire or
otherwise utilize the services of any Subcontractor, and shall not permit any
Subservicer to hire or otherwise utilize the services of any Subcontractor, to
fulfill any of the obligations of the Servicer as servicer under this Agreement
or any Reconstitution Agreement unless the Servicer complies with the provisions
of paragraph (d) of this Subsection.
(b) The Servicer shall cause any Subservicer used by the Servicer (or by
any Subservicer) for the benefit of the Purchaser and any Depositor to comply
with the provisions of this Subsection and with Subsections 11.24, 11.30 and 12
of this Agreement to the same extent as if such Subservicer were the Servicer,
and to provide the information required with respect to such Subservicer under
Section 12A(15) of this Agreement. The Servicer shall be responsible for
obtaining from each Subservicer and delivering to the Purchaser and any
Depositor any Annual Statement of Compliance required to be delivered by such
Subservicer under Section 11.24, any Assessment of Compliance and Attestation
Report required to be delivered by such Subservicer under Section 11.30 and any
Annual Certification required under Section 11.24 as and when required to be
delivered.
(c) The Servicer shall promptly upon request provide to the Purchaser and
any Depositor (or any designee of the Depositor, such as a master servicer or
administrator) a written description (in form and substance satisfactory to the
Purchaser and such Depositor) of the role and function of each Subcontractor
utilized by the Servicer or any Subservicer, specifying (i) the identity of each
such Subcontractor, (ii) which (if any) of such Subcontractors are
"participating in the servicing function" within the meaning of Item 1122 of
Regulation AB, and (iii) which elements of the Servicing Criteria will be
addressed in assessments of compliance provided by each Subcontractor identified
pursuant to clause (ii) of this paragraph.
Exh 9-20
(d) As a condition to the utilization of any Subcontractor determined to be
"participating in the servicing function" within the meaning of Item 1122 of
Regulation AB, the Servicer shall cause any such Subcontractor used by the
Servicer (or by any Subservicer) for the benefit of the Purchaser and any
Depositor to comply with the provisions of Sections 11.30 and 12 of this
Agreement to the same extent as if such Subcontractor were the Servicer. The
Servicer shall be responsible for obtaining from each Subcontractor and
delivering to the Purchaser and any Depositor any Assessment of Compliance and
Attestation Report required to be delivered by such Subcontractor under Section
11.30, in each case as and when required to be delivered.
Subsection 11.32 Intent of the Parties; Reasonableness.
In addition, the Purchaser, Seller and Servicer acknowledge and agree that
the purpose of Subsections 11.30, 11.31 and 12A(6) - (16) of this Agreement is
to facilitate compliance by the Purchaser and any Depositor with the provisions
of Regulation AB and related rules and regulations of the Commission. Although
Regulation AB is applicable by its terms only to offerings of asset-backed
securities that are registered under the Securities Act, the Seller and Servicer
acknowledge that investors in privately offered securities may require that the
Purchaser or any Depositor provide comparable disclosure in unregistered
offerings. References in this Agreement to compliance with Regulation AB include
provision of comparable disclosure in private offerings. Neither the Purchaser
nor any Depositor shall exercise its right to request delivery of information or
other performance under these provisions other than in good faith, or for
purposes other than compliance with the Securities Act, the Exchange Act and, in
each case, the rules and regulations of the Commission thereunder (or the
provision in a private offering of disclosure comparable to that required under
the Securities Act) and the Xxxxxxxx-Xxxxx Act. The Seller and Servicer
acknowledges that interpretations of the requirements of Regulation AB may
change over time, whether due to interpretive guidance provided by the
Commission or its staff, consensus among participants in the asset-backed
securities markets, advice of counsel, or otherwise, and agrees to comply with
requests made by the Purchaser, any Master Servicer or any Depositor in good
faith for delivery of information under these provisions on the basis of
established or, to the extent applicable, evolving interpretations of Regulation
AB. In connection with any Pass-Through Transfer, the Seller and Servicer shall
cooperate fully with the Purchaser and any Master Servicer to deliver to the
Purchaser (including any of its assignees or designees), any Master Servicer and
any Depositor, any and all statements, reports, certifications, records and any
other information necessary in the good faith determination of the Purchaser,
the Master Servicer or any Depositor to permit the Purchaser, such Master
Servicer or such Depositor to comply with the provisions of Regulation AB,
together with such disclosures relating to the Seller, Servicer, any
Subservicer, any Third-Party Originator and the Mortgage Loans, or the servicing
of the Mortgage Loans, reasonably believed by the Purchaser or any Depositor to
be necessary in order to effect such compliance.
Subsection 11.33 Compliance with REMIC Provisions.
If a REMIC election has been made with respect to the arrangement under
which the Mortgage Loans and REO Property are held, the Servicer shall not take
any action, cause the REMIC to take any action or fail to take (or fail to cause
to be taken) any action that, under the REMIC Provisions, if taken or not taken,
as the case may be, could (i) endanger the status of the REMIC as a REMIC or
(ii) result in the imposition of a tax upon the REMIC (including but not
Exh 9-21
limited to the tax on "prohibited transactions" as defined in Section 860F(a)(2)
of the Code and the tax on "contributions" to a REMIC set forth in Section
860G(d) of the Code) unless the Servicer has received an Opinion of Counsel (at
the expense of the party seeking to take such action) to the effect that the
contemplated action will not endanger such REMIC status or result in the
imposition of any such tax.
Exh 9-22
EXHIBIT 10
FORM OF
FORM OF ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
This is an Assignment, Assumption and Recognition Agreement (this "AAR
Agreement") made as of _____, 200_, among HSBC Bank, National Association (the
"Assignor"), ____________________ (the "Assignee") [not individually but solely
as trustee on behalf of the holders of the ___________, Series ____,
Asset-Backed Certificates] and _______________ (the "Company").
In consideration of the mutual promises contained herein the parties hereto
agree that the residential mortgage loans (the "Assigned Loans") listed on
Attachment 1 annexed hereto (the "Assigned Loan Schedule") purchased by Assignor
from Company pursuant to (a) the Master Mortgage Loan Purchase and Servicing
Agreement, dated as of _____, 200_, between Assignor and Company (the "Purchase
Agreement"), shall be subject to the terms of this AAR Agreement. Capitalized
terms used herein but not defined shall have the meanings ascribed to them in
the Purchase Agreement.
Assignment and Assumption
1. Assignor hereby grants, transfers and assigns to Assignee all of the
right, title and interest of Assignor in the Assigned Loans and, as they relate
to the Assigned Loans, all of its right, title and interest in, to and under the
Purchase Agreement and Assignee hereby assumes all rights and obligations with
respect to the Assigned Loans under the Purchase Agreement. Assignor
specifically reserves and does not assign to Assignee any right title and
interest in, to or under any Mortgage Loans subject to the Purchase Agreement
other than those set forth on Attachment 1.
Recognition of the Company
2. [For Pass-Through Transfers include this sentence: From and after the
date hereof, the Company shall and does hereby recognize that the Assignee will
transfer the Assigned Loans and assign its rights under the Purchase Agreement
(solely to the extent set forth herein) and this AAR Agreement to
______________________________ (the "Trust") created pursuant to a Pooling and
Servicing Agreement, dated as of _______________, 200_ (the "Pooling
Agreement"), among the Assignee as trustee (including its successors in interest
and any successor trustees under the Pooling Agreement), the Assignor and
_________________________, as servicer (including its successors in interest and
any successor servicer under the Pooling Agreement, the "Servicer").] The
Company hereby acknowledges and agrees that from and after the date hereof (i)
the [Trust][Assignee] will be the owner of the Assigned Loans, (ii) the Company
shall look solely to the [Trust][Assignee] for performance of any obligations of
the Assignor insofar as they relate to the enforcement of the representations,
warranties and covenants with respect to the Assigned Loans, (iii) the
[Assignee][Trust (including the Assignee and the Servicer acting on the Trust's
behalf)] shall have all the rights and remedies available to the Assignor,
insofar as they relate to the Assigned Loans, under the
Exh 10-1
Purchase Agreement, including, without limitation, the enforcement of the
document delivery requirements and remedies with respect to breaches of
representations and warranties set forth in the Purchase Agreement, and shall be
entitled to enforce all of the obligations of the Company thereunder insofar as
they relate to the Assigned Loans, and (iv) all references to the Purchaser
(insofar as they relate to the rights, title and interest and, with respect to
obligations of the Purchaser, only insofar as they relate to the enforcement of
the representations, warranties and covenants of the Company) under the Purchase
Agreement insofar as they relate to the Assigned Loans, shall be deemed to refer
to the [Assignee] [Trust (including the Assignee and the Servicer acting on the
Trust's behalf)]. Neither the Company nor the Assignor shall amend or agree to
amend, modify, waiver, or otherwise alter any of the terms or provisions of the
Purchase Agreement which amendment, modification, waiver or other alteration
would in any way affect the Assigned Loans or the Company's performance under
the Purchase Agreement with respect to the Assigned Loans without the prior
written consent of the Assignee.
Representations; Warranties and Covenants
3. Assignor warrants and represents to Assignee and Company as of the date
hereof:
a. Attached hereto as Attachment 2 is a true and accurate copy of
the Purchase Agreement, which agreement is in full force and
effect as of the date hereof and the provisions of which have not
been waived, amended or modified in any respect, nor has any
notice of termination been given thereunder;
b. Assignor is the lawful owner of the Assigned Loans with full
right to transfer the Assigned Loans and any and all of its
interests, rights and obligations under the Purchase Agreement as
they relate to the Assigned Loans, free and clear of any and all
liens, claims and encumbrances; and upon the transfer of the
Assigned Loans to Assignee as contemplated herein, Assignee shall
have good title to each and every Assigned Loan, as well as any
and all of Assignor's interests, rights and obligations under the
Purchase Agreement as they relate to the Assigned Loans, free and
clear of any and all liens, claims and encumbrances;
c. Assignor has not received notice of, and has no knowledge of, any
offsets, counterclaims or other defenses available to Company
with respect to the Assigned Loans or the Purchase Agreement;
d. Assignor is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
formation, and has all requisite power and authority to acquire,
own and sell the Assigned Loans;
e. Assignor has full power and authority to execute, deliver and
perform its obligations under this AAR Agreement, and to
consummate the transactions set forth herein. The consummation of
the transactions
Exh 10-2
contemplated by this AAR Agreement is in the ordinary course of
Assignor's business and will not conflict with, or result in a
breach of, any of the terms, conditions or provisions of
Assignor's charter or by-laws or any legal restriction, or any
material agreement or instrument to which Assignor is now a party
or by which it is bound, or result in the violation of any law,
rule, regulation, order, judgment or decree to which Assignor or
its property is subject. The execution, delivery and performance
by Assignor of this AAR Agreement and the consummation by it of
the transactions contemplated hereby, have been duly authorized
by all necessary action on the part of Assignor. This AAR
Agreement has been duly executed and delivered by Assignor and,
upon the due authorization, execution and delivery by Assignee
and Company, will constitute the valid and legally binding
obligation of Assignor enforceable against Assignor in accordance
with its terms except as enforceability may be limited by
bankruptcy, reorganization, insolvency, moratorium or other
similar laws now or hereafter in effect relating to creditors'
rights generally, and by general principles of equity regardless
of whether enforceability is considered in a proceeding in equity
or at law;
f. No material consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental entity
is required to be obtained or made by Assignor in connection with
the execution, delivery or performance by Assignor of this AAR
Agreement, or the consummation by it of the transactions
contemplated hereby; and
g. There is no action, suit, proceeding, investigation or litigation
pending or, to Assignor's knowledge, threatened, which either in
any instance or in the aggregate, if determined adversely to
Assignor, would adversely affect Assignor's execution or delivery
of, or the enforceability of, this AAR Agreement, or the
Assignor's ability to perform its obligations under this AAR
Agreement.
4. Assignee warrants and represents to, and covenants with, Assignor and
Company as of the date hereof:
a. Assignee is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has
all requisite power and authority to acquire and [own] [hold] the
Assigned Loans [as trustee on behalf of the Trust];
b. Assignee has full power and authority to execute, deliver and
perform its obligations under this AAR Agreement, and to
consummate the transactions set forth herein. The consummation of
the transactions contemplated by this AAR Agreement is in the
ordinary course of Assignee's business and will not conflict
with, or result in a breach of, any of the terms, conditions or
provisions of Assignee's organizational
Exh 10-3
documentation or any legal restriction, or any material agreement
or instrument to which Assignee is now a party or by which it is
bound, or result in the violation of any law, rule, regulation,
order, judgment or decree to which Assignee or its property is
subject. The execution, delivery and performance by Assignee of
this AAR Agreement and the consummation by it of the transactions
contemplated hereby, have been duly authorized by all necessary
action on the part of Assignee. This AAR Agreement has been duly
executed and delivered by Assignee and, upon the due
authorization, execution and delivery by Assignor and Company,
will constitute the valid and legally binding obligation of
Assignee enforceable against Assignee in accordance with its
terms except as enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally,
and by general principles of equity regardless of whether
enforceability is considered in a proceeding in equity or at law;
c. No material consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental entity
is required to be obtained or made by Assignee in connection with
the execution, delivery or performance by Assignee of this AAR
Agreement, or the consummation by it of the transactions
contemplated hereby; and
d. There is no action, suit, proceeding, investigation or litigation
pending or, to Assignee's knowledge, threatened, which either in
any instance or in the aggregate, if determined adversely to
Assignee, would adversely affect Assignee's execution or delivery
of, or the enforceability of, this AAR Agreement, or the
Assignee's ability to perform its obligations under this AAR
Agreement.
5. Company warrants and represents to, and covenants with, Assignor and
Assignee as of the date hereof:
a. Attached hereto as Attachment 2 is a true and accurate copy of
the Purchase Agreement, which agreement is in full force and
effect as of the date hereof and the provisions of which have not
been waived, amended or modified in any respect, nor has any
notice of termination been given thereunder;
b. Company is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, and has
all requisite power and authority to perform its obligations
under the Purchase Agreement;
c. Company has full corporate power and authority to execute,
deliver and perform its obligations under this AAR Agreement, and
to consummate the transactions set forth herein. The consummation
of the transactions contemplated by this AAR Agreement is in the
ordinary course of Company's business and will not conflict with,
or result in a breach of, any
Exh 10-4
of the terms, conditions or provisions of Company's
organizational documentation or any legal restriction, or any
material agreement or instrument to which Company is now a party
or by which it is bound, or result in the violation of any law,
rule, regulation, order, judgment or decree to which Company or
its property is subject, except in such case where the conflict,
breach or violation would not have a material adverse effect on
the Company or its ability to perform its obligations under this
AAR Agreement. The execution, delivery and performance by Company
of this AAR Agreement and the consummation by it of the
transactions contemplated hereby, have been duly authorized by
all necessary corporate action on the part of Company. This AAR
Agreement has been duly executed and delivered by Company, and,
upon the due authorization, execution and delivery by Assignor
and Assignee, will constitute the valid and legally binding
obligation of Company, enforceable against Company in accordance
with its terms except as enforceability may be limited by
bankruptcy, reorganization, insolvency, moratorium or other
similar laws now or hereafter in effect relating to creditors'
rights generally, and by general principles of equity regardless
of whether enforceability is considered in a proceeding in equity
or at law;
d. No consent, approval, order or authorization of, or declaration,
filing or registration with, any governmental entity is required
to be obtained or made by Company in connection with the
execution, delivery or performance by Company of this AAR
Agreement, or the consummation by it of the transactions
contemplated hereby;
e. There is no action, suit, proceeding, investigation or litigation
pending or, to Company's knowledge, threatened, which either in
any instance or in the aggregate, if determined adversely to
Company, would adversely affect Company's execution or delivery
of, or the enforceability of, this AAR Agreement, or the
Company's ability to perform its obligations under this AAR
Agreement; and
f. Pursuant to Section 12 of the Purchase Agreement, the Company
hereby represents and warrants, for the benefit of the Assignor,
the Assignee [and the Trust,] that the representations and
warranties set forth in Section 7.01 and 7.02 of the Purchase
Agreement, are true and correct as of the date hereof in all
material respects, except that the representation and warranty
set forth in Section 7.02(i) shall, for purposes of this AAR
Agreement, relate to the Mortgage Loan Schedule attached hereto.
[Additional Representations and Warranties Necessary for Securitization]
6. The Company hereby acknowledges and agrees that the remedies available
to the Assignor, the Assignee [and the Trust (including the Assignee and the
Servicer acting on the Trust's behalf)] in connection with any breach of the
representations and warranties made by the
Exh 10-5
Company set forth in Section 5 hereof shall be as set forth in Subsection 7.03
of the Purchase Agreement as if they were set forth herein (including without
limitation the repurchase and indemnity obligations set forth therein).
7. [Notwithstanding any term hereof to the contrary, the execution and
delivery of this AAR Agreement by the Assignee is solely in its capacity as
trustee for the Trust and not individually, and any recourse against the
Assignee in respect of any obligations it may have under or pursuant to the
terms of this AAR Agreement shall be limited solely to the assets it may hold as
trustee of the Trust.]
Miscellaneous
8. All demands, notices and communications related to the Assigned Loans,
the Purchase Agreements and this AAR Agreement shall be in writing and shall be
deemed to have been duly given if personally delivered or mailed by registered
mail, postage prepaid, as follows:
a. In the case of Company,
[Company]
____________________
____________________, __________ _______
Attn: ____________________
b. In the case of Assignor,
HSBC Bank USA, National Association
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: [__________]
c. In the case of Assignee,
[Assignee]
____________________
____________________, __________ _______
Attn: ____________________
9. This AAR Agreement shall be construed in accordance with the laws of the
State of New York, without regard to conflicts of law principles, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
10. No term or provision of this AAR Agreement may be waived or modified
unless such waiver or modification is in writing and signed by the party against
whom such waiver or modification is sought to be enforced.
Exh 10-6
11. This AAR Agreement shall inure to the benefit of the successors and
assigns of the parties hereto. Any entity into which Assignor, Assignee or
Company may be merged or consolidated shall without the requirement for any
further writing, be deemed Assignor, Assignee or Company, respectively
hereunder.
12. This AAR Agreement shall survive the conveyance of the Assigned Loans
as contemplated in this AAR Agreement.
13. This AAR Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original and all such
counterparts shall constitute one and the same instrument.
14. In the event that any provision of this AAR Agreement conflicts with
any provision of the Purchase Agreement with respect to the Assigned Loans, the
terms of this AAR Agreement shall control.
Exh 10-7
IN WITNESS WHEREOF, the parties hereto have executed this AAR Agreement as
of the day and year first above written.
HSBC BANK USA, NATIONAL ASSOCIATION
Assignor
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
[ASSIGNEE]
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
[COMPANY]
Company
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Exh 10-8
ATTACHMENT l
ASSIGNED LOAN SCHEDULE
Xxx 00-0
XXXXXXXXXX 0
XXXXXXXX XXXXXXXXX
Xxx 10-10
EXHIBIT 11
FORM OF INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement"), dated as of _____, 200_
(the "Settlement Date"), by and between HSBC Asset Securitization Corp., a
Delaware corporation (such entity, and its successors and assigns, being
referred to herein as the "Depositor") and [COMPANY] (the "Company").
The Depositor and the Company hereby recite and agree as follows:
RECITALS
1. HSBC Bank USA, National Association (the "Seller") has purchased certain
[adjustable]-rate, [first] lien mortgage loans (the "Mortgage Loans") from the
Company and intends to transfer all of its right, title and interest in and to
the Mortgage Loans to the _______________ (the "Trust") pursuant to the terms of
a Pooling and Servicing Agreement, dated as of _____, 200_ (the "Pooling and
Servicing Agreement"), by and among the Seller, the Depositor, _________ as
[master] servicer and ___________, as trustee of the Trust (the "Trustee").
2. In exchange for the Mortgage Loans, the Trust shall issue to the Seller
___________________________, Series _____, Asset-Backed Certificates (the
"Certificates") pursuant to the terms of the Pooling and Servicing Agreement.
3. In accordance with an Underwriting Agreement, dated _____, 200_ (the
"Underwriting Agreement"), the Depositor will sell to HSBC Securities (USA),
Inc. (the "Underwriter") the Certificates.
4. The Certificates will be offered and sold by the Underwriter pursuant to
the terms and conditions of the Underwriting Agreement, through the use of a
prospectus supplement to be dated as of the date of its printing but not later
than the Settlement Date (the "Prospectus Supplement") and a related prospectus
dated _____, 200_, (the "Base Prospectus" and together with the Prospectus
Supplement, the "Prospectus").
AGREEMENT
NOW THEREFORE, in consideration of the mutual promises herein made and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Representations and Warranties.
(a) The Company hereby represents and warrants to the Depositor, as of
the date of this Agreement, that:
Exh 11-1
(i) the Company has been duly organized and is validly existing
and in good standing as a [corporation] under the laws of the State of
__________, with full power and authority to enter into and perform
its obligations under this Agreement; and
(ii) this Agreement has been duly authorized, executed and
delivered by the Company and constitutes a legal, valid and binding
agreement of the Company, enforceable against it in accordance with
its terms, subject to (A) bankruptcy, insolvency, receivership,
conservatorship or other similar laws affecting creditors' rights
generally, (B) general principles of equity regardless of whether
enforcement is sought in a proceeding in equity or at law, and (C)
public policy considerations limiting the enforceability of provisions
of this Agreement that purport to provide indemnification from
liabilities under applicable securities laws.
(b) The Company represents and warrants to the Depositor that as of
the Settlement Date:
(i) the information set forth in the Prospectus Supplement under
[TO BE DETERMINED], (such information, the "Company Information") does
not contain an untrue statement of a material fact; and
(ii) the Company Information does not omit or fail to state any
material fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
(c) The Depositor hereby represents and warrants to the Company that
as of the date of this Agreement:
(ii) it is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has full
corporate power and authority to enter into and perform its
obligations under this Agreement; and
(iii) this Agreement has been duly authorized, executed and
delivered by the Depositor and constitutes the legal, valid and
binding agreement of the Depositor enforceable against the Depositor
in accordance with its terms, subject to (A) bankruptcy, insolvency,
receivership, conservatorship, reorganization, moratorium or other
similar laws affecting creditors' rights generally, (B) general
principals of equity regardless of whether enforcement is sought in a
proceeding in equity or at law, and (C) public policy considerations
limiting the enforceability of provisions of this Agreement that
purport to provide indemnification from penalties under applicable
securities laws.
2. Indemnification.
Exh 11-2
(a) Company (also referred to herein as the "Indemnifying Party")
agrees to indemnify and hold harmless the Depositor and each of its directors
and officers and affiliates and each person, if any, who controls the Depositor
within the meaning of Section 15 of the Securities Act of 1933, as amended (the
"Securities Act"), or Section 20 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (the "Indemnified Party"), against any and all
actual losses, claims, expenses, damages or liabilities to which the Depositor
or any such director, officer or controlling person may become subject, under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (x)
any untrue statement of any material fact contained in the Company Information
or omission to state therein, a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which such statements were made, not misleading (in each case, regardless
of whether a final judgment has been entered by a finder of fact) or (y) any
material misstatement or omission contained in the Prospectus Supplement
regarding information or statistics therein regarding the Mortgage Loans based
on information correctly derived by the Depositor or its affiliates and included
in the Prospectus Supplement which results or arises from information actually
provided in writing to the Depositor or its affiliates by Company; and will
promptly upon request reimburse any such reasonable legal or other expenses
reasonably incurred by the Depositor or any such director, officer or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action. This indemnity agreement will be in addition
to any liability which Company may otherwise have.
(b) Promptly after receipt by the Indemnified Party under this Section
2 of notice of the commencement of any action described therein, the Indemnified
Party will, if a claim in respect thereof is to be made against the Indemnifying
Party under this Section 2, notify the Indemnifying Party of the commencement
thereof, but the omission so to notify the Indemnifying Party will not relieve
the Indemnifying Party from any liability that it may have to the Indemnified
Party under this Agreement, except to the extent that such failure or delay in
notification materially prejudices the Indemnifying Party's defense of such
action or proceeding, and shall in no event relieve the Indemnifying Party from
any other obligation or liability which it may have to any Indemnified Person
otherwise than under this Agreement or with respect to any other action or
proceeding. In case any such action is brought against the Indemnified Party,
and it notifies the Indemnifying Party of the commencement thereof, the
Indemnifying Party will be entitled to participate therein, and, to the extent
that it may wish to do so, jointly with any other Indemnifying Party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
the Indemnified Party, and, after notice from the Indemnifying Party to the
Indemnified Party under this Section 2, the Indemnifying Party shall not be
liable for any legal or other expenses subsequently incurred by the Indemnified
Party in connection with the defense thereof other than reasonable out-of-pocket
costs of investigation.
(c) The Indemnified Party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of the Indemnified
Party unless: (i) the employment thereof has been specifically authorized by the
Indemnifying Party; (ii) the Indemnifying Party shall have been advised by such
counsel that there may be one or more legal defenses available to the
Indemnified Party which are different from those available to the Indemnifying
Party and in the reasonable judgment of such counsel it is advisable for the
Indemnified Party to employ separate
Exh 11-3
counsel (iii) a conflict exists between the Indemnified Party and the
Indemnifying Party (in which case the Indemnifying Party will not have the right
to direct the defense of such action on behalf of the Indemnified Party) or (iv)
the Indemnifying Party has failed to assume the defense of such action and
employ counsel reasonably satisfactory to the Indemnified Party, in which case,
if the Indemnified Party notifies the Indemnifying Party in writing that it
elects to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense of such action
on behalf of the Indemnified Party, it being understood, however, the
Indemnifying Party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to local counsel) at any time for the Indemnified Party, which firm
shall be designated in writing by the Depositor or any of the Depositor's
directors, officers or controlling persons.
(d) The Indemnified Party, as a condition of the indemnity agreements
contained herein, shall use its best efforts to cooperate with the Indemnifying
Party in the defense of any such action or claim. The Indemnifying Party shall
not be liable for any settlement of any such action effected without its written
consent (which consent shall not be unreasonably withheld), but if settled with
its written consent or if there be a final judgment for the plaintiff in any
such action, the Indemnifying Party agrees to indemnify and hold harmless the
Indemnified Party from and against any loss or liability (to the extent set
forth herein as applicable) by reason of such settlement or judgment.
3. Successors and Assigns, Additional Information. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. No party hereto may assign either this Agreement or any
of its rights, interests or obligations hereunder without the prior written
approval of the other parties hereto.
4. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, covenants, indemnities and other statements of the
Depositor and the Company and their respective officers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of the Depositor or the Company and will
survive delivery of and payment for the Certificates. The provisions of Section
4 hereof shall survive the termination or cancellation of this Agreement.
5. Notices. All demands, notices and communications hereunder shall be in
writing, shall be effective only upon receipt and shall, if sent to the
Depositor, be addressed to it at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: President, with a copy to General Counsel; or, if sent to the
Company, be addressed to it at, [ADDRESS], Attn: [_________].
6. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Neither this Agreement nor
any term hereof may be changed, waived, discharged or terminated except by a
writing signed by the party against whom enforcement of such change, waiver,
discharge or termination is sought. This Agreement may be signed in any number
of counterparts, each of which shall be deemed an original, which taken together
shall constitute one and the same instrument. This Agreement
Exh 11-4
supersedes all prior or contemporaneous agreements and understandings relating
to the subject matter hereof.
7. Severability of Provisions. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
Exh 11-5
IN WITNESS WHEREOF, the Depositor and the Company have caused this
Agreement to be duly executed by their respective officers as of the day and
year first above written.
HSBC ASSET SECURITIZATION CORP.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
[COMPANY]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Exh 11-6
EXHIBIT 12
FORM OF ANNUAL CERTIFICATION
I, the _______________________ of [NAME OF COMPANY] certify to [the
Purchaser], [the Depositor], and the [Master Servicer] [Securities
Administrator] [Trustee], and their officers, with the knowledge and intent that
they will rely upon this certification, that:
(i) I have reviewed the servicer compliance statement of the Company
provided in accordance with Item 1123 of Regulation AB (the "Compliance
Statement"), the report on assessment of the Company's compliance with the
servicing criteria set forth in Item 1122(d) of Regulation AB (the
"Servicing Criteria"), provided in accordance with Rules 13a-18 and 15d-18
under Securities Exchange Act of 1934, as amended (the "Exchange Act") and
Item 1122 of Regulation AB (the "Servicing Assessment"), the registered
public accounting firm's attestation report provided in accordance with
Rules 13a-18 and 15d-18 under the Exchange Act and Section 1122(b) of
Regulation AB (the "Attestation Report"), and all servicing reports,
officer's certificates and other information relating to the servicing of
the Mortgage Loans by the Company during 200[_] that were delivered to the
[Depositor] [Master Servicer] [Securities Administrator] [Trustee] pursuant
to the Agreement (collectively, the "Company Servicing Information");
(ii) Based on my knowledge, the Company Servicing Information, taken
as a whole, does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in the
light of the circumstances under which such statements were made, not
misleading with respect to the period of time covered by the Company
Servicing Information;
(iii) Based on my knowledge, all of the Company Servicing Information
required to be provided by the Company under the Agreement has been
provided to the [Depositor] [Master Servicer] [Securities Administrator]
[Trustee];
(iv) I am responsible for reviewing the activities performed by the
Company as servicer under the Agreement, and based on my knowledge and the
compliance review conducted in preparing the Compliance Statement and
except as disclosed in the Compliance Statement, the Servicing Assessment
or the Attestation Report, the Company has fulfilled its obligations under
the Agreement in all material respects; and
(v) The Compliance Statement required to be delivered by the Company
pursuant to the Agreement, and the Servicing Assessment and Attestation
Report required to be provided by the Company and by any Subservicer or
Subcontractor pursuant to the Agreement, have been provided to the
[Depositor] [Master Servicer]. Any material instances of noncompliance
described in such reports have been disclosed to the [Depositor] [Master
Exh 12-1
Servicer]. Any material instance of noncompliance with the Servicing Criteria
has been disclosed in such reports.
[COMPANY]
(Servicer)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
Exh 12-2
EXHIBIT 13
MORTGAGE LOAN DOCUMENTS
(a) the original Mortgage Note bearing all intervening endorsements necessary
to show a complete chain of endorsements from the original payee, endorsed
in blank, "Pay to the order of _____________, without recourse", and, if
previously endorsed, signed in the name of the last endorsee by a duly
qualified officer of the last endorsee. If the Mortgage Loan was acquired
by the last endorsee in a merger, the endorsement must be by "[name of last
endorsee], successor by merger to [name of predecessor]". If the Mortgage
Loan was acquired or originated by the last endorsee while doing business
under another name, the endorsement must be by "[name of last endorsee],
formerly known as [previous name]";
(b) the original Assignment of Mortgage for each Mortgage Loan, in form and
substance acceptable for recording. The Mortgage shall be assigned, with
assignee's name left blank. If the Mortgage Loan was acquired by the last
assignee in a merger, the Assignment of Mortgage must be made by "[name of
last assignee], successor by merger to [name of predecessor]". If the
Mortgage Loan was acquired or originated by the last assignee while doing
business under another name, the Assignment of Mortgage must be by "[name
of last assignee], formerly known as [previous name];
(c) the original of each guarantee executed in connection with the Mortgage
Note, if any;
(d) the original recorded Mortgage, with evidence of recording thereon. If in
connection with any Mortgage Loan, the Seller has not delivered or caused
to be delivered the original Mortgage with evidence of recording thereon on
or prior to the related Closing Date because of a delay caused by the
public recording office where such Mortgage has been delivered for
recordation or because such Mortgage has been lost or because such public
recording office retains the original recorded Mortgage, the Seller shall
deliver or cause to be delivered to the Custodian, (i) in the case of a
delay caused by the public recording office, a copy of such Mortgage
certified by the Seller, escrow agent, title insurer or closing attorney to
be a true and complete copy of the original Mortgage that was submitted to
the public recording office for recordation and (ii) in the case where a
public recording office retains the original recorded Mortgage or in the
case where a Mortgage is lost after recordation in a public recording
office, a
Exh 13-1
copy of such Mortgage certified by such public recording office to be a
true and complete copy of the original recorded Mortgage;
(e) originals or a certified copy of each modification agreement, if any;
(f) the originals of all intervening assignments of mortgage with evidence of
recording thereon evidencing a complete chain of ownership from the
originator of the Mortgage Loan to the last assignee, or if any such
intervening assignment of mortgage has not been returned from the
applicable public recording office or has been lost or if such public
recording office retains the original recorded intervening assignments of
mortgage, a photocopy of such intervening assignment of mortgage, together
with (i) in the case of a delay caused by the public recording office, an
Officer's Certificate of the Seller, escrow agent, closing attorney or the
title insurer insuring the Mortgage stating that such intervening
assignment of mortgage has been delivered to the appropriate public
recording office for recordation and that such original recorded
intervening assignment of mortgage or a copy of such intervening assignment
of mortgage certified by the appropriate public recording office to be a
true and complete copy of the original recorded intervening assignment of
mortgage will be promptly delivered to the Custodian upon receipt thereof
by the party delivering the Officer's Certificate or by the Seller; or (ii)
in the case of an intervening assignment of mortgage where a public
recording office retains the original recorded intervening assignment of
mortgage or in the case where an intervening assignment of mortgage is lost
after recordation in a public recording office, a copy of such intervening
assignment of mortgage with recording information thereon certified by such
public recording office to be a true and complete copy of the original
recorded intervening assignment of mortgage;
(g) if the Mortgage Note, the Mortgage, any Assignment of Mortgage or any other
related document has been signed by a Person on behalf of the Mortgagor,
the copy of the power of attorney or other instrument that authorized and
empowered such Person to sign;
(h) the original lender's title insurance policy (or a marked title insurance
commitment, in the event that an original lender's title insurance policy
has not yet been issued) in the form of an ALTA mortgage title insurance
policy, containing each of the endorsements required by FNMA and insuring
the Purchaser and its successors and assigns as to the first priority lien
of the Mortgage in the original principal amount of the Mortgage Loan; and
Exh 13-2
(i) original of any security agreement, chattel mortgage or equivalent document
executed in connection with the Mortgage, if any.
Exh 13-3
EXHIBIT 14
UNDERWRITING GUIDELINES
Exh 14-1
EXHIBIT 15
SUMMARY OF REGULATION AB
SERVICING CRITERIA
NOTE: This Exhibit 15 is provided for convenience of reference only. In the
event of a conflict or inconsistency between the terms of this Exhibit 15 and
the text of Regulation AB, the text of Regulation AB, its adopting release and
other public statements of the SEC shall control.
ITEM 1122(D)
(a) General servicing considerations.
(1) Policies and procedures are instituted to monitor any performance
or other triggers and events of default in accordance with the transaction
agreements.
(2) If any material servicing activities are outsourced to third
parties, policies and procedures are instituted to monitor the third party's
performance and compliance with such servicing activities.
(3) Any requirements in the transaction agreements to maintain a
back-up servicer for the mortgage loans are maintained.
(4) A fidelity bond and errors and omissions policy is in effect on
the party participating in the servicing function throughout the reporting
period in the amount of coverage required by and otherwise in accordance with
the terms of the transaction agreements.
(b) Cash collection and administration.
(1) Payments on mortgage loans are deposited into the appropriate
custodial bank accounts and related bank clearing accounts no more than two
business days following receipt, or such other number of days specified in the
transaction agreements.
(2) Disbursements made via wire transfer on behalf of an obligor or to
an investor are made only by authorized personnel.
(3) Advances of funds or guarantees regarding collections, cash flows
or distributions, and any interest or other fees charged for such advances, are
made, reviewed and approved as specified in the transaction agreements.
(4) The related accounts for the transaction, such as cash reserve
accounts or accounts established as a form of overcollateralization, are
separately maintained (e.g., with respect to commingling of cash) as set forth
in the transaction agreements.
(5) Each custodial account is maintained at a federally insured
depository institution as set forth in the transaction agreements. For purposes
of this criterion, "federally insured depository institution" with respect to a
foreign financial institution means a foreign
Exh 15-1
financial institution that meets the requirements of Rule 13k-1(b)(1) of the
Securities Exchange Act.
(6) Unissued checks are safeguarded so as to prevent unauthorized
access.
(7) Reconciliations are prepared on a monthly basis for all
asset-backed securities related bank accounts, including custodial accounts and
related bank clearing accounts. These reconciliations are (A) mathematically
accurate; (B) prepared within 30 calendar days after the bank statement cutoff
date, or such other number of days specified in the transaction agreements; (C)
reviewed and approved by someone other than the person who prepared the
reconciliation; and (D) contain explanations for reconciling items. These
reconciling items are resolved within 90 calendar days of their original
identification, or such other number of days specified in the transaction
agreements.
(c) Investor remittances and reporting.
(1) Reports to investors, including those to be filed with the
Commission, are maintained in accordance with the transaction agreements and
applicable Commission requirements. Specifically, such reports (A) are prepared
in accordance with timeframes and other terms set forth in the transaction
agreements; (B) provide information calculated in accordance with the terms
specified in the transaction agreements; (C) are filed with the Commission as
required by its rules and regulations; and (D) agree with investors' or the
trustee's records as to the total unpaid principal balance and number of
mortgage loans serviced by the Servicer.
(2) Amounts due to investors are allocated and remitted in accordance
with timeframes, distribution priority and other terms set forth in the
transaction agreements.
(3) Disbursements made to an investor are posted within two business
days to the Servicer's investor records, or such other number of days specified
in the transaction agreements.
(4) Amounts remitted to investors per the investor reports agree with
cancelled checks, or other form of payment, or custodial bank statements.
(d) Mortgage Loan administration.
(1) Collateral or security on mortgage loans is maintained as required
by the transaction agreements or related mortgage loan documents.
(2) Mortgage loan and related documents are safeguarded as required by
the transaction agreements.
(3) Any additions, removals or substitutions to the asset pool are
made, reviewed and approved in accordance with any conditions or requirements in
the transaction agreements.
Exh 15-2
(4) Payments on mortgage loans, including any payoffs, made in
accordance with the related mortgage loan documents are posted to the Servicer's
obligor records maintained no more than two business days after receipt, or such
other number of days specified in the transaction agreements, and allocated to
principal, interest or other items (e.g., escrow) in accordance with the related
mortgage loan documents.
(5) The Servicer's records regarding the mortgage loans agree with the
Servicer's records with respect to an obligor's unpaid principal balance.
(6) Changes with respect to the terms or status of an obligor's
mortgage loans (e.g., loan modifications or re-agings) are made, reviewed and
approved by authorized personnel in accordance with the transaction agreements
and related mortgage loan documents.
(7) Loss mitigation or recovery actions (e.g., forbearance plans,
modifications and deeds in lieu of foreclosure, foreclosures and repossessions,
as applicable) are initiated, conducted and concluded in accordance with the
timeframes or other requirements established by the transaction agreements.
(8) Records documenting collection efforts are maintained during the
period a mortgage loan is delinquent in accordance with the transaction
agreements. Such records are maintained on at least a monthly basis, or such
other period specified in the transaction agreements, and describe the entity's
activities in monitoring delinquent mortgage loans including, for example, phone
calls, letters and payment rescheduling plans in cases where delinquency is
deemed temporary (e.g., illness or unemployment).
(9) Adjustments to interest rates or rates of return for mortgage
loans with variable rates are computed based on the related mortgage loan
documents.
(10) Regarding any funds held in trust for an obligor (such as escrow
accounts): (A) such funds are analyzed, in accordance with the obligor's
mortgage loan documents, on at least an annual basis, or such other period
specified in the transaction agreements; (B) interest on such funds is paid, or
credited, to obligors in accordance with applicable mortgage loan documents and
state laws; and (C) such funds are returned to the obligor within 30 calendar
days of full repayment of the related mortgage loans, or such other number of
days specified in the transaction agreements.
(11) Payments made on behalf of an obligor (such as tax or insurance
payments) are made on or before the related penalty or expiration dates, as
indicated on the appropriate bills or notices for such payments, provided that
such support has been received by the Servicer at least 30 calendar days prior
to these dates, or such other number of days specified in the transaction
agreements.
(12) Any late payment penalties in connection with any payment to be
made on behalf of an obligor are paid from the Servicer's funds and not charged
to the obligor, unless the late payment was due to the obligor's error or
omission.
Exh 15-3
(13) Disbursements made on behalf of an obligor are posted within two
business days to the obligor's records maintained by the Servicer, or such other
number of days specified in the transaction agreements.
(14) Delinquencies, charge-offs and uncollectable accounts are
recognized and recorded in accordance with the transaction agreements.
(15) Any external enhancement or other support, identified in Item
1114(a)(1) through (3) or Item 1115 of Regulation AB, is maintained as set forth
in the transaction agreements.
Exh 15-4
EXHIBIT 16
SUMMARY OF APPLICABLE REGULATION AB REQUIREMENTS
NOTE: This Exhibit 16 is provided for convenience of reference only. In the
event of a conflict or inconsistency between the terms of this Exhibit 16 and
the text of Regulation AB, the text of Regulation AB, its adopting release and
other public statements of the SEC shall control.
ITEM 1105(A)(1)-(3) AND (C)
-Provide static pool information with respect to mortgage loans that were
originated or purchased by the Seller and which are of the same type as the
Mortgage Loans.
-Provide static pool information regarding delinquencies, cumulative losses
and prepayments for prior securitized pools of the Seller.
-If the Seller has less than 3 years experience securitizing assets of the
same type as the Mortgage Loans, provide the static pool information by vintage
origination years regarding loans originated or purchased by the Seller, instead
of by prior securitized pool. A vintage origination year represents mortgage
loans originated during the same year.
-Such static pool information shall be for the prior five years, or for so
long as the Seller has been originating or purchasing (in the case of data by
vintage origination year) or securitizing (in the case of data by prior
securitized pools) such mortgage loans if for less than five years.
-The static pool information for each vintage origination year or prior
securitized pool, as applicable, shall be presented in monthly increments over
the life of the mortgage loans included in the vintage origination year or prior
securitized pool.
-Provide summary information for the original characteristics of the prior
securitized pools or vintage origination years, as applicable and material,
including: number of pool assets, original pool balance, weighted average
initial loan balance, weighted average mortgage rate, weighted average and
minimum and maximum FICO, product type, loan purpose, weighted average and
minimum and maximum LTV, distribution of loans by mortgage rate, and geographic
concentrations of 5% or more.
ITEM 1108(B) AND (C)
Provide the following information with respect to each servicer that will
service, including interim service, 20% or more of the mortgage loans in any
loan group in the securitization issued in the Pass-Through Transfer:
-a description of the Servicer's form of organization;
-a description of how long the Servicer has been servicing residential
mortgage loans; a general discussion of the Servicer's experience in servicing
assets of any type as well as a more detailed discussion of the Servicer's
experience in, and procedures for the servicing function it
Exh 16-1
will perform under this Agreement and any Reconstitution Agreements; information
regarding the size, composition and growth of the Servicer's portfolio of
mortgage loans of the type similar to the Mortgage Loans and information on
factors related to the Servicer that may be material to any analysis of the
servicing of the Mortgage Loans or the related asset-backed securities, as
applicable, including whether any default or servicing related performance
trigger has occurred as to any other securitization due to any act or failure to
act of the Servicer, whether any material noncompliance with applicable
servicing criteria as to any other securitization has been disclosed or reported
by the Servicer, and the extent of outsourcing the Servicer uses;
-a description of any material changes to the Servicer's policies or
procedures in the servicing function it will perform under this Agreement and
any Reconstitution Agreements for mortgage loans of the type similar to the
Mortgage Loans during the past three years;
-information regarding the Servicer's financial condition to the extent
that there is a material risk that the effect on one or more aspects of
servicing resulting from such financial condition could have a material impact
on the performance of the securities issued in the Pass-Through Transfer, or on
servicing of mortgage loans of the same asset type as the Mortgage Loans;
-any special or unique factors involved in servicing loans of the same type
as the Mortgage Loans, and the Servicer's processes and procedures designed to
address such factors;
-statistical information regarding principal and interest advances made by
the Servicer on the Mortgage Loans and the Servicer's overall servicing
portfolio for the past three years; and
-the Servicer's process for handling delinquencies, losses, bankruptcies
and recoveries, such as through liquidation of REO Properties, foreclosure, sale
of the Mortgage Loans or workouts.
ITEM 1110(A)
-Identify any originator or group of affiliated originators that
originated, or are expected to originate, 10% or more of the mortgage loans in
any loan group in the securitization issued in the Pass-Through Transfer.
ITEM 1110(B)
Provide the following information with respect to any originator or group
of affiliated originators that originated, or is expected to originate, 20% or
more of the mortgage loans in any loan group in the securitization issued in the
Pass-Through Transfer:
-the Seller's form of organization; and
-a description of the Seller's origination program and how long the Seller
has been engaged in originating residential mortgage loans, which description
must include a discussion of the Seller's experience in originating mortgage
loans of the same type as the Mortgage Loans and information regarding the size
and composition of the Seller's origination portfolio as well
Exh 16-2
as information that may be material to an analysis of the performance of the
Mortgage Loans, such as the Seller's credit-granting or underwriting criteria
for mortgage loans of the same type as the Mortgage Loans.
ITEM 1117
-describe any legal proceedings pending against the Seller and Servicer or
against any of their respective property, including any proceedings known to be
contemplated by governmental authorities, that may be material to the holders of
the securities issued in the Pass-Through Transfer.
ITEM 1119(A)
-describe any affiliations of the Servicer, each other originator of the
Mortgage Loans and each Subservicer with the sponsor, depositor, issuing entity,
trustee, any originator, any other servicer, any significant obligor,
enhancement or support provider or any other material parties related to the
Pass-Through Transfer.
ITEM 1119(B)
-describe any business relationship, agreement, arrangement, transaction or
understanding entered into outside of the ordinary course of business or on
terms other than those obtained in an arm's length transaction with an unrelated
third party, apart from the Pass-Through Transfer, between the Seller,
Servicer, each other originator of the Mortgage Loans and each Subservicer, or
their respective affiliates, and the sponsor, depositor or issuing entity or
their respective affiliates, that exists currently or has existed during the
past two years, that may be material to the understanding of an investor in the
securities issued in the Pass-Through Transfer.
ITEM 1119(C)
-describe any business relationship, agreement, arrangement, transaction or
understanding involving or relating to the Mortgage Loans or the Pass-Through
Transfer, including the material terms and approximate dollar amount involved,
between the Seller, Servicer, each other originator of the Mortgage Loans and
each Subservicer, or their respective affiliates and the sponsor, depositor or
issuing entity or their respective affiliates, that exists currently or has
existed during the past two years.
Exh 16-3
EXHIBIT 17
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by [the Servicer] [Name of
Subservicer] shall address, at a minimum, the criteria identified as below as
"Applicable Servicing Criteria":
SERVICING CRITERIA APPLICABLE
-------------------------------------------------------------------------------- SERVICING
REFERENCE CRITERIA CRITERIA
---------------- ------------------------------------------------------------- ----------
GENERAL SERVICING CONSIDERATIONS
1122(d)(1)(i) Policies and procedures are instituted to monitor any
performance or other triggers and events of default in
accordance with the transaction agreements.
1122(d)(1)(ii) If any material servicing activities are outsourced to third
parties, policies and procedures are instituted to monitor
the third party's performance and compliance with such
servicing activities.
1122(d)(1)(iii) Any requirements in the transaction agreements to maintain a
back-up servicer for the mortgage loans are maintained.
1122(d)(1)(iv) A fidelity bond and errors and omissions policy is in effect
on the party participating in the servicing function
throughout the reporting period in the amount of coverage
required by and otherwise in accordance with the terms of the
transaction agreements.
CASH COLLECTION AND ADMINISTRATION
1122(d)(2)(i) Payments on mortgage loans are deposited into the appropriate
custodial bank accounts and related bank clearing accounts no
more than two business days following receipt, or such other
number of days specified in the transaction agreements.
1122(d)(2)(ii) Disbursements made via wire transfer on behalf of an obligor
or to an investor are made only by authorized personnel.
1122(d)(2)(iii) Advances of funds or guarantees regarding collections, cash
flows or distributions, and any interest or other fees
charged for such advances, are made, reviewed and approved as
specified in the transaction agreements.
1122(d)(2)(iv) The related accounts for the transaction, such as cash
reserve accounts or accounts established as a form of
overcollateralization, are separately maintained (e.g., with
respect to commingling of cash) as set forth in the
transaction agreements.
1122(d)(2)(v) Each custodial account is maintained at a federally insured
depository institution as set forth in the transaction
agreements. For purposes of this criterion, "federally
insured depository institution" with respect to a foreign
financial institution means a foreign financial institution
that meets the requirements of Rule 13k-1(b)(1) of the
Securities Exchange Act.
1122(d)(2)(vi) Unissued checks are safeguarded so as to prevent unauthorized
access.
1122(d)(2)(vii) Reconciliations are prepared on a monthly basis for all
asset-backed securities related bank accounts, including
custodial accounts and related bank clearing accounts. These
reconciliations are (A) mathematically accurate; (B) prepared
within 30 calendar days after the bank statement cutoff date,
or such other number of days specified in the transaction
agreements; (C) reviewed and approved by someone other than
the person who prepared the reconciliation; and (D) contain
explanations for reconciling items. These reconciling items
are resolved within 90 calendar days of their original
identification, or such other number of days specified in the
transaction agreements.
Exh 17-1
SERVICING CRITERIA APPLICABLE
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REFERENCE CRITERIA CRITERIA
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INVESTOR REMITTANCES AND REPORTING
1122(d)(3)(i) Reports to investors, including those to be filed with the
Commission, are maintained in accordance with the transaction
agreements and applicable Commission requirements.
Specifically, such reports (A) are prepared in accordance
with timeframes and other terms set forth in the transaction
agreements; (B) provide information calculated in accordance
with the terms specified in the transaction agreements; (C)
are filed with the Commission as required by its rules and
regulations; and (D) agree with investors' or the trustee's
records as to the total unpaid principal balance and number
of mortgage loans serviced by the Servicer.
1122(d)(3)(ii) Amounts due to investors are allocated and remitted in
accordance with timeframes, distribution priority and other
terms set forth in the transaction agreements.
1122(d)(3)(iii) Disbursements made to an investor are posted within two
business days to the Servicer's investor records, or such
other number of days specified in the transaction agreements.
1122(d)(3)(iv) Amounts remitted to investors per the investor reports agree
with cancelled checks, or other form of payment, or custodial
bank statements.
POOL ASSET ADMINISTRATION
1122(d)(4)(i) Collateral or security on mortgage loans is maintained as
required by the transaction agreements or related mortgage
loan documents.
1122(d)(4)(ii) Mortgage loan and related documents are safeguarded as
required by the transaction agreements
1122(d)(4)(iii) Any additions, removals or substitutions to the asset pool
are made, reviewed and approved in accordance with any
conditions or requirements in the transaction agreements.
1122(d)(4)(iv) Payments on mortgage loans, including any payoffs, made in
accordance with the related mortgage loan documents are
posted to the Servicer's obligor records maintained no more
than two business days after receipt, or such other number of
days specified in the transaction agreements, and allocated
to principal, interest or other items (e.g., escrow) in
accordance with the related mortgage loan documents.
1122(d)(4)(v) The Servicer's records regarding the mortgage loans agree
with the Servicer's records with respect to an obligor's
unpaid principal balance.
1122(d)(4)(vi) Changes with respect to the terms or status of an obligor's
mortgage loans (e.g., loan modifications or re-agings) are
made, reviewed and approved by authorized personnel in
accordance with the transaction agreements and related pool
asset documents.
1122(d)(4)(vii) Loss mitigation or recovery actions (e.g., forbearance plans,
modifications and deeds in lieu of foreclosure, foreclosures
and repossessions, as applicable) are initiated, conducted
and concluded in accordance with the timeframes or other
requirements established by the transaction agreements.
1122(d)(4)(viii) Records documenting collection efforts are maintained during
the period a mortgage loan is delinquent in accordance with
the transaction agreements. Such records are maintained on at
least a monthly basis, or such other period specified in the
transaction agreements, and describe the entity's activities
in monitoring delinquent mortgage loans including, for
example, phone calls, letters and payment rescheduling plans
in cases where delinquency is deemed temporary (e.g., illness
or unemployment).
1122(d)(4)(ix) Adjustments to interest rates or rates of return for mortgage
loans with variable rates are computed based on the related
mortgage loan documents.
Exh 17-2
SERVICING CRITERIA APPLICABLE
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REFERENCE CRITERIA CRITERIA
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1122(d)(4)(x) Regarding any funds held in trust for an obligor (such as
escrow accounts): (A) such funds are analyzed, in accordance
with the obligor's mortgage loan documents, on at least an
annual basis, or such other period specified in the
transaction agreements; (B) interest on such funds is paid,
or credited, to obligors in accordance with applicable
mortgage loan documents and state laws; and (C) such funds
are returned to the obligor within 30 calendar days of full
repayment of the related mortgage loans, or such other number
of days specified in the transaction agreements.
1122(d)(4)(xi) Payments made on behalf of an obligor (such as tax or
insurance payments) are made on or before the related penalty
or expiration dates, as indicated on the appropriate bills or
notices for such payments, provided that such support has
been received by the servicer at least 30 calendar days prior
to these dates, or such other number of days specified in the
transaction agreements.
1122(d)(4)(xii) Any late payment penalties in connection with any payment to
be made on behalf of an obligor are paid from the servicer's
funds and not charged to the obligor, unless the late payment
was due to the obligor's error or omission.
1122(d)(4)(xiii) Disbursements made on behalf of an obligor are posted within
two business days to the obligor's records maintained by the
servicer, or such other number of days specified in the
transaction agreements.
1122(d)(4)(xiv) Delinquencies, charge-offs and uncollectible accounts are
recognized and recorded in accordance with the transaction
agreements.
1122(d)(4)(xv) Any external enhancement or other support, identified in Item
1114(a)(1) through (3) or Item 1115 of Regulation AB, is
maintained as set forth in the transaction agreements.
[SERVICER] [NAME OF SUBSERVICER]
Date:
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By:
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Name:
---------------------------------
Title:
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Exh 17-3
