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