EXHIBIT 4.4
FORM OF MORTGAGE LOAN PURCHASE AGREEMENT
This Loan Purchase Agreement, dated as of [ ], by and between [ ],
a [ ] corporation, its successors and assigns (the "Transferor"), and Home
Equity Securitization Corp., a [ ] corporation and its successors (the
"Depositor").
W I T N E S S E T H:
WHEREAS, Exhibit A attached hereto and made a part hereof as such Exhibit A
may be amended from time to time to reflect additions and deletions lists
certain Loans (as defined herein) owned by the Transferor that the Transferor
desires to sell to the Depositor and that the Depositor desires to purchase;
WHEREAS, it is the intention of the Transferor and the Depositor that
simultaneously with the Transferor's conveyance of the Loans to the Depositor on
the Closing Date, (a) the Depositor shall sell, transfer, assign, set over and
otherwise convey to the Issuer, all of the right, title and interest of the
Depositor in and to the Trust Estate pursuant to a Sale and Servicing Agreement
to be dated as of [ ] (the "Sale and Servicing Agreement"), to be entered
into by and among the Depositor, as depositor, [ ], as transferor (the
"Transferor"), [ ], as servicer (in such capacity, the "Servicer")
and [ ], as indenture trustee (the "Indenture Trustee") and co-owner trustee
(the "Co-Owner Trustee") and (b) the Issuer shall pledge to the Indenture
Trustee the Trust Estate and the Indenture Trustee, pursuant to the written
instructions of the Issuer, shall execute and cause to be authenticated and
delivered the Notes to the Depositor or its designee, upon the order of the
Issuer. Upon the formation of the Issuer and prior to the Issuer's purchase of
the Loans from the Depositor, the Owner Trustee pursuant to the instructions of
the owners of the Residual Interests, shall execute (not in its individual
capacity, but solely as Owner Trustee on behalf of the Issuer) and cause to be
authenticated and delivered the Residual Interests to the initial
Certificateholders designated in the Trust Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Whenever used herein, the following words and
phrases, unless the context otherwise requires, shall have the meanings
specified in this Article. Capitalized terms used herein and not otherwise
defined shall have the respective meanings ascribed thereto in the Sale and
Servicing Agreement.
Agreement: This Loan Purchase Agreement and all amendments hereof and
supplements hereto.
Class: With respect to the Notes, all Notes bearing the same Class
designation.
Class A1 Note, Class A2 Note, Class A3 Note, Class A4 Note, Class M1 Note,
Class M2 Note and Class B Note: The respective meanings assigned thereto in the
Indenture.
2
Cut-Off Date: With respect to the Initial Loans, the close of business on [
].
Defective Loan: As defined in Section 3.4 of this Agreement.
Depositor: Home Equity Securitization Corp., a North Carolina corporation,
and any successor thereto.
Indenture: The Indenture, dated as of [ ], between the Issuer and the
Indenture Trustee.
Loan: Any home loan sold pursuant to the terms hereof as indicated by its
designation on the Loan Schedule attached hereto as Exhibit A. As applicable, a
Loan shall be deemed to refer to the related Debt Instrument, Mortgage and any
related Foreclosure Property. The term "Loan" includes any Subsequent Loan.
Loan File: As defined in Section 2.4.
Loan Sale Agreement: The loan sale agreement between [ ] as Seller and the
Transferor, as Purchaser, dated as of [ ].
Loan Schedule: The schedule of Loans attached hereto as Exhibit A, such
schedule identifying each Loan by address (including the related state and Zip
code) of the related Mortgaged Property, if any, and the name(s) of each
Mortgagor and setting forth as to each Loan the following information: (i) the
Principal Balance as of the Cut-Off Date, (ii) the account number, (iii) the
original principal amount, (iv) the Due Date, (v) whether such Loan is a Fixed
Rate Loan or an Adjustable Rate Loan, (vi) for each Fixed Rate Loan, the Loan
Interest Rate and for each Adjustable Rate Loan, the Gross Margin, (vii) the
first date on which a Monthly Payment is due under the related Debt Instrument,
(viii) the Monthly Payment, (ix) the maturity date of the related Debt
Instrument, and (x) the remaining number of months to maturity as of the Cut-Off
Date.
Officer's Certificate: A certificate delivered to the Depositor signed by
the President or a Vice President or an Assistant Vice President of the
Transferor, in each case, as required by this Agreement.
Purchase Price: As defined in Section 2.2 herein.
Purchaser: The Transferor as Purchaser under the Loan Sale Agreement.
Purchaser's Loan File: As defined in Section 2.5(c).
Qualified Substitute Loan: A home loan or home loans substituted for a
Defective Loan pursuant to Section 2.6 or 3.5, which (i) is a Fixed Rate Loan if
the related Defective Loan is a Fixed Rate Loan, (ii) has or have an interest
rate or rates of not less than two percentage points fewer and not more than two
percentage points greater than the Loan Interest Rate for the Defective Loan,
(iii) matures or mature not more than two years later than and not more than two
years earlier than the Defective Loan (provided, however, that no such Qualified
Substitute Loan shall mature later than the latest maturing Loan in the Trust as
of the Closing Date), (iv) has or
3
have a principal balance or principal balances (after application of all
payments received on or prior to the date of substitution) equal to or less than
the Principal Balance of the Defective Loan as of such date, (v) has or have a
lien priority equal or superior to that of the Defective Loan, (vi) has or have
a borrower with a comparable credit grade classification to the credit grade
classification of the borrower with respect to the Deleted Loans, including a
FICO Score that is no more than 10 points below that of such Deleted Loan; and
(vii) complies or comply as of the date of substitution with each representation
and warranty set forth in Section 3.4 (including without limitation satisfaction
of the condition set forth in Section 3.3(af) as not constituting a "real estate
mortgage" if the related Defective Loan did not constitute a "real estate
mortgage") and is or are not more than 29 days delinquent as of the date of
substitution for such Deleted Loan. For purposes of determining whether multiple
mortgage loans proposed to be substituted for one or more Deleted Loans pursuant
to Section 2.6 or 3.5 are in fact "Qualified Substitute Loans" as provided
above, the criteria specified in clauses (i) and (iii) above may be considered
on an aggregate or weighted average basis, rather than on a loan-by-loan basis
(e.g. so long as the weighted average Loan Interest Rate of any loans proposed
to be substituted is not less than two percentage points fewer than and not more
than two percentage points greater than the Loan Interest Rate for the
designated Deleted Loan or Loans, the requirements of clause (i) above would be
deemed satisfied).
Repurchased Loan: Any Loan that has been repurchased pursuant to clause
(ii) of the fourth sentence of Section 3.4(a).
Registration Statement: means that certain registration statement on Form
S3, as amended (Registration No. _________________) relating to the offering by
the Depositor from time to time of its ________________________________
(Issuable in Series) as heretofore declared effective by the Commission.
Seller: [ ] as Seller under the Loan Sale Agreement.
Termination Event: means the existence of any one or more of the following
conditions:
4
(a) a stop order suspending the effectiveness of the Registration
Statement shall have been issued or a proceeding for that purpose shall
have been initiated or threatened by the Commission; or
(b) subsequent to the execution and delivery of this Agreement, a
downgrading, or public notification of a possible change, without
indication of direction, shall have occurred in the rating afforded any of
the debt securities or claims paying ability of any person providing any
form of credit enhancement for any of the Notes, by any "nationally
recognized statistical rating organization," as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the Securities Act; or
(c) subsequent to the execution and delivery of this Agreement, there
shall have occurred an adverse change in the condition, financial or
otherwise, earnings, affairs, regulatory situation or business prospects of
the Seller reasonably determined by the Depositor to be material; or
(d) subsequent to the date of this Agreement there shall have occurred
any of the following: (i) a suspension or material limitation in trading in
securities substantially similar to the Notes; (ii) a general moratorium on
commercial banking activities in New York declared by either Federal or New
York State authorities; or (iii) the engagement by the United States in
hostilities, or the escalation of such hostilities, or any calamity or
crisis, if the effect of any such event specified in this clause (iii) in
the reasonable judgment of the Depositor makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Notes on the terms and in the manner contemplated in the Prospectus
Supplement. Transferor: [ ], in its capacity as the transferor hereunder.
Trust Agreement: The Trust Agreement dated as of [ ], among the
Depositor, the Company, the Co-Owner Trustee and the Owner Trustee.
Trust Estate: The assets subject to the Sale and Servicing Agreement, the
Trust Agreement and the Indenture and assigned to the Issuer, which assets
consist of: (i) such Loans and other home loans as from time to time are subject
to the Sale and Servicing Agreement as listed in the loan schedule attached to
the Sale and Servicing Agreement, as the same may be amended or supplemented
from time to time including the addition of Subsequent Loans, the removal of
Deleted Loans and the addition of Qualified Substitute Loans (as defined in the
Sale and Servicing Agreement and not as defined herein), together with the
Servicer's Loan Files and the Trustee's Loan Files relating thereto and all
proceeds thereof, (ii) all payments in respect of interest received with respect
to the Loans and any other home loans as from time to time are subject to the
Sale and Servicing Agreement as listed in the loan schedule attached to the Sale
and Servicing Agreement, as the same may be amended or supplemented from time to
time including the addition of Subsequent Loans, the removal of Deleted Loans
and the addition of Qualified Substitute Loans (as defined in the Sale and
Servicing Agreement and not as defined herein) on or after the Cut-Off Date or
Subsequent Cut-Off Date as applicable and all payments received with respect to
principal, on or after the Cut-Off Date or Subsequent Cut-Off Date as
applicable, (iii) such assets as from time to time are identified as Foreclosure
Property, (iv) such assets and funds as are from time to time are deposited in
the Collection Account, the Note
5
Distribution Account and the Certificate Distribution Account, including amounts
on deposit in such accounts which are invested in Permitted Investments, (v) the
Transferor's and the Seller's rights under all insurance policies with respect
to the Loans and any Insurance Proceeds, (vi) Net Liquidation Proceeds, Post
Liquidation Proceeds and Released Mortgaged Property Proceeds, (vii) all right,
title and interest of the Servicer and the Transferor in and to the rights and
obligations of any Subservicer, pursuant to any Subservicing Agreement, and
(viii) all rights, title and interest of the Depositor in and to the obligations
of the Transferor under this Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
6
ARTICLE II
PURCHASE, SALE AND CONVEYANCE OF LOANS
Section 2.1 Agreement to Purchase. (a) Subject to the terms and conditions
of this Agreement, the Transferor hereby sells, transfers, conveys, and assigns
and the Depositor hereby purchases the Loans.
(b) The Depositor and the Transferor have agreed upon which of the
Transferor's Loans are purchased by the Depositor pursuant to this
Agreement, and the Transferor has prepared a Loan Schedule. The Loan
Schedule is attached hereto as Exhibit A.
(c) The closing for the purchase and sale of the Loans shall take
place at the offices of [ ], at 10:00 a.m., [ ] time, on [ ] or
such other place and time as the parties shall agree (such time being
herein referred to as the "Closing Date").
Section 2.2 Purchase Price. On the Closing Date, as full consideration for
the Transferor's sale of the Loans to the Depositor, the Depositor will deliver
to the Transferor an amount in cash equal to $_____________________, payable in
immediately available funds.
Section 2.3 Conveyance of Loans; Possession of Loan Schedule. (a) Effective
as of the Closing Date, the Transferor hereby sells, transfers, assigns, sets
over and conveys to the Depositor, without recourse but subject to the terms of
this Agreement, all right, title and interest in and to the Loans, the insurance
policies relating to each such Loan, if any, and all right, title and interest
in and to the proceeds of such insurance policies from and after the Closing
Date.
(b) Upon the sale of such Loans, the ownership of each related Debt
Instrument, each related Mortgage and the contents of the related Loan File
shall immediately vest in the Depositor and the ownership of all related
records and documents with respect to each Loan prepared by or which come
into the possession of the Transferor shall immediately vest in the
Depositor.
(c) Pursuant to the Sale and Servicing Agreement, the Depositor shall,
on the Closing Date, irrevocably transfer, assign, set over and otherwise
convey all of its right, title and interest in and to the applicable Loans
and all of its rights (exclusive of its obligations) under this Agreement
to the Issuer for the benefit of the Indenture Trustee.
(d) Pursuant to the Indenture, the Issuer shall pledge to the
Indenture Trustee, on the Closing Date, all of its right, title and
interest in and to the Trust Estate and all of its right, title and
interest in the Sale and Servicing Agreement. Section
2.4 Delivery of Loan Documents. (a) On or prior to the Closing Date, the
Transferor shall cause the Seller to deliver to the Indenture Trustee each of
the following documents for each applicable Loan (collectively, the "Loan
Files"):
(i) The original Debt Instrument, endorsed by the Seller in blank
or in the following form: "Pay to the order of [ ], as Indenture
Trustee and Co-Owner Trustee, ___________ Trust, without recourse",
with all prior and
7
intervening endorsements showing a complete chain of endorsement from
origination of the Loan to the Seller;
(ii) The original Mortgage with evidence of recording thereon
(or, if the original Mortgage has not been returned from the
applicable public recording office or is not otherwise available, a
copy of the Mortgage certified by a Responsible Officer of the Seller
or by the closing attorney or by an officer of the title insurer or
agent of the title insurer which issued the related title insurance
policy or commitment therefor to be a true and complete copy of the
original Mortgage submitted for recording) and, if the Mortgage was
executed pursuant to a power of attorney, the original power of
attorney with evidence of recording thereon (or, if the original power
of attorney has not been returned from the applicable public recording
office or is not otherwise available, a copy of the power of attorney
certified by a Responsible Officer of the Seller or by the closing
attorney or by an officer of the title insurer or agent of the title
insurer which issued the related title insurance policy or commitment
therefor, to be a true and complete copy of the original power of
attorney submitted for recording);
(iii) The original executed Assignment of Mortgage, acceptable
for recording except with respect to any currently unavailable
recording information, from the Seller to the Indenture Trustee in
blank or in the following form "[ ] to ______________________,
____________________, as Indenture Trustee and Co-Owner Trustee,
_______________ Trust, without recourse";
(iv) The original Assignment of Mortgage and any original
intervening Assignments of Mortgage, with evidence of recording
thereon, showing a complete chain of assignment from origination of
the Loan to the Seller (or, if any such Assignment of Mortgage has not
been returned from the applicable public recording office or is not
otherwise available, a copy of such Assignment of Mortgage certified
by a Responsible Officer of the Seller]or by the closing attorney or
by an officer of the title insurer or agent of the title insurer which
issued the related title insurance policy or commitment therefor to be
a true and complete copy of the original Assignment submitted for
recording); and
(v) The original, or a copy certified by the Seller to be a true
and correct copy of the original, of each assumption, modification,
written assurance or substitution agreement, if any.
(b) With respect to any Mortgage referred to in Section 2.4(a)(ii)
above as to which the original Mortgage is not available as of the Closing
Date and with respect to any Assignment of Mortgage referred to in Section
2.4(a)(iii) or 2.4(a)(iv) as to which the original Assignment of Mortgage
is not available as of the Closing Date, the Transferor shall cause the
Seller to deliver, prior to the Closing Date, a copy of such Mortgage or
such Assignment of Mortgage, as the case may be, certified by the Seller to
be a true and correct copy, to the Indenture Trustee and shall also deliver
the original Mortgage, or where the original Mortgage is unavailable a copy
thereof certified by the applicable public recording office, and the
original Assignment of Mortgage, or where the original Assignment of
Mortgage is unavailable a copy thereof certified by the applicable public
recording office, to the Indenture Trustee within five
8
Business Days of receipt thereof by the Seller but in no event later than
360 days following the date of origination of the related Loan or the date
of such Assignment of Mortgage to the Seller. The failure of the Seller to
deliver to the Indenture Trustee (x) any original Mortgage as required
under Section 2.4(a)(ii) (or where the original is unavailable a copy
thereof certified by the applicable public recording office), or (y) any
original Assignment of Mortgage as required under Section 2.4(a)(iii) and
(iv) (or where the original is unavailable a copy thereof certified by the
applicable public recording office), shall not be deemed a breach of this
Agreement by the Transferor for any purpose whatsoever until the expiration
of such 360 day period.
The Transferor shall cause the Seller to promptly upon receipt thereof (and
in no event later than the earlier of (i) five Business Days following such
receipt and (ii) 360 days after the Closing Date, deliver to the Indenture
Trustee (a) the original recorded Mortgage in those instances where a certified
copy thereof was delivered to the Indenture Trustee; (b) the original recorded
Assignment of Mortgage or Assignment of Mortgages showing a complete chain of
assignment from origination of a Loan to the Indenture Trustee in those
instances where certified copies thereof were delivered to the Indenture
Trustee; (c) the original policy of title insurance or title report, as
applicable, or a copy certified by the Seller to be a true and correct copy in
those instances where a commitment (binder) (including any marked additions
thereto or deletions therefrom) to issue such policy was delivered to the
Indenture Trustee; and (d) any other original documents constituting a part of a
Loan File received with respect to any Home Loan, including, but not limited to,
any original documents evidencing an assumption or modification of any Loan.
All original documents relating to the Loans that are not delivered to the
Indenture Trustee are and shall be held by the Seller, in trust for the benefit
of the Transferor and the Depositor or any of their assignees. In the event that
any such original document is required pursuant to the terms of this Section 2.4
to be a part of a Loan File, such document shall be delivered promptly to, or
upon the instruction of, the Depositor. Any original document that is not
required pursuant to the terms of this Section to be a part of a Loan File shall
be delivered promptly to the Seller.
In connection with the delivery of documentation provided by this Section
2.4, the Transferor hereby appoints the Depositor its attorney with full power
and authority to act in its stead for the purpose of executing and certifying
assignments and endorsing and certifying promissory notes which make a part of
each Loan File to cure any deficiencies in such documentation.
If the Seller has not delivered all required documentation with respect to
any Loan within the time periods, if any, specified in this Agreement, the
Transferor shall be required to take action with respect to such Loan as and to
the extent provided in Section 2.5 hereof.
(c) All loan documents held by the Indenture Trustee are referred to
herein as the "Indenture Trustee's Loan File." All recordings required
pursuant to this Section 2.4 shall be accomplished by and at the expense of
the Transferor.
Section 2.5 Acceptance of Loans. (a) The Depositor acknowledges receipt by
the Indenture Trustee on behalf of the Depositor on the Closing Date, in good
faith without
9
notice of adverse claims, subject to the provisions of Sections 2.5(a)(ii) and
2.5(b) of the Sale and Servicing Agreement and to any exceptions noted on the
Indenture Trustee's receipt in the form annexed as Exhibit C to the Sale and
Servicing Agreement of (x) the documents referred to in Section 2.4(a)(i), (ii),
(iii), (iv) and (v) above (except that any such applicable document may be
endorsed in blank upon receipt) with respect to the Loans listed on the Loan
Schedule delivered to the Depositor on the Closing Date; in addition, the
Depositor acknowledges the assignment to it by the Transferor and the assignment
by it to the Issuer of all other assets included in clauses (i) through (v) of
the definition of "Trust Estate" declares that such documents and the other
documents delivered to the Indenture Trustee constituting the Loan Files and all
such assets and such other assets included in the definition of "Trust Estate"
that are delivered to the Indenture Trustee are held or will be held in trust
for the exclusive use and benefit of all present and future Securityholders.
If in the process of reviewing the Loan Files and making or preparing
the certifications referred to in the Sale and Servicing Agreement, the
Indenture Trustee finds any document or documents constituting a part of a Loan
File to be missing or defective in any material respect, or at the end of any
360day period referenced above finds that all recorded Assignments of Mortgage
and all original Mortgages or certified copies thereof have not been delivered
to it, the Indenture Trustee has agreed to promptly so notify the Transferor,
the Depositor, the Seller and the Servicer. In performing any such review, the
Indenture Trustee may conclusively rely on the Seller as to the purported
genuineness of any such document and any signature thereon. It is understood
that the scope of the Indenture Trustee's review of the items delivered to the
Indenture Trustee pursuant to Section 2.5 of the Sale and Servicing Agreement,
unless otherwise expressly stated in the Sale and Servicing Agreement, shall be
limited solely to confirming that the documents listed in Section 2.5 of the
Sale and Servicing Agreement have been executed and received, relate to the
Loans in the Loan Schedule and conform as to the loan number and address and
description thereof in the Loan Schedule. The Sale and Servicing Agreement also
provides that upon the discovery by the Transferor, the Depositor, the Servicer
or the Indenture Trustee of a breach of any of the representations and
warranties made by the Transferor or the Servicer therein in respect of any Loan
which materially and adversely affects the value of such Loan or the interests
of the Securityholders in such Loan, the Person discovering such breach shall
give prompt written notice to the other Persons set forth in this sentence.
If the Seller has not delivered all required documentation with respect to
any Loan within the time periods specified in this Agreement (as such may have
been extended pursuant to Section 2.4(b) hereof), the Transferor shall be
required to take action with respect to such Loan as and to the extent provided
in Section 3.4 hereof.
(b) The Transferor shall cause the Servicer to hold the Servicer's
Loan File in the custody of the Servicer for the benefit of, and as agent
for, the Securityholders and the Indenture Trustee as the owner thereof. It
is intended by this Section 2.5(b) that the Indenture Trustee shall be
deemed to have possession of the Servicer's Loan Files for purposes of
Section 9305 of the Uniform Commercial Code of the state in which such
documents or instruments are located. The Servicer has agreed to promptly
report to the Indenture Trustee any failure by it to hold the Servicer's
Loan File as herein provided and shall promptly take appropriate action to
remedy any such failure. In acting as custodian of such
10
documents and instruments, the Servicer has agreed not to assert any legal
or beneficial ownership interest in the Loans or such documents or
instruments. The Indenture Trustee shall have no duty to monitor or
otherwise oversee the Servicer's performance as custodian.
(c) If the Custodian, during the process of reviewing the Indenture
Trustee's Loan Files, finds any document constituting a part of a Indenture
Trustee's Loan File which is not executed, has not been received, is
unrelated to any Loan identified in the Loan Schedule, does not conform to
the requirements of Section 2.4 or does not conform, in all material
respects, to the description thereof as set forth in the Loan Schedule,
then the Custodian shall promptly so notify the Transferor, the Servicer,
the Indenture Trustee, the Issuer and the Depositor. In performing any such
review, the Custodian may conclusively rely on the Seller as to the
purported genuineness of any such document and any signature thereon. It is
understood that the scope of the Custodian's review of the Indenture
Trustee's Loan Files is limited solely to confirming that the documents
listed in Section 2.4 have been received and further confirming that any
and all documents delivered pursuant to Section 2.4 have been executed and
relate to the Loans identified in the Loan Schedule. None of the Issuer,
the Depositor or the Custodian shall have any responsibility for
determining whether any document is valid and binding, whether the text of
any assignment or endorsement is in proper or recordable form, whether any
document has been recorded in accordance with the requirements of any
applicable jurisdiction, or whether a blanket assignment is permitted in
any applicable jurisdiction. If a material defect in a document
constituting part of a Indenture Trustee's Loan File is discovered, then
Transferor shall comply with the cure, substitution and repurchase
provisions of Section 3.5 hereof. Section
2.6 Transfer of Loans; Assignment of Agreement. The Transferor hereby
acknowledges and agrees that the Depositor may sell, transfer and assign its
interest under this Agreement to the Depositor, who in accordance with the Sale
and Servicing Agreement may assign its interest to the Indenture Trustee as may
be required to effect the purposes of the Sale and Servicing Agreement, without
further notice to, or consent of, the Purchaser or Transferor, and the Indenture
Trustee shall succeed to such of the rights and obligations of the Depositor as
shall be so assigned.
Section 2.7 Books and Records. The sale of each Loan shall be reflected on
the Transferor's balance sheets and other financial statements as a sale of
assets by the Transferor to the Depositor under generally accepted accounting
principles ("GAAP").
Section 2.8 Cost of Delivery and Recordation of Documents. The costs
relating to the delivery and recordation of the documents specified in this
Article II in connection with the Loans shall be borne by the Seller.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
11
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties as to the Transferor. The
Transferor hereby represents and warrants to the Depositor, as of the Closing
Date, that:
(a) The Transferor is a [ ] corporation duly organized, validly
existing and in good standing under the laws of the State of [ ] and has
all licenses necessary to carry on its business as now being conducted and
is licensed, qualified and in good standing in each state where a Mortgaged
Property is located if the laws of such state require licensing or
qualification in order for the Transferor to conduct such business and to
perform its obligations as the Transferor hereunder and is in any event in
compliance with the laws of each state in which any Mortgaged Property is
located to the extent necessary to ensure the enforceability of each Loan
in accordance with the terms of this Agreement;
(b) The execution and delivery of this Agreement by the Transferor and
its performance of and compliance with the terms of this Agreement will not
violate the Transferor's Certificate of Incorporation or bylaws or
constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, or result in the breach or
acceleration of, any material contract, agreement or other instrument to
which the Transferor is a party or which may be applicable to the
Transferor or any of its assets;
(c) The Transferor has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement, and
has duly executed and delivered this Agreement. This Agreement, assuming
due authorization, execution and delivery by the Depositor, constitutes a
valid, legal and binding obligation of the Transferor, enforceable against
it in accordance with the terms hereof, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, receivership, moratorium
or other similar laws relating to or affecting the rights of creditors
generally, and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law);
(d) The Transferor is not in violation of, and the execution and
delivery of this Agreement by the Transferor 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, which violation would materially and adversely affect the
condition (financial or otherwise) or operations of the Transferor,
materially and adversely affect the performance of its duties hereunder or
impair the ability of the Indenture Trustee (or the Transferor as agent of
the Indenture Trustee) to realize on the Loans or impair the value of the
Loans;
(e) There is no action, suit, proceeding or investigation pending or,
to the knowledge of the Transferor, threatened, before any court,
administrative agency or government tribunal against the Transferor which,
either in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition, properties
or assets of the Transferor, or in any material impairment of the right or
ability of the Transferor to carry on its business substantially as now
conducted, or in any material liability on
12
the part of the Transferor, or which would draw into question the validity
of this Agreement, the Loans, or of any action taken or to be taken in
connection with the obligations of the Transferor contemplated herein, or
which would impair materially the ability of the Transferor to perform
under the terms of this Agreement or that might prohibit its entering into
this Agreement or the consummation of any of the transactions contemplated
hereby;
(f) The Transferor will examine each Subservicing Agreement and will
be familiar with the terms thereof. Each designated Subservicer and the
terms of each Subservicing Agreement will be required to comply with the
provisions of Section 4.7 of the Sale and Servicing Agreement. The terms of
any Subservicing Agreement will not be inconsistent with any of the
provisions of this Agreement;
(g) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Transferor of, or compliance by the Transferor with,
this Agreement or the Securities, or for the consummation of the
transactions contemplated by this Agreement, except for such consents,
approvals, authorizations and orders, if any, that have been obtained prior
to the Closing Date;
(h) The collection practices used by the Seller with respect to the
Loans have been, in all material respects, legal, proper, prudent and
customary in the nonconforming mortgage servicing business; (i) The
transactions contemplated by this Agreement are in the ordinary course of
business of the Transferor;
(i) The transactions contemplated by this Agreement are in the
ordinary course of business of the Transferor.
(j) The Transferor is duly licensed where required as a "licensee" or
is otherwise qualified in each state in which it transacts business and is
not in default of such state's applicable laws, rules and regulations,
except where the failure to so qualify or such default would not have a
material adverse effect on the ability of the Transferor to conduct its
business or perform its obligations hereunder;
(k) The Seller is an Eligible Servicer and services mortgage loans in
accordance with Accepted Servicing Procedures;
(l) This Agreement contains no untrue statement or alleged untrue
statement of a material fact or omits to state any material fact necessary
to make the statements contained herein or therein, in light of the
circumstances under which they will be made, not misleading
(m) No Officers' Certificate, statement, report or other document
prepared by the Transferor and furnished or to be furnished by it 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;
(n) The Transferor is solvent and will not be rendered insolvent as a
result of the performance of its obligations pursuant to this Agreement;
13
(o) The Transferor has not waived any default, breach, violation or
event of acceleration under any Debt Instrument or the related Mortgage;
(p) The Transferor is not required to be registered as an "investment
company" under the Investment Company Act of 1940, as amended.
(q) This Agreement, the Sale and Servicing Agreement and the Custodial
Agreement were each approved by the board of directors or loan committee of
the Seller, which approval is reflected in the minutes of said board or
committee, and will be continuously maintained from the time of its
execution as an official record of the Seller.
Section 3.2 Representations and Warranties Relating to the Loans. The
Transferor represents and warrants to the Depositor as of the Closing Date that,
as to each Loan, immediately prior to the sale and transfer of such Loan by the
Transferor to the Depositor:
(a) The information set forth in the Loan Schedule is complete, true
and correct;
(b) [reserved];
(c) Each Mortgage is a valid first or second lien on a fee simple (or
its equivalent under applicable state law) estate in the real property
securing the amount owed by the Mortgagor under the Debt Instrument subject
only to (i) the lien of current real property taxes and assessments which
are not delinquent, (ii) any related first mortgage loan, (iii) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage, such exceptions
appearing of record being acceptable to mortgage lending institutions
generally in the area wherein the property subject to the Mortgage is
located and specifically referred to in the title insurance policy
delivered to the originator of the Loan and referred to or otherwise
considered in the appraisal obtained in connection with the origination of
the related Loan obtained by the Transferor and (iv) 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 such Mortgage or
the use, enjoyment, value or marketability of the related Mortgaged
Property;
(d) Immediately prior to the sale of the Loan to the Depositor (i) the
Transferor was the sole owner and holder of each Loan, (ii) each Loan was
not otherwise assigned or pledged, (iii) the Transferor had good,
indefeasible and marketable title thereto, (iv) the Transferor had full
right to transfer and sell the Loan therein to the Depositor hereunder free
and clear of any encumbrance, equity interest, participation interest,
lien, pledge, charge, claim or security interest, and (v) the Transferor
had full right and authority subject to no interest or participation of, or
agreement with, any other party, to sell and assign each Loan to the
Depositor hereunder and following the sale of each Loan by the Depositor,
the Depositor will own such Loan free and clear of any encumbrance, equity
interest, participation interest, lien, pledge, charge, claim or security
interest;
(e) As of the Cut-Off Date, no payment of principal or interest on or
in respect of any Loan remains unpaid for 30 or more days past the date the
same was due in accordance with the related Debt Instrument without regard
to applicable grace periods;
14
(f) No Fixed Rate Loan has a Loan Interest Rate less than 8.00% per
annum and the weighted average interest rate of the Fixed Rate Loans as of
the Cut-Off Date was 13.385% and no Adjustable Rate Loan has a Loan
Interest Rate less than 8.625% per annum and the weighted average interest
rate of the Adjustable Rate Loans as of the Cut-Off Date was 11.00%;
(g) At origination, no Loan had an original term to maturity of
greater than ____ months;
(h) As of the Cut-Off Date, the weighted average maturity of the Loans
was ____ months;
(i) There is no mechanics' or similar lien or claim for work, labor or
material (and no rights are outstanding that under law could give rise to
such lien) affecting the premise; subject to any Mortgage which is or may
be a lien prior to, or equal or coordinate with, the lien of such Mortgage,
except those which are insured against by the title insurance policy
referred to in (af) below;
(j) There is no delinquent tax or assessment lien against any
Mortgaged Property;
(k) Such Loan, the Mortgage, and the Debt Instrument, including,
without limitation, the obligation of the Mortgagor to pay the unpaid
principal of and interest on the Debt Instrument, are each not subject to
any right of rescission (or any such rescission right has expired in
accordance with applicable law), setoff, counterclaim, or defense,
including the defense of usury, nor will the operation of any of the terms
of the Debt Instrument or the Mortgage, or the exercise of any right
thereunder, render either the Debt Instrument or the Mortgage
unenforceable, in whole or in part, or subject to any right of rescission,
setoff, counterclaim, or defense, including the defense of usury, and no
such right of rescission, setoff, counterclaim, or defense has been
asserted with respect thereto;
(l) The Mortgaged Property is free of material damage and is in good
repair, and there is no pending or threatened proceeding for the total or
partial condemnation of the Mortgaged Property;
(m) The Transferor has not received a notice of default of any first
mortgage loan secured by the Mortgaged Property which has not been cured by
a party other than the Transferor;
(n) Each Debt Instrument and Mortgage are in substantially the forms
previously provided to the Depositor;
(o) No Loan had, at the date of origination, a Combined Loan-to-Value
Ratio in excess of ____%, and the weighted average Combined Loan-to-Value
ratio of all Loans as of the Cut-Off Date was [ ]%;
15
(p) The Loan was not originated in a program in which the amount of
documentation in the underwriting process was limited in comparison to the
originator's normal documentation requirements for similar type loans;
(q) No more than the following percentages of the Loans by Principal
Balance as of the Cut-Off Date were secured by Mortgaged Properties located
in the following states.
16
State Percent of
Principal Balance
---------------- [ ]%
---------------- [ ]%
---------------- [ ]%
---------------- [ ]%
(r) The Loans were not selected by the Transferor for sale to the
Depositor on any basis adverse to the Depositor relative to the portfolio
of similar mortgage loans of the Depositor;
(s) None of the Loans constitutes a lien on leasehold interests;
(t) Each Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of the
security including (A) in the case of a Mortgage designated as a deed of
trust, by trustee's sale and (B) otherwise by judicial foreclosure. To the
best of the Transferor's knowledge, there is no homestead or other
exemption available to the related Mortgagor which would materially
interfere with the right to sell the related Mortgaged Property at a
trustee's sale or the right to foreclose the related Mortgage. The Mortgage
contains customary and enforceable provisions for the acceleration of the
payment of the Principal Balance of such Loan in the event all or any part
of the related Mortgaged Property is sold or otherwise transferred without
the prior written consent of the holder thereof;
(u) Each Loan has been closed and the proceeds of such Loan have been
fully disbursed, including reserves set aside by the Transferor, there is
no requirement for, and the Transferor shall not make any, future advances
thereunder. Any future advances made prior to the Cut-Off Date have been
consolidated with the principal balance secured by the Mortgage, and such
principal balance, as consolidated, bears a single interest rate and single
repayment term reflected on the applicable Loan Schedule. The Principal
Balance as of the Cut-Off Date does not exceed the original principal
amount of such Loan. Any and all requirements as to completion of any
onsite or off site improvements and as to disbursements of any escrow funds
therefor have been complied with. All costs, fees, and expenses incurred in
making, or recording such Loan have been paid and the related Mortgagor is
not entitled to any refund of any amounts paid or due under the related
Debt Instrument or Mortgage;
(v) All Loans were originated in compliance with the Seller's
Underwriting Guidelines and the Seller's Underwriting Guidelines conform in
all material respects to the description thereof set forth in the
Prospectus Supplement;
(w) The terms of the Mortgage and Debt Instrument have not been
impaired, waived, altered, or modified in any respect, except by a written
instrument which has been recorded, if necessary, to protect the interest
of the Depositor and which has been delivered to the Depositor. The
substance of any such alteration or modification is reflected on the Loan
Schedule and, to the extent necessary, has been approved by (i) the insurer
under the applicable mortgage title insurance policy, and (ii) the insurer
under any other insurance policy required
17
hereunder for such Loan where such insurance policy requires approval and
the failure to procure approval would impair coverage under such policy;
(x) No instrument of release, satisfaction, subordination, rescission,
waiver, alteration, or modification has been executed in connection with
such Loan, no Loan has been satisfied, canceled, subordinated or rescinded,
in whole or in part, and no Loan has been released, in whole or in part,
except in connection with an assumption agreement which has been approved
by the insurer under any insurance policy required hereunder for such Loan
where such policy requires approval and the failure to procure approval
would impair coverage under such policy, and which is part of the Loan File
and has been delivered to the Depositor, and the terms of which are
reflected in the applicable Loan Schedule;
(y) There is no default, breach, violation, or event of acceleration
existing under the Mortgage or the Debt Instrument and no event which, with
the passage of time or with notice and the expiration of any grace or cure
period, would constitute such a default, breach, violation or event of
acceleration, and the Transferor has not waived any such default, breach,
violation or event of acceleration. All taxes, governmental assessments
(including assessments payable in future installments), insurance premiums,
water, sewer, and municipal charges, leaseholder payments, or ground rents
which previously became due and owing in respect of or affecting the
related Mortgaged Property have been paid. The Transferor has not advanced
funds, or induced, solicited, or knowingly received any advance of funds by
a party other than the Mortgagor, directly or indirectly, for the payment
of any amount required by the Mortgage or the Debt Instrument;
(z) All of the improvements which were included for the purposes of
determining the Appraised Value of the Mortgaged Property were completed at
the time that such Loan was originated and lie wholly within the boundaries
and building restriction lines of such Mortgaged Property. No improvements
on adjoining properties encroach upon the Mortgaged Property. No
improvement located on or being part of the Mortgaged Property is in
violation of any applicable zoning law or regulation. All inspections,
licenses, and certificates required to be made or issued with respect to
all occupied portions of the Mortgaged Property (including all such
improvements which were included for the purpose of determining such
Appraised Value) and, with respect to the use and occupancy of the same,
including but not limited to certificates of occupancy and fire
underwriters certificates, have been made or obtained from the appropriate
authorities and the Mortgaged Property is lawfully occupied under
applicable law;
(aa) There do not exist any circumstances or conditions with respect
to the Mortgage, the Mortgaged Property, the Mortgagor, or the Mortgagor's
credit standing that can be reasonably expected to cause such Loan to
become delinquent or adversely affect the value or marketability of such
Loan, other than any such circumstances or conditions permitted under the
Seller's Underwriting Guidelines;
(bb) All parties which have had any interest in the Mortgage, whether
as mortgagee, assignee, pledgee or otherwise, are (or, during the period in
which they held and disposed of such interest, were) (i) in compliance with
any and all applicable licensing requirements of the laws of the state
wherein the Mortgaged Property is located and (ii) (A)
18
organized under the laws of such state, (B) qualified to do business in
such state, (C) federal savings and loan associations or national banks,
(D) not doing business in such state, or (E) not required to qualify to do
business in such state;
(cc) The Debt Instrument, the Mortgage and every other agreement, if
any, executed by the applicable Mortgagor in connection with such Loan, are
genuine, and each is the legal, valid and binding obligation of the maker
thereof, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, or other similar laws affecting the enforcement of creditors'
rights generally and except that the equitable remedy of specific
performance and other equitable remedies are subject to the discretion of
the courts. All parties to the Debt Instrument, the Mortgage and every
other such agreement had legal capacity to execute the Debt Instrument, the
Mortgage and every other such agreement and convey the estate therein
purported to be conveyed, and the Debt Instrument, the Mortgage and every
other such agreement have been duly and properly executed by such parties
or pursuant to a valid power-of-attorney that has been recorded with the
Mortgage;
(dd) The transfer of the Debt Instrument and the Mortgage as and in
the manner contemplated by this Agreement is sufficient either (i) fully to
transfer to the Depositor all right, title, and interest of the Transferor
thereto as note holder and mortgagee or (ii) to grant to the Depositor the
security interest referred to in Section 6.7 hereof. The Mortgage has been
duly assigned and the Debt Instrument has been duly endorsed. The
assignment of Mortgage delivered to the Depositor pursuant to Section
2.1(a) is in recordable form and is acceptable for recording under the laws
of the applicable jurisdiction. The endorsement of the Debt Instrument, the
delivery to the Depositor of the endorsed Debt Instrument, and such
assignment of Mortgage, and the delivery of such assignment of Mortgage for
recording to, and the due recording of such assignment of Mortgage in, the
appropriate public recording office in the jurisdiction in which the
Mortgaged Property is located are sufficient to permit the Depositor to
avail itself of all protection available under applicable law against the
claims of any present or future creditors of the Transferor, and are
sufficient to prevent any other sale, transfer, assignment, pledge, or
hypothecation of the Debt Instrument and Mortgage by the Seller from being
enforceable;
(ee) Any and all requirements of any federal, state, or local law
including, without limitation, usury, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit
opportunity, or disclosure laws applicable to such Loan have been complied
with, and the Seller shall maintain in its possession, available for the
Depositor's inspection, and shall deliver to the Depositor or its designee
upon demand, evidence of compliance with all such requirements. The
consummation of the transactions contemplated by this Agreement will not
cause the violation of any such laws;
(ff) On the Closing Date, [ ]% or more (by aggregate Principal
Balance) of the Loans do not constitute "real estate mortgages" for the
purpose of Treasury Regulation ss.301.7701 under the Code. For this purpose
a Loan does not constitute a "real estate mortgage" if:
(i) The Loan is not secured by an interest in real property, and
19
(ii) The Loan is not an "obligation principally secured by an
interest in real property." For this purpose an " obligation is
principally secured by an interest in real property" if it satisfies
either the test set out in paragraph (1) or paragraph (2) below.
(1) The 80percent test. An obligation is principally secured by
an interest in real property if the fair market value of the interest
in real property securing the obligation
(A) was at least equal to 80 percent of the adjusted issue
price of the obligation at the time the obligation was originated
(or, if later, the time the obligation was significantly
modified); or
(B) is at least equal to 80 percent of the adjusted issue
price of the obligation on the Closing Date.
For purposes of this paragraph (1), the fair market value of the real
property interest must be first reduced by the amount of any lien on the
real property interest that is senior to the obligation being tested, and
must be further reduced by a proportionate amount of any lien that is in
parity with the obligation being tested, in each case before the
percentages set forth in (1)(A) and (1)(B) are determined. The adjusted
issue price of an obligation is its issue price plus the amount of accrued
original issue discount, if any, as of the date of determination.
(2) Alternative test. An obligation is principally secured by an
interest in real property if substantially all of the proceeds of the
obligation were used to acquire or to improve or protect an interest in
real property that, at the origination date, is the only security for the
obligation. For purposes of this test, loan guarantees made by the United
States or any state (or any political subdivision, agency, or
instrumentality of the United States or of any state), or other third party
credit enhancement are not viewed as additional security for a loan. An
obligation is not considered to be secured by property other than real
property solely because the obligor is personally liable on the obligation.
For this purpose only, substantially all of the proceeds of the obligations
means 66% or more of the gross proceeds.
20
(gg) Such Loan, if a first lien, is covered by an ALTA mortgage title
insurance policy or such other generally used and acceptable form of policy
and such Loan, if a second lien, is covered by a PERT policy, issued by and
the valid and binding obligation of a title insurer qualified to do
business in the jurisdiction where the Mortgaged Property is located,
insuring the Transferor, and its successors and assigns, as to the first
priority lien, of the Mortgage in the original principal amount of such
Loan. The assignment to the Depositor of the Transferor's interest in such
mortgage title insurance policy does not require the consent of or
notification to the insurer. Such mortgage title insurance policy is in
full force and effect and will be in full force and effect and inure to the
benefit of the Depositor upon the consummation of the transactions
contemplated by this Agreement. No claims have been made under such
mortgage title insurance policy and neither the Transferor nor any prior
holder of the Mortgage has done, by act or omission, anything which would
impair the coverage of such mortgage title insurance policy;
(hh) All improvements upon the Mortgaged Property are insured against
loss by fire, hazards of extended coverage, and such other hazards as are
customary in the area where the Mortgaged Property is located pursuant to
insurance policies conforming to the requirements of Section 4.8 of the
Sale and Servicing Agreement. If the Mortgaged Property at origination was
located in an area identified on a flood hazard boundary 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), such Mortgaged Property was covered by flood insurance at
origination. Each individual insurance policy is the valid and binding
obligation of the insurer, is in full force and effect, and will be in full
force and effect and inure to the benefit of the Indenture Trustee upon the
consummation of the transactions contemplated by this Agreement, and
contain a standard mortgagee clause naming the originator of such Loan, and
its successors and assigns, as mortgagee and loss payee. All premiums
thereon have been paid. The Mortgage obligates the Mortgagor to maintain
all such insurance at the Mortgagor's cost and expense, and upon the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to
obtain and maintain such insurance at the Mortgagor's cost and expense and
to seek reimbursement therefor from the Mortgagor, and neither the
Transferor nor any prior holder of the Mortgage has acted or failed to act
so as to impair the coverage of any such insurance policy or the validity,
binding effect, and enforceability thereof;
(ii) If the Mortgage constitutes a deed of trust, a trustee,
authorized and duly qualified under applicable law to serve as such, has
been properly designated and currently so serves and is named in such
Mortgage, and no fees or expenses are or will become payable by the
Depositor or its assignees to the trustee under the deed of trust, except
in connection with a trustee's sale after default by the Mortgagor;
(jj) The Mortgaged Property consists of one or more parcels of real
property separately assessed for tax purposes. Each Mortgaged Property is
improved by a one-to-four-family residential dwelling, which does not
include (i) a unit in a cooperative apartment, (ii) a property constituting
part of a syndication, (iii) a time share unit, (iv) a property held in
trust, (v) a mobile home, (vi) a manufactured dwelling, (vii) a
log-constructed home, or (viii) a recreational vehicle, and each such
Mortgaged Property does not constitute other than real property under
applicable state law;
21
(kk) There exist no material deficiencies with respect to escrow
deposits and payments, if such are required, for which customary
arrangements for repayment thereof have not been made or which the
Transferor expects not to be cured, and no escrow deposits or payments of
other charges or payments due the Transferor have been capitalized under
the Mortgage or the Debt Instrument;
(ll) Such Loan was not originated at a below market interest rate.
Such Loan does not have a shared appreciation feature, or other contingent
interest feature;
(mm) The origination and collection practices used by the Transferor
with respect to such Loan have been in all respects legal, proper, prudent,
and customary in the mortgage origination and servicing business;
(nn) The Mortgagor has, to the extent required by applicable law,
executed a statement to the effect that the Mortgagor has received all
disclosure materials, if any, required by applicable law with respect to
the making of mortgage loans. The Servicer shall maintain or cause to be
maintained such statement in the Loan File;
(oo) All amounts received by the Transferor with respect to such Loan
after the Cut-Off Date and required to be deposited in the Certificate
Distribution Account or Collection Account have been so deposited in the
Certificate Distribution Account or Collection Account and are, as of the
Closing Date in the Certificate Distribution Account or Collection Account;
(pp) Any appraisal report with respect to a Mortgaged Property
contained in the Loan File was signed prior to the approval of the
application for such Loan by a qualified appraiser, duly appointed by the
originator of such Loan, who had no interest, direct or indirect, in the
Mortgaged Property or in any loan made on the security thereof and whose
compensation is not affected by the approval or disapproval of such
application;
(qq) When measured by the Cut-Off Date Principal Balances as of the
Cut-Off Date, the Mortgagors with respect to at least 99.00% of the Loans
represented at the time of origination that the Mortgagor would occupy the
Mortgaged Property as the Mortgagor's primary residence;
(rr) Each Debt Instrument is payable on the _____ day of each month.
The Loan Interest Rate and Monthly Payment with respect to the Adjustable
Rate Loans are adjusted in accordance with the terms of the related Debt
Instrument. All required notices of interest rate and payment amount
adjustments have been sent to the Mortgagor on a timely basis and the
computations of such adjustments were properly calculated. Installments of
interest on the Adjustable Rate Loans are subject to change due to the
adjustments to the Loan Interest Rate on each Interest Adjustment Date,
with interest calculated and payable in arrears, sufficient to amortize the
Loan fully by the stated maturity date over an original term of no more
than 30 years from the closing date of the Loan. All Loan Interest Rate
adjustments have been made in strict compliance with state and federal law
and the terms of the related Debt Instrument. Any interest required to be
paid pursuant to state and local law has been properly paid and credited.
As of the Cut-Off Date, for each Adjustable Rate Loan, the Lifetime Cap is
not lower than approximately ____% per annum, the Lifetime Floor is not
lower than
22
approximately ____% per annum, the Gross Margin is not less than
approximately ____%, the related Debt Instrument does not provide for
negative amortization, limits in the amount of monthly payments or a
conversion feature, the Loan Interest Rate is subject to adjustment on each
Interest Adjustment Date to equal the sum of the Index, plus the applicable
Gross Margin, subject to rounding, the Periodic Rate Cap, the applicable
Lifetime Floor and the applicable Lifetime Cap on each Interest Adjustment
Date;
(ss) To the best of the Transferor's knowledge, there exists no
violation of any local, state, or federal environmental law, rule or
regulation in respect of the Mortgaged Property which violation has or
could have a material adverse effect on the market value of such Mortgaged
Property. The Transferor has no knowledge of any pending action or
proceeding directly involving the related Mortgaged Property in which
compliance with any environmental law, rule or regulation is in issue; and,
to the best of the Transferor's knowledge, nothing further remains to be
done to satisfy in full all requirements of each such law, rule or
regulation constituting a prerequisite to the use and employment of such
Mortgaged Property;
(tt) With respect to second lien Loans:
(i) the Transferor has no knowledge that the Mortgagor has
received notice from the holder of the prior mortgage that such prior
mortgage is in default;
(ii) no consent from the holder of the prior mortgage is needed
for the creation of the second lien Mortgage or, if required, has been
obtained and is in the related Loan File;
(iii) if the prior mortgage has a negative amortization, the
Combined Loan-to-Value Ratio was determined using the maximum loan
amount of such prior mortgage;
(iv) the related first mortgage loan encumbering the related
Mortgaged Property does not have a mandatory future advance provision;
(v) except with respect to ____% of the second Loans which are
Balloon Loans, the related prior loan requires equal monthly payments;
and
(vi) the maturity date of the Loan is prior to the maturity date
of the related prior lien if such provides for a balloon payment; (uu)
Each Loan conforms, and all such Loans in the aggregate conform, to
the individual and aggregate descriptions thereof in the Prospectus
Supplement;
(uu) Each Loan conforms, and all such Loans in the aggregate conform,
to the individual and aggregate descriptions thereof in the Prospectus
Supplement.
(vv) [reserved];
(ww) To the best of the Transferor's knowledge, no error, omission,
misrepresentation, negligence, fraud or similar occurrence with respect to
a Loan has taken place on the part of any person, including without
limitation the Mortgagor, any appraiser, a builder or
23
developer, or any other party involved in the origination of the Loan or in
the application of any insurance in relation to such Loan;
(xx) Each Debt Instrument held by the Depositor is the sole original
Debt Instrument and no copies exist which are not stamped duplicate;
(yy) Each Mortgage was recorded, and all subsequent assignments of the
original Mortgage have been recorded in the appropriate jurisdictions
wherein such recordation is necessary to perfect the lien thereof as
against creditors of the Transferor;
(zz) No more than ____% of the Fixed Rate Loans, and ____% of the
Adjustable Rate Loans are secured by properties sharing a single zip code;
(aaa) Except with respect to ____% of the Loans which are balloon
loans, with respect to each Loan, the payments required of the related
Mortgagor are and will be such that the Loan will fully amortize over its
term;
(bbb) No Loan contains any provisions pursuant to which payments are
paid or partially paid with funds deposited in any separate account
established by the Transferor, the Mortgagor or anyone else on behalf of
the Mortgagor, or paid by any source other than the Mortgagor. No Loan
contains any other similar provision which may constitute a "buydown"
provision. No Loan is a graduated payment mortgage loan. No Loan has a
shared appreciation or other contingent interest feature;
(ccc) The Loans are not being transferred with any intent to hinder,
delay or defraud any creditor;
(ddd) No Mortgagor has or will have a claim or defense under any
express or implied warranty or otherwise with respect to goods or services
provided under such Loan;
(eee) The Mortgage and the Debt Instrument contain the entire
agreement of the parties and all obligations of the seller or subcontractor
under the related Loan, no other agreement defines, modifies, or expands
the obligations of the seller or subcontractor under the Loan.
Section 3.3 Representations and Warranties of the Depositor. The Depositor
hereby represents, warrants and covenants to the Transferor, as of the date of
execution of this Agreement and the Closing Date, that:
(a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of North Carolina and has
all licenses necessary to carry on its business as now being conducted and
is licensed, qualified and in good standing in each state where a Mortgaged
Property is located if the laws of such state require licensing or
qualification in order for the Depositor to conduct such business and to
perform its obligations as the Depositor hereunder, and in any event the
Depositor is in compliance with the laws of any such state to the extent
necessary to ensure the enforceability of the related Loans, and had at all
relevant times, full corporate power to originate or purchase the Loans, to
own its property, to
24
carry on its business as presently conducted and to enter into and perform
its obligations under this Agreement;
(b) The execution and delivery of this Agreement by the Depositor and
its performance of and compliance with the terms of this Agreement will not
violate the Depositor's articles of incorporation or bylaws or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach or acceleration of,
any material contract, agreement or other instrument to which the Depositor
is a party or which may be applicable to the Depositor or any of its
assets;
(c) The Depositor has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement to be
consummated by it, has duly authorized the execution, delivery and
performance of this Agreement, and has duly executed and delivered this
Agreement. This Agreement, assuming due authorization, execution and
delivery by the Transferor, constitutes a valid, legal and binding
obligation of the Depositor, enforceable against it in accordance with the
terms hereof, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, receivership, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in
a proceeding in equity or at law);
(d) The Depositor is not in violation of, and the execution and
delivery of this Agreement by the Depositor 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, which violation would materially and adversely affect the
condition (financial or otherwise) or operations of the Depositor or its
properties or materially and adversely affect the performance of its duties
hereunder;
(e) There is no action, suit, proceeding or investigation pending or,
to the knowledge of the Depositor, threatened, before any court,
administrative agency or governmental tribunal against the Depositor which,
either in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition, properties
or assets of the Depositor, or in any material impairment of the right or
ability of the Depositor to carry on its business substantially as now
conducted, or in any material liability on the part of the Depositor, or
which would draw into question the validity of this Agreement, the Loans,
or of any action taken or to be taken in connection with the obligations of
the Depositor contemplated herein, or which would impair materially the
ability of the Depositor to perform under the terms of this Agreement or
that might prohibit its entering into this Agreement or the consummation of
any of the transactions contemplated hereby;
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Depositor of, or compliance by the Depositor with, this
Agreement, or for the consummation of the transactions contemplated by this
Agreement, except for such consents, approvals, authorizations and orders,
if any, that have been obtained prior to the Closing Date;
25
(g) The Depositor acquired title to the Loans in good faith, without
notice of any adverse claim;
(h) The collection practices used by the Depositor with respect to the
Loans have been, in all material respects, legal, proper, prudent and
customary in the nonconforming mortgage servicing business;
(i) No Officers' Certificate, statement, report or other document
prepared by the Depositor and furnished or to be furnished by it 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;
(j) The Depositor is duly licensed where required as a "Licensee" or
is otherwise qualified in each state in which it transacts business and is
not in default of such state's applicable laws, rules and regulations,
except where the failure to so qualify or such default would not have a
material adverse effect on the ability of the Depositor to conduct its
business or perform its obligations hereunder;
(k) The Depositor 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;
(l) This Agreement contains no untrue statement or alleged untrue
statement of a material fact or omits to state any material fact necessary
to make the statements contained herein or therein, in light of the
circumstances under which they will be made, not misleading;
(m) The Depositor is not required to be registered as an "investment
company" under the Investment Company Act of 1940, as amended; and
(n) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Depositor.
Section 3.4 Purchase and Substitution.
(a) It is understood and agreed that the representations and
warranties set forth in Article III, shall survive the conveyance of the
Loans to the Depositor. Upon discovery by the Depositor or any of its
assignees of a breach of any of such representations and warranties which
materially and adversely affects the value of the Loans or the interest of
the Securityholders, or which materially and adversely affects the
interests of the Securityholders in the related Loan in the case of a
representation and warranty relating to a particular Loan (notwithstanding
that such representation and warranty was made to the Transferor's best
knowledge), the party discovering such breach shall give prompt written
notice to the others. The Transferor shall within 60 days of the earlier of
its discovery or its receipt of notice of any breach of a representation or
warranty, promptly cure such breach in all material respects. If, however,
within 60 days after the earlier of the Transferor's discovery of such
breach or the Transferor's receiving notice thereof such breach has not
been remedied by either the Transferor and such breach materially and
adversely affects the interests of the Securityholders or in the
26
related Loan (the "Defective Loan"), the Transferor shall on or before the
Determination Date next succeeding the end of such 60day period either (i)
remove such Defective Loan from the Issuer (in which case it shall become a
"Deleted Loan") and substitute one or more Qualified Substitute Loans in
the manner and subject to the conditions set forth in this Section 3.4 or
(ii) purchase such Defective Loan at a purchase price equal to the Purchase
Price by depositing such Purchase Price in the Collection Account. The
Transferor shall provide the Depositor with a certification of a
Responsible Officer on the Determination Date next succeeding the end of
such 60day period indicating whether the Purchaser is purchasing the
Defective Loan or substituting in lieu of such Defective Loan a Qualified
Substitute Loan.
Any substitution of Loans pursuant to this Section 3.4(a) and Section
2.5(b) shall be accompanied by payment by the Transferor of the Substitution
Adjustment, if any, to be deposited in the Collection Account. For purposes of
calculating the Available Collection Amount for any Distribution Date, amounts
paid by the Purchaser or [ ] pursuant to this Section 3.4 in connection with the
repurchase or substitution of any Defective Loan that are on deposit in the
Collection Account as of the Determination Date for such Distribution Date shall
be deemed to have been paid during the related Due Period and shall be
transferred to the Note Distribution Account as part of the Available Collection
Amount to be retained therein or transferred to the Certificate Distribution
Account, if applicable, pursuant to Section 5.1(c) of the Sale and Servicing
Agreement.
As to any Deleted Loan for which the Transferor substitutes a Qualified
Substitute Loan or Loans, the Transferor shall effect such substitution by
delivering to the Depositor (i) a certification executed by a Responsible
Officer of the Transferor to the effect that the Substitution Adjustment has
been credited to the Collection Account and (ii) the documents constituting the
Indenture Trustee's Loan File for such Qualified Substitute Loan or Loans.
27
(b) The Transferor shall cause the Seller to deposit in the Collection
Account all payments received in connection with such Qualified Substitute
Loan or Loans after the date of such substitution. Monthly Payments
received with respect to Qualified Substitute Loans on or before the date
of substitution will be retained by the Transferor. The Depositor will be
entitled to all payments received on the Defective Loan on or before the
date of substitution, and the Transferor, as the case may be, shall
thereafter be entitled to retain all amounts subsequently received in
respect of such Deleted Loan. The Transferor shall give written notice to
the Depositor that such substitution has taken place and the Servicer shall
amend the Loan Schedule to reflect (i) the removal of such Defective Loan
from the terms of this Agreement and (ii) the substitution of the Qualified
Substitute Loan. The Transferor shall promptly deliver to the Depositor, a
copy of the amended Loan Schedule. Upon such substitution, such Qualified
Substitute Loan or Loans shall be subject to the terms of this Agreement in
all respects, and the Transferor shall be deemed to have made with respect
to such Qualified Substitute Loan or Loans, as of the date of substitution,
the covenants, representations and warranties set forth in Section 3.1. On
the date of such substitution, the Transferor, will deposit into the
Collection Account an amount equal to the related Substitution Adjustment,
if any. In addition, on the date of such substitution, the Depositor and
its assigns shall cause the Indenture Trustee to release the Deleted Loan
from the lien of the Indenture and the Issuer will cause such Qualified
Substitute Loan to be pledged to the [Indenture Trustee] under the
Indenture as part of the Trust Estate.
(c) It is understood and agreed that the obligations of the Transferor
set forth in this Section 3.5 to cure, purchase or substitute for a
Defective Loan constitute the sole remedies of the Depositor and its
assigns hereunder respecting a breach of the representations and warranties
contained in Section 3.1. Any cause of action against the Transferor
relating to or arising out of a defect in a Indenture Trustee's Loan File
as contemplated by Section 2.6 or against the Transferor relating to or
arising out of a breach of any representations and warranties made in
Section 3.1 shall accrue as to any Loan upon (i) discovery of such defect
or breach by any party and notice thereof to the Transferor or notice
thereof by the Transferor to the Depositor or its assigns, (ii) failure by
the Transferor or the Seller to cure such defect or breach or purchase or
substitute such Loan as specified above, and (iii) demand upon the
Transferor, as applicable, by the Depositor or its assigns for all amounts
payable in respect of such Loan.
(d) None of the Depositor or its assigns shall have any duty to
conduct any affirmative investigation other than as specifically set forth
in this Agreement as to the occurrence of any condition requiring the
repurchase or substitution of any Loan pursuant to this Section or the
eligibility of any Loan for purposes of this Agreement.
(e) With respect to all Defective Loans or other Loans repurchased by
the Transferor pursuant to this Agreement, upon the deposit of the Purchase
Price therefor in the Note Distribution Account, the Depositor or its
assigns shall assign to the Transferor, as the case may be, without
recourse, representation or warranty, all its title and interest in and to
such Defective Loans or Loans, which right, title and interest were
conveyed to the Depositor pursuant to Section 2.3.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
28
ARTICLE IV
THE TRANSFEROR
Section 4.1 Covenants of the Transferor. The Transferor covenants to the
Depositor as follows:
(a) The Transferor shall cooperate with the Depositor in making
available all information and taking all steps reasonably necessary to
permit accountants' letters to be delivered as necessary.
(b) The Transferor agrees to satisfy or cause to be satisfied on or
prior to the Closing Date, all of the conditions to the Depositor's
obligations set forth in Section 5.1 hereof that are within the
Transferor's (or its agents') control.
(c) The Transferor hereby agrees to do all acts, transactions, and
things and to execute and deliver all agreements, documents, instruments,
and papers by and on behalf of the Transferor as the Depositor or its
counsel may reasonably request in order to consummate the transfer of the
Loans to the Depositor and the subsequent transfer thereof to the
Depositor.
Section 4.2 Merger or Consolidation. The Transferor will keep in full
effect its existence, rights and franchises as a [ ] corporation and will obtain
and preserve its qualification to do business as a foreign corporation, in each
jurisdiction necessary to protect the validity and enforceability of this
Agreement or any of the Loans and to perform its duties under this Agreement.
Section 4.3 Indemnification. (a) The Transferor agrees to indemnify and to
hold the Depositor harmless against any and all claims, losses, penalties,
fines, forfeitures, legal fees and related costs, judgments, and any other
costs, fees and expenses that the Depositor may sustain in any way related to
the failure of the Transferor to perform its duties in compliance with the terms
of this Agreement. The Depositor shall immediately notify the Transferor if a
claim is made by a third party with respect to this Agreement, and the
Transferor shall have the right to assume the defense of any such claim and will
pay or cause to be paid all expenses in connection therewith, including
reasonable counsel fees, and will promptly cause to be paid, discharged and
satisfied, any judgment or decree which may be entered against the Transferor or
the Depositor in respect of such claim. Pursuant to the Sale and Servicing
Agreement, the Trustee shall reimburse the Depositor in accordance with the Loan
Purchase Agreement for all amounts advanced by the Depositor in accordance with
the preceding sentence except when the claim relates directly to the failure of
the Transferor to perform its duties in compliance with the terms of this
Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
29
ARTICLE V
CONDITIONS OF CLOSING
Section 5.1 Conditions of Depositor's Obligations. The obligations of the
Depositor to purchase the Loans will be subject to the satisfaction on the
Closing Date and on each Subsequent Transfer Date of the following conditions.
Upon payment of the purchase price for the Loans, such conditions shall be
deemed satisfied or waived.
(a) Each of the obligations of the Transferor required to be performed
by it on or prior to the Closing Date or such Subsequent Transfer Date
pursuant to the terms of this Agreement shall have been duly performed and
complied with and all of the representations and warranties of the
Transferor under this Agreement shall be true and correct as of the Closing
Date or such Subsequent Transfer Date and no event shall have occurred
which, with notice or the passage of time, would constitute a default under
this Agreement.
(b) The Loans will be acceptable to the Depositor, in its sole
discretion.
(c) The Depositor shall have received the Loan Schedule and an
executed receipt acknowledging the delivery of consideration in exchange
for the Loans.
(d) The Transferor shall have furnished the Depositor with such other
certificates of its officers or others and such other documents or opinions
as the Depositor or its counsel may reasonably request.
Section 5.2 Conditions of Transferor's Obligations. The obligations of the
Transferor under this Agreement shall be subject to the satisfaction, on the
Closing Date or such Subsequent Transfer Date and on each Subsequent Transfer
Date, of the following conditions:
(a) Each of the obligations of the Depositor required to be performed
by it at or prior to the Closing Date or such Subsequent Transfer Date
pursuant to the terms of this Agreement shall have been duly performed and
complied with and all of the representations and warranties of the
Depositor contained in this Agreement shall be true and correct as of the
Closing Date or such Subsequent Transfer Date.
(b) The Transferor shall have received an executed receipt
acknowledging delivery of the Loans and the Loan Schedule to the Depositor.
(c) The Depositor shall have furnished the Transferor with such other
certificates of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in this Agreement as the Transferor
may reasonably request.
Section 5.3 Termination of Depositor's Obligations. The Depositor may
terminate its obligations hereunder by notice to the Transferor at any time
before delivery of and payment of the purchase price for the Loans if: (a) any
of the conditions set forth in Section 5.1 are not satisfied when and as
provided therein; (b) there shall have been the entry of a decree or order by a
court or agency or supervisory authority having jurisdiction in the premises for
the appointment of a conservator, receiver or liquidator in any insolvency,
readjustment of debt,
30
marshalling of assets and liabilities or similar proceedings of or relating to
the Transferor, or for the winding up or liquidation of the affairs of the
Transferor; (c) there shall have been the consent by the Transferor to the
appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Transferor or of or relating to substantially
all of the property of the Transferor; (d) any purchase and assumption agreement
with respect to the Transferor or the assets and properties of the Transferor
shall have been entered into; or (e) a Termination Event shall have occurred.
The termination of the Depositor's obligations hereunder shall not terminate the
Depositor's rights hereunder or its right to exercise any remedy available to it
at law or in equity.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
31
ARTICLE VI
MISCELLANEOUS
Section 6.1 Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by overnight mail, certified mail or registered mail,
postage prepaid, to: the address for the Transferor and the Depositor set forth
in Section 12.6 of the Sale and Servicing Agreement. Any such notices shall be
deemed to be effective with respect to any party hereto upon the receipt of such
notice by such party, except that notices to the Securityholders shall be
effective upon mailing or personal delivery.
Section 6.2 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other covenants, agreements, provisions or terms of this
Agreement.
Section 6.3 Agreement of Transferor. The Transferor agrees to execute and
deliver such instruments and take such actions as the Depositor may, from time
to time, reasonably request in order to effectuate the purpose and to carry out
the terms of this Agreement.
Section 6.4 Survival. The parties to this Agreement agree that the
representations, warranties and agreements made by each of them herein and in
any certificate or other instrument delivered pursuant hereto shall be deemed to
be relied upon by the other party hereto, notwithstanding any investigation
heretofore or hereafter made by such other party or on such other party's
behalf, and that the representations, warranties and agreements made by the
parties hereto in this Agreement or in any such certificate or other instrument
shall survive the delivery of and payment for the Loans.
Section 6.5 Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 6.6 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Except as expressly permitted by the terms
hereof, this Agreement may not be assigned, pledged or hypothecated by any party
hereto to a third party without the written consent of the other party to this
Agreement; provided, however, that the Depositor may assign its rights hereunder
without the consent of the Transferor.
Section 6.7 Confirmation of Intent; Grant of Security Interest. It is the
intention of the parties hereto that the conveyance by the Transferor of the
Trust Estate to the Depositor shall constitute a purchase and sale of such Trust
Estate and not a loan. In the event, however, that a court of competent
jurisdiction were to hold that the transaction evidenced hereby constitutes a
loan and not a purchase and sale, it is the intention of the parties hereto that
32
this Agreement shall constitute a security agreement under applicable law, and
that the Transferor shall be deemed to have granted and hereby grants to the
Depositor, a first priority perfected security interest in all of the
Transferor's right, title and interest in, to and under the Trust Estate to
secure a loan in an amount equal to the purchase price of the Loans.
Section 6.8 Miscellaneous. This Agreement supersedes all prior agreements
and understandings relating to the subject matter hereof.
Section 6.9 Amendments. This Agreement may be amended from time to time by
the Transferor and the Depositor by written agreement.
Section 6.10 Third Party Beneficiaries. The Transferor intends that the
Issuer and the Indenture Trustee are third party beneficiaries of each of the
Transferor's representations and warranties and covenants stated herein.
Section 6.11 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE OF NEW
YORK.
Section 6.12 Execution in Counterparts.
This Agreement may be executed in any number of counterparts, each of which
so executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
[SIGNATURES COMMENCE ON FOLLOWING PAGE]
33
IN WITNESS WHEREOF, the parties to this Loan Purchase Agreement have caused
their names to be signed by their respective officers thereunto duly authorized
as of the date first above written.
HOME EQUITY SECURITIZATION CORP., as Depositor
By:___________________________
Name:
Title:
[ ], as Transferor
By:___________________________
Name:
Title:
34
STATE OF [ ]
COUNTY OF [ ]
On ________________,[ ] before me, ______________, a Notary Public in and
for said County and State, personally appeared __________________, personally
known to me or proved to me on the basis of satisfactory evidence to be the
person whose name is subscribed to the within instrument and acknowledged to me
that he executed the same in his authorized capacity, and that by his signature
on the instrument the person, or the entity upon behalf of which the person
acted, executed the instrument.
WITNESS my hand and official seal.
------------------------------
Notary Public
STATE OF [ ]
COUNTY OF [ ]
On _________________,[ ] before me, ______________, a Notary Public in and
for said County and State, personally appeared _______________., personally
known to me or proved to me on the basis of satisfactory evidence to be the
person whose name is subscribed to the within instrument and acknowledged to me
that he executed the same in his authorized capacity, and that by his signature
on the instrument the person, or the entity upon behalf of which the person
acted, executed the instrument.
WITNESS my hand and official seal.
------------------------------
Notary Public
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS .........................................................2
Section 1.1 Definitions. .............................................2
ARTICLE II PURCHASE, SALE AND CONVEYANCE OF LOANS .............................7
Section 2.1 Agreement to Purchase.................................... 7
Section 2.2 Purchase Price. ..........................................7
Section 2.3 Conveyance of Loans; Possession of LoanSchedule...........7
Section 2.4 Delivery of Loan Documents. ..............................7
Section 2.5 Acceptance of Loans. .....................................9
Section 2.6 Transfer of Loans; Assignment of Agreement. .............11
Section 2.7 Books and Records. ......................................11
Section 2.8 Cost of Delivery and Recordation of Documents ...........11
ARTICLE III REPRESENTATIONS AND WARRANTIES ...................................12
Section 3.1 Representations and Warranties as to the Transferor.....12
Section 3.2 Representations and Warranties Relating to the Loans. ...14
Section 3.3 Representations and Warranties of the Depositor..........24
Section 3.4 Purchase and Substitution. ..............................26
ARTICLE IV THE TRANSFEROR ....................................................29
Section 4.1 Covenants of the Transferor. ............................29
Section 4.2 Merger or Consolidation. ................................29
Section 4.3 Indemnification. ........................................29
ARTICLE V CONDITIONS OF CLOSING ..............................................30
Section 5.1 Conditions of Depositor's Obligations. ..................30
Section 5.2 Conditions of Transferor's Obligations. .................30
Section 5.3 Termination of Depositor's Obligations. .................30
i
ARTICLE VI MISCELLANEOUS .....................................................32
Section 6.1 Notices. ................................................32
Section 6.2 Severability of Provisions. .............................32
Section 6.3 Agreement of Transferor. ................................32
Section 6.4 Survival. ...............................................32
Section 6.5 Effect of Headings and Table of Contents. ...............32
Section 6.6 Successors and Assigns. .................................32
Section 6.7 Confirmation of Intent; Grant of Security Interest. .....32
Section 6.8 Miscellaneous. ..........................................33
Section 6.9 Amendments. .............................................33
Section 6.10 Third Party Beneficiaries. .............................33
Section 6.11 GOVERNING LAW; CONSENT TO JURISDICTION;
WAIVER OF JURY TRIAL .................................33
Section 6.12 Execution in Counterparts. .............................33
ii
MORTGAGE LOAN PURCHASE AGREEMENT
HOME EQUITY SECURITIZATION CORP.
DEPOSITOR
and
[-------------------------------]
TRANSFEROR
Dated as of [______________]
