EXHIBIT 99.1
XXXXXXX XXXXX MORTGAGE INVESTORS, INC.
Purchaser
XXXXXXX XXXXX MORTGAGE LENDING, INC.
Seller
SUBSEQUENT MORTGAGE LOAN PURCHASE AGREEMENT
Dated as of October 18, 2006
$69,165,613.32
SPECIALTY UNDERWRITING AND RESIDUAL FINANCE TRUST
Mortgage Loan Asset-Backed Certificates, Series SURF 2006-AB3
Subsequent Mortgage Loan Purchase Agreement (this "Agreement"), dated as
of October 18, 2006, between Xxxxxxx Xxxxx Mortgage Investors, Inc., as
purchaser (the "Purchaser"), and Xxxxxxx Xxxxx Mortgage Lending, Inc., as seller
(the "Seller").
The Seller agrees to sell, and the Purchaser agrees to purchase, certain
mortgage loans listed in Exhibit A hereto (the "Subsequent Mortgage Loans") as
described herein on October 18, 2006 (the "Subsequent Transfer Date"). The
Purchaser, a Delaware corporation, intends to deposit the Subsequent Mortgage
Loans into a trust fund (the "Trust Fund") evidenced by Specialty Underwriting
and Residential Finance Trust, Asset-Backed Certificates, Series 2006-AB3 (the
"Certificates"). The Certificates were issued pursuant to a Pooling and
Servicing Agreement, dated as of September 1, 2006 (the "Cut-Off Date"), among
the Purchaser, Wilshire Credit Corporation, as servicer, and U.S. Bank National
Association, as trustee (the "Pooling and Servicing Agreement").
The Certificates are described more fully in the related prospectus dated
September 8, 2006, as supplemented by the Prospectus Supplement, dated September
22, 2006 (as supplemented, the "Prospectus").
All capitalized terms not otherwise defined herein have the meanings set
forth in the Pooling and Servicing Agreement. The following terms are defined as
follows:
Subsequent Cut-Off Date: October 1, 2006
Subsequent Transfer Date: October 18, 2006
Now, therefore, in consideration of the premises and the mutual agreements
set forth herein, the parties agree as follows:
ARTICLE I
SALE AND CONVEYANCE OF SUBSEQUENT MORTGAGE LOANS
SECTION 1.01. Sale and Conveyance of Mortgage; Possession of Mortgage
File. The Seller does hereby sell, transfer, assign, set over and convey to the
Purchaser, without recourse, all right, title, and interest, other than the
servicing rights, of the Seller in and to $69,165,613.32 of Subsequent Mortgage
Loans and each of the documents and records maintained by the Seller with
respect to the origination or servicing of a particular Subsequent Mortgage Loan
(each, a "Mortgage File") including all principal and interest due on or with
respect to the Subsequent Mortgage Loans after the Subsequent Cut-off Date. All
documents relating to the Subsequent Mortgage Loans not delivered to the
Purchaser are and shall be held in trust by the Seller for the benefit of the
Purchaser as the owner thereof or the Purchaser's assignee or designee and the
Seller's possession of the contents of each such document so retained is at the
will of the Purchaser or the Purchaser's assignee or designee and such retention
and possession by the Seller is in a custodial capacity only. Upon sale of the
Subsequent Mortgage Loans, the ownership of each related Mortgage Note, the
Mortgage and the contents of the related Mortgage File will be vested in the
Purchaser and the ownership of all records and documents with respect to the
related Subsequent Mortgage Loan prepared by or which come into the possession
of the Seller shall immediately vest in the Purchaser and shall be retained and
maintained, in trust, by the Seller at the will of the Purchaser in such
custodial capacity only. The Seller's records will accurately reflect the sale
of each Subsequent Mortgage Loan to the Purchaser. The Seller shall release its
custody of the contents of any Mortgage File only in accordance with written
instructions from the Purchaser or the Purchaser's
assignee or designee, except that where such release is required as incidental
to a repurchase of any such Subsequent Mortgage Loan pursuant to Section 1.04 or
2.02 hereof, such written instructions shall not be required. The ownership of
each Mortgage Note, the Mortgage and the contents of the related Mortgage File
will be vested in the Trustee, as assignee of the Purchaser. The Seller shall
not take any action inconsistent with such ownership and shall not claim any
ownership interest therein. The Seller shall respond to any third party
inquiries with respect to ownership of the Subsequent Mortgage Loans by stating
that such ownership is held by the Trustee and the Certificateholders.
Nothwithstanding any provision herein or otherwise to the contrary, the
assignment, transfer, sale and conveyance shall not include the servicing rights
associated with the Subsequent Mortgage Loans.
SECTION 1.02. Books and Records. From and after the sale of the Subsequent
Mortgage Loans to the Purchaser, record title to each Mortgage and the related
Mortgage Note shall be transferred to the Purchaser or its assignee in
accordance with this Agreement. All rights arising out of the Subsequent
Mortgage Loans, including, but not limited to, all funds received on or in
connection with a Subsequent Mortgage Loan, shall be received and held by the
Seller in trust for the benefit of the Purchaser or its assignee as the owner of
the Subsequent Mortgage Loans. The Seller shall be responsible for maintaining,
and shall maintain, a set of records for each Subsequent Mortgage Loan which
shall be clearly marked to reflect the ownership of each Subsequent Mortgage
Loan by the Purchaser or its assignee pursuant to the Pooling and Servicing
Agreement.
SECTION 1.03. Delivery of Subsequent Mortgage Loan Documents. The Seller
has delivered or caused to be delivered to the Purchaser or its designee in
accordance with the instructions of the Purchaser, each of the documents
referred to in Section 2.01 of the Pooling and Servicing Agreement.
If, in connection with any Subsequent Mortgage Loan, the Seller cannot
deliver the Mortgage with evidence of recording thereon concurrently with the
execution and delivery of this Agreement solely because of a delay caused by the
public recording office where such Mortgage has been delivered for recordation,
the Seller shall deliver or cause to be delivered to the Purchaser or its
designee an Officer's Certificate, with a photocopy of such Mortgage attached
thereto, stating that such Mortgage has been delivered to the appropriate public
recording official for recordation. The Seller shall promptly deliver or cause
to be delivered to the Purchaser or its designee such Mortgage with evidence of
recording indicated thereon upon receipt thereof from the public recording
official. Notwithstanding the above, the Seller shall co-operate with the
Servicer and use its best efforts to cause each original Mortgage with evidence
of recording thereon to be delivered to the Purchaser or its designee upon
receipt thereof from the public recording office.
SECTION 1.04. Review of Subsequent Mortgage Loans; Repurchase of
Subsequent Mortgage Loans. The Trustee, or its designee shall review the
documents delivered pursuant to Section 1.03 or Section 2.03 hereof in the
manner and timeframe set forth in the Pooling and Servicing Agreement to
ascertain that all required documents have been executed and received and that
such documents relate to the mortgage loans identified on the Subsequent
Mortgage Loan Schedule. If the Trustee discovers that any document or documents
constituting a part of a Mortgage File is missing or defective in any material
respect, the Trustee shall promptly notify the Seller. The Seller shall, in the
manner and timeframe set forth in the Pooling and Servicing Agreement correct or
cure any such omission or defect, substitute for the related Subsequent Mortgage
Loan or repurchase the related Subsequent Mortgage Loan. In the case of Seller's
repurchase of a Mortgage Loan in accordance with the terms of the Pooling and
Servicing Agreement, the Trustee shall, release documents in its possession
relating to such Subsequent Mortgage Loan to the Seller.
2
SECTION 1.05. Treatment as a Security Agreement. The Seller, concurrently
with the execution and delivery hereof, has conveyed to the Purchaser all of the
Seller's right, title and interest, other than the servicing rights, in and to
the Subsequent Mortgage Loans. The parties intend that the conveyance of the
Seller's right, title and interest, in and to the Subsequent Mortgage Loans
pursuant to this Agreement shall constitute a purchase and sale and not a loan.
If such conveyance is deemed to be a pledge and not a sale, then the parties
also intend and agree that the Seller shall be deemed to have granted, and in
such event does hereby grant, to the Purchaser a first priority security
interest in all of the Seller's right, title and interest, other than the
servicing rights, in and to the Subsequent Mortgage Loans, all payments of
principal or interest on such Subsequent Mortgage Loans, all other payments made
in respect of such Subsequent Mortgage Loans, and all proceeds if any thereof,
and that this Agreement shall constitute a security agreement under applicable
law. If such conveyance is deemed to be a pledge and not a sale, the Purchaser
may, to secure the Purchaser's own borrowings, repledge (i) all or any portion
of the Subsequent Mortgage Loans pledged to the Purchaser and not released from
the security interest of this Agreement at the time of such pledge and (ii) all
proceeds, products and profits derived from such Subsequent Mortgage Loans,
including, without limitation, to the extent of the Seller's interest therein,
all moneys, goods, insurance proceeds and other tangible or intangible property
received upon the liquidation or sale thereof or otherwise relating thereto.
Such a repledge may be made by the Purchaser with or without a repledge by the
Purchaser of its rights under this Agreement and without further notice to or
acknowledgment from the Seller. The Seller waives, to the extent permitted by
applicable law, all claims, causes of action and remedies whether legal or
equitable (including any right of set-off) against the Purchaser or any assignee
of the Purchaser relating to such action by the Purchaser.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Representations and Warranties of the Seller. The Seller
represents and warrants to the Purchaser that, as of the Subsequent Transfer
Date, it has made the representations and warranties set forth in Section 1.04
of the Sale Agreement for the benefit of the Purchaser. Such representations and
warranties are incorporated by reference in this Section 2.01, and the Purchaser
may rely thereon as if such representations and warranties were fully set forth
herein; provided, however, the reference to Cut-off Date in Section
1.04(b)(xxiii) of the Sale Agreement shall be deemed to refer to the Subsequent
Cut-off Date when incorporated into this Section 2.01.
It is understood and agreed that the representations and warranties
incorporated by reference in this Section 2.01 shall survive the sale of the
Subsequent Mortgage Loans to the Purchaser and the sale and delivery of the
Subsequent Mortgage Loans to the Trust Fund, and shall continue so long as any
Class A, Class M or Class B Certificate shall remain outstanding or until the
Pooling and Servicing Agreement shall have been terminated as therein provided,
and shall inure to the benefit of the Purchaser, notwithstanding any restrictive
or qualified endorsement on any Mortgage Note or Assignment of Mortgage or the
examination of any Mortgage File.
The Seller acknowledges that, pursuant to the Pooling and Servicing
Agreement, the Purchaser will assign all of its right, title and interest in and
to the Subsequent Mortgage Loans and its right to exercise the remedies created
by Sections 1.04 and 2.02 hereof to the Trustee for the benefit of the
Certificateholders. The Seller agrees that, upon such assignment to the Trustee,
the Trustee, or the Securities Administrator as its designee, may enforce
directly, without joinder of the Purchaser, the repurchase obligations of the
Seller set forth in Sections 1.04 and 2.02 hereof with respect to breaches of
the representations and warranties set forth in Section 2.03 of the Pooling and
Servicing Agreement, or
3
with respect to documentary defects or omissions set forth in Section 2.02 of
the Pooling and Servicing Agreement.
SECTION 2.02. Breach of Representations and Warranties; Repurchase of
Subsequent Mortgage Loans. Upon discovery by the Seller, the Purchaser or the
Trustee of a breach of any of the representations and warranties incorporated by
reference in Section 2.01 hereof, irrespective of any limitation in such
representation or warranty regarding the knowledge of the Seller, which
materially and adversely affects the value of the Subsequent Mortgage Loans or
the interests of the Purchaser or the Trustee (or which materially and adversely
affects the interests of the Purchaser or the Trustee in the related Subsequent
Mortgage Loan in the case of a representation and warranty relating to a
particular Subsequent Mortgage Loan), the party discovering such breach shall
give prompt written notice to the other parties. Within 90 days of its discovery
or its receipt of notice of any such breach, the Seller shall (i) cure such
breach, or (ii) substitute a Subsequent Mortgage Loan if permitted to do so by
the provisions of Section 2.03 below, or (iii) if the breach relates to a
particular Subsequent Mortgage Loan, repurchase such Subsequent Mortgage Loan
from the Trustee or the Purchaser, as appropriate, at a price equal to the
Purchase Price, or (iv) if the breach relates to a breach of a representation or
warranty regarding the Subsequent Mortgage Loans as a whole, repurchase
Subsequent Mortgage Loans selected by the Purchaser (or its designee) such that
the representations and warranties with respect to the Subsequent Mortgage Loans
as a whole are materially correct, from the Trustee or the Purchaser, as
appropriate, at the Purchase Price therefor, so long as such repurchase is in
accordance with the Pooling and Servicing Agreement. Any such repurchase shall
be accomplished by payment to the Servicer or deposit in the Certificate Account
of the Purchase Price (after deducting therefrom any amounts received in respect
of such repurchased Subsequent Mortgage Loan and being held in the Certificate
Account for future distribution).
SECTION 2.03. Option to Substitute. If the Seller would otherwise be
required to repurchase any Subsequent Mortgage Loan pursuant to Section 1.04 or
2.02 hereof, the Seller may, at its option, but only within less than two years
of the Closing Date, remove such deficient Subsequent Mortgage Loan from the
terms of this Agreement and substitute another mortgage loan for such deficient
Subsequent Mortgage Loan, in lieu of repurchasing such deficient Subsequent
Mortgage Loan. Any substitute Subsequent Mortgage Loan shall (i) have an
outstanding principal amount at the time of substitution not in excess of the
outstanding principal amount of the deficient Subsequent Mortgage Loan, (ii)
have a Mortgage Rate not less than the Mortgage Rate of the deficient Subsequent
Mortgage Loan, and not more than one percentage point greater than the Mortgage
Rate of the deficient Subsequent Mortgage Loan, (iii) have a remaining term to
maturity not later than, and not more than one year less than, the remaining
term to maturity of the deficient Subsequent Mortgage Loan, (iv) be, in the
reasonable determination of the Servicer, of the same type, quality and
character (including location of the Mortgaged Property) as the deficient
Subsequent Mortgage Loan as if the breach had not occurred, (v) have a Combined
Loan-to-Value Ratio at origination not greater than that of the deficient
Subsequent Mortgage Loan, (vi) be, in the reasonable determination of the
Servicer, in material compliance with the representations and warranties
incorporated by reference in Section 2.01 hereof as of the date of substitution
and (vii) if the deficient Subsequent Mortgage Loan for which it is being
substituted is not a Balloon Loan, not be a Balloon Loan.
The Seller shall amend the Subsequent Mortgage Loan Schedule to reflect
the withdrawal of the deficient Subsequent Mortgage Loan from this Agreement and
the substitution of such substitute Subsequent Mortgage Loan therefor. Upon such
amendment, the Seller shall be deemed to have made as to such substitute
Subsequent Mortgage Loan the representations and warranties incorporated by
reference in Section 2.01 as of the date of such substitution, which shall
continue so long as any Class A,
4
Class M or Class B Certificate shall remain outstanding or until the Pooling and
Servicing Agreement shall have been terminated as therein provided.
SECTION 2.04. Action to Ensure Enforceability. The Seller shall, at the
request of the Purchaser, the Trustee or the Securities Administrator on behalf
of the Trustee, take all action on its part which is reasonably necessary to
ensure the enforceability of a Subsequent Mortgage Loan.
ARTICLE III
MISCELLANEOUS PROVISIONS
SECTION 3.01. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
SECTION 3.02. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws.
SECTION 3.03. Fees and Expenses. The Seller shall pay all costs, fees and
expenses incurred in connection with the transactions contemplated hereby. The
Seller will pay, or arrange for payment of, all recording fees in connection
with the transactions contemplated hereby.
SECTION 3.04. 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 first class or registered mail, postage prepaid, to
(i) in the case of the Purchaser, Xxxxxxx Xxxxx Mortgage Investors, Inc., 000
Xxxxx Xxxxxx, 4 World Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxxx Xxxxxx, (ii) in the case of the Seller, Xxxxxxx Xxxxx Mortgage Lending,
Inc., 4 World Finance Center, New York, New York 10080 or (iii) in the case of
either of the preceding Persons, such other address as may hereafter be
furnished to the other Person in writing by such Person.
SECTION 3.05. Severability Clause. Any part, provision, representation or
warranty of this Agreement which is prohibited or which is held to be void or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any part,
provision, representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Subsequent
Mortgage Loan shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 3.06. Counterparts. This Agreement may be executed in any number
of counterparts. Each counterpart shall be deemed to be an original, and all
such counterparts shall constitute one and the same instrument.
SECTION 3.07. Place of Delivery. The Agreement shall be deemed in effect
when a fully executed counterpart thereof is received by the Purchaser and shall
be deemed to have been made in the State of New York.
5
SECTION 3.08. Agreement of Parties. The Seller and the Purchaser agree to
execute and deliver such instruments and take such actions as the other party
may, from time to time, reasonably request in order to effectuate the purpose
and to carry out the terms of this Agreement.
SECTION 3.09. Successors and Assigns; Assignment of Agreement. This
Agreement shall bind and inure to the benefit of and be enforceable by the
Seller and the Purchaser and their respective successors and assigns. This
Agreement cannot be assigned, pledged or hypothecated by any party hereto to a
third party without the written consent of each other party to this Agreement,
and any such purported assignment, pledge or hypothecation shall be of no force
or effect.
SECTION 3.10. Amendment. The Agreement may be amended from time to time by
the Seller and the Purchaser by written agreement signed by the Seller and the
Purchaser.
SECTION 3.11. Waivers; Other Agreements. No term or provision of this
Agreement may be waived or modified unless such waiver or modification is in
writing and signed by a duly authorized officer of the party against whom such
waiver or modification is sought to be enforced.
6
IN WITNESS WHEREOF, the Purchaser and the Seller have caused their
names to be signed hereto by their respective officers thereunto duly authorized
as of the day and year first above written.
XXXXXXX XXXXX MORTGAGE INVESTORS, INC.
By: _____________________________________
Name:
Title:
XXXXXXX XXXXX MORTGAGE LENDING, INC.
By: _____________________________________
Name:
Title:
7
EXHIBIT A
SUBSEQUENT MORTGAGE LOAN SCHEDULE
SEE TAB 4
A-1
