Exhibit 99.6
EXECUTION COPY
FLOW SALE AGREEMENT
(Residential Mortgage Loans)
Dated as of November 1, 2006
by and among
LUMINENT MORTGAGE CAPITAL, INC.,
MERCURY MORTGAGE FINANCE STATUTORY TRUST
and
MAIA MORTGAGE FINANCE STATUTORY TRUST,
as Purchasers
and
LEHMAN CAPITAL, A DIVISION OF
XXXXXX BROTHERS HOLDINGS INC.
as Seller
TABLE OF CONTENTS
ARTICLE I DEFINITIONS..........................................................1
ARTICLE II AGREEMENT TO PURCHASE; PURCHASE PRICE; POSSESSION OF
MORTGAGE FILES; BOOKS AND RECORDS; DELIVERY OF
DOCUMENTS; CLOSING CONDITIONS.................................12
Section 2.01. Agreement to Purchase; Purchase Price; Mortgage and
Servicing Files.......................................12
Section 2.02. Books and Records; Transfers of Mortgage Loans........13
Section 2.03. Custodial Agreement; Delivery of Documents............14
Section 2.04. Closing Conditions....................................15
ARTICLE III REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH................16
Section 3.01. Seller Representations and Warranties.................16
Section 3.02. Purchasers' Representations and Warranties............17
Section 3.03. Representations and Warranties Regarding Individual
Mortgage Loans........................................18
Section 3.04. Repurchase............................................18
Section 3.05. Repurchase of Mortgage Loans With First Payment
Defaults..............................................19
Section 3.06. Purchase Price Protection.............................20
Section 3.07. Review of Mortgage Loans..............................20
ARTICLE IV SELLER TO COOPERATE................................................21
Section 4.01. Actions of Servicer...................................21
Section 4.02. Cooperation...........................................21
ARTICLE V THE SELLER..........................................................21
Section 5.01. Indemnification; Third Party Claims...................21
ARTICLE VI WHOLE LOAN TRANSFERS AND SECURITIZATION TRANSACTIONS...............22
Section 6.01. Removal of Mortgage Loans from Inclusion Under
this Agreement........................................22
ARTICLE VII MISCELLANEOUS PROVISIONS..........................................23
Section 7.01. Amendment.............................................23
Section 7.02. Governing Law.........................................23
Section 7.03. Duration of Agreement.................................23
Section 7.04. Notices...............................................23
Section 7.05. Severability of Provisions............................24
Section 7.06. Relationship of Parties...............................24
Section 7.07. Execution; Successors and Assigns; Counterparts.......25
Section 7.08. Recordation of Assignments of Mortgage................25
Section 7.09. Assignment by Purchaser...............................25
Section 7.10. Solicitation of Mortgagor.............................25
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Section 7.11. Further Agreements....................................26
Section 7.12. Confidential Information..............................26
Section 7.13. Exhibits..............................................27
Section 7.14. General Interpretive Principles.......................27
Section 7.15. Reproduction of Documents.............................27
Section 7.16. Purchase Price and Terms Letter.......................28
EXHIBITS
Exhibit A Mortgage Loan Documents
Exhibit B Custodial Agreement
Exhibit C Form of Assignment, Assumption and Recognition Agreement
Exhibit D Representations and Warranties Regarding Individual
Mortgage Loans
Exhibit E Form of Memorandum of Sale
Exhibit F Regulation AB Compliance Addendum
ii
FLOW SALE AGREEMENT, dated as of November 1, 2006 (as amended, restated,
supplemented or otherwise modified and in effect from time to time, this
"Agreement"), is made by and among LUMINENT MORTGAGE CAPITAL, INC., MERCURY
MORTGAGE FINANCE STATUTORY TRUST, MAIA MORTGAGE FINANCE STATUTORY TRUST, as
purchasers (collectively, the "Purchasers", and individually, as the purchaser
of any Mortgage Loan (defined below) hereunder, the "Purchaser"), and XXXXXX
CAPITAL, A DIVISION OF BROTHERS HOLDINGS INC., as seller (the "Seller").
W I T N E S S E T H
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WHEREAS, among other things, the Seller is in the business of selling
residential first and second lien fixed and adjustable rate mortgage loans; and
WHEREAS, each Purchaser has agreed to purchase from time to time from the
Seller and the Seller has agreed to sell from time to time to such Purchaser
first and second lien fixed and adjustable rate mortgage loans; and
WHEREAS, the Mortgage Loans will be sold by the Seller and purchased by the
Purchaser as pools or groups of whole loans, servicing retained (each, a
"Mortgage Loan Package") on the various Closing Dates as provided herein; and
WHEREAS, each of the Mortgage Loans will be secured by a mortgage, deed of
trust or other security instrument creating a first or second lien on a
residential dwelling located in the jurisdiction indicated on the related
Mortgage Loan Schedule for the related Mortgage Loan Package, which will be
annexed to a Memorandum of Sale on the related Closing Date; and
WHEREAS, each Mortgage Loan Package will initially be serviced by Aurora
Loan Services LLC, pursuant to a Servicing Agreement, dated as of November 1,
2006 by and among the Seller, the Purchasers and Aurora Loan Services LLC; and
WHEREAS, following any purchase of the Mortgage Loans from the Seller, the
Purchaser may desire to sell some or all of the Mortgage Loans to one or more
purchasers as a whole loan transfer, agency transfer or a public or private,
rated or unrated mortgage securitization transaction.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, each of the Purchasers and the Seller agree as
follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the content
otherwise requires, shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan, those
mortgage servicing practices and procedures (including collection procedures)
(i) of prudent mortgage lending institutions which service mortgage loans of the
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same type as such Mortgage Loans in the jurisdiction where the related Mortgaged
Property is located, (ii) that comply with applicable federal, state and local
law and (iv) that, where applicable, are in accordance with the Xxxxxx Mae
Guides in all material respects.
Adjustable Rate Mortgage Loan: A Mortgage Loan that contains a provision
pursuant to which the Mortgage Interest Rate is adjusted periodically.
Agreement: As defined in the introductory paragraph hereof.
ALTA: The American Land Title Association or any successor thereto.
Anti-Money Laundering Laws: As defined in paragraph (ff) of Exhibit D.
Appraisal: A written appraisal of a Mortgaged Property made by a Qualified
Appraiser, which appraisal must be written, in form and substance, to Xxxxxx Xxx
and Xxxxxxx Mac standards, and satisfy the requirements of Title XI of the
Financial Institution, Reform, Recovery and Enforcement Act of 1989 and the
regulations promulgated thereunder, in effect as of the date of the appraisal.
Appraised Value: The value set forth in an appraisal made in connection
with the origination of the related Mortgage Loan as the value of the Mortgaged
Property.
Approved Flood Policy Insurer: An insurer that meets the guidelines of the
Federal Insurance Administration.
Assignment, Assumption and Recognition Agreement: The agreement
substantially in the form of Exhibit C attached hereto.
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
sale of the Mortgage to the Purchaser.
BPO: A broker's price opinion with respect to a Mortgaged Property.
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a day on
which banking and savings and loan institutions in the State of New York,
Colorado, Nebraska or the state in which the Seller's servicing operations are
located are authorized or obligated by law or executive order to be closed.
Buydown Agreement: An agreement which provides for the application of
Buydown Funds.
Buydown Funds: In respect of any Buydown Mortgage Loan, an amount held by
the servicer of such Buydown Mortgage Loan in order to enable the Mortgagor to
reduce the portion of each Monthly Payment required to be made from the
Mortgagor's funds.
Buydown Mortgage Loan: Any Mortgage Loan that is subject to a Buydown
Agreement.
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Buydown Period: The period of time when a Buydown Agreement is in effect
with respect to a related Buydown Mortgage Loan.
Closing Date: With respect to a Mortgage Loan Package, the date or dates,
set forth in the related Memorandum of Sale, on which the Purchaser will
purchase and the Seller will sell the Mortgage Loans identified therein.
Code: The Internal Revenue Code of 1986, as it may be amended from time to
time or any successor statute thereto, and applicable U.S. Department of the
Treasury regulations issued pursuant thereto.
Combined Loan-to-Value Ratio or CLTV: With respect to any Second Lien
Mortgage Loan, the sum of the original principal balance of such Second Lien
Mortgage Loan and the outstanding principal balance, as of the date of
origination of the Second Lien Mortgage Loan, of any mortgage loan which is
senior in priority to such Second Lien Mortgage Loan, divided by the lesser of
(i) the Appraised Value of the Mortgaged Property and (ii) if the Mortgage Loan
was made to finance the acquisition of the related Mortgaged Property, the
purchase price of the Mortgaged Property.
Consumer Information: Shall have the meaning set forth in the Interagency
Guidelines Establishing Standards for Safeguarding Customer Information
published in final form on February 1, 2001, 66 Fed. Reg. 8616 (as amended,
supplemented or restated).
Covered Loan: A Mortgage Loan categorized as "Covered" pursuant to Appendix
E of Standard & Poor's Glossary.
Custodial Account: The separate account or accounts created and maintained
pursuant to Section 4.04 of the Servicing Agreement.
Custodial Agreement: The agreement governing the retention of the originals
of each Mortgage Note, Mortgage, Assignment of Mortgage and other Mortgage Loan
Documents, which is annexed hereto as Exhibit B.
Custodian: The custodian under the Custodial Agreement, or its successor in
interest or assigns, or any successor to the Custodian under the Custodial
Agreement as provided therein.
Cut-off Date: With respect to each Mortgage Loan in a Mortgage Loan
Package, the date set forth in the related Purchase Price and Terms Letter.
Defective Document: As defined in Section 3.04.
Depositor: The depositor, as such term is defined in Regulation AB, with
respect to any Securitization Transaction.
Due Date: The first day of the month on which the Monthly Payment is due on
a Mortgage Loan, exclusive of any days of grace. With respect to each Mortgage
Loan for which payment from the related Mortgagor is due on a day other than the
first day of the month, each such Mortgage Loan will be treated as if the
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Monthly Payment is due on the first day of the month following the actual Due
Date.
Due Period: With respect to each Remittance Date, the period commencing on
the second day of the month preceding the month of the Remittance Date and
ending on the first day of the month of the Remittance Date.
Escrow Account: The separate account or accounts created and maintained
pursuant to the Servicing Agreement.'
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other related
document.
Xxxxxx Xxx: The entity formerly known as Federal National Mortgage
Association (FNMA), or any successor thereto.
First Lien Mortgage Loan: A Mortgage Loan secured by a first priority lien
on the related Mortgaged Property.
Xxxxxxx Mac: The entity formerly known as the Federal Home Loan Mortgage
Corporation (FHLMC), or any successor thereto.
GAAP: With respect to the financial statements or other financial
information of any Person, generally accepted accounting principals in the
United States that are in effect from time to time.
Gross Margin: With respect to each Adjustable Rate Mortgage Loan, the fixed
percentage amount set forth in the related Mortgage Note which is added to the
Index in order to determine the related Mortgage Interest Rate.
High Cost Loan: A Mortgage Loan (a) covered by HOEPA or (b) a "high cost
home," "threshold," "covered," (excluding New Jersey "Covered Home Loans" as
that term was defined in clause (1) of the definition of that term in the New
Jersey Home Ownership Security Act of 2002 during the period between November
26, 2003 and July 7, 2004), "high risk home," "predatory" or similar loan under
any other applicable state, federal or local law (or a similarly classified loan
using different terminology under a law imposing heightened regulatory scrutiny
or additional legal liability for residential mortgage loans having high
interest rates, points and/or fees).
HOEPA: The Home Ownership and Equity Protection Act of 1994, as amended.
Holding Period: As to each Mortgage Loan, except as set forth in the
related Purchase Price and Terms letter, the period beginning on the Closing
Date and ending on the last day of the second full calendar month thereafter.
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Index: With respect to any Adjustable Rate Mortgage Loan, the index set
forth in the related Mortgage Note for the purpose of calculating interest
therein.
Interest Only Mortgage Loan: A Mortgage Loan that requires only payments of
interest for a period of time specified in the related Mortgage Note.
Interim Funder: With respect to each MERS Designated Mortgage Loan, the
Person named on the MERS System as the interim funder pursuant to the MERS
Procedures Manual.
Investor: With respect to each MERS Designated Mortgage Loan, the Person
named on the MERS System as the investor pursuant to the MERS Procedures Manual.
Liquidation Proceeds: Cash received in connection with the liquidation of a
defaulted Mortgage Loan, whether through the sale or assignment of such Mortgage
Loan, trustee's sale, discounted payoff, foreclosure sale or otherwise, or the
sale of an REO Property acquired in satisfaction of the Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the ratio of
the original loan amount of the Mortgage Loan at its origination (unless
otherwise indicated) to the lesser of (i) the Appraised Value of the Mortgaged
Property and (ii) if the Mortgage Loan was made to finance the acquisition of
the related Mortgaged Property, the purchase price of the Mortgaged Property.
Losses: Losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments and other costs and expenses,
provided, however, that losses shall not include punitive, consequential,
exemplary or special damages except to the extent that an indemnified party
hereunder is obligated to pay such damages to a third party that is not an
indemnitee of such indemnified party.
Master Servicer: With respect to any Securitization Transaction, the
"master servicer," if any, identified in the related transaction documents.
Memorandum of Sale: With respect to each Mortgage Loan and the Mortgage
Loan Package, the memorandum of sale, substantially in the form of Exhibit E
attached hereto, confirming the sale by Seller and the purchase by Purchaser of
the Mortgage Loan Package on the related Closing Date.
MERS: MERSCORP, Inc., its successors and assigns.
MERS Designated Mortgage Loan: A Mortgage Loan for which (a) the Seller has
designated or will designate MERS as, and has taken or will take such action as
is necessary to cause MERS to be, the mortgagee of record, as nominee for the
Seller, in accordance with MERS Procedures Manual and (b) the Seller has
designated or will designate the Purchaser as the Investor on the MERS System.
MERS Procedures Manual: The MERS Procedures Manual, as it may be amended,
supplemented or otherwise modified from time to time.
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MERS Report: The report from the MERS System listing MERS Designated
Mortgage Loans and other information.
MERS System: MERS mortgage electronic registry system, as more particularly
described in the MERS Procedures Manual.
Monthly Payment: With respect to any Mortgage Loan, the scheduled payment
of principal, if any, and interest payable by a Mortgagor under the related
Mortgage Note on each Due Date, which payment may change on any Adjustment Date
as provided in the related Mortgage Note and Mortgage for any Adjustable Rate
Mortgage Loan.
Moody's: Xxxxx'x Investors Service, Inc.
Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first lien on an unsubordinated estate in fee
simple or leasehold estate in real property securing the Mortgage Note.
Mortgage File: The items pertaining to a particular Mortgage Loan that are
held by the Custodian and any additional documents required to be added to the
Mortgage File pursuant to this Agreement.
Mortgage Interest Rate: The annual rate of interest borne on a Mortgage
Note in accordance with the provisions of the Mortgage Note net of any Relief
Act Reduction.
Mortgage Loan: An individual Mortgage Loan which is the subject of this
Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the Mortgage Loan Schedule annexed to the related Memorandum
of Sale, which Mortgage Loan includes without limitation the Mortgage File, the
Monthly Payments, Principal Prepayments, Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds, REO Disposition Proceeds and all other rights,
benefits, proceeds and obligations arising from or in connection with such
Mortgage Loan, except for any and all Servicing Rights related thereto.
Mortgage Loan Documents: The documents referred to in Exhibit A.
Mortgage Loan Package: The pool or group of whole loans purchased on a
Closing Date, as described in the Mortgage Loan Schedule annexed to the related
Memorandum of Sale.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Purchaser, which shall be equal to the
related Mortgage Interest Rate minus the Servicing Fee Rate.
Mortgage Loan Schedule: With respect to each Mortgage Loan Package, the
schedule of Mortgage Loans annexed to the related Memorandum of Sale (and
delivered in electronic format to the Purchaser), such schedule setting forth
the following information with respect to each Mortgage Loan in the related
Mortgage Loan Package:
(1) the Seller's Mortgage Loan number;
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(2) Mortgagor's name (including any co-mortgagors);
(3) the full xxxxxx xxxxxxx, xxxx, xxxxx and zip code of the
Mortgaged Property;
(4) the Mortgagor's and co-mortgagor's FICO score;
(5) a code indicating whether the loan was originated through a
correspondent, retail, or wholesale channel;
(6) the number of units for all Mortgaged Properties;
(7) [Reserved];
(8) a code indicating whether the Mortgaged Property is a single
family residence, two-family residence, three-family residence,
four-family residence, PUD, townhouse or condominium or secured
by Co-op Shares;
(9) the Mortgage Interest Rate as of the Cut-off Date;
(10) the Mortgage Interest Rate as of the date of origination;
(11) the current Mortgage Loan Remittance Rate;
(12) the Monthly Payment as of the date of origination;
(13) the Monthly Payment as of the Cut-off Date;
(14) the date of the Mortgage Note;
(15) the principal balance of the Mortgage Loan as of the Cut-off Date
after deduction of payments of principal due on or before the
Cut-off Date whether or not collected;
(16) the date on which the first Monthly Payment was due;
(17) the last payment date on which a payment was applied;
(18) the original term to maturity or the remaining months to maturity
from the related Cut-off Date, in any case based on the original
amortization schedule, and if different, the maturity expressed
in the same manner but based on the actual amortization schedule;
(19) the scheduled maturity date;
(20) the Loan-to-Value Ratio;
(21) a code indicating the type of Adjustable Rate Mortgage Loan (i.e.
3/1, 5/1, 7/1, etc.);
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(22) the Gross Margin;
(23) the Index;
(24) Adjustment Dates and the next Adjustment Date;
(25) the lifetime Mortgage Interest Rate cap and Periodic Caps;
(26) a code indicating whether the Mortgage Loan is convertible or
not;
(27) a code indicating the name of the issuer of the PMI Policy, if
any;
(28) a code indicating the lien status of the Mortgage Loan;
(29) a code indicating whether the Mortgage Loan is a Buydown
Mortgage Loan;
(30) a code indicating whether such Mortgage Loan provides for a
Prepayment Penalty and, if applicable, the Prepayment Penalty
period for such loan;
(31) a code indicating whether the Mortgaged Property is
owner-occupied or investor property;
(32) the documentation level (full, alternative, limited);
(33) loan purpose;
(34) the Appraised Value;
(35) the applicable Servicing Fee Rate;
(36) a code indicating whether the Mortgage Loan is a "high cost" (or
similarly classified) loan under applicable federal, state and
local laws;
(37) the debt-to-income ratio of the Mortgagor; and
(38) delinquency counter.
With respect to the Mortgage Loans in the aggregate in the related
Mortgage Loan Package, the respective Mortgage Loan Schedule shall set
forth the following information, as of the Cut-Off Date:
(i) the number of Mortgage Loans;
(ii) the current aggregate outstanding principal balance of the
Mortgage Loans;
(iii) the weighted average Mortgage Interest Rate of the Mortgage
Loans;
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(iv) the weighted average months to maturity of the Mortgage Loans.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
Mortgaged Property: The real property, including any improvements, securing
repayment of the debt evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
Negative Amortization: An increase in the mortgage debt that occurs when
the Monthly Payment is not sufficient for full application to both principal and
interest. The interest shortage is added to the unpaid principal balance to
create "negative" amortization.
Officer's Certificate: A certificate signed by the Chairman of the Board or
the Vice Chairman of the Board or the President, a Senior Vice President, a
First Vice President, a Vice President, Assistant Vice President, Treasurer,
Secretary, Assistant Treasurer, Assistant Secretary or another authorized
signatory of the Seller.
Opinion of Counsel: A written opinion of counsel, who may be an employee of
the Seller, reasonably acceptable to the Purchaser.
Payment Adjustment Date: With respect to each Adjustable Rate Mortgage Loan
or Interest Only Mortgage Loan, the date on which Monthly Payments shall be
adjusted. With respect to each Adjustable Rate Mortgage Loan, the Payment
Adjustment Date shall occur on the date which is 11 months from the first
payment date for the Mortgage Loan, unless otherwise specified in the Mortgage
Note, and on each anniversary of such first Payment Adjustment Date.
Periodic Interest Rate Cap: As to each Adjustable Rate Mortgage Loan, the
maximum increase or decrease in the Mortgage Interest Rate on any Adjustment
Date pursuant to the terms of the Mortgage Note.
Person: Any individual, corporation, partnership, joint venture, limited
liability company, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof.
Prepayment Interest Shortfall: As to any Remittance Date and each Mortgage
Loan subject to a Principal Prepayment received during the calendar month
preceding such Remittance Date, the amount, if any, by which one month's
interest at the related Mortgage Loan Remittance Rate on such Principal
Prepayment exceeds the amount of interest paid in connection with such Principal
Prepayment.
Prepayment Premium: Payments received on a Mortgage Loan as a result of a
Principal Prepayment hereon, not otherwise due thereon in respect of principal
or interest, which, unless otherwise set forth in the Purchase Price and Terms
Letter, shall be retained by the Seller.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date, including
any Prepayment Premium thereon (to the extent the Purchaser is entitled to such
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pursuant to the related Purchase Price and Terms Letter) and which is not
accompanied by an amount of interest representing scheduled interest due on any
date or dates in any month or months subsequent to the month of prepayment.
Purchase Price: The price paid on the Closing Date by the Purchaser to the
Seller for the Mortgage Loans.
Purchase Price and Terms Letter: The letter agreement between the Seller
and the Purchaser entered into prior to the related Closing Date relating to the
sale of one or more Mortgage Loan Packages.
Purchaser(s): As defined in the introductory paragraph hereof.
Qualified Appraiser: An appraiser who had no interest, direct or indirect
in the Mortgaged Property or in any loan made on the security thereof, and whose
compensation was not affected by the approval or disapproval of the Mortgage
Loan, and such appraiser and the appraisal made by such appraiser both satisfied
the requirements of Title XI of the Financial Institution Reform, Recovery, and
Enforcement Act and the regulations promulgated thereunder, all as in effect on
the date the Mortgage Loan was originated.
Rating Agency: Each of Fitch, Inc., Moody's and S&P, or any successor
thereto.
Reconstitution Agreement: As defined in Section 6.01.
Reconstitution Date: The date on which any or all of the Mortgage Loans
serviced under this Agreement shall be removed from this Agreement and
reconstituted as part of a Securitization Transaction or Whole Loan Transfer
pursuant to Section 6.01 hereof. The Reconstitution Date shall be such date
which the Purchaser and the subsequent purchaser or transferee of the related
Mortgage Loans shall designate. On such date, except as provided in this
Agreement, the Mortgage Loans transferred shall cease to be covered by this
Agreement and the Seller's servicing responsibilities shall cease under this
Agreement with respect to the related transferred Mortgage Loans.
Regulation AB Compliance Addendum: Exhibit F attached hereto and
incorporated herein by reference thereto.
Relief Act Reduction: With respect to any Mortgage Loan as to which there
has been a reduction in the amount of interest collectible thereon as a result
of the application of the Servicemembers Civil Relief Act, as amended, or any
similar state or local law, any amount by which interest collectible on such
Mortgage Loan for the Due Date in the related Due Period is less than the
interest accrued thereon for the applicable one-month period at the Mortgage
Interest Rate without giving effect to such reduction.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating to a
REMIC, which appear at Section 860A through 860G of Subchapter M of Chapter 1,
Subtitle A of the Code, and related provisions, and regulations, rulings or
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pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
Repurchase Price: Except as otherwise provided in the Purchase Price and
Terms Letter, with respect to any Mortgage Loan, the Stated Principal Balance of
the Mortgage Loan plus interest on such Stated Principal Balance at the Mortgage
Loan Remittance Rate from the date on which interest has last been paid and
distributed to the Purchaser to the last day of the month in which such
repurchase occurs, less amounts received or advanced in respect of such
repurchased Mortgage Loan which are being held in the Custodial Account for
distribution in the month of repurchase plus, without duplication, the amount of
any advances owed to any servicer.
RESPA: The Real Estate Settlement Procedures Act, as amended.
S&P: Standard & Poor's Ratings Services, a division of The XxXxxx-Xxxx
Companies., Inc.
Second Lien Mortgage Loan: A Mortgage Loan secured by a second priority
lien on the related Mortgaged Property.
Securities Act of 1933 or the 1933 Act: The Securities Act of 1933, as
amended.
Securitization Transaction: Any transaction involving either (1) a sale or
other transfer of some or all of the Mortgage Loans directly or indirectly to an
issuing entity in connection with an issuance of publicly offered or privately
placed, rated or unrated mortgage-backed securities or (2) an issuance of
publicly offered or privately placed, rated or unrated securities, the payments
on which are determined primarily by reference to one or more portfolios of
residential mortgage loans consisting, in whole or in part, of some or all of
the Mortgage Loans.
Seller: As defined in the introductory paragraph hereof.
Servicer: Aurora Loan Services LLC.
Servicing Agreement: The servicing agreement, dated as of November 1, 2006,
by and among the Purchasers, the Servicer and the Seller, as servicing rights
owner.
Servicing File: With respect to each Mortgage Loan, the file retained by
the Seller consisting of originals or copies, which may be imaged copies, of all
documents in the Mortgage File which are not delivered to the Custodian and
copies of the Mortgage Loan Documents listed in the Custodial Agreement the
originals of which are delivered to the Custodian pursuant to Section 2.03.
Servicing Officer: Any officer of the Seller involved in or responsible for
the administration and servicing of the Mortgage Loans whose name appears on a
list of servicing officers furnished by the Seller to the Purchaser upon
request, as such list may from time to time be amended.
Servicing Rights: With respect to each Mortgage Loan, any of the following:
(a) all rights to service the Mortgage Loan; (b) any payments or monies payable
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or received or receivable for servicing the Mortgage Loan, (c) any late fees,
assumption fees, penalties or similar payments with respect to the Mortgage; (d)
all agreements or documents creating, defining or evidencing any such servicing
rights and all rights of the Seller thereunder; (e) Escrow Payments or other
similar payments with respect to the Mortgage Loan and any amounts actually
collected with respect thereto; (f) all accounts and other rights to payment
related to any of the property described in this paragraph; (g) possession and
use of any and all Servicing Flies pertaining to the Mortgage Loan or pertaining
to the past, present or prospective servicing of the Mortgage Loan; and (h) all
rights, powers and privileges incident to any of the forgoing.
Stated Principal Balance: As to each Mortgage Loan as to any date of
determination, (i) the principal balance of the Mortgage Loan at the related
Cut-off Date after giving effect to the principal portion of any Monthly
Payments due on or before such date, whether or not received, as well as any
Principal Prepayments received before such date, minus (ii) all amounts
previously distributed to the Purchaser with respect to the Mortgage Loan
representing payments or recoveries of principal, or advances in lieu thereof.
Underwriting Guidelines: The underwriting guidelines pursuant to which one
or more of the Mortgage Loans were originated, as attached as an exhibit to the
Memorandum of Sale. The exception policies of the Seller shall be incorporated
into and considered a part of the Underwriting Guidelines.
Whole Loan Transfer: Any sale or transfer of some or all of the Mortgage
Loans, other than a Securitization Transaction.
ARTICLE II
AGREEMENT TO PURCHASE; PURCHASE PRICE; POSSESSION OF MORTGAGE
FILES; BOOKS AND RECORDS; DELIVERY OF DOCUMENTS; CLOSING
CONDITIONS
Section 2.01. Agreement to Purchase; Purchase Price; Mortgage and Servicing
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Files.
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(a) Agreement to Purchase.
----------------------
(i) In exchange for the payment of the Purchase Price to the Seller on the
related Closing Date, the Seller agrees to sell and the Purchaser agrees to
purchase, without recourse but subject to the terms of this Agreement, on a
servicing retained basis, all the right, title and interest of the Seller in and
to the Mortgage Loans included in a Mortgage Loan Package, other than the
Servicing Rights with respect thereto.
(ii) The Purchaser, on each Closing Date, does hereby assume for the
benefit of the Seller all of the rights, title, interest, and obligations of the
Seller arising from and after the related Closing Date (except with respect to
Servicing Rights), in and to (A) the Mortgage Loans in the related Mortgage Loan
Package and (B) with respect to each Mortgage Loan in the related Mortgage Loan
Package, the Mortgage Files.
(b) Purchase Price.
---------------
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(i) The Purchase Price for each Mortgage Loan Package shall be the
percentage of par as stated in or as otherwise calculated pursuant to the
related Purchase Price and Terms Letter (subject to adjustment as provided
therein) multiplied by the aggregate Stated Principal Balance of the Mortgage
Loans listed on the related Mortgage Loan Schedule as of the related Cut-off
Date, plus accrued interest on the aggregate Stated Principal Balance of the
Mortgage Loan Package at the weighted average Mortgage Loan Remittance Rate from
the related Cut-off Date through the day prior to the related Closing Date,
inclusive. Such payments shall be made by Purchaser to the account designated by
the Seller by wire transfer to immediately available funds by 3:00 p.m.,
Charlotte, North Carolina time, on the related Closing Date.
(ii) The Purchaser shall be entitled to (A) all scheduled principal due
after the related Cut-off Date, (B) all other recoveries of principal collected
on or after the related Cut-off Date (minus any principal due on or before the
Cut-off Date), (C) all payments of interest after the Cut-off Date on the
Mortgage Loans at the Mortgage Loan Remittance Rate (minus that portion of any
such payment that is allocable to the period prior to the related Cut-off Date)
and (D) to the extent set forth in the Purchase Price and Terms Letter, all
Prepayment Premiums.
(iii) If, subsequent to the related Closing Date, the principal amount on
which the Purchase Price with respect to a Mortgage Loan was based is found to
be in error, or if, for any other reason, the Purchase Price or such other
amounts are found to be in error, within ten Business Days of the receipt of
information sufficient to provide notice that payment is due the party
benefiting from the error shall pay an amount sufficient to correct and
reconcile the Purchase Price.
(c) Possession of Mortgage Files.
-----------------------------
Upon the sale of the Mortgage Loans the ownership of each Mortgage Note,
the related Mortgage and the related Mortgage File and Servicing File shall vest
immediately in the Purchaser, and the ownership of all records and documents
with respect to the related Mortgage Loan prepared by or which come into the
possession of the Seller shall vest immediately in the Purchaser and shall be
retained and maintained by the Seller, in trust, at the will of the Purchaser
and only in such custodial capacity.
Section 2.02. Books and Records; Transfers of Mortgage Loans.
----------------------------------------------
(a) From and after the sale of the Mortgage Loans to the Purchaser all
rights arising out of the Mortgage Loans, including, but not limited to, all
funds received on or in connection with the Mortgage Loans, but not including
Servicing Rights or Prepayment Premiums except to the extent provided for in the
Purchase Price and Terms Letter, shall be received and held by the Seller in
trust for the benefit of the Purchaser as owner of the Mortgage Loans.
(b) The sale of each Mortgage Loan shall be reflected on the Seller's
balance sheet and other financial statements as a sale of assets by the Seller.
The Seller shall be responsible for maintaining, and shall maintain, a complete
set of books and records for each Mortgage Loan, which shall be marked clearly
to reflect the ownership of each Mortgage Loan by the Purchaser.
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(c) No transfer of a Mortgage Loan may be made unless such transfer is in
compliance with the terms hereof. For the purposes of this Agreement, the Seller
shall be under no obligation to deal with any person with respect to this
Agreement or the Mortgage Loans unless the books and records show such person as
the owner of the Mortgage Loan. The Purchaser may, subject to the terms of this
Agreement, sell and transfer one or more of the Mortgage Loans; provided,
however, that the transferee will not be deemed to be a Purchaser hereunder
binding upon the Seller unless such transferee shall agree in writing to be
bound by the terms of this Agreement and an Assignment, Assumption and
Recognition Agreement. The Purchaser shall also advise the Seller of any such
transfer.
Section 2.03. Custodial Agreement; Delivery of Documents.
------------------------------------------
(a) The Seller will, with respect to each Mortgage Loan, deliver and
release the Mortgage Loan Documents to the Custodian at least five Business Days
prior to the related Closing Date.
(b) With respect to any Mortgage Loan that is not a MERS Designated
Mortgage Loan, the Seller shall deliver an Assignment of Mortgage (together with
any intervening Assignments of Mortgage) in blank in recordable form. All
recording fees and other costs associated with the initial recording of
Assignments of Mortgage and other relevant documents to the Purchaser or its
designee will be borne by the Seller. For Mortgage Loans not registered under
the MERS System, if the Purchaser requests that the related Assignments of
Mortgage be recorded, the Seller shall cause such Assignments of Mortgage which
were delivered in blank to be completed and to be recorded. The Seller shall be
required to deliver such Assignments of Mortgage for recording within 90 days
after the date on which the Seller is notified that recording will be required
pursuant to this Section 2.03. The Seller shall furnish the Custodian with a
copy of each Assignment of Mortgage submitted for recording. In the event that
any such Assignment is lost or returned unrecorded because of a defect therein,
the Seller shall promptly have a substitute Assignment of Mortgage prepared or
have such defect cured, as the case may be, and thereafter cause such Assignment
of Mortgage to be duly recorded. The Purchaser shall bear all recordation costs
and expenses in connection with any subsequent Assignments of Mortgage.
(c) With respect to any MERS Designated Mortgage Loan, the Seller agrees
that on or prior to each Closing Date it will cause, at its own expense, the
MERS System to indicate that the related Mortgage Loans have been assigned by
the Seller to the Purchaser in accordance with this Agreement by entering in the
MERS System the information required by the MERS System to identify the
Purchaser as owner of such Mortgage Loans.
(d) If pursuant to the foregoing provisions the Seller repurchases a
Mortgage Loan that is a MERS Designated Mortgage Loan, the Seller shall either
(i) cause MERS to execute and deliver an Assignment of Mortgage in recordable
form to transfer the Mortgage from MERS to the Seller and shall cause such
Mortgage to be removed from registration on the MERS system in accordance with
MERS' rules and regulations or (ii) cause MERS to designate on the MERS System
the Seller or its designee as the beneficial holder of such Mortgage Loan.
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(e) The Custodian shall be required to certify its receipt of the Mortgage
Loan Documents required to be delivered pursuant to the Custodial Agreement
prior to the related Closing Date, as evidenced by the initial certification of
the Custodian in the form annexed to the Custodial Agreement. The Purchaser
shall be responsible for the initial and on-going fees and expenses of the
Custodian.
Section 2.04. Closing Conditions.
------------------
(a) The closing for the purchase and sale of each Mortgage Loan Package
shall take place on the respective Closing Date. The closing shall be either by
telephone, confirmed by letter or wire as the parties shall agree, or conducted
in person, at such place as the parties may agree.
(b) The closing for each Mortgage Loan Package shall be subject to the
satisfaction of each of the following conditions precedent:
(i) with respect to the Purchaser's obligations to close:
(A) the Seller shall have delivered to the Purchaser and the
Custodian the related Mortgage Loan Schedule and an electronic data file
containing information on a loan-level basis;
(B) all of the representations and warranties of the Seller under
this Agreement shall be true and correct as of the related Closing Date (or,
with respect to Section 3.03, such other date specified therein) in all
material respects;
(C) the Purchaser shall have received from the Custodian an
initial certification with respect to its receipt of the Mortgage Loan Documents
for the related Mortgage Loans;
(D) the Purchaser shall have received true executed copies of the
related Memorandum of Sale, the related Purchase Price and Terms Letter
setting forth the Purchase Price(s), and the accrued interest thereon, for the
Mortgage Loan Package, in each case executed on behalf of the Seller;
(E) all other terms and conditions of this Agreement, the related
Memorandum of Sale and the related Purchase Price and Terms Letter to be
satisfied by the Seller shall have been complied with in all material
respects; and
(ii) with respect to the Seller's obligations to close:
(A) the Seller shall have received a copy of the initial
certification of the Custodian with respect to its receipt of the Mortgage
Loan Documents for the related Mortgage Loans;
(B) the Seller has received true executed copies of the related
Memorandum of Sale, the related Purchase Price and Terms Letter setting
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forth the Purchase Price(s), and accrued interest thereon, for the Mortgage Loan
Package, in each case executed on behalf of the Purchaser;
(C) all terms and conditions of this Agreement, the related
Memorandum of Sale and the related Purchase Price and Terms Letter to be
satisfied by the Purchaser shall have been materially complied with; and
(D) upon satisfaction of the foregoing conditions (A) through
(C), payment by the Purchaser to the Seller of the Purchase Price for the
related Mortgage Loan Package.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH
Section 3.01. Seller Representations and Warranties.
-------------------------------------
The Seller hereby represents and warrants to the Purchasers that, as of the
related Closing Date:
(a) Due Organization and Authority. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, 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 to conduct business of the type conducted by the Seller;
the Seller has the full corporate power and authority to execute and deliver
this Agreement and to perform in accordance herewith; the execution, delivery
and performance of this Agreement (including all instruments of transfer to be
delivered pursuant to this Agreement) by the Seller and the consummation of the
transactions contemplated hereby have been duly and validly authorized; this
Agreement evidences the valid, binding and enforceable obligation of the Seller;
and all requisite corporate action has been taken by the Seller to make this
Agreement valid and binding upon the Seller in accordance with its terms.
(b) Ordinary Course of Business. The consummation of the transactions
contemplated by this Agreement are in the ordinary course of business of the
Seller.
(c) No Conflicts. Neither the execution and delivery of this Agreement, the
acquisition of the Mortgage Loans by the Seller, the sale of the Mortgage Loans
to the Purchaser or the transactions contemplated hereby, nor the fulfillment of
or compliance with the terms and conditions of this Agreement will conflict with
or result in a breach of any of the organizational documents of the Seller, or
constitute a default or result in the violation of any law, rule, regulation,
order, judgment or decree to which the Seller or its property is subject.
(d) Ability to Perform; Solvency. The Seller does not believe, nor does it
have any reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement. The Seller is solvent and the sale of the
Mortgage Loans will not cause the Seller to become insolvent. The sale of the
Mortgage Loans is not undertaken to hinder, delay or defraud any of the Seller's
creditors.
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(e) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or to its knowledge threatened against the Seller 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 Seller, or in any material impairment of the right or ability of
the Seller to carry on its business substantially as now conducted, or in any
material liability on the part of the Seller, or which would draw into question
the validity of this Agreement or the Mortgage Loans or of any action taken or
to be contemplated herein, or which would be likely to impair materially the
ability of the Seller to perform under the terms of this Agreement.
(f) No Consent Required. No consent, approval, authorization or order of
any court or governmental agency or body is required for the execution, delivery
and performance by the Seller of or compliance by the Seller with this Agreement
or the sale of the Mortgage Loans as evidenced by the consummation of the
transactions contemplated by this Agreement, or if required, such consent,
approval, authorization or order has been obtained prior to the related Closing
Date.
(g) Selection Process. The Seller used no selection procedures so as to
affect adversely the interests of the Purchaser.
(h) Sale Treatment. The Seller will treat the sale of the Mortgage Loans to
the Purchaser as a sale for accounting and tax purposes.
(i) No Brokers' Fees. The Seller has not dealt with any broker, investment
banker, agent or other Person that may be entitled to any commission or
compensation in the connection with the sale of the Mortgage Loans.
Section 3.02. Purchasers' Representations and Warranties.
------------------------------------------
Each Purchaser hereby represents and warrants to the Seller that, as of the
related Closing Date:
(a) Due Organization and Authority. The Purchaser is either a Maryland
corporation or a Maryland business trust, in each case duly organized, validly
existing and in good standing and each 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 to conduct business of the
type conducted by the Purchaser; each Purchaser has the full entity power and
authority to execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this Agreement (including
all instruments of transfer to be delivered pursuant to this Agreement) by each
Purchaser and the consummation of the transactions contemplated hereby have been
duly and validly authorized; this Agreement evidences the valid, binding and
enforceable obligation of each Purchaser; and all requisite entity action has
been taken by each Purchaser to make this Agreement valid and binding upon such
Purchaser in accordance with its terms.
(b) Ordinary Course of Business. The consummation of the transactions
contemplated by this Agreement are in the ordinary course of business of each
Purchaser.
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(c) No Conflicts. Neither the execution and delivery of this Agreement, the
acquisition of the Mortgage Loans by a Purchaser, the sale of the Mortgage Loans
to a Purchaser or the transactions contemplated hereby, nor the fulfillment of
or compliance with the terms and conditions of this Agreement will conflict with
or result in a breach of any of the organizational documents of such Purchaser,
or constitute a default or result in the violation of any law, rule, regulation,
order, judgment or decree to which such Purchaser or its property is subject.
(d) Ability to Perform. No Purchaser believes, nor does it have any reason
or cause to believe, that it cannot perform each and every covenant contained in
this Agreement.
(e) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or to its knowledge threatened against any Purchaser
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 such Purchaser, or in any material impairment of the
right or ability of such Purchaser to carry on its business substantially as now
conducted, or in any material liability on the part of such Purchaser, or which
would draw into question the validity of this Agreement or the Mortgage Loans or
of any action taken or to be contemplated herein, or which would be likely to
impair materially the ability of such Purchaser to perform under the terms of
this Agreement.
(f) No Consent Required. No consent, approval, authorization or order of
any court or governmental agency or body is required for the execution, delivery
and performance by the Purchaser of or compliance by the Purchaser with this
Agreement or the sale of the Mortgage Loans as evidenced by the consummation of
the transactions contemplated by this Agreement, or if required, such consent,
approval, authorization or order has been obtained prior to the related Closing
Date.
(g) No Brokers' Fees. No Purchaser has dealt with any broker, investment
banker, agent or other Person that may be entitled to any commission or
compensation in the connection with the sale of the Mortgage Loans.
Section 3.03. Representations and Warranties Regarding Individual Mortgage
------------------------------------------------------------
Loans.
------
As to each Mortgage Loan, the Seller hereby represents and warrants to the
Purchaser that as of the related Closing Date (or such other date as set forth
therein) all of the representations and warranties set forth on Exhibit D are
true, complete and correct.
Section 3.04. Repurchase.
----------
It is understood and agreed that the representations and warranties set
forth or referred to in Sections 3.01 and 3.03 shall survive the sale of the
Mortgage Loans to the Purchaser and the delivery of the Mortgage Loan Documents
to the Custodian and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note or
Assignment of Mortgage or the examination or failure to examine any Mortgage
File. Upon discovery by either the Seller or the Purchaser of (a) any Mortgage
Loan Document that is materially defective or missing six months following the
Closing Date (other than the missing original documents that are being recorded
and have not yet been returned from the recording office) ("Defective Document")
or (b) a breach of any of the representations and warranties set forth in
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Sections 3.01 or 3.03 (without regard to any knowledge qualifier) that
materially and adversely affects the value of a Mortgage Loan or the interest of
the Purchaser (or that materially and adversely affects the interests of the
Purchaser in the related Mortgage Loan in the case of a representation and
warranty relating to a particular Mortgage Loan) (a "Breach"), the party
discovering such breach shall give prompt written notice to the other. Any
breach of paragraph (nn), (xx) or (ccc) of Exhibit D shall be deemed to
materially and adversely affect the interests of the Purchaser.
Within 60 days after the earlier of either discovery by or notice to the
Seller of any Defective Document or Breach, the Seller shall use its
commercially reasonable best efforts promptly to cure such Defective Document or
Breach in all material respects and, if such Defective Document or Breach cannot
be cured, the Seller shall, at the Purchaser's option, repurchase such Mortgage
Loan at the Repurchase Price. In the event that a Breach shall involve any
representation or warranty set forth in Section 3.01, and such Breach cannot be
cured within 60 days of the earlier of either discovery by or notice to the
Seller of such Breach, all of the Mortgage Loans in the Mortgage Loan Package
for which such representation or warranty was given, to the extent each such
Mortgage Loan is materially affected by such Breach, shall, at the Purchaser's
option, be repurchased by the Seller at the Repurchase Price.
Any repurchase of a Mortgage Loan or Loans pursuant to the foregoing
provisions of this Section 3.03 shall occur on a date mutually acceptable to the
Purchaser and the Seller and within the 30 days following the end of the cure
period and shall be accomplished by wire transfer of immediately available funds
or a deposit in the Custodial Account of the amount of the Repurchase Price for
distribution to the Purchaser on the next scheduled Remittance Date, after
deducting therefrom any amount received in respect of such repurchased Mortgage
Loan or Loans and being held in the Custodial Account for future distribution.
At the time of repurchase, the Purchaser and the Seller shall arrange for
the reassignment of the Deleted Mortgage Loan to the Seller and the delivery to
the Seller of any documents held by the Custodian relating to the Deleted
Mortgage Loan. Upon such repurchase the Mortgage Loan Schedule shall be deemed
amended to reflect the withdrawal of the repurchased Mortgage Loan from this
Agreement.
In addition to such repurchase obligation, the Seller shall indemnify (from
its own funds and not from the Custodial Account or Escrow Account) the
Purchaser and hold it harmless against any Losses resulting from any claim,
demand, defense or assertion resulting from a Breach of the representations and
warranties of the Seller contained in this Agreement; provided, however, that
such indemnification shall not include punitive, consequential, exemplary or
special damages. It is understood and agreed that the obligations of the Seller
set forth in this Section 3.04 to cure or repurchase a defective Mortgage Loan
and to indemnify the Purchaser as provided in this Section 3.04 constitute the
sole remedies of the Purchaser respecting a breach of its representations and
warranties.
Section 3.05. Repurchase of Mortgage Loans With First Payment Defaults.
--------------------------------------------------------
Except as set forth in a Purchase Price and Terms Letter, if the related
Mortgagor is 30 days or more delinquent with respect to a Monthly Payment under
a Mortgage Loan at any time prior to the expiration of the Holding Period for
-19-
such Mortgage Loan, the Seller shall, at the Purchaser's option exercised no
later then 90 days after the end of the related Holding Period, repurchase such
Loan from the Purchaser in accordance with Section 3.03 hereof; provided, that
the Seller shall not be required to repurchase such Mortgage Loan if it can
demonstrate to the Purchaser's reasonable satisfaction within 30 days of such
reported delinquency that the related Mortgagor timely made all payments
required of the Mortgagor but such payment was otherwise misapplied. In the
event a Mortgagor exercises any right of rescission it may have with respect to
the related Mortgage Loan that arises as a result of an act or omission prior to
the related Closing Date, the Seller shall repurchase such Mortgage Loan at the
related Repurchase Price within 30 days of receiving notice of such Mortgagor's
intention to rescind the Mortgage Loan.
Section 3.06. Purchase Price Protection.
-------------------------
Except as set forth in a Purchase Price and Terms Letter, with respect to
any Mortgage Loan that prepays in full at any time prior to the date that is 60
days after the Closing Date for such Mortgage Loan, the Seller shall reimburse
the Purchaser, within 30 days following the prepayment in full of such Mortgage
Loan, the amount (if any) by which the portion of the Purchase Price paid by the
Purchaser to the Seller for such Mortgage Loan exceeded 100% of the outstanding
Stated Principal Balance of the Mortgage Loan as of the related Cut-off Date.
Section 3.07. Review of Mortgage Loans.
------------------------
(a) Prior to the related Closing Date, the Purchaser shall have the right
at its own expense to review the Mortgage Files and obtain BPOs on the Mortgaged
Properties relating to the Mortgage Loans purchased on the related Closing Date,
with the results of such BPO reviews to be communicated to the Seller at least
ten Business Days prior to the related Closing Date. In addition, the Purchaser
shall have the right to reject any Mortgage Loan which in the Purchaser's sole
reasonable determination (i) fails to conform to the applicable Underwriting
Guidelines (unless the Mortgage Loan has been underwritten to provide for
compensating factors) or (ii) the value of the Mortgaged Property pursuant to
any BPO is 15% lower than the lesser of (A) the Appraised Value of the Mortgaged
Property or (B) the purchase price of the Mortgaged Property as of the date of
origination of the related Mortgage Loan. The Seller shall make available all
files required by the Purchaser in order to complete its review, including all
CRA/HMDA required data fields. Any review performed by the Purchaser prior to
the related Closing Date shall not limit the Purchaser's rights or the Seller's
obligations under this section.
(b) If post-closing due diligence review is permitted under the related
Purchase Price and Terms Letter, from the related Closing Date until the date 30
days after the related Closing Date, the Purchaser shall have the right to
review the Mortgage Files and obtain BPOs on the Mortgaged Properties relating
to the Mortgage Loans purchased on the related Closing Date, with the results of
such BPO reviews to be communicated to the Seller for a period up to 30 days
after the related Closing Date. In addition, the Purchaser shall have the right
to reject any Mortgage Loan which in the Purchaser's sole reasonable
determination (i) fails to conform to the applicable Underwriting Guidelines
(unless the Mortgage Loan has been underwritten to provide for compensating
factors) or (ii) the value of the Mortgaged Property pursuant to any BPO is 15%
lower than the lesser of (A) the Appraised Value of the Mortgaged Property or
(B) the purchase price of the Mortgaged Property as of the date of origination
-20-
of the related Mortgage Loan. In the event that the Purchaser so rejects any
Mortgage Loan, the Seller shall repurchase the rejected Mortgage Loan at the
repurchase price as set forth in the related Purchase Price and Terms Letter
upon receipt of notice from the Purchaser of the rejection of such Mortgage
Loan. Any rejected Mortgage Loan shall be removed from the terms of this
Agreement. The Seller shall make available all files required by the Purchaser
in order to complete its review, including all CRA/HMDA required data fields.
Any review performed by the Purchaser prior to the related Closing Date shall
not limit the Purchaser's rights or the Seller's obligations under this section.
ARTICLE IV
SELLER TO COOPERATE
Section 4.01. Actions of Servicer.
-------------------
The parties agree that the performance of the Servicer of any of the
Seller's obligations hereunder shall be deemed to be the performance by the
Seller.
Section 4.02. Cooperation.
-----------
The Seller and the Purchaser shall cooperate fully with each other and
their respective counsel and other representatives and advisors in connection
with the steps required to be taken as part of their respective obligations
under this Agreement.
ARTICLE V
THE SELLER
Section 5.01. Indemnification; Third Party Claims.
-----------------------------------
The Seller shall indemnify each Purchaser and hold it harmless against any
and all Losses that any Purchaser may sustain resulting from or arising out of
the negligence, bad faith or willful misconduct of the Seller in the performance
of its duties under this Agreement.
The Purchasers, jointly and severally, shall indemnify the Seller and hold
it harmless against any and all Losses that the Seller may sustain resulting
from or arising out the Mortgage Loans or this Agreement, including any Breach
by the Purchaser.
The Seller shall notify the Purchasers if a claim is made by a third party
with respect to this Agreement or the Mortgage Loans, assume (with the prior
written consent of the Purchaser) the defense of any such claim and pay all
expenses in connection therewith, including counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against it or
any Purchaser in respect of such claim. The Seller shall follow any written
instructions received from the Purchaser in connection with such claim. The
Purchasers promptly shall reimburse the Seller for all amounts advanced by it
pursuant to the preceding sentence, except when the claim results from or arises
out of a Breach by the Seller or the negligence, bad faith or willful misconduct
of the Seller. The provisions of this Section 5.01 shall survive termination of
this Agreement.
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ARTICLE VI
WHOLE LOAN TRANSFERS AND SECURITIZATION TRANSACTIONS
Section 6.01. Removal of Mortgage Loans from Inclusion Under this Agreement.
-------------------------------------------------------------
The Purchasers and the Seller agree that with respect to some or all of the
Mortgage Loans, the Purchaser, at its sole option, may effect one or more Whole
Loan Transfers or Securitization Transactions (but in no event may the Purchaser
affect more than three Reconstitutions of the Mortgage Loans in any Mortgage
Loan Package), retaining the Servicer as the servicer thereof or subservicer if
a master servicer is employed.
The Seller shall cooperate with the Purchaser in connection with each Whole
Loan Transfer or Securitization Transaction in accordance with this Section
6.01. In connection therewith the Seller shall:
(a) (i) restate all representations and warranties made herein with respect
to the Mortgage Loans as of the related Closing Date (or such other date as set
forth in any representation and warranty) and (ii) make representations (a)
through (f) with respect to the Seller itself as of the closing date of each
Whole Loan Transfer or Securitization Transaction to the extent provided for in
such Reconstitution Agreement; provided, however, that the Seller shall have no
obligation to make or restate any additional representations and warranties with
respect to the Mortgage Loans or itself;
(b) execute an Assignment, Assumption and Recognition Agreement and at the
option of the Purchaser, cause the Servicer to negotiate in good faith and
execute any pooling and servicing agreement or similar agreements (a
"Reconstitution Agreement") necessary to effectuate the foregoing provided (i)
that the Seller and Servicer shall be given reasonable time to negotiate any
such Reconstitution Agreement, which shall in no event be less than ten Business
Days prior to the related Closing Date and (ii) that such agreements create no
greater obligation on the part of the Seller or Servicer than otherwise set
forth in this Agreement and do not materially and adversely alter the Seller's
rights hereunder or Servicer's rights under the Servicing Agreement; and
(c) provide as applicable:
(i) any and all information and appropriate verification of
information which may be reasonably available to the Seller, including
information regarding the Seller's foreclosure, delinquency and loss experience,
as the Purchaser shall reasonably request; and
(ii) such additional opinions of counsel, letters from auditors, and
certificates of public officials or officers of the Seller as are reasonably
believed necessary by the trustee, any rating agency or any credit enhancement
provider, as the case may be, in connection with Whole-Loan Transfers or
Securitization Transactions;
Unless otherwise set forth in the Purchase Price and Term Letter, the
internal and third-party fees and costs of the Seller associated with the
negotiation, preparation and delivery of the information required or requested
pursuant to this Section 6.01 in connection with the first Reconstitution with
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respect to a Mortgage Loan Package shall be borne by the Seller. The Purchaser
shall pay the reasonable third-party fees and costs of the Seller associated
with the negotiation, preparation and delivery of the information required or
requested pursuant to this Section 6.01 in connection with any subsequent
Reconstitution with respect to a Mortgage Loan Package.
In order to facilitate compliance with Regulation AB promulgated under the
Securities Act, the Seller and the Purchasers agree to comply with the
provisions of the Regulation AB Compliance Addendum attached hereto as Exhibit
F.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01. Amendment.
---------
This Agreement may be amended from time to time by written agreement signed
by the Seller and the Purchaser.
Section 7.02. 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.
EACH OF THE SELLER AND THE PURCHASERS HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION
WITH, THIS AGREEMENT, OR ANY OTHER DOCUMENTS AND INSTRUMENTS EXECUTED IN
CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE SELLER OR THE PURCHASER. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE PURCHASER TO ENTER INTO THIS
AGREEMENT.
Section 7.03. Duration of Agreement.
---------------------
This Agreement shall continue in existence and effect until terminated as
herein provided. This Agreement shall continue notwithstanding transfers of the
Mortgage Loans by the Purchaser.
Section 7.04. Notices.
-------
All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given if sent by facsimile, personally
delivered at or mailed by overnight courier, addressed as follows:
-23-
(i) if to the Seller:
Lehman Capital, A Division of
Xxxxxx Brothers Holdings Inc.
000 0xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
or such other address as may hereafter be furnished to the
Purchasers in writing by the Seller;
(ii) if to any Purchaser:
Luminent Mortgage Capital, Inc.
One Commerce Square,
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Luminent Mortgage Capital Inc.
One Market Street, Spear Tower, 30th floor
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxxxxxx Xxxx
Tel: 000-000-0000
Fax: 000-000-0000
or such other address as may hereafter be furnished to the Seller
in writing by any Purchaser.
Section 7.05. 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 provisions of this Agreement.
Section 7.06. Relationship of Parties.
-----------------------
Nothing herein contained shall be deemed or construed to create a
partnership or joint venture between the parties hereto and the services of the
Seller shall be rendered as an independent contractor and not as agent for any
Purchaser.
-24-
Section 7.07. Execution; Successors and Assigns; Counterparts.
-----------------------------------------------
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement. This Agreement shall inure to the benefit
of and be binding upon the Seller and each Purchaser and their respective
successors and assigns.
Section 7.08. Recordation of Assignments of Mortgage.
--------------------------------------
To the extent permitted by applicable law, each of the Assignments of
Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or other comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected at the Seller's expense, in the event recordation is either necessary
or advisable in accordance with Acceptable Servicing Practices or under
applicable law or is requested by the Purchaser at its sole option in the case
of Mortgage Loans that are not registered on MERS.
Section 7.09. Assignment by Purchaser.
-----------------------
The Purchaser shall have the right, subject to the limits set forth in
Section 2.02 and Section 6.01 hereof, to assign, in whole or in part, its
interest under this Agreement with respect to some or all of the Mortgage Loans,
and designate any person to exercise any rights of the Purchaser hereunder, by
executing a Reconstitution Agreement (subject to the terms of Section 6.01) with
the Seller and such assignee, and the assignee or designee shall accede to the
rights and obligations hereunder of the Purchaser with respect to such Mortgage
Loans (except with respect to any rights of indemnification pursuant to this
Agreement, which rights shall survive any assignment or termination). All
references to the Purchaser in this Agreement shall be deemed to include a
reasonable assignee or designee (except with respect to any indemnification
rights of the Purchaser under this Agreement), provided prior written notice of
such assignee of designee has been given to the Seller by the Purchaser. In the
event the Purchaser assigns this Agreement, and the assignee assumes any of the
Purchaser's obligations hereunder, the Seller acknowledges and agrees to look
solely to such assignee, and not the Purchaser, for performance of the
obligations so assumed and the Purchaser shall be relieved from any liability to
the Seller with respect thereto, except with respect to any rights of
indemnification pursuant to this Agreement, which rights shall survive any
assignment or termination.
Section 7.10. Solicitation of Mortgagor.
-------------------------
From and after the Closing Date, the Seller agrees that it will not take
any action or permit or cause any action to be taken by any of its agents or
affiliates, or by any independent contractors or independent mortgage brokerage
companies on the Seller's behalf, to personally, by telephone, mail or
electronic mail, solicit the Mortgagor under any Mortgage Loan (on a targeted
basis) for the purpose of refinancing such Mortgage Loan provided, however, that
this limitation shall not prohibit the Seller from soliciting such Mortgagor for
purposes of prepayment, refinance or modification of any loan owned or serviced
by the Seller other than a Mortgage Loan. Notwithstanding the foregoing, it is
understood and agreed that promotions, solicitations (including, without
-25-
limitation, those for purposes of prepayment, refinance or modification) and
other marketing activities undertaken by the Seller or any of its affiliates
which are directed to the general public at large or which are directed
generally to a segment of the then existing customers of the Seller or any of
its affiliates, including, without limitation, mass mailings based on
commercially acquired mailing lists, newspaper, radio or television
advertisements, the mailing of promotional materials to the Seller's or its
affiliates' deposit customers by inserting such materials into customer account
statements shall not constitute solicitation under this Section and
solicitations made on the basis of information acquired by the Seller or its
affiliates that indicates that a borrower may be planning to refinance, nor is
the Seller prohibited from responding to unsolicited requests or inquiries made
by a Mortgagor or an agent of a Mortgagor. Language included on or in the Seller
's website, interactive voice response system, coupon books or billing
statements that is not specifically targeted at the borrower or obligor under
any Mortgage Loan, shall not be deemed to constitute solicitations under Section
7.10. Notwithstanding anything to the contrary, this section shall not prohibit
the Seller or its agent or affiliates from serving the refinancing needs or
other financial needs of a Mortgagor who, without solicitation, contacts the
Seller or its agents or affiliates directly.
Section 7.11. Further Agreements.
------------------
Each of the Purchasers and the Seller agrees to execute and deliver to the
other such additional documents, instruments or agreements as may be necessary
or appropriate to effectuate the purposes of this Agreement.
Section 7.12. Confidential Information.
------------------------
The Seller and the Purchaser shall keep confidential and shall not divulge
to any other party, without the Purchaser's or the Seller's, as applicable,
prior written consent, the price paid by the Purchaser for the Mortgage Loans,
except to the extent that it is reasonable and necessary for the Seller or the
Purchaser to do so in working with legal counsel, auditors, taxing authorities
or other governmental agencies. The restrictions set forth in this paragraph
shall survive the termination of this Agreement.
Each of the Purchasers and the Seller agrees that it (i) shall comply with
all applicable laws and regulations regarding the privacy or security of
Consumer Information, (ii) shall not collect, create, use, store, access,
disclose or otherwise handle Consumer Information in any manner inconsistent
with any applicable laws or regulations regarding the privacy or security of
Consumer Information, (iii) shall not disclose Consumer Information to any
non-affiliated third party except to enforce or preserve its rights, as
otherwise permitted or required by applicable law (or by regulatory authorities
having jurisdiction in the premises) or, in the case of the Seller, at the
specific written direction of the Purchaser, (iv) shall maintain appropriate
administrative, technical and physical safeguards to protect the security,
confidentiality and integrity of Consumer Information, including maintaining
security measures designed to meet the Interagency Guidelines Establishing
Standards for Safeguarding Consumer Information published in final form on
February 1, 2001, 66 Fed. Reg. 8616 (as amended, supplemented or restated), and
the rules promulgated thereunder and (v) shall promptly notify the other party
in writing upon becoming aware of any actual breach and of any suspected breach
of this section. The restrictions set forth in this paragraph shall survive the
termination of this Agreement.
-26-
The Seller shall promptly provide any Purchaser's regulators reasonable
information regarding such security measures upon the reasonable request of such
Purchaser, which information shall include, but not be limited to, independent
audit reports, summaries of test results or equivalent measures taken by the
Seller with respect to its security measures, as agreed upon by the parties.
Section 7.13. Exhibits.
--------
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
Section 7.14. General Interpretive Principles.
-------------------------------
For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned to them
in this Agreement and include the plural as well as the singular, and the use of
any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP;
(c) references herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
(d) a reference to a Subsection without further reference to a Section is a
reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular provision;
and
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
Section 7.15. Reproduction of Documents.
-------------------------
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by any party at the closing, and (c) financial
statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
-27-
Section 7.16. Purchase Price and Terms Letter.
-------------------------------
The terms and conditions set forth in the Purchase Price and Terms Letter
among the Purchasers and the Seller with respect to each Closing Date shall be
incorporated herein. In the event of any conflict between the terms of this
Agreement and the related Purchase Price and Terms Letter, the Purchase Price
and Terms Letter shall control, provided, that, in the case of a conflict
relating to the servicing of the Mortgage Loans, this Agreement shall control.
[SIGNATURES FOLLOW]
-28-
IN WITNESS WHEREOF, the Seller and the Purchasers have caused their names
to be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.
SELLER
------
XXXXXX CAPITAL, A DIVISION OF
XXXXXX BROTHERS HOLDINGS INC.
By: ______________________________
Name:
Title:
PURCHASERS
----------
LUMINENT MORTGAGE CAPITAL, INC.
By: ______________________________
Name:
Title:
MERCURY MORTGAGE FINANCE
STATUTORY TRUST
By: ______________________________
Name:
Title:
MAIA MORTGAGE FINANCE STATUTORY
TRUST
By: ______________________________
Name:
Title:
EXHIBIT A
MORTGAGE LOAN DOCUMENTS
-----------------------
With respect to each Mortgage Loan, the Mortgage Loan Documents shall
include each of the following items, which shall be available for inspection by
the Purchaser and any prospective Purchaser, and which shall be retained by the
Servicer in the Servicing File or delivered to the Custodian pursuant to
Sections 2.03 of the Flow Sale Agreement.
(a) the original Mortgage Note bearing all intervening endorsements and
including any riders to the Mortgage Note endorsed "Pay to the order of
_____________________________, without recourse and signed in the name of
the previous owner by an authorized officer;
(b) the original of any guarantee executed in connection with the Mortgage
Note (if any);
(c) the original Mortgage with evidence of recording thereon or, copies
certified by the related recording office or if the original Mortgage has
not yet been returned from the recording office, a copy certified by the
Seller indicating that such Mortgage has been delivered for recording. The
return directions for the original Mortgage should indicate, when recorded,
mail to the Seller;
(d) the originals of all assumption, modification, consolidation or extension
agreements, (or, if an original of any of these documents has not been
returned from the recording office, a certified copy thereof, the original
to be delivered to the Seller forthwith after return from such recording
office) with evidence of recording thereon, if any;
(e) the original Assignment of Mortgage as appropriate, in recordable form, for
each Mortgage Loan to ___________, for Mortgage Loans that are not
registered with MERS,
(f) the originals of any intervening recorded Assignments of Mortgage showing a
complete chain of assignment from origination to the Seller, including
warehousing assignments, with evidence of recording thereon, (or, if any
original intervening Assignment of Mortgage has not been returned from the
recording office, a certified copy thereof, the original to be delivered to
the Custodian forthwith after return from such recording office);
(g) with respect to each Mortgage Loan, the original mortgage title insurance
policy or attorney's opinion of title and abstract or a title commitment or
title binder if an original title insurance policy has not been issued, or
a duplicate copy of an original title insurance policy; and
(h) the original or copy of the PMI policy or certificate of insurance, where
required; and
(i) such additional documents, instruments and/or agreements as may be
reasonably necessary or appropriate to accomplish the transfer.
A-1
EXHIBIT B
CUSTODIAL AGREEMENT
-------------------
B-1
EXHIBIT C
FORM OF ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
--------------------------------------------------------
[DATE OF ASSIGNMENT]
ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT dated ___________________,
among _________________, a _________________ corporation having an office at
_________________ ("Assignor"), _________________, having an office at
_________________ ("Assignee") and LEHMAN CAPITAL, A DIVISION OF XXXXXX BROTHERS
HOLDINGS INC. (the "Seller"), having an office at 000 0xx Xxxxxx, Xxx Xxxx, XX
00000:
For and in consideration of the sum of one dollar ($1.00) and other
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
1. With respect to the Mortgage Loans listed on Exhibit A hereto, the
Assignor hereby grants, transfers and assigns to Assignee all of the right,
title and interest of Assignor, as Purchaser, in, to and under that certain Flow
Sale Agreement, (the "Flow Sale Agreement"), dated as of November 1, 2006, by
and among Luminent Mortgage Capital, Inc., Mercury Mortgage Finance Statutory
Trust, Maia Mortgage Finance Statutory Trust, as purchasers (collectively, the
"Purchasers", and individually, as the purchaser of any Mortgage Loan under the
Flow Sale Agreement, the "Purchaser"), and the Seller, and the Mortgage Loans
delivered thereunder by the Seller to the Purchaser.
2. The Assignor warrants and represents to, and covenants with, the
Assignee that:
a. The Assignor is the lawful owner of the Mortgage Loans with the
full right to transfer the Mortgage Loans free from any and all claims and
encumbrances whatsoever;
b. The Assignor has not received notice of, and has no knowledge of,
any offsets, counterclaims or other defenses available to the Seller with
respect to the Flow Sale Agreement or the Mortgage Loans;
c. The Assignor has not waived or agreed to any waiver under, or
agreed to any amendment or other modification of, the Flow Sale Agreement or the
Mortgage Loans, including without limitation the transfer of the servicing
obligations under the Flow Sale Agreement. The Assignor has no knowledge of, and
has not received notice of, any waivers under or amendments or other
modifications of, or assignments of rights or obligations under, the Flow Sale
Agreement or the Mortgage Loans; and
d. Neither the Assignor nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any
interest in the Mortgage Loans or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Mortgage Loans, any interest in the Mortgage Loans or any other similar security
from, or otherwise approached or negotiated with respect to the Mortgage Loans,
C-1
any interest in the Mortgage Loans or any other similar security with, any
person in any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action which would
constitute a distribution of the Mortgage Loans under the Securities Act of 1933
(the "Securities Act") or which would render the disposition of the Mortgage
Loans a violation of Section 5 of the Securities Act or require registration
pursuant thereto.
3. That Assignee warrants and represent to, and covenants with, the
Assignor and the Seller pursuant to Section 7.09 of the Flow Sale Agreement
that:
a. The Assignee agrees to be bound, as Purchaser, by all of the terms,
covenants and conditions of the Flow Sale Agreement, the Mortgage Loans and the
Custodial Agreement, and from and after the date hereof, the Assignee assumes
for the benefit of each of the Seller and the Assignor all of the Assignor's
obligations as purchaser thereunder;
b. The Assignee understands that the Mortgage Loans have not been
registered under the Securities Act or the securities laws of any state;
c. The purchase price being paid by the Assignee for the Mortgage
Loans is in excess of $250,000.00 and will be paid by cash remittance of the
full purchase price within 60 days of the sale;
d. The Assignee is acquiring the Mortgage Loans for investment for its
own account only and not for any other person. In this connection, neither the
Assignee nor any person authorized to act therefor has offered to sell the
Mortgage Loans by means of any general advertising or general solicitation
within the meaning of Rule 502(c) Regulation D, promulgated under the Securities
Act;
e. The Assignee considers itself a substantial sophisticated
institutional investor having such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
investment in the Mortgage Loans;
f. The Assignee has been furnished with all information regarding the
Mortgage Loans that it has requested from the Assignor or the Seller;
g. Neither the Assignee nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any
interest in the Mortgage Loans or any other similar security to, or solicited
any offer to buy or accepted a transfer, pledge or other disposition of the
Mortgage Loans, any interest in the Mortgage Loans or any other similar security
from, or otherwise approached or negotiated with respect to the Mortgage Loans,
any interest in the Mortgage Loans or any other similar security with, any
person in any manner which would constitute a distribution of the Mortgage Loans
under the Securities Act or which would render the disposition of the Mortgage
Loans a violation of Section 5 of the Securities Act or require registration
pursuant thereto, nor will it act, nor has it authorized or will it authorize
any person to act, in such manner with respect to the Mortgage Loans; and
C-2
h. Either (1) the Assignee is not an employee benefit plan ("Plan")
within the meaning of section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or a plan ("Plan") within the meaning of
section 4975(e)(1) of the Internal Revenue Code of 1986 ("Code"), and the
Assignee is not directly or indirectly purchasing the Mortgage Loans on behalf
of, investment manager of, as named fiduciary of, as trustee of, or with assets
of, a Plan; or (2) the Assignee's purchase of the Mortgage Loans will not result
in a prohibited transaction under section 406 of ERISA or section 4975 of the
Code.
i. The Assignee's address for purposes of all notices and
correspondence related to the Mortgage Loans and the Flow Sale Agreement is:
[NAME AND ADDRESS OF ASSIGNEE]
Attention: __________________________
Telephone: _________________________
Fax: _______________________________
4. Accuracy of the Sale Agreement.
The Seller and the Assignor represent and warrant to the Assignee that (i)
attached hereto as Exhibit B is a true, accurate and complete copy of the Flow
Sale Agreement and all amendments and modifications, if any, thereto, (ii) the
Flow Sale Agreement has not been amended or modified in any respect, except as
set forth in this Agreement, and (iii) no notice of termination has been given
to the Seller under the Flow Sale Agreement.
[Signatures Follow]
C-3
IN WITNESS WHEREOF, the parties have caused this Assignment, Assumption and
Recognition Agreement be executed by their duly authorized officers as of the
date first above written.
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By:_______________________________ By: _________________________________
Name: ____________________________ Name: _______________________________
Its: _____________________________ Its: ________________________________
XXXXXX CAPITAL, A DIVISION OF
XXXXXX BROTHERS HOLDINGS,
as Seller
By: __________________________________
Name: _______________________________
Its: __________________________________
C-4
EXHIBIT A
to the Assignment, Assumption and Recognition Agreement
MORTGAGE LOAN SCHEDULE
----------------------
C-5
EXHIBIT B
to the Assignment, Assumption and Recognition Agreement
EXECUTION COPIES OF FLOW SALE AGREEMENT
---------------------------------------
]
C-6
EXHIBIT D
REPRESENTATIONS AND WARRANTIES
REGARDING INDIVIDUAL MORTGAGE LOANS
-----------------------------------
(a) Mortgage Loans as Described.
---------------------------
The information set forth in the Mortgage Loan Schedule annexed to the
related Memorandum of Sale and the final agreed-upon data tape is
complete, true and correct;
(b) Payments Current.
-----------------
Except as set forth in the Mortgage Loan Schedule, all payments
required to be made prior to the related Cut-off Date for the Mortgage
Loan under the terms of the Mortgage Note have been made and credited.
Except as set forth in the Mortgage Loan Schedule no payment under any
Mortgage Loan has been thirty (30) days or more delinquent since
origination of such Mortgage Loan;
(c) No Outstanding Charges.
-----------------------
All taxes, governmental assessments, insurance premiums, leasehold
payments, ground rents, water, sewer and municipal charges, which
previously became due and owing have been paid, or an escrow of funds
has been established in an amount sufficient to pay for every such
item which remains unpaid and which has been assessed but is not yet
due and payable.
(d) Original Terms Unmodified.
--------------------------
The terms of the Mortgage Note and Mortgage have not been impaired,
waived, altered or modified in any respect, except by a written
instrument and is part of the Collateral File, and which has been
recorded, to the extent required by law, to protect the interests of
the Purchaser; provided, further, that the Mortgage Loan Schedule
reflects the terms of such impairment, waiver, alteration or
modification. The substance of any such waiver, alteration or
modification has been approved by the issuer of any related PMI Policy
and the title insurer, to the extent required by the policy, and its
terms are reflected on the Mortgage Loan Schedule. No instrument of
waiver, alteration or modification has been executed, and no Mortgagor
has been released, in whole or in part, except in connection with an
assumption agreement approved by the issuer of any related PMI Policy
and the title insurer, to the extent required by the policy, and which
assumption agreement is part of the Mortgage File delivered to the
Custodian and the terms of which are reflected on the related Mortgage
Loan Schedule;
D-1
(e) No Defenses.
------------
The Mortgage Note and the Mortgage are not subject to any right of
rescission, set-off, counterclaim or defense, including without
limitation the defense of usury, nor will the operation of any of the
terms of the Mortgage Note or the Mortgage, or the exercise of any
right thereunder, render either the Mortgage Note or the Mortgage
unenforceable, in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including without
limitation the defense of usury, and no such right of rescission,
set-off, counterclaim or defense has been asserted with respect
thereto, and no Mortgagor was a debtor in any state or federal
bankruptcy or insolvency proceeding at the time the Mortgage Loan was
originated;
(f) No Satisfaction of Mortgage.
----------------------------
The Mortgage has not been satisfied, canceled, subordinated or
rescinded, in whole or in part, and the Mortgaged Property has not
been released from the lien of the Mortgage, in whole or in part, nor
has any instrument been executed that would effect any such
satisfaction, release, cancellation, subordination or rescission;
(g) Validity of Mortgage Documents.
-------------------------------
The Mortgage Note and the Mortgage are genuine, and each is the legal,
valid and binding obligation of the maker thereof enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
moratorium and other principles of equity affecting the rights of
creditors generally, whether considered in the proceeding at law or in
equity. All parties to the Mortgage Note and the Mortgage had legal
capacity to enter into the Mortgage Loan and to execute and deliver
the Mortgage Note and the Mortgage, and the Mortgage Note and the
Mortgage have been duly and properly executed by such parties;
(h) No Fraud.
---------
No fraud, error, omission, misrepresentation, negligence or similar
occurrence with respect to a Mortgage Loan has taken place on the part
of the Seller or, to the knowledge of the Seller, the Mortgagor, any
appraiser, any builder or any developer, or any other party involved
in the solicitation, origination or servicing of the Mortgage Loan or
in the application for any insurance in relation to such Mortgage Loan
or in connection with the sale of such Mortgage Loan to the Purchaser,
and, to the knowledge of the Seller, there are no circumstances
existing with respect to the Mortgage Loan which would permit the
primary mortgage guaranty insurer to deny coverage under any insurance
policy;
D-2
(i) Location and Type of Mortgaged Property.
----------------------------------------
The Mortgaged Property is located in the state identified in the
Mortgage Loan Schedule and consists of a contiguous parcel of real
property with a detached single family residence erected thereon, or a
two- to four-family dwelling, or an individual condominium unit in a
condominium project, or an individual unit in a planned unit
development or a townhouse; provided, however, that any condominium
project or planned unit development shall conform with the applicable
Xxxxxx Xxx or Xxxxxxx Xxx requirements regarding such dwellings. If
the Mortgage Loan is secured by a long-term residential lease, the
leasehold estate conformed with the Underwriting Guidelines. None of
the Mortgaged Properties are log homes, mobile homes, geodesic domes
or other unique property types. To the Seller's knowledge, as of the
date of origination, no portion of the Mortgaged Property was being
used for commercial or mixed-use purposes and, to the Seller's
knowledge, since such date, no portion of the Mortgaged Property has
been used for commercial purposes. No Mortgage Loan finances builder
inventory;
(j) Valid First or Second Lien.
---------------------------
The Mortgage is a valid, subsisting, enforceable and perfected first
or second lien on the Mortgaged Property, including all buildings on
the Mortgaged Property and all installations and mechanical,
electrical, plumbing, heating and air conditioning systems located in
or annexed to such buildings, and all additions, alterations and
replacements made at any time with respect to the foregoing. The lien
of the Mortgage is subject only to:
(i) the lien of current real property taxes and assessments not yet
due and payable;
(ii) covenants, conditions and restrictions, rights of way, easements
and other matters of the public record as of the date of
recording acceptable to mortgage lending institutions generally
and specifically referred to in the lender's title insurance
policy delivered to the originator of the Mortgage Loan and (i)
referred to or otherwise considered in the Appraisal made for
the originator of the Mortgage Loan and (ii) which do not
adversely affect the Appraised Value of the Mortgaged Property
set forth in such Appraisal;
(iii) other matters to which like properties are commonly subject
which do not materially interfere with the benefits of the
security intended to be provided by the Mortgage or the use,
enjoyment, value or marketability of the related Mortgaged
Property; and
(iv) with respect to each Second Lien Mortgage a prior mortgage lien
on the Mortgaged Property.
D-3
Any security agreement, chattel mortgage or equivalent document
related to and delivered in connection with the Mortgage Loan
establishes and creates a valid, subsisting and enforceable (A) first
lien and first priority security interest with respect to each First
Lien Mortgage Loan, or (B) second lien and second priority security
interest with respect to each Second Lien Mortgage Loan, in each case,
on the property described therein and the Seller has full right to
sell and assign the same to the Purchaser. The Mortgaged Property was
not, as of the date of origination of the Mortgage Loan, subject to a
mortgage, deed of trust, deed to secure debt or other security
instrument creating a lien subordinate to the lien of the Mortgage;
(k) Full Disbursement of Proceeds.
------------------------------
The proceeds of the Mortgage Loan have been fully disbursed, and there
is no requirement for future advances thereunder. Any and all
requirements as to completion of any on-site or off-site improvements
and any and all requirements as to disbursements of escrow funds for
such improvements have been complied with. All costs, fees and
expenses incurred in making or closing the Mortgage Loan and the
recording of the Mortgage were paid, and the Mortgagor is not entitled
to any refund of any amounts paid or due under the Mortgage Note or
Mortgage;
(l) Consolidation of Future Advances.
---------------------------------
Any future advances made prior to the related Cut-off Date have been
consolidated with the outstanding principal amount secured by the
Mortgage, and the secured principal amount, as consolidated, bears a
single interest rate and single repayment term reflected on the
Mortgage Loan Schedule. The lien of the Mortgage securing the
consolidated principal amount is expressly insured as having first
lien priority by a title insurance policy, an endorsement to the
policy insuring the mortgagee's consolidated interest or by other
title evidence acceptable to Xxxxxx Mae or Xxxxxxx Mac; the
consolidated principal amount does not exceed the original principal
amount of the Mortgage Loan; the Seller shall not make future advances
after the related Cut-off Date;
(m) Ownership.
----------
The Seller, or MERS as nominee for the Seller, is the sole owner of
record and holder of the Mortgage Loan and the related Mortgage Note
and the Mortgage are not assigned or pledged, and the Seller has good
and marketable title thereto and has full right to transfer and sell
the Mortgage Loan to the Purchaser. The Seller is transferring the
Mortgage Loan free and clear of any and all encumbrances, liens,
pledges, equities, participation interests, claims, agreements with
other parties to sell or otherwise transfer the Mortgage Loan, charges
or security interests of any nature encumbering such Mortgage Loan;
D-4
(n) Origination/Doing Business.
---------------------------
The Mortgage Loan was originated by a savings and loan association, a
savings bank, a commercial bank, a credit union, an insurance Seller,
or similar institution that is supervised and examined by a federal or
state authority or by a mortgagee approved by the Secretary of Housing
and Urban Development pursuant to Sections 203 and 211 of the National
Housing Act. All parties which have had any interest in the Mortgage
Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest,
were) (1) in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged Property
is located, and (2) either (A) organized under the laws of such state,
(B) qualified to do business in such state, (C) federal savings and
loan associations or national banks having principal offices in such
state, or (D) not doing business in such state;
(o) LTV, PMI Policy.
----------------
No Mortgage Loan has a LTV greater than 100%. Except as set forth in
the Mortgage Loan Schedule, if a Mortgage Loan had an original LTV of
80% or greater, and the Mortgage Loan Schedule reflects that the
Mortgage Loan is covered by a PMI Policy, the excess over 78% is and
will be insured as to payment defaults by a PMI Policy until
terminated pursuant to the Homeowners Protection Act of 1998, 12 USC
ss.4901, et seq. All provisions of such PMI Policy have been and are
being complied with, such policy is in full force and effect, and all
premiums due thereunder have been paid. The insurer under such PMI
Policy is a Qualified Insurer. Any Mortgage Loan subject to a PMI
Policy obligates the Mortgagor thereunder or the related servicer to
maintain the PMI Policy and to pay all premiums and charges in
connection therewith. Any such premium is not payable from any portion
of the Mortgage Interest Rate. No Mortgage Loan requires payment of
such premiums, in whole or in part, by the Purchaser;
(p) Title Insurance.
----------------
The Mortgage Loan is covered by either (i) an attorney's opinion of
title and abstract of title the form and substance of which is
acceptable to mortgage lending institutions making mortgage loans in
the area where the Mortgaged Property is located or (ii) an ALTA
lender's title insurance policy or other generally acceptable form of
policy of insurance, issued by a Qualified Insurer and qualified to do
business in the jurisdiction where the Mortgaged Property is located,
insuring the Seller, its successors and assigns, as to the first or
second priority lien of the Mortgage in the original principal amount
of the Mortgage Loan, subject only to the exceptions contained in
clauses (1), (2) and (3) of Paragraph (j) of this Section 3.02, with
respect to each Second Lien Mortgage Loan, clause (4) of Paragraph (j)
of this Section 3.02, and against any loss by reason of the invalidity
or unenforceability of the lien resulting from the provisions of the
Mortgage providing for adjustment to the Mortgage Interest Rate and
Monthly Payment. Additionally, such lender's title insurance policy
affirmatively insures ingress and egress, and against encroachments by
D-5
or upon the Mortgaged Property or any interest therein. Where required
by state law or regulation, the Mortgagor has been given the
opportunity to choose the carrier of such lender's title insurance
policy. The Seller, its successors and assigns, are the sole insureds
of such lender's title insurance policy, and such lender's title
insurance policy is in full force and effect and will be in full force
and effect upon the consummation of the purchase of the Mortgage Loans
as contemplated by this Agreement. No claims have been made under such
lender's title insurance policy, and, to the knowledge of the Seller,
no prior holder of the Mortgage, including the Seller, has done, by
act or omission, anything which would impair the coverage of such
lender's title insurance policy. In connection with the issuance of
such lender's title insurance policy, no unlawful fee, commission,
kickback or other unlawful compensation or value of any kind has been
or will be received, retained or realized by any attorney, firm or
other person or entity, and no such unlawful items have been received,
retained or realized by the Seller;
(q) No Defaults.
------------
Except as set forth in the Mortgage Loan Schedule, there is no
default, breach, violation or event of acceleration existing under the
Mortgage or the Mortgage Note and no event which, with the passage of
time or with notice and the expiration of any grace or cure period,
would constitute a default, breach, violation or event of
acceleration, and neither the Seller nor its predecessors have waived
any default, breach, violation or event of acceleration. With respect
to each Second Lien Mortgage Loan, (i) the prior mortgage is in full
force and effect, (ii) there is no default, breach, violation or event
of acceleration existing under such prior mortgage or the related
mortgage note, (iii) no event which, with the passage of time or with
notice and the expiration of any grace or cure period, would
constitute a default, breach, violation or event of acceleration
thereunder, and either (A) the prior mortgage contains a provision
which allows or (B) applicable law requires, the mortgagee under the
Second Lien Mortgage Loan to receive notice of, and affords such
mortgagee an opportunity to cure any default by payment in full or
otherwise under the prior mortgage;
(r) No Mechanics' Liens.
--------------------
There are no mechanics' or similar liens or claims which have been
filed for work, labor or material (and no rights are outstanding that
under the law could give rise to such liens) affecting the related
Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage;
(s) Location of Improvements; No Encroachments.
-------------------------------------------
Except as insured against by the title insurance policy referenced in
Paragraph (p) above, all improvements which were considered in
determining the Appraised Value of the Mortgaged Property lay wholly
within the boundaries and building restriction lines of the Mortgaged
Property and no improvements on adjoining properties encroach upon the
D-6
Mortgaged Property. No improvement located on or being part of the
Mortgaged Property is in violation of any applicable zoning law or
regulation;
(t) Payment Terms.
--------------
Except with respect to the Interest Only Mortgage Loans and Mortgage
Loans providing for Negative Amortization, principal payments
commenced no more than sixty (60) days after the funds were disbursed
to the Mortgagor in connection with the Mortgage Loan. Except as set
forth in the Mortgage Loan Schedule, the Mortgage Loans have an
original term to maturity of not more than thirty (30) years, with
interest payable in arrears on the Due Date set forth on the related
Mortgage Loan Schedule. As to each Adjustable Rate Mortgage Loan on
each applicable Adjustment Date, the Mortgage Interest Rate will be
adjusted to equal the sum of the Index plus the applicable Gross
Margin, rounded up or down to the nearest or next highest multiple of
0.125% indicated by the Mortgage Note; provided that the Mortgage
Interest Rate will not increase or decrease by more than the Periodic
Interest Rate Cap on any Adjustment Date, and will in no event exceed
the maximum Mortgage Interest Rate or be lower than the minimum
Mortgage Interest Rate listed on the Mortgage Loan Schedule for such
Mortgage Loan. As to each Adjustable Rate Mortgage Loan which is not
an Interest Only Mortgage Loan or a Mortgage Loan providing for
Negative Amortization, each Mortgage Note requires a monthly payment
which is sufficient to fully amortize the outstanding principal
balance as of the first day of such period over the then remaining
term of such Mortgage Note and to pay interest at the related Mortgage
Interest Rate. As to each Adjustable Rate Mortgage Loan, if the
related Mortgage Interest Rate changes on an Adjustment Date (or with
respect to an Interest Only Mortgage Loan, on an Adjustment Date
following the related interest-only period), the then outstanding
principal balance will be reamortized over the remaining life of such
Mortgage Loan;
(u) Customary Provisions.
---------------------
The Mortgage and related Mortgage Note contain customary and
enforceable provisions such as to render the rights and remedies of
the holder thereof adequate for the realization against the Mortgaged
Property of the benefits of the security provided thereby, including,
(i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise by judicial foreclosure. There is
no homestead or other exemption (other than under the Servicemembers
Civil Relief Act) available to a Mortgagor which would interfere with
the right to sell the Mortgaged Property at a trustee's sale or the
right to foreclose the Mortgage;
(v) Occupancy of the Mortgaged Property.
------------------------------------
To the best of the Seller's knowledge, the Mortgaged Property is
lawfully occupied as of the Closing Date;
D-7
(w) No Additional Collateral.
-------------------------
The Mortgage Note is not and has not been secured by any collateral,
pledged account or other security except the lien of the corresponding
Mortgage and the security interest of any applicable security
agreement or chattel mortgage referred to in Paragraph (m) above;
(x) Deeds of Trust.
---------------
In the event the Mortgage constitutes a deed of trust, a trustee, duly
qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Mortgage, and
no fees or expenses are or will become payable by the mortgagee to the
trustee under the deed of trust, except in connection with a trustee's
sale after default by the Mortgagor;
(y) Transfer of Mortgage Loans.
---------------------------
With respect to each Mortgage that is not recorded in the name of MERS
or its designee, the Assignment of Mortgage, upon the insertion of the
name of the assignee and recording information, is in recordable form
(other than the name of the assignee if in blank) and is acceptable
for recording under the laws of the jurisdiction in which the related
Mortgaged Property is located;
(z) Mortgaged Property Undamaged.
-----------------------------
The Mortgaged Property is not subject to material damage and undamaged
by waste, fire, earthquake or earth movement, windstorm, hurricane,
flood, tornado or other casualty so as to affect adversely the value
of the Mortgaged Property as security for the Mortgage Loan or the use
for which the premises were intended;
(aa) Servicing and Collection Practices; Escrow Deposits.
----------------------------------------------------
The servicing and collection practices used with respect to the
Mortgage Loan have been in accordance with Accepted Servicing
Practices, any applicable laws, rules and regulations and in
accordance with the terms of the Mortgage Note, Mortgage and other
loan documents, whether such servicing was done by the Seller, its
affiliates, any third party or any servicing agent of any of the
foregoing. With respect to Mortgage Loans for which an escrow account
is established, all escrow deposits and Escrow Payments are in the
possession of the Seller and there exist no deficiencies in connection
therewith for which customary arrangements for repayment thereof have
not been made. All Escrow Payments have been collected in full
compliance with state and federal law. Except as set forth on the
Mortgage Loan Schedule, no escrow deposits or Escrow Payments or other
charges or payments have been capitalized under the Mortgage Note;
D-8
(bb) No Condemnation.
----------------
There is no proceeding pending or to the best of the Seller's
knowledge threatened for the total or partial condemnation of the
related Mortgaged Property;
(cc) The Appraisal.
--------------
The Mortgage File contains an Appraisal of the related Mortgaged
Property. The appraisal was made and signed, prior to the approval of
the Mortgage Loan application, by a Qualified Appraiser;
(dd) Insurance.
----------
All buildings on the Mortgaged Property are insured by a Qualified
Insurer against loss by fire and such hazards as are covered under a
standard extended coverage endorsement and such other hazards as are
provided for in the Underwriting Guidelines and the requirements of
Section 4.10, in an amount which is not less than the lesser of 100%
of the insurable value of the Mortgaged Property and the outstanding
principal balance of the Mortgage Loan. If the Mortgaged Property is a
condominium unit, it is included under the coverage afforded by a
blanket policy for the project. If the improvements on the Mortgaged
Property are in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards,
then a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration is in effect with a
generally acceptable insurance carrier and such policy conforms to the
Underwriting Guidelines. Such flood insurance policy is in an amount
representing coverage not less than the least of (A) the outstanding
principal balance of the Mortgage Loan, (B) the full insurable value
of the related Mortgaged Property and (C) the maximum amount of
insurance which was available under the Flood Disaster Protection Act
of 1973, as amended. All individual insurance policies contain a
standard mortgagee clause naming the Seller and its successors and
assigns as loss payee, and all premiums thereon have been paid. The
Mortgage obligates the Mortgagor thereunder to maintain such insurance
at the Mortgagor's cost and expense, and on the Mortgagor's failure to
do so, authorizes the holder of the Mortgage to obtain and maintain
such insurance at such Mortgagor's cost and expense, and to seek
reimbursement therefor from the Mortgagor. Each such 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 Purchaser upon the consummation of the transactions
contemplated by this Agreement. The Seller has not acted or failed to
act so as to impair the coverage of any such insurance policy or the
validity, binding effect and enforceability thereof;
D-9
(ee) No Impairment of Insurance Coverage.
------------------------------------
No action, inaction, or event has occurred and no state of facts
exists or has existed that has resulted or will result in the
exclusion from, denial of, or defense to coverage under any applicable
hazard insurance policy or PMI Policy, irrespective of the cause of
such failure of coverage. In connection with the placement of any such
insurance, no commission, fee, or other compensation has been or will
be received by the Seller or any designee of the Seller or any
corporation in which the Seller or any officer, director, or employee
had a financial interest at the time of placement of such insurance;
(ff) Servicemembers Civil Relief Act.
--------------------------------
The Mortgagor has not notified the Seller, and the Seller has no
knowledge of any relief requested by or allowed to the Mortgagor under
the Servicemembers Civil Relief Act or any similar state law or local
laws;
(gg) Balloon Payments, Graduated Payments or Contingent Interests.
-------------------------------------------------------------
With respect to any Mortgage Loan which is identified on the Mortgage
Loan Schedule as a balloon mortgage loan (each, a "Balloon Mortgage
Loan"), the Mortgage Note is payable in Monthly Payments based on a
thirty (30) year amortization schedule with a final Monthly Payment
substantially greater than the preceding Monthly Payment which is
sufficient to amortize the remaining principal balance of the Balloon
Mortgage Loan and such final Monthly Payment shall not be due prior to
180 months following the origination of the Balloon Mortgage Loan. The
Mortgage Loan is not a graduated payment Mortgage Loan and the
Mortgage Loan does not have a shared appreciation or other contingent
interest feature.
(hh) No Construction Loans.
----------------------
No Mortgage Loan was made in connection with (i) the construction or
rehabilitation of a Mortgaged Property or (ii) facilitating the
trade-in or exchange of a Mortgaged Property other than a
construction-to-permanent loan which has converted to a permanent
Mortgage Loan;
(ii) Underwriting.
-------------
Each Mortgage Loan was underwritten in accordance with the
Underwriting Guidelines; the Mortgage Note and the Mortgage are on
forms acceptable to Xxxxxx Xxx or Xxxxxxx Mac;
D-10
(jj) Buydown Mortgage Loans.
-----------------------
With respect to each Mortgage Loan that is a Buydown Mortgage Loan:
(1) On or before the date of origination of such Mortgage Loan,
the Seller and the Mortgagor, or the Seller, the Mortgagor and
the seller of the Mortgaged Property or a third party entered
into a Buydown Agreement. The Buydown Agreement provides that the
seller of the Mortgaged Property (or third party) shall deliver
to the Seller temporary Buydown Funds in an amount equal to the
aggregate undiscounted amount of payments that, when added to the
amount the Mortgagor on such Mortgage Loan is obligated to pay on
each Due Date in accordance with the terms of the Buydown
Agreement, is equal to the full scheduled Monthly Payment due on
such Mortgage Loan. The temporary Buydown Funds enable the
Mortgagor to qualify for the Buydown Mortgage Loan. The effective
interest rate of a Buydown Mortgage Loan, if less than the
interest rate set forth in the related Mortgage Note, will
increase within the Buydown Period as provided in the related
Buydown Agreement so that the effective interest rate will be
equal to the interest rate as set forth in the related Mortgage
Note. The Buydown Mortgage Loan satisfies the requirements of the
Underwriting Guidelines;
(2) The Mortgage and Mortgage Note reflect the permanent payment
terms rather than the payment terms of the Buydown Agreement. The
Buydown Agreement provides for the payment by the Mortgagor of
the full amount of the Monthly Payment on any Due Date that the
Buydown Funds are available. The Buydown Funds were not used to
reduce the original principal balance of the Mortgage Loan or to
increase the Appraised Value of the Mortgage Property when
calculating the Loan-to-Value Ratios for purposes of the
Agreement and, if the Buydown Funds were provided by the Seller
and if required under the Underwriting Guidelines, the terms of
the Buydown Agreement were disclosed to the Qualified Appraiser
of the Mortgaged Property;
(3) The Buydown Funds may not be refunded to the Mortgagor unless
the Mortgagor makes a principal payment for the outstanding
balance of the Mortgage Loan; and
(4) As of the date of origination of the Mortgage Loan, the
provisions of the related Buydown Agreement complied with the
requirements of the Underwriting Guidelines regarding buydown
agreements;
(kk) No Bankruptcy.
--------------
No Mortgagor was a debtor in any state or federal bankruptcy or
insolvency proceeding at the time the Mortgage Loan was originated
and, to the best of the Seller's knowledge, following the date of
origination of the Mortgage Loan, the Mortgagor with respect to the
D-11
Mortgage Loan was not a debtor in any state or federal bankruptcy or
insolvency proceeding, and the Mortgaged Property has not been subject
to any bankruptcy or foreclosure proceedings;
(ll) Interest Calculation.
---------------------
Interest on each Mortgage Loan is calculated on the basis of a 360-day
year consisting of twelve 30-day months. No Mortgage Loan provides for
interest payable on a simple interest basis. No Mortgage Loan provides
for an increase in the related Mortgage Interest Rate upon the
occurrence of a default under the terms of the related Mortgage Note;
(mm) No Violation of Environmental Laws.
-----------------------------------
To the best of Seller's knowledge: (i) the Mortgaged Property is free
from any and all toxic or hazardous substances and (ii) there exists
no violation of any local, state or federal environmental law, rule or
regulation. There is no pending action or proceeding directly
involving any Mortgaged Property of which the Seller is aware in which
compliance with any environmental law, rule or regulation is an issue;
and to the best of the Seller'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 use and enjoyment of said
property;
(nn) Texas Refinance Mortgage Loans.
-------------------------------
Each Mortgage Loan originated in the state of Texas pursuant to
Article XVI, Section 50(a)(6) of the Texas Constitution (a "Texas
Refinance Loan") has been originated in compliance with the provisions
of Article XVI, Section 50(a)(6) of the Texas Constitution, Texas
Civil Statutes and the Texas Finance Code. If the Mortgage Loan was
originated in Texas, it is not a cash out refinancing;
(oo) Conversion to Fixed Interest Rate.
----------------------------------
No Adjustable Rate Mortgage Loan contains a provision permitting or
requiring conversion to a fixed rate of interest;
(pp) The Mortgagor.
--------------
The Mortgagor is one or more natural persons and/or trustees for an
Illinois land trust or a trustee under a "living trust" or "blind
trust" and such "living trust" or "blind trust" is in compliance with
the Underwriting Guidelines. In the event the Mortgagor is a trustee
of a "living trust," such trustee is a natural person and is an
obligor under the Mortgage Note in his or her individual capacity;
(qq) Due on Sale.
------------
The Mortgage contains an enforceable provision, to the extent not
prohibited by applicable law as of the date of such Mortgage, for the
acceleration of the payment of the unpaid principal balance of the
D-12
Mortgage Loan in the event that the Mortgaged Property is sold or
transferred without the prior written consent of the mortgagee
thereunder;
(rr) Adjustments.
------------
All of the terms of the related Mortgage Note pertaining to interest
adjustments, payment adjustments and adjustments of the outstanding
principal balance, if any, are enforceable and such adjustments on
such Mortgage Loan have been made properly and in accordance with the
provisions of such Mortgage Loan;
(ss) Compliance with Anti-Money Laundering Laws.
-------------------------------------------
The Seller has complied with all applicable and anti-money laundering
laws and regulations, including without limitation the USA Patriot Act
of 2001 (collectively, the "Anti-Money Laundering Laws");
(tt) Tax Service Contracts; Flood Certification Contract.
----------------------------------------------------
Each First Lien Mortgage Loan is covered by a paid in full, life of
loan, tax service contract and each Mortgage Loan is covered by a paid
in full, life of loan, flood certification contract and each of these
contracts is assignable to the Purchaser and its assigns;
(uu) Consent.
--------
Either (a) no consent for the Second Lien Mortgage Loan is required by
the holder of the related first lien or (b) such consent has been
obtained and is contained in the Mortgage File;
(vv) CLTV.
-----
No Second Lien Mortgage Loan has a CLTV in excess of 100%;
(ww) Debt-to-Income Ratio.
---------------------
Except as set forth on the Mortgage Loan Schedule, each Mortgagor had
a debt-to-income ratio of 55% or less at the time of origination;
(xx) Qualified Mortgages.
--------------------
Each Mortgage Loan is a "qualified mortgage" within Section 860G(a)(3)
of the Code;
D-13
(yy) No Litigation Pending.
----------------------
There is no action, suit, proceeding or investigation pending, or to
the Seller's knowledge threatened, that is related to the Mortgage
Loan and likely to affect materially and adversely the servicing of
such Mortgage Loan;
(zz) Pledged Asset Loans.
--------------------
The Mortgage Loan is not a "pledged asset" mortgage loan;
(aaa) Compliance with Applicable Laws.
--------------------------------
All requirements of any applicable federal, state or local law
including, without limitation, all applicable predatory and abusive
lending, usury, truth-in-lending, real estate settlement procedures,
consumer credit protection (including Uniform Consumer Credit Code
laws), fair credit reporting, unfair collection practices, equal
credit opportunity or fair housing and disclosure laws (including,
without limitation, any provisions relating to Prepayment Premiums)
applicable to the solicitation, origination, servicing and collection
of the Mortgage Loan have been complied with, the Mortgagor received
all disclosure materials required by applicable law with respect to
the making of mortgage loans of the same type as the Mortgage Loan
and, if the Mortgage Loan is a refinanced Mortgage Loan, rescission
materials required by applicable laws. All inspections, licenses and
certificates required to be made or issued with respect to all
occupied portions of the Mortgaged Property and, with respect to the
use and occupancy of the same, including, but not limited to,
certificates of occupancy and fire underwriting certificates, have
been made or obtained from the appropriate authorities;
(bbb) Prepayment Premiums.
--------------------
Each Prepayment Premium is permissible and enforceable in accordance
with its terms under applicable law. Each Mortgage Loan with a
Prepayment Premium provides some benefit to the borrower (e.g., a
rate or fee reduction) in exchange for accepting such Prepayment
Premium;
(ccc) HOEPA and Similar Laws.
-----------------------
No Mortgage Loan is (a) a "high cost" loan under the Home Ownership
and Equity Protection Act of 1994 as amended, or (b) a "high cost,"
"threshhold," "covered," "predatory," "abusive," or similarly defined
loan, including refinance loans, under any other applicable state,
federal or local law (or a similarly classified loan using different
terminology under a law imposing heightened regulatory scrutiny or
additional legal liability for residential mortgage loans having high
interest rates, points and/or fees), provided that any Mortgage Loan
secured by a Mortgaged Property in Illinois characterized as a
"threshold" loan shall not be a "high cost" loan unless it is
characterized as "predatory" under applicable local law or (c) a
"High Cost Loan" or "Covered Loan" as defined in the S&P LEVELS
D-14
Glossary; the Seller has implemented and conducted compliance
procedures to determine if each Mortgage Loan is "high cost" home
loan under the applicable laws and performed a review of the
disclosure provided to the related Mortgagor in accordance with such
laws and the related Mortgage Note in order to determine that such
Mortgage Loan, if subject to any such law, does not violate any such
law;
(ddd) Single Premium Credit Life Insurance.
-------------------------------------
No Mortgagor was required to purchase any single premium credit life,
credit disability, credit unemployment, credit property, accident or
health insurance product as a condition of obtaining the extension of
credit for the Mortgage Loan or in connection with the origination of
the Mortgage Loan;
(eee) Credit Reporting.
-----------------
The Seller for each Mortgage Loan has fully furnished, in accordance
with the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information (i.e. favorable and unfavorable) on
its borrower credit files to Equifax, Experian and Trans Union Credit
Information Seller (three of the credit repositories);
(fff) Higher Cost Credit Products.
----------------------------
No Mortgagor was encouraged or required to select a Mortgage Loan
product offered by the originator of the Mortgage Loan which is a
higher cost product designed for less creditworthy borrowers, unless
at the time of the Mortgage Loan's origination, such Mortgagor did
not qualify, taking into account credit history and debt-to-income
ratios, for a lower cost credit product then offered by the
originator; and
(ggg) No Mandatory Arbitration Provisions.
------------------------------------
With respect to each Mortgage Loan originated on or after August 1,
2004, neither the related Mortgage nor the related Mortgage Note
requires the Mortgagor to submit to arbitration to resolve any
dispute arising out of or relating in any way to the mortgage loan
transaction.
D-15
EXHIBIT E
FORM OF MEMORANDUM OF SALE
--------------------------
CLOSING DATE:
This Memorandum of Sale (this "Memorandum"), dated as of _______ (the
"Closing Date"), confirms the sale by Xxxxxx Capital, A Division of Xxxxxx
Brothers Holdings Inc. (the "Seller"), to [LUMINENT MORTGAGE CAPITAL, INC. /
MERCURY MORTGAGE FINANCE STATUTORY TRUST / MAIA MORTGAGE FINANCE STATUTORY
TRUST] (the "Purchaser"), and the purchase by the Purchaser from the Seller, of
the first lien [fixed rate] [adjustable rate] residential mortgage loans on a
servicing retained basis described on the Mortgage Loan Schedule attached hereto
as Schedule I (the "Mortgage Loans"), pursuant to the terms of the Flow Sale
Agreement (the "Flow Sale Agreement"), dated as of November 1, 2006, and is by
and between the Purchaser and the Seller. The Mortgage Loans will be serviced
pursuant to the terms of the Flow Servicing Agreement, dated as of November 1,
2006, by and among the Purchaser, Aurora Loan Services LLC, as servicer, and the
Seller, as servicing rights owner.
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Seller does hereby bargain, sell, convey, assign and
transfer to Purchaser without recourse, except as provided in the Flow Sale
Agreement, and on a servicing retained basis (at a Servicing Fee Rate of [ - ]%
per annum), all right, title and interest of the Seller in and to each of the
Mortgage Loans, together with all documents maintained as part of the related
Mortgage Files, all Mortgaged Properties which secure any Mortgage Loan but are
acquired by foreclosure, deed in lieu of foreclosure after the Cut-off Date or
otherwise, all payments of principal and interest received on the Mortgage Loans
after the Cut-off Date, all other unscheduled collections collected in respect
of the Mortgage Loans after the Cut-off Date, and all proceeds of the foregoing,
subject, however, to the rights of the Seller under the Flow Sale Agreement.
The Seller has delivered to the Custodian prior to the date hereof the
documents with respect to each Mortgage Loan required to be delivered under the
Flow Sale Agreement.
Capitalized terms that are used herein but are not defined herein shall
have the respective meanings set forth in the Flow Sale Agreement.
E-1
IN WITNESS WHEREOF, the parties hereto, by the hands of their duly
authorized officers, execute this Memorandum as of the Closing Date referred to
above.
[LUMINENT MORTGAGE CAPITAL, INC.
MERCURY MORTGAGE FINANCE STATUTORY TRUST
MAIA MORTGAGE FINANCE STATUTORY TRUST],
as Purchaser
By: ___________________________
Name: ________________________
Its: _________________________
XXXXXX CAPITAL, A DIVISION OF XXXXXX BROTHERS HOLDINGS INC.,
as Seller
By: ___________________________
Name: _________________________
Its: _________________________
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SCHEDULE I
MORTGAGE LOAN SCHEDULE
----------------------
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EXHIBIT F
REGULATION AB COMPLIANCE ADDENDUM
---------------------------------
ARTICLE I
DEFINED TERMS
Capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Agreement. The following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
Commission: The United States Securities and Exchange Commission.
Seller Information: As defined in Section 2.07(a).
Exchange Act: The Securities Exchange Act of 1934, as amended.
Master Servicer: With respect to any Securitization Transaction, the "master
servicer," if any, identified in the related transaction documents.
Public Securitization Transaction: Any transaction involving either (1) a sale
or other transfer of some or all of the Mortgage Loans directly or indirectly to
an issuing entity in connection with an issuance of publicly offered
mortgage-backed securities or (2) an issuance of publicly offered securities,
the payments on which are determined primarily by reference to one or more
portfolios of residential mortgage loans consisting, in whole or in part, of
some or all of the Mortgage Loans.
Qualified Correspondent: Any Person from which the Seller purchased Mortgage
Loans, provided that the following conditions are satisfied: (i) such Mortgage
Loans were originated pursuant to an agreement between the Seller and such
Person that contemplated that such Person would underwrite mortgage loans from
time to time, for sale to the Seller, in accordance with underwriting guidelines
designated by the Seller ("Designated Guidelines") or guidelines that do not
vary materially from such Designated Guidelines; (ii) such Mortgage Loans were
in fact underwritten as described in clause (i) above and were acquired by the
Seller within 180 days after origination; (iii) either (x) the Designated
Guidelines were, at the time such Mortgage Loans were originated, used by the
Seller in origination of mortgage loans of the same type as the Mortgage Loans
for the Seller's own account or (y) the Designated Guidelines were, at the time
such Mortgage Loans were underwritten, designated by the Seller on a consistent
basis for use by lenders in originating mortgage loans to be purchased by the
Seller; and (iv) the Seller employed, at the time such Mortgage Loans were
acquired by the Seller, pre-purchase or post-purchase quality assurance
procedures (which may involve, among other things, review of a sample of
mortgage loans purchased during a particular time period or through particular
channels) designed to ensure that Persons from which it purchased mortgage loans
properly applied the underwriting criteria designated by the Seller.
Reconstitution: Any Securitization Transaction or Whole Loan Transfer.
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Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB), 17
C.F.R. ss.ss.229.1100-229.1123, as such may be amended from time to time, and
subject to such clarification and interpretation as have been provided by the
Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff
of the Commission, or as may be provided by the Commission or its staff from
time to time.
Securities Act: The Securities Act of 1933, as amended.
Static Pool Information: Static pool information as described in Item
1l05(a)(l)-(3) and 1105(c) of Regulation AB.
Third-Party Originator: Each Person, other than a Qualified Correspondent or the
Seller, that originated (within the Meaning of Regulation AB) Mortgage Loans
acquired by the Seller.
ARTICLE II
COMPLIANCE WITH REGULATION AB
Section 2.01. Intent of the Parties; Reasonableness.
-------------------------------------
The Purchaser and the Seller acknowledge and agree that the purpose of
Article II of this Reg AB Addendum is to facilitate compliance by the Purchaser
and any Depositor with the provisions of Regulation AB and related rules and
regulations of the Commission. Although Regulation AB is applicable by its terms
only to offerings of asset-backed securities that are registered under the
Securities Act, the Seller acknowledges that investors in privately offered
securities may require that the Purchaser or any Depositor provide comparable
disclosure in unregistered offerings. Except to the extent otherwise set forth
herein, references in this Regulation AB Addendum to compliance with Regulation
AB include provision of comparable disclosure in private offerings.
None of the Purchaser, the Depositor nor any Master Servicer shall exercise
its right to request delivery of information or other performance under these
provisions other than in good faith, or for purposes other than compliance with
the Securities Act, the Exchange Act and the rules and regulations of the
Commission thereunder (or the provision in a private offering of disclosure
comparable to that required under the Securities Act). The Seller acknowledges
that interpretations of the requirements of Regulation AB may change over time,
and agrees to reasonably amend this Agreement to comply with requests made by
the Purchaser, any Master Servicer or any Depositor in good faith for delivery
of information under these provisions on the basis of evolving interpretations
of Regulation AB.
The Purchaser (including any of its assignees or designees), the Master
Servicer and the Depositor shall reasonably cooperate with the Seller by
providing timely notice of requests for information under these provisions and
by reasonably limiting such requests to information required, in the Purchaser's
reasonable judgment, to comply with this Regulation AB Addendum.
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Section 2.02. Additional Representations and Warranties.
-----------------------------------------
(a) In connection with a Securitization Transaction, the Seller hereby
represents to the Purchaser, to any Master Servicer and to the Depositor, as of
the date on which information is first provided to the Purchaser, any Master
Servicer or the Depositor under Section 2.03 that, except as described in
writing to the Purchaser, such Master Servicer or Depositor prior to such date:
(i) there are no material legal proceedings pending or known to be contemplated
by governmental authorities against the Seller or any Third-Party Originator
that are material to the related securityholders; and (ii) there are no
affiliations relating to the Seller or Third-Party Originator with respect to
any Securitization Transaction and any party thereto (identified in writing in
the Reconstitution Agreement) of a type described in Item 1119 of Regulation AB.
(b) If so requested by the Purchaser, any Master Servicer or any Depositor
on any date following the date on which information is first provided to the
Purchaser, any master Servicer or any Depositor under Section 2.03, the Seller
shall endeavor within five Business Days but in no event later than ten Business
Days following such request to confirm in writing the accuracy of the
representations and warranties set forth in paragraph (a) of this section or, if
any such representation and warranty is not accurate as of the date of such
request, provide reasonably adequate disclosure of the pertinent facts, in
writing, to the requesting party.
Section 2.03. Information to Be Provided by the Seller.
----------------------------------------
In connection with any Securitization Transaction, the Seller shall (i)
endeavor within five Business Days but in no event later than ten Business Days
following request by the Purchaser or any Depositor, provide to the Purchaser
and such Depositor (or, as applicable, cause each Third-Party Originator to
provide), in writing and in form and substance reasonably satisfactory to the
Purchaser and such Depositor, the information and materials specified in
paragraphs (a) and (b) of this Section, and (ii) as promptly as practicable
following notice to or discovery by the Seller, provide to the Purchaser and any
Depositor (in writing and in form and substance reasonably satisfactory to the
Purchaser and such Depositor) the information specified in paragraph (c) of this
Section.
(a) If so requested by the Purchaser or any Depositor, the Seller shall
provide such information regarding (i) the Seller, as originator of the Mortgage
Loans (including as an acquirer of Mortgage Loans from a Qualified
Correspondent), or (ii) each Third-Party Originator, as is requested for the
purpose of compliance with Items 1103(a)(l), 1105, 1110, 1117 and 1119 of
Regulation AB. Such information shall include:
(A) the originator's form of organization;
(B) a description of the originator's origination program and how long
the originator has been engaged in originating residential mortgage loans,
which description shall include a discussion of the originator's experience
in originating mortgage loans of a similar type as the Mortgage Loans;
information regarding the size and composition of the originator's
origination portfolio; and information that may be material, in the good
faith judgment of the Purchaser or any Depositor, to an analysis of the
performance of the Mortgage Loans, including the originators'
credit-granting or underwriting criteria for mortgage loans of similar
type(s) as the Mortgage Loans and such other information as the Purchaser
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or any Depositor may reasonably request for the purpose of compliance with
Item 1110(b)(2) of Regulation AB;
(C) a description of any material legal proceedings pending or known
to be contemplated by governmental authorities against the Seller and each
Third-Party Originator; and
(D) a description of any affiliation (of a type described in Item 1119
of Regulation AB) between the Seller, each Third-Party Originator, each
Subservicer and any of the following parties to a Securitization
Transaction, as such parties are identified to the Seller by the Purchaser
or any Depositor in writing in advance of such Securitization Transaction:
(1) any servicer;
(2) any trustee;
(3) any originator;
(4) any significant obligor;
(5) any enhancement or support provider; and
(6) any other material transaction party.
provided, in the event of a conflict between the obligations contained in
this subsection (a) and the requirements of Regulation AB, the requirements
of Regulation AB shall control.
(b) In connection with a Public Securitization, if so requested by the
Purchaser or any Depositor, the Seller shall provide (or, as applicable, cause
each Third-Party Originator to provide) Static Pool Information with respect to
the mortgage loans (of a similar type as the Mortgage Loans, as reasonably
identified by the Purchaser as provided below) sold by the Seller or any
Third-Party Originator and originated by (i) the Seller, if the Seller is an
originator of Mortgage Loans (including as an acquirer of Mortgage Loans from a
Qualified Correspondent), and/or (ii) each Third-Party Originator. Such Static
Pool Information shall be prepared by the Seller (or Third-Party Originator) on
the basis of its reasonable, good faith interpretation of the requirements of
Item 1105(a)(1)-(3) of Regulation AB. To the extent that there is reasonably
available to the Seller (or Third-Party Originator) Static Pool Information with
respect to more than one mortgage loan type, the Purchaser or any Depositor
shall be entitled to specify whether some or all of such information shall be
provided pursuant to this paragraph. The content of such Static Pool Information
may be in the form customarily provided by the Seller, and need not be
customized for the Purchaser or any Depositor. Such Static Pool Information for
each vintage origination year or prior securitized pool, as applicable, shall be
presented in increments no less frequently than quarterly over the life of the
mortgage loans included in the vintage origination year or prior securitized
pool. The most recent periodic increment must be as of a date no later than 135
days prior to the date of the prospectus or other offering document in which the
Static Pool Information is to be included or incorporated by reference. The
Static Pool Information shall be provided in an electronic format that provides
a permanent record of the information provided, such as a portable document
format (pdf) file, or other such electronic format reasonably required by the
Purchaser or the Depositor, as applicable. Notwithstanding the foregoing, the
parties acknowledge that the Seller has advised the Purchaser that it currently
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does not possess any Static Pool Information relevant to mortgage loans
originated by Xxxxxx Brothers Bank (or its correspondents) to the Bank's
underwriting guidelines, and is unable to obtain same without unreasonable
effort or expense; provided further, in connection with this sentence, that the
Seller shall not be in default or liable for the failure to deliver Static Pool
Information. The Seller agrees to advise the Purchaser if and when it can
provide such Static Pool Information.
Promptly following notice or discovery of a material error in Static Pool
Information provided pursuant to the immediately preceding paragraph (including
an omission to include therein information required to be provided pursuant to
such paragraph), the Seller shall provide corrected Static Pool Information to
the Purchaser or any Depositor, as applicable, in the same format in which
Static Pool Information was previously provided to such party by the Seller.
If so requested by the Purchaser or any Depositor, the Seller shall provide
(or, as applicable, cause each Third-Party Originator to provide), at the
expense of the requesting party (to the extent of any additional incremental
expense associated with delivery pursuant to this Agreement), such statements
and agreed-upon procedures letters of certified public accountants reasonably
acceptable to the Purchaser or Depositor, as applicable, pertaining to Static
Pool Information relating to prior securitized pools for securitizations closed
on or after January 1, 2006 or, in the case of Static Pool Information with
respect to the Seller's or Third-Party Originator's originations or purchases,
to calendar months commencing January 1, 2006, as the Purchaser or such
Depositor shall reasonably request. Such statements and letters shall be
addressed to and be for the benefit of such parties as the Purchaser or such
Depositor shall designate, which may include, by way of example, any Sponsor,
any Depositor and any broker dealer acting as underwriter, placement agent or
initial purchaser with respect to a Securitization Transaction. Any such
statement or letter may take the form of a standard, generally applicable
document accompanied by a reliance letter authorizing reliance by the addressees
designated by the Purchaser or such Depositor.
(c) If so requested by the Purchaser or any Depositor for the purpose of
satisfying its reporting obligation under the Exchange Act with respect to any
class of asset-backed securities, the Seller shall (or shall cause each
Third-Party Originator to) (i) notify the Purchaser and such Depositor in
writing of (A) any legal proceedings pending against the Seller or any
Third-Party Originator that is material to the securityholders or any such
proceedings known to be contemplated by governmental authorities, (B) any
affiliations that develop following the closing date of a Securitization
Transaction between the Seller or any Third-Party Originator and any of the
parties specified in clause (a) (D) of Section 2.03 (and any other parties
identified in writing by the requesting party) with respect to such
Securitization Transaction, and (ii) provide to the Purchaser and such Depositor
a description of such proceedings or affiliations.
Section 2.04. Indemnification; Remedies.
-------------------------
(a) The Seller shall indemnify the Purchaser, each affiliate of the
Purchaser that has entered into the applicable Reconstitution Agreement, and
each of the following parties participating in a Securitization Transaction, to
the extent identified in such Reconstitution Agreement: each sponsor and issuing
entity; each Person (including, but not limited to, any Master Servicer if
applicable) responsible for the preparation, execution or filing of any report
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required to be filed with the Commission with respect to such Securitization
Transaction, or for execution of a certification pursuant to Rule 13a-14(d) or
Rule 15d-14(d) under the Exchange Act with respect to such Securitization
Transaction; each broker dealer acting as underwriter, placement agent or
initial purchaser, each Person who controls any of such parties or the Depositor
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act); and the respective present and former directors, officers and
employees of each of the foregoing and of the Depositor (each, an "Indemnified
Party"), and shall hold each of them harmless from and against any claims,
losses, damages, penalties, fines, forfeitures, legal fees and expenses and
related costs, judgments, and any other costs, fees and expenses that any of
them may sustain arising out of or based upon:
(i) (A) any untrue statement of a material fact contained or alleged
to be contained in any information, report, certification, data,
accountants' letter or other material provided under this Article II by or
on behalf of the Seller, or provided under this Article II by or on behalf
of any Third-Party Originator (collectively, the "Seller Information"), or
(B) the omission or alleged omission to state in the Seller Information a
material fact required to be stated in the Seller Information or necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, by way of
clarification, that clause (B) of this paragraph shall be construed solely
by reference to the Seller Information and not to any other information
communicated in connection with a sale or purchase of securities, without
regard to whether the Seller Information or any portion thereof is
presented together with or separately from such other information;
(ii) any material breach by the Seller of its obligations under this
Article II, including particularly any failure by the Seller to deliver any
information, report, certification, accountants' letter or other material
when and as required under this Article;
(iii) any breach by the Seller of a representation or warranty set
forth in Section 2.02(a) or in a writing furnished pursuant to Section
2.02(b) and made as of a date prior to the closing date of the related
Securitization Transaction, to the extent that such breach is not cured by
such closing date, or any breach by the Seller of a representation or
warranty in a writing furnished pursuant to Section 2.02(b) to the extent
made as of a date subsequent to such closing date; or
(iv) the negligence, bad faith or willful misconduct of the Seller in
connection with its performance under this Article II.
provided, for claims of an alleged untrue statement of fact or alleged omission,
the Purchaser shall not enter into any such claim without the consent of Seller,
which consent shall not be unreasonably withheld and that the Seller shall not
be subject to the indemnification provisions of this clause (a) if such claims
are made without merit or not in good faith; provided, further, that in no event
shall the Seller be liable for any indirect, incidental, special, exemplary or
consequential damages.
In the case of any failure of performance described in clause (a)(ii) of
this Section, the Seller shall promptly reimburse the Purchaser, any Depositor,
as applicable, and each Person responsible for the preparation, execution or
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filing of any report required to be filed with the Commission with respect to
such Securitization Transaction, or for execution of a certification pursuant to
Rule 13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect to such
Securitization Transaction, for all costs reasonably incurred by each such party
in order to obtain the information, report, certification, accountants' letter
or other material not delivered as required by the Seller or any Third-Party
Originator.
(b) The Purchaser shall indemnify the Seller, each Person who controls the
Seller (within the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act; and the respective present and former directors, officers and
employees of each of the foregoing (each a "Seller Indemnified Party"), and
shall hold each of them harmless from and against any claims, losses, damages,
penalties, fines, forfeitures, legal fees and expenses and related costs,
judgments, and any other costs, fees and expenses that any of them may sustain
arising out of or based upon (1)(a) any untrue statement of a material fact
contained or alleged to be contained in any offering materials related to a
Securitization Transaction, including without limitation the registration
statement, prospectus, prospectus supplement, any private placement memorandum,
any offering circular, any computational materials, and any amendments or
supplements to the foregoing (collectively, the "Securitization Materials") or
(b) the omission or alleged omission to state in the Securitization Materials a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, but only to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission is other than a
statement or omission arising out of, result in from, or based upon the Seller
Information and (2) the negligence, bad faith or willful misconduct of any party
to the Securitization Transaction other than the Seller. This indemnification
shall survive the termination of this Agreement or the termination of any party
to this Agreement.
(c) If the indemnification provided for herein is unavailable or
insufficient to hold harmless an Indemnified Party, then the indemnifying party
agrees that it shall contribute to the amount paid or payable by such
Indemnified Party as a result of any claims, losses, damages or liabilities
incurred by such Indemnified Party in such proportion as is appropriate to
reflect the relative fault of such Indemnified Party on the one hand and the
indemnifying party on the other.
(d) This indemnification shall survive the termination of this Agreement or
the termination of any party to this Agreement.
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