EXHIBIT 10.1
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XXXXXXX XXXXX MORTGAGE INVESTORS, INC.
as Company,
PACIFICAMERICA MONEY CENTER, INC.
as Seller,
PACIFICAMERICA HOME EQUITY LOAN TRUST SERIES 1997-1
as Issuer,
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
as Indenture Trustee
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HOME EQUITY LOAN PURCHASE AGREEMENT
Dated as of December 11, 1997
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Fixed and Adjustable Rate Mortgage Loans
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
Section 1.1. DEFINITIONS........................................2
ARTICLE II
SALE OF MORTGAGE LOANS AND RELATED PROVISIONS
Section 2.1. SALE OF INITIAL MORTGAGE LOANS....................16
Section 2.2. OBLIGATIONS REGARDING THE MORTGAGE LOANS..........16
Section 2.3. CONVEYANCE OF THE SUBSEQUENT MORTGAGE LOANS.......19
Section 2.4. PRE-FUNDING ACCOUNT...............................22
Section 2.5. INTEREST COVERAGE ACCOUNT.........................23
ARTICLE III
REPRESENTATIONS AND WARRANTIES;
REMEDIES FOR BREACH
Section 3.1. SELLER REPRESENTATIONS AND WARRANTIES.............24
Section 3.2 COMPANY REPRESENTATIONS AND WARRANTIES............38
ARTICLE IV
SELLER'S COVENANTS
Section 4.1. COVENANTS OF THE SELLER...........................39
Section 4.2. PAYMENT OF EXPENSES...............................40
ARTICLE V
CONDITIONS TO INITIAL MORTGAGE LOAN PURCHASE
Section 5.1. CONDITIONS OF COMPANY'S OBLIGATIONS...............41
ARTICLE VI
LIMITATION ON LIABILITY OF THE SELLER
WITH RESPECT TO THE MORTGAGE LOANS
Section 6.1. LIMITATION ON LIABILITY OF THE SELLER.............41
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ARTICLE VII
TERMINATION
Section 7.1. TERMINATION.......................................42
Section 7.2. OPTIONAL REDEMPTION...............................43
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1. AMENDMENT.........................................44
Section 8.2. GOVERNING LAW.....................................44
Section 8.3. NOTICES...........................................44
Section 8.4. SEVERABILITY OF PROVISIONS........................45
Section 8.5. RELATIONSHIP OF PARTIES...........................46
Section 8.6. COUNTERPARTS......................................46
Section 8.7. FURTHER AGREEMENTS................................46
Section 8.8. INTENTION OF THE PARTIES..........................46
Section 8.9. SUCCESSORS AND ASSIGNS; ASSIGNMENT OF PURCHASE
AGREEMENT.........................................46
Section 8.10. SURVIVAL..........................................47
Section 8.11. THIRD PARTY BENEFICIARY...........................47
Exhibits
Exhibit 1 Mortgage Loan Schedule for Initial Mortgage Loans
Exhibit 2 Subsequent Transfer Instrument
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This HOME EQUITY LOAN PURCHASE AGREEMENT (this "Agreement"),
dated as of December 11, 1997, is made among PacificAmerica Money Center, Inc.
(the "Seller"), Xxxxxxx Xxxxx Mortgage Investors, Inc. (the "Company"),
PacificAmerica Home Equity Loan Trust Series 1997-1 (the "Issuer") and Bankers
Trust Company of California, N.A.
(the "Indenture Trustee").
W I T N E S S E T H :
WHEREAS, the Seller owns certain Mortgage Loans indicated on
the Mortgage Loan Schedule attached as Exhibit 1 hereto (the "Initial Mortgage
Loans"), including rights to (a) any property acquired by foreclosure or deed in
lieu of foreclosure or otherwise, and (b) the proceeds of any insurance policies
covering the Initial Mortgage Loans;
WHEREAS, pursuant to the terms of this Home Equity Loan
Purchase Agreement the parties hereto desire that the Seller sell (i) the
Initial Mortgage Loans to the Company on the Closing Date and (ii) the
Subsequent Mortgage Loans to the Issuer on each Subsequent Transfer Date, and
that the Seller make certain representations and warranties on the Closing Date
and on each Subsequent Transfer Date;
WHEREAS, the Company will sell the Initial Mortgage Loans and
transfer all of its rights under this Home Equity Loan Purchase Agreement to the
Issuer on the Closing Date;
WHEREAS, pursuant to the terms of the Trust Agreement, the
Issuer will issue and transfer to or at the direction of the Company, the
Certificates;
WHEREAS, pursuant to the terms of the Indenture, the Issuer
will issue and transfer to or at the direction of the Company, the Notes; and
WHEREAS, pursuant to the terms of the Servicing Agreement, the
Master Servicer will service the Mortgage Loans directly or through one or more
Subservicers;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.1. DEFINITIONS. For all purposes of this Agreement,
all capitalized terms used herein shall have the meanings specified herein.
ADDITION NOTICE: With respect to the transfer of Subsequent
Mortgage Loans to the Trust pursuant to Section 2.3 herein, a notice given to
the Rating Agencies, the Indenture Trustee, the Note Insurer and the Owner
Trustee , which shall be given not later than seven Business Days prior to the
related Subsequent Transfer Date, of the Seller's designation of Subsequent
Mortgage Loans to be sold to the Issuer and the aggregate principal balance as
of the Subsequent Cut-off Date of such Subsequent Mortgage Loans.
ADJUSTABLE RATE INITIAL MORTGAGE LOAN: Each of the Adjustable
Rate Mortgage Loans transferred to the Issuer on the Closing Date.
ADJUSTABLE RATE MORTGAGE LOAN: Each of the Mortgage Loans
identified in the Mortgage Loan Schedule as having a Mortgage Rate that is
subject to adjustment.
ADJUSTMENT DATE: As to each Adjustable Rate Mortgage Loan,
each date set forth in the related Mortgage Note on which an adjustment to the
interest rate on such Mortgage Loan becomes effective.
APPRAISED VALUE: The appraised value of a Mortgaged Property
based upon the lesser of (i) the appraisal made at the time of the origination
of the related Mortgage Loan, or (ii) the sales price of such Mortgaged Property
at such time of origination. With respect to a Mortgage Loan the proceeds of
which were used to refinance an existing mortgage loan, the appraised value of
the Mortgaged Property based upon the appraisal (as reviewed and approved by the
Seller) obtained at the time of refinancing.
ASSIGNMENT OF MORTGAGE: An assignment of Mortgage, notice of
transfer or equivalent instrument, in recordable form, which is sufficient under
the laws of the jurisdiction wherein the related Mortgaged Property is located
to reflect of record the sale of the Mortgage, which assignment, notice of
transfer or equivalent instrument may be in the form of one or more blanket
assignments covering Mortgages secured by Mortgaged Properties located in the
same county, if permitted by law.
BANKRUPTCY CODE: The Bankruptcy Code of 1978, as amended.
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BASIC DOCUMENTS: The Trust Agreement, the Certificate of
Trust, the Indenture, this Agreement, the Insurance Agreement, the
Indemnification Agreement, the Servicing Agreement, the Sub-Servicing Agreement
and the other documents and certificates delivered in connection with any of the
above.
BUSINESS DAY: Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the City of New York, Delaware or
California or in the city in which the corporate trust offices of the Indenture
Trustee or the principal office of the Note Insurer are located, are required or
authorized by law to be closed.
BUSINESS TRUST STATUTE: Chapter 38 of Title 12 of the Delaware
Code, 12 DEL. Code ss.ss.3801 ET SEQ., as the same may be amended from time to
time.
CARRY-FORWARD AMOUNT: With respect to the Notes and any
Payment Date, an amount equal to (a) the amount determined pursuant to clause
(i) of the definition of Interest Payment Amount minus (b) the Guaranteed
Interest Payment Amount.
CERTIFICATE OF TRUST: The Certificate of Trust filed for the
Trust pursuant to Section 3810(a) of the Business Trust Statute.
CERTIFICATES OR HOME EQUITY LOAN ASSET-BACKED CERTIFICATES:
The PacificAmerica Home Equity Loan Asset-Backed Certificates, Series 1997-1,
evidencing the beneficial ownership interest in the Issuer and executed by the
Owner Trustee in substantially the form set forth in Exhibit A to the Trust
Agreement.
CERTIFICATEHOLDER: The Person in whose name a Certificate is
registered in the Certificate Register. Pledgees of Certificates that have been
pledged in good faith may be regarded as Certificateholders if the pledgee
establishes to the satisfaction of the Indenture Trustee or the Owner Trustee,
as the case may be, the pledgee's right so to act with respect to such
Certificates and that the pledgee is not the Issuer, any other obligor upon the
Certificates or any Affiliate of any of the foregoing Persons.
CLOSING DATE: December 18, 1997.
COLLECTION ACCOUNT: The account or accounts created and
maintained pursuant to the Servicing Agreement. The Collection Account shall be
an Eligible Account.
COMBINED LOAN-TO-VALUE RATIO: With respect to any Mortgage
Loan which is secured by a second lien on the related Mortgaged Property and any
date, the ratio, expressed as a percentage, the numerator of which is the sum of
(i) the unpaid principal balance of the Mortgage Loan plus (ii) the original
principal balance of any second lien on the related Mortgaged
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Property as of such date, and the denominator of which is the lesser of (i) the
Appraised Value of the related Mortgaged Property as of the date of the
appraisal used by or on behalf of the Seller to underwrite such Mortgage Loan or
(ii) the sale price of the related Mortgaged Property if such a sale occurred at
origination of the Mortgage Loan.
COMPANY: Xxxxxxx Xxxxx Mortgage Investors, Inc., a Delaware
corporation, and its successors and assigns.
CUT-OFF DATE: December 1, 1997.
DEFICIENT VALUATION: With respect to any Mortgage Loan, a
valuation by a court of competent jurisdiction of the Mortgaged Property in an
amount less than the then outstanding indebtedness under the Mortgage Loan, or
any reduction in the amount of principal to be paid in connection with any
scheduled Monthly Payment that constitutes a permanent forgiveness of principal,
which valuation or reduction results from a proceeding under the Bankruptcy
Code.
DELETED MORTGAGE LOAN: A Mortgage Loan replaced or to be
replaced with an Eligible Substitute Mortgage Loan.
DETERMINATION DATE: With respect to any Payment Date, the 15th
day of the related month, or if the 15th day of such month is not a Business
Day, the immediately preceding Business Day.
DUE DATE: The first day of the month of the related Payment
Date.
DUE PERIOD: With respect to any Mortgage Loan and Due Date,
the period commencing on the second day of the month preceding the month of such
Payment Date (or, with respect to the first Due Period, the day following the
Cut-off Date) and ending on the related Due Date.
ELIGIBLE ACCOUNT: An account that is either: (A) (1) (i) a
segregated account or (ii) accounts maintained with an institution whose
deposits are insured by the FDIC, (2) the unsecured and uncollateralized long
term debt obligations of which institution shall be rated A+ or higher by
Standard & Poor's and A1 or higher by Moody's and the unsecured and
uncollateralized short term debt obligations of which institution shall be rated
A-1 or higher by Standard & Poor's and P-1 or higher by Moody's, and (3) which
is (i) a federal savings and loan association duly organized, validly existing
and in good standing under the federal banking laws, (ii) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state; (iii) a national banking association duly organized, validly
existing and in good standing under the federal banking laws, (iv) a principal
subsidiary of a bank holding company or (v) approved in writing by the Note
Insurer and each Rating Agency or (B) a
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segregated trust account or accounts maintained with the trust department of a
federal or state chartered depository institution acceptable to the Note Insurer
and each Rating Agency, having capital and surplus of not less than
$100,000,000, acting in its fiduciary capacity.
ELIGIBLE INVESTMENTS: One or more of the following:
(i) direct obligations of, and obligations fully
guaranteed by, the United States of America, any of the Federal Home
Mortgage Corporation, the Federal National Mortgage Association, the
Federal Home Loan Banks or any agency or instrumentality of the United
States of America the obligations of which are backed by the full faith
and credit of the United States of America;
(ii) (A) demand and time deposits in, certificates of
deposit of, banker's acceptances issued by or federal funds sold by any
depository institution or trust company (including the Indenture
Trustee or its agent acting in their respective commercial capacities)
incorporated under the laws of the United States of America or any
State thereof and subject to supervision and examination by federal
and/or state authorities, so long as at the time of such investment or
contractual commitment providing for such investment, such depository
institution or trust company has a short term unsecured debt rating in
the highest available rating category of each of the Rating Agencies
and provided that each such investment has an original maturity of no
more than 365 days, and (B) any other demand or time deposit or deposit
which is fully insured by the Federal Deposit Insurance Corporation;
(iii) repurchase obligations with a term not to exceed 30
days with respect to any security described in clause (i) above and
entered into with a depository institution or trust company (acting as
a principal) rated "A" or higher by Standard & Poor's and A2 or higher
by Moody's; provided, however, that collateral transferred pursuant to
such repurchase obligation must (A) be valued daily at current market
price plus accrued interest, (B) pursuant to such valuation, equal, at
all times, 105% of the cash transferred by the Indenture Trustee in
exchange for such collateral and (C) be delivered to the Indenture
Trustee or, if the Indenture Trustee is supplying the collateral, an
agent for the Indenture Trustee, in such a manner as to accomplish
perfection of a security interest in the collateral by possession of
certificated securities.
(iv) securities bearing interest or sold at a discount
issued by any corporation incorporated under the laws of the United
States of America or any State thereof which has a long term unsecured
debt rating in the highest available rating category of each of the
Rating Agencies at the time of such investment;
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(v) commercial paper having an original maturity of
less than 365 days and issued by an institution having a short term
unsecured debt rating in the highest available rating category of each
of the Rating Agencies at the time of such investment;
(vi) a guaranteed investment contract approved by each
of the Rating Agencies and the Note Insurer and issued by an insurance
company or other corporation having a long term unsecured debt rating
in the highest available rating category of each of the Rating Agencies
at the time of such investment;
(vii) money market funds having ratings in the highest
available long-term rating category of each of the Rating Agencies at
the time of such investment; any such money market funds which provide
for demand withdrawals being conclusively deemed to satisfy any
maturity requirement for Eligible Investments set forth in the
Indenture; and
(viii) any investment approved in writing by each of the
Rating Agencies and the Note Insurer.
provided, however, that each such instrument shall be acquired in an arm's
length transaction and no such instrument shall be an Eligible Investment if it
represents, either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal and
interest payments derived from obligations underlying such instrument and the
principal and interest payments with respect to such instrument provide a yield
to maturity greater than 120% of the yield to maturity at par of such underlying
obligations; provided further, however, that each such instrument acquired shall
not be acquired at a price in excess of par.
The Indenture Trustee may purchase from or sell to itself or an affiliate, as
principal or agent, the Eligible Investments listed above.
ELIGIBLE SUBSTITUTE MORTGAGE LOAN: A Mortgage Loan substituted
by the Seller for a Deleted Mortgage Loan which must, on the date of such
substitution, as confirmed in an Officer's Certificate delivered to the
Indenture Trustee and the Note Insurer, (i) have an outstanding principal
balance, after deduction of the principal portion of the monthly payment due in
the month of substitution (or in the case of a substitution of more than one
Mortgage Loan for a Deleted Mortgage Loan, an aggregate outstanding principal
balance, after such deduction), not in excess of the outstanding principal
balance of the Deleted Mortgage Loan (the amount of any shortfall to be
deposited by the Seller in the Collection Account in the month of substitution);
(ii) comply in all material respects with each representation and warranty set
forth in clauses (i) through (lxvi) of Section 3.1(b) hereof other than clauses
(iii)-(xiv), (xli), (xliv), (lv) and (lix); (iii) have a Mortgage Rate (or in
the case of a substitution of more than one Mortgage Loan for a Deleted Mortgage
Loan, a weighted average Mortgage Rate) and, with respect to an Adjustable Rate
Mortgage Loan, a Gross Margin, no lower than and not more than 1% per annum
higher than the Mortgage Rate and Gross Margin, respectively, of the Deleted
Mortgage Loan as of the
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date of substitution; (iv) have a Loan-to-Value Ratio and Combined Loan-to-Value
Ratio, if applicable, at the time of substitution no higher than that of the
Deleted Mortgage Loan at the time of substitution; (v) have a remaining term to
stated maturity not greater than (and, unless consented to by the Note Insurer,
not more than one year less than) that of the Deleted Mortgage Loan; (vi) not be
30 days or more delinquent; (vii) have a property type, occupancy status, and
credit quality based on the applicable underwriting guidelines that are at least
as favorable as those of the Deleted Mortgage Loan and not provide for a balloon
payment; (viii) in the case of each Adjustable Rate Mortgage Loan, have a next
Adjustment Date not more than two months later than that of the Deleted Mortgage
Loan; (ix) in the case of a Mortgage Loan substituted for an Adjustable Rate
Mortgage Loan, be an Adjustable Rate Mortgage Loan; and (x) be acceptable to the
Note Insurer, in its sole discretion.
FIXED RATE INITIAL MORTGAGE LOAN: Each of the Fixed Rate
Mortgage Loans transferred to the Issuer on the Closing Date.
FIXED RATE MORTGAGE LOAN: Each of the Mortgage Loans
identified in the Mortgage Loan Schedule as having a Mortgage Rate that is
fixed.
FUNDING PERIOD: The period beginning on the Closing Date and
ending on the earlier of the date on which (a) the amount on deposit in the
related Pre-Funding Account (net of any investment earnings thereon) is less
than $10,000 or (b) the close of business on January 26, 1998.
GUARANTEED INTEREST PAYMENT AMOUNT: As to any Payment Date, an
amount equal to interest accrued on the aggregate outstanding Principal Balance
of the Mortgage Loans payable on the related Due Date minus the aggregate amount
of the related Servicing Fee, the Indenture Trustee Fee, the Owner Trustee Fee,
the Note Insurance Premium and the Minimum Spread, each as determined pursuant
to the Basic Documents.
GROSS MARGIN: With respect to any Mortgage Loan, the
percentage set forth as the "Gross Margin" for such Mortgage Loan on the
Mortgage Loan Schedule, as adjusted from time to time in accordance with the
terms of the Servicing Agreement.
HOME EQUITY LOAN PURCHASE AGREEMENT: This Agreement, dated
December 11, 1997, among the Seller, the Company, the Indenture Trustee and the
Issuer.
INDENTURE: The indenture, to be dated as of December 1, 1997,
between the Issuer, as debtor, and the Indenture Trustee, as Indenture Trustee.
INDENTURE TRUSTEE: Bankers Trust Company of California, N.A.,
a national banking association, and its successors and assigns or any successor
indenture trustee appointed pursuant to the terms of the Indenture.
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INDEX: With respect to any Adjustable Rate Mortgage Loan, the
index for the adjustment of the Mortgage Rate set forth as such on the related
Mortgage Note.
INITIAL MORTGAGE LOAN: A Mortgage Loan transferred and
conveyed by the Company to the Issuer on the Closing Date, as listed on the
Mortgage Loan Schedule.
INSURANCE AGREEMENT: The Insurance Agreement, to be dated as
of December 1, 1997, among the Master Servicer, the Seller, the Company, the
Issuer, the Indenture Trustee and the Note Insurer, including any amendments and
supplements thereto.
INTEREST COVERAGE ACCOUNT: The account established and
maintained pursuant to Section 2.5 of this Agreement.
INTEREST COVERAGE ADDITION: As to any Payment Date, an amount,
not less than $0.00, equal to the sum of (x) interest accrued for the related
Interest Period on an amount equal to (i) the Original Pre-Funded Amount minus
(ii) the aggregate Principal Balance of any related Subsequent Mortgage Loans
transferred prior to the related Interest Period, calculated at a rate equal to
the Note Interest Rate and (y) the Note Insurance Premium accrued on the excess,
if any, of the Original Pre-Funded Amount over the aggregate Principal Balance
of any related Subsequent Mortgage Loans transferred prior to the related
Interest Period.
INTEREST COVERAGE AMOUNT: The amount to be paid from proceeds
received from the sale of the Notes for deposit into the related Interest
Coverage Account pursuant to Section 2.5 hereof on the Closing Date, which
amount shall be $110,219.87.
INTEREST PAYMENT AMOUNT: With respect to any Payment Date, an
amount equal to the lesser of (i) interest accrued during the related Interest
Period on the Note Principal Balances of the Notes at the then-applicable Note
Interest Rate and (ii) the Guaranteed Interest Payment Amount.
ISSUER: PacificAmerica Home Equity Loan Trust Series 1997-1, a
Delaware business trust, or its successor in interest.
LIEN: Any mortgage, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance, lien
(statutory or other), preference, priority right or interest or other security
agreement or preferential arrangement of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention
agree ment, any financing lease having substantially the same economic effect as
any of the foregoing and the filing of any financing statement under the UCC
(other than any such financing statement filed for informational purposes only)
or comparable law of any jurisdiction to evidence any of the foregoing.
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LOAN-TO-VALUE RATIO: With respect to any Mortgage Loan, as of
any date of determination, a fraction expressed as a percentage, the numerator
of which is the then current principal amount of the Mortgage Loan, and the
denominator of which is the lesser of the Purchase Price or the Appraised Value
of the related Mortgaged Property.
MASTER SERVICER: PacificAmerica Money Center, Inc. a Delaware
corporation, and its successors and assigns.
MAXIMUM MORTGAGE RATE: With respect to each Adjustable Rate
Mortgage Loan, the maximum Mortgage Rate as set forth in the related Mortgage
Note.
MINIMUM MORTGAGE RATE: With respect to each Adjustable Rate
Mortgage Loan, the minimum Mortgage Rate as set forth in the related Mortgage
Note.
MONTHLY PAYMENT: With respect to any Mortgage Loan (including
any REO Property) and any Due Date, the payment of principal and interest due
thereon in accordance with the amortization schedule at the time applicable
thereto (after adjustment, if any, for partial Principal Prepayments and for
Deficient Valuations occurring prior to such Due Date but before any adjustment
to such amortization schedule by reason of any bankruptcy, other than a
Deficient Valuation, or similar proceeding or any moratorium or similar waiver
or grace period).
MORTGAGE: The mortgage, deed of trust or other instrument
creating a first lien on an estate in fee simple interest in real property
securing a Mortgage Loan.
MORTGAGE FILE: The file containing the Related Documents
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to Section 2.2 hereof or the Servicing
Agreement.
MORTGAGE LOAN SCHEDULE: With respect to any date, the schedule
of Mortgage Loans pledged under the Indenture on such date, including, as
applicable, the schedule of Initial Mortgage Loans as of the Cut-off Date set
forth in Exhibit 1 of this Agreement and such schedule, as amended by the Seller
to reflect (i) Eligible Substitute Mortgage Loans and Deleted Mortgage Loans,
and (ii) as of each Subsequent Transfer Date, any Subsequent Mortgage Loans,
which schedules set forth as to each Mortgage Loan
(i) the loan number and name of the Mortgagor;
(ii) xxx xxxxxx xxxxxxx, xxxx, xxxxx and zip code of the
Mortgaged Property;
(iii) the Mortgage Rate at origination;
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(iv) with respect to an Adjustable Rate Mortgage Loan, the
Maximum Rate and
the Minimum Rate;
(v) the maturity date;
(vi) the original principal balance;
(vii) the first payment date;
(viii) the type of Mortgaged Property;
(ix) the Monthly Payment in effect as of the Cut-off Date
(with respect to an Initial Mortgage Loan) or
Subsequent Cut-off Date (with respect to a Subsequent
Mortgage Loan);
(x) the Principal Balance as of the Cut-off Date (with
respect to an Initial Mortgage Loan) or Subsequent
Cut-off Date (with respect to a Subsequent
Mortgage Loan);
(xi) with respect to an Adjustable Rate Mortgage Loan, the
Index, the Gross Margin; the Lifetime Rate Cap and
the Periodic Rate Cap;
(xii) with respect to an Adjustable Rate Mortgage Loan, the
first Adjustment Date and next Adjustment Date, if
any;
(xiii) with respect to an Adjustable Rate Mortgage Loan, the
Adjustment Date frequency and Payment Date frequency;
(xiv) the occupancy status;
(xv) the purpose of the Mortgage Loan;
(xvi) the Appraised Value of the Mortgaged Property;
(xvii) the original term to maturity;
(xviii) the paid-through date of the Mortgage Loan;
(xix) the Loan-to-Value Ratio;
(xx) whether the Mortgage Loan is an Adjustable Rate
Mortgage Loan or a Fixed Rate Mortgage Loan; and
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(xxi) whether or not the Mortgage Loan was underwritten
pursuant to a limited documentation program.
The Mortgage Loan Schedule shall also set forth the total of
the amounts described under (ix) above for all of the Mortgage Loans.
MORTGAGE LOANS: At any time, collectively, all Mortgage Loans
that have been sold or otherwise transferred and conveyed by the Seller to the
Company or to the Issuer, as applicable, under this Agreement, in each case
together with the Related Documents, and that remain subject to the terms
thereof. As applicable, Mortgage Loan shall be deemed to refer to the related
REO Property and to Initial Mortgage Loans, Eligible Substitute Mortgage Loans
and Subsequent Mortgage Loans.
MORTGAGE NOTE: The note or other evidence of the indebtedness
of a Mortgagor under a Mortgage Loan.
MORTGAGE RATE: With respect to any Mortgage Loan, the annual
rate at which interest accrues on such Mortgage Loan.
MORTGAGED PROPERTY: The underlying property, including real
property and improvements thereon, securing a Mortgage Loan.
MORTGAGOR: The obligor or obligors under a Mortgage Note.
NOTE INSURER: Financial Security Assurance Inc., a New York
stock insurance corporation or any successor thereto.
NOTE INTEREST RATE: With respect to each Payment Date after
the first Payment Date, a per annum rate equal to the lesser of (i) (a) with
respect to each Payment Date up to and including the Payment Date on which the
aggregate Principal Balance of the Mortgage Loans is less than 10% of the
aggregate Cut-off Date Principal Balance of the Mortgage Loans and the Original
Pre-Funded Amount, One-Month LIBOR plus 0.26%, and (b) with respect to each
Payment Date thereafter, One-Month LIBOR plus 0.52% and (ii) 15.00% per annum.
NOTE PRINCIPAL BALANCE: With respect to any Note, the initial
principal balance thereof as of the Closing Date and reduced by all amounts
distributed in respect of principal with respect to such Note.
NOTEHOLDER OR HOLDER: The Person in whose name a Note is
registered in the Note Register, except that, any Note registered in the name of
the Company, the Issuer or the Indenture Trustee or any Affiliate of any of them
shall be deemed not to be a Noteholder or Holder, nor shall any Note so owned be
considered outstanding, for purposes of giving any request, demand,
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authorization, direction, notice, consent or waiver under the Indenture or the
Trust Agreement, provided that, in determining whether the Indenture Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Notes that the Indenture Trustee
knows to be so owned shall be so disregarded. Any Notes on which payments are
made under the Note Insurance Policy shall be deemed Outstanding until the Note
Insurer has been reimbursed with respect thereto and the Note Insurer shall be
deemed the Noteholder thereof to the extent of such unreimbursed payment.
NOTES: PacificAmerica Home Equity Loan Asset-Backed Notes,
Series 1997-1, designated as the "Notes" in the Indenture.
OFFICER'S CERTIFICATE: With respect to the Master Servicer, a
certificate signed by the President, a Director, a Vice President or an
Assistant Vice President, of the Master Servicer and delivered to the Indenture
Trustee. With respect to the Seller, a certificate signed by the President, a
Director, a Vice President or an Assistant Vice President, of the Seller, under
the circumstances described in, and otherwise complying with, the applicable
requirements of Section 2.03(b)(vi) of this Agreement. With respect to the
Issuer, a certificate signed by any Authorized Officer of the Issuer, under the
circumstances described in, and otherwise complying with, the applicable
requirements of Section 10.01 of the Indenture, and delivered to the Indenture
Trustee.
OPINION OF COUNSEL: A written opinion of counsel acceptable to
the Note Insurer, who may be in-house counsel for the Master Servicer if
acceptable to the Indenture Trustee, the Note Insurer and the Rating Agencies or
counsel for the Company, as the case may be.
ORIGINAL PRE-FUNDED AMOUNT: The amount deposited (from
proceeds) in the Pre- Funding Account on the Closing Date, which amount is
$23,831,323.
OWNER TRUSTEE: Wilmington Trust Company and its successors and
assigns or any successor owner trustee appointed pursuant to the terms of the
Trust Agreement.
PAYMENT ACCOUNT: The account established by the Indenture
Trustee pursuant to Section 3.01 of the Indenture. The Payment Account shall be
an Eligible Account.
PAYMENT DATE: The 25th day of each month, or if such day is
not a Business Day, then the next Business Day.
PERIODIC RATE CAP: With respect to any Adjustable Rate
Mortgage Loan, the maximum rate, if any, by which the Mortgage Rate on such
Mortgage Loan can adjust on any Adjustment Date, as stated in the related
Mortgage Note or Mortgage.
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PERSON: Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
PRE-FUNDED AMOUNT: With respect to any date of determination,
the amount on deposit in the Pre-Funding Account.
PRE-FUNDING ACCOUNT: The account established and maintained
pursuant to Section 2.4 of this Agreement.
PRINCIPAL BALANCE: With respect to any Mortgage Loan or
related REO Property, at any given time, (i) the Principal Balance of the
Mortgage Loan as of the Cut-off Date or Subsequent Cut-off Date, as applicable,
minus (ii) the sum of (a) the principal portion of the Monthly Payments which
were received with respect to such Mortgage Loan or REO Property during each Due
Period ending prior to the most recent Payment Date, and (b) all Principal
Prepayments with respect to such Mortgage Loan or REO Property, and all
Insurance Proceeds, Liquidation Proceeds and REO Proceeds, to the extent applied
by the Master Servicer as recoveries of principal in accordance with the
Servicing Agreement with respect to such Mortgage Loan or REO Property, and (c)
the principal portion of any Realized Loss with respect thereto for any previous
Payment Date.
PROSPECTUS: The Prospectus Supplement dated December 11, 1997,
together with the attached Prospectus dated June 19, 1997, with respect to the
Notes.
PROSPECTUS SUPPLEMENT: The Prospectus Supplement dated
December 11, 1997, with respect to the Notes.
PURCHASE PRICE: The meaning specified in Sections 2.1 and
2.3(a) of this Agreement.
RELATED DOCUMENTS: With respect to each Mortgage Loan, the
documents specified in Section 2.2 of this Agreement and any documents required
to be added to such documents pursuant to this Agreement, the Trust Agreement,
the Indenture or the Servicing Agreement.
REO PROPERTY: A Mortgaged Property that is acquired by the
Issuer by foreclosure or by deed in lieu of foreclosure.
REPURCHASE EVENT: With respect to any Mortgage Loan, either
(i) a discovery that, as of the Closing Date the related Mortgage was not a
valid first lien on the related Mortgaged Property subject only to (A) the lien
of real property taxes and assessments not yet due and payable, (B) covenants,
conditions, and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage and such other
permissible title
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exceptions as are permitted and (C) other matters to which like properties are
commonly subject which do not materially adversely affect the value, use,
enjoyment or marketability of the related Mortgaged Property or (ii) with
respect to any Mortgage Loan as to which the Seller delivers an affidavit
certifying that the original Mortgage Note has been lost or destroyed, a
subsequent default on such Mortgage Loan if the enforcement thereof or of the
related Mortgage is materially and adversely affected by the absence of such
original Mortgage Note.
REPURCHASE PRICE: With respect to any Mortgage Loan required
to be repurchased on any date pursuant to this Agreement or permitted to be
purchased by the Master Servicer pursuant to the Servicing Agreement, an amount
equal to the sum, without duplication, of (i) 100% of the Principal Balance
thereof (without reduction for any amounts charged off) and (ii) unpaid accrued
interest at the Mortgage Rate on the outstanding principal balance thereof from
the Due Date to which interest was last paid by the Mortgagor (or with respect
to which an Advance was last made by the Master Servicer) to the first day of
the month following the month of purchase plus (iii) the amount of any
unreimbursed Servicing Advances or unreimbursed Advances made with respect to
such Mortgage Loan plus (iv) any other amounts owed to the Master Servicer or
the Subservicer pursuant to Section 3.07 of the Servicing Agreement and not
included in clause (iii) of this definition.
REQUIRED SUBORDINATION AMOUNT: The Required Subordination
Amount determined pursuant to the Indenture, which amount may be adjusted
thereunder by mutual agreement of the Note Insurer and the Seller, under the
circumstances set forth in Section 2.3(e) of this Agreement.
SECURITY: Any of the Certificates or Notes.
SECURITYHOLDER or HOLDER: Any Noteholder or a
Certificateholder.
SELLER: PacificAmerica Money Center, Inc. a Delaware
corporation, and its successors and assigns.
SERVICING ADVANCES: All customary, reasonable and necessary
"out of pocket" costs and expenses incurred in connection with a default,
delinquency or other unanticipated event in the performance by the Master
Servicer of its servicing obligations, including, without duplication, but not
limited to, the cost of (i) the preservation, restoration and protection of a
Mortgaged Property, (ii) any enforcement or judicial proceedings, including
foreclosures, (iii) the management and liquidation of any REO Property and (iv)
compliance with the obligations under Section 3.13 of the Servicing Agreement.
SERVICING AGREEMENT: The Servicing Agreement, to be dated as
of December 1, 1997, among the Master Servicer, the Indenture Trustee and the
Issuer.
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SERVICING OFFICER: Any officer of the Master Servicer involved
in, or responsible for, the administration and servicing of the Mortgage Loans
whose name and specimen signature appear on a list of servicing officers
furnished to the Indenture Trustee (with a copy to the Note Insurer) by the
Master Servicer or a Subservicer, as such list may be amended from time to time.
SUBSEQUENT CUT-OFF DATE: With respect to those Subsequent
Mortgage Loans which are sold to the Trust pursuant to a Subsequent Transfer
Instrument the date specified in the related Subsequent Transfer Instrument.
SUBSEQUENT MORTGAGE LOAN: A Mortgage Loan sold by the Seller
to the Issuer pursuant to Section 2.3 of this Agreement, such Mortgage Loan
being identified on the Mortgage Loan Schedule attached to a Subsequent Transfer
Instrument, as set forth in such Subsequent
Transfer Instrument.
SUBSEQUENT TRANSFER DATE: With respect to each Subsequent
Transfer Instrument, the date on which the related Subsequent Mortgage Loans are
sold to the Trust.
SUBSEQUENT TRANSFER INSTRUMENT: Each Subsequent Transfer
Instrument dated as of a Subsequent Transfer Date executed by the Seller and the
Issuer substantially in the form of Exhibit 2 to this Agreement, by which
Subsequent Mortgage Loans are sold to the Trust.
SUB-SERVICER: Advantage Mortgage Corp. USA, and its successors
and assigns.
SUB-SERVICING AGREEMENT: The Sub-Servicing Agreement, to be
dated as of December 1, 1997, between the Master Servicer and the Sub-Servicer.
TRUST: The PacificAmerica Home Equity Loan Trust Series 1997-1
to be created pursuant to the Trust Agreement.
TRUST AGREEMENT: The Trust Agreement, to be dated as of
December 1, 1997, as amended and restated by the Amended and Restated Trust
Agreement, to be dated as of December 1, 1997, between the Owner Trustee and the
Company.
TRUST ESTATE: The meaning specified in the Granting Clause of
the Indenture.
UCC: The Uniform Commercial Code, as amended from time to
time, as in effect in any specified jurisdiction.
UNDERWRITER: Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated.
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ARTICLE II
SALE OF MORTGAGE LOANS AND RELATED PROVISIONS
Section 2.1. SALE OF INITIAL MORTGAGE LOANS.
The Seller hereby sells, and the Company hereby purchases on
the Closing Date, the Initial Mortgage Loans identified on the Mortgage Loan
Schedule annexed hereto as Exhibit 1. In addition, the Seller shall deposit with
the Indenture Trustee from proceeds of the issuance of the Notes on the Closing
Date (i) the Original Pre-Funded Amount for deposit in the Pre- Funding Account
and (ii) the Interest Coverage Amount for deposit in the Interest Coverage
Account. The Initial Mortgage Loans will be fixed and adjustable rate,
residential first lien mortgage loans. The Initial Mortgage Loans will have a
Principal Balance as of the close of business on the Cut-off Date, after giving
effect to any payments due on or before such date whether or not received, of
approximately $76,168,676.59. The sale of the Initial Mortgage Loans will take
place on the Closing Date, subject to and simultaneously with the deposit of the
Initial Mortgage Loans and the amounts in the Pre-Funding Account and the
Interest Coverage Account into the Trust Estate, the issuance of the Securities
and the sale of the Notes by the Issuer pursuant to the Underwriting Agreement.
The purchase price (the "Purchase Price") for the Initial Mortgage Loans to be
paid by the Company to the Seller on the Closing Date shall consist of the
following:
(i) a payment in an amount equal to 99.396% of the
aggregate Principal Balance of the Initial Mortgage Loans as of the
close of business on the Cut-off Date, which payment shall be paid to
the Seller by wire transfer in immediately available funds on the
Closing Date by or on behalf of the Company, or as otherwise agreed by
the Company; and
(ii) delivery to the Seller of the Certificates issued
by the Issuer pursuant to the Trust Agreement.
Section 2.2. OBLIGATIONS REGARDING THE MORTGAGE LOANS. (a) In
connection with the conveyances by the Seller of the Initial Mortgage Loans and
the Subsequent Mortgage Loans, the Seller shall on behalf of and at the
direction of the Company deliver to, and deposit with, the Indenture Trustee, on
or before the Closing Date in the case of an Initial Mortgage Loan, and one
Business Day prior to the related Subsequent Transfer Date in the case of a
Subsequent Mortgage Loan, the following documents or instruments with respect to
each Mortgage Loan (the "Mortgage File"):
(i) the original Mortgage Note endorsed to the order of
"Bankers Trust Company of California, N.A., as trustee pursuant to the
Indenture dated as of December 1, 1997, relating to the PacificAmerica
Home Equity Loan Asset-Backed Notes, 1997-1";
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(ii) the original Mortgage with evidence of recording thereon,
or, if the original Mortgage has not yet been returned from the public
recording office, a copy of the original Mortgage certified by the
Seller, its designee or the public recording office in which such
original Mortgage has been recorded;
(iii) an original assignment (which may be included in one or
more blanket assignments if permitted by applicable law) of the
Mortgage endorsed to "Bankers Trust Company of California, N.A., as
trustee pursuant to the Indenture dated as of December 1, 1997,
relating to the PacificAmerica Home Equity Loan Asset-Backed
Notes,
Series 1997-1", and otherwise in recordable form;
(iv) originals of any intervening assignments of the Mortgage,
with evidence of recording thereon, or, if the original of any such
intervening assignment has not yet been returned from the public
recording office, a copy of such original intervening assignment
certified by the Seller, its designee or the public recording office in
which such original intervening assignment has been recorded;
(v) the original policy of title insurance (or a commitment
for title insurance, if the policy is being held by the title insurance
company pending recordation of the Mortgage or a binder or preliminary
title policy if the final title insurance policy is not available);
(vi) a true and correct copy of each assumption, modification,
consolidation or substitution agreement, if any, relating to the
Mortgage Loan.
If a material defect in any Mortgage File is discovered which
may materially and adversely affect the value of the related Mortgage Loan, or
the interests of the Indenture Trustee (as pledgee of the Mortgage Loans), the
Noteholders, the Certificateholders or the Note Insurer in such Mortgage Loan,
including if any document required to be delivered to the Indenture Trustee has
not been delivered (provided that a Mortgage File will not be deemed to contain
a defect for an unrecorded assignment under clause (iii) above for 180 days
following submission of the assignment if the Seller has submitted such
assignment for recording pursuant to the terms of the following paragraph), the
Seller shall cure such defect, repurchase the related Mortgage Loan at the
Repurchase Price or substitute an Eligible Substitute Mortgage Loan for the
related Mortgage Loan upon the same terms and conditions set forth in Section
3.1 hereof as to the Initial Mortgage Loans and the Subsequent Mortgage Loans
and Section 2.3(c) hereof as to the Subsequent Mortgage Loans.
Within 30 days after the Closing Date in the case of an
Initial Mortgage Loan or, in the case of a Subsequent Mortgage Loan, promptly
after the Subsequent Transfer Date (or after the date of transfer of any
Eligible Substitute Mortgage Loan), the Seller at its own expense shall complete
and submit for recording in the appropriate public office for real property
records each
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of the assignments referred to in clause (iii) above, with such
assignment completed in favor of the Indenture Trustee. While such assignment to
be recorded is being recorded, the Indenture Trustee shall retain a photocopy of
such assignment. If any assignment is lost or returned unrecorded to the
Indenture Trustee because of any defect therein, the Seller is required to
prepare a substitute assignment or cure such defect, as the case may be, and the
Seller shall cause such substitute assignment to be recorded in accordance with
this paragraph.
In instances where an original Mortgage or any original
intervening assignment of Mortgage is not, in accordance with clause (ii) or
(iv) above, delivered by the Seller to the Indenture Trustee prior to or on the
Closing Date in the case of an Initial Mortgage Loan or, in the case of a
Subsequent Mortgage Loan, prior to or on the Subsequent Transfer Date, the
Seller will deliver or cause to be delivered the originals of such documents to
the Indenture Trustee promptly upon receipt thereof.
Effective on the Closing Date, the Company hereby acknowledges
its acceptance of all right, title and interest to the Initial Mortgage Loans
and other property, existing on the Closing Date and thereafter created,
conveyed to it pursuant to Section 2.1 and this Section
2.2.
The Indenture Trustee, as assignee or transferee of the
Company, shall be entitled to all scheduled principal payments due after the
Cut-off Date, all other payments of principal due and collected after the
Cut-off Date, and all payments of interest on the Initial Mortgage Loans, minus
that portion of any such payment which is allocable to the period prior to the
Cut-off Date. No scheduled payments of principal due on or before the Cut-off
Date and collected after the Cutoff Date shall belong to the Company pursuant to
the terms of this Agreement. The Servicing Agreement shall provide that any late
payment charges collected in connection with a Mortgage Loan shall be paid to
the Master Servicer as provided therein.
(b) The parties hereto intend that the transactions set forth
herein constitute a sale by the Seller to the Company on the Closing Date of all
the Seller's right, title and interest in and to the Initial Mortgage Loans and
other property as and to the extent described above. In the event the
transactions set forth herein shall be deemed not to be a sale, the Seller
hereby grants to the Company as of the Closing Date a security interest in all
of the Seller's right, title and interest in, to and under the Initial Mortgage
Loans and such other property, to secure all of the Seller's obligations
hereunder, and this Agreement shall constitute a security agreement under
applicable law. The Seller agrees to take or cause to be taken such actions and
to execute such documents, including without limitation the filing of all
necessary UCC-1 financing statements filed in the State of Delaware and the
State of California (which shall be submitted for filing within 10 days after
the Closing Date), any continuation statements with respect thereto and any
amendments thereto required to reflect a change in the name or corporate
structure of the Seller or the filing of any additional UCC-1 financing
statements due to the change in the principal office of the Seller, as are
necessary to perfect and protect the interests of the Company and its assignees
in each Initial Mortgage Loan and the proceeds thereof.
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Section 2.3. CONVEYANCE OF THE SUBSEQUENT MORTGAGE LOANS.
(a) Subject to the conditions set forth in paragraphs (b) and
(c) below in consideration of the Issuer's delivery on the related Subsequent
Transfer Dates of all or a portion of the balance of funds in the Pre-Funding
Account, the Seller shall on any Subsequent Transfer Date sell, transfer,
assign, set over and convey without recourse to the Issuer but subject to the
other terms and provisions of this Agreement all of the right, title and
interest of the Seller in and to (i) the Subsequent Mortgage Loans identified on
the related Mortgage Loan Schedule attached to the related Subsequent Transfer
Instrument delivered by the Seller on such Subsequent Transfer Date, (ii)
principal due and interest accruing on the Subsequent Mortgage Loans after the
related Subsequent Cut-off Date and (iii) all items with respect to such
Subsequent Mortgage Loans to be delivered pursuant to Section 2.2 above and the
other items in the related Mortgage Files; PROVIDED, HOWEVER, that the Seller
reserves and retains all right, title and interest in and to principal received
and interest accruing on the Subsequent Mortgage Loans prior to the related
Subsequent Cut-off Date. The transfer to the Issuer by the Seller of the
Subsequent Mortgage Loans identified on each Mortgage Loan Schedule attached to
the related Subsequent Transfer Instrument shall be absolute and is intended by
the Issuer and the Seller to constitute and to be treated as a sale of the
Subsequent Mortgage Loans by the Seller to the Issuer. In the event the
transactions set forth herein shall be deemed not to be a sale, the Seller
hereby grants to the Issuer as of each Subsequent Transfer Date a security
interest in all of the Seller's right, title and interest in, to and under the
related Subsequent Mortgage Loans and such other property, to secure all of the
Seller's obligations hereunder, and this Agreement shall constitute a security
agreement under applicable law. The Seller agrees to take or cause to be taken
such actions and to execute such documents, including without limitation the
filing of all necessary UCC-1 financing statements filed in the State of
Delaware and the State of California (which shall be submitted for filing as of
the related Subsequent Transfer Date), any continuation statements with respect
thereto and any amendments thereto required to reflect a change in the name or
corporate structure of the Seller or the filing of any additional UCC-1
financing statements due to the change in the principal office of the Seller, as
are necessary to perfect and protect the interests of the Issuer and its
assignees in each Subsequent Mortgage Loan and the proceeds thereof.
The Issuer on each Subsequent Transfer Date shall acknowledge
its acceptance of all right, title and interest to the related Subsequent
Mortgage Loans and other property, existing on the Subsequent Transfer Date and
thereafter created, conveyed to it pursuant to this Section
2.3.
The Indenture Trustee, as assignee of the Issuer, shall be
entitled to all scheduled principal payments due after each Subsequent Cut-off
Date, all other payments of principal due and collected after each Subsequent
Cut-off Date, and all payments of interest on the Subsequent Mortgage Loans,
minus that portion of any such payment which is allocable to the period prior to
the related Subsequent Cut-off Date. No scheduled payments of principal due on
or before the
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related Subsequent Cut-off Date and collected after the related Subsequent
Cut-off Date shall belong to the Issuer pursuant to the terms of thisn
Agreement.
The Purchase Price paid for any Subsequent Mortgage Loan by
the Indenture Trustee, at the direction of the Issuer, from amounts on deposit
in the Pre-Funding Account shall be one-hundred percent (100%) of the aggregate
Principal Balances of the Subsequent Mortgage Loans so transferred (as
identified on the Mortgage Loan Schedule attached to the related Subsequent
Transfer Instrument provided by the Seller).
(b) The Seller shall transfer to the Issuer the Subsequent
Mortgage Loans and the other property and rights related thereto described in
Section 3 (a) above, and the Issuer shall cause to be released funds from the
related Pre-Funding Account, only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date:
(i) the Seller shall have provided the Indenture Trustee and
the Note Insurer with a timely Addition Notice, which notice shall be
given no fewer than seven Business Days prior to the related Subsequent
Transfer Date and shall designate the Subsequent Mortgage Loans to be
sold to the Issuer and the aggregate Principal Balances of such
Subsequent Mortgage Loans as of the related Subsequent Cut-off Date and
any other information reasonably requested by the Indenture Trustee or
the Note Insurer with respect to the Subsequent Mortgage Loans,
provided that such notice shall be deemed to have been given to the
Note Insurer in a timely manner with respect to the pool of proposed
Substitute Mortgage Loans as to which information was provided to the
Note Insurer on or about December 10, 1997.
(ii) the Seller shall have delivered to the Indenture Trustee
a duly executed Subsequent Transfer Instrument substantially in the
form of Exhibit 2, (A) confirming the satisfaction of each condition
precedent and representations specified in this Section
2.3(b)
and Section 2.3(c) following and in the related Subsequent Transfer
Instrument and (B) including a Subsequent Mortgage Loan Schedule
listing the Subsequent Mortgage Loans;
(iii) as of each Subsequent Transfer Date, as evidenced by
delivery of the Subsequent Transfer Instrument in the form of Exhibit
2, the Seller shall not be insolvent nor shall it have been made
insolvent by such transfer nor shall it be aware of any pending
insolvency;
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(iv) such sale and transfer shall not result in a material
adverse tax consequence to the Issuer or, due to any action or inaction
on the part of the Seller, to the
Securityholders;
(v) the Funding Period shall not have terminated;
(vi) the Note Insurer shall have informed the Seller that the
Subsequent Mortgage Loans are acceptable to the Note Insurer in its
sole discretion, and the Seller shall have delivered to the Issuer and
the Indenture Trustee, with a copy to the Note Insurer, an Officer's
Certificate confirming such approval;
(vii) the Seller shall have delivered to the Indenture
Trustee, the Rating Agencies and the Note Insurer Opinions of Counsel
addressed to the Note Insurer, the Rating Agencies and the Indenture
Trustee with respect to the transfer of the Subsequent Mortgage Loans
substantially in the form of the Opinions of Counsel delivered to the
Note Insurer and the Indenture Trustee on the Closing Date regarding
certain bankruptcy, corporate and tax matters.
(c) The obligation of the Issuer to purchase a Subsequent
Mortgage Loan on any Subsequent Transfer Date is subject to the following
conditions: (1) each such Subsequent Mortgage Loan must satisfy the
representations and warranties specified in the related Subsequent Transfer
Instrument and this Agreement; (2) the Seller will select such Subsequent
Mortgage Loans only in a manner that it reasonably believes is not adverse to
the interests of the Noteholders or the Note Insurer; (3) the Seller will
deliver to the Note Insurer and the Indenture Trustee certain Opinions of
Counsel acceptable to the Note Insurer and the Indenture Trustee with respect to
the validity of the conveyance of such Subsequent Mortgage Loans; and (4) as of
each Subsequent Cut-off Date each Subsequent Mortgage Loan will satisfy the
following criteria: such Subsequent Mortgage Loan may not be 30 or more days
contractually delinquent as of the related Subsequent Cut-off Date; (ii) the
remaining stated term to maturity of such Subsequent Mortgage Loan will not
exceed 360 months; (iii) the lien securing any such Subsequent Mortgage Loan
must be a first lien priority; (iv) such Subsequent Mortgage Loan must have an
outstanding Principal Balance of at least $20,000 and no more than $350,000 as
of the Subsequent Cut-off Date; (v) such Subsequent Mortgage Loan will be
underwritten in accordance with the criteria set forth under "Description of the
Home Equity Pool--Underwriting" in the Prospectus Supplement; (vi) such
Subsequent Mortgage Loan must have a Loan-to-Value Ratio at origination of no
more than 90.00%; and, if applicable, a Combined Loan-to-Value Ratio at
origination of no more than 90.00%; (vii) the stated maturity of such Subsequent
Mortgage Loan will be no later than 360 months; (viii) such Subsequent Mortgage
Loan shall not provide for negative amortization; (ix) such Subsequent Mortgage
Loan must have a fixed Mortgage Rate of at least 9.00% or, if an adjustable rate
loan, a Gross Margin of at least 5.50%; (x) such Subsequent Mortgage Loan must
not have a fixed Mortgage Rate if the aggregate principal balance of Fixed Rate
Mortgage Loans included in the Trust Estate following the purchase of such
Subsequent Mortgage Loan would be greater than 8.0% of the aggregate principal
balance of all Mortgage Loans included in the Trust Estate following the
purchase of such Subsequent Mortgage Loans and (xi) following the purchase of
such Subsequent Mortgage Loan by the Issuer, the Mortgage Loans included in the
Trust Estate must have a weighted average interest rate, a weighted average
remaining term to maturity and a weighted average Loan-to-Value Ratio at
origination, as of each respective Subsequent Cut-off Date, which would not vary
materially from the Initial Mortgage Loans included initially in the
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Trust Estate. In addition, the Indenture Trustee shall not agree to any transfer
of Subsequent Mortgage Loans without a signed certification required pursuant to
Section 2.3(b)(vi). Subsequent Mortgage Loans with characteristics varying from
those set forth above may be purchased by the Issuer and included in the Trust
Estate if they are acceptable to the Note Insurer, in its sole discretion, as
evidenced by the certification required pursuant to Section 2.3(b)(vi);
provided, however, that the addition of such Mortgage Loans will not materially
affect the aggregate characteristics of the entire Mortgage Loans. Upon the end
of the Funding Period, the Note Insurer may adjust the Required Subordination
Amount pursuant to Section 2.3(e) hereof.
(d) Within five Business Days after each Subsequent Transfer
Date, the Seller shall deliver to the Rating Agencies, the Indenture Trustee and
the Note Insurer a copy of the updated Mortgage Loan Schedule including the
Subsequent Mortgage Loans in electronic
format.
(e) In the event that a mortgage loan is not acceptable to the
Note Insurer as a Subsequent Mortgage Loan pursuant to Section 2.3(b)(vi)
hereof, the Note Insurer and the Seller may mutually agree to the transfer of
such mortgage loan to the Issuer as a Subsequent Mortgage Loan, subject to any
increase in the Required Subordination Amount that may be agreed to by the
Seller and the Note Insurer pursuant to the Indenture, in which event the Seller
shall deliver to the Issuer and the Indenture Trustee, with a copy to the Note
Insurer, an Officer's Certificate confirming the agreement to the transfer of
such Subsequent Mortgage Loan and specifying the amount of such increase in the
Required Subordination Amount.
Section 2.4. PRE-FUNDING ACCOUNT.
(a) No later than the Closing Date, the Indenture Trustee
shall establish and maintain in the name of the Indenture Trustee one or more
segregated trust accounts that are Eligible Accounts, which shall be titled
"Pre-Funding Account, Bankers Trust Company of California, N.A., as indenture
trustee for the registered holders of PacificAmerica Home Equity Loan Asset
Trust Series 1997-1" (the "Pre-Funding Account"). The Indenture Trustee shall,
promptly upon receipt, deposit in the Pre-Funding Account and retain therein the
Original Pre- Funded Amount remitted on the Closing Date to the Indenture
Trustee by the Issuer from proceeds of the sale of the Notes. Funds deposited in
the Pre-Funding Account shall be held in trust by the Indenture Trustee for the
Holders of the Notes and the Note Insurer for the uses and purposes set forth
herein. If the Indenture Trustee shall not have received an investment direction
from the Issuer, the Indenture Trustee will invest funds deposited in the
Pre-Funding Account in Eligible Investments of the kind described in clause
(vii) of the definition of Eligible Investments with a maturity date no later
than the second Business Day preceding each Payment Date. The Issuer shall be
the owner of the Pre-Funding Account and shall report all items of income,
deduction, gain or loss arising therefrom. All income and gain realized from
investment of funds deposited in the Pre-Funding Account shall be transferred to
the Interest Coverage Account on the Business Day immediately preceding each
Payment Date. The Issuer shall deposit in the Pre-Funding
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Account the amount of any net loss incurred in respect of any such Eligible
Investment immediately upon realization of such loss without any right of
reimbursement therefor.
(ii) Amounts on deposit in the Pre-Funding Account shall
be withdrawn by the Indenture Trustee as follows:
(A) On any Subsequent Transfer Date, upon the
direction of the Issuer, the Indenture Trustee shall withdraw from the
Pre-Funding Account an amount equal to 100% of the Principal Balances
of the Subsequent Mortgage Loans transferred and assigned to the
Indenture Trustee on such Subsequent Transfer Date and pay such amount
to or upon the order of the Seller upon satisfaction of the conditions
set forth in Section 2.3 hereof with respect to such transfer and
assignment; and
(B) If the Pre-Funded Amount has not been reduced to
zero during the Funding Period, on the second Business Day immediately
prior to the first Payment Date following the end of the Funding
Period, the Indenture Trustee shall deposit into the Payment Account
any amounts remaining in the Pre-Funding Account.
Section 2.5. INTEREST COVERAGE ACCOUNT.
(a) No later than the Closing Date, the Indenture Trustee
shall establish and maintain on behalf of itself one or more segregated trust
accounts, which shall be Eligible Accounts, titled "Interest Coverage Account,
Bankers Trust Company of California, N.A., as indenture trustee for the
registered holders of PacificAmerica Home Equity Loan Asset Trust Series 1997-1"
(the "Interest Coverage Account"). The Indenture Trustee shall, promptly upon
receipt, deposit in the Interest Coverage Account and retain therein the
Interest Coverage Amount remitted on the Closing Date to the Indenture Trustee
by the Issuer. In addition, the Indenture Trustee shall deposit into the
Interest Coverage Account all income and gain on investments in the Pre-Funding
Account pursuant to Section 2.4. Funds deposited in the Interest Coverage
Account shall be held in trust by the Indenture Trustee for the Holders of the
Notes and the Note Insurer for the uses and purposes set forth herein. If the
Indenture Trustee shall not have received an investment direction from the
Issuer, the Indenture Trustee will invest funds deposited in the Interest
Coverage Account in Eligible Investments of the kind described in clause (vii)
of the definition of Eligible Investments with a maturity date no later than the
second Business Day preceding each Payment Date. The Seller shall deposit in the
Interest Coverage Account the amount of any net loss incurred in respect of any
such Eligible Investment immediately upon realization of such loss without any
right of reimbursement therefor. The Seller shall be the
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owner of the Interest Coverage Account and shall report all items of income,
deduction, gain or loss arising therefrom.
(b) On each Payment Date during the Funding Period and on the
Payment Date immediately after the Funding Period, the Indenture Trustee shall
withdraw from the Interest Coverage Account and deposit in the Payment Account
the Interest Coverage Addition.
(c) On each Payment Date following the conveyance of a
Subsequent Mortgage Loan to the Indenture Trustee, funds on deposit in the
Interest Coverage Account in an amount equal to (i) the product of (a) the
Pre-Funding Amount on the related Due Date (or in the case of the first Payment
Date during the Funding Period, on the Closing Date) and (b) one-twelfth and (c)
the weighted average of the applicable Note Interest Rates for the Notes minus
(ii) in the case of any Subsequent Mortgage Loan transferred to the Issuer
during the related Due Period, the amount of any interest collected after the
related Subsequent Cut-off Date and during such related Due Period shall be
deposited into the Payment Account.
(d) Upon the earlier of (i) termination of the Trust Estate in
accordance with Section 8.01 of the Trust Agreement and (ii) the Payment Date
following the end of the Funding Period, any amount remaining on deposit in the
Interest Coverage Account shall be withdrawn by
the Indenture Trustee and paid to the Seller.
ARTICLE III
REPRESENTATIONS AND WARRANTIES;
REMEDIES FOR BREACH
Section 3.1. SELLER REPRESENTATIONS AND WARRANTIES. The Seller
hereby represents and warrants to the Company, the Indenture Trustee and the
Note Insurer as of the date hereof and as of the Closing Date and as of each
Subsequent Transfer Date (or if otherwise specified below, as of the date so
specified):
(a) As to the Seller:
(i) The Seller (i) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and (ii) is qualified and in good standing as a foreign corporation to
do business in each jurisdiction where such qualification is necessary,
except where the failure so to qualify would not have a material
adverse effect on the Seller's ability to enter into this Agreement and
each Subsequent Transfer Instrument and to consummate the transactions
contemplated hereby and thereby;
(ii) The Seller has the power and authority to make, execute,
deliver and perform its obligations under this Agreement and each
Subsequent Transfer Instrument and all of the transactions contemplated
under this Agreement and each Subsequent Transfer Instrument, and has
taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement and each Subsequent Transfer
Instrument;
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(iii) The Seller is not required to obtain the consent of any
other Person or any consent, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance,
validity or enforceability of this Agreement or any Subsequent Transfer
Instrument, except for such consents, approvals or authorization, or
registration or declaration, as shall have been obtained or filed, as
the case may be;
(iv) The execution and delivery of this Agreement and each
Subsequent Transfer Instrument and the performance of the transactions
contemplated hereby by the Seller will not violate any provision of any
existing law or regulation or any order or decree of any court
applicable to the Seller or any provision of the certificate of
incorporation or bylaws of the Seller, or constitute a material breach
of any mortgage, indenture, contract or other agreement to which the
Seller is a party or by which the Seller may be bound;
(v) No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending, or to
the knowledge of the Seller threatened, against the Seller or any of
its properties or with respect to this Agreement or any Subsequent
Transfer Instrument, the Notes or the Certificates which in the opinion
of the Seller has a reasonable likelihood of resulting in a material
adverse effect on the transactions contemplated by this Agreement or
any Subsequent Transfer Instrument;
(vi) This Agreement and each Subsequent Transfer Instrument
constitute the legal, valid and binding obligations of the Seller,
enforceable against the Seller in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect affecting the enforcement of creditors' rights in general and
except as such enforceability may be limited by general principles of
equity (whether considered in a proceeding at law or in equity);
(vii) This Agreement constitutes a valid transfer and
assignment to the Company of all right, title and interest of the
Seller in and to the Cut-off Date Principal Balance of the Initial
Mortgage Loans, all monies due or to become due with respect thereto,
and all proceeds of such Cut-off Date Principal Balance of the Initial
Mortgage Loans and this Agreement and the related Subsequent Transfer
Instrument constitute a valid transfer and assignment to the Issuer of
all right, title and interest of the Seller in and to the Subsequent
Cut-off Date Principal Balance of the Subsequent Mortgage Loans, all
monies due or to become due with respect thereto, and all proceeds of
such Subsequent Cut-off Date Principal Balance of the Subsequent
Mortgage Loans; and
(viii) The Seller is not in default with respect to any order
or decree of any court or any order or regulation of any federal, state
or governmental agency, which
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default might have consequences that would materially and adversely
affect the condition (financial or other) or operations of the Seller or
its properties or might have consequences that would materially
adversely affect its performance hereunder; and
(b) As to each Initial Mortgage Loan as of the Closing Date, and with
respect to each Subsequent Mortgage Loan as of the related Subsequent Transfer
Date, except as otherwise
expressly stated:
(i) The information set forth on the Mortgage Loan Schedule
with respect to each Mortgage Loan is true and correct in all material
respects as of the Closing Date, each Subsequent Transfer Date and each
date of substitution of an Eligible Substitute Mortgage Loan, as
applicable, and the information regarding the Mortgage Loans on the
computer diskette or tape delivered to the Note Insurer prior to the
Closing Date, each Subsequent Transfer Date and each date of
substitution of an Eligible Substitute Mortgage Loan, is true and
accurate in all material respects and describes the same Mortgage Loans
as the Mortgage Loans on the Mortgage Loan Schedule;
(ii) The Mortgage Loans are not being transferred with any
intent to hinder, delay or defraud any creditors;
(iii) No more than 1.80% of the Initial Mortgage Loans (by
Cut-off Date Principal Balance) were secured by condominium units; no
more than 3.00% of the Initial Mortgage Loans (by Cut-off Date
Principal Balance) were secured by attached housing; and no Initial
Mortgage Loans were secured by properties in planned unit developments;
(iv) As of the Cut-off Date, the remaining term of each
Mortgage Loan is not
more than 360 months and not less than 177 months;
(v) No more than 22.68% of the Initial Mortgage Loans (by
Cut-off Date Principal Balance) have been the subject of cash-out
refinances;
(vi) No more than 46.29% of the Initial Mortgage Loans (by
Cut-off Date Principal Balance) have been the subject of rate and term
(no cash-out) refinances;
(vii) No fewer than 31.03% of the Initial Mortgage Loans (by
Cut-off Date Principal Balance) are purchase money loans;
(viii) No more than 19.95% of the Initial Mortgage Loans (by
Cut-off Date Principal Balance) are secured by Mortgaged Properties
located in the State of California, and no more than 14.19% of the
Initial Mortgage Loans (by Cut-off Date Principal Balance) are located
in any other state;
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(ix) The original Principal Balances of the Initial Mortgage
Loans ranged from $19,491.78 to $420,000.00. The average outstanding
Principal Balance of the Initial Mortgage Loans (by Cut-off Date
Principal Balance) is approximately $97,903.18;
(x) At least 92.40% of the Initial Mortgage Loans (by Cut-off
Date Principal Balance) were secured by a first lien on a parcel of
real property improved by a single family detached residence; no more
than 2.07% of the Initial Mortgage Loans (by Cut-off Date Principal
Balance) were secured by a first lien on a parcel of real estate
improved by a two-to four-unit single family residence; no more than
0.49% of the Initial Mortgage Loans (by Cut-off Date Principal Balance)
were secured by a first lien on a parcel of real estate improved by
manufactured housing; and no more than 0.24% of the Initial Mortgage
Loans (by Cut-off Date Principal Balance) were secured by a first lien
on a parcel of real estate improved by a townhouse;
(xi) The earliest year of origination of any Initial Mortgage
Loan is 1997 and the latest month and year of origination of any
Initial Mortgage Loan is November,
1997.
(xii) The Mortgage Rates borne by the Initial Mortgage Loans
as of the Cutoff Date range from 7.4% per annum to 16.09% per annum and
the weighted average Mortgage Rate (by Cut-off Date Principal Balance)
of the Initial Mortgage loans was 11.02% per annum;
(xiii) No Initial Mortgage Loan in the Mortgage Pool had a
Loan-to-Value Ratio at origination in excess of 90.00%, and the
weighted average Loan-to-Value Ratio (by Cut-off Date Principal
Balance) was equal to or less than 77.40%. Approximately 35.00% of the
Initial Mortgage Loans (by Cut-off Date Principal Balance) have a
Loan-to-
Value Ratio in excess of
80% and none were covered by a Primary Insurance Policy;
(xiv) All of the Mortgage Loans are secured by first liens on
the related Mortgaged Property; 18.91% of the Initial Mortgage Loans
(by Cut-off Date Principal Balance) have secondary financing on the
related Mortgaged Property, which second lien
is not included in the Trust Estate;
(xv) To the best of the Seller's knowledge, there is no valid
offset, right of rescission, defense, claim or counterclaim of any
obligor under any Mortgage Note or Mortgage, including the obligation
of the Mortgagor to pay the unpaid principal of or interest on such
Mortgage Note, and any applicable right of rescission has expired, nor
will the operation of any of the terms of such Mortgage Note or
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, recoupment, counterclaim
or defense, including, without limitation, the defense of usury, and no
such right of rescission, set-off, recoupment, counterclaim or defense
has been asserted with respect
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thereto, and, to the best of Seller's knowledge, no Mortgagor
as of the Cut-off Date or as of the Subsequent Cut-off Date, as
applicable, of the applicable Mortgage was a debtor in any state or
federal bankruptcy or insolvency proceeding;
(xvi) To the best of the Seller's knowledge, there are no
mechanics' liens or claims for work, labor or material affecting any
Mortgaged Property which are or may be a lien prior to, or equal with,
the lien of such Mortgage, except those which are insured against by
the title insurance policy referred to in clause (xix) below;
(xvii) To the best of the Seller's knowledge, as of the
Cut-off Date in the case of an Initial Mortgage Loan or as of the
related Subsequent Cut-off Date in the case of a Subsequent Mortgage
Loan, each Mortgaged Property is free of material damage and is in good
repair and there is no proceeding pending or threatened for the total
or partial condemnation of any Mortgage Property;
(xviii) Each Mortgage is a valid and enforceable first lien on
the Mortgaged Property securing the related Mortgage Note and each
Mortgaged Property is owned by the Mortgagor in fee simple (except with
respect to common areas in the case of condominiums, PUDs and DE
MINIMIS PUDs) subject only to (1) the lien of nondelinquent current
real property taxes and assessments, (2) covenants, conditions and
restrictions, rights of way, easements and other matters of public
record as of the date of recording of such Mortgage, such exceptions
appearing of record being acceptable to mortgage lending institutions
generally or specifically reflected in the appraisal made in connection
with the origination of the related Mortgage Loan or referred to in the
lender's title insurance policy delivered to the originator of the
related Mortgage Loan and (3) other matters to which like properties
are commonly subject that do not materially interfere with the benefits
of the security intended to be provided by such Mortgage. Immediately
prior to the sale of such Mortgage Loan to the Company in the case of
an Initial Mortgage Loan and to the Issuer in the case of a Subsequent
Mortgage Loan pursuant to this Agreement, the Seller had full right to
sell and assign the same to the Company or the Issuer, as the case may
be. Immediately following the sale of such Mortgage Loan to the Company
and the Company's assignment and sale thereof to the Issuer in the case
of an Initial Mortgage Loan and immediately following the sale of such
Mortgage Loan to the Issuer in the case of a Subsequent Mortgage Loan,
the Issuer will have good title thereto subject to no claims or liens
other than the lien of the Indenture;
(xix) To the best of the Seller's knowledge, each Mortgage
Loan at origination complied in all material respects with applicable
state and federal laws, including, without limitation, usury, equal
credit opportunity, real estate settlement procedures, the Federal
Truth-In-Lending Act and disclosure laws and consummation of the
transactions contemplated hereby, including without limitation, the
receipt of interest by the owner of such Mortgage Loan or the holders
of Notes secured thereby, will not violate any such
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laws. Each Mortgage Loan is being serviced in all material respects in
accordance with applicable state and federal laws, including, without
limitation, the Federal Truth-In- Lending Act and other consumer
protection laws, real estate settlement procedures, usury, equal credit
opportunity and disclosure laws;
(xx) Neither the Seller nor any prior holder of any Mortgage
has impaired, waived, altered or modified the Mortgage or Mortgage
Notes in any material respect (except that a Mortgage Loan may have
been modified by a written instrument which has been recorded, if
necessary to protect the interests of the owner of such Mortgage Loan
or the Notes, and which has been delivered to the Indenture Trustee);
satisfied, canceled or subordinated such Mortgage in whole or in part;
released the applicable Mortgaged Property in whole or in part from the
lien of such Mortgage; or executed any instrument of release,
cancellation or satisfaction with respect thereto;
(xxi) A lender's policy of title insurance (on an ALTA or CLTA
form) or binder, or other assurance of title customary in the relevant
jurisdiction insuring the first lien priority of the Mortgage Loan in
an amount at least equal to the original Principal Balance of each such
Mortgage Loan or a commitment binder or commitment to issue the same
was effective on the date of the origination of each Mortgage Loan,
each such policy is valid and remains in full force and effect, and
each such policy was issued by a title insurer qualified to do business
in the jurisdiction where the Mortgaged Property is located, which
policy insures the Seller and successor owners of indebtedness secured
by the insured Mortgage as to the first priority lien of the Mortgage
as applicable. The Seller is, and such successor owners will be, the
sole insured under such lender's title insurance policy; no claims have
been made under such mortgage title insurance policy; no prior holder
of the applicable Mortgage, including the Seller, has done, by act or
omission, anything which would impair the coverage of such mortgage
title insurance policy; and each such policy, binder or assurance
contains all applicable endorsements;
(xxii) All of the improvements which were included for the
purpose of determining the Appraised Value of the Mortgaged Property
lie wholly within the boundaries and building restriction lines of such
property and no improvements on adjoining properties encroach upon the
Mortgaged Property;
(xxiii) No improvement located on or being part of the
Mortgaged Property is in violation of any applicable zoning law or
regulation, subdivision law or ordinance, except where the failure to
comply would not have a material adverse effect on the market value of
the Mortgaged Property. 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 and
fire underwriting certificates, have been made or obtained from the
appropriate authorities and the Mortgaged Property is lawfully occupied
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under applicable law except where the failure to comply would not have
a material adverse effect on the market value of the Mortgaged
Property;
(xxiv) Each Mortgage Note and the applicable Mortgage are
genuine, and each is the legal, valid and binding obligation of the
maker thereof, enforceable in accordance with its terms, except as
limited by bankruptcy, insolvency, reorganization, moratorium,
receivership and other similar laws relating to creditors' rights
generally or by equitable principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law). All
parties to the Mortgage Note and the Mortgage had legal capacity to
execute the Mortgage Note and the Mortgage and each Mortgage Note and
Mortgage has been duly and properly executed by such parties;
(xxv) The proceeds of the Mortgage Loans have been fully
disbursed, there is no requirement for future advances thereunder and
any and all requirements as to completion of any on-site or off-site
improvements and as to disbursement of any escrow funds therefor have
been complied with. All costs, fees and expenses incurred in making,
closing or recording the Mortgage Loans were paid and the Mortgagor is
not entitled to any refund of amounts paid or due under the Mortgage
Note;
(xxvi) Each Mortgage contains customary and enforceable
provisions that render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the
benefits of the security, including (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii) otherwise by
judicial foreclosure or if applicable, non-judicial foreclosure. Upon
default by a Mortgagor on a Mortgage Loan and foreclosure on, or
trustee's sale of, the Mortgaged Property pursuant to the proper
procedures, the holder of the Mortgage Loan will be able to deliver
good and merchantable title to the property, subject to any applicable
rights of redemption;
(xxvii) With respect to each Mortgage constituting a deed of
trust, either a trustee, duly qualified under applicable law to serve
as such, has been properly designated and currently so serves and is
named in such Mortgage or if no duly qualified trustee has been
properly designated and so serves, the Mortgage contains satisfactory
provisions for the appointment of such trustee by the holder of the
Mortgage at no cost or expense to such holder, and no fees or expenses
are or will become payable by the Noteholders or the Note Insurer to
the trustee under the deed of trust, except in connection with a
trustee's sale after default by the Mortgagor;
(xxviii) There exist no deficiencies with respect to escrow
deposits and payments, if such are required, for which customary
arrangements for repayment thereof cannot be made, and no escrow
deficits or payments of other charges or payments due the Seller have
been capitalized under the Mortgage or the applicable Mortgage Note;
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(xxix) The Mortgage Note is not and has not been secured by
any collateral, pledged account or other security other than real
estate securing the Mortgagor's obligations and no Mortgage Loan is
secured by more than one Mortgaged Property;
(xxx) To the best of the Seller's knowledge, as of the Closing
Date in the case of an Initial Mortgage Loan, and as of the related
Subsequent Transfer Date in the case of a Subsequent Mortgage Loan, the
improvements upon each Mortgaged Property are covered by a valid and
existing hazard insurance policy substantially acceptable to the Seller
which policy provides for fire extended coverage and such other hazards
as are customary in the area where the Mortgaged Property is located
representing coverage in an amount not less than the lesser of (A) the
maximum insurable value of the improvements securing such Mortgage Loan
and (B) the outstanding Principal Balance of the related Mortgage Loan;
if the improvement on the Mortgaged Property is a condominium unit, it
is included under the coverage afforded by a blanket policy for the
condominium project. All individual insurance policies contain a
standard mortgagee clause naming the Seller or the original holder of
the Mortgage, and its successors in interest, as mortgagee, and the
Seller has received no notice that any premiums due and payable thereon
have not been paid; the Mortgage obligates the Mortgagor thereunder to
maintain all such insurance at the Mortgagor's cost and expense, and
upon the Mortgagor's failure to do so, authorizes the holder of the
Mortgage to obtain and maintain such insurance at the Mortgagor's cost
and expense and to seek reimbursement therefor from the Mortgagor.
There has been no act or omission which would impair the coverage of
any such policy, the benefits of the endorsement provided for herein,
or the validity and binding effect of either;
(xxxi) If the Mortgaged Property is in an area identified in
the Federal Register by the Federal Emergency Management Agency as
having special flood hazards, a flood insurance policy in a form
meeting the requirements of the current guidelines of the Flood
Insurance Administration is in effect with respect to such Mortgaged
Property with a generally acceptable carrier in an amount representing
coverage not less than the least of (A) the outstanding Principal
Balance of the Mortgage Loan, (B) the minimum amount required to
compensate for damage or loss on a replacement cost basis and (C) the
maximum amount of flood coverage that is available under federal law;
(xxxii) Except for the Mortgage Loans referred to in clause
(xli) as being delinquent, there is no material monetary default,
breach, violation or event of acceleration existing under the Mortgage
or the applicable Mortgage Note; and no material event which, with the
passage of time or with notice and the expiration of any grace or cure
period, would constitute a material default, breach, violation or event
of acceleration, and neither the Seller, any of its affiliates nor any
Master Servicer or subservicer of any related Mortgage Loan has waived
any default, breach, violation or event of acceleration; no
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foreclosure action is threatened or has been commenced with respect to
the Mortgage Loan;
(xxxiii) Each Mortgage Loan is being serviced by Advanta
Mortgage Corp. USA;
(xxxiv) There is no obligation on the part of the Seller or
any other party to make any payments with respect to the related
Mortgage Loan in addition to the Monthly
Payments required to be made by the applicable Mortgagor;
(xxxv) Any future advances made prior to the Cut-off Date in
the case of an Initial Mortgage Loan and as of the related Subsequent
Cut-off Date in the case of a Subsequent Mortgage Loan, with respect to
any Mortgage Loan have been consolidated with the outstanding principal
amount secured by such Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment term
reflected on the Mortgage Loan Schedule. The consolidated principal
amount does not exceed the original principal amount of the Mortgage
Loan. The Mortgage Note with respect to any Mortgage Loan does not
permit or obligate the Master Servicer to make future advances to the
Mortgagor at the option of the Mortgagor;
(xxxvi) The Seller has caused or will cause to be performed
any and all acts required to preserve the rights and remedies of the
Company and the Issuer evidencing an interest in the Mortgage Loans in
any insurance policies applicable to the Mortgage Loans including,
without limitation, any necessary notifications of insurers,
assignments of policies or interests therein, and establishments of
coinsured, joint loss payee and mortgagee rights in favor of the
Company or the Issuer, as applicable;
(xxxvii) To the best of the Seller's knowledge, except as set
forth in clause (xli), there are no defaults by the Mortgagor in
complying with the terms of any Mortgage, and all taxes, governmental
assessments, insurance premiums, water, sewer and municipal charges
which previously became due and owing have been paid, or, if required
by the terms of the Mortgage Loan, 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. Except for (A) payments in the nature of escrow payments and
(B) interest accruing from the date of the Mortgage Note or date of
disbursement of the Mortgage proceeds to the day which precedes by one
month the Due Date of the first installment of principal and interest,
including, without limitation, taxes and insurance payments, the Master
Servicer has not advanced funds, or induced, solicited or knowingly
received any advance of funds by a party other than the Mortgagor,
directly or indirectly, for the payment of any amount required by the
Mortgage;
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(xxxviii) At the time of origination, each Mortgaged Property
was the subject of an appraisal which conforms to the underwriting
requirements of the related originator; and the Mortgage File contains
an appraisal of the applicable Mortgaged Property;
(xxxix) None of the Mortgage Loans are graduated payment
Mortgage Loans or growth equity Mortgage Loans;
(xl) None of the Adjustable Rate Mortgage Loans permit or
require the conversion of the related Mortgage Rate to a fixed rate;
(xli) (a) Except with respect to no more than 0.37% of the
Initial Mortgage Loans (by Cut-off Date Principal Balance) and of the
Mortgage Loans (by Principal Balance) as of the end of the Funding
Period, none of the payments of principal of or interest on or in
respect of any Initial Mortgage Loans shall be 30 days or more but less
than 60 days past due as of December 1, 1997; none of the payments of
principal or interest on or in respect of any Initial Mortgage Loans or
Subsequent Mortgage Loans shall be 60 days or more past due as of the
Cut-off Date or Subsequent Cut-off Date, as applicable; (b) except as
set forth in clause (a) above, no Mortgage Loan has been contractually
delinquent for more than one monthly installment period during the
twelve months preceding the Cut-off Date or the Subsequent Cut-off
Date, as applicable; (c) except as set forth in clause (a) above, all
payments required to be made by the Mortgagor under the terms of the
Mortgage Note have been made and credited; and (d) to the Seller's
knowledge, there was no delinquent recording, tax or assessment lien
against the property subject to any Mortgage, except where such lien
was being contested in good faith and a stay had been granted against
levying on the property;
(xlii) Upon payment of the Purchase Price for the Mortgage
Loans by the Company or the Issuer, as applicable, pursuant to this
Agreement, the Seller has transferred to the Company in the case of an
Initial Mortgage Loan and to the Issuer in the case of a Subsequent
Mortgage Loan good and marketable title to each Mortgage Note and
Mortgage free and clear of any and all liens (except as set forth in
clause (xviii) above), claims, encumbrances, participation interests,
equities, pledges, charges or security interests of any nature and has
or had full right and authority, subject to no participation of or
agreement with any other person, to sell and assign the same, and
following the sale of each Mortgage Loan, the Company, or the Issuer,
as applicable, will own such Mortgage Loan free and clear of any
encumbrance, equity interest, participation interest, lien, pledge,
charge, claim or security interest;
(xliii) The Seller acquired any right, title and interest in
and to the Mortgage Loans in good faith and without notice of any
adverse claim;
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(xliv) 89.19% of the Initial Mortgage Loans are Adjustable
Rate Mortgage Loans and 10.81% of the Initial Mortgage Loans are Fixed
Rate Mortgage Loans;
(xlv) The Mortgage Note, the Mortgage, the related Assignment
of Mortgage and any other documents required to be delivered by the
Seller have been or will be delivered to the Indenture Trustee. The
Indenture Trustee is in possession of a complete, true and accurate
Mortgage File in accordance with Section 2.2 hereof. Substantially all
Mortgage Loans have monthly payments due on the first day of each month
and each Mortgage Loan had an original term to maturity of no greater
than 30 years;
(xlvi) All of the Mortgage Loans contain a due-on-sale
provision except that all of the Mortgage Loans located in Minnesota
that are purchase money loans are assumable;
(xlvii) Each of the Mortgage and the Assignment of Mortgage is
in recordable form and is acceptable for recording under the laws of
the jurisdiction in which the Mortgaged Property is located;
(xlviii) The Mortgagor has not notified the Seller, and the
Seller has no knowledge of any relief requested or allowed to the
Mortgagor under the Soldiers' and Sailors' Civil Relief Act of 1940;
(xlix) To the best of the Seller's knowledge, there exists no
violation of any local, state, or federal environmental law, rule or
regulation in respect of the Mortgaged Property which violation has or
could have a material adverse effect on the market value of such
Mortgaged Property. The Seller has no knowledge of any pending action
or proceeding directly involving the related Mortgaged Property in
which compliance with any environmental law, rule or regulation is in
issue; and, to the best of the 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 the use and
employment of such Mortgaged Property;
(l) Each Mortgage Loan conforms, and all such Mortgage Loans
in the aggregate conform, to the description thereof set forth in the
Prospectus Supplement in all material respects;;
(li) Immediately prior to the transfer to the Company or the
Issuer, as applicable, the Seller had good and marketable title
thereto, and the Seller is the sole owner of beneficial title to and
holder of the Mortgage Loan. The Seller is conveying the same to the
Company or the Issuer, as applicable, free and clear of any and all
liens claims, encumbrances, participation interests, equities, pledges,
charges or security interests of any nature and has full right and
authority to sell and assign the same pursuant
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to this Agreement, except for liens which will be released
simultaneously with such conveyance;
(lii) For each Mortgage Loan, the related Mortgage File
contains a true, accurate and correct copy of each of the documents and
instruments required to be included therein;
(liii) The Seller, in its capacity as Master Servicer, meets
all applicable requirements under the Servicing Agreement;
(liv) No instrument of release or waiver has been executed in
connection with the Mortgage Loans, and no Mortgagor has been released,
in whole or in part from its obligations in connection with a Mortgage
Loan except in connection with an assumption agreement which has been
delivered to the Indenture Trustee;
(lv) On the basis of a representation by the Mortgagor at the
time of origination of the Mortgage Loans, at least 97.10% of the
Initial Mortgage Loans (by Cutoff Date Principal Balance) will be
secured by Mortgages on owner-occupied primary residence properties;
(lvi) None of the Initial Mortgage Loans (by Cut-off Date
Principal Balance) provide for a balloon payment;
(lvii) No Mortgage Loan was originated based on an appraisal
of the related Mortgaged Property made prior to completion of
construction of the improvements thereon;
(lviii) None of the Mortgage Loans is a "buy down" mortgage
loan;
(lix) As of the Cut-Off Date, the Mortgage Rate of each
Adjustable Rate Initial Mortgage Loan was not more than 16.09% per
annum and not less than 7.40% per annum, and the weighted average
Mortgage Rate of the Adjustable Rate Initial Mortgage
Loans was approximately 11.00% per annum;
(lx) No selection procedure reasonably believed by the Seller
to be adverse to the interests of the Noteholders or the Note Insurer
was utilized in selecting the Mortgage Loans;
(lxi) The terms of the Mortgage Note related to each
Adjustable Rate Mortgage Loan provide that, following an initial period
of six months, two years, three years or five years following the month
in which such Mortgage Loan was originated and semiannually or annually
thereafter (each such date, an "Adjustment Date"), the Mortgage
-36-
Rate on such Mortgage Loan will be adjusted to equal the sum of (a) the
related Index and (b) a fixed percentage amount specified in the
related Mortgage Note (each, a "Gross Margin"), provided, however, that
the Mortgage Rate generally will not increase or decrease by the
related Periodic Rate Cap, and will not increase above a specified
maximum Mortgage Rate over the life of the Adjustable Rate Mortgage
Loan (the "Maximum Mortgage Rate") or decrease below a specified
minimum Mortgage Rate over the life of the Adjustable Rate Mortgage
Loan (the "Minimum Mortgage Rate").
(lxii) No material misrepresentation, fraud or similar
occurrence with respect to a Mortgage Loan has taken place on the part
of the Seller, its affiliates or employees or to the best of the
Seller's knowledge, any other person involved in the origination of the
Mortgage Loan or in the application for any insurance in relation to
such Mortgage Loan.
(lxiii) Each Mortgage Loan was originated by a mortgagee
approved by the Secretary of Housing and Urban Development pursuant to
Sections 203 and 211 of the Act, a savings and loan association, a
savings bank, a commercial bank, credit union, insurance company or
similar institution which is supervised and examined by a federal or
state authority.
(lxiv) With respect to each Mortgage Loan secured by
manufactured housing, such manufactured housing is permanently affixed
to a foundation and constitutes real estate under applicable state law.
(lxv) No Mortgage Loans are date of payment or simple interest
loans.
(lxvi) The sale, transfer, assignment and conveyance of
Mortgage Loans by the Seller pursuant to this Agreement is not subject
to and will not result in any tax, fee or governmental charge payable
by the Company, the Issuer or the Indenture Trustee to any federal,
state or local government ("Transfer Taxes") other than Transfer Taxes
which have or will be paid by the Seller as due.
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Upon discovery by the Seller or upon notice from the Company,
the Note Insurer, the Issuer, the Owner Trustee or the Indenture Trustee, as
applicable, of a breach of any representation or warranty in subsection (a) of
this Section which materially and adversely affects the interests of the
Noteholders or the Certificateholders or the Note Insurer, as applicable, the
Seller shall, within 45 days of its discovery or its receipt of notice of such
breach, either (i) cure such breach in all material respects or (ii) to the
extent that such breach is with respect to a Mortgage Loan or a Related
Document, either (A) repurchase such Mortgage Loan from the Issuer
at the Repurchase Price, or (B) substitute one or more Eligible Substitute
Mortgage Loans for such Mortgage Loan, in each case in the manner and subject to
the conditions and limitations set forth
below.
Upon discovery by the Seller or upon notice from the Company,
the Note Insurer, the Issuer, the Owner Trustee or the Indenture Trustee, as
applicable, of a breach of any representation or warranty in this subsection (b)
with respect to any Mortgage Loan or upon the occurrence of a Repurchase Event,
which materially and adversely affects the value of the related Mortgage Loan or
the interests of any Noteholders, Certificateholders or the Note Insurer, as
applicable, or of the Company or the Issuer in such Mortgage Loan (notice of
which shall be given to the Company and the Issuer by the Seller, with a copy to
the Note Insurer, if it discovers the same) the Seller shall, within 90 days
after the earlier of its discovery or receipt of notice thereof, either cure
such breach or Repurchase Event in all material respects or either (i)
repurchase such Mortgage Loan from the Issuer at the Repurchase Price, or (ii)
substitute one or more Eligible Substitute Mortgage Loans for such Mortgage
Loan, in each case in the manner and subject to the conditions set forth below.
The Repurchase Price for any such Mortgage Loan repurchased by the Seller shall
be deposited or caused to be deposited by the Master Servicer in the Collection
Account maintained by it pursuant to Section 3.06 of the Servicing Agreement.
With respect to the representations and warranties contained herein that the
Seller has made to the best of its knowledge, if it is discovered that the
substance of any such representation and warranty was inaccurate as of the date
such representation and warranty was made or deemed to be made, and such
inaccuracy materially and adversely affects the value of the related Mortgage
Loan or the interest therein of the Company or the Note Insurer, then
notwithstanding the lack of knowledge by the Seller with respect to the
substance of such representation and warranty being inaccurate at the time the
representation and warranty was made, the Seller shall take such action
described in this paragraph in respect of such Mortgage Loan.
In the event that the Seller elects to substitute an Eligible
Substitute Mortgage Loan or Loans for a Deleted Mortgage Loan pursuant to this
Section 3.1, the Seller shall deliver to the Indenture Trustee on behalf of the
Issuer, with respect to such Eligible Substitute Mortgage Loan or Loans, the
original Mortgage Note and all other documents and agreements as are required by
Section 2.2 hereof, with the Mortgage Note endorsed as required by such Section
2.2 hereof. No substitution will be made in any calendar month after the
Determination Date for such month. Monthly Payments due with respect to Eligible
Substitute Mortgage Loans in the month of substitution shall not be part of the
Trust Estate and will be retained by the Master Servicer and remitted by the
Master Servicer to the Seller on the next succeeding Payment Date. For the month
of substitution, distributions to the Payment Account pursuant to the Servicing
Agreement will include the Monthly Payment due on a Deleted Mortgage Loan for
such month and thereafter the Seller shall be entitled to retain all amounts
received in respect of such Deleted Mortgage Loan. The Seller shall cause the
Master Servicer to amend the Mortgage Loan Schedule to reflect the removal of
such Deleted Mortgage Loan and the substitution of the Eligible Substitute
Mortgage Loan or Loans and to deliver the amended Mortgage Loan Schedule to the
Indenture Trustee.
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Upon such substitution, the Eligible Substitute Mortgage Loan or Loans shall be
subject to the terms of this Agreement and the Servicing Agreement in all
respects, the Seller shall be deemed to have made the representations and
warranties with respect to the Eligible Substitute Mortgage Loan contained
herein set forth in this Section 3.1(b), to the extent set forth in the
definition of "Eligible Substitute Mortgage Loan", as of the date of
substitution, and the Seller shall be obligated to repurchase or substitute for
any Eligible Substitute Mortgage Loan as to which a Repurchase Event has
occurred as provided herein. In connection with the substitution of one or more
Eligible Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the
Master Servicer will determine the amount (such amount, a "Substitution
Adjustment Amount"), if any, by which the aggregate principal balance of all
such Eligible Substitute Mortgage Loans as of the date of substitution is less
than the aggregate principal balance of all such Deleted Mortgage Loans (after
application of the principal portion of the Monthly Payments due in the month of
substitution that are to be distributed to the Payment Account in the month of
substitution). The Seller shall pay the amount of such shortfall to the Master
Servicer for deposit into the Collection Account on the day of substitution,
without any reimbursement therefor.
Upon receipt by the Issuer and the Indenture Trustee of
written notification, signed by a Servicing Officer, of the deposit of such
Repurchase Price or of such substitution of an Eligible Substitute Mortgage Loan
and deposit of any applicable Substitution Adjustment Amount as provided above,
the Indenture Trustee on behalf of the Issuer and the Note Insurer shall release
to the Seller the related Mortgage File for the Mortgage Loan being repurchased
or substituted for and the Issuer shall execute and deliver such instruments of
transfer or assignment prepared by the Master Servicer, in each case without
recourse, as shall be necessary to vest in the Seller or its designee such
Mortgage Loan released pursuant hereto and thereafter such Mortgage Loan shall
not be an asset of the Issuer.
It is understood and agreed that the obligation of the Seller
to cure any breach with respect to or to repurchase or substitute for, any
Mortgage Loan as to which such a breach has occurred and is continuing shall,
except to the extent provided in Section 5.1 of this
Agreement,
constitute the sole remedy respecting such breach available to the Company, the
Issuer, the Certificateholders (or the Owner Trustee on behalf of the
Certificateholders) and the Noteholders (or the Indenture Trustee on behalf of
the Noteholders) against the Seller.
It is understood and agreed that the representations and
warranties set forth in this Section 3.1 shall survive delivery of the
respective Mortgage Files to the Issuer.
Section 3.2 COMPANY REPRESENTATIONS AND WARRANTIES. The
Company hereby represents and warrants to the Seller, the Indenture Trustee and
the Note Insurer as of the date hereof and as of the Closing Date that:
(a) The Company is duly organized and validly existing as a
corporation in good standing under the laws of the State of Delaware, with power
and authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted.
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(b) The Company is duly qualified to do business as a foreign
corporation in good standing and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of its property
or the conduct of its business shall require such qualifications and in which
the failure to so qualify would have a material adverse effect on the business,
properties, assets or condition (financial or other) of the Company and the
ability of the Company to perform under this Agreement.
(c) The Company has the power and authority to execute and
deliver this Agreement and to carry out its terms; the Company has full power
and authority to purchase the property to be purchased from the Seller and the
Company has duly authorized such purchase by all necessary corporate action; and
the execution, delivery and performance of this Agreement have been duly
authorized by the Company by all necessary corporate action.
(d) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under, the articles of incorporation
or bylaws of the Company, or any indenture, agreement or other instrument to
which the Company is a party or by which it is bound; nor result in the creation
or imposition of any Lien upon any of its properties pursuant to the terms of
any such indenture, agreement or other instrument (other than pursuant to the
Basic Documents); nor violate any law or, to the best of the Company's
knowledge, any order, rule or regulation applicable to the Company of any court
or of any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Company or its
properties.
ARTICLE IV
SELLER'S COVENANTS
Section 4.1. COVENANTS OF THE SELLER. The Seller hereby
covenants as of the date hereof and as of the Closing Date and as of each
Subsequent Transfer Date that, except for the transfer hereunder, on and after
the Closing Date, the Seller will not sell, pledge, assign or transfer to any
other Person, or grant, create, incur or assume any Lien on, any Initial
Mortgage Loan or Subsequent Mortgage Loan, whether now existing or hereafter
created, or any interest therein; the Seller will notify the Issuer, on its own
behalf and as assignee of the Company, the Indenture Trustee and the Note
Insurer of the existence of any such Lien on any Mortgage Loan immediately upon
discovery thereof; and the Seller will defend the right, title and interest of
the Issuer, on its own behalf and as assignee of the Company, the Indenture
Trustee and the Note Insurer in, to and under the Mortgage Loans, whether now
existing or hereafter created, against all claims of third parties claiming
through or under the Seller.
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In the event that the Indenture Trustee receives actual notice of any
Transfer Taxes arising out of the transfer, assignment and conveyance of the
Mortgage Loans, on written demand by the Indenture Trustee, or upon the Seller's
otherwise being given notice thereof by the Indenture Trustee, the Seller shall
pay any and all such Transfer Taxes (it being understood that the Holders of the
Notes, the Indenture Trustee and the Note Insurer shall have no obligation to
pay such Transfer Taxes).
Section 4.2. PAYMENT OF EXPENSES.
(a) The Seller will pay on the Closing Date all expenses
incident to the performance of its obligations under this Agreement, including
(i) the preparation, printing and any filing of the preliminary prospectus,
Prospectus Supplement and Prospectus (including any schedules or exhibits and
any document incorporated therein by reference) originally filed and of each
amendment or supplement thereto, (ii) the preparation, printing and delivery to
the Underwriter of this Agreement, the Indenture and such other documents as may
be required in connection with the offering, purchase, sale and delivery of the
Notes, (iii) the preparation, issuance and delivery of the certificates for the
Notes to the Underwriter, including any charges of DTC in connection therewith;
(iv) the fees and disbursements of the Company's accountants and other advisors,
(v) the qualification of the Notes under securities laws in accordance with the
provisions of Section 3(f) of the Underwriting Agreement, including filing fees
and the reasonable fees and disbursements of counsel for the Underwriter in
connection therewith, (vi) the printing and delivery to the Underwriter of
copies of each preliminary prospectus and of the Prospectus and any amendments
or supplements thereto, (vi) the fees and expenses of the Indenture Trustee and
Owner Trustee, including the fees and disbursements of counsel for the Indenture
Trustee and Owner Trustee in connection with the Indenture, the Trust Agreement
and the Notes and (vii) any fees payable in connection with the rating of the
Notes.
(b) If the Underwriting Agreement is terminated by the
Underwriter in accordance with the provisions of Section 5 or Section 9(a)(i)
thereof, the Seller shall reimburse the Underwriter for all of their
out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Underwriter.
ARTICLE V
CONDITIONS TO INITIAL MORTGAGE LOAN PURCHASE
Section 5.1. CONDITIONS OF COMPANY'S OBLIGATIONS. The
Company's obligation to purchase the Initial Mortgage Loans which it accepts for
purchase hereunder shall be subject to each of the following conditions:
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(i) the Mortgage File for each Initial Mortgage
Loan shall have been delivered in accordance
with this Agreement and the Trust Agreement;
(ii) the representations and warranties set forth
in Section 3.1(b) hereof with respect to
each Initial Mortgage Loan shall be true as
of the
Closing Date;
(iii) The Underwriter or its affiliates shall have
had an opportunity to perform a due
diligence review of each Mortgage Loan and
shall have arranged for reappraisals of
value with respect to each Mortgage Loan if
desired by the Underwriter; and
(iv) The Seller shall have provided to the
Underwriter or its affiliates such other
documents which are then required to have
been delivered under this Agreement or which
are reasonably requested by the Underwriter
or its affiliates, which other documents may
include UCC financing statements, a
favorable opinion or opinions of counsel
with respect to matters which are reasonably
requested by the Underwriter, and/or an
Officers' Certificate from the Underwriter.
ARTICLE VI
LIMITATION ON LIABILITY OF THE SELLER
WITH RESPECT TO THE MORTGAGE LOANS
Section 6.1. LIMITATION ON LIABILITY OF THE SELLER. None of
the directors, officers, employees or agents of the Seller shall be under any
liability to the Company, it being expressly understood that all such liability
is expressly waived and released as a condition of, and as consideration for,
the execution of this Agreement. Except as and to the extent expressly provided
in the Basic Documents, the Seller shall not be under any liability to the
Issuer, the Owner Trust, the Owner Trustee, the Indenture Trustee, the
Noteholders or the Certificateholders. The Seller and any director, officer,
employee or agent of the Seller may rely in good faith on any document of any
kind PRIMA FACIE properly executed and submitted by any Person respecting any
matters arising hereunder.
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ARTICLE VII
TERMINATION
Section 7.1. TERMINATION.
(a) Except as provided in Section 7.1(b) hereof, the
respective obligations and responsibilities of the Seller, the Company, the
Issuer and the Indenture Trustee created hereby shall terminate, except for the
Seller's indemnity obligations as provided herein, upon the earlier of (i) the
termination of the Issuer pursuant to the terms of the Trust Agreement and (ii)
the purchase by the Seller from the Issuer of all, but not part, of the Mortgage
Loans and all property acquired, in respect of any Mortgage Loan pursuant to
Section 7.2 hereof.
(b) The Company may terminate this Agreement, by notice to the
Seller, at any time at or prior to the Closing Date:
(i) if the Underwriting Agreement is terminated by the
Underwriter pursuant to the terms of the Underwriting Agreement or if
there has been, since the time of execution of this Agreement or since
the respective dates as of which information is given in the
Prospectus, any material adverse change in the financial condition,
earnings, business affairs or business prospects of the Seller, whether
or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the
financial markets in the United States, any outbreak of hostilities or
escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of
which is such as to make it, in the judgment of the Underwriter,
impracticable to market the Notes or to enforce contracts for the sale
of the Notes, or
(iii) if trading in any securities of the Seller has been
suspended or limited by the Commission or the New York Stock Exchange,
or if trading generally on the American Stock Exchange or the New York
Stock Exchange or in the NASDAQ National Market System has been
suspended or limited, or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices have been required, by any of
said exchanges or by such system or by order of the Commission, the
National Association of Securities Dealers, Inc. or any other
governmental authority,
(iv) if a banking moratorium has been declared by either
Federal or New York authorities,
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(v) a change in control of the Seller shall have occurred
other than in connection with and as a result of the issuance and sale
by the Seller or registered, publicly offered common stock;
(vi) there is (A) a material breach by the Seller of any
representation and warranty contained in this Agreement or the
Underwriting Agreement other than a representation or warranty relating
to particular Mortgage Loans, and the Underwriter has reason to believe
in good faith either that such breach is not curable within 2 (two)
days or that such breach may not have been cured in all material
respects at the expiration of 2 (two) days following discovery thereof
by the Seller OR (B) a failure by the Seller to make any payment
payable by it under this Agreement OR (C) any other failure by the
Seller to observe and perform in any material respect its material
covenants, agreements and obligations with the Company, including
without limitation those contained in this Agreement, and the Company
has reason to believe in good faith that such failure may not have been
cured in all material respects at the expiration of 2 (two) days
following discovery thereof by the Seller, or
(vii) the Seller fails to provide written notification to the
Underwriter of any change in its loan origination, acquisition or
appraisal guidelines or practices, or the
Seller,
without the prior consent of the Underwriter (which shall not be
unreasonably withheld), amends in any material respect its loan
origination, acquisition or appraisal guidelines or
practices.
If this Agreement is terminated pursuant to this Section
7.1(b), such termination shall be without liability of any party to any other
party except as provided in Section 4.2 hereof.
Section 7.2. OPTIONAL REDEMPTION. (a) Subject to the
provisions of clause (b) below, the Seller has the right to purchase the
Mortgage Loans in whole, but not in part, on any Payment Date on or after the
Payment Date on which the aggregate Principal Balance of the Mortgage Loans as
of any Payment Date is less than or equal to 10% of the sum of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date and the Original
Pre-Funded Amount. The purchase price will be equal to 100% of the aggregate
outstanding Note Principal Balance and accrued and unpaid interest thereon
(including any Carry-Forward Amount) at the Note Interest Rate through the date
on which the Notes are redeemed in full together with all amounts due and owing,
including any such amounts due and owing in connection with such redemption, to
the Note Insurer, the Master Servicer and the Indenture Trustee. If such right
is exercised by the Seller, the Seller shall deposit the amount calculated above
with the Indenture Trustee pursuant to Section 5.02 of the Indenture and, upon
the receipt of such deposit, the Indenture Trustee shall release to the Seller
pursuant to Section 8.07 of the Indenture the Mortgage Files pertaining to the
Mortgage Loans being purchased.
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(b) The Seller, at its expense, shall prepare and deliver to
the Indenture Trustee for execution, at the time the Mortgage Loans are to be
released to the Seller, appropriate documents assigning each such Mortgage Loan
from the Indenture Trustee or the Trust to the
Seller or the appropriate party.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1. AMENDMENT. This Agreement may be amended from
time to time by the Seller, the Indenture Trustee and the Company by written
agreement signed by the Seller, the Indenture Trustee and the Company, with the
prior written consent of the Note Insurer.
Section 8.2. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
Section 8.3. NOTICES. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by registered mail, postage prepaid, addressed
as follows:
(i) if to the Seller:
PacificAmerica Money Center, Inc.
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxxx, XX 00000-0000
Attention:
or, such other address as may hereafter be furnished to the Company in writing
by the Seller.
(ii) if to the Company:
Xxxxxxx Xxxxx Mortgage Investors, Inc.
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Legal Department
or such other address as may hereafter be furnished to the Seller in writing by
the Company.
(iii) if to the Issuer:
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PacificAmerica Home Equity Loan Trust Series 1997-1
c/o PacificAmerica Money Center, Inc.
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxxx, XX 00000-0000
Attention:
or such other address as may hereafter be furnished to the Seller in writing by
the Issuer.
(iv) if to the Indenture Trustee:
Bankers Trust Company of California, N.A.
0 Xxxx Xxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: PacificAmerica Series 1997-1
or such other address as may hereafter be furnished to the Seller in writing
by the Indenture Trustee.
(v) if to the Note Insurer:
Financial Security Assurance
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Surveillance Department
Re: PacificAmerica Home Equity Loan
Asset-Backed Notes
Series 1997-1
Telecopy No.: (000) 000-0000, (000) 000-0000
Confirmation: (000) 000-0000
Section 8.4. 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 8.5. 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 the Company.
Section 8.6. COUNTERPARTS. This Agreement may be executed in
two or more counterparts and by the different parties hereto on separate
counterparts, each of which, when so
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executed, shall be deemed to be an original and such counterparts together
shall constitute one and the same agreement.
Section 8.7. FURTHER AGREEMENTS. The Company, the Indenture
Trustee and the Seller each agree 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. Each of the Company
and the Seller agrees to use its best reasonable efforts to take all actions
necessary to be taken by it to cause the Notes to be issued and rated in the
highest rating category by each of the Rating Agencies, and each party will
cooperate with the other in connection therewith.
Section 8.8. INTENTION OF THE PARTIES. It is the intention of
the parties that (i) the Company will be purchasing on the Closing Date, and the
Seller will be selling on the Closing Date, the Initial Mortgage Loans, rather
than the Company providing a loan to the Seller secured by the Initial Mortgage
Loans on the Closing Date, and (ii) the Issuer will be purchasing on each
Subsequent Transfer Date, and the Seller will be selling on each Subsequent
Transfer Date, the related Subsequent Mortgage Loans, rather than the Issuer
providing a loan to the Seller secured by the related Subsequent Mortgage Loans
on each Subsequent Transfer Date. Accordingly, the parties hereto each intend to
treat this transaction with respect to the transaction for federal income tax
purposes as (i) a sale by the Seller, and a purchase by the Company, of the
Initial Mortgage Loans on the Closing Date and (ii) a sale by the Seller, and a
purchase by the Issuer, of the related Subsequent Mortgage Loans on each
Subsequent Transfer Date. The Company and the Issuer will have the right to
review the Mortgage Loans and the Related Documents to determine the
characteristics of the Mortgage Loans which will affect the federal income tax
consequences of owning the Mortgage Loans and the Seller will cooperate with all
reasonable requests made by the Company and/or the Issuer in the course of such
review.
Section 8.9. SUCCESSORS AND ASSIGNS; ASSIGNMENT OF PURCHASE
AGREEMENT. This Agreement shall bind and inure to the benefit of and be
enforceable by the Seller, the Company, the Issuer, the Indenture Trustee and
the Note Insurer and their respective successors and assigns. The obligations of
the Seller under this Agreement cannot be assigned or delegated to a third party
without the consent of the Company and the Note Insurer, which consent shall be
at the Company's and the Note Insurer's sole discretion. The parties hereto
acknowledge that (i) the Company is acquiring the Initial Mortgage Loans for the
purpose of selling them to the Issuer, who will in turn pledge the Initial
Mortgage Loans to the Indenture Trustee for the benefit of the Noteholders and
the Note Insurer and (ii) the Issuer is acquiring the Subsequent Mortgage Loans
for the purpose of pledging the Subsequent Mortgage Loans to the Indenture
Trustee for the benefit of the Noteholders and the Note Insurer. As an
inducement to the Company and the Issuer to purchase the Mortgage Loans, the
Seller acknowledges and consents to (i) the assignment by the Company to the
Issuer of all of the Company's rights against the Seller pursuant to this
Agreement and to the enforcement or exercise of any right or remedy against the
Seller pursuant to this Agreement and (ii) the assignment by the Issuer to the
Indenture Trustee and the Note Insurer of such rights and to the enforcement or
exercise of any right or remedy against the Seller
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pursuant to this Agreement. Such enforcement of a right or remedy by the Issuer,
the Owner Trustee, the Indenture Trustee or the Note Insurer, as applicable,
shall have the same force and effect as if the right or remedy had been enforced
or exercised by the Company or the Issuer directly.
Section 8.10. SURVIVAL. The representations and warranties
made herein by the Seller and the provisions of Article V hereof shall survive
the purchase of the Mortgage Loans hereunder.
Section 8.11. THIRD PARTY BENEFICIARY. The Note Insurer shall
be a third party beneficiary hereof and shall be entitled to enforce the
provisions of this Agreement as if a party hereto.
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IN WITNESS WHEREOF, the Seller and the Company have caused
their names to be signed to this Home Equity Loan Purchase Agreement by their
respective officers thereunto duly authorized as of the day and year first above
written.
XXXXXXX XXXXX MORTGAGE INVESTORS, INC.
as Company
By:_________________________________
Name:
Title:
PACIFICAMERICA MONEY CENTER, INC. as Seller
By:__________________________________
Name:
Title:
PACIFICAMERICA HOME EQUITY LOAN
TRUST SERIES 1997-1
as Issuer
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely in its
capacity as Owner Trustee
By:_________________________________
Authorized Signatory
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A.
as Indenture Trustee
By:_________________________________
Name:
Title:
EXHIBIT 1
MORTGAGE LOAN SCHEDULE
EXHIBIT 2
SUBSEQUENT TRANSFER INSTRUMENT
Pursuant to this Subsequent Transfer Instrument (the
"Instrument"), dated ___________, 199_, between PacificAmerica Money Center,
Inc. as seller (the "Seller"), and PacificAmerica Home Equity Loan Trust Series
1997-1 as issuer (the "Issuer"), and pursuant to the Home Equity Loan Purchase
Agreement, dated as of December 11, 1997, among the Seller, the Issuer, Xxxxxxx
Xxxxx Mortgage Investors, Inc. and Bankers Trust Company of California, N.A.
(the "Home Equity Loan Purchase Agreement"), the Seller and the Issuer agree to
the sale by the Seller and the purchase by the Issuer of the Mortgage Loans
listed on the attached Subsequent Mortgage Loan Schedule (the "Subsequent
Mortgage Loans").
Capitalized terms used and not defined herein have their
respective meanings as set forth in Section 1.1 of the Home Equity Loan Purchase
Agreement, which meanings are incorporated by reference herein. All other
capitalized terms used herein shall have the meanings
specified herein.
Section 1. CONVEYANCE OF SUBSEQUENT MORTGAGE LOANS.
(a) The Seller does hereby sell, transfer, assign, set over
and convey to the Issuer, without recourse, all of its right, title and interest
in and to the Subsequent Mortgage Loans, and including all principal received
and interest accruing on the Subsequent Mortgage Loans on and after the related
Subsequent Cut-off Date, and all items with respect to the Subsequent Mortgage
Loans to be delivered pursuant to Section 2.2 of the Home Equity Loan Purchase
Agreement; provided, however, that the Seller reserves and retains all right,
title and interest in and to principal received and interest accruing on the
Subsequent Mortgage Loans prior to the related Subsequent Cut-off Date. The
Seller, contemporaneously with the delivery of this Agreement, has delivered or
caused to be delivered to the Indenture Trustee each item set forth in Section
2.2 of the Home Equity Loan Purchase Agreement. The transfer to the Issuer by
the Seller of the Subsequent Mortgage Loans identified on the Subsequent
Mortgage Loan Schedule shall be absolute and is intended by the Seller, the
Issuer, the Indenture Trustee and the Noteholders to constitute and to be
treated as a sale by the Seller.
The parties hereto intend that the transactions set forth
herein constitute a sale by the Seller to the Issuer on the Subsequent Transfer
Date of all the Seller's right, title and interest in and to the Subsequent
Mortgage Loans, and other property as and to the extent described
above.
In the event the transactions set forth herein shall be deemed not to be a sale,
the Seller hereby grants to the Issuer as of the Subsequent Transfer Date a
security interest in all of the Seller's right, title and interest in, to and
under the Subsequent Mortgage Loans, and such other property, to secure all of
the Issuer's obligations hereunder, and this Agreement shall constitute a
security agreement under applicable law. The Seller agrees to take or cause to
be taken such actions and to execute such documents, including without
limitation the filing of all necessary UCC-1
financing statements filed in the State of Delaware and the State of California
(which shall be submitted for filing as of the Subsequent Transfer Date), any
continuation statements with respect thereto and any amendments thereto required
to reflect a change in the name or corporate structure of the Seller or the
filing of any additional UCC-1 financing statements due to the change in the
principal office of the Seller, as are necessary to perfect and protect the
Issuer's interests in each Subsequent Mortgage Loan and the proceeds thereof.
(b) The expenses and costs relating to the delivery of the
Subsequent Mortgage Loans, this Instrument and the Home Equity Loan Purchase
Agreement shall be borne by the Seller.
(c) Additional terms of the sale are set forth on Attachment A
hereto.
Section 2. REPRESENTATIONS AND WARRANTIES; CONDITIONS
PRECEDENT.
(a) The Seller hereby affirms the representations and
warranties set forth in Section 3.1 of the Home Equity Loan Purchase Agreement
that relate to the Seller or the Subsequent Mortgage Loans as of the date
hereof. The Seller hereby confirms that each of the conditions set forth in
Section 2.3(b) of the Home Equity Loan Purchase Agreement are satisfied as of
the date hereof and further represents and warrants that each Subsequent
Mortgage Loan complies with the requirements of this Instrument and Section
2.3(c) of the Home Equity Loan Purchase Agreement.
(b) The Seller is solvent, is able to pay its debts as they
become due and has capital sufficient to carry on its business and its
obligations hereunder; it will not be rendered insolvent by the execution and
delivery of this Instrument or by the performance of its obligations hereunder
nor is it aware of any pending insolvency; no petition of bankruptcy (or similar
insolvency proceeding) has been filed by or against the Seller prior to the date
hereof;
(c) All terms and conditions of the Home Equity Loan Purchase
Agreement are hereby ratified and confirmed; provided, however, that in the
event of any conflict the provisions of this Instrument shall control over the
conflicting provisions of the Home Equity
Loan Purchase Agreement.
Section 3. RECORDATION OF INSTRUMENT.
To the extent permitted by applicable law, this Instrument, or
a memorandum thereof if permitted under applicable law, is subject to
recordation in all appropriate public offices for real property records in all
of the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Master Servicer at the Noteholders' expense on direction of the Majority
Noteholders or the Note Insurer, but only when accompanied by an Opinion of
Counsel to the effect that such recordation materially and
beneficially affects the interests of the Noteholders or the Note Insurer or is
necessary for the administration or servicing of the Mortgage Loans.
Section 4. GOVERNING LAW.
This Instrument 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, without giving
effect to principles of conflicts of law.
Section 5. COUNTERPARTS.
This Instrument 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 instrument.
Section 6. SUCCESSORS AND ASSIGNS.
This Instrument shall inure to the benefit of and be binding
upon the Seller and the Issuer and their respective successors and assigns.
PACIFICAMERICA MONEY CENTER, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
TRUST SERIES 1997-1
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely in its
capacity as Owner Trustee
By:________________________________
Authorized Signatory
ATTACHMENTS
-----------
A. Additional terms of the sale.
B. Schedule of Subsequent Mortgage Loans.
C. Opinions of Seller's counsel (bankruptcy, corporate).
D. Seller's Officer's Certificate.
E. Seller's Officer's Certificate (confirmation of Note Insurer
approval).
PACIFICAMERICA HOME EQUITY LOAN
ASSET-BACKED-
NOTES, SERIES 1997-1
ATTACHMENT A TO SUBSEQUENT TRANSFER INSTRUMENT
Series 1997-1
________, 199__
A.
1. Subsequent Cut-off Date:
2. Pricing Date:
3. Subsequent Transfer Date:
4. Aggregate Principal Balance of the Subsequent Mortgage Loans
as of the Subsequent Cut-off Date:
5. Purchase Price: 100.00%
B.
As to all the Subsequent Mortgage Loans the subject of this Instrument:
1. Longest stated term to maturity: _____ months
2. Minimum Mortgage Rate: _____ %
3. Maximum Mortgage Rate: _____ %
4. WAC of all Mortgage Loans: _____ %
5. WAM of all Mortgage Loans: _____ %
6. Largest Principal Balance: $________
7. Non-owner occupied Mortgaged Properties: _____ %
8. California zip code concentration: _____ %
9. Condominiums: _____ %
10. Single-family: _____ %
11. Weighted average term since origination:
12. [January/February/March 1998] first payment date: _____ %
