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ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
This
is an Assignment, Assumption and Recognition Agreement (this
"AAR
Agreement") made as of January 1, 2007, among HSBC Bank, National
Association
(the "Assignor"), HSI Asset Securitization Corporation (the
"Assignee"),
CitiMortgage, Inc. as master servicer (the "Master Servicer"),
Deutsche Bank
National Trust Company (the "Trustee") not individually but solely
as trustee on
behalf of the holders of the HSI Asset Loan Obligation Trust,
Series 2007-AR1,
Asset-Backed Certificates and SunTrust Mortgage, Inc. (the
"Company").
In
consideration of the mutual promises contained herein the parties
hereto
agree that the residential mortgage loans (the "Assigned Loans")
listed on
Attachment 1 annexed hereto (the "Assigned Loan Schedule")
purchased by Assignor
from Company pursuant to the Master Mortgage Loan Purchase and
Servicing
Agreement, dated as of November 1, 2006, between Assignor and
Company (the
"Purchase Agreement"), shall be subject to the terms of this AAR
Agreement.
Capitalized terms used herein but not defined shall have the
meanings ascribed
to them in the Purchase Agreement.
Assignment and Assumption
1.
Assignor hereby grants, transfers and assigns to Assignee all of
the
right, title interest and obligations of Assignor in the Assigned
Loans and, as
they relate to the Assigned Loans, all of its right, title,
interest and
obligations in, to and under the Purchase Agreement and Assignee
hereby assumes
all rights and obligations with respect to the Assigned Loans under
the Purchase
Agreement. Assignor specifically reserves and does not assign to
Assignee any
right title and interest in, to or under any Mortgage Loans subject
to the
Purchase Agreement other than those set forth on Attachment l. The
Company shall
service the Assigned Loans in accordance with the Purchase
Agreement as modified
by this AAR Agreement.
Recognition of the Company
2.
From and after the date hereof, the Company shall and does
hereby
recognize that the Assignee will transfer the Assigned Loans and
assign its
rights under the Purchase Agreement (solely to the extent set forth
herein) and
this AAR Agreement to HSI Asset Loan Obligation Trust 2007-AR1 (the
"Trust")
created pursuant to a Pooling and Servicing Agreement, dated as of
January 1,
2007 (the "Pooling Agreement"), among the Assignee as Depositor,
the Trustee,
the Master Servicer, Citibank, N.A. as Securities Administrator
(the "Securities
Administrator") and Wells Fargo Bank, N.A. as custodian (the
"Custodian"). The
Company hereby acknowledges and agrees that from and after the date
hereof (i)
the Trust will be the owner of the Assigned Loans, (ii) the Company
shall look
solely to the Trust for performance of any obligations of the
Assignor insofar
as they relate to the enforcement of the representations,
warranties and
covenants with respect to the Assigned Loans and the Trust hereby
acknowledges
that it has assumed such representations, warranties and covenants
and that any
claim by the Company with respect thereto shall be made by written
notice to the
Trustee, (iii) the Trust shall have all the rights and remedies
available to the
Assignor, insofar as they relate to the Assigned Loans, under the
Purchase
Agreement, including,
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without limitation, the enforcement of the document delivery
requirements and
remedies with respect to breaches of representations and warranties
set forth in
the Purchase Agreement, and shall be entitled to enforce all of the
obligations
of the Company thereunder insofar as they relate to the Assigned
Loans, and (iv)
all references to the Purchaser (insofar as they relate to the
rights, title and
interest and, with respect to obligations of the Purchaser, only
insofar as they
relate to the enforcement of the representations, warranties and
covenants of
the Company) under the Purchase Agreement insofar as they relate to
the Assigned
Loans, shall be deemed to refer to the Trust. The Company and the
Assignor shall
have the right to amend, modify, waive, or otherwise alter any of
the terms or
provisions of the Purchase Agreement without the joinder of the
Assignee;
provided, however, that such amendment, modification, waiver or
other alteration
shall not in any way affect the Assigned Loans or the Company's
performance
under the Purchase Agreement with respect to the Assigned Loans.
The Company
acknowledges that CitiMortgage, Inc. has been appointed as the
Master Servicer
of the Assigned Loans pursuant to this AAR Agreement and therefore
has the right
to enforce all obligations of the Company as they relate to the
Assigned Loans
under the Purchase Agreement and this AAR Agreement.
Representations; Warranties and Covenants
3.
Assignor warrants and represents to Assignee, the Master Servicer,
the
Trust and Company as of the date hereof:
a. Attached
hereto as Attachment 2 is a true and accurate copy of
the Purchase Agreement, which agreement is in full force and
effect as of the date hereof and the provisions of which have
not
been waived, amended or modified in any respect, nor has any
notice of termination been given thereunder;
b. Assignor is
the lawful owner of the Assigned Loans with full
right to transfer the Assigned Loans and any and all of its
interests, rights and obligations under the Purchase Agreement
as
they relate to the Assigned Loans, free and clear of any and
all
liens, claims and encumbrances; and upon the transfer of the
Assigned Loans to Assignee as contemplated herein, Assignee
shall
have good title to each and every Assigned Loan, as well as any
and all of Assignor's interests, rights and obligations under
the
Purchase Agreement as they relate to the Assigned Loans, free
and
clear of any and all liens, claims and encumbrances;
c. Assignor has
not received notice of, and has no knowledge of, any
offsets, counterclaims or other defenses available to Company
with respect to the Assigned Loans or the Purchase Agreement;
d. Assignor is a
corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
formation, and has all requisite power and authority to
acquire,
own and sell the Assigned Loans;
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e. Assignor has
full power and authority to execute, deliver and
perform its obligations under this AAR Agreement, and to
consummate the transactions set forth herein. The consummation
of
the transactions contemplated by this AAR Agreement is in the
ordinary course of Assignor's business and will not conflict
with, or result in a breach of, any of the terms, conditions or
provisions of Assignor's charter or by-laws or any legal
restriction, or any material agreement or instrument to which
Assignor is now a party or by which it is bound, or result in
the
violation of any law, rule, regulation, order, judgment or
decree
to which Assignor or its property is subject. The execution,
delivery and performance by Assignor of this AAR Agreement and
the consummation by it of the transactions contemplated hereby,
have been duly
authorized by all necessary action on the part of
Assignor. This AAR Agreement has been duly executed and
delivered
by Assignor and, upon the due authorization, execution and
delivery by Assignee and Company, will constitute the valid and
legally binding obligation of Assignor enforceable against
Assignor in accordance with its terms except as enforceability
may be limited by bankruptcy, reorganization, insolvency,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and by general
principles of equity regardless of whether enforceability is
considered in a proceeding in equity or at law;
f. No material
consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental
entity
is required to be obtained or made by Assignor in connection
with
the execution, delivery or performance by Assignor of this AAR
Agreement, or the consummation by it of the transactions
contemplated hereby; and
g. There is no
action, suit, proceeding, investigation or litigation
pending or, to Assignor's knowledge, threatened, which either
in
any instance or in the aggregate, if determined adversely to
Assignor, would adversely affect Assignor's execution or
delivery
of, or the enforceability of, this AAR Agreement, or the
Assignor's ability to perform its obligations under this AAR
Agreement.
4.
Assignee warrants and represents to, and covenants with, Assignor,
the
Master Servicer, the Trust and Company as of the date hereof:
a. Assignee is
duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has
all requisite
power and authority to acquire and own the Assigned
Loans;
b. Assignee has
full power and authority to execute, deliver and
perform its obligations under this AAR Agreement, and to
consummate the transactions set forth herein. The consummation
of
the transactions contemplated by this AAR Agreement is in the
ordinary course of
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Assignee's business and will not conflict with, or result in a
breach of, any of the terms, conditions or provisions of
Assignee's organizational documentation or any legal
restriction,
or any material agreement or instrument to which Assignee is
now
a party or by which it is bound, or result in the violation of
any law, rule, regulation, order, judgment or decree to which
Assignee or its property is subject. The execution, delivery
and
performance by Assignee of this AAR Agreement and the
consummation by it of the transactions contemplated hereby,
have
been duly authorized by all necessary action on the part of
Assignee. This AAR Agreement has been duly executed and
delivered
by Assignee and, upon the due authorization, execution and
delivery by Assignor and Company, will constitute the valid and
legally binding obligation of Assignee enforceable against
Assignee in accordance with its terms except as enforceability
may be limited by bankruptcy, reorganization, insolvency,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and by general
principles of equity regardless of whether enforceability is
considered in a proceeding in equity or at law;
c. No material
consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental
entity
is required to be obtained or made by Assignee in connection
with
the execution, delivery or performance by Assignee of this AAR
Agreement, or the consummation by it of the transactions
contemplated hereby; and
d. There is no
action, suit, proceeding, investigation or litigation
pending or, to Assignee's knowledge, threatened, which either
in
any instance or in the aggregate, if determined adversely to
Assignee, would adversely affect Assignee's execution or
delivery
of, or the enforceability of, this AAR Agreement, or the
Assignee's ability to perform its obligations under this AAR
Agreement.
5.
Company warrants and represents to, and covenants with, Assignor,
the
Trust and Assignee as of the date hereof:
a. Attached
hereto as Attachment 2 is a true and accurate copy of
the Purchase Agreement, which agreement is in full force and
effect as of the date hereof and the provisions of which have
not
been waived, amended or modified in any respect as to the
Assigned Loans, nor has any notice of termination been given
thereunder;
b. Company is
duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, and
has
all requisite power and authority to perform its obligations
under the Purchase Agreement;
c. Company has
full corporate power and authority to execute,
deliver and perform its obligations under this AAR Agreement,
and
to consummate the transactions set forth herein. The
consummation
of the transactions
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contemplated by this AAR Agreement is in the ordinary course of
Company's business and will not conflict with, or result in a
breach of, any of the terms, conditions or provisions of
Company's organizational documentation or any legal
restriction,
or any material agreement or instrument to which Company is now
a
party or by which it is bound, or result in the violation of
any
law, rule, regulation, order, judgment or decree to which
Company
or its property is subject. The execution, delivery and
performance by Company of this AAR Agreement and the
consummation
by it of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of
Company. This AAR Agreement has been duly executed and
delivered
by Company, and, upon the due authorization, execution and
delivery by Assignor and Assignee, will constitute the valid
and
legally binding obligation of Company, enforceable against
Company in accordance with its terms except as enforceability
may
be limited by bankruptcy, reorganization, insolvency,
moratorium
or other similar laws now or hereafter in effect relating to
creditors' rights generally, and by general principles of
equity
regardless of whether enforceability is considered in a
proceeding in equity or at law;
d. No consent,
approval, order or authorization of, or declaration,
filing or registration with, any governmental entity is
required
to be obtained or made by Company in connection with the
execution, delivery or performance by Company of this AAR
Agreement, or the consummation by it of the transactions
contemplated hereby;
e. There is no
action, suit, proceeding, investigation or litigation
pending or, to Company's knowledge, threatened, which either in
any instance or in the aggregate, if determined adversely to
Company, would adversely affect Company's execution or delivery
of, or the
enforceability of, this AAR Agreement, or the
Company's ability to perform its obligations under this AAR
Agreement; and
f. Pursuant to
Section 12 of the Purchase Agreement, the Company
hereby
represents and warrants, for the benefit of the Assignor,
the Assignee, the Master Servicer and the Trust, that the
representations and warranties set forth in Section 7.01 and
7.02
of the Purchase Agreement (except for those representations and
warranties contained in Sections 7.02(iii), (iv), (xvii) (only
with respect to delinquencies regarding the related Mortgage
Loan
and the condition of the related Mortgaged Property), (xix)
(only
with respect to encroachments and violations of applicable
zoning
law, regulations and ordinances as they relate to the condition
of the related Mortgaged Property after the related Closing
Date), (xxiii), (xxxi) and (xxxvii) therein), are true and
correct as of the date hereof, except that the representation
and
warranty set forth in Section 7.02(i) shall, for purposes
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of this AAR Agreement, relate to the Assigned Loan Schedule
attached hereto.
6.
The Company hereby acknowledges and agrees that the remedies
available
to the Assignor, the Assignee and the Trust (including the Assignee
and the
Company acting on the Trust's behalf) in connection with any breach
of the
representations and warranties made by the Company set forth in
Section 5 hereof
shall be as set forth in Subsection 7.03 of the Purchase Agreement
as if they
were set forth herein (including without limitation the repurchase
and indemnity
obligations set forth therein).
7.
In connection with the transfer of the Assigned Loans hereunder,
the
Company agrees that, from and after the date hereof, each Assigned
Loan
transferred hereunder will be subject to, and serviced under, the
Purchase
Agreement, provided that, solely with respect to the Assigned
Loans, the
following modifications shall be made (all capitalized terms used
below shall
have the meanings assigned to such terms by this AAR Agreement and
such terms
shall be incorporated into the Purchase Agreement to the extent
such terms are
not already defined therein):
(i) Section 14.04 shall be amended so that (a) the reference to
the
"Purchaser" in the first sentence thereof will be changed to "the
Master
Servicer, the Depositor and the Securities Administrator and with
written
notice to the Trustee"; and (b) the reference to "Purchaser" in the
second
sentence there of will be changed to "Master Servicer and
Securities
Administrator";
(ii) Section 14.05 shall be amended so that approval for any
transferring of servicing must be provided in writing by the
Master
Servicer, the Depositor, the Securities Administrator and written
notice
must
be provided to the Trustee in order for such transfer to become
effective;
(iii) Section 15.01 shall be amended so that all references to
the
"Purchaser" shall be changed to "Master Servicer";
(iv) Sections 15.02, 16 and 17 shall be amended so that any
references
to
the "Purchaser" shall be changed to "Master Servicer"; and Section
16
shall be further amended so that the following is added at the end
of the
second sentence in the
first paragraph: "provided, however, that no such
compensation shall be in excess of that permitted by the Servicer
under
this
Agreement"
(v) Section 11.01 of Exhibit 9 shall be amended so that (a) the
reference to "Purchaser" in the fifth line of the second paragraph
thereof
shall be replaced with "the Master Servicer or the Trustee for the
benefit
of
the holders of any security issued by the Trust" and (b) the
phrase
"effect an exchange or reissuance of such Mortgage Loan under
Section 1001
of
the Code and cause either any REMIC designation made in connection
with
a
Pass-Through Transfer to fail to qualify as a REMIC under the Code
or the
imposition of any tax on 'prohibited transactions' or
'contributions after
the
startup day' under the REMIC provisions of the Code" shall be
added
after the word "principal" in the ninth line of the second
paragraph
thereof;
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(vi) Section 11.03 of Exhibit 9 shall be amended so that the
following
shall be added as the last paragraph thereof:
"In the event that a Mortgage Loan becomes part of a REMIC, and
becomes REO Property, such property shall be disposed of by the
Seller, with the consent of the trustee as required pursuant to
this
Agreement, within two (2) years after becoming an REO Property,
unless
the Seller provides to the trustee and the Securities
Administrator
under such REMIC an opinion of counsel to the effect that the
holding
of such REO Property subsequent to two (2) years after its
becoming
REO Property, will not result in the imposition of taxes on
"prohibited transactions" as defined in Section 860F of the Code,
or
cause the transaction to fail to qualify as a REMIC at any time
that
certificates are outstanding. The Seller shall manage,
conserve,
protect and operate each such REO Property for the
certificateholders
solely for the purpose of its prompt disposition and sale in a
manner
which does not cause such property to fail to qualify as
"foreclosure
property" within the meaning of Section 860G(a)(8) of the Code, or
any
"net income from foreclosure property" which is subject to
taxation
under the REMIC provisions of the Code. Pursuant to its efforts
to
sell such property, the Seller shall either itself or through an
agent
selected by the Seller, protect and conserve such property in the
same
manner and to such an extent as is customary in the locality
where
such property is located. Additionally, the Seller shall provide
the
Purchaser or any master servicer with information sufficient to
perform the tax withholding and reporting related to Sections 1445
and
6050J of the Code."
(vii) [RESERVED]
(viii) Section 11.05 of Exhibit 9 shall be amended so that the
phrase
"in
excess of the Purchase Price" shall be added after the word
"thereon"
in
the second line of subsection (xvi);
(ix) Section 11.09 of Exhibit 9 shall be amended so that any
consent
for
the transfer of the Custodial Account or Escrow Account must be
obtained from the Master Servicer and the Depositor;
(x) Section 11.13 of Exhibit 9 shall be amended as follows:
(a) the first paragraph shall be deleted in its entirety and
replaced with the following "This Section shall apply only to
REO
Properties acquired for the account of the Trustee and shall not
apply
to any REO Property relating to a Mortgage Loan which was purchased
or
repurchased from the Trustee pursuant to any
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provision hereof. In the event that title to any such REO Property
is
acquired, the deed or certificate of sale shall be issued to
the
Trust, or if not permitted by law, to the Trustee, or its nominee
for
the benefit of the holders of any security issued by the Trust."
and
(b) the following shall be added as the first sentence to
second
paragraph, "the Servicer shall manage, conserve, protect and
operate
each REO Property for the Trustee solely for the purpose of its
prompt
disposition and sale."
(xi) Sections 11.14, 11.16, 11.17, 11.18 and 11.22 of Exhibit 9
shall
be
amended so all references to "Purchaser" made in connection with
the
provision of any notice, the disposition of any funds or the
requirement of
any
consent shall be changed to references to the "Master
Servicer";
(xii) Section 11.15 of Exhibit 9 shall be deleted in its entirety
and
replaced with the following:
Subsection 11.15 Remittance Reports.
No later than the fifth Business Day of each month, the Servicer
shall
furnish to the Master Servicer or its designee an electronic
file
containing, and a hard copy of, the monthly data (the "Remittance
Report").
The
Remittance Report will contain, at a minimum the following -
(i) with respect to each Mortgage Loan and each Monthly
Payment,
the
amount of such remittance allocable to principal (including a
separate
breakdown of any Principal Prepayment, including the date of
such
prepayment, and any Prepayment Charges, along with a detailed
report of
interest on principal prepayment amounts remitted in accordance
with
Subsection 11.04);
(ii) with respect to each Mortgage Loan and each Monthly
Payment,
the
amount of such remittance allocable to interest;
(iii) with respect to each Mortgage Loan, the amount of
servicing
compensation received by the Servicer during the prior distribution
period;
(iv) the Stated Principal Balance of each Mortgage Loan and the
aggregate Stated Principal Balance of all Mortgage Loans as of the
first
day
of the distribution period and the last day of the distribution
period;
(v) with respect to each Mortgage Loan, the current Mortgage
Interest Rate;
(vi) with respect to each Mortgage Loan, the aggregate amount
of
any
Insurance Proceeds, Condemnation Proceeds, Liquidation Proceeds and
REO
Disposition Proceeds received during the prior distribution
period;
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(vii) the number of Mortgage Loans as of the first day of the
distribution period and the last day of the distribution
period;
(viii) with respect to each Mortgage Loan, the Stated Principal
Balance of each Mortgage Loan (a) delinquent as grouped in the
following
intervals through final liquidation of such Mortgage Loan: 30 to 59
days,
60
to 89 days, 90 days or more; (b) as to which foreclosure has
commenced;
and
(c) as to which REO Property has been acquired;
(ix) with respect to each Mortgage Loan, the amount and
severity
of
any realized loss following liquidation of such Mortgage Loan;
(x) with respect to each Mortgage Loan, the amount of any
Monthly
Advances and Nonrecoverable Advances reimbursed to the Servicer
with
respect to such Mortgage Loan during the prior distribution period
pursuant
to
Section 11.05, and the source of funds for such reimbursement, and
the
aggregate amount of any Monthly Advances and Nonrecoverable
Advances
reimbursed to the Servicer for all Mortgage Loans during the
prior
distribution period pursuant to Section 11.05;
(xi) with respect to any Mortgage Loan, a description of any
material modifications, extensions or waivers to the terms, fees,
penalties
or
payments of such Mortgage Loan during the prior distribution period
or
that
have cumulatively become material over time;
(xii) a description of any material breach of a representation
or
warranty set forth in
Subsections 7.01 or 7.02 herein or of any other
breach of a covenant or condition contained herein and the status
of any
resolution of such breach;
(xiii) with respect to each Mortgage Loan, the Stated Principal
Balance of any substitute Mortgage Loan provided by the Servicer
and the
Stated Principal Balance of any Mortgage Loan that has been
replaced by a
substitute Mortgage Loan in accordance with Subsection 7.04;
and
(xiv) with respect to each Mortgage Loan, the Stated Principal
Balance of any Mortgage Loan that has been repurchased by the
Servicer in
accordance with Subsection 7.05.
The
Servicer shall modify the electronic file as requested by the
Master
Servicer from time to time to satisfy any reporting needs which may
arise
because of regulatory or legal requirements.
On
the Business Day following each Determination Date, the Servicer
shall
deliver to the Master Servicer or its designee by telecopy (or by
such other
means as the Servicer and the Master Servicer may agree from time
to time) an
electronic file containing, and a hard copy of, the determination
data with
respect to the related Distribution Date, together with such other
information
with respect to the Mortgage Loans as the Master Servicer may
reasonably require
to allocate distributions made pursuant to this Agreement and
provide
appropriate statements with respect to such distributions.
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(xiii) Section 11.16 of Exhibit 9 shall be deleted in its entirety
and
replaced with the following:
Subsection 11.16 Statements to the Master Servicer.
Upon request the Servicer shall forward to the Master Servicer or
its
designee a statement prepared by the Servicer setting forth the
status of
the
Custodial Account as of the close of business on such Distribution
Date
and
showing, for the period covered by such statement sufficient detail
to
as
to allow the Master Servicer to determine that the account has
been
properly balanced and funded.
In addition, not more than 60 days after the end of each
calendar
year, the Servicer shall furnish to each Person who was the Master
Servicer
at
any time during such calendar year, (i) as to the aggregate of
remittances for the applicable portion of such year, an annual
statement in
accordance with the requirements of applicable federal income tax
law, and
(ii)
listing of the principal balances of the Mortgage Loans outstanding
at
the
end of such calendar year.
The Servicer shall prepare and file any and all tax returns,
information statements or other filings required to be delivered to
any
governmental taxing authority or to the Master Servicer pursuant to
any
applicable law with respect to the Mortgage Loans and the
transactions
contemplated hereby. In addition, the Servicer shall provide the
Master
Servicer with such information concerning the Mortgage Loans as
is
necessary for the Master Servicer to prepare its federal income tax
return
as
the Master Servicer may reasonably request from time to time.
(xiv) Section 11.25 shall be amended so that references to the
"Purchaser" in the last sentence thereof are changed to "the
Depositor, the
Master Servicer and the Trustee".
Miscellaneous
8.
All demands, notices and communications related to the Assigned
Loans,
the Agreements and this AAR Agreement shall be in writing and shall
be deemed to
have been duly given if personally delivered or mailed by
registered mail,
postage prepaid, as follows:
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a. In the case
of Company,
SunTrust Mortgage,
Inc.
1001 Semmes Avenue
Second Floor
Richmond, Virginia 23224
Attn: Annette Holman-Foreman
b. In the case
of Assignor,
HSBC Bank USA, National Association
Re: HALO 2007-AR1
452 Fifth Avenue
New York, New York 10018
Attention: Head of MBS Principal Finance
c. In the case
of Assignee (or the Trust),
HSI Asset Securitization Corporation
Re: HALO 2007-AR1
452 Fifth Avenue
New York, New York 10018
Attn: Head MBS Principal Finance
c. In the case
of Trustee,
Deutsche Bank National Trust Company
1761 St. Andrew Place
Santa Ana, California 92705
d. In the case
of the Master Servicer:
CitiMortgage Mortgage, Inc.
4000 Regent Blvd.
Irving, TX 75063
Attention: Master Servicing Division,
Compliance Manager - HALO 2007-AR1
e. In the case
of the Securities Administrator:
Citbank, N.A.
388 Greenwich Street, 14th Floor
New York, New York 10013
Attention: Structured Finance Agency and Trust, HALO 2007-AR1
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9.
This AAR Agreement shall be construed in accordance with the laws
of the
State of New York, without regard to conflicts of law principles,
and the
obligations, rights and remedies of the parties hereunder shall be
determined in
accordance with such laws.
10.
No term or provision of this AAR Agreement may be waived or
modified
unless such waiver or modification is in writing and signed by the
party against
whom such waiver or modification is sought to be enforced.
11.
This AAR Agreement shall inure to the benefit of the successors
and
assigns of the parties hereto. Any entity into which Assignor,
Assignee or
Company may be merged or consolidated shall without the requirement
for any
further writing, be deemed Assignor, Assignee or Company,
respectively
hereunder.
12.
This AAR Agreement shall survive the conveyance of the Assigned
Loans
as contemplated in this AAR Agreement.
13.
This AAR Agreement may be executed simultaneously in any number
of
counterparts. Each counterpart shall be deemed to be an original
and all such
counterparts shall constitute one and the same instrument.
14.
In the event that any provision of this AAR Agreement conflicts
with
any provision of the Purchase Agreement with respect to the
Assigned Loans, the
terms of this AAR Agreement shall control.
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IN
WITNESS WHEREOF, the parties hereto have executed this AAR
Agreement as
of the day and year first above written.
HSBC BANK USA, NATIONAL ASSOCIATION
Assignor
By:
---------------------------------
Name: Jon E. Voigtman
Title: Managing Director #14311
HSI ASSET SECURITIZATION CORPORATION
By:
---------------------------------
Name: Andrea Lenox
Title: Vice President
SUNTRUST MORTGAGE, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Trustee
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
5-12
<PAGE>
CITIMORTGAGE, INC., as Master
Servicer
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
5-13
<PAGE>
ATTACHMENT 1
ASSIGNED LOAN SCHEDULE
5-14
<PAGE>
ATTACHMENT 2
PURCHASE AGREEMENT
5-15
<PAGE>
MASTER MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT
SUNTRUST MORTGAGE, INC.
Seller and Servicer
HSBC BANK USA, NATIONAL ASSOCIATION
Initial Purchaser
Dated as of November 1, 2006
First and Second Lien, Fixed and Adjustable Rate Mortgage Loans
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S>
<C>
SECTION 1.
Definitions...................................................
1
SECTION 2. Agreement to
Purchase......................................... 14
SECTION 3. Mortgage Loan
Schedules....................................... 14
SECTION 4. Purchase
Price................................................ 14
SECTION 5. Examination of Mortgage
Files................................. 15
SECTION 6. Conveyance from Seller to Initial
Purchaser................... 16
Subsection 6.01.
Conveyance of Mortgage
Loans; Possession of
Servicing Files.................................. 16
Subsection 6.02.
Books and
Records................................... 16
Subsection 6.03.
Delivery of Mortgage
Loan Documents................. 16
Subsection 6.04.
Quality Control
Procedures.......................... 17
SECTION 7.
Representations, Warranties and Covenants of the Seller:
Remedies for Breach.......................................
17
Subsection 7.01.
Representations and
Warranties Respecting the
Seller........................................... 17
Subsection 7.02.
Representations and
Warranties Regarding Individual
Mortgage Loans................................... 20
Subsection 7.03.
Remedies for Breach of
Representations and
Warranties....................................... 35
Subsection 7.04.
Repurchase of Certain
Mortgage Loans; Premium
Protection....................................... 37
SECTION 8.
Closing......................................................
38
SECTION 9. Closing
Documents............................................ 39
SECTION 10.
Costs........................................................
40
SECTION 11. Servicer's Servicing
Obligations............................. 40
SECTION 12. Removal of Mortgage Loans from Inclusion under This
Agreement Upon a Whole Loan Transfer or a Pass-Through
Transfer on One or More Reconstitution Dates..............
40
SECTION 13. COMPLIANCE WITH REGULATION
AB................................ 43
Subsection
13.01. Intent of the Parties; Reasonableness...............
43
Subsection
13.02. Additional Representations and Warranties of the
Seller........................................... 44
Subsection
13.03. Information to Be Provided by the Seller............
44
Subsection
13.04. Servicer Compliance Statement.......................
50
Subsection
13.05. Report on Assessment of Compliance and Attestation..
50
Subsection
13.06. Use of Subservicers and Subcontractors..............
51
Subsection
13.07. Indemnification; Remedies...........................
52
SECTION 14. The Seller and the
Servicer.................................. 55
Subsection
14.01. Additional Indemnification by the Seller and the
Servicer......................................... 55
Subsection
14.02. Merger or Consolidation of the Seller and the
Servicer......................................... 55
</TABLE>
i
<PAGE>
<TABLE>
<S>
<C>
Subsection
14.03. Limitation on Liability of the Seller, the Servicer
and Others....................................... 55
Subsection
14.04. Servicer Not to Resign..............................
56
Subsection
14.05. No Transfer of Servicing............................
56
SECTION 15.
Default......................................................
57
Subsection
15.01. Events of Default...................................
57
Subsection
15.02. Waiver of Defaults..................................
58
SECTION 16.
Termination..................................................
58
SECTION 17. Successor to the
Servicer.................................... 59
SECTION 18. Financial
Statements......................................... 60
SECTION 19. Mandatory Delivery: Grant of Security
Interest............... 60
SECTION 20.
Notices......................................................
61
SECTION 21. Severability
Clause.......................................... 61
SECTION 22.
Counterparts.................................................
62
SECTION 23. Governing
Law................................................ 62
SECTION 24. Intention of the
Parties..................................... 62
SECTION 25. Successors and
Assigns....................................... 62
SECTION 26.
Waivers......................................................
62
SECTION 27.
Exhibits.....................................................
63
SECTION 28.
Nonsolicitation..............................................
63
SECTION 29. General Interpretive
Principles.............................. 63
SECTION 30. Reproduction of
Documents.................................... 64
SECTION 31. Further
Agreements........................................... 64
SECTION 32. Third-Party
Beneficiary...................................... 64
SECTION 33. Entire
Agreement............................................. 64
</TABLE>
ii
<PAGE>
EXHIBITS
EXHIBIT 1 SELLER'S
OFFICER'S CERTIFICATE
EXHIBIT 2 FORM OF OPINION
OF COUNSEL TO THE SELLER
EXHIBIT 3 SECURITY RELEASE
CERTIFICATION
EXHIBIT 4 ASSIGNMENT AND
CONVEYANCE
EXHIBIT 5 CONTENTS OF EACH
MORTGAGE FILE
EXHIBIT 6 CUSTODIAL
AGREEMENT
EXHIBIT 7 FORM OF
CUSTODIAL ACCOUNT LETTER AGREEMENT
EXHIBIT 8 FORM OF ESCROW
ACCOUNT LETTER AGREEMENT
EXHIBIT 9 SERVICING
ADDENDUM
EXHIBIT 10
FORM OF ASSIGNMENT AND RECOGNITION AGREEMENT
EXHIBIT 11
FORM OF INDEMNIFICATION AGREEMENT
EXHIBIT 12
FORM OF ANNUAL CERTIFICATION
EXHIBIT 13
MORTGAGE LOAN DOCUMENTS
EXHIBIT 14
UNDERWRITING GUIDELINES OF THE SELLER
EXHIBIT 15
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
SCHEDULE I
MORTGAGE LOAN SCHEDULE
SCHEDULE II
PREPAYMENT CHARGE SCHEDULE
iii
<PAGE>
MASTER MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT
This is an MASTER MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT
(the
"Agreement"), dated as of November 1, 2006, by and between HSBC
Bank USA,
National Association, having an office at 452 Fifth Avenue, New
York, New York
10018 (the "Initial Purchaser", and the Initial Purchaser or the
Person, if any,
to which the Initial Purchaser has assigned its rights and
obligations hereunder
as Purchaser with respect to a Mortgage Loan, and each of their
respective
successors and assigns, the "Purchaser"), SUNTRUST MORTGAGE, INC.
having an
office at 901 Semmes Avenue, Richmond, Virginia 23224 (the "Seller"
and
"Servicer").
WITNESSETH:
WHEREAS, the Seller desires to sell, from time to time, to the
Initial
Purchaser, and the Initial Purchaser desires to purchase, from time
to time,
from the Seller, certain conventional, fixed and adjustable rate
residential
first and second lien mortgage loans, including the right to any
Prepayment
Charges payable by the related Mortgagors as described herein, (the
"Mortgage
Loans") as described herein on a servicing-retained basis, and
which shall be
delivered in groups of whole loans on various dates as provided
herein and in
the related Confirmation (each, a "Closing Date");
WHEREAS, each Mortgage Loan is secured by a mortgage, deed of trust
or
other security instrument creating a first or second lien on a
residential
dwelling located in the jurisdiction indicated on the Mortgage Loan
Schedule for
the related Mortgage Loan Package, which is to be annexed hereto on
each Closing
Date as Schedule I;
WHEREAS, the Initial Purchaser, the Seller and the Servicer wish
to
prescribe the manner of the conveyance, servicing and control of
the Mortgage
Loans; and
WHEREAS,
following its purchase of the Mortgage Loans from the Seller,
the Purchaser desires to sell some or all of the Mortgage Loans to
one or more
purchasers as a whole loan transfer in a whole loan or
participation format or a
public or private mortgage-backed securities transaction;
NOW, THEREFORE, in consideration of the premises and mutual
agreements
set forth herein, and for other good and valuable consideration,
the receipt and
sufficiency of which are hereby acknowledged, the Purchaser and the
Seller agree
as follows:
SECTION 1. Definitions.
For purposes of this Agreement the following capitalized terms
shall
have the respective meanings set forth below.
Accepted Servicing Practices: With respect to any Mortgage Loan,
those
mortgage servicing practices (including collection procedures) of
prudent
mortgage banking institutions which service mortgage loans of the
same type as
such Mortgage Loan in the jurisdiction where the related Mortgaged
Property is
located, which are in accordance with Fannie Mae servicing
practices and
procedures for MBS pool mortgages, as defined in the
1
<PAGE>
Fannie Mae Guides including future updates, the terms of the
Mortgage Loan
Documents and all applicable federal, state and local legal and
regulatory
requirements.
Adjustable Rate Mortgage Loan: A Mortgage Loan which provides for
the
adjustment of the Mortgage Interest Rate payable in respect
thereto.
Adjustment Date: With respect to each Adjustable Rate Mortgage
Loan,
the date set forth in the related Mortgage Note on which the
Mortgage Interest
Rate on such Adjustable Rate Mortgage Loan is adjusted in
accordance with the
terms of the related Mortgage Note.
Agreement:
This Master Mortgage Loan Purchase and Servicing Agreement
including all exhibits, schedules, amendments and supplements
hereto.
Appraised Value: With respect to any Mortgaged Property, the lesser
of
(i) the value thereof as determined by an appraisal made for the
originator of
the Mortgage Loan at the time of origination of the Mortgage Loan
by an
appraiser who met the minimum requirements of FNMA and FHLMC and
the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989, and
(ii) the
purchase price paid for the related Mortgaged Property by the
Mortgagor with the
proceeds of the Mortgage Loan, provided, however, in the case of a
Refinanced
Mortgage Loan, such value of the Mortgaged Property is based solely
upon the
value determined by an appraisal made for the originator of such
Refinanced
Mortgage Loan at the time of origination of such Refinanced
Mortgage Loan by an
appraiser who met the minimum requirements of FNMA and FHLMC and
the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989.
Assignment and Conveyance: An assignment and conveyance of the
Mortgage Loans purchased on a Closing Date in the form annexed
hereto as Exhibit
4.
Assignment of Mortgage: With respect to each Mortgage Loan which
is
not a MERS Loan, an individual assignment of the Mortgage, notice
of transfer or
equivalent instrument in recordable form, sufficient under the laws
of the
jurisdiction wherein the related Mortgaged Property is located to
give record
notice of the sale of the Mortgage to the Purchaser.
Balloon Mortgage Loan: A Mortgage Loan that provided on the date
of
origination for an amortization schedule extending beyond its
maturity date.
Balloon Payment: With respect to any Balloon Mortgage Loan as of
any
date of determination, the Monthly Payment payable on the maturity
of such
Mortgage Loan.
Business Day: Any day other than a Saturday or Sunday, or a day
on
which banking and savings and loan institutions in the Commonwealth
of Virginia
or the State of New York are authorized or obligated by law or
executive order
to be closed.
Cash-Out Refinancing: A Refinanced Mortgage Loan the proceeds of
which
were in excess of the principal balance of any existing first
mortgage on the
related Mortgaged Property and related closing costs, and were used
to pay any
such existing first mortgage, related closing costs and subordinate
mortgages on
the related Mortgaged Property.
2
<PAGE>
Closing Date: The date or dates on which the Initial Purchaser
from
time to time shall purchase and the Seller from time to time shall
sell to the
Initial Purchaser, the Mortgage Loans listed on the related
Mortgage Loan
Schedule with respect to the related Mortgage Loan Package.
Closing Documents: With respect to any Closing Date, the
documents
required pursuant to Section 9.
Code: The Internal Revenue Code of 1986, or any successor
statute
thereto.
Combined Loan-to-Value Ratio or CLTV: With respect to any
Mortgage
Loan as of any date of determination, the ratio on such date of the
outstanding
principal amount of the Mortgage Loan and any other mortgage loan
which is
secured by a lien on the related Mortgaged Property to the
Appraised Value of
the Mortgaged Property.
Commission or SEC: The United States Securities and Exchange
Commission.
Condemnation Proceeds: All awards, compensation and settlements
in
respect of a taking of all or part of a Mortgaged Property by
exercise of the
power of condemnation or the right of eminent domain.
Confirmation: With respect to any Mortgage Loan Package purchased
and
sold on any Closing Date, the letter agreement among the Initial
Purchaser, the
Servicer and the Seller (including any exhibits, schedules and
attachments
thereto), setting forth the terms and conditions of such
transaction and
describing the Mortgage Loans to be purchased by the Initial
Purchaser on such
Closing Date. A Confirmation may relate to more than one Mortgage
Loan Package
to be purchased on one or more Closing Dates hereunder.
Convertible Mortgage Loan: A Mortgage Loan that by its terms
and
subject to certain conditions contained in the related Mortgage or
Mortgage Note
allows the Mortgagor to convert the adjustable Mortgage Interest
Rate on such
Mortgage Loan to a fixed Mortgage Interest Rate.
Custodial Account: The separate account or accounts, each of
which
shall be an Eligible Account, created and maintained pursuant to
this Agreement,
which shall be entitled "SunTrust Mortgage, Inc., as servicer, in
trust for the
Purchaser and various Mortgagors, Fixed and Adjustable Rate
Mortgage Loans",
established at a financial institution acceptable to the Purchaser.
Each
Custodial Account shall be an Eligible Account.
Custodial Agreement: The agreement governing the retention of
the
originals of each Mortgage Note, Mortgage, Assignment of Mortgage
and other
Mortgage Loan Documents, annexed hereto as Exhibit 6.
Custodian: The custodian under the Custodial Agreement, or its
successor in interest or assigns, or any successor to the Custodian
under the
Custodial Agreement, as therein provided.
Cut-off Date: The first day of the month in which the related
Closing
Date occurs.
3
<PAGE>
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced
by a
Qualified Substitute Mortgage Loan.
Depositor: The depositor, as such term is defined in Regulation
AB,
with respect to any Pass-Through Transfer that is identified as
such by notice
in writing to the Servicer.
Determination Date: With respect to each Distribution Date, the
fifteenth (15th) day of the calendar month in which such
Distribution Date
occurs or, if such fifteenth (15th) day is not a Business Day, the
Business Day
immediately preceding such fifteenth (15th) day.
Distribution Date: The eighteenth (18th) day of each month,
commencing
on the eighteenth day of the month next following the month in
which the related
Cut-off Date occurs, or if such eighteenth (18th) day is not a
Business Day, the
first Business Day immediately preceding such eighteenth (18th)
day.
Due Date: With respect to each Mortgage Loan, the day of the
calendar
month on which each Monthly Payment is due on such Mortgage Loan
(including the
Balloon Payment with respect to a Balloon Mortgage Loan), exclusive
of any days
of grace.
Eligible Account: Either (i) an account or accounts maintained with
a
federal or state chartered depository institution or trust company
the
short-term unsecured debt obligations of which (or, in the case of
a depository
institution or trust company that is the principal subsidiary of a
holding
company, the short-term unsecured debt obligations of such holding
company) are
rated A-1 by S&P or Prime-1 by Moody's (or a comparable rating
if another rating
agency is specified by the Initial Purchaser by written notice to
the Seller and
Servicer) at the time any amounts are held on deposit therein or
(ii) a trust
account or accounts maintained with a federal or state chartered
depository
institution or trust company acting in its fiduciary capacity.
Eligible Accounts
may bear interest.
Escrow Account: The separate trust account or accounts created
and
maintained pursuant to this Agreement which shall be entitled
"SunTrust
Mortgage, Inc., as servicer, in trust for the Purchaser and various
Mortgagors,
Fixed and Adjustable Rate Mortgage Loans," established at a
financial
institution acceptable to the Purchaser. Each Escrow Account shall
be an
Eligible Account.
Escrow Payments: The amounts constituting ground rents, taxes,
assessments, water charges, sewer rents, Primary Insurance Policy
premiums, fire
and hazard insurance premiums and other payments required to be
escrowed by the
Mortgagor with the Mortgagee pursuant to the terms of any Mortgage
Note or
Mortgage.
Event of Default: Any one of the events enumerated in
Subsection
14.01.
Exchange Act: The Securities Exchange Act of 1934, as amended.
FDIC: The Federal Deposit Insurance Corporation, or any
successor
thereto.
FHLMC: Freddie Mac or any successor thereto.
4
<PAGE>
Final Recovery Determination: With respect to any defaulted
Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO
Property purchased
by the Seller pursuant to this Agreement), a determination made by
the Servicer
that all Insurance Proceeds, Liquidation Proceeds and other
payments or
recoveries which the Servicer, in its reasonable good faith
judgment, expects to
be finally recoverable in respect thereof have been so recovered.
The Servicer
shall maintain records, prepared by a servicing officer of the
Servicer, of each
Final Recovery Determination.
Fixed Rate Mortgage Loan: A Mortgage Loan with respect to which
the
Mortgage Interest Rate set forth in the Mortgage Note is fixed for
the term of
such Mortgage Loan.
Flood Zone Service Contract: A transferable contract maintained
for
the Mortgaged Property with a nationally recognized flood zone
service provider
for the purpose of obtaining the current flood zone status relating
to such
Mortgaged Property.
FNMA: Fannie Mae or any successor thereto.
FNMA Guide(s): The Fannie Mae Selling Guide and the Fannie Mae
Servicing Guide and all amendments or additions thereto.
Gross Margin: With respect to any Adjustable Rate Mortgage Loan,
the
fixed percentage amount set forth in the related Mortgage Note and
the related
Mortgage Loan Schedule that is added to the Index on each
Adjustment Date in
accordance with the terms of the related Mortgage Note to determine
the new
Mortgage Interest Rate for such Mortgage Loan.
HUD: The United States Department of Housing and Urban Development
or
any successor thereto.
Index: With respect to any Adjustable Rate Mortgage Loan, the
index
identified on the Mortgage Loan Schedule and set forth in the
related Mortgage
Note for the purpose of calculating the interest rate thereon.
Initial Closing Date: The Closing Date on which the Initial
Purchaser
purchases and the Seller sells the first Mortgage Loan Package
hereunder.
Initial Purchaser: HSBC Bank USA, National Association, or any
successor or assign.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds
of
insurance policies insuring the Mortgage Loan or the related
Mortgaged Property.
Liquidation Proceeds: Amounts, other than Insurance Proceeds
and
Condemnation Proceeds, received in connection with the liquidation
of a
defaulted Mortgage Loan through trustee's sale, foreclosure sale or
otherwise,
other than amounts received following the acquisition of REO
Property.
5
<PAGE>
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan as
of
any date of determination, the ratio on such date of the
outstanding principal
amount of the Mortgage Loan, to the Appraised Value of the
Mortgaged Property.
Master Servicer: With respect to any Pass-Through Transfer, the
"master servicer", if any, specified by the Purchaser and
identified in the
related transaction documents.
Maximum Mortgage Interest Rate: With respect to each Adjustable
Rate
Mortgage Loan, a rate that is set forth on the related Mortgage
Loan Schedule
and in the related Mortgage Note and is the maximum interest rate
to which the
Mortgage Interest Rate on such Mortgage Loan may be increased on
any Adjustment
Date.
MERS: Mortgage Electronic Registration Systems, Inc., a
corporation
organized and existing under the laws of the State of Delaware, or
any successor
thereto.
MERS(R) System: The system of recording transfers of Mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number of Mortgage Loans
registered
with MERS on the MERS(R) System.
Minimum Mortgage Interest Rate: With respect to each Adjustable
Rate
Mortgage Loan, a rate that is set forth on the related Mortgage
Loan Schedule
and in the related Mortgage Note and is the minimum interest rate
to which the
Mortgage Interest Rate on such Mortgage Loan may be decreased on
any Adjustment
Date.
MOM Loan: Any Mortgage Loan where MERS acts as the mortgagee of
record
of such Mortgage Loan, solely as nominee for the originator of such
Mortgage
Loan and its successors and assigns, at the origination
thereof.
Monthly Advance: The aggregate of the advances made by the Servicer
on
any Distribution Date pursuant to Subsection 11.34.
Monthly Payment: With respect to any Mortgage Loan, the
scheduled
combined payment of principal and interest (including any Balloon
Payment)
payable by a Mortgagor under the related Mortgage Note on each Due
Date.
Moody's: Moody's Investors Service, Inc. or its successor in
interest.
Mortgage: The mortgage, deed of trust or other instrument creating
a
first or second lien on Mortgaged Property securing the Mortgage
Note.
Mortgage File: The items pertaining to a particular Mortgage
Loan
referred to in Exhibit 5 annexed hereto, and any additional
documents required
to be added to the Mortgage File pursuant to this Agreement or the
related
Confirmation.
Mortgage Interest Rate: With respect to each Fixed Rate Mortgage
Loan,
the fixed annual rate of interest provided for in the related
Mortgage Note and,
with respect to each
6
<PAGE>
Adjustable Rate Mortgage Loan, the annual rate that interest
accrues on such
Adjustable Rate Mortgage Loan from time to time in accordance with
the
provisions of the related Mortgage Note.
Mortgage Loan:
Each first or second lien, residential mortgage loan,
sold, assigned and transferred to the Purchaser pursuant to this
Agreement and
the related Confirmation and identified on the Mortgage Loan
Schedule annexed to
this Agreement on such Closing Date, which Mortgage Loan includes
without
limitation the Mortgage File, the Monthly Payments, Principal
Prepayments
(including any Prepayment Charges), Liquidation Proceeds,
Condemnation Proceeds,
Insurance Proceeds, REO Disposition proceeds, and all other rights,
benefits,
proceeds and obligations arising from or in connection with such
Mortgage Loan.
Mortgage Loan Documents: The documents listed in Exhibit 13
hereto
pertaining to any Mortgage Loan.
Mortgage Loan Package: The Mortgage Loans listed on a Mortgage
Loan
Schedule, delivered to the Custodian and the Initial Purchaser at
least five (5)
Business Days prior to the related Closing Date and attached to the
related
Assignment and Conveyance on the related Closing Date.
Mortgage Loan Schedule: With respect to each Mortgage Loan
Package,
the schedule of Mortgage Loans to be annexed to the related
Assignment and
Conveyance on the related Closing Date for the Mortgage Loan
Package delivered
on such Closing Date in electronic form, such schedule setting
forth the
following information with respect to each Mortgage Loan in the
Mortgage Loan
Package: (1) the Seller's Mortgage Loan identifying number; (2) the
Mortgagor's
first and last name; (3) the street address of the Mortgaged
Property including
the state and zip code; (4) a code indicating whether the Mortgaged
Property is
owner-occupied; (5) the type of Residential Dwelling constituting
the Mortgaged
Property; (6) the original months to maturity; (7) the original
date of the
Mortgage Loan and the remaining months to maturity from the Cut-off
Date, based
on the original amortization schedule; (8) the Loan-to-Value Ratio
or Combined
Loan-to-Value Ratio at origination; (9) the Mortgage Interest Rate
in effect
immediately following the Cut-off Date; (10) the date on which the
first Monthly
Payment was due on the Mortgage Loan; (11) the stated maturity
date; (12) the
amount of the Monthly Payment at origination; (13) the amount of
the Monthly
Payment as of the Cut-off Date; (14) the last Due Date on which a
Monthly
Payment was actually applied to the unpaid Stated Principal
Balance; (15) the
original principal amount of the Mortgage Loan and with respect to
second liens
the related first lien on the Mortgaged Property; (16) the Stated
Principal
Balance of the Mortgage Loan and with respect to second liens the
principal
balance of the related first lien on the Mortgaged Property as of
the close of
business on the Cut-off Date; (17) with respect to each Adjustable
Rate Mortgage
Loan, the first Adjustment Date; (18) with respect to each
Adjustable Rate
Mortgage Loan, the Gross Margin; (19) a code indicating the purpose
of the loan
(i.e., purchase financing, Rate/Term Refinancing, Cash-Out
Refinancing); (20)
with respect to each Adjustable Rate Mortgage Loan, the Maximum
Mortgage
Interest Rate under the terms of the Mortgage Note; (21) with
respect to each
Adjustable Rate Mortgage Loan, the Minimum Mortgage Interest Rate
under the
terms of the Mortgage Note; (22) the Mortgage Interest Rate at
origination; (23)
with respect to each Adjustable Rate Mortgage Loan, the Periodic
Rate Cap; (24)
with respect to each Adjustable Rate Mortgage Loan, the first
Adjustment Date
immediately
7
<PAGE>
following the Cut-off Date; (25) with respect to each Adjustable
Rate Mortgage
Loan, the Index; (26) the date on which the first Monthly Payment
was due on the
Mortgage Loan and, if such date is not consistent with the Due Date
currently in
effect, such Due Date; (27) a code indicating the documentation
style (i.e.,
full (providing two years employment verification - 2 years W-2's
and current
pay stub or 2 years 1040's for self employed borrowers),
alternative or
reduced); (28) a code indicating whether the Mortgage Loan is an
Adjustable Rate
Mortgage Loan or a Fixed Rate Mortgage Loan; (29) the Appraised
Value of the
Mortgaged Property; (30) the sale price of the Mortgaged Property,
if
applicable; (31) a code indicating whether the Mortgage Loan is
subject to a
Prepayment Charge or penalty; (32) the amount and the term of any
Prepayment
Charge or penalty; (33) with respect to each MERS Mortgage Loan,
the related
MIN; (34) a code indicating if the Mortgage Loan is a Negative
Amortization
Mortgage Loan; (35) a code indicating if the Mortgage Loan is an
interest-only
Mortgage Loan and, if so, the term of the interest-only period of
such Mortgage
Loan; (36) a code indicating whether the Mortgage Loan is a first
or second
lien; (37) a code indicating whether the Mortgage Loan is a Balloon
Mortgage
Loan and, if so, the term of the Balloon Mortgage Loan and the
amount of the
Balloon Payment scheduled to be due at maturity assuming no
Principal
Prepayments; (38) a code indicating whether a borrower is a
non-resident alien;
(39) a code indicating whether a borrower is in bankruptcy; (40)
the points and
fees charged in connection with the origination of such Mortgage
Loan; and (41)
a code indicating if the Mortgage Loan is subject to a Primary
Insurance Policy,
and if so, the insurer. With respect to the Mortgage Loan Package
in the
aggregate, the Mortgage Loan Schedule shall set forth the following
information,
as of the related Cut-off Date: (1) the number of Mortgage Loans;
(2) the
current principal balance of the Mortgage Loans; (3) the weighted
average
Mortgage Interest Rate of the Mortgage Loans; and (4) the weighted
average
maturity of the Mortgage Loans. Schedule I hereto shall be
supplemented as of
each Closing Date to reflect the addition of the Mortgage Loan
Schedule with
respect to the related Mortgage Loan Package.
Mortgage Note: The original executed note or other evidence of
the
Mortgage Loan indebtedness of a Mortgagor.
Mortgaged Property: The Mortgagor's real property securing
repayment
of a related Mortgage Note, consisting of a fee simple interest in
a single
parcel of real property improved by a Residential Dwelling.
Mortgagee: The mortgagee or beneficiary named in the Mortgage and
the
successors and assigns of such mortgagee or beneficiary.
Mortgagor: The obligor on a Mortgage Note, the owner of the
Mortgaged
Property and the grantor or mortgagor named in the related Mortgage
and such
grantor's or mortgagor's successors in title to the Mortgaged
Property.
Negative Amortization:
With respect to each Negative Amortization
Mortgage Loan, that portion of interest accrued at the Mortgage
Interest Rate in
any month that exceeds the Monthly Payment on the related Mortgage
Loan for such
month and which, pursuant to the terms of the Mortgage Note, is
added to the
principal balance of the Mortgage Loan.
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Negative Amortization Mortgage Loan: Each Mortgage Loan that is
identified on the Mortgage Loan Schedule as a Mortgage Loan that
may be subject
to Negative Amortization.
Net Mortgage Rate: With respect to any Mortgage Loan (or the
related
REO Property), as of any date of determination, a per annum rate of
interest
equal to the then applicable Mortgage Interest Rate for such
Mortgage Loan minus
the Servicing Fee Rate.
Officer's Certificate: A certificate signed by the Chairman of
the
Board or the Vice Chairman of the Board or a President or a Vice
President and
by the Treasurer or the Secretary or one of the Assistant
Treasurers or
Assistant Secretaries of the Person on behalf of whom such
certificate is being
delivered.
Opinion of Counsel: A written opinion of counsel, who may be
salaried
counsel for the Person on behalf of whom the opinion is being
given, reasonably
acceptable to each Person to whom such opinion is addressed.
Pass-Through Transfer: Any transaction involving either (1) a sale
or
transfer of some or all of the Mortgage Loans directly or
indirectly to an
issuing entity in connection with an issuance of publicly offered
or privately
placed, rated or unrated mortgage-backed securities or (2) an
issuance of
publicly offered or privately placed, rated or unrated securities,
the payments
on which are determined primarily by reference to one or more
portfolios of
residential mortgage loans consisting, in whole or in part, of some
or all of
the Mortgage Loans.
Payment Adjustment Date: With respect to each Negative
Amortization
Mortgage Loan, the date on which Monthly Payments shall be
adjusted. A Payment
Adjustment Date with respect to a Negative Amortization Mortgage
Loan shall
occur on each anniversary date of the first payment date for the
Mortgage Loan.
Periodic Rate Cap: With respect to each Adjustable Rate Mortgage
Loan
and any Adjustment Date therefor, a number of percentage points per
annum that
is set forth in the related Mortgage Loan Schedule and in the
related Mortgage
Note, which is the maximum amount by which the Mortgage Interest
Rate for such
Adjustable Rate Mortgage Loan may increase (without regard to the
Maximum
Mortgage Interest Rate) or decrease (without regard to the Minimum
Mortgage
Interest Rate) on such Adjustment Date from the Mortgage Interest
Rate in effect
immediately prior to such Adjustment Date.
Person: An individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company,
trust,
unincorporated organization or government or any agency or
political subdivision
thereof.
Prepayment Charge: With respect to any Mortgage Loan, any
prepayment
penalty or premium thereon payable in connection with a Principal
Prepayment on
such Mortgage Loan pursuant to the terms of the related Mortgage
Note.
Prepayment Charge Schedule: The schedule to be annexed hereto
as
Schedule II indicating whether a Mortgage Loan is subject to a
Prepayment Charge
and if so, the amount and term of such Prepayment Charge.
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Primary Insurance Policy: A policy of primary mortgage guaranty
insurance issued by a Qualified Insurer.
Principal Prepayment: Any payment or other recovery of principal on
a
Mortgage Loan which is received in advance of its scheduled Due
Date, including
any Prepayment Charge, which is not accompanied by an amount of
interest
representing scheduled interest due on any date or dates in any
month or months
subsequent to the month of prepayment.
Purchase Price: The price paid on the related Closing Date by
the
Initial Purchaser to the Seller pursuant to the related
Confirmation in exchange
for the Mortgage Loans purchased on such Closing Date as calculated
as provided
in Section 4.
Purchaser: The Initial Purchaser or the Person, if any, to which
the
Initial Purchaser has assigned its rights and obligations
thereunder as
Purchaser with respect to a Mortgage Loan, and each of their
respective
successors and assigns.
Qualified Correspondent: Any Person from which the Seller
purchased
Mortgage Loans, provided that the following conditions are
satisfied: (i) such
Mortgage Loans were originated pursuant to an agreement between the
Seller and
such Person that contemplated that such Person would underwrite
mortgage loans
from time to time, for sale to the Seller, in accordance with
underwriting
guidelines designated by the Seller ("Designated Guidelines") or
guidelines that
do not vary materially from such Designated Guidelines; (ii) such
Mortgage Loans
were in fact underwritten as described in clause (i) above and were
acquired by
the Seller within 180 days after origination; (iii) either (x) the
Designated
Guidelines were, at the time such Mortgage Loans were originated,
used by the
Seller in origination of mortgage loans of the same type as the
Mortgage Loans
for the Seller's own account or (y) the Designated Guidelines were,
at the time
such Mortgage Loans were underwritten, designated by the Seller on
a consistent
basis for use by lenders in originating mortgage loans to be
purchased by the
Seller; and (iv) the Seller employed, at the time such Mortgage
Loans were
acquired by the Seller, pre-purchase or post-purchase quality
assurance
procedures (which may involve, among other things, review of a
sample of
mortgage loans purchased during a particular time period or through
particular
channels) designed to ensure that Persons from which it purchased
mortgage loans
properly applied the underwriting criteria designated by the
Seller.
Qualified Insurer: An insurance company duly qualified as such
under
the laws of the states in which the Mortgaged Property is located,
duly
authorized and licensed in such states to transact the applicable
insurance
business and to write the insurance provided, and approved as an
insurer by FNMA
and FHLMC and whose claims paying ability is rated in the two
highest rating
categories by the nationally recognized rating agencies with
respect to primary
mortgage insurance and in the two highest rating categories by
Best's Key Rating
Guide with respect to hazard and flood insurance.
Qualified Substitute Mortgage Loan: A mortgage loan substituted for
a
Deleted Mortgage Loan pursuant to the terms of this Agreement which
must, on the
date of such substitution, (i) have an outstanding principal
balance, after
application of all scheduled payments of principal and interest due
during or
prior to the month of substitution, not in excess of the Stated
Principal
Balance of the Deleted Mortgage Loan as of the Due Date in the
calendar
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month during which the substitution occurs, (ii) have a Mortgage
Interest Rate
not less than (and not more than one percentage point in excess of)
the Mortgage
Interest Rate of the Deleted Mortgage Loan, (iii) have a remaining
term to
maturity not greater than (and not more than one year less than)
that of the
Deleted Mortgage Loan, (iv) have the same Due Date as the Due Date
on the
Deleted Mortgage Loan, (v) have a Loan-to-Value Ratio, and in the
case of a
second lien Mortgage Loan, a Combined Loan-to-Value Ratio as of the
date of
substitution equal to or lower than the Loan-to-Value Ratio or
Combined
Loan-to-Value Ratio, as the case may be, of the Deleted Mortgage
Loan as of such
date, (vi) conform to each representation and warranty set forth in
Subsection
7.02 of this Agreement, (vii) be the same type of mortgage loan
(i.e. fixed or
adjustable rate with the same Gross Margin and Index as the Deleted
Mortgage
Loan) and (viii) be covered under a Primary Insurance Policy if
such Qualified
Substitute Mortgage Loan has a Loan-to-Value Ratio in excess of
80%. In the
event that one or more mortgage loans are substituted for one or
more Deleted
Mortgage Loans, the amounts described in clause (i) hereof shall be
determined
on the basis of aggregate principal balances, the Mortgage Interest
Rates
described in clause (ii) hereof shall be determined on the basis of
weighted
average Mortgage Interest Rates and shall be satisfied as to each
such mortgage
loan, the terms described in clause (iii) shall be determined on
the basis of
weighted average remaining terms to maturity, the Loan-to-Value
Ratios, and in
the case of second lien Mortgage Loans the Combined Loan-to-Value
Ratios
described in clause (v) hereof shall be satisfied as to each such
mortgage loan
and, except to the extent otherwise provided in this sentence,
the
representations and warranties described in clause (vii) hereof
must be
satisfied as to each Qualified Substitute Mortgage Loan or in the
aggregate, as
the case may be.
Rate/Term Refinancing: A Refinanced Mortgage Loan, the proceeds
of
which are not in excess of the existing first mortgage loan on the
related
Mortgaged Property and related closing costs, and were used
exclusively to
satisfy the then existing first mortgage loan of the Mortgagor on
the related
Mortgaged Property and to pay related closing costs.
Reconstitution: Any Pass-Through Transfer or Whole Loan
Transfer.
Reconstitution Agreement: The agreement or agreements entered into
by
the Seller, the Servicer and the Purchaser and/or certain third
parties on the
Reconstitution Date or Dates with respect to any or all of the
Mortgage Loans
serviced hereunder, in connection with a Whole Loan Transfer or a
Pass-Through
Transfer as provided in Section 12.
Reconstitution Date: The date or dates on which any or all of
the
Mortgage Loans serviced under this Agreement shall be removed from
this
Agreement and reconstituted as part of a Whole Loan Transfer or
Pass-Through
Transfer pursuant to Section 12 hereof.
Record Date: With respect to each Distribution Date, the last
Business
Day of the month immediately preceding the month in which such
Distribution Date
occurs.
Refinanced Mortgage Loan: A Mortgage Loan the proceeds of which
were
not used to purchase the related Mortgaged Property.
Regulation AB: Subpart 229.1100 - Asset Backed Securities
(Regulation
AB), 17 C.F.R. Sections 229.1100-229.1123, as such may be amended
from time to
time, and subject to such
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clarification and interpretation as have been provided by the
Commission in the
adopting release (Asset-Backed Securities, Securities Act Release
No. 33-8518,
70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff of the
Commission, or
as may be provided by the Commission or its staff from time to
time
REMIC: A real estate mortgage investment conduit within the meaning
of
Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating
to
REMICs, which appear in Sections 860A through 860G of the Code, and
related
provisions, and proposed, temporary and final regulations and
published rulings,
notices and announcements promulgated thereunder, as the foregoing
may be in
effect from time to time.
REO Account: The separate trust account or accounts created and
maintained pursuant to this Agreement which shall be entitled
"SunTrust
Mortgage, Inc., in trust for the Purchaser, as of [date of
acquisition of
title], Fixed and Adjustable Rate Mortgage Loans".
REO Disposition: The final sale by the Servicer of any REO
Property.
REO Property: A Mortgaged Property acquired as a result of the
liquidation of a Mortgage Loan.
Repurchase Price: The Repurchase Price for any Mortgage Loan that
is
required to be repurchased pursuant to Section 7.04 shall be equal
to the sum of
(i) the Stated Principal Balance of such Mortgage Loan plus (ii)
interest on
such Stated Principal Balance at the Mortgage Interest Rate from
and including
the last Due Date through which interest has been paid by or on
behalf of the
Mortgagor to the day immediately prior to the date of repurchase
(unless the
Mortgage Loan has been the subject of a Pass-Through Transfer, in
which case the
measurement date for accrual of interest on such Stated Principal
Balance shall
be the first day of the month following the date of repurchase),
less amounts
received in respect of such repurchased Mortgage Loan which are
being held in
the Custodial Account for distribution in connection with such
Mortgage Loan,
plus (iii) any unreimbursed servicing advances and monthly advances
(including
nonrecoverable monthly advances) allocable to such Mortgage Loan
paid by any
party other than the Servicer and any unpaid servicing fees
allocable to such
Mortgage Loan payable to any party other than Servicer, plus, with
respect to a
repurchase pursuant to a breach of the representations and
warranties contained
in Sections 7.02(viii), 7.02(xl) and 7.02(lix), (iv) any costs and
expenses
incurred by the Purchaser, the servicer, master servicer or any
trustee in
respect of the breach or defect giving rise to the repurchase
obligation
including, without limitation, any costs and damages incurred by
any such party
in connection with any violation by any such Mortgage Loan of any
predatory or
abusive lending law.
Residential Dwelling: Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling,
(iii) a
one-family dwelling unit in a FNMA eligible condominium project, or
(iv) a
detached one-family dwelling in a planned unit development, none of
which is a
co-operative, mobile or manufactured home.
Securities Act: The Securities Act of 1933, as amended.
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<PAGE>
Servicing Addendum: The terms and conditions attached hereto as
Exhibit 9, which will govern the servicing of the Mortgage Loans by
Servicer.
Servicing
Advances: All customary, reasonable and necessary
"out-of-pocket" costs and expenses incurred by the Servicer in the
performance
of its servicing obligations, including, but not limited to, the
cost of (i)
preservation, restoration and repair of a Mortgaged Property, (ii)
any
enforcement or judicial proceedings with respect to a Mortgage
Loan, including
foreclosure actions and (iii) the management and liquidation of REO
Property.
Servicing Criteria: The "servicing criteria" identified as
applicable
to Servicer on Exhibit 15 hereto, as it may be amended by the
parties from time
to time.
Servicing Fee: With respect to each Mortgage Loan, the amount of
the
annual servicing fee the Purchaser shall pay to the Seller, which
shall, for
each month, be equal to one-twelfth of the product of (a) the
Servicing Fee Rate
and (b) the unpaid principal balance of the Mortgage Loan. Such fee
shall be
payable monthly, computed on the basis of the same principal amount
and period
respectively on which any related interest payment on a Mortgage
Loan is
computed. The obligation of the Purchaser to pay the Servicing Fee
is limited
to, and payable solely from, the interest portion (including
recoveries with
respect to interest from Liquidation Proceeds and other proceeds,
to the extent
permitted by Section 11.05) of related Monthly Payment collected by
the Seller,
or as otherwise proved under Section 11.05.
Servicing Fee Rate: The per annum rate at which the Servicing
Fee
accrues, which rate shall be specified on the Mortgage Loan
Schedule.
Servicing File: With respect to each Mortgage Loan, the file
retained
by the Seller consisting of originals of all documents in the
Mortgage File,
which are not delivered to the Purchaser, or the Custodian and
copies of the
Mortgage Loan Documents set forth in Exhibit 13 hereto.
S&P: Standard & Poor's Ratings Group or its successor in
interest.
Stated Principal Balance: As to each Mortgage Loan as of any date
of
determination, (i) the principal balance of the Mortgage Loan as of
the Cut-off
Date after giving effect to payments of principal due on or before
such date,
whether or not collected from the Mortgagor on or before such date,
minus (ii)
all amounts previously distributed to the Purchaser with respect to
the related
Mortgage Loan representing payments or recoveries of principal,
plus (iii) the
cumulative amount of any Negative Amortization.
Static Pool Information: Static pool information as described in
Item
1105(a)(1)-(3) and 1105(c) of Regulation AB.
Subcontractor: Any vendor, subcontractor or other Person that is
not
responsible for the overall servicing (as "servicing" is commonly
understood by
participants in the mortgage-backed securities market) of Mortgage
Loans but
performs one or more discrete functions identified in Item 1122(d)
of Regulation
AB with respect to Mortgage Loans under the direction or authority
of the
Servicer or a Subservicer.
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<PAGE>
Subservicer: Any Person that services Mortgage Loans on behalf of
the
Servicer or any Subservicer and is responsible for the performance
(whether
directly or through Subservicers or Subcontractors) of a
substantial portion of
the material servicing functions required to be performed by the
Servicer under
this Agreement or any Reconstitution Agreement that are identified
in Item
1122(d) of Regulation AB.
Sub-Servicing Agreement: The written contract between the Servicer
and
a Subservicer relating to servicing and administration of certain
Mortgage Loans
as provided in Section 11.30 of this Agreement.
Tax Service Contract: A transferable contract maintained for
the
Mortgaged Property with a tax service provider for the purpose of
obtaining
current information from local taxing authorities relating to such
Mortgaged
Property.
Third-Party Originator: Each Person, other than a Qualified
Correspondent, that originated Mortgage Loans acquired by the
Seller.
Underwriting Guidelines: The Seller's written underwriting
guidelines
attached hereto as Exhibit 14 as in effect with respect to the
Mortgage Loans
purchased by Initial Purchaser on the Initial Closing Date, as may
be amended,
supplemented or modified from time to time.
Whole Loan Transfer: Any sale or transfer of some or all of the
Mortgage Loans, other than a Pass-Through Transfer.
SECTION 2. Agreement to Purchase.
The Seller agrees to sell, and the Purchaser agrees to purchase,
from
time-to-time, Mortgage Loans having an aggregate principal balance
on the
related Cut-off Date in an amount as set forth in the related
Confirmation, or
in such other amount as agreed by the Purchaser and the Seller as
evidenced by
the actual aggregate principal balance of the Mortgage Loans
accepted by the
Purchaser on the related Closing Date.
SECTION 3. Mortgage Loan Schedules.
The Seller shall deliver the Mortgage Loan Schedule for a
Mortgage
Loan Package to be purchased on a particular Closing Date to the
Purchaser at
least five (5) Business Days prior to the related Closing Date.
SECTION 4. Purchase Price.
The Purchase Price for each Mortgage Loan listed on the related
Mortgage Loan Schedule shall be the percentage of par as stated in
the related
Confirmation (subject to adjustment as provided therein),
multiplied by its
Stated Principal Balance as of the related Cut-off Date. If so
provided in the
related Confirmation, portions of the Mortgage Loans shall be
priced separately.
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<PAGE>
In addition to the Purchase Price as described above, the
Initial
Purchaser shall pay to the Seller, at closing, accrued interest on
the Stated
Principal Balance of each Mortgage Loan as of the related Cut-off
Date at its
Mortgage Interest Rate, net of the Servicing Fee, from the related
Cut-off Date
through the day prior to the related Closing Date, both
inclusive.
The Purchaser shall own and be entitled to receive with respect
to
each Mortgage Loan purchased, (1) all scheduled principal due after
the related
Cut-off Date, (2) all other recoveries of principal and any
Prepayment Charges
collected after the related Cut-off Date (provided, however, that
all scheduled
payments of principal due on or before the related Cut-off Date and
collected by
the Seller after the related Cut-off Date shall belong to the
Seller), and (3)
all payments of interest on the Mortgage Loans at the Net Mortgage
Rate (minus
that portion of any such interest payment that is allocable to the
period prior
to the related Cut-off Date). The Stated Principal Balance of each
Mortgage Loan
as of the related Cut-off Date is determined after application to
the reduction
of principal of payments of principal due on or before the related
Cut-off Date
whether or not collected. Therefore, for the purposes of this
Agreement,
payments of scheduled principal and interest prepaid for a Due Date
beyond the
related Cut-off Date shall not be applied to the principal balance
as of the
related Cut-off Date. Such prepaid amounts (minus the applicable
Servicing Fee)
shall be the property of the Purchaser. The Seller shall deposit
any such
prepaid amounts into the Custodial Account, which account is
established for the
benefit of the Purchaser, for remittance by the Seller to the
Purchaser on the
first related Distribution Date. All payments of principal and
interest, less
the applicable Servicing Fee, due on a Due Date following the
related Cut-off
Date shall belong to the Purchaser.
SECTION 5. Examination of Mortgage Files.
In addition to the rights granted to the Initial Purchaser under
the
related Confirmation to underwrite the Mortgage Loans and review
the Mortgage
Files prior to the Closing Date, prior to the related Closing Date,
the Seller,
or Servicer, as applicable, shall, at the Purchaser's option (a)
deliver to the
Custodian in escrow, for examination with respect to each Mortgage
Loan to be
purchased on such Closing Date, the related Mortgage File,
including the
Assignment of Mortgage, pertaining to each Mortgage Loan, or (b)
make the
related Mortgage File available to the Initial Purchaser for
examination at the
Seller's offices or such other location as shall otherwise be
agreed upon by the
Initial Purchaser and the Seller. Such examination may be made by
the Initial
Purchaser or its designee at any reasonable time before or after
the related
Closing Date. If the Initial Purchaser makes such examination prior
to the
related Closing Date and identifies any Mortgage Loans that do not
conform to
the terms of the related Confirmation, the terms of this Agreement
or the
Underwriting Guidelines, such Mortgage Loans may, at the Initial
Purchaser's
option, be rejected for purchase by the Initial Purchaser. If not
purchased by
the Initial Purchaser, such Mortgage Loans shall be deleted from
the related
Mortgage Loan Schedule. The Initial Purchaser may, at its option
and without
notice to the Seller, purchase all or part of any Mortgage Loan
Package without
conducting any partial or complete examination. The fact that the
Initial
Purchaser has conducted or has determined not to conduct any
partial or complete
examination of the Mortgage Files shall not affect the Initial
Purchaser's (or
any of its successors') rights to demand repurchase or other relief
or remedy
provided for in this Agreement.
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SECTION 6. Conveyance from Seller to Initial Purchaser.
Subsection 6.01. Conveyance of Mortgage Loans; Possession of
Servicing
Files.
The Seller, simultaneously with the payment of the Purchase
Price,
shall execute and deliver to the Initial Purchaser an Assignment
and Conveyance
with respect to the related Mortgage Loan Package in the form
attached hereto as
Exhibit 4. The Servicing File retained by the Servicer with respect
to each
Mortgage Loan pursuant to this Agreement shall be appropriately
identified in
the Servicer's computer system to reflect clearly the sale of such
related
Mortgage Loan to the Purchaser. The Purchaser shall be entitled to
receive all
Prepayment Charges required to be paid by a Mortgagor under the
terms of any
Mortgage Loan. The Servicer shall release from its custody the
contents of any
Servicing File retained by it only in accordance with this
Agreement, except
when such release is required in connection with a repurchase of
any such
Mortgage Loan pursuant to Subsection 7.03 or 7.04.
Subsection 6.02. Books and Records.
Record title to each Mortgage and the related Mortgage Note as of
the
related Closing Date shall be in the name of the Seller, the
Servicer, the
Purchaser, the Custodian or one or more designees of the Initial
Purchaser, as
the Initial Purchaser shall designate. Notwithstanding the
foregoing, beneficial
ownership of each Mortgage and the related Mortgage Note shall be
vested solely
in the Purchaser or the appropriate designee of the Purchaser, as
the case may
be. All rights arising out of the Mortgage Loans including, but not
limited to,
all funds received by the Seller after the related Cut-off Date on
or in
connection with a Mortgage Loan as provided in Section 4 shall be
vested in the
Purchaser or one or more designees of the Purchaser; provided,
however, that all
such funds received on or in connection with a Mortgage Loan as
provided in
Section 4 shall be received and held by the Seller in trust for the
benefit of
the Purchaser or the assignee of the Purchaser, as the case may be,
as the owner
of the Mortgage Loans pursuant to the terms of this Agreement.
It is the express intention of the parties that the
transactions
contemplated by this Agreement be, and be construed as, a sale of
the Mortgage
Loans by the Seller and not a pledge of the Mortgage Loans by the
Seller to the
Purchaser to secure a debt or other obligation of the Seller.
Consequently, the
sale of each Mortgage Loan shall be reflected as a sale on the
Seller's business
records, tax returns and financial statements.
Subsection 6.03. Delivery of Mortgage Loan Documents.
The Seller or Servicer, as applicable, shall from time to time
in
connection with each Closing Date, at least five (5) Business Days
prior to such
Closing Date, deliver and release to the Custodian those Mortgage
Loan Documents
set forth on Exhibit 13 hereto with respect to each Mortgage Loan
to be
purchased and sold on the related Closing Date and set forth on the
related
Mortgage Loan Schedule delivered with such Mortgage Loan
Documents.
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<PAGE>
The Servicer shall provide to each of the Purchaser and the
Custodian
a notice containing a list of authorized servicing officers (each,
an
"Authorized Representative") for the purpose of giving and
receiving notices,
requests and instructions and delivering certificates and documents
in
connection with this Agreement. Such notice shall contain the
specimen signature
for each Authorized Representative. From time to time, the Servicer
may, by
delivering to the others a revised notice, change the information
previously
given pursuant to this Section, but each of the parties hereto
shall be entitled
to rely conclusively on the then current notice until receipt of a
superseding
notice.
The Custodian shall certify its receipt of all such Mortgage
Loan
Documents required to be delivered pursuant to this Agreement for
the related
Closing Date, as evidenced by the Trust Receipt and Initial
Certification of the
Custodian in the form annexed to the Custodial Agreement. The fees
and expenses
of the Custodian shall be paid by the Purchaser.
The Servicer shall forward to the Custodian original documents
evidencing an assumption, modification, consolidation or extension
of any
Mortgage Loan entered into in accordance with this Agreement within
two weeks of
their execution, provided, however, that the Servicer shall provide
the
Custodian with a certified true copy of any such document submitted
for
recordation within two weeks of its execution, and shall provide
the original of
any document submitted for recordation or a copy of such document
certified by
the appropriate public recording office to be a true and complete
copy of the
original within ninety (90) days of its submission for
recordation.
Subsection
6.04. Quality Control Procedures.
The Seller shall have an internal quality control program that
verifies, on a regular basis, the existence and accuracy of the
legal documents,
credit documents, property appraisals, and underwriting decisions.
Such program
shall include evaluating and monitoring the overall quality of the
Seller's loan
production and the servicing activities of the Seller. Such program
is to ensure
that the Mortgage Loans are originated and serviced in accordance
with Accepted
Servicing Standards and the Underwriting Guidelines; guard against
dishonest,
fraudulent, or negligent acts; and guard against errors and
omissions by
officers, employees, or other authorized persons.
SECTION 7. Representations, Warranties and Covenants of the
Seller:
Remedies for Breach.
Subsection 7.01. Representations and Warranties Respecting the
Seller.
(a) The Seller represents, warrants and covenants to the
Initial
Purchaser and to any subsequent Purchaser as of the Initial Closing
Date and
each subsequent Closing Date or as of such date specifically
provided herein or
in the applicable Assignment and Conveyance:
(i) The Seller is a corporation duly organized, validly
existing
and
in good standing under the laws of Virginia. The Seller has all
licenses necessary to carry out its business as now being
conducted, and is
licensed and qualified to transact business in and is in good
standing
under the laws of each state in which any Mortgaged Property
17
<PAGE>
is
located or is otherwise exempt under applicable law from such
licensing
or
qualification or is otherwise not required under applicable law
to
effect such licensing or qualification and no demand for such
licensing or
qualification has been made upon the Seller by any such state, and
in any
event the Seller is in compliance with the laws of any such state
to the
extent necessary to ensure the enforceability of each Mortgage Loan
and the
servicing of the Mortgage Loans in accordance with the terms of
this
Agreement. No licenses or approvals obtained by the Seller have
been
suspended or revoked by any court, administrative agency,
arbitrator or
governmental body and no proceedings are pending which might result
in such
suspension or revocation;
(ii) The Seller has the full power and authority to hold each
Mortgage Loan, to sell each Mortgage Loan, and to execute, deliver
and
perform, and to enter into and consummate, all transactions
contemplated by
this
Agreement. The Seller has duly authorized the execution, delivery
and
performance of this Agreement, and has duly executed and delivered
this
Agreement, and this Agreement, assuming due authorization,
execution and
delivery by the Purchaser, constitutes a legal, valid and
binding
obligation of the Seller, enforceable against it in accordance with
its
terms except as the enforceability thereof may be limited by
bankruptcy,
insolvency or reorganization provisions;
(iii) The execution and delivery of this Agreement by the
Seller
and
the performance of and compliance with the terms of this Agreement
by
the
Seller, will not violate the Seller's articles of incorporation
or
by-laws or constitute a default under or result in a breach or
acceleration
of,
any material contract, agreement or other instrument to which
the
Seller is a party or which may be applicable to the Seller or its
assets;
(iv) The Seller is not in violation of, and the execution and
delivery of this Agreement by the Seller and its performance and
compliance
with
the terms of this Agreement will not constitute a violation
with
respect to, any order or decree of any court or any order or
regulation of
any
federal, state, municipal or governmental agency having
jurisdiction
over
the Seller or its assets, which violation might have consequences
that
would materially and adversely affect the condition (financial
or
otherwise) or the operation of the Seller or its assets or might
have
consequences that would materially and adversely affect the
performance of
its
obligations and duties hereunder;
(v) The Seller is an approved seller/servicer for FNMA and
FHLMC
in
good standing and is a HUD approved mortgagee pursuant to Section
203 of
the
National Housing Act. No event has occurred, including but not
limited
to a
change in insurance coverage, which would make the Seller unable
to
comply with FNMA, FHLMC or HUD eligibility requirements or which
would
require notification to FNMA, FHLMC or HUD;
(vi) The Seller does not believe, nor does it have any reason
or
cause to believe, that it cannot perform each and every covenant by
it
contained in this Agreement;
18
<PAGE>
(vii) The Mortgage Note, the Mortgage, the Assignment of
Mortgage
and
any other documents required to be delivered with respect to
each
Mortgage Loan pursuant to this Agreement, have been delivered to
the
Custodian all in compliance with the specific requirements of
this
Agreement. With respect to each Mortgage Loan, the Seller is in
possession
of a
complete Mortgage File in compliance with Exhibit 5, except for
such
documents as have been delivered to the Custodian;
(viii) Immediately prior to the payment of the Purchase Price
for
each
Mortgage Loan, the Seller was the owner of record of the
related
Mortgage and the indebtedness evidenced by the related Mortgage
Note and
upon
the payment of the Purchase Price by the Purchaser, in the event
that
the
Seller retains record title, the Seller shall retain such record
title
to
each Mortgage, each related Mortgage Note and the related Mortgage
Files
with
respect thereto in trust for the Purchaser as the owner thereof
and
only
for the purpose of servicing and/or supervising the servicing of
each
Mortgage Loan;
(ix) There are no actions or proceedings against, or
investigations of, the Seller before any court, administrative
agency or
other tribunal (A) that might prohibit its entering into this
Agreement,
(B)
seeking to prevent the sale of the Mortgage Loans or the
consummation
of
the transactions contemplated by this Agreement or (C) that
might
prohibit or materially and adversely affect the performance by the
Seller
of
its obligations under, or the validity or enforceability of,
this
Agreement;
(x) No consent, approval, authorization or order of any court
or
governmental agency or body is required for the execution, delivery
and
performance by the Seller of, or compliance by the Seller with,
this
Agreement or the consummation of the transactions contemplated by
this
Agreement, except for such consents, approvals, authorizations or
orders,
if
any, that have been obtained prior to the related Closing Date;
(xi) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Seller, and
the
transfer, assignment and conveyance of the Mortgage Notes and the
Mortgages
by
the Seller pursuant to this Agreement are not subject to the
bulk
transfer or any similar statutory provisions;
(xii) The transfer of the Mortgage Loans shall be treated as a
sale
on the books and records of the Seller, and the Seller has
determined
that, and will treat, the disposition of the Mortgage Loans
pursuant to
this
Agreement for tax and accounting purposes as a sale. The Seller
shall
maintain a complete set of books and records for each Mortgage Loan
which
shall be clearly marked to reflect the ownership of each Mortgage
Loan by
the
Purchaser;
(xiii) The consideration received by the Seller upon the sale
of
the Mortgage Loans
constitutes fair consideration and reasonably equivalent
value for such Mortgage Loans;
19
<PAGE>
(xiv) The Seller is solvent and will not be rendered insolvent
by
the
consummation of the transactions contemplated hereby. The Seller is
not
transferring any Mortgage Loan with any intent to hinder, delay or
defraud
any
of its creditors;
(xv) The information delivered by the Seller to the Purchaser
with
respect to the Seller's loan loss, foreclosure and delinquency
experience for the twelve (12) months immediately preceding the
Initial
Closing Date on mortgage loans underwritten to the same standards
as the
Mortgage Loans and covering mortgaged properties similar to the
Mortgaged
Properties, is true and correct in all material respects;
(xvi) Neither this Agreement nor any written statement, report
or
other document prepared and furnished or to be prepared and
furnished by
the
Seller pursuant to this Agreement or in connection with the
transactions contemplated hereby contains any untrue statement of
material
fact
or omits to state a material fact necessary to make the
statements
contained herein or therein not misleading;
(xvii) The Seller is a member of MERS, will comply in all
material respects with the rules and procedures of MERS in
connection with
the
servicing of the Mortgage Loans that are registered with MERS and
is
current in payment of all fees and assessments imposed by MERS;
and
(xviii) The Seller has not dealt with any broker, investment
banker, agent or other person that may be entitled to any
commission or
compensation in connection with the sale of the Mortgage Loans.
Subsection 7.02. Representations and Warranties Regarding
Individual
Mortgage Loans.
The Seller hereby represents and warrants to the Initial Purchaser
and
to any subsequent Purchaser that, as to each Mortgage Loan, as of
the related
Closing Date for such Mortgage Loan:
(i) The information set forth in the related Mortgage Loan
Schedule and the mortgage loan data delivered to the Purchaser
are
complete, true and
correct;
(ii) The Mortgage Loan is in compliance with all requirements
set
forth in the related Confirmation, and the characteristics of the
related
Mortgage Loan Package as set forth in the related Confirmation are
true and
correct; provided, however, that in the event of any conflict
between the
terms of any Confirmation and this Agreement, the terms of this
Agreement
shall control;
(iii) All payments required to be made up to the close of
business on the Closing Date for such Mortgage Loan under the terms
of the
Mortgage Note have been made; the Seller has not advanced funds,
or
induced, solicited or knowingly received any advance of funds from
a party
other than the owner of the related Mortgaged Property, directly
or
indirectly, for the payment of any amount required by the Mortgage
Note or
Mortgage; no Mortgage Loan is thirty (30) or more days delinquent
as
20
<PAGE>
of
the Closing Date and there has been no delinquency, exclusive of
any
period of grace, in any payment by the Mortgagor thereunder since
the
origination of the Mortgage Loan;
(iv) There are no delinquent taxes, ground rents, water
charges,
sewer rents, assessments, insurance premiums, leasehold payments,
including
assessments payable in future installments or other outstanding
charges
affecting the related Mortgaged Property;
(v) The terms of the Mortgage Note and the Mortgage have not
been
impaired, waived, altered or modified in any respect, except by
written
instruments, recorded in the applicable public recording office
if
necessary to maintain the lien priority of the Mortgage, and which
have
been
delivered to the Custodian; the substance of any such waiver,
alteration or modification has been approved by the insurer under
the
Primary Insurance Policy, if any, and has been approved by the
title
insurer, to the extent
required by the related policy, and is reflected on
the
related Mortgage Loan Schedule. No instrument of waiver, alteration
or
modification has been executed, and no Mortgagor has been released,
in
whole or in part, except in connection with an assumption
agreement
approved by the insurer under the Primary Insurance Policy, if any,
and by
the
title insurer, to the extent required by the policy, and which
assumption agreement has been delivered to the Custodian and the
terms of
which are reflected in the related Mortgage Loan Schedule;
(vi) The Mortgage Note and the Mortgage are not subject to any
right of rescission, set-off, counterclaim or defense, including
the
defense of usury, nor will the operation of any of the terms of
the
Mortgage Note and the Mortgage, or the exercise of any right
thereunder,
render the Mortgage unenforceable, in whole or in part, or subject
to any
right of rescission, set-off, counterclaim or defense, including
the
defense of usury and no such right of rescission, set-off,
counterclaim or
defense has been asserted with respect thereto. Each Prepayment
Charge or
penalty with respect to any Mortgage Loan is permissible,
enforceable and
collectible under applicable federal, state and local law;
(vii) All buildings upon the Mortgaged Property are insured by
a
Qualified Insurer acceptable to FNMA and FHLMC against loss by
fire,
hazards of extended coverage and such other hazards as are
customary in the
area
where the Mortgaged Property is located, pursuant to insurance
polices
providing coverage in an amount not less than the greatest of (i)
100% of
the
replacement cost of all improvements to the Mortgaged Property,
(ii)
either (A) the outstanding principal balance of the Mortgage Loan
with
respect to each first lien Mortgage Loan or (B) with respect to
each second
lien
Mortgage Loan, the sum of the outstanding principal balance of
the
related first lien mortgage loan and the outstanding principal
balance of
the
second lien Mortgage Loan, (iii) the amount necessary to avoid
the
operation of any co-insurance provisions with respect to the
Mortgaged
Property, and consistent with the amount that would have been
required as
of
the date of origination in accordance with the Underwriting
Guidelines,
or
(iv) the amount necessary to fully compensate for any damage or
loss to
the
improvements that are a part of such property on a replacement
cost
basis. All such insurance policies contain a standard mortgagee
clause
naming the Servicer, its successors and assigns as mortgagee and
all
premiums thereon have been
21
<PAGE>
paid. If the Mortgaged Property is in an area identified on a Flood
Hazard
Map
or Flood Insurance Rate Map issued by the Federal Emergency
Management
Agency as having special flood hazards (and such flood insurance
has been
made
available) a flood insurance policy meeting the requirements of
the
current guidelines of the Federal Insurance Administration is in
effect
which policy conforms to the requirements of FNMA and FHLMC. The
Mortgage
obligates the Mortgagor thereunder to maintain all such insurance
at the
Mortgagor's cost and expense, and on the Mortgagor's failure to do
so,
authorizes the holder of the Mortgage to maintain such insurance
at
Mortgagor's cost and expense and to seek reimbursement therefor
from the
Mortgagor;
(viii) Any and all requirements of any federal, state or local
law
including, without limitation, usury, truth in lending, real
estate
settlement procedures, predatory and abusive lending, fair
lending,
consumer credit protection, equal credit opportunity, fair housing
or
disclosure laws applicable to the origination and servicing of
mortgage
loans of a type similar to the Mortgage Loans and applicable to
any
prepayment penalty associated with the Mortgage Loans at
origination have
been
complied with;
(ix) The Mortgage has not been satisfied, cancelled,
subordinated
or
rescinded, in whole or in part, and the Mortgaged Property has not
been
released from the lien of the Mortgage, in whole or in part, nor
has any
instrument been executed that would effect any such
satisfaction,
cancellation, subordination, rescission or release;
(x) The Mortgage (including any Negative Amortization which may
arise thereunder) is a valid, existing and enforceable (A) first
lien and
first priority security interest with respect to each Mortgage Loan
which
is
indicated by the Seller to be a first lien (as reflected on the
Mortgage
Loan
Schedule), or (B) second lien and second priority security
interest
with
respect to each Mortgage Loan which is indicated by the Seller to
be a
second lien (as reflected on the Mortgage Loan Schedule), in either
case,
on
the Mortgaged Property, including all improvements on the
Mortgaged
Property subject only to (a) the lien of current real property
taxes and
assessments not yet due and payable, (b) covenants, conditions
and
restrictions, rights of way, easements and other matters of public
record
as
of the date of recording being acceptable to mortgage lending
institutions generally and specifically referred to in the lender's
title
insurance policy delivered to the originator of the Mortgage Loan
and which
do
not adversely affect the Appraised Value of the Mortgaged Property,
(c)
first lien and first priority security interest with respect to
each
Mortgage Loan which is indicated by the Seller to be a second lien
Mortgage
Loan
(as reflected on the Mortgage Loan Schedule); and (d) other matters
to
which like properties are commonly subject which do not
materially
interfere with the benefits of the security intended to be provided
by the
Mortgage or the use, enjoyment, value or marketability of the
related
Mortgaged Property. Any security agreement, chattel mortgage or
equivalent
document related to and delivered in connection with the Mortgage
Loan
establishes and creates a valid, existing and enforceable first or
second
lien
and first or second priority security interest (in each case,
as
indicated on the Mortgage Loan Schedule) on the property described
therein
and
the Seller has full right to sell and assign the same to the
Purchaser.
The
Mortgaged Property was not, as of the date of origination of
the
Mortgage Loan, subject to a mortgage, deed
22
<PAGE>
of
trust, deed to secure debt or other security instrument creating a
lien
subordinate to the lien of the Mortgage;
(xi) The Mortgage Note and the related Mortgage are genuine and
each
is the legal, valid and binding obligation of the maker
thereof,
enforceable in accordance with its terms;
(xii) All parties to the Mortgage Note and the Mortgage had
legal
capacity to enter into the Mortgage Loan and to execute and deliver
the
Mortgage Note and the Mortgage, and the Mortgage Note and the
Mortgage have
been
duly and properly executed by such parties. The Mortgagor is a
natural
person;
(xiii) The proceeds of the Mortgage Loan have been fully
disbursed to or for the account of the Mortgagor and there is no
obligation
for
the Mortgagee to advance additional funds thereunder and any and
all
requirements as to completion of any on-site or off-site
improvement and as
to
disbursements of any escrow funds therefor have been complied with.
All
costs, fees and expenses incurred in making or closing the Mortgage
Loan
and
the recording of the Mortgage have been paid, and the Mortgagor is
not
entitled to any refund of any amounts paid or due to the Mortgagee
pursuant
to
the Mortgage Note or Mortgage;
(xiv) The Seller is the sole legal, beneficial and equitable
owner of the Mortgage Note and the Mortgage and has full right to
transfer
and
sell the Mortgage Loan to the Purchaser free and clear of any
encumbrance, equity, lien, pledge, charge, claim or security
interest;
(xv) All parties which have had any interest in the Mortgage
Loan, whether as mortgagee, assignee, pledgee or otherwise, are
(or, during
the
period in which they held and disposed of such interest, were)
in
compliance with any and all applicable "doing business" and
licensing
requirements of the laws of the state wherein the Mortgaged
Property is
located;
(xvi) The Mortgage Loan is covered by an American Land Title
Association ("ALTA") lender's title insurance policy (which, in the
case of
an
Adjustable Rate Mortgage Loan has an adjustable rate mortgage
endorsement in the form of ALTA 6.0 or 6.1) acceptable to Fannie
Mae and
Freddie Mac, issued by a title insurer acceptable to Fannie Mae and
Freddie
Mac
and qualified to do business in the jurisdiction where the
Mortgaged
Property is located, insuring (subject to the exceptions contained
in
(x)(a), (x)(b) and (x)(d), and with respect to any second lien
Mortgage
Loan
(x)(c), above) the Seller, its successors and assigns as to the
first
or
second priority lien (as indicated on the Mortgage Loan Schedule)
of the
Mortgage in the original principal amount of the Mortgage Loan
(including,
if
the Mortgage Loan provides for Negative Amortization, the maximum
amount
of
Negative Amortization in accordance with the Mortgage) and, with
respect
to
any Adjustable Rate Mortgage Loan, against any loss by reason of
the
invalidity or
unenforceability of the lien resulting from the provisions of
the
Mortgage providing for adjustment in the Mortgage Interest Rate
and
Monthly Payment and Negative Amortization provisions of the
Mortgage Note.
Additionally, such lender's title
23
<PAGE>
insurance policy affirmatively insures ingress and egress to and
from the
Mortgaged Property, and against encroachments by or upon the
Mortgaged
Property or any interest therein. The Seller is the sole insured of
such
lender's title insurance policy, and such lender's title insurance
policy
is
in full force and effect and will be in full force and effect upon
the
consummation of the transactions contemplated by this Agreement. No
claims
have
been made under such lender's title insurance policy, and no
prior
holder of the related Mortgage, including the Seller, has done, by
act or
omission, anything which would impair the coverage of such lender's
title
insurance policy;
(xvii) There is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note and
no event
which, with the passage of time or with notice and the expiration
of any
grace or cure period, would constitute a default, breach, violation
or
event of acceleration, and the Seller has not waived any default,
breach,
violation or event of acceleration. With respect to each second
lien
Mortgage Loan (i) the first lien mortgage loan is in full force and
effect,
(ii)
there is no default, breach, violation or event of acceleration
under
such
first lien mortgage or the related mortgage note, (iii) there is
no
event which, with the passage of time or with notice and the
expiration of
any
grace or cure period, would constitute a default, breach, violation
or
event of acceleration under such first lien mortgage or the
related
Mortgage, (iv) either (A) the first lien mortgage contains a
provision
which allows or (B) applicable law requires, the mortgagee under
the second
lien
Mortgage Loan to receive notice of, and affords such mortgagee
an
opportunity to cure any default by payment in full or otherwise
under the
first lien mortgage,
(v) the related first lien does not provide for or
permit negative amortization under such first lien Mortgage Loan,
and (vi)
either no consent for the Mortgage Loan is required by the holder
of the
first lien or such consent has been obtained and is contained in
the
Mortgage File;
(xviii) There are no mechanics' or similar liens or claims
which
have
been filed for work, labor or material (and no rights are
outstanding
that
under law could give rise to such lien) affecting the related
Mortgaged Property which are or may be liens prior to, or equal
or
coordinate with, the lien of the related Mortgage;
(xix) All improvements which were considered in determining the
Appraised Value of the related Mortgaged Property lay wholly within
the
boundaries and building restriction lines of the Mortgaged
Property, and no
improvements on adjoining properties encroach upon the Mortgaged
Property.
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;
(xx) The Mortgage Loan was originated by the Seller or by a
savings and loan association, a savings bank, a commercial bank or
similar
banking institution which is supervised and examined by a federal
or state
authority, or by a mortgagee approved as such by the Secretary of
HUD;
(xxi) Principal payments on the Mortgage Loan commenced no more
than
sixty (60) days after the proceeds of the Mortgage Loan were
disbursed. The Mortgage Loan bears interest at the Mortgage
Interest Rate.
With
respect to each
24
<PAGE>
Mortgage Loan which is not a Negative Amortization Loan, the
Mortgage Note
is
payable on the first day of each month in Monthly Payments, which,
in
the
case of a Fixed Rate Mortgage Loan, are sufficient to fully
amortize
the
original principal balance over the original term thereof (other
than
with
respect to a Mortgage Loan identified on the related Mortgage
Loan
Schedule as an interest-only Mortgage Loan during the interest-only
period
or a
Mortgage Loan which is identified on the related Mortgage Loan
Schedule as a Balloon Mortgage Loan) and to pay interest at the
related
Mortgage Interest Rate, and, in the case of an Adjustable Rate
Mortgage
Loan, are changed on each Adjustment Date, and in any case, are
sufficient
to
fully amortize the original principal balance over the original
term
thereof (other than with respect to a Mortgage Loan identified on
the
related Mortgage Loan Schedule as an interest-only Mortgage Loan
during the
interest-only period
or a Mortgage Loan which is identified on the related
Mortgage Loan Schedule as a Balloon Mortgage Loan) and to pay
interest at
the
related Mortgage Interest Rate. With respect to each Negative
Amortization Mortgage Loan, the related Mortgage Note requires a
Monthly
Payment which is sufficient during the period following each
Payment
Adjustment Date, to fully amortize the outstanding principal
balance as of
the
first day of such period (including any Negative Amortization) over
the
then
remaining term of such Mortgage Note and to pay interest at the
related Mortgage Interest Rate; provided, that the Monthly Payment
shall
not
increase to an amount that exceeds 107.5% of the amount of the
Monthly
Payment that was due immediately prior to the Payment Adjustment
Date;
provided, further, that the payment adjustment cap shall not be
applicable
with
respect to the adjustment made to the Monthly Payment that occurs
in a
year
in which the Mortgage Loan has been outstanding for a multiple of
five
(5)
years and in any such year the Monthly Payment shall be adjusted
to
fully amortize the Mortgage Loan over the remaining term. With
respect to
each
Mortgage Loan identified on the Mortgage Loan Schedule as an
interest-only Mortgage Loan, the interest-only period shall not
exceed ten
(10)
years (or such other period specified on the Mortgage Loan
Schedule)
and
following the expiration of such interest-only period, the
remaining
Monthly Payments shall be sufficient to fully amortize the
original
principal balance over the remaining term of the Mortgage Loan and
to pay
interest at the related Mortgage Interest Rate. With respect to
each
Balloon Mortgage Loan, the Mortgage Note requires a monthly payment
which
is
sufficient to fully amortize the original principal balance over
the
original term thereof and to pay interest at the related Mortgage
Interest
Rate
and requires a final Monthly Payment substantially greater than
the
preceding monthly payment which is sufficient to repay the
remaining unpaid
principal balance of the Balloon Mortgage Loan at the Due Date of
such
monthly payment. The Index for each Adjustable Rate Mortgage Loan
is as set
forth on the Mortgage Loan Schedule. No Mortgage Loan is a
Convertible
Mortgage Loan. No Balloon Mortgage Loan has an original stated
maturity of
less
than seven (7) years;
(xxii) The origination, servicing and collection practices used
with
respect to each Mortgage Note and Mortgage including, without
limitation, the establishment, maintenance and servicing of the
Escrow
Accounts and Escrow Payments, if any, since origination, have been
in all
respects legal, proper, prudent and customary in the mortgage
origination
and
servicing industry. The Mortgage Loan has been serviced by the
Seller
and
any predecessor servicer in accordance with the terms of the
Mortgage
Note
and Accepted Servicing Practices. With respect to escrow deposits
and
Escrow
25
<PAGE>
Payments, if any, all such payments are in the possession of, or
under the
control of, the Seller and there exist no deficiencies in
connection
therewith for which customary arrangements for repayment thereof
have not
been
made. No escrow deposits or Escrow Payments or other charges or
payments due the Seller have been capitalized under any Mortgage or
the
related Mortgage Note and no such escrow deposits or Escrow
Payments are
being held by the Seller for any work on a Mortgaged Property which
has not
been
completed;
(xxiii) The Mortgaged Property is free of damage and waste and
in
good
repair and there is no proceeding pending for the total or
partial
condemnation thereof;
(xxiv) The Mortgage and related Mortgage Note contain customary
and
enforceable provisions such as to render the rights and remedies of
the
holder thereof adequate for the realization against the Mortgaged
Property
of
the benefits of the security provided thereby, including, (a) in
the
case
of a Mortgage designated as a deed of trust, by trustee's sale,
and
(b)
otherwise by judicial foreclosure. The Mortgaged Property has not
been
subject to any bankruptcy proceeding or foreclosure proceeding and
the
Mortgagor has not filed for protection under applicable bankruptcy
laws.
There is no homestead or other exemption available to the Mortgagor
which
would interfere with the right to sell the Mortgaged Property at
a
trustee's sale or the right to foreclose the Mortgage. The
Mortgagor has
not
notified the Seller and the Seller has no knowledge of any
relief
requested or allowed to the Mortgagor under the Servicemembers'
Civil
Relief Act;
(xxv) The Mortgage Loan was underwritten in accordance with the
Underwriting Guidelines in effect at the time the Mortgage Loan
was
originated which underwriting standards satisfy the standards of
FNMA and
FHLMC; and the Mortgage Note and Mortgage are on forms generally
acceptable
to
prudent investors in the secondary mortgage market;
(xxvi) The Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage on the
Mortgaged
Property and the security interest of any applicable security
agreement or
chattel mortgage referred to in (x) above;
(xxvii) The Mortgage File contains an appraisal of the related
Mortgaged Property which satisfied the standards of FNMA and FHLMC,
was on
appraisal form 1004 or form 2055 with an interior inspection and
was made
and
signed, prior to the approval of the Mortgage Loan application, by
a
qualified appraiser, duly appointed by the Seller, who had no
interest,
direct or indirect in the Mortgaged Property or in any loan made on
the
security thereof, whose compensation is not affected by the
approval or
disapproval of the Mortgage Loan and who met the minimum
qualifications of
FNMA
and FHLMC. Each appraisal of the Mortgage Loan was made in
accordance
with
the relevant provisions of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989;
26
<PAGE>
(xxviii) In the event the Mortgage constitutes a deed of trust,
a
trustee, duly qualified under applicable law to serve as such, has
been
properly designated and currently so serves and is named in the
Mortgage,
and
no fees or expenses are or will become payable by the Purchaser to
the
trustee under the deed of trust, except in connection with a
trustee's sale
after default by the Mortgagor;
(xxviii) No Mortgage Loan contains provisions pursuant to which
Monthly Payments are (a) paid or partially paid with funds
deposited in any
separate account established by the Seller, the Mortgagor, or
anyone on
behalf of the Mortgagor, (b) paid by any source other than the
Mortgagor or
(c)
contains any other similar provisions which may constitute a
"buydown"
provision. The Mortgage Loan is not a graduated payment mortgage
loan and
the
Mortgage Loan does not have a shared appreciation or other
contingent
interest feature;
(xxix) The Mortgagor has executed a statement to the effect
that
the
Mortgagor has received all disclosure materials required by
applicable
law
with respect to the making of fixed rate mortgage loans in the case
of
Fixed Rate Mortgage Loans, and adjustable rate mortgage loans in
the case
of
Adjustable Rate Mortgage Loans and rescission materials with
respect to
Refinanced Mortgage
Loans, and such statement is and will remain in the
Mortgage File;
(xxx) Reserved;
(xxxi) The Seller has no knowledge of any circumstances or
condition with respect to the Mortgage, the Mortgaged Property,
the
Mortgagor or the Mortgagor's credit standing that can reasonably
be
expected to cause the Mortgage Loan to be an unacceptable
investment, or
cause the Mortgage Loan to become delinquent or adversely affect
the value
of
the Mortgage Loan;
(xxxiii) [BEGINNING WITH THIS SUBSECTION, THE PARAGRAPH NUMBERS
ARE
OFF - THERE ARE TWO (2) XXXIII'S] No Mortgage Loan had an LTV or a
CLTV
at
origination in excess of 100%. Each Mortgage Loan with an LTV
at
origination in excess of 80% is and will be subject to a Primary
Insurance
Policy, issued by a Qualified Insurer, which insures that portion
of the
Mortgage Loan in excess of the portion of the Appraised Value of
the
Mortgaged Property as required by Fannie Mae. With respect to any
Mortgage
Loan
which allows Negative Amortization, such Primary Insurance
Policy
contains provisions to cover the potential Negative Amortization of
such
Mortgage Loan. All provisions of such Primary Insurance Policy have
been
and
are being complied with, such policy is in full force and effect,
and
all
premiums due thereunder have been paid. Any Mortgage subject to
any
such
Primary Insurance Policy obligates the Mortgagor thereunder to
maintain such insurance and to pay all premiums and charges in
connection
therewith. The Mortgage Interest Rate for the Mortgage Loan does
not
include any such insurance premium. No Mortgage Loan is subject to
a lender
paid
primary mortgage insurance policy;
(xxxii) The Mortgaged Property is lawfully occupied under
applicable law; all inspections, licenses and certificates required
to be
made
or issued with respect to
27
<PAGE>
all
occupied portions of the Mortgaged Property and, with respect to
the
use
and occupancy of the same, including but not limited to
certificates of
occupancy, have been made or obtained from the appropriate
authorities;
(xxxiii) No error, omission, misrepresentation, negligence,
fraud
or
similar occurrence with respect to a Mortgage Loan has taken place
on
the
part of the Seller, any person, including without limitation
the
Mortgagor, any appraiser, any builder or developer, or any other
party
involved in the origination of the Mortgage Loan or in the
application of
any
insurance in relation to such Mortgage Loan;
(xxxiv) The Assignment of Mortgage is in recordable form,
except
for
the name of the assignee which is blank, and is acceptable for
recording under the laws of the jurisdiction in which the
Mortgaged
Property is located;
(xxxvii) Any principal advances made to the Mortgagor prior to
the
Cut-off Date have been consolidated with the outstanding
principal
amount secured by the Mortgage, and the secured principal amount,
as
consolidated, bears a single interest rate and single repayment
term. The
lien
of the Mortgage securing the consolidated principal amount is
expressly insured as having first or second (as indicated on the
Mortgage
Loan
Schedule) lien priority by a title insurance policy, an endorsement
to
the
policy insuring the mortgagee's consolidated interest or by other
title
evidence acceptable to FNMA or FHLMC. The consolidated principal
amount
does
not exceed the original principal amount of the Mortgage Loan plus
any
Negative Amortization;
(xxxviii) If the Residential Dwelling on the Mortgaged Property
is a
condominium unit or a unit in a planned unit development (other
than a
de
minimis planned unit development) such condominium or planned
unit
development project meets the eligibility requirements of the
Underwriting
Guidelines, FNMA and FHLMC;
(xxxv) The source of the down payment with respect to each
Mortgage Loan has been fully verified by the Seller;
(xxxvi) Interest on each Mortgage Loan is calculated on the
basis
of a
360-day year consisting of twelve 30-day months;
(xxxvii) The Mortgaged Property is in material compliance with
all
applicable environmental laws pertaining to environmental
hazards
including, without limitation, asbestos, and neither the Seller nor
the
related Mortgagor, has received any notice of any violation or
potential
violation of such law;
(xxxviii) The Seller shall, at its own expense, cause each
Mortgage Loan to be covered by a Tax Service Contract which is
assignable
to
the Purchaser or its designee; provided however, that if the
Seller
fails to purchase such Tax Service Contract, the Seller shall be
required
to
reimburse the Purchaser for all costs and expenses incurred by
the
Purchaser in connection with the purchase of any such Tax Service
Contract;
28
<PAGE>
(xxxix) Each Mortgage Loan is covered by a Flood Zone Service
Contract which is assignable to the Purchaser or its designee or,
for each
Mortgage Loan not covered by such Flood Zone Service Contract, the
Seller
agrees to purchase such Flood Zone Service Contract;
(xl) No Mortgage Loan is (a)(1) subject to the provisions of
the
Homeownership and Equity Protection Act of 1994 as amended
("HOEPA") or (2)
has
an "annual percentage rate" or "total points and fees" (as each
such
term
is defined under HOEPA) payable by the Mortgagor that equal or
exceed
the
applicable thresholds defined under HOEPA (as defined in 12 CFR
226.32
(a)(1)(i) and (ii)), (b) a "high cost" mortgage loan, "covered"
mortgage
loan, "high risk home" mortgage loan, or "predatory" mortgage loan
or any
other comparable term, no matter how defined under any federal,
state or
local law, (c) subject to any comparable federal, state or local
statutes
or
regulations, or any other statute or regulation providing for
heightened
regulatory scrutiny or assignee liability to holders of such
mortgage
loans, or (d) a High Cost Loan or Covered Loan, as applicable (as
such
terms are defined in the current Standard & Poor's LEVELS(R)
Glossary
Revised, Appendix E);
(xli) No predatory, abusive, or deceptive lending practices,
including but not limited to, the extension of credit to a
Mortgagor
without regard for the Mortgagor's ability to repay the Mortgage
Loan and
the
extension of credit to a Mortgagor which has no apparent benefit to
the
Mortgagor, were employed in connection with the origination of the
Mortgage
Loan. Each Mortgage Loan is in compliance with the anti-predatory
lending
eligibility for purchase requirements of the Fannie Mae Guides;
(xlii) Except as otherwise reflected on the bid tape for the
related Mortgage Loan Package, the debt-to-income ratio of the
related
Mortgagor was not greater than 55% at the origination of the
related
Mortgage Loan;
(xliii) No Mortgagor was required to purchase any credit
insurance product (e.g., life, mortgage, disability, accident,
unemployment
or
health insurance product) or debt cancellation agreement as a
condition
of
obtaining the extension of credit. No Mortgagor obtained a
prepaid
single premium credit insurance policy (e.g., life, mortgage,
disability,
accident, unemployment or health insurance product) or debt
cancellation
agreement in connection with the origination of the Mortgage Loan.
No
proceeds from any Mortgage Loan were used to purchase single
premium credit
insurance policies or debt cancellation agreements as part of
the
origination of, or as a condition to closing, such Mortgage
Loan;
(xlviii) The Mortgage Loans were not selected from the
outstanding one- to four-family mortgage loans in the Seller's
portfolio as
to
which the representations and warranties set forth in this
Agreement
could be made at the related Closing Date in a manner so as to
affect
adversely the interests of the Purchaser;
(xliv) The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the
Mortgage
Loan
in the
29
<PAGE>
event that the Mortgaged Property is sold or transferred without
the prior
written consent of the mortgagee thereunder;
(xlv) The Mortgage Loan complies with all applicable consumer
credit statutes and
regulations, including, without limitation, the
respective Uniform Consumer Credit Code laws in effect in
Alabama,
Colorado, Idaho, Indiana, Iowa, Kansas, Maine, Oklahoma, South
Carolina,
Utah, West Virginia and Wyoming, has been originated by a properly
licensed
entity, and in all other respects, complies with all of the
material
requirements of any such applicable laws;
(xlvi) The information set forth in the Mortgage Loan Schedule
as
to
Prepayment Charges is complete, true and correct in all
material
respects and each Prepayment Charge is permissible, enforceable
and
collectable in accordance with its terms upon the Mortgagor's full
and
voluntary principal payment under applicable law;
(xlvii) The Mortgage Loan was not prepaid in full prior to the
Closing Date and the Seller has not received notification from a
Mortgagor
that
a prepayment in full shall be made after the Closing Date;
(xlviii)
No Mortgage Loan is secured by cooperative housing,
commercial property or mixed use property;
(xlix) Each Mortgage Loan is eligible for sale in the secondary
market or for inclusion in a Pass-Through Transaction without
unreasonable
credit enhancement;
(l) Except as set forth on the related Mortgage Loan Schedule,
none
of the Mortgage Loans is subject to a Prepayment Charge. With
respect
to
any Mortgage Loan that contains a provision permitting imposition
of a
premium upon a prepayment prior to maturity: (a) the Mortgage Loan
provides
some
benefit to the Mortgagor (e.g. a rate or fee reduction) in
exchange
for
accepting such Prepayment Charge; (b) the Mortgage Loan's
originator
had
a written policy of offering the Mortgagor, or requiring
third-party
brokers to offer the Mortgagor, the option of obtaining a Mortgage
Loan
that
did not require payment of such a Prepayment Charge; (c) the
Prepayment Charge was adequately disclosed to the Mortgagor
pursuant to
applicable state and federal law; (d) the duration of the
Prepayment Charge
shall not exceed three (3) years from the date of the Mortgage
Note; and
(e)
such Prepayment Charge shall not be imposed in any instance where
the
Mortgage Loan is accelerated or paid off in connection with the
workout of
a
delinquent Mortgage or due to the Mortgagor's default,
notwithstanding
that
the terms of the Mortgage Loan or state or federal law might
permit
the
imposition of such Prepayment Charge;
(li) The Seller has complied with all applicable anti-money
laundering laws and regulations, including without limitation the
Bank
Secrecy Act, as amended by the USA Patriot Act of 2001
(collectively, the
"Anti-Money Laundering Laws"); the Seller has established an
anti-money
laundering compliance program as required by the Anti-Money
Laundering
Laws, has conducted the requisite due diligence in connection with
the
origination of each Mortgage Loan for purposes of the Anti-Money
Laundering
30
<PAGE>
Laws, including with respect to the legitimacy of the applicable
Mortgagor
and
the origin of the assets used by the said Mortgagor to purchase
the
Mortgaged Property, and maintains, and will maintain,
sufficient
information to identify and verify the identification of the
applicable
Mortgagor for purposes of the Anti-Money Laundering Laws. No
Mortgage Loan
is
subject to nullification pursuant to Executive Order 13224 (the
"Executive Order") or the regulations promulgated by the Office of
Foreign
Assets Control of the United States Department of the Treasury (the
"OFAC
Regulations") or in violation of the Executive Order or the
OFAC
Regulations, and no Mortgagor is subject to the provisions of
such
Executive Order or the OFAC Regulations or listed as a
"specially
designated national or blocked person" for purposes of the OFAC
Regulations;
(lii) The Mortgagor was not encouraged or required to select a
mortgage loan product offered by the Mortgage Loan's originator
which is a
higher cost product designed for less creditworthy borrowers
than
Mortgagor, taking into account such facts as, without limitation,
the
Mortgage Loan's requirements and the Mortgagor's credit history,
income,
assets and liabilities. If, at the time of loan application, the
Mortgagor
may
have qualified for a lower cost credit product then offered by
any
mortgage lending affiliate of the Mortgage Loan's originator, the
Mortgage
Loan's originator referred the Mortgagor's application to such
affiliate
for
underwriting consideration. With respect to any Mortgage Loan,
the
Mortgagor was assigned the highest credit grade available with
respect to a
mortgage loan product offered by such Mortgage Loan's originator,
based on
a
comprehensive assessment of risk factors, including the
Mortgagor's
credit history;
(liii) The methodology used in underwriting the extension of
credit for each Mortgage Loan did not rely solely on the extent of
the
Mortgagor's equity in the collateral as the principal determining
factor in
approving such extension of credit. The methodology employed
objective
criteria such as the Mortgagor's income, assets and liabilities, as
they
related to the proposed mortgage payment and, based on such
methodology,
the
Mortgage Loan's originator made a reasonable determination that at
the
time
of origination the Mortgagor had the ability to make timely
payments
on
the Mortgage Loan;
(liv) With respect to each Mortgage Loan, the Seller has fully
and
accurately furnished complete information (i.e., favorable and
unfavorable) on the related borrower credit files to Equifax,
Experian and
Trans Union Credit Information Company, in accordance with the Fair
Credit
Reporting Act and its implementing regulations, on a monthly basis
and, for
each
Mortgage Loan, the Seller will furnish, in accordance with the
Fair
Credit Reporting Act and its implementing regulations, accurate
and
complete information on its borrower credit files to Equifax,
Experian, and
Trans Union Credit Information Company, on a monthly basis;
(lv) All points and fees related to each Mortgage Loan were
disclosed in writing to the related Borrower in accordance with
applicable
state and federal laws and regulations. No related Borrower was
charged
"points and fees" (whether or not financed) in an amount greater
than (a)
$1,000 or (b) 5% of the principal amount of such loan, whichever
is
greater, such 5% limitation is calculated in accordance with
Fannie
31
<PAGE>
Mae's anti-predatory lending requirements as set forth in the
Fannie Mae
Guides. For purposes of this representation, "points and fees" (a)
include
origination, underwriting, broker and finder's fees and other
charges that
the
lender imposed as a condition of making the loan, whether they are
paid
to
the lender or a third party, and (b) exclude bona fide discount
points,
fees
paid for actual services rendered in connection with the
origination
of
the mortgage (such as attorneys' fees, notaries fees and fees paid
for
property appraisals, credit reports, surveys, title examinations
and
extracts, flood and tax certifications, and home inspections); the
cost of
mortgage insurance or credit-risk price adjustments; the costs of
title,
hazard, and flood insurance policies; state and local transfer
taxes or
fees; escrow deposits for the future payment of taxes and
insurance
premiums; and other miscellaneous fees and charges, which
miscellaneous
fees
and charges, in total, do not exceed 0.25 percent of the loan
amount.
All
points, fees and charges (including finance charges) whether or
not
financed, assessed, collected or to be collected in connection with
the
origination and servicing of each Mortgage Loan were disclosed in
writing
to
the related Mortgagor in accordance with applicable state and
federal
laws
and regulations;
(lvi) The Seller will transmit full-file credit reporting data
for
each Mortgage Loan pursuant to Fannie Mae Guide Announcement 95-19
and
for
each Mortgage Loan, Seller agrees it shall report one of the
following
statuses each month as follows: new origination, current,
delinquent (30-,
60-,
90-days, etc.), foreclosed, or charged-off;
(lvii) With respect to any Mortgage Loan which is secured by
manufactured housing, if such Mortgage Loans are permitted
hereunder, such
Mortgage Loan satisfies the requirements for inclusion in
residential
mortgage backed securities transactions rated by Standard &
Poor's Ratings
Services, and such manufactured housing will be the principal
residence of
the
Mortgagor upon the origination of the Mortgage Loan. With respect
to
any
second lien Mortgage Loan, such lien is on a one- to
four-family
residence that is (or will be) the principal residence of the
Mortgagor
upon
the origination of the second lien Mortgage Loan;
(lviii) Each Mortgage Loan constitutes a "qualified mortgage"
under Section 860G(a)(3)(A) of the Code and Treasury Regulation
Section
1.860G-2(a)(1);
(lix) No Mortgage Loan is secured by real property or secured
by
a
manufactured home located in the state of Georgia unless (x)
such
Mortgage Loan was originated prior to October 1, 2002 or after
March 6,
2003, or (y) the property securing the Mortgage Loan is not, nor
will it
be,
occupied by the Mortgagor as the Mortgagor's principal dwelling.
No
Mortgage Loan is a "High Cost Home Loan" as defined in the Georgia
Fair
Lending Act, as amended (the "Georgia Act"). Each Mortgage Loan
that is a
"Home Loan" under the Georgia Act complies with all applicable
provisions
of
the Georgia Act. No Mortgage Loan secured by owner occupied
real
property or an owner occupied manufactured home located in the
State of
Georgia was originated (or modified) on or after October 1, 2002
through
and
including March 6, 2003;
32
<PAGE>
(lx) No Mortgage Loan is a "High-Cost" loan as defined under
the
New
York Banking Law Section 6-1, effective as of April 1, 2003;
(lxi) No Mortgage Loan (a) is secured by property located in
the
State of New York; (b) had an unpaid principal balance at
origination of
$300,000 or less, and (c) has an application date on or after April
1,
2003, the terms of which Mortgage Loan equal or exceed either the
APR or
the
points and fees threshold for "high-cost home loans", as defined
in
Section 6-1 of the New York State Banking Law;
(lxii) No Mortgage Loan is a "High Cost Home Loan" as defined
in
the
Arkansas Home Loan Protection Act effective July 16, 2003 (Act 1340
or
2003);
(lxviii) No Mortgage Loan is a "High Cost Home Loan" as defined
in
the Kentucky high-cost loan statute effective June 24, 2003 (Ky.
Rev.
Stat. Section 360.100);
(lxiii) No Mortgage Loan secured by property located in the
State
of
Nevada is a "home loan" as defined in the Nevada Assembly Bill No.
284;
(lxiv) No Mortgage Loan is a "manufactured housing loan" or
"home
improvement home loan" pursuant to the New Jersey Home Ownership
Act. No
Mortgage Loan is a "High-Cost Home Loan" or a refinanced "Covered
Home
Loan," in each case, as defined in the New Jersey Home Ownership
Act
effective November 27, 2003 (N.J.S.A. 46;10B-22 et seq.);
(lxv) No Mortgage Loan is a subsection 10 mortgage under the
Oklahoma Home Ownership and Equity protection Act;
(lxvi) No Mortgage Loan is a "High-Cost Home Loan" as defined
in
the
New Mexico Home Loan Protection Act effective January 1, 2004
(N.M.
Stat. Ann. Sections 58-21A-1 et seq.);
(lxxiii) No Mortgage Loan is a "High-Risk Home Loan" as defined
in
the Illinois High-Risk Home Loan Act effective January 1, 2004 (815
Ill.
Comp. Stat. 137/1 et seq.);
(lxvii) No Loan that is secured by property located within the
State of Maine meets the definition of a (i) "high-rate, high-fee"
mortgage
loan
under Article VIII, Title 9-A of the Maine Consumer Credit Code
or
(ii)
"High-Cost Home Loan" as defined under the Maine House Bill 383
L.D.
494,
effective as of September 13, 2003;
(lxviii) With respect to any Loan for which a mortgage loan
application was submitted by the Mortgagor after April 1, 2004, no
such
Loan
secured by Mortgaged Property in the State of Illinois which has
a
Loan
Interest Rate in excess of 8.0% per annum has lender-imposed fees
(or
other charges) in excess of 3.0% of the original principal balance
of the
Loan;
(lxix) No Mortgage Loan is a "High Cost Home Mortgage Loan" as
defined in the Massachusetts Predatory Home Loan Practices Act,
effective
November 7,
33
<PAGE>
2004
(Mass. Ann. Laws Ch. 183C). No Mortgage Loan secured by a
Mortgaged
Property located in the Commonwealth of Massachusetts was made to
pay off
or
refinance an existing loan or other debt of the related borrower
(as the
term
"borrower" is defined in the regulations promulgated by the
Massachusetts Secretary of State in connection with Massachusetts
House
Bill
4880 (2004)) unless either (1) (a) the related Mortgage Interest
Rate
(that would be effective once the introductory rate expires, with
respect
to
Adjustable Rate Mortgage Loans) did or would not exceed by more
than
2.25% the yield on United States Treasury securities having
comparable
periods of maturity to the maturity of the related Mortgage Loan as
of the
fifteenth day of the month immediately preceding the month in which
the
application for the extension of credit was received by the related
lender
or
(b) the Mortgage Loan is an "open-end home loan" (as such term is
used
in
the Massachusetts House Bill 4880 (2004)) and the related Mortgage
Note
provides that the related Mortgage Interest Rate may not exceed at
any time
the
Prime rate index as published in The Wall Street Journal plus a
margin
of
one percent, or (2) such Mortgage Loan is in the "borrower's
interest,"
as
documented by a "borrower's interest worksheet" for the
particular
Mortgage Loan, which worksheet incorporates the factors set forth
in
Massachusetts House Bill 4880 (2004) and the regulations
promulgated
thereunder for determining "borrower's interest," and otherwise
complies in
all
material respects with the laws of the Commonwealth of
Massachusetts;
(lxxvii) No Loan is a "High Cost Home Loan" as defined by the
Indiana Home Loan Practices Act, effective January 1, 2005 (Ind.
Code Ann.
Sections 24-9-1 et seq.);
(lxxviii) The Mortgagee has not made or caused to be made any
payment in the nature of an "average" or "yield spread premium" to
a
mortgage broker or a like Person which has not been fully disclosed
to the
Mortgagor;
(lxx) The sale or transfer of the Mortgage Loan by the Seller
complies with all applicable federal, state, and local laws, rules,
and
regulations governing such sale or transfer, including, without
limitation,
the
Fair and Accurate Credit Transactions Act ("FACT Act") and the
Fair
Credit Reporting Act, each as may be amended from time to time, and
the
Seller has not received any actual or constructive notice of any
identity
theft, fraud, or other misrepresentation in connection with such
Mortgage
Loan
or any party thereto;
(lxxi) With respect to each MOM Loan, a MIN has been assigned
by
MERS
and such MIN is accurately provided on the Mortgage Loan Schedule.
The
related Assignment of Mortgage to MERS has been duly and properly
recorded,
or
has been delivered for recording to the applicable recording
office;
(lxxii) With respect to each MOM Loan, Seller has not received
any
notice of liens or legal actions with respect to such Mortgage Loan
and
no
such notices have been electronically posted by MERS;
(lxxxii) With respect to each Mortgage Loan, (i) if the related
first lien provides for negative amortization, the CLTV was
calculated at
the
maximum principal balance of such first lien that could result
upon
application of such negative amortization
34
<PAGE>
feature, and (ii) either no consent for the Mortgage Loan is
required by
the
holder of the first lien or such consent has been obtained and
is
contained in the Mortgage File; and
(lxxxiii) No Mortgagor agreed to submit to arbitration to
resolve
any
dispute arising out of or relating in any way to the Mortgage
Loan
transaction.
(lxxxiv) No Mortgage Loan is subject to mandatory arbitration;
(lxxiii) No Mortgage Loan is secured by a lien on a "condo
hotel;"
(lxxxvi) No Mortgage Loan is secured by manufactured housing,
cooperative housing, commercial property or mixed use property;
and
(lxxxvii) Each Mortgage Loan secured by property located within
the
Cook County, Illinois anti-predatory lending Pilot Program area
(i.e.,
ZIP
Codes 60620, 60621, 60623, 60628, 60629, 60632, 60636, 60638, 60643
and
60652) complies with the recording requirements outlined in
Illinois House
Bill
4050 and Senate Bill 304 effective September 1, 2006.
Subsection 7.03. Remedies for Breach of Representations and
Warranties.
It is understood and agreed that the representations and
warranties
set forth in Subsections 7.01 and 7.02 shall survive the sale of
the Mortgage
Loans to the Purchaser and shall inure to the benefit of the
Purchaser,
notwithstanding any restrictive or qualified endorsement on any
Mortgage Note or
Assignment of Mortgage or the examination or lack of examination of
any Mortgage
File. Upon discovery by the Seller of a breach of any of the
foregoing
representations and warranties which materially and adversely
affects the value
of the Mortgage Loans or the interest of the Purchaser (or which
materially and
adversely affects the value of a Mortgage Loan or the interests of
the Purchaser
in the related Mortgage Loan in the case of a representation and
warranty
relating to a particular Mortgage Loan), the Seller shall give
prompt written
notice to the Purchaser.
Within 60 days of the earlier of either discovery by the Seller,
or
notice to the Seller, of any breach of a representation or warranty
which
materially and adversely affects the value of a Mortgage Loan or
the Mortgage
Loans or the Purchaser's interest in a Mortgage Loan or the
Mortgage Loans, the
Seller shall use its best efforts promptly to cure such breach in
all material
respects and, if such breach cannot be cured, the Seller shall, at
the
Purchaser's option, repurchase such Mortgage Loan at the Repurchase
Price. In
the event that a breach shall involve any representation or
warranty set forth
in Subsection 7.01 and such breach cannot be cured within 60 days
of the earlier
of either discovery by or notice to the Seller of such breach, all
of the
Mortgage Loans shall, at the Purchaser's option, be repurchased by
the Seller at
the Repurchase Price. The Seller shall, at the request of the
Purchaser and
assuming that Seller has a Qualified Substitute Mortgage Loan,
rather than
repurchase the Mortgage Loan as provided above, remove such
Mortgage Loan and
substitute in its place a Qualified Substitute Mortgage Loan or
Loans; provided
that such substitution shall be effected not later than 120 days
after the
related Closing Date. If the Seller has no Qualified Substitute
Mortgage Loan,
it shall repurchase the deficient Mortgage Loan. Any repurchase of
a Mortgage
Loan(s) pursuant to the
35
<PAGE>
foregoing provisions of this Subsection 7.03 shall occur on a date
designated by
the Purchaser and shall be accomplished by deposit in the Custodial
Account of
the amount of the Repurchase Price for distribution to the
Purchaser on the next
scheduled Distribution Date. Notwithstanding anything to the
contrary contained
herein, it is understood by the parties hereto that a breach of
the
representations and warranties made in Subsections 7.02(viii),
(xliv), (xlvii),
(lv), (lvii), (lviii), (lix), (lx), (lxii), (lxiii), (lxiv) or
(lxxxii) will be
deemed to materially and adversely affect the value of the related
Mortgage Loan
or the interest of the Purchaser therein.
At the time of repurchase of any deficient Mortgage Loan, the
Purchaser and the Seller shall arrange for the reassignment of the
repurchased
Mortgage Loan to the Seller and the delivery to the Seller of any
documents held
by the Custodian relating to the repurchased Mortgage Loan. In the
event the
Repurchase Price is deposited in the Custodial Account, the Seller
shall,
simultaneously with such deposit, give written notice to the
Purchaser that such
deposit has taken place. Upon such repurchase the related Mortgage
Loan Schedule
shall be amended to reflect the withdrawal of the repurchased
Mortgage Loan from
this Agreement.
As to any Deleted Mortgage Loan for which the Seller substitutes
a
Qualified Substitute Mortgage Loan or Loans, the Seller shall
effect such
substitution by delivering to the Purchaser for such Qualified
Substitute
Mortgage Loan or Loans the Mortgage Note, the Mortgage, the
Assignment of
Mortgage and such other documents and agreements as are set forth
in Exhibit 13
hereto, with the Mortgage Note endorsed as required therein. The
Seller shall
deposit in the Custodial Account the Monthly Payment less the
Servicing Fee due
on such Qualified Substitute Mortgage Loan or Loans in the month
following the
date of such substitution. Monthly Payments due with respect to
Qualified
Substitute Mortgage Loans in the month of substitution will be
retained by the
Seller. For the month of substitution, distributions to the
Purchaser will
include the Monthly Payment due on such Deleted Mortgage Loan in
the month of
substitution, and the Seller shall thereafter be entitled to retain
all amounts
subsequently received by the Seller in respect of such Deleted
Mortgage Loan.
The Seller shall give written notice to the Purchaser that such
substitution has
taken place and shall amend the Mortgage Loan Schedule to reflect
the removal of
such Deleted Mortgage Loan from the terms of this Agreement and the
substitution
of the Qualified Substitute Mortgage Loan. Upon such substitution,
such
Qualified Substitute Mortgage Loan or Loans shall be subject to the
terms of
this Agreement in all respects, and the Seller shall be deemed to
have made with
respect to such Qualified Substitute Mortgage Loan or Loans, as of
the date of
substitution, the covenants, representations and warranties set
forth in
Subsections 7.01 and 7.02.
For any month in which the Seller substitutes one or more
Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans,
the Seller
will determine the amount (if any) by which the aggregate principal
balance of
all such Qualified Substitute Mortgage Loans as of the date of
substitution is
less than the aggregate Stated Principal Balance of all such
Deleted Mortgage
Loans (after application of scheduled principal payments due in the
month of
substitution). An amount equal to the sum of (x) the product of (i)
the amount
of such shortfall and (ii) the purchase price percentage used to
calculate the
Purchase Price, as stated in the related Commitment Letter and (y)
accrued
interest on the amount of such shortfall to the last day of the
month such
substitution occurs, shall be distributed by the Seller in the
month of
substitution pursuant to the Servicing Addendum. Accordingly, on
the date of
such substitution, the Seller,
36
<PAGE>
as applicable, will deposit from its own funds into the Custodial
Account an
amount equal to such amount.
In addition to such cure, repurchase and substitution obligation,
the
Seller shall indemnify the Initial Purchaser and any subsequent
Purchaser and
hold them harmless against any losses, damages, penalties, fines,
forfeitures,
reasonable and necessary legal fees and related costs, judgments,
and other
costs and expenses resulting from any claim, demand, defense or
assertion based
on or grounded upon, or resulting from, a breach of the Seller's
representations
and warranties, respectively, contained in this Section 7,
including, without
limitation, any loss incurred by the Purchaser of any Prepayment
Charge to which
the Purchaser would otherwise be entitled pursuant to this
Agreement. It is
understood and agreed that the obligations of the Seller set forth
in this
Subsection 7.03 to cure, substitute for or repurchase a defective
Mortgage Loan
and to indemnify the Initial Purchaser and any subsequent Purchaser
as provided
in this Subsection 7.03 constitute the sole remedies of the Initial
Purchaser
and any subsequent Purchaser respecting a breach of the
foregoing
representations and warranties.
Any cause of action against the Seller relating to or arising out
of
the breach of any representations and warranties made in
Subsections 7.01 or
7.02 shall accrue as to any Mortgage Loan upon (i) discovery of
such breach by
the Purchaser or notice thereof by the Seller to the Purchaser, and
(ii) demand
upon the Seller by the Purchaser for compliance with the relevant
provisions of
this Agreement.
In addition to the foregoing, in the event that a breach of any
representation of the Seller materially and adversely affects the
interests of
the Purchaser in any Prepayment Charge or the collectability of
such Prepayment
Charge, the Seller shall pay the amount of the scheduled Prepayment
Charge to
the Purchaser upon the payoff of any related Mortgage Loan, to the
extent that
such Prepayment Charge is not collected by Seller.
Subsection 7.04. Repurchase of Certain Mortgage Loans; Premium
Protection.
(a) In the event that (i) the first Due Date for a Mortgage Loan
is
prior to the Cut-off Date and the initial Monthly Payment is not
made by the
related Mortgagor within thirty (30) days of such Due Date or (ii)
the first
Monthly Payment on any Mortgage Loan due following the Cut-off Date
is not made
by the related Mortgagor within thirty (30) days of the related Due
Date, then,
in each such case, the Seller shall repurchase the affected
Mortgage Loans
within five (5) Business Days following receipt of notice from
Initial Purchaser
requesting such amount at the Repurchase Price, which shall be paid
as provided
for in Subsection 7.03. The Seller shall notify the Purchaser of
any such
default under this Subsection 7.04(a) within thirty (30) days of
any such
Mortgage Loan becoming thirty (30) days delinquent.
(b) In the event that any Mortgage Loan prepays-in-full within
three
(3) months following the related Closing Date, Seller shall remit
to the Initial
Purchaser, within thirty (30) days following the receipt of notice
from Initial
Purchaser requesting such amount, an amount equal to the product of
(i) the
excess of (A) the percentage of par as stated in
