<PAGE>
Exhibit 99.4
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, American Home Mortgage Corp. (the
"Company") and
American Home Mortgage Servicing, Inc.
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 (a) the Master Mortgage Loan Purchase and
Servicing
Agreement, dated as of June 21, 2006, between Assignor, Servicer
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 Assigned
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, without limitation, the enforcement of the
document
delivery requirements and remedies with respect to breaches of
Assignment, Assumption and Recognition Agreement
(American Home Mortgage Corp.)
<PAGE>
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. Neither the Company nor the Assignor shall amend or
agree to
amend, modify, waiver, or otherwise alter any of the terms or
provisions of the
Purchase Agreement which amendment, modification, waiver or other
alteration
would in any way affect the Assigned Loans or the Company's
performance under
the Purchase Agreement with respect to the Assigned Loans without
the prior
written consent of the Assignee, the Master Servicer and the
Trustee. Any party
requesting such amendment shall provide to the Assignee, the Master
Servicer and
the Trustee, at its own expense, an opinion of counsel stating that
(i) such
amendment is permitted under the terms of the Purchase Agreement
and (ii) such
amendment will not materially and adversely affect the interests of
the holders
of any securities issued by the Trust. 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;
Assignment, Assumption and Recognition Agreement
(American Home Mortgage Corp.)
<PAGE>
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;
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;
Assignment, Assumption and Recognition Agreement
(American Home Mortgage Corp.)
<PAGE>
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 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, 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;
Assignment, Assumption and Recognition Agreement
(American Home Mortgage Corp.)
<PAGE>
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 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, except in such
case
where the conflict, breach or violation would not have a
material
adverse effect on the Company or its ability to perform its
obligations under this AAR Agreement. 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, are true and correct as of the date
hereof in all material respects, except that the representation
and warranty set forth in Section 7.02(i) shall, for purposes
of
this AAR Agreement, relate to the Mortgage Loan Schedule
attached
hereto.
Assignment, Assumption and Recognition Agreement
(American Home Mortgage Corp.)
<PAGE>
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 and the Servicer agree 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):
(i) Section 11.30 shall be amended so that the references to
the
"Purchaser" therein shall be replaced with references to "the
Master
Servicer, the Depositor, the Trustee or any other party required
to
file the reports referred to in this Section 11.30".
8.
Pursuant to Section 11.15 of Exhibit 9 to the Purchase Agreement,
no
later than 10 calendar days, the Company shall furnish to the
Master Servicer
(i)(a) monthly loan data in such format mutually agreed-upon
between the Company
and the Master Servicer, (b) default loan data in such format
mutually agreed
upon between the Company and the Master Servicer and (c)
information regarding
the realized losses and gains as in such format mutually agreed
upon between the
Company and the Master Servicer, in each case relating to the
period ending on
the last day of the preceding calendar month, (ii) all such
information required
pursuant to clause (i)(a) above on a magnetic tape, electronic
mail, or other
similar media reasonably acceptable to the Master Servicer and the
Company, and
(iii) all supporting documentation reasonably necessary and
available with
respect to the information required above. Notwithstanding the
foregoing, the
Company is not required to report data relating to prepayment
charges or
penalties.
Miscellaneous
9.
All demands, notices and communications related to the Assigned
Loans,
the Purchase 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:
a. In the case
of Company,
American Home Mortgage Corp.
538 Broadhollow Road
Melville, New York 11747
Attention: Robert F. Johnson, Jr.
With copies to:
Assignment, Assumption and Recognition Agreement
(American Home Mortgage Corp.)
<PAGE>
American Home Mortgage Corp.
538 Broadhollow Road
Melville, New York 11747
Attention: Alan B. Horn, General Counsel
b. In the case
of Assignor,
HSBC Bank USA, National Association
Re: HALO 2007-AR2
452 Fifth Avenue
New York, New York 10018
Attention: Head of MBS Principal Finance
c. In the case
of Assignee,
HSI Asset Securitization Corporation
452 Fifth Avenue, 10th floor
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
Attn: Trust Administration-[__________]
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
10.
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.
Assignment, Assumption and Recognition Agreement
(American Home Mortgage Corp.)
<PAGE>
11.
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.
12.
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.
13.
This AAR Agreement shall survive the conveyance of the Assigned
Loans
as contemplated in this AAR Agreement.
14.
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.
15.
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.
Assignment, Assumption and Recognition Agreement
(American Home Mortgage Corp.)
<PAGE>
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
American Home Mortgage Corp.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
American Home Mortgage Servicing,
Inc.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Deutsche Bank National Trust Company,
as Trustee
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Assignment, Assumption and Recognition Agreement
(American Home Mortgage Corp.)
<PAGE>
CitiMortgage, Inc., as Master
Servicer
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Assignment, Assumption and Recognition Agreement
(American Home Mortgage Corp.)
<PAGE>
ATTACHMENT 1
(form of Assigned Loan Tape)
Assignment, Assumption and Recognition Agreement
(American Home Mortgage Corp.)
<PAGE>
ATTACHMENT 2
(Form of Purchase Agreement)
Assignment, Assumption and Recognition Agreement
(American Home Mortgage Corp.)
<PAGE>
Exhibit 99.4
EXECUTION VERSION
MASTER MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT
AMERICAN HOME MORTGAGE CORP.
Seller
AMERICAN HOME MORTGAGE SERVICING, INC.
Servicer
HSBC BANK USA, NATIONAL ASSOCIATION
Initial Purchaser
Dated as of June 21, 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 ................. 15
Subsection 6.01.
Conveyance of Mortgage
Loans; Possession of
Servicing Files .................................... 15
Subsection 6.02.
Books and Records
.................................. 16
Subsection 6.03.
Delivery of Mortgage
Loan Documents ................ 16
SECTION 7.
Representations, Warranties and Covenants of the
Seller and the Servicer: Remedies for Breach ................
17
Subsection 7.01.
Representations and
Warranties Respecting
the Seller and the Servicer ........................ 17
Subsection 7.02.
Representations and
Warranties Regarding
Individual Mortgage Loans .......................... 22
Subsection 7.03.
Remedies for Breach of
Representations and
Warranties ......................................... 36
Subsection 7.04.
Repurchase of Certain
Mortgage Loans;
Premium Protection ................................. 38
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 .......................................................
41
SECTION 13. The Seller and the Servicer
................................. 48
Subsection
13.01. Additional Indemnification by the Seller
and the Servicer ................................... 48
Subsection
13.02. Merger or Consolidation of the Seller and
the Servicer ....................................... 48
Subsection
13.03. Limitation on Liability of the Seller, the
Servicer and Others ................................ 48
Subsection
13.04. Servicer Not to Resign .............................
49
Subsection
13.05. No Transfer of Servicing ...........................
49
SECTION 14. Default
..................................................... 49
Subsection
14.01. Events of Default ..................................
49
Subsection
14.02. Waiver of Defaults .................................
51
</TABLE>
i
<PAGE>
<TABLE>
<S>
<C>
SECTION 15. Termination
................................................. 51
SECTION 16. Successor to the Servicer
................................... 52
SECTION 17. Financial Statements
........................................ 53
SECTION 18. Mandatory Delivery: Grant of Security Interest.
............. 53
SECTION 19. Notices
..................................................... 53
SECTION 20. Severability Clause
......................................... 54
SECTION 21. Counterparts
................................................ 55
SECTION 22. Governing Law
............................................... 55
SECTION 23. Intention of the Parties
.................................... 55
SECTION 24. Successors and Assigns
...................................... 56
SECTION 25. Waivers
..................................................... 56
SECTION 26. Exhibits
.................................................... 56
SECTION 27. Nonsolicitation
............................................. 56
SECTION 28. General Interpretive Principles
............................. 57
SECTION 29. Reproduction of Documents ..................................
57
SECTION 30. Further Agreements
.......................................... 58
SECTION 31. Third-Party Beneficiary
..................................... 58
SECTION 32. Entire Agreement
............................................ 58
</TABLE>
ii
<PAGE>
EXHIBITS
EXHIBIT 1A
SELLER'S OFFICER'S CERTIFICATE
EXHIBIT 1B
SERVICER'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
SUMMARY OF REGULATION AB SERVICING CRITERIA
EXHIBIT 16
SUMMARY OF APPLICABLE REGULATION AB REQUIREMENTS
EXHIBIT 17
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
EXHIBIT 18 FORM
OF REMITTANCE REPORT
SCHEDULE I
MORTGAGE LOAN 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 June 21, 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"), AMERICAN HOME MORTGAGE
CORP., having
an office at 538 Broadhollow Road, Melville, New York 11747 (the
"Seller") and
AMERICAN HOME MORTGAGE SERVICING, INC., having an office at 4600
Regent
Boulevard, Suite 200, Irving, Texas 75063 (the "Servicer").
WITNESSETH:
WHEREAS, the Seller desires to sell, from time to time, to the
Purchaser, and the 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, where specifically provided
in the
related Confirmation, 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, the
Seller and the
Servicer 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
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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 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.
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
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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 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 "American Home Mortgage Servicing, Inc., as
servicer, in
trust for the Purchaser, 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.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced
by a
Qualified Substitute Mortgage Loan.
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Depositor: The depositor, as such term is defined in Regulation
AB,
with respect to any Pass-Through Transfer.
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, (ii)
an account
or accounts the deposits in which are fully insured by the FDIC or
(iii) 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
"American Home
Mortgage Servicing, 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.
Final Recovery Determination: With respect to any defaulted
Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO
Property repurchased
by the Seller pursuant to this Agreement), a determination made by
the Servicer
that all Insurance Proceeds,
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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.
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.
Issuing Entity: The issuing entity, as such term is defined in
Regulation AB, with respect to any Pass-Through Transfer.
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.
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.
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<PAGE>
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 11.21 of the Servicing
Addendum.
Monthly Payment: With respect to any Mortgage Loan, the
scheduled
combined payment (including any Balloon Payment) of principal and
interest
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 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 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
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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, Prepayment Charges (where
specifically
provided in the related Confirmation), 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 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; (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; (16) the Stated Principal Balance of the Mortgage
Loan; 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 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 term of any Prepayment
Charge or penalty;
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(33) with respect to each MERS Mortgage Loan, the related MIN; (34)
reserved;
(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; and (37) a
code indicating whether the Mortgage Loan is a Balloon Mortgage
Loan and, if so,
the term of the Balloon Mortgage Loan; (38) reserved; (39)
reserved; (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 successor's 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.
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.
Nonrecoverable Advance: Any Monthly Advance or Servicing
Advance
previously made or proposed to be made in respect of a Mortgage
Loan or REO
Property that, in the good faith business judgment of the Servicer,
will not,
or, in the case of a proposed Monthly Advance or Servicing Advance,
would not
be, ultimately recoverable from related late payments, Insurance
Proceeds or
Liquidation Proceeds on such Mortgage Loan or REO Property as
provided herein.
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
8
<PAGE>
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.
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.
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
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
9
<PAGE>
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 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 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 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
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<PAGE>
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 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
"American Home
Mortgage Servicing, 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.
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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 product of the Stated Principal Balance of such Mortgage
Loan times the
greater of (x) the Purchase Price percentage as stated in the
related
Confirmation and (y) 100%, 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) and any unpaid servicing fees allocable to such Mortgage
Loan paid by
any party other than the Servicer, plus (iv) any costs and expenses
incurred by
the Purchaser, any 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.
Servicing Addendum: The terms and conditions attached hereto as
Exhibit 9, which will govern the servicing of the Mortgage
Loans.
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: As of any date of determination, the
"servicing
criteria" set forth in Item 1122(d) of Regulation AB, or any
amendments thereto,
a summary of the requirements of which as of the date hereof is
attached hereto
as Exhibit 15 for convenience of reference only. In the event of a
conflict or
inconsistency between the terms of Exhibit 15 and the text of Item
1122(d) of
Regulation AB, the text of Item 1122(d) of Regulation AB shall
control.
Servicing Fee: With respect to each Mortgage Loan, the amount of
the
annual servicing fee the Purchaser shall pay to the Servicer, 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 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
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Liquidation Proceeds and other proceeds, to the extent permitted by
Section
11.05) of related Monthly Payment collected by the Servicer, 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 equal to thirty-seven and one-half
(37.5) basis
points (0.375%).
Servicing File: With respect to each Mortgage Loan, the file
retained
by the Servicer 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.
Sponsor: The sponsor, as such term is defined in Regulation AB,
with
respect to any Pass-Through Transfer.
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.
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 11.31 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.
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Underwriting Guidelines: The Seller's underwriting guidelines
attached
hereto as Exhibit 14 as in effect with respect to the Mortgage
Loans purchased
by Purchaser on the Initial Closing Date, as may be amended,
supplemented or
modified from time to time thereafter with prior written notice to
the Initial
Purchaser.
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.
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
(unless otherwise specified in the related Confirmation) collected
after the
related Cut-off Date (provided, however, that all scheduled
payments of interest
and principal due on or before the related Cut-off Date and
collected by the
Purchaser or Servicer 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
Servicer shall
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<PAGE>
deposit any such prepaid amounts into the Custodial Account, which
account is
established for the benefit of the Purchaser, for remittance by the
Servicer to
the Purchaser on the first related Distribution Date. All payments
of principal
and interest, whenever received, relating to a Due Date prior to
the related
Cut-off Date shall belong to the Seller and all payments of
principal and
interest less the applicable Servicing Fee, or any Monthly Advance
or Servicing
Advance, 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 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.
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. Where specifically provided in the
related
Confirmation, the Purchaser shall be entitled to receive all
Prepayment Charges
required to be paid by a Mortgagor under the terms of any Mortgage
Loan that are
collected after the related Cut-off Date. 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.
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<PAGE>
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 Purchaser,
as the
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.
The Seller or Servicer, as applicable, shall provide the Purchaser,
or
its designee, with a copy, certified by the Seller or Servicer, as
applicable,
to be a true and complete copy of any original document submitted
for
recordation on or before the fifth Business Day prior to the
related Closing
Date. If the original or copy of any document submitted for
recordation to the
appropriate recording office is not delivered to the Purchaser or
its designee
within 180 days following the related Closing Date due to a delay
at the
applicable recording office, the Seller, or Servicer, as
applicable, shall
deliver to the Purchaser an officer's written certification
certifying that the
delay in delivering the original recorded document to the Purchaser
is due to
delays at the applicable recording office and that the Seller or
Servicer shall
deliver the original recorded documents no later than twelve (12)
months after
the related Closing Date.
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.
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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 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 days of its submission for recordation.
In the event the Seller or Servicer, as applicable, does not
comply
with the delivery requirements set forth in this Subsection 6.03
and such
noncompliance materially and adversely affects the Purchaser's
interest in the
Mortgage Loan, the Purchaser shall notify the Seller or Servicer,
as applicable,
of such noncompliance, and the Seller or Servicer, as applicable,
shall correct
or cure the related omission or defect within thirty (30) days of
the receipt of
such notice. If the Seller or Servicer, as applicable, does not
correct or cure
such material and adverse omission or defect within such period,
then the Seller
or Servicer, as applicable, shall repurchase such Mortgage Loan
from the
Purchaser within two (2) Business Days after the expiration of such
thirty (30)
day period at the Repurchase Price.
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.
The program
shall include evaluating and monitoring the overall quality of the
Seller's loan
production and the servicing activities of the Seller. The 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
and the
Servicer: Remedies for Breach.
Subsection 7.01. Representations and Warranties Respecting the
Seller
and the Servicer.
(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 New York. The Seller has all
licenses necessary to carry
out its business as now being conducted, and is
licensed and qualified to transact business
17
<PAGE>
in
and is in good standing under the laws of each state in which
any
Mortgaged Property is
located, except where the failure to be so licensed
would not have a material adverse effect on the Seller's business
or
operations or the enforceability of any Mortgage Loan or the
transactions
contemplated by this Agreement, 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 corporate 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, 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 (a) bankruptcy, insolvency, liquidation,
receivership,
moratorium, reorganization or other similar laws affecting the
enforcement
of
the rights of creditors and (b) general principles of equity,
whether
enforcement is sought in a proceeding in equity or at law;
(iii) The execution
and delivery of this Agreement by the Seller
and
the performance of and compliance with the terms of this Agreement
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 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
contained
in
this Agreement;
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(vii) Except for such documents which have been delivered for
recording, 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 or delivered for recording;
(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;
(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;
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<PAGE>
(xv) Reserved;
(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) At such time that the Seller becomes a member of MERS,
the
Seller 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
(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.
(b) The Servicer 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 Servicer is a corporation duly organized, validly
existing and in good standing under the laws of Maryland. The
Servicer 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 is
located, except where the failure to be so licensed would not have
a
material adverse effect on the Servicer's business or operations or
the
enforceability of any Mortgage Loan or the transactions
contemplated by
this
Agreement, 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 Servicer by any
such
state, and in any event the Servicer 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
Servicer 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 Servicer has the full corporate power and authority to
execute, deliver and perform, and to enter into and consummate,
all
transactions contemplated by this Agreement. The Servicer has
duly
authorized the execution, delivery and performance of this
Agreement, 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 Servicer, enforceable
against it
in
accordance with its terms except as the enforceability thereof may
be
limited by (a) bankruptcy, insolvency, liquidation,
receivership,
moratorium, reorganization or other similar laws affecting the
enforcement
of
the rights of creditors and (b) general principles of equity,
whether
enforcement is sought in a proceeding in equity or at law;
20
<PAGE>
(iii) The execution and delivery of this Agreement by the
Servicer and the performance of and compliance with the terms of
this
Agreement will not violate the Servicer'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
Servicer is a party or which may be applicable to the Seller or its
assets;
(iv) The Servicer is not in violation of, and the execution and
delivery of this Agreement by the Servicer 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 Servicer or its assets, which violation might
have
consequences that would materially and adversely affect the
condition
(financial or otherwise) or the operation of the Servicer or its
assets or
might have consequences that would materially and adversely affect
the
performance of its obligations and duties hereunder;
(v) The Servicer is an approved 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 Servicer unable
to
comply with FNMA, FHLMC or HUD eligibility requirements or which
would
require notification
to FNMA, FHLMC or HUD;
(vi) The Servicer does not believe, nor does it have any reason
or
cause to believe, that it cannot perform each and every
covenant
contained in this Agreement;
(vii) Reserved;
(viii) Reserved;
(ix) There are no actions or proceedings against, or
investigations of, the Servicer 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
Servicer
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 Servicer of, or compliance by the Servicer 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
Servicer;
(xii) Reserved;
21
<PAGE>
(xiii) Neither this Agreement nor any written statement, report
or
other document prepared and furnished or to be prepared and
furnished by
the
Servicer 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;
(xiv) At such time that the Servicer becomes a member of MERS,
the
Servicer 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
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 related Mortgage File delivered to the Purchaser
is
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;
(iii) All payments required to be made up to the close of
business on the Cut-off 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 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,
22
<PAGE>
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
an
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
conforming
to
the requirements of the Servicing Addendum. All such insurance
policies
contain a standard mortgagee clause naming the Servicer, its
successors and
assigns as mortgagee and all premiums thereon have been 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 an 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, 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
[in
all material respects];
(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
23
<PAGE>
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 the 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) 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), a first lien on
the
Mortgaged Property; 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 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 legal, beneficial or
equitable 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;
24
<PAGE>
(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) and (b), and with respect to any second lien Mortgage Loan
(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 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
existing under such first lien mortgage or the related mortgage
note, (iii)
no
event which, with the passage of time or with notice and the
expiration
of
any grace or cure period, would constitute a default, breach,
violation
or
event of acceleration thereunder, (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
25
<PAGE>
building restriction lines of the Mortgaged Property, and no
improvements
on
adjoining properties encroach upon the Mortgaged Property
unless
otherwise disclosed and are affirmatively insured by the title
insurance
policy referred to in (xvi) above;
(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 Mortgage 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 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 Payments, if any, all such payments are in the possession
of, or
under the control of, the Seller and
26
<PAGE>
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
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 acceptable
to FNMA
and
FHLMC;
(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;
(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;
27
<PAGE>
(xxix) 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;
(xxx) 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;
(xxxi) No Mortgage Loan was made in connection with (a) the
construction or rehabilitation of a Mortgaged Property or (b)
facilitating
the
trade-in or exchange of a Mortgaged Property;
(xxxii) 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) No Mortgage Loan had an LTV or 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. 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;
(xxxiv) The Mortgaged Property is lawfully occupied under
applicable law; all inspections, licenses and certificates required
to be
made
or issued with respect to all occupied portions of the
Mortgaged
Property and, with respect to the use and occupancy of the same,
including
but
not limited to certificates of occupancy, have been made or
obtained
from
the appropriate authorities;
(xxxv) No error, omission, misrepresentation, negligence, fraud
or
similar occurrence with respect to a Mortgage Loan has taken place
on
the
part of 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;
28
<PAGE>
(xxxvi) 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;
(xxxix) The source of the down payment with respect to each
Mortgage Loan has been fully verified by the Seller;
(xl) Interest on each Mortgage Loan is calculated on the basis
of
a
360-day year consisting of twelve 30-day months;
(xli) 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, to the
best
of the Seller's and the Servicer's knowledge, the related
Mortgagor,
has
received any notice of any violation or potential violation of
such
law;
(xlii) 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;
(xliii) 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;
(xliv) 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 APR or total points and fees that are equal to or exceeds
the
HOEPA thresholds (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)
29
<PAGE>
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);
(xlv) 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;
(xlvi) Unless otherwise specified in the related Confirmation
or
the
related Mortgage Loan Schedule, the debt-to-income ratio of the
related
Mortgagor was not greater than 60% at the origination of the
related
Mortgage Loan;
(xlvii) 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;
(xlix) The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the
Mortgage
Loan
in the event that the Mortgaged Property is sold or transferred
without the prior written
consent of the mortgagee thereunder;
(l) 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;
(li) 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 and enforceable
in
accordance with its terms upon the Mortgagor's full and voluntary
principal
payment under applicable law, except to the
30
<PAGE>
extent that: (1) enforceability thereof may be limited by
bankruptcy,
insolvency, moratorium, receivership and other similar laws
relating to
creditors' rights; (2) the collectability thereof may be limited
due to
acceleration in connection with a foreclosure or other
involuntary
prepayment; or (3)
subsequent changes in applicable law may limit or
prohibit enforceability thereof under applicable law;
(lii) 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;
(liii) No Mortgage Loan is secured by cooperative housing,
commercial property or mixed use property;
(liv) Reserved;
(lv) Except as set forth on the related Mortgage Loan Schedule,
none
of the Mortgage Loans are subject to a Prepayment Charge. For
any
Mortgage Loan originated prior to October 1, 2002 that is subject
to a
Prepayment Charge, such Prepayment Charge does not extend beyond
five (5)
years after the date of origination. For any Mortgage Loan
originated on or
following October 1, 2002 that is subject to a Prepayment Charge,
such
Prepayment Charge does not extend beyond three (3) years after the
date of
origination. With respect to any Mortgage Loan that contains a
provision
permitting imposition of a premium upon a prepayment prior to
maturity: (i)
prior to the Mortgage Loan's origination, the Mortgagor agreed to
such
premium in exchange for a monetary benefit, including but not
limited to a
rate
or fee reduction, (ii) prior to the Mortgage Loan's origination,
the
Mortgagor was offered the option of obtaining a Mortgage Loan that
did not
require payment of
such a premium, (iii) the prepayment premium is
disclosed to the Mortgagor in the loan documents pursuant to
applicable
state and federal law, and (iv) notwithstanding any state or
federal law to
the
contrary, the Seller shall not impose such Prepayment Charge in
any
instance when the mortgage loan is accelerated or paid off in
connection
with
the workout of a delinquent Mortgage Loan or as the result of
the
Mortgagor's default in making the loan payments;
(lvi) The Seller has complied with all applicable anti-money
laundering laws and regulations, including without limitation 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 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 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 nor listed as a "blocked person" for purposes of the
OFAC
Regulations;
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<PAGE>
(lvii) No Mortgagor was 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,
unless at the
time
of the Mortgage Loan's origination, such Mortgagor did not
qualify
taking into account credit history and debt to income ratios for a
lower
cost credit product
then offered by the Mortgage Loan's originator or any
affiliate of the Mortgage Loan's originator. If, at the time of
loan
application, the Mortgagor may have qualified for a 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;
(lviii) The methodology used in underwriting the extension of
credit for each Mortgage Loan employs objective mathematical
principles
which relate the Mortgagor's income, assets, liabilities and/or
credit
history to the proposed payment and such underwriting methodology
does not
rely
on the extent of the Mortgagor's equity in the collateral as
the
principal determining factor in approving such credit extension.
Such
underwriting methodology confirmed that at the time of
origination
(application/approval) the Mortgagor had a reasonable ability to
make
timely payments on the Mortgage Loan;
(lix) 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;
(lx) 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
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 that, in total,
do not
exceed 0.25 percent of the loan amount. All points, fees and
charges
(including finance charges) and whether or not
32
<PAGE>
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;
(lxi) The Seller or the Servicer 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 and Servicer
agree
that
either Seller or Servicer shall report one of the following
statuses
each
month as follows: new origination, current, delinquent (30-,
60-,
90-days, etc.), foreclosed, or charged-off;
(lxii) 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; (lxiii) 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);
(lxiv) 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 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;
(lxv) 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;
(lxvi) 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;
(lxvii) 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);
33
<PAGE>
(lxix) 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;
(lxx) 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.);
(lxxi) No Mortgage Loan is a subsection 10 mortgage under the
Oklahoma Home Ownership and Equity protection Act;
(lxxii) 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.);
(lxxiv) 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;
(lxxv) 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;
(lxxvi) No Mortgage Loan is a "High Cost Home Mortgage Loan" as
defined in the Massachusetts Predatory Home Loan Practices Act,
effective
November 7, 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"
34
<PAGE>
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 Mortgagor 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;
(lxxix) 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;
(lxxx) 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;
(lxxxi) 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 second lien 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 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;
(lxxxv) No Mortgage Loan is secured by a lien on a "condo
hotel;"
(lxxxvi) Reserved.
(lxxxvii) No Mortgage Loan is subject to Negative Amortization.
35
<PAGE>
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, the Servicer or the Purchaser
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), or in
the event that any Mortgagor fails to make the first payment due to
the
Purchaser following the Closing Date, the party discovering such
breach shall
give prompt written notice to the other parties.
Within sixty (60) days of the earlier of either discovery by,
or
notice to the Seller or the Servicer, 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 or the Servicer, as applicable, 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, (i)
repurchase such Mortgage Loan at the Repurchase Price, or (ii)
substitute a
Qualified Substitute Mortgage Loan for such Mortgage Loan as
provided below. 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 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
(lxxxiii) 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, the Seller and the Servicer 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.
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<PAGE>
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 greater of, the Purchase Price
Percentage used to
calculate the Purchase Price, as stated in the related
Confirmation, and 100%,
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 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. The indemnification obligation of
the Seller set
forth herein shall survive the termination of this Agreement.
37
<PAGE>
Any cause of action against the Seller or the Servicer 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 or
the Servicer
to the Purchaser, and (ii) demand upon the Seller or the Servicer
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.
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)
any of the
first, second or third Monthly Payments 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 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
ninety
(90) days following the related Closing Date, Seller shall remit to
the Initial
Purchaser an amount equal to the product of (i) the excess of (A)
the percentage
of par as stated in the related Confirmation as the purchase price
percentage
(subject to adjustment as provided therein) over (B) 100%, times
(ii) the
outstanding principal balance of such Mortgage Loan as of the
Cut-off Date. Such
obligation to the Initial Purchaser shall survive any sale or
assignment of the
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