ASSUMPTION AND RECOGNITION AGREEMENT
This is an
Assignment, Assumption
and Recognition
Agreement (this "AAR
Agreement") made as of December 1, 2006, 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 2006-2,
Asset-Backed Certificates and HSBC Mortgage Corporation (USA) (the
"Company").
In
consideration
of the mutual
promises contained herein the parties
hereto agree that the residential mortgage loans (the "Assigned
Loans") listed
on Attachment 1
annexed hereto (the
"Assigned Loan Schedule") purchased by
Assignor from
Company pursuant to the Master Mortgage Loan Purchase and
Servicing Agreement,
dated as of May 1, 2006, between Assignor and Company (the
"Purchase Agreement"),
shall be subject to the terms of this AAR
Agreement.
Capitalized terms used
herein but not defined shall have the meanings ascribed
to them in the Purchase Agreement.
Assignment and Assumption
1.
Assignor hereby
grants, transfers and assigns to Assignee
all of the
right, title interest
and obligations of Assignor in the Assigned Loans and, as
they relate to the
Assigned Loans, all of its right, title, interest and
obligations in, to and under the Purchase Agreement and 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 2006-2 (the "Trust")
created pursuant to a Pooling and Servicing Agreement, dated as of November 1,
2006 (the "Pooling
Agreement"), among the
Assignee as Depositor,
the Trustee,
CitiMortgage, Inc., as Master Servicer (including its successors in
interest and
any successor
master servicer under the Pooling Agreement, 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
<PAGE>
Agreement, including,
without limitation, the enforcement of the document
delivery requirements
and remedies with respect to breaches of representations
and warranties
set forth in the
Purchase Agreement,
and shall be entitled
to
enforce all of the obligations of the Company thereunder insofar as they
relate
to the Assigned Loans, and (iv) all references to the Purchaser
(insofar as they
relate to the rights, title and interest and, with respect to
obligations of the
Purchaser, only
insofar
as they relate to the enforcement of the
representations,
warranties and
covenants of the
Company) under the
Purchase
Agreement insofar as they relate to the Assigned Loans, shall be
deemed to refer
to the Trust. 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;
<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;
<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;
<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. 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,
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.
<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 agrees
that, from and after the date hereof, each Assigned Loan
transferred hereunder
will be subject to,
and serviced
under, the Purchase
Agreement, provided
that, solely with respect to the Assigned Loans, the
following
modifications shall be
made (all capitalized
terms used below shall
have the meanings
assigned to such terms by this AAR Agreement and such terms
shall be incorporated
into the Purchase
Agreement to the extent such terms are
not already defined therein):
(i) Section 1 shall be
amended so that
"[Seller]" as found in
the
definition
of "Custodial Account"
shall be replaced with
"HSBC Mortgage
Corporation (USA)";
(ii) Section 1 shall be amended so that "[Seller]" as found in the
definition
of "Escrow
Account" shall be replaced with "HSBC Mortgage
Corporation (USA)";
(iii) Section
13.04 shall be amended
so that (a) the
reference to
the
"Purchaser"
in the first
sentence thereof will be changed to "the
Master
Servicer, the
Depositor and the Securities Administrator and with
written
notice to the
Trustee"; and (b) the
reference to
"Purchaser" in
the second
sentence there of will be changed to "Depositor";
(iv) Section
13.05 shall be amended so that approval for any
transferring of
servicing must be provided in writing by the Master
Servicer,
the Depositor, the
Securities
Administrator and written notice
must be
provided to the Trustee in order for such transfer to become
effective;
(v) Section
14.01 shall be amended
so that all references
to the
"Purchaser" shall be changed to "Master Servicer";
(vi) Sections
14.02, 15 and 16 shall be amended so that any
references
to the "Purchaser" shall be changed to "Master Servicer"; and
Section 16
shall be further
amended so that the following is added at the
end of the
second sentence in the
first paragraph:
"provided,
however,
that no
such compensation
shall be in
excess of that
permitted by the
Servicer
under this Agreement"
(vii) Section
11.01 of Exhibit 9 shall be amended so that
(a) the
reference
to "Purchaser" in the fifth line of the second paragraph
thereof
shall be
replaced with "the
Trustee for the benefit of the holders of any
security
issued by the Trust"
and (b) the phrase
"effect an exchange
or
reissuance
of such Mortgage Loan
under Section 1001 of the Code and cause
either
any REMIC designation made in connection with a Pass-Through
Transfer
to fail to qualify as a REMIC under the Code or the imposition
of
any tax on
`prohibited
transactions' or `contributions after the startup
day' under
the REMIC provisions of the Code" shall be added after the word
"principal" in the ninth line of the second paragraph thereof;
<PAGE>
(viii) Section
11.03 of Exhibit 9 shall be amended so that the
following
shall be added as the last paragraph thereof:
"In the event that a Mortgage Loan becomes part of a REMIC,
and becomes REO Property, such property shall be disposed of
by the
Seller, with the consent of the trustee as required pursuant to
this
Agreement, within two
(2) years after
becoming an REO Property,
unless the
Seller provides to the trustee under such REMIC an
opinion of
counsel to the effect that the holding of such REO
Property subsequent
to two (2) years after its becoming REO
Property, will not
result in the imposition of taxes on "prohibited
transactions" as
defined in Section 860F of the Code, or cause the
transaction to
fail to qualify as a REMIC at any time that
certificates are
outstanding.
The Seller shall
manage, conserve,
protect and
operate
each
such
REO Property for the
certificateholders
solely for the purpose of its prompt disposition
and sale in a manner
which does not cause such property to fail to
qualify as
"foreclosure property"
within the meaning of Section
860G(a)(8) of
the Code, or any "net income from foreclosure
property" which is subject to taxation under the REMIC provisions
of
the Code. Pursuant to its efforts to sell such property,
the Seller
shall either
itself or through an
agent selected
by the Seller,
protect and conserve such property in the same manner and to such
an
extent as is customary
in the locality where such property is
located. Additionally, the Seller shall provide the Purchaser or
any
master servicer
with information sufficient to perform the tax
withholding and reporting related to Sections 1445 and 6050J
of the
Code."
(ix) Section
11.04 of Exhibit 9 shall be amended so that
the last
paragraph
thereof is deleted in its entirety;
(x) Section
11.05 of Exhibit 9
shall be amended so that the phrase
"in excess
of the Purchase Price"
shall be added after the word "thereon"
in the
second line of subsection (iv);
(xi) Section 11.09 of Exhibit 9 shall be amended so that any
consent
for the
transfer of the Custodial Account or Escrow Account must be
obtained from the
Master Servicer and the Depositor;
(xii) Section 11.13 of Exhibit 9 shall be amended as follows:
(a) the first
paragraph shall be
deleted in its entirety and
replaced with the
following "This Section shall apply only to
REO
Properties acquired
for the account of the Trustee and shall not
apply to any REO
Property relating
to a Mortgage Loan which was
purchase or repurchased from the Trustee pursuant to any provision
hereof. In the
event that title to any such REO Property is
acquired, the deed or
certificate
of sale shall be issued to the
Trust, or if not
permitted by law, to
the Trustee, or its
nominee
for the benefit of the holders of any security issued by the
Trust."
and
<PAGE>
(b) the following
shall be added as the
first sentence to
second paragraph, "the Servicer shall manage, conserve,
protect and
operate each REO Property for the Trustee solely for the purpose of
its prompt disposition and sale."
(xii) Sections 11.14,
11.16, 11.17, 11.18 and 11.22 of Exhibit 9
shall be
amended so all references to "Purchaser" made in connection with
the
provision of any notice, the disposition of any funds or the
requirement of any
consent shall be
changed to references to the "Master
Servicer";
(xiv) Section 11.15 of Exhibit 9 shall not apply;
(xv) Section 11.23 and 11.24 of Exhibit 9 shall not apply;
(xvi) Section
11.25 shall be amended so that references to the
"Purchaser" in the last sentence thereof are changed to "the
Depositor and
the
Trustee".
8.
Pursuant to
Section11.05 of Exhibit 9 to the Purchase Agreement, the
Company shall
establish a Custodial
Account with respect to the Assigned Loans
which is separate and distinct from the Custodial Account
previously established
under such provision.
9.
Pursuant to
Section11.06 of Exhibit 9 to the Purchase Agreement, the
Company shall
establish an Escrow
Account with respect
to the Assigned
Loans
which is separate and distinct from the Escrow Account previously established
under such provision.
10.
Pursuant to Section 11.16 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.
<PAGE>
Miscellaneous
11. All
demands, notices and communications related to the Assigned
Loans,
the Agreements and this AAR Agreement shall be in writing and shall
be deemed to
have been duly given
if personally
delivered or mailed by registered mail,
postage prepaid, as follows:
a. In the case of Company,
HSBC Mortgage Corporation (USA)
2929 Walden Avenue
Depew, NY 14043
Attn: Michael T.
Stilb
b. In the case of Assignor,
HSBC Bank USA, National Association
Re: HALO 2006-2
452 Fifth Avenue
New York, New York 10018
Attention: Head of MBS Principal Finance
c. In the case of Assignee (or the Trust),
HSI Asset Securitization Corporation
Re: HALO 2006-2
452 Fifth Avenue
New York, New York 10018
Attn: Head MBS Principal Finance
c. In the case of Trustee,
Deutsche Bank National Trust Company
1761 St. Andrew Place
Santa Ana, California 92705
Attn: [
]
d. In the case of the Master Servicer:
CitiMortgage Mortgage, Inc.
4000 Regent Blvd.
Irving, TX 75063
Attention: Master Servicing Division,
Compliance Manager - HALO 2006-2
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 2006-2
<PAGE>
12. 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.
13. 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.
14. 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.
15. This
AAR Agreement shall
survive the conveyance of the Assigned Loans
as contemplated in this AAR Agreement.
16. 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.
17. 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.
<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
HSBC MORTGAGE CORPORATION (USA)
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee
By:
------------------------------
Name:
------------------------------
itle:
------------------------------
<PAGE>
CITIMORTGAGE, INC., as
Master Servicer
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
<PAGE>
ATTACHMENT 1
(form of Assigned Loan Tape)
<PAGE>
ATTACHMENT 2
(Form of Purchase Agreement)
<PAGE>
EXECUTION VERSION
MASTER MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT
HSBC MORTGAGE CORPORATION (USA)
Seller and Servicer
and
HSBC BANK USA, NATIONAL ASSOCIATION
Initial Purchaser
Dated as of May 1, 2006
First and Second Lien, Fixed and Adjustable Rate Mortgage Loans
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1.
Definitions.....................................................2
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
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.........................................20
Subsection 7.03.
Remedies for Breach of Representations and Warranties..32
Subsection 7.04.
Repurchase of Certain
Mortgage Loans...................34
SECTION 8.
Closing........................................................36
SECTION 9. Closing
Documents..............................................36
SECTION 10.
Costs..........................................................38
SECTION 11. Servicer's Servicing
Obligations...............................38
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......................................38
SECTION 13. The Seller and the
Servicer....................................41
Subsection 13.01. Additional Indemnification by the Seller and
the
Servicer...............................................41
Subsection 13.02. Merger or Consolidation of the Seller and the
Servicer...............................................41
Subsection 13.03. Limitation on Liability of the Seller, the
Servicer and
Others.................................................42
Subsection 13.04. Servicer Not to
Resign.................................42
Subsection 13.05. No Transfer of
Servicing...............................42
i
<PAGE>
SECTION 14.
Default........................................................43
Subsection 14.01. Events of
Default......................................43
Subsection 14.02. Waiver of
Defaults.....................................44
SECTION 15.
Termination....................................................44
SECTION 16. Successor to the
Servicer......................................45
SECTION 17. Financial
Statements...........................................46
SECTION 18. Mandatory Delivery:
Grant of Security Interest.................46
SECTION 19.
Notices........................................................46
SECTION 20. Severability
Clause............................................47
SECTION 21.
Counterparts...................................................47
SECTION 22. Governing
Law..................................................48
SECTION 23. Intention of the
Parties.......................................48
SECTION 24. Successors and
Assigns.........................................48
SECTION 25.
Waivers........................................................49
SECTION 26.
Exhibits.......................................................49
SECTION 27.
Nonsolicitation................................................49
SECTION 28. General Interpretive
Principles................................49
SECTION 29. Reproduction of
Documents......................................50
SECTION 30. Further
Agreements.............................................50
SECTION 31. Entire
Agreement...............................................50
ii
<PAGE>
EXHIBITS
EXHIBIT 1
SELLER'S OFFICER'S CERTIFICATE
EXHIBIT 2
FORM OF OPINION OF COUNSEL TO THE SELLER
EXHIBIT 3
SECURITY RELEASE CERTIFICATION
EXHIBIT 4
ASSIGNMENT AND CONVEYANCE
EXHIBIT 5
CONTENTS OF EACH MORTGAGE FILE
EXHIBIT 6
CUSTODIAL AGREEMENT
EXHIBIT 7
FORM OF CUSTODIAL ACCOUNT LETTER AGREEMENT
EXHIBIT 8
FORM OF ESCROW ACCOUNT LETTER AGREEMENT
EXHIBIT 9
SERVICING ADDENDUM
EXHIBIT 10
FORM OF ASSIGNMENT AND RECOGNITION AGREEMENT
EXHIBIT 11
FORM OF INDEMNIFICATION AGREEMENT
EXHIBIT 12
MORTGAGE LOAN DOCUMENTS
EXHIBIT 13
UNDERWRITING GUIDELINES OF THE SELLER
SCHEDULE I
MORTGAGE LOAN SCHEDULE
iii
<PAGE>
MASTER MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT
This is a MASTER MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT (the
"Agreement"), dated as
of May 1, 2006, by and
between HSBC Bank USA,
National
Association, having an office at 452 Fifth Avenue, New York, New
York 10018 (the
"Initial Purchaser",
and the Initial
Purchaser or the Person, if any, to which
the Initial Purchaser
has assigned its rights and obligations hereunder as
Purchaser with
respect to a Mortgage Loan, and each of their respective
successors and assigns, the "Purchaser"), and HSBC Mortgage Corporation
(USA),
having an office at 2929 Walden Avenue, Depew, New York 14043 (the
"Seller" and
"Servicer").
W I T N E S S E T H :
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, (the "Mortgage Loans") and certain fixed and
adjustable rate first
and second
lien Co-op
Loans as described herein on a
servicing-retained
basis, and which shall be delivered in groups of whole loans
or participation interests therein, as applicable, on various dates as provided
herein and in the related Commitment Letter (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, each of the
Co-op Loans is
secured by a pledge of
shares of stock issued by a Cooperative and the assignment of the appurtenant
proprietary lease,
all relating to a
specified dwelling
unit in an
apartment
building owned by the
Cooperative
and located in the
states indicated on
the
related Mortgage Loan Schedule; and
WHEREAS, the
Purchaser and the Seller 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 not
more than five purchasers as a whole loan transfer in a whole loan or
participation format
or a public or private mortgage-backed securities
transaction; and
WHEREAS, certain
Mortgage Loans have been, or will be,
registered on the
MERS(R) System
(defined below) such that the mortgagee of
record under each such Mortgage Loan shall be identified as
MERS.
NOW, THEREFORE,
in consideration of the premises and
mutual
agreements set forth herein, and for other good and valuable
consideration, the
receipt and sufficiency of which are hereby acknowledged,
the Purchaser and
the
Seller agree as follows:
1
<PAGE>
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 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. 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, or such collateral assessment
acceptable
per the Underwriting Guidelines and acceptable to FNMA and FHLMC.
However in the
case of a mortgage
made on property in New York State value will always be
determined by the appraisal for determining any requirement for
primary mortgage
insurance only.
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.
2
<PAGE>
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 [Seller's
State of doing business] or the State of New York are authorized or
obligated by
law or executive order to be closed.
Cash-Out Refinancing:
A Refinanced Mortgage Loan the proceeds
of which were in excess of the principal balance, as defined per the
Underwriting Guidelines.
Closing Date: The date
or dates on which the
Purchaser from
time to time shall
purchase and the
Seller from time to time shall sell to the
Purchaser, the
Mortgage Loans listed on the related Mortgage Loan Schedule
with
respect to the related Mortgage Loan Package.
Closing Documents:
With respect
to any Closing Date, the
documents required pursuant to Section 9.
Code: The Internal
Revenue Code of 1986,
as amended, or any
successor statute thereto.
Combined Loan-to-Value
Ratio or CLTV:
With respect to any
Mortgage Loan, the fraction, expressed as a percentage,
the numerator of
which
is the sum of (a) the original principal balance of the Mortgage
Loan, plus (b)
the unpaid principal balance of any related subordinate mortgage loan or loans
secured by the Mortgaged Property plus (c) any approved
home equity line amount
whether in use or not, and the denominator of which is the Appraised
Value of
the related Mortgaged Property.
Commitment Letter:
With respect to any
Mortgage Loan Package
purchased and
sold on any Closing Date, the letter agreement among the
Purchaser, the
Servicer and the Seller (including any exhibits,
schedules and
attachments thereto), setting forth the terms and conditions of
such transaction
and describing
the Mortgage
Loans to be
purchased by the Purchaser on such
Closing Date.
A Commitment
Letter may relate to
more than one Mortgage
Loan
Package to be purchased on one or more Closing Dates hereunder.
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.
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.
Co-op Lease:
With respect to a
Co-op Loan, the
proprietary
lease with respect to a dwelling unit occupied by the Mortgagor and
relating to
the stock allocated to the related dwelling unit.
Co-op Loan:
A Mortgage Loan that is secured by a first or
second line on a
perfected security
interest in Cooperative Shares and the
related proprietary
lease granting exclusive rights to occupy the related
Cooperative Apartment in the building owned by the related
Cooperative.
3
<PAGE>
Co-op Stock:
With respect to a Co-op Loan, the single
outstanding class of stock, partnership interest or other ownership
instrument
in the related residential cooperative housing corporation.
Cooperative: The
private, non profit
cooperative
apartment
corporation which owns
all of the real
property that
comprises the Project,
including the land, separate dwelling units and all common
areas.
Cooperative Unit: With
respect to any Co-op Loan, a specific
unit in a Project.
Cooperative Shares:
With respect to any Co-op Loan, the
shares of stock issued by a Cooperative and allocated to a
cooperative apartment
and represented by a stock certificate
Credit Score: The
credit score of the
Mortgagor provided
by
Fair, Isaac & Company, Inc. or such other organization providing credit
scores
as per HSBC
underwriting/program
guidelines
in affect at the time of the
origination of a Mortgage Loan.
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 "[SELLER],
as servicer, in trust for the
Purchaser and various
Mortgagors, Fixed and
Adjustable Rate
Mortgage Loans",
established at a
financial institution acceptable to the Purchaser. Each
Custodial Account shall be an Eligible Account.
Custodial Agreement:
The agreement governing the retention of
the originals of each Mortgage Note, Mortgage, Assignment of Mortgage and
other
Mortgage Loan Documents, annexed hereto as Exhibit 6.
Custodian: The custodian under the Custodial Agreement, or its
successor in interest or assigns, or any successor to the
Custodian under the
Custodial Agreement, as therein provided.
Cut-off Date: The
first day of the month in which the related
Closing Date occurs or as otherwise set forth in the related
Commitment Letter.
Deleted Mortgage Loan:
A Mortgage
Loan replaced or to be
replaced by a Qualified Substitute Mortgage Loan.
Determination Date:
With respect to each
Distribution Date,
the sixteenth (16th) day of the calendar month in which such
Distribution
Date
occurs or, if such sixteenth (16th) day is not a Business Day,
the Business Day
immediately preceding such sixteenth (16th) day.
Distribution Date: The eighteenth (18th) day of each month, 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 Distribution
Date, the first
day of the calendar month in which such Distribution Date occurs, which is the
day on which the Monthly Payment is due on a Mortgage
Loan, exclusive of any
days of grace.
4
<PAGE>
Due Period: With respect to each Distribution Date, the period
commencing on
the second day of the month preceding the month of the
Distribution Date and
ending on the first day of the month of the Distribution
Date.
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 if the amounts on deposit are to be held
in the account for no
more than 365 days (or at least "A-2" if the amounts on deposit are to be
held
in the account for no more than 30 days) 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
"[SELLER], 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.
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
purchased by the Seller pursuant to this Agreement), a
determination made by the
Servicer that all Insurance Proceeds, Liquidation Proceeds and
other payments or
recoveries which the Servicer, in its reasonable good faith
judgment, expects to
be finally recoverable
in respect thereof have been so recovered. The Servicer
shall maintain records, prepared by a servicing officer of the
Servicer, of each
Final Recovery Determination.
Fixed Rate Mortgage
Loan: A Mortgage Loan with respect to
which the Mortgage Interest Rate set forth in the Mortgage Note is
fixed for the
term of such Mortgage Loan.
Flood Zone Service
Contract: A life of
loan service contract
transferable to a nationally recognized flood service provider,
maintained for
the Mortgaged
Property for the purpose of monitoring the Federal Emergency
Management Agency (FEMA) map status relating to such Mortgaged
Property.
5
<PAGE>
FNMA: Fannie Mae or
any successor thereto.
FNMA Guides: The
Fannie Mae Seller's Guide and the Fannie Mae
Services Guide and all amendments or additions thereto.
Gross Margin:
With respect to any
Adjustable
Rate Mortgage
Loan, the fixed percentage amount set forth in the related Mortgage
Note and the
related Mortgage Loan
Schedule that is added to the Index on each
Adjustment
Date in accordance with the terms of the related Mortgage Note to determine the
new Mortgage Interest Rate for such Mortgage Loan.
High Cost Loan: A Mortgage Loan (a) subject to the provisions
of the Homeownership
and Equity Protection Act of 1994 as amended ("HOEPA") or,
(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 applicable to the
Mortgage Loan, (c) subject to any comparable federal, state or
local statutes or
regulations, or any
other statute or regulation providing for heightened
regulatory scrutiny or
assignee liability to holders of such mortgage loans, or
(d) a High Cost Loan or Covered Loan, as applicable (as such terms are defined
in the current Standard & Poor's LEVELS(R) Glossary Revised,
Appendix E).
HUD: The United States Department of Housing and Urban
Development or any successor thereto.
Index: With respect to
any Adjustable Rate Mortgage Loan, the
index identified
on the Mortgage Loan Schedule and set forth in the
related
Mortgage Note for the purpose of calculating the interest rate
thereon.
Initial Closing
Date: The Closing Date on which the
Initial
Purchaser purchases
and the Seller sells the first Mortgage Loan Package
hereunder.
Initial Purchaser: HSBC Bank USA, National Association, or any
successor or assign.
Insurance Proceeds:
With respect to each Mortgage Loan,
proceeds of
insurance policies insuring the Mortgage Loan or the related
Mortgaged Property.
Initial Rate
Cap: With respect to each Adjustable Rate
Mortgage Loan and the initial Adjustment Date therefore,
a number of
percentage
points per annum
that is set forth in
the related
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
or decrease on
such Adjustment Date from the Mortgage Interest Rate in effect
immediately prior
to such Adjustment Date.
Interest Only
Mortgage Loan: A Mortgage Loan that requires
payment of interest only for a period of time specified on the
related Mortgage
Note. The
interest-only period
followed by full
amortization of the remaining
balance over the remaining duration of the loan.
6
<PAGE>
Lender Paid Mortgage Insurance Policy or LPMI Policy: A policy
of mortgage guaranty
insurance issued by a Qualified Insurer in which the owner
or servicer of the Mortgage Loan is responsible for the premiums
associated with
such mortgage insurance policy.
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 lower of the Appraised Value or
the sale price of the
Mortgaged Property.
However, in the case of a mortgage
made on property
in New York State,
value will
always be determined by the
appraisal for determining any requirement for primary mortgage
insurance only.
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
System,
Inc., a
subsidiary of MERSCORP, Inc.
MERS(R) System: The electronic mortgage registration system
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 Mortgage:
A Mortgage
Loan naming
MERS as the
original
mortgagee on the mortgage security instrument.
Monthly Advance:
The aggregate of the advances
made by the
Seller on any
Distribution Date
pursuant to Subsection
11.30 of the Servicing
Addendum.
Monthly Payment:
With respect
to any Mortgage Loan, the
scheduled combined
payment of principal (
if applicable) 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: (a)
With respect to any Mortgage Loan that
is not
a Co- op Loan, the mortgage, deed of trust or other
instrument
creating a
first
or second lien on the Mortgaged
7
<PAGE>
Property securing
the Mortgage
Note and (b) with
respect to a Co-op Loan, the
related Security Agreement.
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 Commitment Letter.
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
residential mortgage
loan or Co-op Loan,
sold, assigned and
transferred to the Purchaser pursuant to this Agreement and
the related Commitment
Letter and
identified
on the Mortgage
Loan Schedule
annexed to this
Agreement on the related Closing Date, which Mortgage Loan
includes without
limitation the Mortgage File, the Monthly Payments, Principal
Prepayments,
Liquidation Proceeds,
Condemnation Proceeds,
Insurance Proceeds,
REO Disposition
proceeds, and all other rights, benefits, proceeds and
obligations arising from or in connection with such Mortgage
Loan.
Mortgage Loan
Documents: The
documents listed in
Exhibit 13
hereto pertaining to any Mortgage Loan or Co-op 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 both hard copy and
electronic
form, such
schedule setting forth
the following
information with respect to each Mortgage
Loan in the Mortgage Loan Package: (1) the Seller's Mortgage Loan identifying
number; (2) the
Mortgagor's first and
last name; (3) the street address of the
Mortgaged Property
including the state and zip code; (4) a code indicating
whether the Mortgaged
Property is
owner-occupied; (5)
the type of Residential
Dwelling constituting
the Mortgaged Property; (6) the original months to
maturity; (7) the original date of the Mortgage Loan and the
remaining months to
maturity from the Cut-off Date, based on the original amortization
schedule; (8)
the Loan-to-Value Ratio or Combined Loan-to-Value Ratio at
origination; (9)
the
Mortgage Interest Rate
in effect immediately
following the Cut-off
Date; (10)
the date on which the first Monthly Payment was due on the Mortgage
Loan; (11)
the stated maturity date; (12) the amount of the Monthly Payment at
origination;
(13) the amount of the Monthly Payment as of the Cut-off Date; (14)
the last Due
Date on which a Monthly Payment was actually applied to the unpaid Stated
Principal
Balance; (15)
the original principal amount of the Mortgage
Loan; (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;
8
<PAGE>
(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 whether the Mortgage Loan is
an Adjustable
Rate Mortgage Loan or a Fixed Rate Mortgage Loan; (28) a code indicating the
documentation style (i.e., full, alternative or reduced); (29) a
code indicating
if the Mortgage Loan
is subject to a Primary Insurance Policy or LPMI Policy;
(30) the Appraised Value of the Mortgaged Property; (31) the sale price of the
Mortgaged Property, if
applicable; (32) a
code indicating whether the Mortgage
Loan is subject
to a Prepayment Charge; (33) the amount and the term of
any
Prepayment Charge or penalty; (34) 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; (35) a code indicating whether the Mortgage Loan is a
first
or second lien; (36) a
code indicating the
Mortgagor's
debt to income
ratio;
(37) the points and fees charged in connection with the origination of such
Mortgage Loan and (38)
a code indicating
if the Mortgage Loan is subject to
Primary Insurance
Policy. 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: (a) With respect to each
Mortgage Loan
which is not a Co-op Loan, the Mortgagor's real property securing
repayment of a
related Mortgage
Note, consisting of a fee simple
interest or leasehold
in a
single parcel of real property improved by a Residential
Dwelling and (b)
with
respect to each Co-op Loan, the related cooperative apartment.
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.
Net Mortgage Interest
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.
9
<PAGE>
Nonrecoverable Monthly Advance: Any Monthly 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 Seller, will not, or, in the case of
a proposed Monthly 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 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.
Preliminary Servicing
Period: With respect to any Mortgage
Loans, the period
commencing on the related Closing Date and ending on the date
the Seller enters
into Reconstitution Agreements which amend or restate the
servicing provisions of this Agreement.
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, excluding 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.
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<PAGE>
Project: All real property owned by the Cooperative including
the land, separate dwelling units and all common areas.
Purchase
Price: The price paid
on the related Closing Date by
the Purchaser
to the Seller pursuant to the related Commitment Letter in
exchange for the
Mortgage Loans
purchased on such
Closing Date 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 Insurer: Any insurer which meets the requirements of
FNMA and FHLMC.
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, and (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). In
the
event that one or more mortgage loans are substituted for one or more Deleted
Mortgage Loans, the
amounts described in
clause (i) hereof shall be determined
on the basis of
aggregate principal
balances, the Mortgage Interest Rates
described in clause
(ii) hereof shall be
determined
on the basis of
weighted
average Mortgage
Interest Rates and shall be satisfied as to each such mortgage
loan, the terms
described in clause
(iii) shall be
determined on the basis of
weighted average remaining terms to maturity, the Loan-to-Value Ratios, and in
the case of second
lien Mortgage Loans the Combined Loan-to-Value Ratios
described in clause (v) hereof shall be satisfied as to each such
mortgage loan
and, except
to the extent otherwise provided in this sentence, the
representations and
warranties
described in clause (vii) hereof must be
satisfied as to each Qualified Substitute Mortgage Loan or in the
aggregate, as
the case may be. In addition, the substitution of more than one Mortgage Loan
pursuant to the previous sentence shall be subject to the
Purchaser's
approval
in its sole discretion.
Rate/Term
Refinancing: A
Refinanced
Mortgage Loan, the
proceeds of which are not in excess of the existing first mortgage,
as outlined
in the Underwriting Guidelines in effect at the time or
origination.
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
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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.
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
"[SELLER], in
trust for the
Purchaser,
as of [date of
acquisition
of title], Fixed and
Adjustable Rate Mortgage Loans".
REO Disposition:
The final sale by the
Servicer of any REO
Property.
REO Property: A Mortgaged Property acquired as a result of the
liquidation of a Mortgage Loan.
Repurchase Price:
The Repurchase Price
for any Mortgage Loan
that is required to be
repurchased pursuant
to Section 7.04 shall
be equal to
(A) during the first twelve (12) months following the related Closing
Date, 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
Commitment Letter and
(y) 100%, and (B)
thereafter, the sum of
(i) the Stated
Principal Balance of
the Mortgage Loan so repurchased, in each case, 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 and plus (iii)
any costs and
expenses incurred by the Purchaser, the
servicer, master
servicer or any trustee in respect of the breach or
defect
giving rise to the repurchase obligation including, without limitation, any
costs and damages incurred by any such party in connection with any
violation by
any such Mortgage Loan of any predatory or abusive lending law.
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<PAGE>
Residential Dwelling:
Any one of the following: (i) a
one-to-four family
detached or attached
dwelling, (ii) a
one-family
dwelling
unit in an eligible
condominium or
cooperative project,
(iii) a Planned
Unit
Development (PUD), as
defined in the
Underwriting
Guidelines in effect at the
time of origination, none of which is 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, by Servicer
during the Preliminary Servicing Period.
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 Fee: With
respect to each Mortgage Loan, the amount
of the annual servicing fee the Purchaser shall pay to the Seller,
which shall,
for each month, be
equal to one-twelfth of the product of (a) the Servicing Fee
Rate and (b) the Stated 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 Liquidation Proceeds and other proceeds,
to the extent
permitted by Section 11.05) of related Monthly Payments collected
by the Seller,
or as otherwise provided under Section 11.05.
Servicing Fee
Rate: The per annum rate set forth in the
related Commitment Letter at which the Servicing Fee accrues.
Servicing File:
With respect to each
Mortgage Loan, the file
retained by the Seller on an image platform consisting of copies or printable
images of all
documents in the
Mortgage File which are not delivered to the
Purchaser or the Custodian and the Mortgage Loan Documents set forth in Section
2 of the Custodial Agreement.
S&P: Standard
& Poor's, a division of the McGraw-Hill
Companies, Inc., or its successor in interest.
Stated Principal
Balance: As to each
Mortgage Loan as of any
date of determination,
(i) the principal balance of the Mortgage Loan as of the
Cut-off Date after giving effect to payments of principal
due on or before such
date, whether or not
collected from the Mortgagor on or before such date, minus
(ii) all amounts
previously distributed
to the Purchaser
with respect to
the
related Mortgage Loan representing payments or recoveries of
principal.
Tax Service
Contract: A life of loan service contract,
transferable to a nationally recognized tax service provider,
maintained for the
Mortgaged Property for
the purpose of obtaining current information from local
taxing authorities relating to such Mortgaged Property.
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<PAGE>
Underwriting Guidelines: The Seller's underwriting
guidelines
attached hereto as
Exhibit 13 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.
Whole Loan Transfer:
Any sale or
transfer of some or
all of
the Mortgage Loans by the Purchaser to a third party, which sale or transfer is
not 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
Commitment Letter, or in such other amount as agreed to 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 two (2) Business Days prior to the related
Closing Date or as
otherwise set forth in the related Commitment Letter.
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
Commitment Letter
(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 Commitment Letter, 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
collected after
the related Cut off Date (provided, however, that all scheduled payments of
principal due on or
before the related Cut off Date and collected by the Seller
after the related Cut off Date shall belong to the Seller), and (3)
all payments
of interest
on the Mortgage Loans net of the Servicing Fee during the
Preliminary Servicing
Period (minus that
portion of any such interest payment
that is allocable to
the period prior to the related Cut off Date). The Stated
Principal Balance
of each Mortgage Loan as of the related Cut off Date is
determined after
application
to the reduction of principal of payments of
principal due on or
before the related Cut off Date whether or not collected.
Therefore, for the
purposes of this Agreement, payments of scheduled
principal
and interest prepaid for a Due Date beyond the related Cut off Date
shall not be
applied to the
principal balance as
of the related Cut off Date. Such prepaid
amounts (minus
the applicable Servicing Fee) shall be the property of the
Purchaser.
The Seller
shall
deposit any such prepaid amounts into
the Custodial
Account,
which
account
is
established for the
benefit of
the Purchaser, for remittance by the Seller to the
14
<PAGE>
Purchaser on the first related Distribution Date. All payments of principal and
interest, less
the applicable
Servicing Fee, due on
a Due Date following
the
related Cut off Date shall belong to the Purchaser.
SECTION 5. Examination
of Mortgage Files.
In addition to the
rights granted to the
Initial Purchaser
under the related
Commitment Letter 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 or any other
party specified
by the Purchaser, 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 via image or printed copies of image (at the
Seller's option)
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. Such examination
shall be during
regular business
hours and Purchaser
shall give Seller
seven
days prior written notice. 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 Commitment Letter 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 and any files should be returned within 48 hours. 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. No assignment is required if the Mortgage Loan is
a MOM Mortgage,
or has been previously assigned to MERS, and will remain
registered on the MERS(R) System. The Servicing File retained by the Servicer
with respect
to each Mortgage Loan pursuant to this Agreement shall be
appropriately
identified in the Servicer's computer system to reflect clearly
the sale of such related Mortgage Loan to the Purchaser. The 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.
15
<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, MERS, 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. In the event,
for any reason, any transaction contemplated herein is construed by
any court or
regulatory authority
as a borrowing rather
than as a sale, the
Seller and the
Purchaser intend that
the Purchaser or its assignee, as the case may be, shall
have a perfected first
priority security
interest in the
Mortgage Loans which
may be held by MERS as the nominee for the Purchaser, the Custodial Account and
the proceeds of any and all of the foregoing (collectively, the "Collateral"),
free and clear of adverse claims. In such case, the Seller shall be deemed to
have hereby granted to
the Purchaser
or its assignee, as the case may be, a
first priority security interest in and lien upon the Collateral,
free and clear
of adverse
claims. In such event, the related Commitment Letter and this
Agreement shall constitute a security agreement, the Custodian shall be deemed
to be an independent
custodian for purposes of perfection of the security
interest granted to
the Purchaser or its assignee, as the case may be, and the
Purchaser or its assignee, as the case may be, shall have all of
the rights of a
secured party under applicable law.
Subsection 6.03.
Delivery of Mortgage Loan Documents.
Pursuant to the Custodial Agreement between the Custodian
and
the Initial Purchaser,
the Servicer, 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 as
required
by the Custodial
Agreement 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 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
16
<PAGE>
each of the
parties hereto
shall be entitled to
rely conclusively on the then
current notice until receipt of a superseding notice.
The Custodian
shall certify its
receipt of all such Mortgage
Loan Documents required to be delivered pursuant to the Custodial
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 be responsible for maintaining the Custodial
Agreement during
the Preliminary Servicing Period.
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 240 days of its submission for recordation.
Subsection 6.04.
Quality Control Procedures.
The Seller shall have an internal quality control program that
verifies, on a regular basis, the existence and accuracy of the
legal documents,
credit documents,
property appraisals,
and underwriting decisions. 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: Remedies for Breach.
Subsection 7.01.
Representations and
Warranties
Respecting
the Seller.
(a) The Seller
represents,
warrants and covenants to the
Initial Purchaser and to any subsequent Purchaser as of the Initial
Closing Date
and each subsequent Closing Date or as of such date specifically
provided herein
or in the applicable Assignment and Conveyance:
(i) The
Seller is a corporation duly organized,
validly existing
and in good standing under the laws of State of
Delaware. The
Seller has all
licenses necessary to carry out its
business as now being
conducted, and is
licensed and qualified to
transact business in
and is in good standing under the laws of each
state in which any Mortgaged Property is located or is otherwise
exempt
under applicable
law from such licensing or qualification or is
otherwise not required under applicable law to effect such
licensing or
qualification and no
demand for such
licensing or
qualification has
been made upon the Seller by any such
state, and in any event the
Seller is
in compliance
with
the laws of any such
state to
the extent necessary to ensure the enforceability
of each
Mortgage
Loan
and the servicing of the Mortgage
Loans in
accordance
with
the terms of this Agreement. No
17
<PAGE>
licenses or approvals
obtained by the Seller
have been suspended
or
revoked by any court, administrative agency, arbitrator or
governmental
body and no proceedings are pending which might result in such
suspension or revocation;
(ii) The Seller has the full power and authority to
hold each Mortgage Loan, to sell each Mortgage Loan, and to execute,
deliver and perform, and to enter into and consummate, all
transactions
contemplated
by this Agreement.
The Seller has duly authorized the
execution, delivery
and performance of this Agreement, has duly
executed and delivered this Agreement, and this Agreement, assuming
due
authorization, execution and delivery by the Purchaser, constitutes a
legal, valid and binding obligation of the Seller, enforceable
against
it in accordance
with its terms except
as the enforceability
thereof
may be limited by bankruptcy, insolvency or reorganization;
(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/servicer for FNMA
and FHLMC in good standing and is a HUD approved mortgagee
pursuant to
Section 203
of the National Housing Act. No event has occurred,
including but not
limited to a change in
insurance coverage, which
would make
the Seller unable to comply with FNMA, FHLMC or HUD
eligibility
requirements or which
would require notification to FNMA,
FHLMC or HUD;
(vi) The Seller does
not believe, nor does
it have any
reason or cause
to believe, that it cannot perform each and every
covenant contained in this Agreement;
(vii) The
Mortgage Loan
Documents
and any other
documents required to be delivered with respect to each
Mortgage Loan
pursuant to this Agreement, have been delivered to the Custodian
all in
compliance with the
specific requirements
of this Agreement. With
respect to
each Mortgage Loan, the Seller is in possession of a
complete Mortgage
File in compliance with Exhibit 5, except
for such
documents as have been delivered to the Custodian;
(viii) Immediately prior to the payment of the Purchase
Price for each Mortgage Loan, the Seller was the owner of
record or
had appointed MERS as the Seller's nominee of the
related Mortgage
and the indebtedness evidenced by the related
18
<PAGE>
Mortgage Note
and upon the payment of the Purchase Price by the
Purchaser, in the
event that the
Seller or MERS as
nominee for the
Seller retains
record title, the Seller or MERS as nominee
for 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;
(xv) The information delivered by the Seller to the
Purchaser with
respect to the Seller's loan loss, foreclosure and
delinquency experience
for
the twelve (12) months immediately
preceding
the
Initial Closing
Date
on
mortgage
loans
underwritten to the same standards as the Mortgage Loans and
covering mortgaged
properties
similar
to the Mortgaged
Properties, is true and correct in all material respects;
19
<PAGE>
(xvi) Neither this Agreement nor any written statement,
report or
other document
prepared and furnished
or to be prepared and
furnished by the
Seller pursuant
to this Agreement or in connection
with the transactions contemplated hereby contains any untrue
statement
of material fact or
omits to state a material fact necessary to make
the statements contained herein or therein not misleading;
(xvii) The Seller 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.
Subsection 7.02.
Representations
and Warranties Regarding
Individual Mortgage Loans.
The Seller hereby
represents
and warrants to the
Purchaser
that, as to each Mortgage Loan, as of the related Closing Date for
such Mortgage
Loan:
(i) The
information set forth
in the related Mortgage
Loan Schedule and the Mortgage Loan data delivered to the Purchaser
and
the Custodian is complete, true and correct;
(ii) The Mortgage Loan is in compliance with all
requirements set
forth in the related Commitment Letter, and the
characteristics of the related Mortgage Loan Package as set forth in
the related Commitment Letter are true and correct;
(iii) All payments
required to be made up
to the close
of business on the related Closing Date for such Mortgage Loan under
the terms of the
Mortgage Note have
been made;
the Seller has not
advanced funds, or induced, solicited or knowingly received any
advance
of funds from a party
other than the owner
of the related
Mortgaged
Property, directly
or indirectly, for the payment of any amount
required by the Mortgage Note or Mortgage. No Mortgage Loan has been
thirty (30)
days or more delinquent in any payment since the
origination of such Mortgage Loan;
(iv) There are no
delinquent taxes, ground rents, water
charges, sewer
rents,
assessments,
insurance premiums, leasehold
payments 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
20
<PAGE>
agreement approved
by the insurer under
the Primary Insurance Policy,
if any, and by the title insurer, to the extent required by the
policy,
and 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 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 and FHLMC.
The Mortgage
obligates the
Mortgagor thereunder
to maintain all such
insurance at the Mortgagor's cost and expense, and on the Mortgagor's
failure to do so,
authorizes
the holder of the Mortgage to
maintain
such insurance
at Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor;
(viii) Any and all requirements of any federal, state or
local law
applicable
to the Mortgage Loans 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 have
been complied with;
(ix) The Mortgage
has not been
satisfied,
cancelled,
subordinated or
rescinded,
in whole or in
part, and the Mortgaged
Property has not been released from the lien of the Mortgage,
in whole
or in part, nor has any instrument been executed that would effect
any
such satisfaction, cancellation, subordination, rescission or
release;
(x) Except
with respect to each Co-op Loan, the
related Mortgage is
properly recorded and 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 on
the
Mortgage
Loan Schedule on the Mortgaged
Property,
including all
improvements on
the Mortgaged Property
subject only
to
(a)
the lien of current
real
property taxes
and assessments not yet due and payable, (b)
covenants, conditions
and restrictions, rights of way, easements and
other matters of
the public record as of the date of
recording being
21
<PAGE>
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) 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, (d)
with respect to each Second Lien
Mortgage a prior
mortgage lien on the Mortgage Property. Except with
respect to each Co-op Loan, 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
(A) first lien and first priority security interest with respect to
each first lien Mortgage Loan, or (B) second lien and
second priority
security interest
with respect to each
second lien Mortgage
Loan, in
either case, on the property described therein and the Seller has
full
right to sell
and assign the same to the Purchaser. The Mortgaged
Property was
not, as of the date of
origination of the Mortgage Loan,
subject to
a mortgage, deed of trust, deed to secure debt or
other
security instrument
creating a lien subordinate to the lien of the
Mortgage. With
respect to each Co-op
Loan, the related
Mortgage is
a valid, enforceable
and subsisting first
or second security interest
on the related Cooperative Shares securing the related
cooperative
note, subject
only
to (a) liens
of the Cooperative for unpaid
assessments
representing
the Mortgagor's pro rata share of the
Cooperative's payments
for its blanket
mortgage, current and future
real property taxes,
insurance premiums, maintenance fees and other
assessments to which like collateral is commonly subject and (b) other
matters to
which like collateral is commonly subject which do not
materially interfere
with the benefits of the security intended to
be provided by the
Security Agreement.
There are no liens
against or
security interest
in the cooperative shares relating to each Co-op
Loan (except for unpaid maintenance, assessments and other amounts
owed
to the related cooperative which individually or in the aggregate
will
not have a material
adverse effect on such Co-op Loan), which have
priority over
the Seller's security interest in such Cooperative
Shares;
(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 or a qualified Living Trust (Revocable
Trust) or a qualified Land Trust as listed in the Underwriting
Guidelines.
(xiii) The proceeds of the Mortgage Loan have been fully
disbursed (except
where there is an established completion escrow) 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;
22
<PAGE>
(xiv) The Seller
is the sole legal, beneficial and
equitable owner
of the Mortgage Note and the Mortgage and has
full
right to transfer and sell the Mortgage Loan to the Purchaser
free and
clear of any encumbrance, equity, lien, pledge, charge, claim or
security interest;
(xv) All parties which have had any interest in the
Mortgage Loan, whether
as mortgagee, assignee, pledgee or otherwise,
are (or, during the
period in which
they held and
disposed of such
interest, were)
in compliance with any and all applicable "doing
business" and licensing requirements of the laws of the state
wherein
the Mortgaged Property
is located;
(xvi) Except with
respect to each Co-op Loan, the
Mortgage Loan, that is
a first lien,
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 above in (x) (a) (b) and (c) and with
respect to
each second lien Mortgage Loan, is covered by an ALTA
lender's title
insurance policy per
Seller's guidelines,
clause (x)
(d) above)
the Seller and/or MERS as nominee for 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 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. 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 and/or MERS as
nominee for the Seller, its successors and assigns, 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 at the time of origination, (ii) there is no
default, breach, violation or event of acceleration existing under
such
first lien
mortgage
or the related mortgage note at the
time of origination,
(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
23
<PAGE>
receive notice
of foreclosure, and affords such mortgagee an
opportunity to cure
any default by payment in full or otherwise under
the first lien mortgage and (v) either no consent for the Mortgage
Loan
is required
by the holder of the
first lien or such
consent has been
obtained and is contained in the Mortgage File;
(xviii) There are
no mechanics' or similar liens or
claims which have been filed for work, labor or material (and no
rights
are outstanding that
under law could give rise to such lien) affecting
the related Mortgaged Property which are or may be liens
prior to, or
equal or coordinate with, the lien of the related Mortgage;
(xix) All
improvements
which
were
considered
in
determining the
Appraised Value of the
related Mortgaged Property
lay wholly
within the boundaries and building
restriction
lines of
the Mortgaged
Property, and no improvements on adjoining
properties
encroach upon the Mortgaged Property;
(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,
Fannie Mae or Freddie Mac or by a mortgage banker or
broker licensed or authorized to originate mortgage loans and do
business in the jurisdiction in which the related Mortgaged Property
is located, applying
substantially
the same underwriting standards
used by the Seller and in a manner that in all respects
meets the
requirements of the
Secondary Mortgage Market Enhancement Act of 1984,
as amended;
(xxi) Principal
payments on the
Mortgage Loan,
other
than the Interest Only Mortgage Loan, shall commence (with respect to
any newly originated
Mortgage Loans) or commenced no more than sixty
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, (A) in the case of
a Fixed Rate Mortgage Loan, are sufficient to fully amortize the
original principal
balance over the
original term thereof
and to pay
interest at the related Mortgage Interest Rate, (B) in the case of an
Adjustable Rate
Mortgage Loan, other than the Interest Only
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 and to pay interest at the related
Mortgage
Interest Rate
and (C) in the case of a Balloon Loan,
are based on a
fifteen (15) or thirty (30) year amortization schedule, as set forth
in the related Mortgage Note, and a final monthly payment
substantially
greater than
the preceding monthly payment which is sufficient to
amortize the remaining principal balance of the Balloon Loan and to
pay
interest at the
related Mortgage
Interest Rate. The Index for each
Adjustable Rate
Mortgage Loan is as defined in the related Commitment
Letter and
the
Mortgage
Loan
Schedule.
The
Mortgage
Note does
not
permit
negative
amortization, unless
otherwise
noted on
the
Mortgage
Loan Schedule. No Mortgage
Loan is
a Convertible
Mortgage
Loan;
(D) in the case of
an
Interest Only
Mortgage
Loan,
the monthly payments on
each
Interest Only
Mortgage Loan during the related
interest only
period
is
equal
to
the product of the
related
Mortgage
Interest
Rate and
the
principal balance
of such
Mortgage
Loan
on the first day of each month and
after
such
interest only
period,
except
with
respect to
Interest
24
<PAGE>
Only Mortgage
Loan that are Adjustable Rate Mortgage Loans, such
Mortgage Loan is payable in equal monthly installments of principal
and
interest. No Mortgage
Loan is a Balloon Mortgage Loan;
(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 in accordance with the
terms of the Mortgage Note and Accepted
Servicing Practices
and any
predecessor servicer in accordance with the terms of the Mortgage
Note.
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 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;
(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, or other
similar statues;
(xxv) The Mortgage
Loan was underwritten
in accordance
with the Underwriting Guidelines in effect at the time the
Mortgage
Loan was originated; 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) With respect
to each First Lien Mortgage, the
Mortgage File
contains an appraisal of the related Mortgaged
Property which
satisfied the standards of FNMA and FHLMC, and was
made
and signed, prior to the closing of the Mortgage Loan, 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
25
<PAGE>
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. For Second Lien Mortgage Loans, the Mortgage File contains an
assessment of the collateral that meets the Underwriting Guidelines;
(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;
(xxix) 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
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;
(xxxi) No Mortgage Loan was made in connection with (a)
the construction or rehabilitation of a Mortgaged Property (other than
a construction loan that has been converted pursuant to its
respective
terms) 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, 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%. With respect to any First Lien Mortgage
Loan with an LTV at origination in excess of 80%, the Mortgage Loan
will be insured
by 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 the
Seller. All provisions of such Primary Insurance
Policy have been and are being complied with, such policy is in full
force and effect, and all remiums 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. For
loans in
New York State, the appraisal will be used to determine the original
Loan-to-Value Ratio as it relates to Primary Mortgage
Insurance.
(xxxiv) The Mortgaged
Property is lawfully occupied
under applicable
law; all inspections, licenses and certificates
required to be made or issued with respect to
26
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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 the Mortgagor, any appraiser 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;
(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 lien
priority with respect
to each Mortgage Loan which is indicated by the
Seller to be a First Lien or Second Lien (as reflected on the Mortgage
Loan Schedule),
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 and
the Seller. The consolidated
principal amount does
not exceed the original principal amount of the
Mortgage Loan.
(xxxviii) If the
Residential Dwelling
on the Mortgaged
Property is a condominium unit, a unit in a planned unit development
(other than a de
minimis planned unit
development), or a
unit in a
cooperative, such condominium, planned unit development project meets
the eligibility requirements of the Underwriting Guidelines;
(xxxix) Interest on each Mortgage Loan is calculated on
the basis of a 360-day year consisting of twelve 30-day months;
(xl)
