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EXHIBIT 99.1
MORTGAGE LOAN PURCHASE AGREEMENT
between
MERRILL LYNCH MORTGAGE LENDING, INC.
as Seller
and
MERRILL LYNCH MORTGAGE INVESTORS, INC.
as Purchaser
Dated as of
October 1, 2006
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TABLE OF CONTENTS
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Page
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SECTION 1.
DEFINITIONS..................................................
1
SECTION 2. PURCHASE
AND SALE OF THE MORTGAGE LOANS AND RELATED RIGHTS... 3
SECTION 3. MORTGAGE
LOAN SCHEDULES...................................... 4
SECTION 4. MORTGAGE
LOAN TRANSFER....................................... 4
SECTION 5. EXAMINATION
OF MORTGAGE FILES................................ 5
SECTION 6. RECORDATION
OF ASSIGNMENTS OF MORTGAGE....................... 7
SECTION 7.
REPRESENTATIONS AND WARRANTIES OF SELLER CONCERNING THE
MORTGAGE LOANS...............................................
8
SECTION 8.
REPRESENTATIONS AND WARRANTIES CONCERNING THE SELLER.........
13
SECTION 9.
REPRESENTATIONS AND WARRANTIES CONCERNING THE PURCHASER......
15
SECTION 10. CONDITIONS TO
CLOSING........................................ 16
SECTION 11. FEES AND
EXPENSES............................................ 18
SECTION 12. ACCOUNTANTS'
LETTERS......................................... 18
SECTION 13.
INDEMNIFICATION..............................................
18
SECTION 14.
NOTICES......................................................
21
SECTION 15. TRANSFER OF MORTGAGE
LOANS................................... 21
SECTION 16.
TERMINATION..................................................
21
SECTION 17. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO
SURVIVE
DELIVERY.....................................................
22
SECTION 18. MANDATORY DELIVERY; GRANT OF SECURITY
INTEREST............... 22
SECTION 19.
SEVERABILITY.................................................
22
SECTION 20.
COUNTERPARTS.................................................
23
SECTION 21.
AMENDMENT....................................................
23
SECTION 22. GOVERNING
LAW................................................ 23
SECTION 23. FURTHER
ASSURANCES........................................... 23
SECTION 24. SUCCESSORS AND
ASSIGNS....................................... 23
SECTION 25. THE
SELLER...................................................
24
SECTION 26. ENTIRE
AGREEMENT............................................. 24
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SECTION 27. NO
PARTNERSHIP...............................................
24
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EXHIBITS AND SCHEDULE TO
MORTGAGE LOAN PURCHASE AGREEMENT
Exhibit 1 Contents of
Mortgage File
Exhibit 2 Contents of
Final Mortgage File
Exhibit 3 Mortgage
Loan Schedule Information
Exhibit 4 Seller's
Information
Exhibit 5 Purchaser's
Information
Exhibit 6 Schedule of
Lost Notes
Exhibit 7 S&P
Appendix
Schedule A Required Ratings for Each Class of Securities
Schedule B Assigned Agreements
ii
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MORTGAGE LOAN PURCHASE AGREEMENT
MORTGAGE LOAN PURCHASE AGREEMENT, dated as of October 1, 2006,
as
amended and supplemented by any and all amendments hereto
(collectively, the
"Agreement"), by and between MERRILL LYNCH MORTGAGE LENDING, INC.,
a Delaware
corporation (the "Seller"), and MERRILL LYNCH MORTGAGE INVESTORS,
INC., a
Delaware corporation (the "Purchaser").
Upon the terms and subject to the conditions of this Agreement,
the
Seller agrees to sell, and the Purchaser agrees to purchase,
certain first lien,
adjustable-rate mortgage loans secured by one- to four-family
residences,
townhouses, individual condominiums, co-op units and units in
planned unit
developments (collectively, the "Mortgage Loans") as described
herein. The
Purchaser intends to deposit the Mortgage Loans into a trust fund
(the "Trust
Fund") and create Mortgage Pass-Through Certificates, MLMI Series
2006-AF2 (the
"Certificates"), under a pooling and servicing agreement, to be
dated as of
October 1, 2006 (the "Pooling and Servicing Agreement"), by and
among the
Purchaser, as depositor, HSBC Bank USA, National Association, as
trustee (the
"Trustee") and Wells Fargo Bank, N.A., as master servicer and
securities
administrator (the "Master Servicer" and "Securities
Administrator"). The assets
of the Trust Fund will primarily consist of two separate stacks of
Mortgage
Loans, "Stack I" and "Stack II". The Mortgage Loans transferred
pursuant to this
Agreement will relate to Stack II.
The Purchaser has filed with the Securities and Exchange
Commission
(the "Commission") a registration statement on Form S-3 (Number
333-130545)
relating to its Mortgage Pass-Through Certificates and the offering
of certain
series thereof (including certain classes of the Certificates) from
time to time
in accordance with Rule 415 under the Securities Act of 1933, as
amended, and
the rules and regulations of the Commission promulgated thereunder
(the
"Securities Act"). Such registration statement, when it became
effective under
the Securities Act, and the prospectus relating to the public
offering of
certain classes of the Certificates by the Purchaser (the "Public
Offering"), as
from time to time each is amended or supplemented pursuant to the
Securities Act
or otherwise, are referred to herein as the "Registration
Statement" and the
"Prospectus," respectively. The "Prospectus Supplement" shall mean
that
supplement, dated October 30, 2006 to the Prospectus, dated
September 8, 2006,
relating to certain classes of the Certificates. With respect to
the Public
Offering of certain classes of the Certificates, the Purchaser and
Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch")
have entered into a
terms agreement dated as of October 27, 2006 to an underwriting
agreement dated
February 28, 2003, between the Purchaser and Merrill Lynch
(together, the
"Underwriting Agreement").
Now, therefore, in consideration of the premises and the mutual
agreements set forth herein, the parties hereto agree as
follows:
Section 1. Definitions.
Certain terms are defined herein. Capitalized terms used herein but
not
defined herein shall have the meanings specified in the Pooling and
Servicing
Agreement. The following other terms are defined as follows:
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Closing
Date: October 31, 2006.
Custodial Agreement: An agreement, dated as of the Closing Date
among
the Depositor, the Master Servicer, the Securities Administrator,
the Trustee
and the Custodian in substantially the form of Exhibit G to the
Pooling and
Servicing Agreement.
Custodian: Wells Fargo Bank, N.A., including any successors in
interest, or any successor custodian appointed pursuant to the
provisions hereof
and of the Custodial Agreement.
Cut-off Date: October 1, 2006.
Cut-off Date Balance: $370,217,348.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced
by a
Substitute Mortgage Loan.
Due Date: With respect to each Mortgage Loan, the first day in
each
month.
Fannie Mae: Federal National Mortgage Association or any
successor
thereto.
Freddie Mac: The Federal Home Loan Mortgage Corporation or any
successor thereto.
Master Servicer: Wells Fargo Bank, N.A.
Merrill Lynch: Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
Moody's: Moody's Investors Service, Inc., or its successors in
interest.
Mortgage: The mortgage or deed of trust creating a first lien on
an
interest in real property securing a Mortgage Note.
Mortgage File: The items referred to in Exhibit 1 and Exhibit 2
pertaining to a particular Mortgage Loan and any additional
documents required
to be added to such documents pursuant to this Agreement.
Mortgage Interest Rate: The annual rate of interest borne by a
Mortgage Note as stated therein.
Mortgagor: The obligor(s) on a Mortgage Note.
Net Rate: With respect to any Distribution Date and each
Mortgage
Loan, the Mortgage Interest Rate for such Mortgage Loan on such
Distribution
Date less the Servicing Fee Rate for such Mortgage Loan on such
Distribution
Date.
Opinion of Counsel: A written opinion of counsel, who may be
counsel
for the Seller or the Purchaser, reasonably acceptable to the
Trustee.
Person: Any legal person, including any individual,
corporation,
partnership, joint
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venture, association, joint stock company, trust, unincorporated
organization or
government or any agency or political subdivision thereof.
Purchase Price: With respect to any Mortgage Loan required to
be
purchased by the Seller pursuant to the applicable provisions of
this Agreement,
an amount equal to the sum of (i) 100% of the principal remaining
unpaid on such
Mortgage Loan as of the date of purchase (including if a
foreclosure has already
occurred, the principal balance of the related Mortgage Loan at the
time the
Mortgaged Property was acquired), (ii) accrued and unpaid interest
thereon at
the Mortgage Interest Rate through and including the last day of
the month of
purchase and (iii) any costs and damages incurred by the Issuing
Entity in
connection with any violation by such Mortgage Loan of any
predatory or
abusive-lending law.
Rating Agencies: S&P and Moody's, each a "Rating Agency."
S&P: Standard & Poor's, a division of The McGraw-Hill
Companies, Inc.,
or its successors in interest.
Securities Act: The Securities Act of 1933, as amended.
Security: As used herein, the term shall refer to the Trust Fund
and
the Certificates created thereby.
Stack II Offered Certificates: Shall mean the Class AV-1
Certificates,
the Class AV-2A Certificates, the Class AV-2B Certificates, the
Class AV-2C
Certificates, the Class AV-2D Certificates, the Class MV-1
Certificates, Class
MV-2 Certificates, the Class MV-3 Certificates, the Class MV-4
Certificates, the
Class MV-5 Certificates, the Class MV-6 Certificates, the Class
BV-1
Certificates, the Class BV-2 Certificates and the Class BV-3
Certificates issued
pursuant to the Pooling and Servicing Agreement.
Substitute Mortgage Loan: A mortgage loan substituted for a
Deleted
Mortgage Loan which must meet on the date of such substitution the
requirements
stated herein and in the Pooling and Servicing Agreement; upon
such
substitution, such mortgage loan shall be a "Mortgage Loan"
hereunder.
Value: The value of the Mortgaged Property at the time of
origination
of the related Mortgage Loan, such value being the lesser of (i)
the value of
such property set forth in an appraisal accepted by the Originator
or (ii) the
sales price of such property at the time of origination.
Section 2. Purchase and Sale of the Mortgage Loans and Related
Rights.
(a)
Upon satisfaction of the conditions set forth in Section 10
hereof, the Seller agrees to sell, and the Purchaser agrees to
purchase Mortgage
Loans having an aggregate Cut-off Date Balance of $370,217,348.
(b) The closing for the purchase and sale of the Mortgage Loans
and
the closing for the issuance of the Certificates will take place on
the Closing
Date at the office of the Purchaser's counsel in New York, New York
or such
other place as the parties shall agree.
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(c) Upon the satisfaction of the conditions set forth in Section
10
hereof, on the Closing Date, in consideration of the purchase of
the Mortgage
Loans, the Purchaser shall (i) pay to the Seller an amount equal to
the net sale
proceeds of the Stack II Offered Certificates plus accrued interest
in
immediately available funds by wire transfer to such account or
accounts as
shall be designated by the Seller and (ii) deliver to the Seller
the Class P and
Class C Certificates.
(d) In addition to the foregoing, on the Closing Date the
Seller
assigns to the Purchaser without recourse all of its right, title
and interest
in the agreements set forth on Schedule B hereto.
Section 3. Mortgage Loan Schedules.
The Seller agrees to
provide to the Purchaser as of the date hereof a
preliminary listing of the Mortgage Loans (the "Preliminary
Mortgage Loan
Schedule") setting forth the information listed on Exhibit 3 to
this Agreement
with respect to each of the Mortgage Loans being sold by the
Seller. If there
are changes to the Preliminary Mortgage Loan Schedule, the Seller
shall provide
to the Purchaser as of the Closing Date a final schedule (the
"Final Mortgage
Loan Schedule") setting forth the information listed on Exhibit 3
to this
Agreement with respect to each of the Mortgage Loans being sold by
the Seller to
the Purchaser. The Final Mortgage Loan Schedule shall be delivered
to the
Purchaser on the Closing Date, shall be attached to an amendment to
this
Agreement to be executed on the Closing Date by the parties hereto
and shall be
in form and substance mutually agreed to by the Seller and the
Purchaser (the
"Amendment"). If there are no changes to the Preliminary Mortgage
Loan Schedule,
the Preliminary Mortgage Loan Schedule shall be the Final Mortgage
Loan Schedule
for all purposes hereof.
Section 4 Mortgage Loan Transfer.
The Purchaser will be entitled to all scheduled payments of
principal
and interest on the Mortgage Loans due after the Cut-off Date
(regardless of
when actually collected) and all payments thereof other than
scheduled principal
and interest received after the Cut-off Date. The Seller will be
entitled to all
scheduled payments of principal and interest on the Mortgage Loans
due on or
before the Cut-off Date (including payments collected after the
Cut-off Date)
and all payments thereof other than scheduled principal and
interest on the
Mortgage Loans received on or before the Cut-off Date. Such
principal amounts
and any interest thereon belonging to the Seller as described above
will not be
included in the aggregate outstanding principal balance of the
Mortgage Loans as
of the Cut-off Date as set forth on the Final Mortgage Loan
Schedule.
Pursuant to various conveyancing documents to be executed on
the
Closing Date and pursuant to the Pooling and Servicing Agreement,
the Purchaser
will assign on the Closing Date all of its right, title and
interest in and to
the Mortgage Loans to the Trustee for the benefit of the
Certificateholders. In
connection with the transfer and assignment of the Mortgage Loans,
the Seller
has delivered or will deliver or cause to be delivered to the
Trustee by the
Closing Date or such later date as is agreed to by the Purchaser
and the Seller
(each of the Closing Date and such later date is referred to as a
"Mortgage File
Delivery Date"), the items of each Mortgage File, provided,
however, that in
lieu of the foregoing, the Seller may deliver the following
documents, under the
circumstances set forth below: (x) in lieu of the original
Mortgage,
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assignments to the Trustee or intervening assignments thereof which
have been
delivered, are being delivered or will upon receipt of recording
information
relating to the Mortgage required to be included thereon, be
delivered to
recording offices for recording and have not been returned in time
to permit
their delivery as specified above, the Seller may deliver a true
copy thereof
with a certification by the Seller or the Originator, on the face
of such copy,
substantially as follows: "Certified to be a true and correct copy
of the
original, which has been transmitted for recording;" (y) in lieu of
the
Mortgage, assignments to the Trustee or intervening assignments
thereof, if the
applicable jurisdiction retains the originals of such documents or
if the
originals are lost (in each case, as evidenced by a certification
from the
Seller to such effect), the Seller may deliver photocopies of such
documents
containing an original certification by the judicial or other
governmental
authority of the jurisdiction where such documents were recorded;
and (z) in
lieu of the Mortgage Notes relating to the Mortgage Loans, each
identified in
the list delivered by the Purchaser to the Trustee on the Closing
Date and
attached hereto as Exhibit 6 the Seller may deliver lost note
affidavits and
indemnities of the Seller; and provided further, however, that in
the case of
Mortgage Loans which have been prepaid in full after the Cut-off
Date and prior
to the Closing Date, the Seller, in lieu of delivering the above
documents, may
deliver to the Trustee a certification by the Seller to such
effect. The Seller
shall deliver such original documents (including any original
documents as to
which certified copies had previously been delivered) or such
certified copies
to the Trustee promptly after they are received. The Seller shall
cause the
Mortgage and intervening assignments, if any, and the assignment of
the Mortgage
to be recorded not later than 180 days after the Closing Date, or,
in lieu of
such assignments, shall provide an Opinion of Counsel pursuant to
Section 6(a)
hereof to the effect that the recordation of such assignment is not
necessary to
protect the Trustee's interest in the related Mortgage Loan. Upon
the request of
the Purchaser, the Seller will assist the Purchaser in effecting
the assignment
referred to above.
The Seller and the Purchaser acknowledge hereunder that all of
the
Mortgage Loans and the related servicing will ultimately be
assigned to HSBC
Bank USA, National Association, as Trustee for the
Certificateholders, on the
date hereof.
Section 5. Examination of Mortgage Files.
(a) On or before the Mortgage File Delivery Date, the Seller will
have
made the Mortgage Files available to the Purchaser or its agent for
examination
which may be at the offices of the Trustee or the Seller and/or the
Custodian.
The fact that the Purchaser or its agent has conducted or has
failed to conduct
any partial or complete examination of the Mortgage Files shall not
affect the
Purchaser's rights to demand cure, repurchase, substitution or
other relief as
provided in this Agreement. In furtherance of the foregoing, the
Seller shall
make the Mortgage Files available to the Purchaser or its agent
from time to
time so as to permit the Purchaser to confirm the Seller's
compliance with the
delivery and recordation requirements of this Agreement and the
Pooling and
Servicing Agreement. In addition, upon request of the Purchaser,
the Seller
agrees to provide to the Purchaser, Merrill Lynch and to any
investors or
prospective investors in the Certificates information regarding the
Mortgage
Loans and their servicing, to make the Mortgage Files available to
the
Purchaser, Merrill Lynch and to such investors or prospective
investors (which
may be at the offices of the Seller and/or the Seller's custodian)
and to make
available personnel knowledgeable about the Mortgage Loans for
discussions with
the Purchaser, Merrill Lynch and such investors or prospective
investors, upon
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reasonable request during regular business hours, sufficient to
permit the
Purchaser, Merrill Lynch and such investors or potential investors
to conduct
such due diligence as any such party reasonably believes is
appropriate.
(b) Pursuant to the Pooling and Servicing Agreement, on the
Closing
Date the Trustee (or the Custodian), for the benefit of the
Certificateholders,
will review items of the Mortgage Files as set forth on Exhibit 1
and will
deliver to the Seller a certification in the form attached as
Exhibit One to the
Custodial Agreement.
(c) Pursuant to the Pooling and Servicing Agreement, the Trustee
or
the Custodian, as its agent, will review the Mortgage Files within
180 days of
the Closing Date and will deliver to the Purchaser a final
certification
substantially in the form of Exhibit Two to the Custodial
Agreement. If the
Trustee or the Custodian, as its agent, is unable to deliver a
final
certification with respect to the items listed in Exhibit 2 due to
any document
that is missing, has not been executed, is unrelated, determined on
the basis of
the Mortgagor name, original principal balance and loan number, to
the Mortgage
Loans identified in the Final Mortgage Loan Schedule (a "Material
Defect"), the
Trustee or the Custodian, as its agent, shall notify the Seller of
such Material
Defect. The Seller shall correct or cure any such Material Defect
within 90 days
from the date of notice from the Trustee or the Custodian, as
applicable, of the
Material Defect and if the Seller does not correct or cure such
Material Defect
within such period and such defect materially and adversely affects
the
interests of the Certificateholders in the related Mortgage Loan,
the Seller
will, in accordance with the terms of the Pooling and Servicing
Agreement,
within 90 days of the date of notice, provide the Trustee with a
Substitute
Mortgage Loan (if within two years of the Closing Date) or purchase
the related
Mortgage Loan at the applicable Purchase Price; provided, however,
that if such
defect relates solely to the inability of the Seller to deliver the
original
security instrument or intervening assignments thereof, or a
certified copy
because the originals of such documents, or a certified copy, have
not been
returned by the applicable jurisdiction, the Seller shall not be
required to
purchase such Mortgage Loan if the Seller delivers such original
documents or
certified copy promptly upon receipt, but in no event later than
360 days after
the Closing Date. The foregoing repurchase obligation shall not
apply in the
event that the Seller cannot deliver such original or copy of any
document
submitted for recording to the appropriate recording office in the
applicable
jurisdiction because such document has not been returned by such
office;
provided that the Seller shall instead deliver a recording receipt
of such
recording office or, if such receipt is not available, a
certificate of the
Seller confirming that such documents have been accepted for
recording, and
delivery to the Trustee or the Custodian, as its agent, shall be
effected by the
Seller within thirty days of its receipt of the original recorded
document.
(d) At the time of any substitution, the Seller shall deliver or
cause
to be delivered the Substitute Mortgage Loan, the related Mortgage
File and any
other documents and payments required to be delivered in connection
with a
substitution pursuant to the Pooling and Servicing Agreement. At
the time of any
purchase or substitution, the Trustee shall (i) assign to the
Seller and release
or cause the Custodian, as its agent, to release the documents
(including, but
not limited to, the Mortgage, Mortgage Note and other contents of
the Mortgage
File) in the possession of the Trustee or the Custodian relating to
the Deleted
Mortgage Loan and (ii) execute and deliver such instruments of
transfer or
assignment, in each case without recourse, as shall be necessary to
vest in the
Seller title to such Deleted Mortgage Loan.
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Section 6. Recordation of Assignments of Mortgage.
(a) The Seller need not cause to be recorded any assignment
which
relates to a Mortgage Loan in any jurisdiction; provided, however,
each
assignment of Mortgage shall be submitted for recording by the
Seller, at no
expense to the Issuing Entity or Trustee, upon the earliest to
occur of (i)
reasonable direction by the Holders of Certificates evidencing, in
the
aggregate, not less than 25% of the Voting Rights, (ii) the
occurrence of an
Event of Default with respect to the Master Servicer (upon
instruction of the
Seller), (iii) the occurrence of a bankruptcy, insolvency or
foreclosure
relating to the Seller or (iv) with respect to any one assignment
of Mortgage,
the occurrence of a bankruptcy, insolvency or foreclosure relating
to the
Mortgagor under the related Mortgage.
While each such Mortgage or assignment is being recorded, if
necessary, the Seller shall leave or cause to be left with the
Trustee a
certified copy of such Mortgage or assignment. All customary
recording fees and
reasonable expenses relating to the recordation of the assignments
of Mortgage
to the Trustee shall be borne by the Seller.
(b) It is the express intent of the parties hereto that the
conveyance
of the Mortgage Loans by the Seller to the Purchaser, as
contemplated by this
Agreement be, and be treated as, a sale. It is, further, not the
intention of
the parties that such conveyance be deemed a pledge of the Mortgage
Loans by the
Seller to the Purchaser to secure a debt or other obligation of the
Seller.
However, in the event that, notwithstanding the intent of the
parties, the
Mortgage Loans are held by a court of competent jurisdiction to
continue to be
property of the Seller, then (i) this Agreement shall also be
deemed to be a
security agreement within the meaning of Articles 8 and 9 of the
applicable
Uniform Commercial Code; (ii) the transfer of the Mortgage Loans
provided for
herein shall be deemed to be a grant by the Seller to the Purchaser
of a
security interest in all of the Seller's right, title and interest
in and to the
Mortgage Loans and all amounts payable to the holders of the
Mortgage Loans in
accordance with the terms thereof and all proceeds of the
conversion, voluntary
or involuntary, of the foregoing into cash, instruments, securities
or other
property, to the extent the Purchaser would otherwise be entitled
to own such
Mortgage Loans and proceeds pursuant to Section 4 hereof, including
all amounts,
other than investment earnings, from time to time held or invested
in any
accounts created pursuant to the Pooling and Servicing Agreement,
whether in the
form of cash, instruments, securities or other property; (iii) the
possession by
the Purchaser or the Trustee of Mortgage Notes and such other items
of property
as constitute instruments, money, negotiable documents or chattel
paper shall be
deemed to be "possession by the secured party" for purposes of
perfecting the
security interest pursuant to Section 9-305 (or comparable
provision) of the
applicable Uniform Commercial Code; and (iv) notifications to
persons holding
such property, and acknowledgments, receipts or confirmations from
persons
holding such property, shall be deemed notifications to, or
acknowledgments,
receipts or confirmations from, financial intermediaries, bailees
or agents (as
applicable) of the Purchaser for the purpose of perfecting such
security
interest under applicable law. Any assignment of the interest of
the Purchaser
pursuant to any provision hereof or pursuant to the Pooling and
Servicing
Agreement shall also be deemed to be an assignment of any security
interest
created hereby. The Seller and the Purchaser shall, to the extent
consistent
with this Agreement, take such actions as may be reasonably
necessary to ensure
that, if this Agreement were deemed to create a security interest
in the
Mortgage Loans, such security interest would be deemed to be a
perfected
security interest of first priority under applicable law and will
be
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maintained as such throughout the term of the Pooling and Servicing
Agreement.
Section 7. Representations and Warranties of Seller Concerning the
Mortgage
Loans.
The Seller hereby
represents and warrants to the Purchaser as of the
Closing Date or such other date as may be specified below with
respect to each
Mortgage Loan being sold by it:
(a) the information set forth in the Mortgage Loan Schedule hereto
is
true
and correct in all material respects;
(b) immediately prior to the transfer to the Purchaser, the Seller
was
the
sole owner of beneficial title and holder of each Mortgage and
Mortgage
Note
relating to the Mortgage Loans and is conveying the same free
and
clear of any and all liens, claims, encumbrances, participation
interests,
equities, pledges, charges or security interests of any nature and
the
Seller has full right and authority to sell or assign the same
pursuant to
this
Agreement;
(c) no selection procedure reasonably believed by the Seller to
be
adverse to the interests of the Certificateholders was utilized
in
selecting the Mortgage Loans;
(d) each Mortgage Loan constitutes a "qualified mortgage" under
Section 860G(a)(3)(A) of the Code and Treasury Regulation
Section
1.860G-2(a)(1);
(e) no Mortgage Loan is in foreclosure;
(f) no Mortgage Loan provides for interest other than at either (i)
a
single fixed rate in effect throughout the term of the Mortgage
Loan or
(ii)
a "variable rate" (within the meaning of Treas. Reg. Section
1.860G-1(a)(3)) in effect throughout the term of the Mortgage
Loan;
(g) the Seller would not, based on the delinquency status of
the
Mortgage Loans, institute foreclosure proceedings with respect to
any of
the
Mortgage Loans prior to the next scheduled payment for such
Mortgage
Loan;
(h) the information set forth under the captions "Description of
the
Mortgage Groups--General," "--Tabular Characteristics of the
Mortgage
Loans" and in Annex II of the Prospectus Supplement is true and
correct in
all
material respects;
(i) as of the Cut-off Date, no Mortgage Loan is more than 30 days
past
due.
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;
(j) to the best of the Seller's knowledge, there are no
delinquent
taxes, ground rents, water charges, sewer rents, assessments,
insurance
premiums, leasehold payments, including assessments payable in
future
installments or other outstanding charges affecting the related
Mortgaged
Property;
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(k) to the best of the Seller's knowledge, 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;
(l) to the best of the Seller's knowledge, the Mortgaged Property
is
free
of damage and waste and there is no proceeding pending for the
total
or
partial condemnation thereof;
(m) to the best of the Seller's knowledge, the Mortgaged Property
is
lawfully occupied under applicable law at time of origination;
all
inspections, licenses and certificates required to be made or
issued with
respect to all occupied portions of the Mortgaged Property and,
with
respect to the use and occupancy of the same, including but not
limited to
certificates of occupancy, have been made or obtained from the
appropriate
authorities;
(n) all requirements of any federal, state or local law
(including
usury, truth in lending, real estate settlement procedures,
consumer credit
protection, equal credit opportunity, disclosure or recording,
predatory
and
abusive lending laws) applicable to the origination and servicing
of
such
Mortgage Loan have been complied with in all material respects;
(o) to the best of the Seller's knowledge, as of the date of
transfer
of
the Mortgage Loans, there is no mechanics' lien or claim for work,
labor
or
material affecting the Mortgaged Property except those which are
insured
against by the title insurance policy;
(p) to the best of the Seller's knowledge, as of the date of
the
transfer of the Mortgage Loans to the Purchaser, there is no valid
offset,
defense or counterclaim to any Mortgage Note or Mortgage;
(q) to the best of the Seller's knowledge, as of the date of
closing,
the
Mortgaged Property subject to any Mortgage is free of material
damage
and
is in good repair;
(r) at the time of origination, no improvement located on or
being
part
of the Mortgaged Property was in violation of any applicable
zoning
and
subdivision laws or ordinances;
(s) each Mortgage Loan is and will be a mortgage loan arising out
of
the
originator's practice in accordance with the
seller/originator's
underwriting guidelines. The seller has no knowledge of any fact
that
should have led it to expect at the time of the initial creation of
an
interest in the Mortgage Loan that such Mortgage Loan would not be
paid in
full
when due;
(t) each original Mortgage has been recorded or is in the process
of
being
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<PAGE>
recorded in the appropriate jurisdictions wherein such recordation
is
required to perfect the lien thereof for the benefit of the Trust
Fund;
(u) the related Mortgage File contains each of the documents
and
instruments specified;
(v) each Mortgage Loan is being serviced according to the
related
Servicer's guidelines;
(w) the Mortgage Note and the Mortgage have not been impaired,
altered
or
modified in any material respect, except by a written instrument
which
has
been recorded or is in the process of being recorded;
(x) a lender's title policy or binder, or other assurance of
title
insurance customary in a
form acceptable to Fannie Mae or Freddie Mac was
issued at origination and each policy or binder is valid and
remains in
full
force and effect;
(y) none of the Mortgage Loans are secured by a leasehold
interest;
(z) There is no Mortgage Loan in the Trust Fund that was originated
on
or
after October 1, 2002 and before March 7, 2003, which is secured
by
property located in the State of Georgia. There is no Mortgage Loan
in the
Trust Fund that was originated on or after March 7, 2003, which is
a "high
cost
home loan" as defined under the Georgia Fair Lending Act;
(aa) none of the Mortgage Loans is subject to the Home Ownership
and
Equity Protection Act of 1994 or is a "high cost" or "predatory"
loan as
defined by applicable local, state and federal predatory and
abusive
lending laws; and
(bb) no Mortgage Loan is a High Cost Loan or Covered Loan, as
applicable (as such terms are defined in Appendix E of the then
current
Standard & Poor's Glossary For File Format For LEVELS(R)
Version 5.7
(attached hereto as Exhibit 7);
(cc) There is no Mortgage Loan in the Trust Fund that was
originated
on
or after January 1, 2005, which is a "high cost home loan" as
defined
under the Indiana Home Loan Practices Act (I.C. 24-9);
(dd) With respect to each Mortgage Loan underlying the Security,
no
borrower obtained a prepaid single-premium credit-life, credit
disability,
credit unemployment or credit property insurance policy in
connection with
the
origination of the mortgage loan;
(ee) With respect to any Mortgage Loan underlying the Security
that
contains a provision permitting imposition of a penalty upon a
prepayment
prior to maturity: (a) the Mortgage Loan provides some benefit to
the
borrower (e.g., a rate or fee reduction) in exchange for accepting
such
prepayment penalty; (b) the Mortgage Loan's originator had a
written policy
of
offering the borrower, or requiring third-party brokers to offer
the
borrower, the option of obtaining a mortgage loan that did not
require
payment of such a
10
<PAGE>
penalty; (c) the prepayment penalty was adequately disclosed to
the
borrower pursuant to applicable state and federal law; (d) no
Mortgage Loan
that
is a subprime loan originated on or after October 1, 2002
underlying
the
Security will provide for prepayment penalties for a term in excess
of
three years and any Mortgage Loans originated prior to such date,
and any
non-subprime loans, will not provide for prepayment penalties for a
term in
excess of five years; in each case unless the Mortgage Loan was
modified to
reduce the prepayment period to no more than three years from the
date of
the
note and the borrower was notified in writing of such reduction
in
prepayment period; and (e) such prepayment penalty shall not be
imposed in
any instance where the
Mortgage Loan is accelerated or paid off in
connection with the workout of a delinquent mortgage or due to
the
borrower's default, notwithstanding that the terms of the Mortgage
Loan or
state or federal law might permit the imposition of such
penalty;
(ff) The Servicer for each Mortgage Loan underlying the Security
has
fully furnished, in accordance with the Fair Credit Reporting Act
and its
implementing regulations, accurate and complete information
(i.e.,
favorable and unfavorable) on its borrower credit files to
Equifax,
Experian, and Trans Union Credit Information Company (three of the
credit
repositories), on a monthly basis;
(gg) The Servicer for each Mortgage Loan underlying the Security
will
fully furnish, in accordance with the Fair Credit Reporting Act and
its
implementing regulations, accurate and complete information
(i.e.,
favorable and unfavorable) on its borrower credit files to
Equifax,
Experian, and Trans
Union Credit Information Company (three of the credit
repositories), on a monthly basis;
(hh) With respect to each Mortgage Loan underlying the Security,
the
borrower was not encouraged or required to select a mortgage loan
product
offered by the related Originator which is a higher cost product
designed
for
less creditworthy borrowers, taking into account such facts as,
without
limitation, the Mortgage Loan's requirements and the borrower's
credit
history, income,
assets and liabilities. For a borrower who seeks financing
through such Originator's higher-priced subprime lending channel,
the
borrower should be directed towards or offered such Originator's
standard
mortgage line if the borrower is able to qualify for one of the
standard
products;
(ii) The methodology used in underwriting the extension of credit
for
each
Mortgage Loan in the Trust Fund did not rely on the extent of
the
borrower's equity in the collateral as the principal determining
factor in
approving such extension of credit. The methodology employed
objective
criteria that related such facts as, without limitation, the
borrower's
credit history, income, assets or liabilities, to the proposed
mortgage
payment and, based on such methodology, the Originator made a
reasonable
determination that at the time of origination the borrower had the
ability
to
make timely payments on the Mortgage Loan;
(jj) No borrower under a Mortgage Loan in the Trust Fund was
charged
"points and fees" in an amount greater than (a) $1,000 or (b) 5% of
the
principal amount of such Mortgage Loan, whichever is greater. For
purposes
of
this representation, "points
11
<PAGE>
and
fees" (x) include origination, underwriting, broker and finder's
fees
and
charges that the lender imposed as a condition of making the
Mortgage
Loan, whether they are paid to the lender or a third party; and (y)
exclude
bona
fide discount points, fees paid for actual services rendered in
connection with the origination of the mortgage (such as attorneys'
fees,
notaries fees and fees paid for property appraisals, credit
reports,
surveys, title examinations and extracts, flood and tax
certifications, and
home
inspections); the cost of mortgage insurance or credit-risk
price
adjustments; the costs of title, hazard, and flood insurance
policies;
state and local transfer taxes or fees; escrow deposits for the
future
payment of taxes and insurance premiums; and other miscellaneous
fees and
charges that, in total, do not exceed 0.25 percent of the loan
amount;
(kk) With respect to any Mortgage Loan originated on or after
August
1,
2004 and underlying the Security, neither the related Mortgage nor
the
related Mortgage Note requires the borrower to submit to
arbitration to
resolve any dispute arising out of or relating in any way to the
mortgage
loan
transaction;
(ll) With respect to any Mortgage Loans underlying the Security
that
are
on manufactured housing, upon the origination of each such
Mortgage
Loan
the manufactured housing unit either: (i) will be the principal
residence of the borrower or (ii) will be classified as real
property under
applicable state law;
(mm) No first lien Mortgage Loan underlying the Security has an
original principal balance that exceeds the applicable Freddie Mac
loan
limit; and
(nn) If any of the Mortgage Loans underlying the Security are
"seasoned" (a seasoned mortgage loan is one where the date of the
Mortgage
Note
is more than 1 year before the date of issuance of the related
Security) the Seller:
(i) represents that it currently operates or actively participates
in
an on-going and active program or business (A) to originate
mortgages,
and/or (B) to make periodic purchases of mortgage loans from
originators or other selle
