Exhibit 99.2
Execution Copy
------------------------------------------------------------------------------
MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT
TAYLOR, BEAN & WHITAKER MORTGAGE CORP.
Seller and Servicer
UBS REAL ESTATE SECURITIES INC.
Purchaser
Dated as of February 1, 2007
First and Second Lien
Fixed and Adjustable Rate Loans
------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1.
Definitions....................................................1
SECTION 2.
Agreement to
Purchase.........................................13
SECTION 3.
Loan
Schedules................................................13
SECTION 4.
Purchase
Price................................................13
SECTION 5.
Examination of Loan
Files.....................................14
SECTION 6.
Conveyance from Seller to
Purchaser...........................15
Subsection 6.01.
Conveyance of Loans; Possession of Servicing Files......15
Subsection 6.02.
Books and Records.......................................15
Subsection 6.03.
Delivery of Loan Documents..............................15
SECTION 7.
Representations,
Warranties and
Covenants; Remedies
for
Breach........................................................16
Subsection 7.01.
Representations and Warranties Respecting the Seller....16
Subsection 7.02.
Representations and Warranties Regarding Individual
Loans...................................................19
Subsection 7.03.
Remedies for Breach of Representations and Warranties...31
Subsection 7.04.
Reserved................................................33
Subsection 7.05.
Repurchase of Certain Loans.............................33
Subsection 7.06.
Purchase Price Protection...............................33
SECTION 8.
Closing.......................................................33
SECTION 9.
Closing
Documents.............................................34
SECTION 10.
Costs.........................................................35
SECTION 11.
Seller's Servicing
Obligations................................35
SECTION 12. The
Securitization Transaction................................35
SECTION 13. The
Seller....................................................37
Subsection
13.01. Additional
Indemnification by the Seller..............37
Subsection
13.02. Merger or
Consolidation of the Seller.................37
Subsection
13.03. Limitation on
Liability of the Seller and Others......38
Subsection
13.04. Seller Not to
Resign..................................38
Subsection
13.05. No Transfer of
Servicing..............................38
SECTION 14.
DEFAULT.......................................................39
Subsection
14.01. Events of
Default......................................39
Subsection
14.02. Waiver of
Defaults.....................................40
SECTION 15.
Termination...................................................40
i
<PAGE>
SECTION 16.
Successor to the
Seller.......................................41
SECTION 17.
Reserved......................................................42
SECTION 18.
Mandatory Delivery; Grant of Security
Interest................42
SECTION 19.
Notices.......................................................43
SECTION 20.
Severability
Clause...........................................44
SECTION 21.
Counterparts..................................................44
SECTION 22.
GOVERNING
LAW.................................................44
SECTION 23.
Intention of the
Parties......................................44
SECTION 24.
Successors and
Assigns........................................45
SECTION 25.
Waivers.......................................................45
SECTION 26.
Exhibits......................................................45
SECTION 27.
Nonsolicitation...............................................45
SECTION 28.
Relationship of the
Parties...................................46
SECTION 29.
General Interpretive
Principles...............................46
SECTION 30.
Reproduction of
Documents.....................................46
SECTION 31.
Further
Agreements............................................46
SECTION 32.
Third Party
Beneficiary.......................................47
SECTION 33.
Compliance With Regulation
AB.................................47
Subsection
33.01. Intent of the Parties;
Reasonableness..................47
Subsection
33.02. Additional Representations and Warranties of the
Seller.................................................48
Subsection
33.03. Information to Be Provided by the
Seller...............48
Subsection
33.04. Servicer Compliance
Statement..........................54
Subsection
33.05. Report on Assessment of Compliance and
Attestation.....54
Subsection
33.06. Use of Subservicers and
Subcontractors.................55
Subsection
33.07. Indemnification;
Remedies..............................56
Subsection
33.08. Third Party
Beneficiary................................59
ii
<PAGE>
EXHIBITS
EXHIBIT 1
OFFICER'S CERTIFICATE OF THE SELLER
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 LOAN FILE
EXHIBIT 6 LOAN
DOCUMENTS
EXHIBIT 7 FORM
OF CUSTODIAL ACCOUNT LETTER AGREEMENT
EXHIBIT 8 FORM
OF ESCROW ACCOUNT LETTER AGREEMENT
EXHIBIT 9
SERVICING ADDENDUM
EXHIBIT 10 SELLER
UNDERWRITING STANDARDS
EXHIBIT 11
[Reserved.]
EXHIBIT 12 FORM OF
ANNUAL CERTIFICATION
EXHIBIT 13 SERVICING
CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
EXHIBIT 14-1 STANDARD FILE LAYOUT -
MASTER SERVICING
EXHIBIT 14-2 STANDARD FILE LAYOUT -
DELINQUENCY REPORTING
EXHIBIT 14-3 FORM 332
iii
<PAGE>
MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT
----------------------------------------------
This is a MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT (the
"Agreement"), dated as of February 1, 2007, by and between UBS Real
Estate
Securities Inc., having an office at 1285 Avenue of the Americas,
New York,
New York 10019 (the "Purchaser", and the Depositor or the Person,
if any, to
which the Purchaser has assigned its rights and obligations
hereunder as
Purchaser with respect to one or more Loans, and each of their
respective
successors and assigns, the "Purchaser") and Taylor, Bean &
Whitaker Mortgage
Corp., having an office at 101 NE 2nd Street, Ocala Florida 34470
(the
"Seller").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Seller desires to sell to the Purchaser, and the
Purchaser desires to purchase from the Seller, certain conventional
fixed rate
and adjustable rate residential first and second lien mortgage
loans (the
"Loans") as described herein on a servicing-retained basis;
WHEREAS, each 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 Loan Schedule
for the
Loans, which is to be annexed to the related Assignment and
Conveyance;
WHEREAS, the Purchaser and the Seller wish to prescribe the
manner
of the conveyance, servicing and control of the Loans; and
WHEREAS, following its purchase of the Loans from the Seller,
the
Purchaser desires to sell all of the Loans to TBW Mortgage-Trust
2007-1 a
pursuant to a public or private mortgage-backed securities
transaction;
NOW, THEREFORE, in consideration of the premises and mutual
agreements set forth herein, and for other good and valuable
consideration,
the receipt and sufficiency of which are hereby acknowledged, the
Purchaser
and the Seller agree as follows:
SECTION 1. Definitions. For purposes of this Agreement the
following capitalized terms shall have the respective meanings set
forth
below.
Accepted Servicing Practices: With respect to any Loan, those
mortgage servicing practices (including collection procedures) of
prudent
mortgage lending institutions which service loans of the same type
as such
Loan in the jurisdiction where the related Mortgaged Property is
located and
in accordance with applicable law, the terms of the Mortgage and
Note and the
servicing guidelines established by Freddie Mac (including future
updates).
Adjustable Rate Loan: A Loan which provides for the adjustment
of
the Loan Interest Rate payable in respect thereto.
Adjustment Date: With respect to each Adjustable Rate Loan, the
date set forth in the related Note on which the Loan Interest Rate
on such
Adjustable Rate Loan is adjusted in accordance with the terms of
the related
Note.
<PAGE>
Agreement: This Mortgage Loan Purchase and Servicing Agreement
including all exhibits, schedules, amendments and supplements
hereto, as the
same may be amended or modified at any time or from time to time in
accordance
with its terms.
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 Loan at the time of origination of the Loan by an
appraiser
who met the minimum requirements of Fannie Mae and Freddie Mac, and
(ii) the
purchase price paid for the related Mortgaged Property by the
Borrower with
the proceeds of the Loan; notwithstanding the foregoing, if the
related Loan
is a Refinanced Loan, the Appraised Value shall be clause (i)
above.
Assignment and Conveyance: An assignment and conveyance of the
Loans purchased on a Closing Date in the form annexed hereto as
Exhibit 4.
Assignment of Mortgage: An individual assignment of 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.
Borrower: The obligor on a Note, the owner of the Mortgaged
Property and the grantor or borrower named in the related Mortgage
and such
grantor's or borrower's successors in title to the Mortgaged
Property.
Business Day: Any day other than a Saturday or Sunday, or a day
on
which banking and savings and loan institutions in the State of New
York or
Florida are authorized or obligated by law or executive order to be
closed.
Cash-Out Refinancing: A Refinanced Loan the proceeds of which
were
in excess of the greater of $2,000 or 2% of the principal balance
of any
existing first mortgage (and any existing junior mortgages, if
applicable) on
the related Mortgaged Property and related closing costs, and were
used to pay
any such existing first mortgage (and any existing junior
mortgages, if
applicable), related closing costs, subordinate mortgages on the
related
Mortgaged Property and to provide additional proceeds for the use
of the
Borrower.
Closing Date: February
27, 2007.
Closing Documents: With respect to any Closing Date, the
documents
required pursuant to Section 9.
Code: The Internal Revenue Code of 1986, or any successor
statute
thereto.
Combined Loan-to-Value Ratio or CLTV: With respect to any Loan,
the ratio of the original outstanding principal amount of the Loan
and any
other mortgage loan which is secured by a lien on the related
Mortgaged
Property to (i) the Appraised Value of the related Mortgaged
Property at
origination with respect to a Refinanced Loan, or (ii) the lesser
of the
Appraised Value of the related Mortgaged Property at origination or
the
purchase price of the related Mortgaged Property with respect to
all other
Loans.
2
<PAGE>
Commission: The United
States Securities and Exchange Commission.
Condemnation Proceeds: All awards, compensation and settlements
in
respect of a taking of all or part of a Mortgaged Property by
exercise of the
power of condemnation or the right of eminent domain.
Confirmation: With respect to Loans purchased and sold on the
Closing Date pursuant to this Agreement, the letter agreement
between the
Purchaser and the Seller (including any exhibits, schedules and
attachments
thereto), setting forth the terms and conditions of such
transaction and
describing the Loans to be purchased by the Purchaser on the
Closing Date.
Convertible Loan: A Loan that by its terms and subject to
certain
conditions contained in the related Mortgage or Note allows the
Borrower to
convert the adjustable Loan Interest Rate on such Loan to a fixed
Loan
Interest Rate.
Custodial Account: The separate account or accounts, each of
which
shall be an Eligible Account, created and maintained pursuant to
this
Agreement, which shall be entitled "Taylor, Bean & Whitaker
Mortgage Corp., in
Trust for The Bank of New York, as Trustee for TBW Mortgage-Backed
Trust,
Series 2007-1", established at Colonial Bank, N.A. or at any other
financial
institution acceptable to the Purchaser. Such accounts shall be
held as a
special deposit by the depository institution maintaining the
related accounts
in a fiduciary capacity, separate and apart from its funds or
general assets
and shall not be held in any capacity that would create a
debtor-creditor
relationship between the depository institution maintaining the
accounts and
the Seller or the Purchaser.
Custodial Agreement: The agreement governing the retention of
the
originals of each Note, Mortgage, Assignment of Mortgage and other
Loan
Documents.
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 Closing
Date
occurs.
Deleted Loan: A Loan replaced or to be replaced by a Qualified
Substitute Loan.
Depositor: The depositor, as such term is defined in Regulation
AB, with respect to any Securitization Transaction.
Determination Date: With respect to each Distribution Date, the
fifteenth (15th) day of the calendar month in which such
Distribution Date
occurs or, if such fifteenth (15th) day is not a Business Day, the
Business
Day immediately preceding such fifteenth (15th) day.
Distribution Date: The eighteenth (18th) day of each month,
commencing on the eighteenth (18th) day of the month next following
the month
in which the related Cut-off Date occurs, or if such eighteenth
(18th) day is
not a Business Day, the first Business Day immediately preceding
such
eighteenth (18th) day.
3
<PAGE>
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 Loan, exclusive of any days
of grace.
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: Any of (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 debt obligations of such holding company) have
either (a)
a rating of at least "A-2" by S&P at the time any amounts are
held on deposit
therein, if the amounts on deposit are to be held in the account
for no more
than 30 days and are not intended to be used as credit enhancement
(provided,
that if such rating falls below "A-2" by S&P, funds in such
account shall
immediately be transferred to an otherwise Eligible Account) or (b)
the
highest short term ratings of each Rating Agency at the time any
amounts are
held on deposit therein, if the amounts on deposit are to be held
in the
account for more than 30 days or are intended to be used as
credit
enhancement, or (ii) an account or accounts in a depository
institution or
trust company in which such accounts are insured by the FDIC (to
the limits
established by the FDIC) and the uninsured deposits in which
accounts are
otherwise secured such that, as evidenced by an Opinion of Counsel
delivered
to the Trustee, the Trust Administrator and to each Rating Agency,
the
Certificateholders have a claim with respect to the funds in such
account or a
perfected first priority security interest against any collateral
(which shall
be limited to Permitted Investments) securing such funds that is
superior to
claims of any other depositors or creditors of the depository
institution or
trust company in which such account is maintained, or (iii) a non
interest
bearing segregated trust account or accounts maintained with (a)
the trust
department of a federal or state chartered depository institution
or (b) a
trust company, acting in its fiduciary capacity or (iv) any other
account
acceptable to each Rating Agency. Eligible Accounts may bear
interest, and may
include, if otherwise qualified under this definition, accounts
maintained
with the Trustee.
Escrow Account: The separate trust account or accounts created
and
maintained pursuant to this Agreement, each of which shall be an
Eligible
Account, and each of which shall be entitled "Taylor, Bean &
Whitaker Mortgage
Corp., in Trust for The Bank of New York, as Trustee for TBW
Mortgage-Backed
Trust, Series 2007-1", established at a financial institution
acceptable to
the Purchaser.
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 Borrower with the Mortgagee pursuant to the terms of any
Note or
Mortgage.
Event of Default: Any one of the events enumerated in Section
14.01.
Exchange Act: The Securities Exchange Act of 1934, as amended.
4
<PAGE>
FDIC: The Federal Deposit Insurance Corporation, or any
successor
thereto.
Final Recovery Determination: With respect to any defaulted
Loan
or any REO Property (other than a Loan or REO Property purchased by
the Seller
pursuant to this Agreement), a determination made by the Seller
that all
Insurance Proceeds, Liquidation Proceeds and other payments or
recoveries
which the Seller, in its reasonable good faith judgment, expects to
be finally
recoverable in respect thereof have been so recovered. The Seller
shall
maintain records, prepared by a servicing officer of the Seller, of
each Final
Recovery Determination.
First Lien: With respect to each Mortgaged Property, the lien
of
the mortgage, deed of trust or other instrument securing a Note
which creates
a first lien on the Mortgaged Property.
Fixed Rate Loan: A Loan with respect to which the Loan Interest
Rate set forth in the Note is fixed for the term of such Loan.
Freddie Mac: Freddie Mac, f/k/a/The Federal Home Loan Mortgage
Corporation, or any successor thereto.
GAAP: Generally accepted accounting principals in the United
States of America in effect from time to time.
Gross Margin: With respect to any Adjustable Rate Loan, the
fixed
percentage amount set forth in the related Note and the related
Loan Schedule
that is added to the Index on each Adjustment Date in accordance
with the
terms of the related Note to determine the new Loan Interest Rate
for such
Loan.
HUD: The United States Department of Housing and Urban
Development
or any successor thereto.
Index: With respect to any Adjustable Rate Loan, the index
identified on the Loan Schedule and set forth in the related Note
for the
purpose of calculating the interest rate thereon.
Initial Rate Cap: With respect to each Adjustable Rate Loan and
the initial Adjustment Date therefor, a number of percentage points
per annum
that is set forth in the related Loan Schedule and in the related
Note, which
is the maximum amount by which the Loan Interest Rate for such
Adjustable Rate
Loan may increase or decrease on such Adjustment Date from the Loan
Interest
Rate in effect immediately prior to such Adjustment Date.
Insurance Proceeds: With respect to each Loan, proceeds of
insurance policies insuring the Loan or the related Mortgaged
Property.
Liquidation Proceeds: Amounts, other than Insurance Proceeds
and
Condemnation Proceeds, received in connection with the liquidation
of a
defaulted Loan through trustee's sale, foreclosure sale or
otherwise, other
than amounts received following the acquisition of REO
Property.
5
<PAGE>
Loan: Each first or second lien, residential mortgage loan,
sold,
assigned and transferred to the Purchaser pursuant to this
Agreement and the
Confirmation and identified on the Loan Schedule, which Loan
includes without
limitation the Loan 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 Loan.
Loan Documents: The documents listed in Exhibit 6 annexed
hereto
pertaining to any Loan.
Loan File: The items pertaining to a particular Loan referred
to
in Exhibit 5 annexed hereto, and any additional documents required
to be added
to the Loan File pursuant to this Agreement.
Loan Interest Rate: With respect to each Fixed Rate Loan, the
fixed annual rate of interest provided for in the related Note and,
with
respect to each Adjustable Rate Loan, the annual rate at which
interest
accrues on such Adjustable Rate Loan from time to time in
accordance with the
provisions of the related Note.
Loan Schedule: The schedule of Loans to be annexed to the
Assignment and Conveyance on the Closing Date for the Loans
delivered on such
Closing Date, such schedule setting forth, but not limited to, the
following
information with respect to each Loan: (1) the Seller's Loan
identification
number; (2) a code indicating whether the Loan is an Adjustable
Rate Loan or a
fixed rate Loan; (3) the Borrower's first and last name; (4) the
street
address of the Mortgaged Property including the city, state and zip
code; (5)
the original principal balance of the Loan; (6) the Scheduled
Principal
Balance of the Loan as of the close of business on the Cut-off
Date; (7) the
actual unpaid principal balance of the Loan as of the close of
business on the
Cut-off Date; (8) the last scheduled Due Date on which a Monthly
Payment was
applied to the Scheduled Principal Balance; (9) the last Due Date
on which a
Monthly Payment was actually applied to the actual unpaid principal
balance;
(10) the Loan Interest Rate in effect immediately following
origination; (11)
the Loan Interest Rate in effect immediately following the Cut-off
Date (if
different from (10)); (12) the amount of the Monthly Payment at
origination;
(13) the amount of the Monthly Payment as of the Cut-off Date (if
different
from (12)); (14) a code indicating whether the Mortgaged Property
is
owner-occupied, a second home or an investor property; (15) a code
indicating
whether the Mortgaged Property is a single family residence, a
two-family
residence, a three-family residence, a four-family residence, a
planned-unit
development, or a condominium; (16) a code indicating the loan
purpose (i.e.,
purchase, rate/term refinance, cash-out refinance); (17) the stated
maturity
date; (18) the original months to maturity; (19) the remaining
months to
maturity from the Cut-off Date based on the original amortization
schedule
and, if different, the remaining months to maturity expressed in
the same
manner but based on the actual amortization schedule; (20) the
origination
date of the Loan and the original date of the Note; (21) the
Appraised Value
(including the purchase price of the Mortgaged Property, if
applicable), LTV
and Combined Loan-to-Value Ratio at origination; (22) the date on
which the
first Monthly Payment was due on the Loan after the origination
date; (23)
with respect to each Adjustable Rate Loan, the Index; (24) with
respect to
each Adjustable Rate Loan, the type of Adjustable Rate Loan (i.e.,
1/1, 3/1,
5/1, etc.); (25) with respect to each Adjustable Rate Loan, the
Gross Margin;
(26) with respect to each Adjustable Rate Loan, the
6
<PAGE>
Periodic Rate Cap; (27) with respect to each Adjustable Rate Loan,
the Initial
Rate Cap (if different from the Periodic Rate Cap) (28) with
respect to each
Adjustable Rate Loan, the Maximum Loan Interest Rate; (29) with
respect to
each Adjustable Rate Loan, the Minimum Loan Interest Rate; (30)
with respect
to each Adjustable Rate Loan, the first Adjustment Date immediately
following
origination; (31) with respect to each Adjustable Rate Loan, the
first
Adjustment Date immediately following the Cut-off Date (if
different from
(30)); (32) a code indicating the documentation style of the Loan;
(33) a code
indicating if the Loan is subject to a Primary Insurance Policy
and, if so,
the name of the Qualified Insurer, the certificate number and the
coverage
amount of the Primary Insurance Policy; (34) the Servicing Fee
Rate; (35) the
Seller's program pursuant to which the Loan was underwritten; (36)
a code
indicating whether the Loan is subject to a prepayment penalty and,
if so, the
term of such prepayment penalty and such other information
necessary to
calculate such prepayment penalty; (37) the credit score (or
mortgage score)
of the Borrower; (38) the debt-to-income ratio of the Loan; (39) a
code
indicating whether the Loan is a MERS Loan and, if so, the
corresponding MIN;
(40) a code indicating whether the Loan is a "Home Loan" as defined
in the
current Standard & Poor's LEVELS(R) Glossary Revised, Appendix
E; (41) a code
indicating if the Loan is an interest-only Loan (including any
Loans with any
interest-only features) and, if so, the term of the interest-only
period of
such Loan; and (42) a code indicating whether the Mortgaged
Property is
subject to a First Lien or a Second Lien. The Loan Schedule shall
set forth
the following information, in aggregate, as of the related Cut-off
Date: (1)
the number of Loans; (2) the original principal balance of the
Loans; (3) the
Scheduled Principal Balance of the Loans; (4) the weighted average
Loan
Interest Rate of the Loans; (5) the weighted average Net Loan Rate
of the
Loans; (4) the weighted average remaining months to maturity of the
Loans; and
(5) with respect to Adjustable Rate Loans, the weighted average
Gross Margin
and the weighted average number of months until the next Adjustment
Date. The
Loan Schedule will be prepared for each Closing Date and will be
attached to
the Assignment and Conveyance. The Loan Schedule shall be delivered
to the
Purchaser, the Depositor and the Custodian in both hard copy and
electronic
format.
Loan-to-Value Ratio or LTV: With respect to any Loan as of any
date of determination, the ratio on such date of the outstanding
principal
amount of the Loan, to the Appraised Value of the Mortgaged
Property.
Master Servicer: With respect to the Securitization
Transaction,
the "master servicer," if any, identified in the related
transaction
documents.
MERS: Mortgage Electronic Registration Systems, Inc., a
corporation organized and existing under the laws of the State of
Delaware, or
any successor thereto.
MERS Loan: Any Loan registered with MERS on the MERS System.
MERS System: The system of recording transfers of mortgages
electronically maintained by MERS.
Maximum Loan Interest Rate: With respect to each Adjustable
Rate
Loan, a rate that is set forth on the Loan Schedule and in the
related Note
which is the maximum interest rate to which the Loan Interest Rate
on such
Loan may be increased on any Adjustment Date.
7
<PAGE>
MIN: The Mortgage Identification Number for any MERS Loan.
Minimum Loan Interest Rate: With respect to each Adjustable
Rate
Loan, a rate that is set forth on the Loan Schedule and in the
related Note
which is the minimum interest rate to which the Loan Interest Rate
on such
Loan may be decreased on any Adjustment Date.
MOM Loan: Any Loan as to which MERS is acting as mortgagee,
solely
as nominee for the originator of such Loan and its successors and
assigns.
Monthly Advance: The aggregate of the advances made by the
Seller
on any Distribution Date pursuant to Section 11.21 of the Servicing
Addendum..
Monthly Payment: With respect to any Loan, the scheduled
combined
payment of principal and interest payable by a Borrower under the
related Note
on each Due Date.
Mortgaged Property: With respect to each Loan, the Borrower's
real
property securing repayment of the related Note, consisting of real
property
improved by a Residential Dwelling.
Moody's: Moody's Investors Service, Inc. or its successor in
interest.
Mortgage: With respect to each Loan, the mortgage, deed of
trust
or other instrument creating a first or second lien on the
Mortgaged Property
securing the related Note.
Mortgagee: The mortgagee or beneficiary named in the Mortgage
and
the successors and assigns of such mortgagee or beneficiary.
Note: The original executed note or other evidence of the Loan
indebtedness of a Borrower.
Net Loan Rate: With respect to any Loan (or the related REO
Property), as of any date of determination, a per annum rate of
interest equal
to the then applicable Loan Interest Rate for such Loan minus the
Servicing
Fee Rate.
Nonrecoverable Monthly Advance: Any Monthly Advance previously
made or proposed to be made in respect of a 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
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 the Chief Executive
Officer or the
Chief Financial Officer 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.
8
<PAGE>
Opinion of Counsel: A written opinion of counsel, who may be an
employee of the Person on behalf of whom the opinion is being
given,
reasonably acceptable to each Person to whom such opinion is
addressed.
Periodic Rate Cap: With respect to each Adjustable Rate Loan
and
any Adjustment Date therefor, a number of percentage points per
annum that is
set forth in the Loan Schedule and in the related Note, which is
the maximum
amount by which the Loan Interest Rate for such Adjustable Rate
Loan may
increase (without regard to the Maximum Loan Interest Rate) or
decrease
(without regard to the Minimum Loan Interest Rate) on such
Adjustment Date
from the Loan Interest Rate in effect immediately prior to such
Adjustment
Date.
Person: An individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company,
trust,
unincorporated organization or government or any agency or
political
subdivision thereof.
Prepayment Interest Excess: With respect to any Distribution
Date,
for each Loan that was the subject of a Principal Prepayment in
full during
the portion of the related Prepayment Period occurring between the
first day
of the calendar month in which such Distribution Date occurs and
the last day
of the related Prepayment Period, an amount equal to interest (to
the extent
received) at the applicable Net Loan Rate on the amount of such
Principal
Prepayment for the number of days commencing on the first day of
the calendar
month in which such Distribution Date occurs and ending on the date
on which
such prepayment is so applied.
Prepayment Interest Shortfall: With respect to any Distribution
Date and any Loan that was subject to a Principal Prepayment or
other
unscheduled receipt of principal (including as a result of a
liquidation)
during the portion of the related Prepayment Period occurring
between and
including the first day of such related Prepayment Period and the
last day of
the calendar month preceding the month in which such Distribution
Date occurs,
an amount equal to interest at the applicable Net Loan Rate on the
amount of
such Principal Prepayment for the number of days commencing on the
date on
which the such prepayment is applied and ending on the last day of
the
calendar month preceding the month in which such Distribution Date
occurs.
Prepayment Period: With respect to any Distribution Date, the
previous calendar month.
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 Loan which is received in advance of its scheduled Due Date,
including
any prepayment penalty or premium thereon, which is not accompanied
by an
amount of interest representing scheduled interest due on any date
or dates in
any month or months subsequent to the month of prepayment.
Purchase
Price: The price paid on the related Closing Date by the
Purchaser to the Seller pursuant to the Confirmation in exchange
for the Loans
purchased on the Closing Date as calculated as provided in Section
4.
9
<PAGE>
Purchaser: UBS Real
Estate Securities Inc., or any successor.
Qualified Correspondent: Any Person from which the Seller
purchased Loans, provided that the following conditions are
satisfied: (i)
such Loans were originated pursuant to an agreement between the
Seller and
such Person that contemplated that such Person would underwrite
mortgage loans
from time to time, for sale to the Seller, in accordance with
underwriting
guidelines designated by the Seller ("Designated Guidelines") or
guidelines
that do not vary materially from such Designated Guidelines; (ii)
such Loans
were in fact underwritten as described in clause (i) above and were
acquired
by the Seller within 180 days after origination; (iii) either (x)
the
Designated Guidelines were, at the time such Loans were originated,
used by
the Seller in origination of mortgage loans of the same type as the
Loans for
the Seller's own account or (y) the Designated Guidelines were, at
the time
such Loans were underwritten, designated by the Seller on a
consistent basis
for use by lenders in originating mortgage loans to be purchased by
the
Seller; and (iv) the Seller employed, at the time such Loans were
acquired by
the Seller, pre-purchase or post-purchase quality assurance
procedures (which
may involve, among other things, review of a sample of mortgage
loans
purchased during a particular time period or through particular
channels)
designed to ensure that Persons from which it purchased mortgage
loans
properly applied the underwriting criteria designated by the
Seller.
Qualified Insurer: Any insurer duly authorized and licensed
where
required by law to transact its business and which meets the
requirements of
Freddie Mac.
Qualified Substitute Loan: A loan substituted for a Deleted
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 Loan as of the Due Date in the calendar month during which
the
substitution occurs, (ii) have a Loan Interest Rate not less than
(and not
more than one percentage point in excess of) the Loan Interest Rate
of the
Deleted Loan, (iii) have a Net Loan Rate equal to the Net Loan Rate
of the
Deleted Loan, (iv) have a remaining term to maturity not greater
than (and not
more than one year less than) that of the Deleted Loan, (v) have
the same Due
Date as the Due Date on the Deleted Loan, (vi) have a Loan-to-Value
Ratio as
of the date of substitution equal to or lower than the
Loan-to-Value Ratio of
the Deleted Loan as of such date, (vii) be covered under a Primary
Insurance
Policy if such Qualified Substitute Loan has a Loan-to-Value Ratio
in excess
of 80%, (viii) conform to each representation and warranty set
forth in
Section 7.02 of this Agreement and (ix) be the same type of loan
(i.e. fixed
or adjustable rate with the same Gross Margin and Index as the
Deleted Loan).
In the event that one or more loans are substituted for one or more
Deleted
Loans, the amounts described in clause (i) hereof shall be
determined on the
basis of aggregate principal balances, the Loan Interest Rates
described in
clause (ii) hereof shall be satisfied as to each such loan, the Net
Loan Rates
described in clause (iii) hereof shall be satisfied as to each such
loan, the
terms described in clause (iv) shall be determined on the basis of
weighted
average remaining terms to maturity, the Loan-to-Value Ratios
described in
clause (vi) hereof shall be satisfied as to each such loan and,
except to the
extent otherwise provided in this sentence, the representations and
warranties
described in clause (ix) hereof must be satisfied as to each
Qualified
Substitute Loan or in the aggregate, as the case may be.
10
<PAGE>
Rate/Term Refinancing: A Refinanced Loan, the proceeds of which
are not in excess of the greater of $2,000 or 2% of the existing
first lien
loan (and any existing junior lien loans, if applicable) of the
related
Mortgaged Property and related closing costs, and were used
exclusively to
satisfy the then existing first lien loan (and any existing junior
lien loans,
if applicable) of the Borrower on the related Mortgaged Property
and to pay
related closing costs.
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 Loan: A Loan the proceeds of which were not used to
purchase the related Mortgaged Property.
Regulation AB: Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be
amended
from time to time, and subject to such clarification and
interpretation as
have been provided by the Commission in the adopting release
(Asset-Backed
Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506,
1,531
(Jan. 7, 2005)) or by the staff of the Commission, or as may be
provided by
the Commission or its staff from time to time.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC
Provisions: Provisions of the federal income tax law
relating to REMICs, which appear in Sections 860A through 860G of
the Code;
and related provisions, and proposed, temporary and final
regulations and
published rulings, notices and announcements promulgated
thereunder, as the
foregoing may be in effect from time to time.
REO Disposition: The final sale by the Seller of any REO
Property.
REO Property: A Mortgaged Property acquired as a result of the
liquidation of a Loan.
Repurchase Price: With respect to any Loan, a price equal to
(i)
the product of the Stated Principal Balance of such Loan times the
greater of
(x) the percentage of par used to calculate the Purchase Price
pursuant to the
Confirmation and (y) 100% plus (ii) interest on such Stated
Principal Balance
at the Loan Interest Rate from and including the last Due Date
through which
interest has been paid by or on behalf of the Borrower to the first
day of the
month following the date of repurchase, plus (iii) any costs and
damages
incurred in connection with any violation of such Loan of any
predatory or
abusive lending law; less amounts received in respect of such
repurchased Loan
which are being held in the Custodial Account for distribution in
connection
with such Loan.
Residential Dwelling: Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two to four-family dwelling,
(iii) a
one-family dwelling unit in a Fannie Mae eligible condominium
project, or (iv)
a detached one-family dwelling in a planned unit development, none
of which is
a unit in a cooperative property or a mobile or manufactured
home.
11
<PAGE>
Sarbanes-Oxley Act: Means the Sarbanes-Oxley Act of 2002 and
the
rules and regulations of the Commission promulgated thereunder
(including any
interpretations thereof by the Commission's staff).
Second Lien: With respect to each Mortgaged Property, the lien
of
the mortgage, deed of trust or other instrument securing a Note
which creates
a second lien on the Mortgaged Property.
Second Lien Loan: A Loan secured by the lien on the Mortgaged
Property, subject to one prior lien on such Mortgaged Property
securing
financing obtained by the related Mortgagor.
Securities Act: The Securities Act of 1933, as amended.
Securitization Transaction: The transaction pursuant to which
TBW
Mortgage-Backed Trust 2007-1 Mortgage-Backed Pass-Through
Certificates, Series
2007-1 are issued.
Seller Information: As
defined in Subsection 33.07(a).
Servicer: As defined
in Subsection 33.03(c).
Servicing Addendum: The terms and conditions attached hereto as
Exhibit 9 which will govern the servicing of the Loans by
Seller.
Servicing Advances: All customary, reasonable and necessary
"out-of-pocket" costs and expenses incurred by the Seller 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 Loan,
including
foreclosure actions and (iii) the management and liquidation of REO
Property.
Servicing Criteria: The "servicing criteria" set forth in Item
1122(d) of Regulation AB, as such may be amended from time to
time.
Servicing Fee: With respect to each Loan, the amount of the
annual
servicing fee the Purchaser shall pay to the Seller, which shall,
for each
month, be equal to one-twelfth of the product of (a) the Servicing
Fee Rate
and (b) the unpaid principal balance of the Loan. Such fee shall be
payable
monthly, computed on the basis of the same principal amount and
period
respecting which any related interest payment on a Loan is
computed. The
obligation of the Purchaser to pay the Servicing Fee is limited to,
and the
Servicing Fee is 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 the Servicing
Addendum)
of related Monthly Payments collected by the Seller.
Servicing Fee Rate: The per annum rate at which the Servicing
Fee
accrues, which rate with respect to each Loan shall be equal to the
percentage
specified as such on the Loan Schedule.
12
<PAGE>
Servicing File: With respect to each Loan, the file retained by
the Seller consisting of originals of all documents in the Loan
File which are
not delivered to the Purchaser or the Custodian and copies of the
Loan
Documents.
Standard & Poor's: Standard & Poor's Rating Services, a
division
of The McGraw-Hill Companies Inc., and its successors in
interest.
Stated Principal Balance: As to each Loan as of any date of
determination, (i) the principal balance of the 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 Borrower on or before such date,
minus (ii)
all amounts previously distributed to the Purchaser with respect to
the
related Loan representing payments or recoveries of principal (or
advances in
lieu thereof).
Static Pool Information: Static pool information as described
in
Item 1105(a)(1)-(3) and 1105(c) of Regulation AB.
Subcontractor: Any vendor, subcontractor or other Person that
is
not responsible for the overall servicing (as "servicing" is
commonly
understood by participants in the mortgage-backed securities
market) of Loans
but performs one or more discrete functions identified in Item
1122(d) of
Regulation AB with respect to Loans under the direction or
authority of the
Seller or a Subservicer.
Subservicer: Any Person that services Loans on behalf of the
Seller or any Subservicer and is responsible for the performance
(whether
directly or through Subservicers or Subcontractors) of a
substantial portion
of the material servicing functions required to be performed by the
Seller
under this Agreement that are identified in Item 1122(d) of
Regulation AB.
Subservicing Agreement: The written contract between the Seller
and a Subservicer relating to servicing and administration of
certain Loans as
provided in Subsection 11.29 of the Servicing Addendum.
Third-Party Originator: Each Person, other than a Qualified
Correspondent, that originated Loans acquired by the Seller and
sold to the
Purchaser hereunder.
SECTION 2. Agreement to Purchase. The Seller agrees to sell, and
the
Purchaser agrees to purchase Loans having an aggregate principal
balance on
the Cut-off Date in an amount as set forth in the Confirmation on
the Closing
Date.
SECTION 3. Loan Schedules. The Seller shall deliver the Loan
Schedule to the Purchaser at least five (5) Business Days prior to
the Closing
Date in both hard copy and electronic format.
SECTION 4. Purchase Price. The Purchase Price for each Loan
listed
on the Loan Schedule shall be the percentage of par as stated in
the
Confirmation (subject to adjustment as provided therein),
multiplied by its
Stated Principal Balance as of the Cut-off Date. If so provided in
the
Confirmation, portions of the Loans shall be priced separately. The
aggregate
Purchaser Price paid to the Seller shall be reduced by the price of
the TBW
Mortgage-Backed
13
<PAGE>
Trust 2007-1 Mortgage Pass-Through Certificates, Series 2007-1,
Class C, Class
P and Class R Certificates (the "Transferred Certificates"). The
aggregate
consideration for the sale of the Loans by the Seller and the
purchase of the
Loans by the Purchaser shall be the total amount of cash paid by
the Purchaser
and the Transferred Certificates.
In addition to the Purchase Price as described above, (i) the
Purchaser shall pay the Seller, at closing, accrued interest on the
Stated
Principal Balance of each Loan as of the related Cut-off Date at
its Net Loan
Rate from the related Cut-off Date through the day prior to the
related
Closing Date, both inclusive and (ii) the Seller shall pay to the
Purchaser
the costs and fees expected to be associated with the recording of
an
Assignment of Mortgage with respect to each Loan (such amount may
be set forth
in the Confirmation).
The Purchaser shall own and be entitled to receive with respect
to
each 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 Loans net of the Servicing Fee 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 Loan as of the related
Cut-off Date
is determined after application to the reduction of principal of
payments of
principal due on or before the related Cut-off Date whether or not
collected.
Therefore, for the purposes of this Agreement, payments of
scheduled principal
and interest prepaid for a Due Date beyond the related Cut-off Date
shall not
be applied to the principal balance as of the related Cut-off Date.
Such
prepaid amounts (minus the applicable Servicing Fee) shall be the
property of
the Purchaser. The Seller shall deposit any such prepaid amounts
into the
Custodial Account, which account is established for the benefit of
the
Purchaser, for remittance by the Seller to the Purchaser on the
first related
Distribution Date. All payments of principal and interest, less the
applicable
Servicing Fee, due on a Due Date following the related Cut-off Date
shall
belong to the Purchaser.
SECTION 5. Examination of Loan Files. In addition to the rights
granted to the Purchaser under the Confirmation to underwrite the
Loans and
review the Loan Files prior to the Closing Date, prior to the
related Closing
Date, the Seller shall (a) deliver to the Custodian in escrow, for
examination
with respect to each Loan to be purchased on the Closing Date, the
related
Loan File, or (b) make the related Loan File available to the
Purchaser for
examination at the Seller's offices or such other location as shall
otherwise
be agreed upon by the Purchaser and the Seller. Such examination
may be made
by the Purchaser or its designee at any reasonable time before the
related
Closing Date. If the Purchaser makes such examination prior to the
Closing
Date and identifies any Loans that do not conform to the terms of
the
Confirmation or the Purchaser's underwriting standards, such Loans
may, at the
Purchaser's option, be rejected for purchase by the Purchaser. If
not
purchased by the Purchaser, such Loans shall be deleted from the
Loan
Schedule. The Purchaser may, at its option and without notice to
the Seller,
purchase all or a portion of the Loans without conducting any
partial or
complete examination. The fact that the Purchaser has conducted or
has
determined not to conduct any partial or complete examination of
the Loan
Files shall not affect the Purchaser's (or any of its successors')
rights to
demand repurchase or other relief or remedy provided for in this
Agreement.
14
<PAGE>
SECTION 6. Conveyance from Seller to Purchaser.
Subsection 6.01. Conveyance of Loans; Possession of Servicing
Files.
The Seller, simultaneously with the payment of the Purchase
Price,
shall execute and deliver to the Purchaser an Assignment and
Conveyance with
respect to the related Loan Package in the form attached hereto as
Exhibit 4.
The Servicing File retained by the Seller with respect to each Loan
pursuant
to this Agreement shall be appropriately identified in the Seller's
computer
system to reflect clearly the sale of such related Loan to the
Purchaser. The
Seller 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
Loan pursuant
to Subsection 7.03 or 7.04.
In addition, in connection with the assignment of any MERS
Loan,
the Seller agrees that on or prior to the Closing Date it will
cause, at its
own expense, the MERS System to indicate that the related Loans
have been
assigned by the Seller to the Purchaser in accordance with this
Agreement by
including in such computer files the information required by the
MERS System
to identify the Purchaser as owner of such Loans.
Subsection 6.02. Books and Records.
Record title to each Note and the related Mortgage as of the
related Closing Date shall be in the name of the Seller, the
Purchaser or one
or more designees of the Purchaser, as the Purchaser shall
designate.
Notwithstanding the foregoing, beneficial ownership of each Note
and the
related Mortgage shall be vested solely in the Purchaser. All
rights arising
out of the Loans including, but not limited to, all funds received
by the
Seller after the Cut-off Date on or in connection with a 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 Loan as provided in Section 4 shall be received and held by
the Seller
in trust for the benefit of the Purchaser as the owner of the 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 Loans by
the Seller and not a pledge of the Loans by the Seller to the
Purchaser to
secure a debt or other obligation of the Seller. Consequently, the
sale of
each Loan shall be reflected as a sale on the Seller's business
records, tax
returns and financial statements.
Subsection 6.03. Delivery of Loan Documents.
The Seller shall in connection with the Closing Date, at least
five (5) Business Days prior to the Closing Date, deliver and
release to the
Custodian the Loan Documents with respect to each Loan to be
purchased and
sold on the Closing Date and set forth on the related Loan
Schedule.
The Custodian shall certify its receipt of all such Loan
Documents
for the related Closing Date, as evidenced by a trust receipt and
initial
certification of the Custodian delivered to the Purchaser. The fees
and
expenses of the Custodian shall be paid by the Seller.
15
<PAGE>
The Seller shall forward to the Custodian original documents
evidencing an assumption, modification, consolidation or extension
of any Loan
entered into in accordance with this Agreement within two weeks of
their
execution, provided, however, that the Seller shall provide the
Custodian with
a certified true copy of any such document submitted for
recordation within
two weeks of its execution.
The Seller shall provide the original of any document submitted
for recordation promptly upon return of such document from the
applicable
recording office and in no event later than 180 days following the
Closing
Date, or in the case of an assumption, modification, consolidation
or
extension pursuant to the preceding paragraph, 180 days following
the date of
submission of such document to the applicable recording office
for
recordation. The Seller shall provide an original mortgagee title
insurance
policy meeting the requirements of this Agreement promptly upon the
issuance
thereof and in no event later than 180 days following the related
Closing
Date. To the extent that the Seller fails to provide any such
original
document within the time period set forth herein, such failure
shall be deemed
a material breach of a representation and warranty in Subsection
7.02 hereof
and the Purchaser may demand, and shall have the right to, a remedy
for such
breach pursuant to Subsection 7.03 hereof (it being understood that
any cure
period set forth in Subsection 7.03 shall be deemed to have
expired).
Notwithstanding the foregoing, in the event the Seller is unable to
deliver by
such date each original document and by reason of the fact that any
such
documents have not been returned by the appropriate recording
office, the
Seller shall deliver such documents to the Custodian as promptly as
possible
upon receipt thereof and, in any event, within 720 days following
the Closing
Date. The Seller shall forward or cause to be forwarded to the
Custodian (a)
from time to time additional original documents evidencing an
assumption or
modification of a Loan and (b) any other documents required to be
delivered by
the Seller to the Custodian. In the event that the original
document is not
delivered and in connection with the payment in full of the related
Loan and
the public recording office requires the presentation of a "lost
instruments
affidavit and indemnity" or any equivalent document, because only a
copy of
the document can be delivered with the instrument of satisfaction
or
reconveyance, the Custodian shall execute and deliver or cause to
be executed
and delivered such a document to the public recording office. In
the case
where a public recording office retains the original recorded
document or in
the case where a document is lost after recordation in a public
recording
office, the Seller shall deliver to the Custodian a copy of such
document
certified by such public recording office to be a true and complete
copy of
the original recorded document.
SECTION 7. Representations, Warranties and Covenants; Remedies
for
Breach.
Subsection 7.01. Representations and Warranties Respecting the
Seller.
The Seller represents, warrants and covenants to the Purchaser
as
of the Closing Date or as of such date specifically provided herein
or in the
applicable Assignment and Conveyance:
(i) The Seller is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and
has all
licenses necessary to carry on its business as now being conducted.
It is
licensed in, qualified to transact business in and is in good
standing under
the laws of the state in which any Mortgaged Property is located
except where
the
16
<PAGE>
failure to be so licensed and qualified would not have a material
adverse
effect on the Seller's business or operations or the enforceability
of any
Loan or the Seller's ability to service such Loan in accordance
with the terms
of this Agreement. No licenses or approvals obtained by 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
Loan, to sell each 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 do not
and 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 Freddie Mac
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 Freddie Mac or HUD eligibility requirements or which would
require
notification to Freddie Mac 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 Note, the Mortgage, the Assignment of Mortgage and
any
other documents required to be delivered with respect to each 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
Loan, the
Seller is in possession of a complete Loan File in compliance with
Exhibit 5,
except for such documents as have been delivered to the
Custodian;
17
<PAGE>
(viii) Immediately prior to the payment of the Purchase Price
for
each Loan, the Seller was the owner of record of the related
Mortgage and the
indebtedness evidenced by the related Note and upon the payment of
the
Purchase Price by the Purchaser, in the event that the Seller
retains record
title, the Seller shall retain such record title in trust for the
Purchaser as
the owner thereof and only for the purpose of servicing and
supervising the
servicing of each Loan;
(ix) There are no actions or proceedings against, or
investigations of, the Seller before any court, administrative or
other
tribunal (A) that might prohibit its entering into this Agreement,
(B) seeking
to prevent the sale of the 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 Notes and the Mortgages
by the
Seller pursuant to this Agreement are not subject to the bulk
transfer or any
similar statutory provisions;
(xii) 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;
(xiii) The origination, servicing and collection practices used
by
the Seller (and by any prior originator or servicer) with respect
to each Note
and Mortgage have been in all respects legal, proper, prudent and
customary in
the mortgage origination and servicing industry and have been in
accordance
with Accepted Servicing Practices. The Loan has been serviced by
the Seller
and any predecessor servicer in accordance with the terms of the
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 Note and no such escrow deposits or Escrow
Payments
are being held by the Seller for any work on a Mortgaged Property
which has
not been completed;
(xiv) The transfer of the 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 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 Loan which shall be clearly marked to
reflect the
ownership of such Loan by the Purchaser;
18
<PAGE>
(xv) The consideration received by the Seller upon the sale of
the
Loans constitutes fair consideration and reasonably equivalent
value for such
Loan;
(xvi) The Seller is solvent and will not be rendered insolvent
by
the consummation of the transactions contemplated hereby. The
Seller is not
transferring any Loan with any intent to hinder; delay or defraud
any of its
creditors;
(xvii) 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
loans underwritten to the same standards as the Loans and covering
properties
similar to the Mortgaged Properties, is true and correct in all
material
respects; and
(xviii) If the Seller is or becomes a member of MERS, the
Seller
is in good standing, and will comply in all material respects with
the rules
and procedures of MERS in connection with the servicing of the MERS
Loans for
as long as such Loans are registered with MERS.
Subsection 7.02. Representations and Warranties Regarding
Individual Loans.
The Seller
hereby represents and warrants to the Purchaser that,
as to each Loan, as of the related Closing Date for such Loan:
(i) The information set forth in the related Loan Schedule is
complete, true and correct;
(ii) The Loan is in compliance with all requirements set forth
in
the Confirmation, and the characteristics of the related Loan
Package as set
forth in the Confirmation are true and correct;
(iii) 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 Note or Mortgage; and no Loan has been more
than 30
days delinquent during the last twelve months;
(iv) There are no delinquent taxes, ground rents, water
charges,
sewer rents, assessments, insurance premiums, leasehold payments,
including
assessments payable in future installments or other outstanding
charges
affecting the related Mortgaged Property;
(v) The terms of the 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
the title insurer, to the extent required by the related policy,
and is
reflected on the related Loan Schedule. No instrument of waiver,
alteration or
modification has been executed, and no Borrower has been released,
in whole or
in part, except in connection with an assumption agreement approved
by the
insurer under the Primary Insurance Policy, if any, and the
title
19
<PAGE>
insurer, to the extent required by the policy, and which assumption
agreement
has been delivered to the Custodian and the terms of which are
reflected in
the related Loan Schedule. With respect to each Second Lien Loan
(a) the
related first lien is in full force and effect, (b) there is no
default,
breach, violation or event of acceleration existing under the
related first
lien mortgage or the mortgage note related to such first lien
mortgage, (c)
either no consent for the Loan is required by the holder of the
first lien or
such consent has been obtained and is contained in the Loan File,
(d) no event
which, with the passage of time or with notice and the expiration
of any grace
or cure period, would constitute a default, breach, violation or
event of
acceleration under the related first lien mortgage loan, and either
(1) the
related first lien mortgage contains a provision which allows or
(2)
applicable law requires, the mortgagee under the Second Lien Loan
to receive
notice of, and affords such mortgagee an opportunity to cure any
default by
payment in full or otherwise under the related first lien mortgage,
and (e)
such Second Lien Loan is secured by a one- to four-family residence
that is
the principal residence of the Borrower;
(vi) The 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 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;
(vii) All buildings upon the Mortgaged Property are insured by
an
insurer acceptable to Freddie Mac against loss by fire, hazards of
extended
coverage and such other hazards as are customary in the area where
the
Mortgaged Property is located, pursuant to insurance policies
conforming to
the requirements of the Servicing Addendum, in an amount which is
not less
than the lesser of 100% of the insurable value of the Mortgaged
Property and
the outstanding principal balance of the Loans, but in no event
less than the
minimum amount necessary to fully compensate for any damage or loss
on a
replacement cost basis. All such insurance policies contain a
standard
mortgagee clause naming the Seller, 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 with a generally acceptable insurance
carrier]
which policy conforms to the requirements of Freddie Mac, in an
amount
representing coverage not less than the least of (A) the
outstanding principal
balance of the Loan, (B) the full insurable value of the Mortgaged
Property
and (C) the maximum amount of insurance which was available under
the National
Flood Insurance Act of 1968, as amended. The Mortgage obligates the
Borrower
thereunder to maintain all such insurance at the Borrower's cost
and expense,
and on the Borrower's failure to do so, authorizes the holder of
the Mortgage
to maintain such insurance at Borrower's cost and expense and to
seek
reimbursement therefor from the Borrower. No prior holder of the
related
Mortgage, including the Seller, has done, by act or omission,
anything which
would impair the coverage of such insurance policies;
(viii) Each Loan and, if any, the related prepayment penalty
complies in all material respects with any and all requirements of
any
federal, state or local law including, without limitation, usury,
truth in
lending, real estate settlement procedures, consumer credit
20
<PAGE>
protection, equal credit opportunity, fair housing, disclosure, or
predatory,
fair and abusive lending laws applicable to the origination and
servicing of
loans of a type similar to the Loans and the consummation of the
transactions
contemplated hereby will not involve the violation of any such
laws;
(ix) Neither the Mortgage nor the related Note has been
satisfied,
cancelled, subordinated or rescinded, in whole or in part, and the
Mortgaged
Property has not been released from the lien of the Mortgage, in
whole or in
part, nor has any instrument been executed that would effect any
such
satisfaction, cancellation, subordination, rescission or
release;
(x) The Mortgage is a valid, existing and enforceable first or
second lien 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 acceptable to mortgage lending
institutions
generally and specifically referred to in the lender's title
insurance policy
delivered to the originator of the Loan and which do not adversely
affect the
Appraised Value of the Mortgaged Property, (c) with respect to
Second Lien
Loans, the first priority lien on the Mortgaged Property and (d)
other matters
to which like properties are commonly subject which do not
materially
interfere with the benefits of the security intended to be provided
by the
Mortgage or the use, enjoyment, value or marketability of the
related
Mortgaged Property. Any security agreement, chattel mortgage or
equivalent
document related to and delivered in connection with the Loan
establishes and
creates a valid, existing and enforceable first lien and first
priority, or
with respect to Second Lien Loans, second lien and second priority,
security
interest 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 Loan, subject to a mortgage, deed
of trust,
deed to secure debt or other security instrument creating a lien
subordinate
to the lien of the Mortgage;
(xi) The 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 Note and the Mortgage had legal
capacity
to enter into the Loan and to execute and deliver the Note and the
Mortgage,
and the Note and the Mortgage have been duly and properly executed
by such
parties;
(xiii) The proceeds of the Loan have been fully disbursed to or
for the account of the Borrower 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 Loan and the recording
of the
Mortgage have been paid, and the Borrower is not entitled to any
refund of any
amounts paid or due to the Mortgagee pursuant to the Note or
Mortgage;
(xiv) The Seller is the sole legal, beneficial and equitable
owner
of the Note and the Mortgage and has full right to transfer and
sell the Loan
to the Purchaser free and clear of any encumbrance, equity, lien,
pledge,
charge, claim or security interest;
21
<PAGE>
(xv) All parties which have had any interest in the Loan,
whether
as mortgagee, assignee or otherwise, are (or, during the period in
which they
held and disposed of such interest, were) in compliance with any
and all
applicable "doing business" and licensing requirements of the laws
of the
state wherein the Mortgaged Property is located;
(xvi) The Loan is covered by an ALTA lender's title insurance
policy (which, in the case of an Adjustable Rate Loan has an
adjustable rate
mortgage endorsement in the form of ALTA 6.0 or 6.1) acceptable to
Freddie
Mac, issued by a title insurer acceptable to Freddie Mac and
qualified to do
business in the jurisdiction where the Mortgaged Property is
located, insuring
(subject to the exceptions contained in (x)(a), (b), (c) and (d)
above) the
Seller, its successors and assigns as (i) to the first priority
lien of the
Mortgage or (ii) with respect to a Second Lien Loan, the second
priority lien
of the Mortgage, in either case, in the original principal amount
of the Loan
and, with respect to any Adjustable Rate 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 Loan 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 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 Note or the Mortgage 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;
(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
unless otherwise disclosed and are affirmatively insured by the
title
insurance policy referred to in (xvi) above; and to the best of the
Seller's
knowledge, the Mortgaged Property and all improvements thereon
comply with all
requirements of any applicable zoning and subdivision laws and
ordinances;
(xx) The Loan was originated by the Seller or by a savings and
loan association, a savings bank, a commercial bank, a credit
union, an
insurance company, or similar institution which is supervised and
examined by
a federal or state authority, or by a mortgagee approved by the
Secretary of
HUD pursuant to Sections 203 and 211 of the National Housing
22
<PAGE>
Act all within the meaning of Section 3(a)(41) of the Securities
Exchange Act
of 1934, as amended;
(xxi) Principal payments on the Loan commenced no more than
sixty
days after the proceeds of the Loan were disbursed. The Loan bears
interest at
the Loan Interest Rate. The Note is payable on the first day of
each month in
Monthly Payments, which, in the case of a Fixed Rate Loan, are
sufficient to
fully amortize the original principal balance over the original
term thereof
(other than during the interest-only period with respect to a Loan
identified
on the related Loan Schedule as an interest-only Loan) and to pay
interest at
the related Loan Interest Rate, and, in the case of an Adjustable
Rate Loan,
are changed on each Adjustment Date, and in any case, are
sufficient to fully
amortize the original principal balance over the original term
thereof (other
than during the interest-only period with respect to a Loan
identified on the
related Loan Schedule as an interest-only Loan) and to pay interest
at the
related Loan Interest Rate. With respect to each Loan identified on
the Loan
Schedule as an interest-only Loan, the interest-only period does
not exceed
ten (10) years (or such lesser period specified on the Loan
Schedule) and
following the expiration of such interest-only period, the
remaining Monthly
Payments shall be sufficient to fully amortize the original
principal balance
over the remaining term of the Loan. The Index for each Adjustable
Rate Loan
is as defined in the Confirmation and set forth in the related Loan
Schedule.
The Note does not permit negative amortization. No Loan provides
for the
capitalization or forbearance of interest. No Loan is a Convertible
Loan;
(xxii) The Mortgaged Property is undamaged by water, fire,
earthquake or other earth movement, windstorm, flood, tornado or
similar
casualty (excluding casualty from the presence of hazardous wastes
or
hazardous substances, as to which the Seller makes no
representations), so as
to affect adversely the value of the Mortgaged Property as security
for the
Loan or the use for which the premises were intended and to the
best of the
Seller's knowledge, there is no proceeding pending or threatened
for the total
or partial condemnation of the Mortgaged Property;
(xxiii) The Mortgage and related 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 Borrower
has not filed
for protection under applicable bankruptcy laws. There is no
homestead or
other exemption available to the Borrower which would interfere
with the right
to sell the Mortgaged Property at a trustee's sale or the right to
foreclose
the Mortgage. The Borrower has not notified the Seller requesting
relief under
the Soldiers' and Sailors' Civil Relief Act of 1940 or the
Servicemembers
Civil Relief Act, and the Seller has no knowledge of any relief
requested or
allowed to the Borrower under the Soldiers' and Sailors' Civil
Relief Act of
1940 or the Servicemembers Civil Relief Act or any similar state
laws;
(xxiv) The
Loan was underwritten in accordance with the
underwriting standards of the Seller in effect at the time the Loan
was
originated, a copy of which underwriting standards are attached as
Exhibit 10
hereto. The Note and Mortgage are on forms acceptable to Freddie
Mac;
23
<PAGE>
(xxv) The Note is not and has not been secured by any
collateral
except the lien of the corresponding Mortgage and the security
interest of any
applicable security agreement or chattel mortgage referred to in
(x) or (xi)
above;
(xxvi) The Loan File contains an appraisal of the related
Mortgaged Property which is on appraisal form 1004 or form 2055
with an
interior inspection or, with respect to any Second Lien Loan, is on
appraisal
form 704, 2065 or 2055 with an exterior inspection only, and, in
each case,
which satisfied the standards of Freddie Mac and was made and
signed, prior to
the approval of the Loan application, by a qualified appraiser,
duly appointed
by the Seller, who had no interest, direct or indirect in the
Mortgaged
Property or in any loan made on the security thereof; whose
compensation is
not affected by the approval or disapproval of the Loan and who met
the
minimum qualifications of Freddie Mac. Each appraisal of the Loan
was made in
accordance with the relevant provisions of the Financial
Institutions Reform,
Recovery, and Enforcement Act of 1989;
(xxvii) 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 Borrower;
(xxviii) No Loan contains provisions pursuant to which Monthly
Payments are (a) paid or partially paid with funds deposited in any
separate
account established by the Seller, the Borrower, or anyone on
behalf of the
Borrower or (b) paid by any source other than the Borrower. The
Loan is not a
graduated payment loan and the Loan does not have a shared
appreciation or
other contingent interest feature. No Loan contains any provisions
which may
constitute buydown provisions;
(xxix) The Borrower has executed a statement to the effect that
the Borrower has received all disclosure materials required by
applicable law
with respect to the making of fixed rate loans in the case of Fixed
Rate
Loans, and adjustable rate loans in the case of Adjustable Rate
Loans and
rescission materials with respect to Refinanced Loans, and such
statement is
and will remain in the Loan File;
(xxx) No Loan was made in connection with (a) the construction
or
rehabilitation of a Mortgaged Property or (b) facilitating the
trade-in or
exchange of a Mortgaged Property;
(xxxi) The Seller has no knowledge of any circumstances or
condition with respect to the Mortgaged Property, the Borrower, the
Borrower's
credit standing or the Mortgage that can reasonably be expected to
cause the
Loan to be an unacceptable investment, cause the Loan to become
delinquent, or
adversely affect the value of the Loan;
(xxxii) Each Loan with an LTV at origination in excess of 80%
is
and will be subject to a Primary Insurance Policy, issued by a
Qualified
Insurer, which insures that portion of the Loan in excess of the
portion of
the Appraised Value of the Mortgaged Property required by Fannie
Mae. All
provisions of such Primary Insurance Policy have been and are
being
24
<PAGE>
complied with, such policy is in full force and effect, and all
premiums due
thereunder have been paid. Any Mortgage subject to any such Primary
Insurance
Policy obligates the Borrower thereunder to maintain such insurance
and to pay
all premiums and charges in connection therewith. No Loan requires
payment of
such premiums, in whole or in part, by the Purchaser. The Loan
Interest Rate
for the Loan does not include any such insurance premium. No Loan
had a CLTV
at the time of origination in excess of 100%;
(xxxiii) The Mortgaged Property is lawfully occupied under
applicable law; all inspections, licenses and certificates required
to be made
or issued with respect to all occupied portions of the Mortgaged
Property and,
with respect to the use and occupancy of the same, including but
not limited
to certificates of occupancy, have been made or obtained from the
appropriate
authorities;
(xxxiv) No error, omission, misrepresentation, negligence,
fraud
or similar occurrence with respect to a Loan has taken place on the
part of
any person, including without limitation the Borrower, any
appraiser, any
builder or developer, or any other party involved in the
origination of the
Loan or in the application of any insurance in relation to such
Loan;
(xxxv) The Assignment of Mortgage, if required, is in
recordable
form and is acceptable for recording under the laws of the
jurisdiction in
which the Mortgaged Property is located;
(xxxvi) Any principal advances made to the Borrower 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 lien priority (or with respect to a Second Lien Loan,
second lien
priority) by a title insurance policy, an endorsement to the policy
insuring
the mortgagee's consolidated interest or by other title evidence
acceptable to
Freddie Mac. The consolidated principal amount does not exceed the
original
principal amount of the Loan;
(xxxvii) No Loan has a balloon payment feature;
(xxxviii) If the Residential Dwelling on the Mortgaged Property
is
a condominium unit or unit in a planned unit development (other
than a de
minimis planned unit development) such condominium or planned unit
development
project meets the eligibility requirements of Freddie Mac;
(xxxix) Each Loan constitutes a qualified mortgage under
Section
860(a)(3)(A) of the Code and Treasury Regulations Section
1.860G-2(a)(1);
(xl) No Loan is (a) subject to, covered by or in violation of
the
Home Ownership and Equity Protection Act of 1994 ("HOEPA"), (b)
classified as
"high cost," "covered," "high risk home", "threshold", or
"predatory" loans
under HOEPA or any other applicable state, federal or local law,
including any
predatory or abusive lending laws (or a similarly classified loan
using
different terminology under a law imposing heightened regulatory
scrutiny or
additional legal liability for residential mortgage loans having
high interest
rates, points and/or fees), (c) a High Cost Loan or Covered Loan,
as
applicable (as such terms are
25
<PAGE>
defined in the current Standard & Poor's LEVELS(R) Glossary,
Appendix E) or
(d) in violation of any state law or ordinance comparable to HOEPA.
No Loan
(including purchase money loans or refinance transactions) has an
"annual
percentage rate" or "total points and fees" payable by the Borrower
(as each
such term is defined under HOEPA) that equal or exceed the
applicable
thresholds defined under HOEPA (Section 32 of Regulation Z, 12
C.F.R. Section
226.32(a)(1)(i) and (ii));
(xli) No Borrower was required to purchase any credit life,
disability, accident, unemployment, property or health insurance
product or
debt cancellation agreement as a condition of obtaining the
extension of
credit. No Borrower obtained a prepaid single premium credit life,
disability,
unemployment, property, mortgage, accident or health insurance
policy in
connection with the origination of the Loan. No proceeds from any
Loan were
used to finance or purchase single-premium credit insurance
policies or debt
cancellation agreements as part of the origination of or as a
condition to
closing, such Loan;
(xlii) Interest on each Loan is calculated on the basis of a
360-day year consisting of twelve 30-day months;
(xliii) The Mortgaged Property is in compliance with all
applicable environmental laws pertaining to environmental hazards
including,
without limitation, asbestos, and neither the Seller nor, to the
Seller's
knowledge, the related Borrower, has received any notice of any
violation or
potential violation of such law;
(xliv) With respect to each Loan, the Seller has fully and
accurately furnished complete information (e.g., favorable and
unfavorable) on
the related borrower credit files to Equifax, Experian and Trans
Union Credit
Information Company (three of the credit repositories), in
accordance with the
Fair Credit Reporting Act and its implementing regulations, on a
monthly basis
and the Seller will furnish for each Loan, in accordance with the
Fair Credit
Reporting Act and its implementing regulations, accurate and
complete
information (e.g., 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;
(xlv) Except as set forth on the related Loan Schedule, none of
the Loans are subject to a prepayment penalty. With respect to any
Loan that
contains a provision permitting imposition of a penalty upon a
prepayment
prior to maturity: (i) the Loan provides some benefit to the
Borrower (e.g., a
rate or fee reduction) in exchange for accepting such prepayment
penalty; (ii)
the 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
Loan that did not require payment of such a prepayment penalty and
the
Borrower was offered such a product by the Loan's originator; (iii)
the
prepayment penalty was adequately disclosed to the Borrower in the
loan
documents pursuant to applicable state and federal law; (v) the
Loan, will not
provide for prepayment penalties for a term in excess of five
years; unless
the Loan was modified to reduce the prepayment period to no more
five years;
and (v) such prepayment penalty shall not be imposed in any
instance where the
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 Loan or state or federal law might permit the imposition of
such
prepayment penalty. Any such prepayment penalty is permissible and
enforceable
in accordance with its terms upon the
26
<PAGE>
mortgagor's full and voluntary principal prepayment under
applicable law,
except to the extent that: the enforceability thereof may be
limited by
bankruptcy, insolvency, moratorium, receivership and other similar
laws
relating to creditors' rights; the collectability thereof may be
limited due
to acceleration in connection with a foreclosure or other
involuntary
prepayment; or subsequent changes in applicable law may limit or
prohibit
enforceability thereof under applicable law;
(xlvi) The Seller has complied with all applicable anti-money
laundering laws and regulations, including without limitation the
USA Patriot
Act of 200l (collectively, the "Anti-Money Laundering Laws"), the
Seller has
established an anti-money laundering compliance program as required
by the
Anti-Money Laundering Laws, has conducted the requisite due
diligence in
connection with the origination of each Loan for purposes of the
Anti-Money
Laundering Laws, including with respect to the legitimacy of the
applicable
Borrower and the origin of the assets used by the said Borrower to
purchase
the property in question, and maintains, and will maintain,
sufficient
information to identify the applicable Borrower for purposes of the
Anti-Money
Laundering Laws. No Loan is subject to nullification pursuant to
Executive
Order 13224 (the "Executive Order") or the regulations promulgated
by the
Office of Foreign Assets Control of the United States Department of
the
Treasury (the "OFAC Regulations") or in violation of the Executive
Order or
the OFAC Regulations, and no Borrower is subject to the provisions
of such
Executive Order or the OFAC Regulations nor listed as a "blocked
person" for
purposes of the OFAC Regulations;
(xlvii) With respect to each Loan secured in whole or in part
by
the interest of the Borrower as a lessee under a ground lease of a
Mortgaged
Property (a "Ground Lease") the real property securing such Loan is
located in
a jurisdiction in which the use of leasehold estates for
residential
properties is a widely-accepted practice and:
(a) The Borrower is the owner of a valid and subsisting
interest
as tenant
under the Ground Lease;
(b) The Ground Lease is in full force and effect, unmodified
and
not
supplemented by any writing or otherwise;
(c) The mortgagor is not in default under any of the terms
thereof
and there
are no circumstances which, with the passage of time or the
giving of
notice or both, would constitute an event of default
thereunder;
(d) The lessor under the Ground Lease is not in default under
any
of the
terms or provisions thereof on the part of the lessor to be
observed
or performed;
(e) The term of the Ground Lease exceeds the maturity date of
the
related
Loan by at least ten years;
(f) The Ground Lease or a memorandum thereof has been recorded
and
by its
terms permits the leasehold estate to be mortgaged. The Ground
Lease
grants any leasehold mortgagee standard protection necessary to
protect
the security of a leasehold mortgagee;
27
<PAGE>
(g) The Ground Lease does not contain any default provisions
that
could give
rise to forfeiture or termination of the Ground Lease except
for the
non-payment of the Ground Lease rents;
(h) The execution, delivery and performance of the Mortgage do
not
require
the consent (other than those consents which have been obtained
and are in
full force and effect) under, and will not contravene any
provision
of or cause a default under, the Ground Lease; and
(i) The Ground Lease provides that the leasehold can be
transferred, mortgaged and sublet an unlimited number of times
either
without
restriction or on payment of a reasonable fee and delivery of
reasonable
documentation to the lessor.
(xlviii) No predatory or deceptive lending practices, including
but not limited to, the extension of credit to the applicable
Borrower without
regard for said Borrower's ability to repay the Loan and the
extension of
credit to said Borrower which has no apparent benefit to said
Borrower, were
employed by the originator of the Loan in connection with the
origination of
the Loan. Each Loan is in compliance with the anti-predatory
lending
eligibility for purchase requirements of Freddie Mac
(xlix) No Loan is a "High Cost Home Loan" as defined in the
Georgia Fair Lending Act, as amended (the "Georgia Act") or the New
York
Banking Law 6-1. There is no Loan that was originated (or modified)
on or
after October 1, 2002 through and including March 6, 2003, which is
secured by
property located in the State of Georgia;
(l) No Borrower was encouraged or required to select a Loan
product offered by the Loan's 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. Any Borrower who sought
financing
through Loan originator's higher-priced subprime lending channel
was directed
towards or offered the Loan originator's standard mortgage line if
the
Borrower was able to qualify for one of the standard products. If,
at the time
of loan application, the Borrower may have qualified for a lower
cost credit
product then offered by any mortgage lending affiliate of the
Loan's
originator, the Loan's originator referred the Borrower's
application to such
affiliate for underwriting consideration;
(li) The methodology used in underwriting the extension of
credit
for each Loan did not rely solely 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 such as the
Borrower's
income, assets and liabilities, to the proposed mortgage payment
and, based on
such methodology, the Loan's originator made a reasonable
determination that
at the time of origination the Borrower had the ability to make
timely
payments on the Loan;
(lii) All points, fees and charges (including finance charges)
and
whether or not financed, assessed, collected or to be collected in
connection
with the origination and servicing of each Loan has been disclosed
in writing
to the Borrower in accordance with applicable state and federal law
and
regulation;
28
<PAGE>
(liii) No Loan is a "high cost home," "covered" (excluding home
loans defined as "covered home loans" in the New Jersey Home
Ownership
Security Act of 2002 (the "NJ Act") that were originated between
November 26,
2004 and July 7, 2004), "high risk home" or "predatory" loan under
any
applicable state, federal or local law (or similarly classified
loan using
different terminology under a law imposing heightened regulatory
scrutiny or
additional legal liability for residential mortgage loans having
high interest
rates, points and/or fees); and each Loan subject to the NJ Act is
considered
under the NJ Act as, either, a (1) purchase money Home Loan, (2)
purchase
money Covered Loan (with respect to Loans which were originated
between
November 26, 2003 and July 7, 2004), or (3) a rate/term refinance
Home Loan;
(liv) The Borrower has not made or caused to be made any
payment
in the nature of an `average' or `yield spread premium' to a
mortgage broker
or a like Person which has not been fully disclosed to the
Borrower;
(lv) No Loan secured by a Mortgaged Property located in the
Commonwealth of Massachusetts was made to pay off or refinance an
existing
loan or other debt of the related borrower (as the term "borrower"
is defined
in the regulations promulgated by the Massachusetts Secretary of
State in
connection with the Massachusetts General Laws Chapter 183, Section
28C)
unless (a) the related Loan Interest Rate (that would be effective
once the
introductory rate expires, with respect to Adjustable Rate Loans)
did or would
not exceed by more than 2.50% the yield on United States Treasury
securities
having comparable periods of maturity to the maturity of the
related Loan as
of the fifteenth day of the month immediately preceding the month
in which the
application for the extension of credit was received by the related
lender or
(b) the Loan is an "open-end home loan" (as such term is used in
the
Massachusetts General Laws Chapter 183, Section 28C or the
regulations
promulgated in connection therewith) and the related Note provides
that the
related Loan Interest Rate may not exceed at any time the Prime
rate index as
published in The Wall Street Journal plus a margin of one
percent;
(lvi) With respect to each Second Lien Loan, the related first
lien does not provide for negative amortization;
(lvii) No Borrower was charged "points and fees" in an amount
greater than (a) $1,000 or (b) 5% of the principal amount of the
related Loan,
whichever is greater. For purposes of this representation, "points
and fees"
(x) include origination, underwriting, broker and finder's fees and
charges
that the lender imposed as a condition of making the 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, which miscellaneous fees and
charges, in
total, do not exceed 0.25 percent of the loan amount;
(lviii) With respect to each Loan, the related Residential
Dwelling is not a manufactured housing unit;
29
<PAGE>
(lix) With respect to any Loan originated on or after August 1,
2004, neither the related Mortgage nor the related Note requires
the borrower
to submit to arbitration to resolve any dispute arising out of or
relating in
any way to the Loan transaction;
(lx) The original principal balance of each Loan is within
Freddie
Mac's dollar amount limits for conforming one-to-four family
Loans;
(lxi) No Loan is "seasoned" (a seasoned Loan is one where the
date
of the Note is more than one year before February 1, 2007);
(lxii) Each Mortgaged Property consists of a one to four unit
residential property, which may include a detached home,
townhouse,
condominium unit or a unit in a planned unit development;
(lxiii) With respect to each Mortgage where a lost note
affidavit
has been delivered to the Trustee in place of the related Note, the
related
Note is no longer in existence;
(lxiv) In the event that the Mortgagor is an inter vivos
"living"
trust, (i) such trust is in compliance with Fannie Mae or Freddie
Mac
standards for inter vivos trusts and (ii) holding title to the
Mortgaged
Property in such trust will not diminish any rights as a creditor
including
the right to full title to the Mortgaged Property in the event
foreclosure
proceedings are initiated;
(lxv) If the Loan is secured by a long term residential lease,
(1)
the lessor under the lease holds a fee simple interest in the land;
(2) the
terms of such lease expressly permit the mortgaging of the
leasehold estate,
the assignment of the lease without the lessor's consent and the
acquisition
by the holder of the Mortgage of the rights of the lessee upon
foreclosure or
assignment in lieu of foreclosure or provide the holder of the
Mortgage with
substantially similar protections; (3) the terms of such lease do
not (a)
allow the termination thereof upon the lessee's default without the
holder of
the Mortgage being entitled to receive written notice of, and
opportunity to
cure, such default or (b) allow the termination of the lease in the
event of
damage or destruction as long as the Mortgage is in existence; (4)
the term of
such lease does not terminate earlier than five years after the
maturity date
of the Note; and (5) the Mortgaged Property is located in a
jurisdiction in
which the use of leasehold estates in transferring ownership in
residential
properties is a widely accepted practice;
(lxvi) The Seller used no adverse selection procedures in
selecting the Loan from among the outstanding first lien,
residential mortgage
loans owned by it which were available for sale to the Seller;
(lxvii) With respect to each Loan, the Seller is in possession
of
a complete Loan File except for the documents which have been
delivered to the
Custodian or which have been submitted for recording and not yet
returned; and
(lxviii) With respect to each Loan, the related Servicing
Agreement requires the related Servicer to deposit into the related
Protected
Account an amount equal to all payments of principal and interest
on such Loan
that are delinquent at the close of business on the related
Determination Date
and not previously advanced by such Servicer. The obligation of
30
<PAGE>
such Servicer to advance such payments as to such Loan will
continue through
the final disposition or liquidation of the Mortgaged Property,
unless such
Servicer deems such advance to be nonrecoverable from liquidation
proceeds,
REO disposition proceeds, condemnation proceeds or insurance
proceeds with
respect to such Loan.
Subsection 7.03. Remedies for Breach of Representations and
Warranties.
It is understood and agreed that the representations and
warranties set forth in Subsections 7.01 and 7.02 shall survive the
sale of
the Loans to the Purchaser and shall inure to the benefit of the
Purchaser,
notwithstanding any restrictive or qualified endorsement on any
Note or
Assignment of Mortgage or the examination or lack of examination of
any Loan
File. Upon discovery by either the Seller or the Purchaser of a
breach of any
of the foregoing representations and warranties which materially
and adversely
affects the value of the Loans or the interest of the Purchaser (or
which
materially and adversely affects the value of a Loan or the
interests of the
Purchaser in the related Loan in the case of a representation and
warranty
relating to a particular Loan), the party discovering such breach
shall give
prompt written notice to the other.
Within 60 days of the earlier of either discovery by or notice
to
the Seller of any breach of a representation or warranty which
materially and
adversely affects the value of a Loan or the Loans, the Seller
shall use
commercially reasonable efforts promptly to cure such breach in all
material
respects and, if such breach cannot be cured, the Seller shall, at
the
Purchaser's option, repurchase such Loan at the Repurchase Price.
In the event
that a breach shall involve any representation or warranty set
forth in
Subsection 7.01 and such breach cannot be cured within 60 days of
the earlier
of either discovery by or notice to the Seller of such breach, all
of the
Loans shall, at the Purchaser's option, be repurchased by the
Seller at the
Repurchase Price. The Seller shall, at the request of the Purchaser
and
assuming that Seller has a Qualified Substitute Loan, rather than
repurchase
the Loan as provided above, remove such Loan and substitute in its
place a
Qualified Substitute Loan or Loans; provided that such substitution
shall be
effected not later than 120 days after the related Closing Date. If
the Seller
has no Qualified Substitute Loan, it shall repurchase the deficient
Loan. Any
repurchase of a Loan(s) pursuant to the foregoing provisions of
this
Subsection 7.03 shall occur on a date designated by the Purchaser
and shall be
accomplished by deposit in the Custodial Account of the amount of
the
Repurchase Price for distribution to the Purchaser on the next
scheduled
Distribution Date.
At the time of repurchase of any deficient Loan, the Purchaser
and
the Seller shall arrange for the reassignment of the repurchased
Loan to the
Seller and the delivery to the Seller of any documents held by the
Custodian
relating to the repurchased Loan. In the event the Repurchase Price
is
deposited in the Custodial Account, the Seller shall,
simultaneously with such
deposit, give written notice to the Purchaser that such deposit has
taken
place. Upon such repurchase the related Loan Schedule shall be
amended to
reflect the withdrawal of the repurchased Loan from this
Agreement.
As to any Deleted Loan for which the Seller substitutes a
Qualified Substitute Loan or Loans, the Seller shall effect such
substitution
by delivering to the Purchaser for such Qualified Substitute Loan
or Loans the
Note, the Mortgage, the Assignment of Mortgage and such other
documents and
agreements as are required by this Agreement, with the Note
endorsed
31
<PAGE>
as required therein. The Seller shall deposit in the Custodial
Account the
Monthly Payment less the Servicing Fee due on such Qualified
Substitute Loan
or Loans in the month following the date of such substitution.
Monthly
Payments due with respect to Qualified Substitute Loans in the
month of
substitution will be retained by the Seller. For the month of
substitution,
distributions to the Purchaser will include the Monthly Payment due
on such
Deleted Loan in the month of substitution, and the Seller shall
thereafter be
entitled to retain all amounts subsequently received by the Seller
in respect
of such Deleted Loan. The Seller shall give written notice to the
Purchaser
that such substitution has taken place and shall amend the Loan
Schedule to
reflect the removal of such Deleted Loan from the terms of this
Agreement and
the substitution of the Qualified Substitute Loan. Upon such
substitution,
such Qualified Substitute Loan or Loans shall be subject to the
terms of this
Agreement in all respects, and the Seller shall be deemed to have
made with
respect to such Qualified Substitute Loan or Loans, as of the date
of
substitution, the covenants, representations and warranties set
forth in
Sections 7.01 and 7.02.
For any month in which the Seller substitutes one or more
Qualified Substitute Loans for one or more Deleted Loans, the
Seller will
determine the amount (if any) by which the aggregate principal
balance of all
such Qualified Substitute Loans as of the date of substitution is
less than
the aggregate Stated Principal Balance of all such Deleted Loans
(after
application of scheduled principal payments due in the month of
substitution).
An amount equal to the product of the amount of such shortfall
multiplied by
the percentage of par set forth in the definition of "Repurchase
Price" shall
be distributed by the Seller in the month of substitution pursuant
to the
Servicing Addendum. Accordingly, on the date of such substitution,
the Seller
will deposit from its own funds into the Custodial Account an
amount equal to
such amount.
Notwithstanding the foregoing, within 90 days of the earlier of
discovery by the Seller or receipt of notice by the Seller of a
breach of any
representation or warranty by the Seller which materially and
adversely
affects the interests of the Purchaser in any prepayment charge or
penalty,
the Seller shall pay the amount of such prepayment charge or
penalty to the
Purchaser.
In addition to such cure, repurchase, payment and substitution
obligations, the Seller shall indemnify the Purchaser and hold it
harmless
against any losses, damages, penalties, fines, forfeitures,
reasonable and
necessary legal fees and related costs actually incurred,
judgments, and other
costs and expenses resulting from any claim, demand, defense or
assertion
based on or grounded upon, or resulting from, a breach of the
Seller's
representations and warranties contained in this Section 7. It is
understood
and agreed that the obligations of the Seller set forth in this
Subsection
7.03 to cure or repurchase a defective Loan, to pay the amount of
certain
prepayment penalties and to indemnify the Purchaser as provided in
this
Subsection 7.03 constitute the sole remedies of the Purchaser
respecting a
breach of the foregoing representations and warranties.
Any cause of action against the Seller relating to or arising
out
of the breach of any representations and warranties made in
Subsections 7.01
or 7.02 shall accrue as to any Loan upon (i) discovery of such
breach by the
Purchaser or notice thereof by the Seller to the Purchaser, (ii)
failure by
the Seller to cure such breach or repurchase such Loan as specified
above, and
(iii) demand upon the Seller by the Purchaser for compliance with
the relevant
provisions of this Agreement.
32
<PAGE>
Subsection 7.04. Reserved.
Subsection 7.05. Repurchase of Certain Loans.
If a Monthly Payment becomes one (1) or more scheduled Monthly
Payments delinquent at any time on or prior to the first day of the
fourth
calendar month following the related Closing Date (or such other
date set
forth in the Confirmation), then the Seller, at the Purchaser's
option, shall
(a) promptly repurchase the related Loan from the Purchaser in
accordance with
the procedures set forth in Subsection 7.03 hereof and any such
repurchase
shall be made at the Repurchase Price, (b) indemnify the Purchaser
in
accordance with Subsection 13.01 hereof, or (c) substitute a
mortgage loan
acceptable to the Purchaser in accordance with Subsection 7.03
hereof.
Subsection 7.06. Purchase Price Protection.
With
respect to any Loan that prepays in full on or prior to the
last day of the third full month following the related Closing Date
(or such
other date set forth in the Confirmation), the Seller shall
reimburse the
Purchaser an amount equal to the product of (a) the excess of the
Purchase
Price percentage paid by the Purchaser to the Seller for such Loan
over 100%,
times (b) the outstanding principal balance of the Loan as of the
date of such
prepayment in full. Such payment shall be made within thirty (30)
days of such
payoff. Upon any assignment of a Loan and/or this Agreement, the
Purchaser may
at its option retain its rights under this Section 7.06
notwithstanding such
assignment.
SECTION 8. Closing. The closing for the sale and purchase of
Loans
shall take place on the Closing Date. At the Purchaser's option,
the closing
shall be either: by telephone, confirmed by letter or wire as the
parties
shall agree, or conducted in person, at such place as the parties
shall agree.
The closing for the Loans to be purchased on each Closing Date
shall be subject to each of the following conditions:
(a) all of the representations and warranties of the Seller
under
this
Agreement shall be true and correct as of the related Closing
Date
and no
event shall have occurred which, with notice or the passage of
time,
would constitute a default under this Agreement;
(b) the Purchaser shall have received, or the Purchaser's
attorneys
shall have received in escrow, all Closing Documents as
specified
in Section 9, in such forms as are agreed upon and acceptable
to the
Purchaser, duly executed by all signatories other than the
Purchaser
as required pursuant to the terms hereof,
(c) the
Seller shall have delivered and released to the Custodian
all
documents required pursuant to this Agreement; and
(d) all other terms and conditions of this Agreement shall have
been
complied with.
33
<PAGE>
Subject to the foregoing conditions, the Purchaser shall pay to
the Seller on the related Closing Date the Purchase Price, plus
accrued
interest pursuant to Section 4, by wire transfer of immediately
available
funds to the account designated by the Seller.
SECTION 9. Closing Documents.
(a) On or before the Closing Date, the Seller shall submit to
the
Purchaser
fully executed originals of the following documents:
1. this
Agreement, in four counterparts;
2. a
Custodial Account Letter Agreement in the form attached as
Exhibit 7 hereto;
3. an
Escrow Account Letter Agreement in the form attached as
Exhibit 8 hereto;
4. an
Officer's Certificate, in the form of Exhibit 1 hereto,
including all attachments thereto;
5. an
Opinion of Counsel to the Seller, in the form of Exhibit
2 hereto; and
6. the
Seller's underwriting guidelines, to be attached as
Exhibit 10 hereto.
(b) The Closing Documents for the Loans to be purchased on each
Closing
Date shall consist of fully executed originals of the following
documents:
1. the
Confirmation;
2. the
related Loan Schedule, one copy to be attached hereto
and one copy to be attached to the Custodian's counterpart
of the Custodial Agreement, as the Loan Schedule thereto;
3. a
Custodian's Trust Receipt and Initial Certification, as
required under the Custodial Agreement, in a form acceptable
to the Purchaser;
4. if
requested by the Purchaser, an Officer's Certificate, in
the form of Exhibit 1 hereto, including all attachments
thereto;
5. if
requested by the Purchaser, an Opinion of Counsel to the
Seller, in the form of Exhibit 2 hereto;
6. if any
of the Loans has at any time been subject to any
security interest, pledge or hypothecation for the benefit
of any Person, a Security Release Certification, in the form
of Exhibit 3 hereto, executed by such Person;
7. a
certificate or other evidence of merger or change of name,
signed or stamped by the applicable regulatory authority, if
any of the Loans were acquired by the Seller by merger or
acquired or originated by the Seller
34
<PAGE>
while conducting business under a name other than its
present name, if applicable; and
8. an
Assignment and Conveyance in the form of Exhibit 4
hereto.
SECTION 10. Costs. The Purchaser shall pay any commissions due
its
salesmen and the legal fees and expenses of its attorneys. All
other costs and
expenses incurred in connection with the transfer and delivery of
the Loans,
including without limitation recording fees, fees for title
policy
endorsements and continuations, fees for recording Assignments of
Mortgage and
the Seller's attorney's fees, shall be paid by the Seller.
SECTION 11. Seller's Servicing Obligations. The Seller, as
independent contract servicer, shall service and administer the
Loans
directly, or through one or more Subservicers, in accordance with
the terms
and provisions set forth in the Servicing Addendum attached as
Exhibit 9;
which Servicing Addendum is incorporated herein by reference.
SECTION 12. The Securitization Transaction.
The Seller and the Purchaser agree that with respect to all of
the
Loans, the Depositor will effect a Securitization Transaction.
With respect to the Securitization Transaction entered into by
the
Depositor, the Seller agrees:
(1) to cooperate
fully with the Purchaser and any prospective
purchaser with respect to all reasonable requests and due
diligence procedures and with respect to the preparation
(including, but not limited to, the endorsement, delivery,
assignment, and execution) of the Loan Documents and other
related documents, and with respect to servicing
requirements reasonably requested by the rating agencies and
credit enhancers;
(2) to deliver
(x) to the Purchaser and to any Person designated
by the Purchaser for inclusion in any prospectus or other
offering material such publicly available information
regarding the Seller, its financial condition and its
mortgage loan delinquency, foreclosure and loss experience
and any additional information reasonably requested by the
Purchaser, and which the Seller is capable of providing
without unreasonable effort or expense, and (y) to the
Purchaser any similar nonpublic, unaudited financial
information (which the Purchaser may, at its option and at
its cost, have audited by certified public accountants); and
to indemnify the Purchaser and any related underwriter and
their affiliates for any untrue statement or alleged untrue
statement of any material fact contained in such information
or an omission or alleged omission to state in such
information a material fact required to be stated therein or
necessary to make the statements therein not misleading;
(3) to deliver
to the Purchaser and to any Person designated by
the Purchaser, at the Purchaser's expense, such statements
and audit letters of reputable,
35
<PAGE>
certified public accountants pertaining to information
provided by the Seller pursuant to clause (4) above as shall
be reasonably requested by the Purchaser;
(4) to deliver
to the Purchaser, and to any Person designated by
the Purchaser, at the Seller's expense, such legal documents
and in-house Opinions of Counsel and opinion of outside
counsel as are customarily delivered by originators or
servicers, as the case may be, and reasonably determined by
the Purchaser to be necessary in connection with the
Securitization Transactions, as the case may be, Opinions of
Counsel
for a Securitization Transaction to be in the form
reasonably acceptable to the Purchaser;
(5) to negotiate
and execute one or more subservicing agreements
between the Seller and any master servicer which is
generally considered to be a prudent master servicer in the
secondary mortgage market, designated by the Purchaser in
its sole discretion after consultation with the Seller
and/or one
or more custodial and servicing agreements among
the Purchaser, the Seller and a third party
custodian/trustee which is generally considered to be a
prudent custodian/trustee in the secondary mortgage market
designated by the Purchaser in its sole discretion after
consultation with the Seller, in either case for the purpose
of pooling the Loans with other Loans for resale or
securitization;
(6) in
connection with the securitization of Loans, to the
extent the Purchaser requests the Seller to be a party to a
pooling and servicing agereement prior to the Closing Date,
to execute a pooling and servicing agreement, which pooling
and servicing agreement may, at the Purchaser's direction,
contain contractual provisions including, but not limited
to, a 24-day certificate payment delay (54-day total payment
delay), servicer advances of delinquent scheduled payments
of principal and interest through liquidation (unless deemed
non-recoverable) and prepayment interest shortfalls (to the
extent of the monthly servicing fee payable thereto),
servicing and loan representations and warranties which in
form and substance conform to the representations and
warranties in this Agreement and to secondary market
standards for securities backed by loans similar to the
Loans and such provisions with regard to servicing
responsibilities, investor reporting, segregation and
deposit of principal and interest payments, custody of the
Loans, a requirement that the master servicer and any
servicer provide backup certifications as to all matters
required to be certified to the Commission pursuant to the
provisions of the Sarbanes-Oxley Act and the regulations
issued thereunder, in a form reasonably required by the
depositor, and to indemnify the depositor, the trustee,
their officers, directors and affiliates and any other
entity making such certifications to the Commission for any
errors or omission in such certification, and such
provisions with regard to servicing responsibilities,
investor reporting, segregation and deposit of principal and
interest payments, custody of the Loans, and other covenants
as are required by
36
<PAGE>
the Purchaser and one or more nationally recognized rating
agencies for "AAA" rated mortgage pass-through transactions
which are "mortgage related securities" for the purposes of
the Secondary Mortgage Market Enhancement Act of 1984,
unless otherwise mutually agreed. If the Purchaser deems it
advisable at any time to pool the Loans with other loans for
the purpose of resale or securitization, the Seller agrees
to execute one or more subservicing agreements between
itself (as servicer) and a master servicer designated by the
Purchaser at its sole discretion, and/or one or more
servicing agreements among the Seller (as servicer), the
Purchaser and a trustee designated by the Purchaser at its
sole discretion, such agreements in each case incorporating
terms and provisions substantially identical to those
described in the immediately preceding paragraph; and
(7) to transfer
the servicing rights to the Purchaser or its
designee as described in Section 15 upon the direction of
the Purchaser.
SECTION 13. The Seller.
Subsection 13.01. Additional Indemnification by the Seller.
In addition to the indemnification provided in Subsection 7.03,
the Seller shall indemnify the Purchaser and hold the Purchaser
harmless
against any and all claims, losses, damages, penalties, fines,
forfeitures,
reasonable and necessary legal fees and related costs, judgments,
and any
other costs, fees and expenses that the Purchaser may sustain in
any way
related to the failure of the Seller to perform its obligations
under this
Agreement including but not limited to its obligation to service
and
administer the Loans in strict compliance with the terms of this
Agreement.
Subsection 13.02. Merger or Consolidation of the Seller.
The Seller shall keep in full force and effect its existence,
rights and franchises as a corporation under the laws of the state
of its
incorporation except as permitted herein, and shall obtain and
preserve its
qualification to do business as a foreign corporation in each
jurisdiction in
which such qualification is or shall be necessary to protect the
validity and
enforceability of this Agreement or any of the Loans, and to enable
the Seller
to perform its duties under this Agreement.
Any Person into which the Seller may be merged or consolidated,
or
any corporation resulting from any merger, conversion or
consolidation to
which the Seller shall be a party, or any Person succeeding to the
business of
the Seller, shall be the successor of the Seller hereunder, without
the
execution or filing of any paper or any further act on the part of
any of the
parties hereto, anything herein to the contrary notwithstanding;
provided,
however, that the successor or surviving Person shall be an
institution having
a GAAP net worth of not less than $25,000,000 and whose deposits
are insured
by FDIC or a company whose primary business is the origination and
servicing
of loans, shall be a Fannie Mae or Freddie Mac approved
37
<PAGE>
seller/servicer in good standing and shall satisfy any requirements
of Section
16 with respect to the qualifications of a successor to the
Seller.
Subsection 13.03. Limitation on Liability of the Seller and
Others.
Neither the Seller nor any of the officers, employees or agents
of
the Seller shall be under any liability to the Purchaser for any
action taken
or for refraining from the taking of any action in good faith in
connection
with the servicing of the Loans pursuant to this Agreement, or for
errors in
judgment; provided, however, that this provision shall not protect
the Seller
or any such person against any breach of warranties or
representations made
herein, or failure to perform its obligations in strict compliance
with any
standard of care set forth in this Agreement, or any liability
which would
otherwise be imposed by reason of any breach of the terms and
conditions of
this Agreement. The Seller and any officer, employee or agent of
the Seller
may rely in good faith on any document of any kind prima facie
properly
executed and submitted by any Person respecting any matters arising
hereunder.
The Seller shall not be under any obligation to appear in,
prosecute or defend
any legal action which is not incidental to its obligation to sell
or duty to
service the Loans in accordance with this Agreement and which in
its opinion
may result in its incurring any expenses or liability; provided,
however, that
the Seller may, with the consent of the Purchaser, undertake any
such action
which it may deem necessary or desirable in respect to this
Agreement and the
rights and duties of the parties hereto. In such event, the legal
expenses and
costs of such action and any liability resulting therefrom shall be
expenses,
costs and liabilities for which the Purchaser shall be liable, the
Seller
shall be entitled to reimbursement therefor from the Purchaser upon
written
demand except when such expenses, costs and liabilities are subject
to the
Seller's indemnification under Subsections 7.03 or 13.01.
Subsection 13.04. Seller Not to Resign.
The Seller shall not assign this Agreement or resign from the
obligations and duties hereby imposed on it except by mutual
consent of the
Seller and the Purchaser or upon the determination that its
servicing duties
hereunder are no longer permissible under applicable law and such
incapacity
cannot be cured by the Seller, in which event the Seller may resign
as
servicer. Any such determination permitting the resignation of the
Seller as
servicer shall be evidenced by an Opinion of Counsel to such effect
delivered
to the Purchaser which Opinion of Counsel shall be in form and
substance
acceptable to the Purchaser and which shall be provided at the cost
of the
Seller. No such resignation shall become effective until a
successor shall
have assumed the Seller's responsibilities and obligations
hereunder in the
manner provided in Section 16.
Subsection 13.05. No Transfer of Servicing.
The Seller acknowledges that the Purchaser has acted in
reliance
upon the Seller's independent status, the adequacy of its
servicing
facilities, plan, personnel, records and procedures, its integrity,
reputation
and financial standing and the continuance thereof. Without in any
way
limiting the generality of this Section, the Seller shall not
either assign
this Agreement or the servicing hereunder or delegate its rights or
duties
hereunder or any portion thereof, or sell or otherwise dispose of
all or
substantially all of its property or assets, without the prior
written
approval of the Purchaser, which consent will not be unreasonably
withheld;
38
<PAGE>
provided, however, that the Seller shall have the right to pledge
its
servicing rights hereunder so long as any successor servicer who
forecloses
upon such servicing rights complies with all of the requirements of
Section 16
herein.
SECTION 14. DEFAULT.
Subsection 14.01. Events of Default.
In case one or more of the following Events of Default by the
Seller shall occur and be continuing, that is to say:
(a) any failure by the Seller to remit to the Purchaser when
due
any
payment required to be made under the terms of this Agreement;
or
(b) failure on the part of the Seller duly to observe or
perform
in any
material respect any other of the covenants or agreements on
the
part of
the Seller set forth in this Agreement which continues
unremedied
for a period of thirty (30) days (except that such number of
days shall
be fifteen (15) in the case of a failure to pay any premium
for any insurance
policy required to be maintained under this Agreement)
after the
date on which written notice of such failure, requiring the
same to be
remedied, shall have been given to the Seller by the
Purchaser;
or
(c) a decree or order of a court or agency or supervisory
authority
having jurisdiction for the appointment of a conservator or
receiver
or liquidator in any insolvency, bankruptcy, readjustment of
debt,
marshalling of assets and liabilities or similar proceedings,
or
for the
winding-up or liquidation of its affairs, shall have been
entered
against the Seller and such decree or order shall have remained
in force
undischarged or unstayed for a period of sixty days; or
(d)
the Seller shall consent to the appointment of a conservator
or
receiver or liquidator in any insolvency, bankruptcy, readjustment
of
debt,
marshalling of assets and liabilities or similar proceedings of
or
relating
to the Seller or of or relating to all or substantially all of
its
property; or
(e) the Seller shall admit in writing its inability to pay its
debts
generally as they become due, file a petition to take advantage
of
any
applicable insolvency or reorganization statute, make an
assignment
for the
benefit of its creditors, or voluntarily suspend payment of its
obligations; or
(f) failure by the Seller to be in compliance with the "doing
business"
or licensing laws of any jurisdiction where a Mortgaged
Property
is located; or
(g) the Seller ceases to be approved by Freddie Mac as a seller
or
servicer;
or
(h) the Seller attempts to assign its right to servicing
compensation hereunder or the Seller attempts, without the consent
of
the
Purchaser, to sell or otherwise dispose of all or substantially
all
of its
property or assets or to assign this Agreement or the servicing
responsibilities hereunder or to delegate its duties hereunder or
any
portion
39
<PAGE>
thereof;
provided, however, that it shall not be an Event of Default if
the Seller
pledges its servicing rights hereunder in accordance with
Section 13.05
herein; or
(i) the Seller fails to duly perform, within the required time
period,
its obligations under Sections 11.24 and 11.25 of the Servicing
Addendum,
which failure continues unremedied for a period of thirty (30)
days after
the date on which written notice of such failure, requiring
the same
to be remedied, shall have been given to the Seller by any
party to
this Agreement or by any master servicer responsible for master
servicing
the Loans pursuant to a securitization of such Loans;
then, and in each and every such case, so long as an Event of
Default shall
not have been remedied, the Purchaser, by notice in writing to the
Seller may,
in addition to whatever rights the Purchaser may have at law or
equity to
damages, including injunctive relief and specific performance,
terminate all
the rights and obligations of the Seller as servicer under this
Agreement. On
or after the receipt by the Seller of such written notice, all
authority and
power of the Seller to service the Loans under this Agreement shall
on the
date set forth in such notice pass to and be vested in the
successor appointed
pursuant to Section 16.
Subsection 14.02. Waiver of Defaults.
The Purchaser may waive any default by the Seller in the
performance of its obligations hereunder and its consequences. Upon
any such
waiver of a past default, such default shall cease to exist, and
any Event of
Default arising therefrom shall be deemed to have been remedied for
every
purpose of this Agreement. No such waiver shall extend to any
subsequent or
other default or impair any right consequent thereon except to the
extent
expressly so waived.
SECTION 15. Termination. The respective obligations and
responsibilities of the Seller, as servicer, shall terminate upon
the
distribution to the Purchaser of the final payment or liquidation
with respect
to the last Loan (or advances of same by the Seller) or the
disposition of all
property acquired upon foreclosure or deed in lieu of foreclosure
with respect
to the last Loan and the remittance of
