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EXHIBIT 99.10
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LEHMAN BROTHERS BANK, FSB
Purchaser
and
GREENPOINT MORTGAGE FUNDING INC.
Seller
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FLOW MORTGAGE LOAN PURCHASE, WARRANTIES AND SERVICING AGREEMENT
Dated as of August 1, 2003
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Conventional Residential Adjustable and Fixed Rate Mortgage
Loans
Group No. 2003-FLOW
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS; CUSTODIAL AGREEMENT;
DELIVERY OF DOCUMENTS
Section 2.01 Conveyance of Mortgage
Loans; Possession of Mortgage Files;
Maintenance of Servicing Files...............................12
Section 2.02 Books and Records; Transfers
of Mortgage Loans.................12
Section 2.03 Custodial Agreement;
Delivery of Documents.....................13
ARTICLE III
PURCHASE PRICE
ARTICLE IV
REPRESENTATIONS AND WARRANTIES;
REMEDIES AND BREACH
Section 4.01 Seller Representations and
Warranties..........................15
Section 4.02 Representations and
Warranties Regarding Individual
Mortgage
Loans................................................17
Section 4.03 Remedies for Breach of
Representations and Warranties..........29
Section 4.04 Post Closing Due
Diligence.....................................31
Section 4.05 Restrictions and
Requirements Applicable in the Event
that a Mortgage Loan is Acquired by a REMIC..................32
ARTICLE
V
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 5.01 Seller to Act as
Servicer......................................34
Section 5.02 Liquidation of Mortgage
Loans..................................35
Section 5.03 Collection of Mortgage Loan
Payments...........................36
Section 5.04 Establishment of and
Deposits to Custodial Account.............36
Section 5.05 Permitted Withdrawals From
Custodial Account...................38
Section 5.06 Establishment of and
Deposits to Escrow Account................39
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Section 5.07 Permitted Withdrawals From
Escrow Account......................39
Section 5.08 Completion and Recordation
of Assignment of Mortgage...........40
Section 5.09 Payment of Taxes, Insurance
and Other Charges..................40
Section 5.10 Protection of
Accounts.........................................41
Section 5.11 Maintenance of Hazard
Insurance................................41
Section 5.12 Maintenance of Mortgage
Insurance..............................43
Section 5.13 Maintenance of Fidelity Bond
and Errors and Omissions
Insurance....................................................44
Section 5.14
Inspections....................................................44
Section 5.15 Restoration of Mortgaged
Property..............................44
Section 5.16 Maintenance of PMI and/or
LPMI Policy; Claims..................45
Section 5.17 Title, Management and
Disposition of REO Property..............46
Section 5.18 Real Estate Owned
Reports......................................48
Section 5.19 Liquidation
Reports............................................48
Section 5.20 Notification of
Adjustments....................................48
Section 5.21 Reports of Foreclosures and
Abandonments
of Mortgaged Property........................................49
Section 5.22 Prepayment
Charges.............................................49
Section 5.23 Credit
Reporting...............................................49
Section 5.24 Safeguarding Customer
Information..............................49
ARTICLE VI
PAYMENTS TO PURCHASER
Section 6.01
Remittances....................................................50
Section 6.02 Statements to
Purchaser........................................50
Section 6.03 Due Dates Other Than the
First of the Month....................51
Section 6.04 Monthly Advances by
Seller.....................................51
ARTICLE VII
GENERAL SERVICING PROCEDURES
Section 7.01 Transfers of Mortgaged
Property................................52
Section 7.02 Satisfaction of Mortgages
and Release of Mortgage Files........52
Section 7.03 Servicing
Compensation.........................................53
Section 7.04 Annual Audit
Report............................................53
Section 7.05 Annual Officer's
Certificate...................................54
Section 7.06 Right to Examine Seller
Records................................54
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ARTICLE VIII
AGENCY TRANSFER; PASS-THROUGH TRANSFER
Section 8.01 Removal of Mortgage Loans
from Inclusion Under this
Agreement Upon an Agency Transfer, or a Pass-Through
Transfer on One or More Reconstitution Dates.................54
Section 8.02 Transfer of Servicing
Following Reconstitution.................56
Section 8.03 Purchaser's Repurchase and
Indemnification Obligations.........57
Section 8.04 Additional Indemnification
by the Seller.......................58
Section 8.05 Transfer Of
Servicing..........................................58
ARTICLE IX
THE SELLER
Section 9.01 Merger or Consolidation of
the Seller..........................59
Section 9.02 Limitation on Liability of
Seller and Others...................59
Section 9.03 Limitation on Resignation
and Assignment by Seller.............59
Section 9.04 Limitation on Assignment by
the Seller.........................60
ARTICLE X
DEFAULT
Section 10.01 Events of
Default..............................................60
Section 10.02 Waiver of
Defaults.............................................62
ARTICLE XI
TERMINATION
Section 11.01
Termination....................................................62
Section 11.02 Termination Without
Cause......................................62
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Successor to
Seller............................................63
Section 12.02
Amendment......................................................64
Section 12.03
Closing........................................................64
Section 12.04 Closing
Documents..............................................65
Section 12.05
Costs..........................................................66
Section 12.06 Governing
Law..................................................67
Section 12.07 Duration of
Agreement..........................................67
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Section 12.08
Notices........................................................67
Section 12.09 Severability of
Provisions.....................................67
Section 12.10 Relationship of
Parties........................................68
Section 12.11 Execution; Successors and
Assigns..............................68
Section 12.12 Recordation of Assignments of
Mortgage.........................68
Section 12.13 Assignment by
Purchaser........................................69
Section 12.14 No Personal
Solicitation.......................................69
Section 12.15 Confidential
Information.......................................69
Section 12.16 Appointment and Designation of
Master Servicer.................71
Section 12.17 Waivers; Other
Agreements......................................71
Section 12.18
Exhibits.......................................................71
Section 12.19 General Interpretive
Principles................................71
EXHIBITS
EXHIBIT A-1
ACKNOWLEDGMENT AND CONVEYANCE AGREEMENT
EXHIBIT A-2
MORTGAGE LOAN SCHEDULE DATA FIELDS
EXHIBIT B
CONTENTS OF EACH MORTGAGE FILE
EXHIBIT C
RESERVED
EXHIBIT D-1 FORM
OF CUSTODIAL ACCOUNT CERTIFICATION
EXHIBIT D-2 FORM
OF CUSTODIAL ACCOUNT LETTER AGREEMENT
EXHIBIT E-1 FORM
OF ESCROW ACCOUNT CERTIFICATION
EXHIBIT E-2 FORM
OF ESCROW ACCOUNT LETTER AGREEMENT
EXHIBIT F-1 FORM
OF MONTHLY REMITTANCE ADVICE
EXHIBIT F-2
STANDARD LAYOUT FOR DEFAULTED LOAN REPORT
EXHIBIT G
FORM OF ASSIGNMENT AND ASSUMPTION
EXHIBIT H
SELLER'S OFFICER'S CERTIFICATE
EXHIBIT I
FORM OF OPINION OF COUNSEL TO SELLER
EXHIBIT J-1
SECURITY RELEASE CERTIFICATION
EXHIBIT J-2
SECURITY RELEASE CERTIFICATION
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This is a Flow Mortgage Loan Purchase, Warranties and Servicing
Agreement for residential conventional
adjustable rate first lien and fixed rate
first and second lien mortgage loans, dated
and effective as of August 1, 2003,
and is executed between Lehman Brothers
Bank, FSB, as purchaser (the
"Purchaser") and Greenpoint Mortgage
Funding Inc., as seller (the "Seller").
W I T N E S S E T H:
WHEREAS, the Seller has agreed to sell from time to time to the
Purchaser, and the Purchaser has agreed to
purchase from time to time from the
Seller, certain fixed and adjustable rate
residential first and second lien
mortgage loans (the "Mortgage Loans") on a
servicing retained basis as described
herein, and which shall be delivered as
whole loans on the related Closing Date,
as defined below;
WHEREAS, each Mortgage Loan will be 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 related
Mortgage Loan Schedule; and
WHEREAS, the Purchaser and the Seller wish to prescribe the manner
of
the conveyance, servicing and control of
the Mortgage Loans.
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:
ARTICLE I
DEFINITIONS
Whenever used
herein, the following words and phrases, unless the
context otherwise requires, shall have the
following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan,
those
mortgage servicing practices of prudent
mortgage lending institutions which
service mortgage loans of the same type as
such Mortgage Loan in the
jurisdiction where the related Mortgaged
Property is located.
Acknowledgment and Conveyance Agreement: The agreement,
substantially
in the form of Exhibit A-1 hereto, to be
executed by the Seller and the
Purchaser on each Closing Date.
Agency Transfer: The sale or transfer by Purchaser of some or all
of
the Mortgage Loans to Fannie Mae under its
Cash Purchase Program or its MBS Swap
Program (Special Servicing Option) or to
Freddie Mac under its Freddie Mac Cash
Program or Gold PC Program, retaining the
Seller as "servicer thereunder".
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Agreement: This Flow Mortgage Loan Purchase, Warranties and
Servicing
Agreement and all amendments hereof and
supplements hereto.
ALTA: The American Land Title Association or any successor
thereto.
Ancillary Income: All income derived from the Mortgage Loans,
excluding
Servicing Fees and Prepayment Charges
attributable to the Mortgage Loans,
including but not limited to, late charges,
fees received with respect to checks
or bank drafts returned by the related bank
for non-sufficient funds, assumption
fees, optional insurance administrative
fees and all other incidental fees and
charges. The Seller shall retain all
Ancillary Income to the extent not required
to be deposited into the Custodial
Account.
Appraised Value: The value set forth in an appraisal made in
connection
with the origination of the related
Mortgage Loan as the value of the Mortgaged
Property.
Approved Flood Policy Insurer: Any of the following insurers:
Flood
Data Services, Inc., Flood Zone, Inc.,
GEOTrac or Transamerica Flood Hazard
Certification.
Approved Tax Service Contract Provider: Any of the following
providers:
First American, TransAmerica, Lereta or
Fidelity.
ARM Mortgage Loan: A Mortgage Loan pursuant to which the interest
rate
shall be adjusted from time to time in
accordance with the related Mortgage
Note.
Assignment of Mortgage: An assignment of the Mortgage, notice
of
transfer or equivalent instrument in
recordable form, sufficient under the laws
of the jurisdiction wherein the related
Mortgaged Property is located to reflect
the sale of the Mortgage to the Purchaser,
or in the case of a MERS Mortgage
Loan, a confirmed electronic transmission
to MERS, identifying a transfer of
ownership of the related Mortgage to the
Purchaser or its designee.
BIF: The Bank Insurance Fund, or any successor thereto.
BPO: A broker's price opinion obtained by the Purchaser.
Business Day: Any day other than (i) a Saturday or Sunday, or (ii)
a
day on which banking and savings and loan
institutions in the State of New York
are authorized or obligated by law or
executive order to be closed.
Closing Date: Means a date on which the Seller shall sell and
the
Purchaser shall purchase Mortgage Loans
under this Agreement as set forth in the
related Purchase Price and Terms
Agreement.
Code: The Internal Revenue Code of 1986, as it may be amended from
time
to time or any successor statute thereto,
and applicable U.S. Department of the
Treasury regulations issued pursuant
thereto.
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Combined Loan-to-Value Ratio or CLTV: With respect to any Second
Lien
Mortgage Loan, the ratio of (a) the sum of
(i) the outstanding principal balance
of the Mortgage Loan at origination and
(ii) the original principal amount of
any related First Lien (as of the Cut-off
Date)(unless otherwise indicated) and
(b) the lesser of (i) the Appraised Value
of the Mortgaged Property and (ii) if
the Mortgage Loan was made to finance the
acquisition of the related Mortgaged
Property, the purchase price of the
Mortgaged Property, expressed as a
percentage.
Condemnation Proceeds: All awards or settlements in respect of
a
Mortgaged Property, whether permanent or
temporary, partial or entire, by
exercise of the power of eminent domain or
condemnation, to the extent not
required to be released to a Mortgagor in
accordance with the terms of the
related Mortgage Loan Documents.
Credit Grade: As defined in the Underwriting Guidelines.
Custodial Account: The separate account or accounts created and
maintained pursuant to Section 4.04.
Custodial Agreement: The agreement governing the retention of
the
originals of each Mortgage ote, Mortgage,
Assignment of Mortgage and other
Mortgage 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: With respect to any Mortgage Loan purchased on a
Closing
Date, the first day of the month in which
the related Closing Date occurs, or
such other date as may be set forth in the
related Purchase Price and Terms
Agreement.
Deleted Mortgage Loan: A Mortgage Loan which is repurchased by
the
Seller in accordance with the terms of this
Agreement.
Determination Date: The last day (or if such last day is not a
Business
Day, the Business Day immediately preceding
such last day) of the month
immediately preceding the month of the
related Remittance Date.
Disqualified Organization: An organization defined as such in
Section
860E(e) of the Code.
Due Date: The day of the month on which the Monthly Payment is due
on a
Mortgage Loan, exclusive of any days of
grace. With respect to the Mortgage
Loans for which payment from the Mortgagor
is due on a day other than the first
day of the month, such Mortgage Loans will
be treated as if the Monthly Payment
is due on the first day of the month
following the actual Due Date.
Due Period: With respect to each Remittance Date, the period
commencing
on the second day of the month preceding
the month of the Remittance Date and
ending on the first day of the month of the
Remittance Date.
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Eligible Investments: Any one or more of the obligations and
securities
listed below which investment provides for
a date of maturity not later than the
Determination Date in each month: (a)
direct obligations of, and obligations
fully guaranteed by, the United States of
America, or any agency or
instrumentality of the United States of
America the obligations of which are
backed by the full faith and credit of the
United States of America; and (b)
federal funds, demand and time deposits in,
certificates of deposits of, or
bankers' acceptances issued by, any
depository institution or trust company
incorporated or organized under the laws of
the United States of America or any
state thereof and subject to supervision
and examination by federal and/or state
banking authorities, so long as at the time
of such investment or contractual
commitment providing for such investment
the commercial paper or other
short-term debt obligations of such
depository institution or trust company (or,
in the case of a depository institution or
trust company which is the principal
subsidiary of a holding company, the
commercial paper or other short-term debt
obligations of such holding company) are
rated "P-1" by Moody's and the
long-term debt obligations of such holding
company) are rated "P-1" by Moody's
and the long-term debt obligations of such
depository institution or trust
company (or, in the case of a depository
institution or trust company which is
the principal subsidiary of a holding
company, the long-term debt obligations of
such holding company) are rated at least
"Aa" by Moody's;
provided, however, that no such instrument shall be an Eligible
Investment if such instrument evidences
either (i) a right to receive only
interest payments with respect to the
obligations underlying such instrument, or
(ii) both principal and interest payments
derived from obligations underlying
such instrument and the principal and
interest payments with respect to such
instrument provide a yield to maturity of
greater than 120% of the yield to
maturity at par of such underlying
obligations; provided, further, that upon a
Pass-Through Transfer, the Eligible
Investments permitted thereunder shall be
set forth in the related Reconstitution
Agreement.
Notwithstanding
anything herein to the contrary, with respect to
Mortgage Loans subject to an Agency
Transfer or a Pass-Through Transfer, in the
event that the applicable Reconstitution
Agreement has a more limiting
definition of "Eligible Investments", then
the definition contained in such
Reconstitution Agreement shall apply to
such Mortgage Loans.
Errors and Omissions Insurance Policy: An errors and omissions
insurance policy to be maintained by the
Seller pursuant to Section 5.13.
Escrow Account:
The separate account or accounts created and maintained
pursuant to Section 5.06.
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes,
assessments, water rates, sewer rents,
municipal charges, mortgage insurance
premiums, fire and hazard insurance
premiums, condominium charges, and any
other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant
to the Mortgage or any other related
document.
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Event of Default: Any one of the conditions or circumstances
enumerated
in Section 10.01.
Fannie Mae: The Federal National Mortgage Association, or any
successor
thereto.
Fannie Mae Guides: The Fannie Mae Selling Guide and the Fannie
Mae
Servicing Guide and all amendments or
additions thereto.
FDIC: The Federal Deposit Insurance Corporation, or any
successor
thereto.
FICO Score: shall mean the Mortgagor's FICO score calculated as
the
lower of two scores or the middle of three
scores.
Fidelity Bond: A fidelity bond to be maintained by the Seller
pursuant
to Section 4.12.
First Lien: With respect to any Second Lien Mortgage Loan, the
mortgage
loan relating to the corresponding
Mortgaged Property having a first priority
lien.
Freddie Mac: The Federal Home Loan Mortgage Corporation, or any
successor thereto.
Gross Margin: With respect to each ARM Mortgage Loan, the fixed
percentage amount set forth in the related
Mortgage Note which amount is added
to the Index in accordance with the terms
of the related Mortgage Note to
determine, on each Interest Rate Adjustment
Date, the Mortgage Interest Rate for
such Mortgage Loan.
Index: With respect to each ARM Mortgage Loan, the applicable rate,
on
each Interest Rate Adjustment Date, which
shall be adjusted semi-annually based
upon the rate per annum equal to the
average of interbank offered rates for
six-month U.S. Dollar Denominated deposits
in the London Market (LIBOR) as
published in the Wall Street Journal.
Initial Mortgage Interest Rate Cap: With respect to each ARM
Mortgage
Loan, the limit on the initial Mortgage
Interest Rate adjustment such that, as
to each Mortgage Loan on the initial
Interest Rate Adjustment Date, no change in
the Mortgage Interest Rate shall exceed 3%
above the Mortgage Interest Rate in
effect immediately prior to the initial
Interest Rate Adjustment Date of the
related Mortgage Loan.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds
of
insurance policies insuring the Mortgage
Loan or the related Mortgaged Property.
Interest Rate Adjustment Date: With respect to each ARM Mortgage
Loan,
the date on which an adjustment to the
Mortgage Interest Rate on a Mortgage Note
becomes effective.
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Lifetime Rate Cap: With respect to each ARM Mortgage Loan, the
provision of each Mortgage Note which
provides for an absolute maximum Mortgage
Interest Rate thereunder, as set forth on
the Mortgage Loan Schedule. The
Mortgage Interest Rate during the term of
each Mortgage Loan shall not at any
time exceed the Mortgage Interest Rate at
the time of origination of such
Mortgage Loan by more than the amount per
annum set forth on the Mortgage Loan
Schedule.
Liquidation Proceeds: Cash received in connection with the
liquidation
of a defaulted Mortgage Loan, whether
through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure
sale or otherwise, or the sale of the
related Mortgaged Property if the Mortgaged
Property is acquired in satisfaction
of the Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan,
the
ratio of the original principal amount of
the Mortgage Loan at origination to
the lesser of (a) the Appraised Value of
the Mortgaged Property and (b) if the
Mortgage Loan was made to finance the
acquisition of the related Mortgaged
Property, the purchase price of the
Mortgaged Property, expressed as a
percentage.
Master Servicer: As such term is defined in Section 3.16.
Monthly Advance: With respect to each Remittance Date and each
Mortgage
Loan following Reconstitution, an amount
equal to the Monthly Payment (with the
interest portion of such Monthly Payment
adjusted to the Mortgage Loan
Remittance Rate) which was due on the
Mortgage Loan on the Due Date in the
related Due Period, and (i) which was
delinquent at the close of business on the
immediately preceding Determination Date
and (ii) which was not the subject of a
previous Monthly Advance.
Monthly Payment: The scheduled monthly payment of principal and
interest on a Mortgage Loan.
Mortgage: The mortgage, deed of trust or other instrument securing
a
Mortgage Note, which creates a first or
second lien on an unsubordinated estate
in fee simple or leasehold estate in real
property securing the Mortgage Note.
Mortgage File: The items pertaining to a particular Mortgage
Loan
referred to in Exhibit B annexed hereto,
and any additional documents required
to be added to the Mortgage File pursuant
to this Agreement.
Mortgage Insurance Policy: A mortgage blanket hazard insurance
policy
as described in Section 5.12.
Mortgage Interest Rate: The annual rate of interest borne on a
Mortgage
Note, which, with respect to each ARM
Mortgage Loan, is adjusted from time to
time in accordance with the provisions of
the Mortgage Note, without regard to
any modification of the Mortgage Note.
Mortgage Interest Rate Cap: With respect to each ARM Mortgage Loan,
the
limit on each Mortgage Interest Rate
adjustment as set forth in the related
Mortgage Note.
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Mortgage Loan: An individual Mortgage Loan which is the
subject of this Agreement, each Mortgage
Loan originally sold and subject to
this Agreement being identified on the
Mortgage Loan Schedule annexed as Annex 1
to the related Acknowledgment and
Conveyance Agreement, which Mortgage Loan
includes without limitation the Mortgage
File, the Monthly Payments, Principal
Prepayments, Liquidation Proceeds,
Condemnation Proceeds, Insurance Proceeds,
REO Disposition Proceeds, Servicing Rights
and all other rights, benefits,
proceeds and obligations arising from or in
connection with such Mortgage Loan.
Mortgage Loan Documents: The documents listed in Exhibit B
hereto.
Mortgage Loan Package: A group of Mortgage Loans sold to the
Purchaser
by the Seller on a Closing Date and set
forth on the Mortgage Loan Schedule
annexed to the related Acknowledgment and
Conveyance Agreement.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan,
the
annual rate of interest remitted to the
Purchaser, which shall be equal to the
Mortgage Interest Rate minus the Servicing
Fee Rate.
Mortgage Loan Schedule: A schedule of Mortgage Loans annexed as
Annex 1
to each Acknowledgment and Conveyance
Agreement, each such schedule setting
forth the data and information listed on
Exhibit A-2 with respect to each
Mortgage Loan.
Mortgage Note: The Mortgage Note or other evidence of the
indebtedness
of a Mortgagor secured by a Mortgage.
Mortgaged Property: The real property securing repayment of the
debt
evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
Notice of Intent: As defined in Section 4.02 hereof.
Officer's Certificate: A certificate signed by the Chairman of
the
Board, the Vice Chairman of the Board, the
President or a Vice President and by
the Treasurer, the Secretary or one of the
Assistant Treasurers or Assistant
Secretaries of the Seller, and delivered to
the Purchaser as required by this
Agreement.
Opinion of Counsel: A written opinion of counsel, who may be an
employee of the Seller, reasonably
acceptable to the Purchaser, provided that
any Opinion of Counsel relating to (a)
qualification of the Mortgage Loans in a
REMIC or (b) compliance with the REMIC
Provisions, must be an opinion of counsel
who (i) is in fact independent of the
Seller and any Master Servicer of the
Mortgage Loans, (ii) does not have any
material direct or indirect financial
interest in the Seller or any Master
Servicer of the Mortgage Loans or in an
affiliate of any such entity and (iii) is
not connected with the Seller or any
Master Servicer of the Mortgage Loans as an
officer, employee, director or
person performing similar functions.
Pass-Through Transfer: The sale or transfer of some or all of
the
Mortgage Loans to a trust to be formed as
part of a publicly-issued and/or
privately placed, rated or unrated,
mortgage pass-through transaction, retaining
the Seller as "servicer" (with or without a
Master Servicer) thereunder.
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Periodic Rate Cap: With respect to each ARM Mortgage Loan, the
provision of each Mortgage Note which
provides for an absolute maximum amount by
which the Mortgage Interest Rate therein
may increase on an Interest Rate
Adjustment Date above the Mortgage Interest
Rate previously in effect. The
Periodic Rate Cap for each ARM Mortgage
Loan is the rate set forth on the
related Mortgage Loan Schedule.
Person: Any individual, corporation, partnership, limited
liability
company, joint venture, association,
joint-stock company, trust, unincorporated
organization, government or any agency or
political subdivision thereof.
Prepayment Charge: With respect to any Mortgage Loan and
Remittance
Date, the charges or premiums, if any, due
in connection with a full or partial
prepayment of such Mortgage Loan during the
immediately preceding Principal
Prepayment Period in accordance with the
terms of the related Mortgage Note.
Prepayment Interest Shortfall Amount: With respect to any Mortgage
Loan
that was subject to a Principal Prepayment
in full during any Due Period, which
Principal Prepayment was applied to such
Mortgage Loan prior to such Mortgage
Loan's Due Date in such Due Period, the
amount of interest (net the related
Servicing Fee) that would have accrued on
the amount of such Principal
Prepayment during the period commencing on
the date as of which such Principal
Prepayment was applied to such Mortgage
Loan and ending on the day immediately
preceding such Due Date, inclusive.
Principal Prepayment: Any payment or other recovery of principal on
a
Mortgage Loan which is received in advance
of its scheduled Due Date, including
any Prepayment Charge or premium thereon
and 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.
Prime Rate: The prime rate announced to be in effect from time to
time,
as published as the average rate in The
Wall Street Journal.
Purchase Price: The price paid on the related Closing Date by
the
Purchaser to the Seller in exchange for the
Mortgage Loans as calculated in
Article III of this Agreement.
Purchase Price and Terms Agreement: With respect to each purchase
of a
Mortgage Loan Package hereunder, that
certain letter agreement by and between
the Seller and the Purchaser setting forth
the general terms, conditions and
portfolio characteristics for each Mortgage
Loan Package to be purchased
hereunder as of any Closing Date.
Purchaser: Lehman Brothers Bank, FSB or its successor in interest
or
any successor to the Purchaser under this
Agreement as herein provided.
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Qualified Appraiser: An appraiser who had no interest, direct
or
indirect, in the Mortgaged Property or in
any loan made on the security thereof,
and whose compensation is not affected by
the approval or disapproval of the
Mortgage Loan, and such appraiser and the
appraisal made by such appraiser both
satisfy the requirements of Title XI of the
Federal Institutions Reform,
Recovery and Enforcement Act of 1989 and
the regulations promulgated thereunder,
all as in effect on the date the Mortgage
Loan was originated.
Qualified Depository: A depository the accounts of which are
insured by
the FDIC through the BIF or the SAIF and
the debt obligations of which are rated
AA or better by Standard & Poor's
Corporation.
Qualified Insurer: A mortgage guaranty insurance company duly
authorized and licensed where required by
law to transact mortgage guaranty
insurance business and approved as an
insurer by Fannie Mae or Freddie Mac.
Rating Agency: Any of Fitch, Inc., Moody's Investors Service, Inc.
or
Standard & Poor's Rating Services, A
Division of The McGraw-Hill Companies,
Inc., or their respective successors.
Reconstitution: A Pass-Through Transfer, a Whole Loan Transfer or
an
Agency Transfer.
Reconstitution Agreements: The agreement or agreements entered into
by
the Purchaser, the Seller, Fannie Mae or
Freddie Mac or certain third parties on
the Reconstitution Date(s) with respect to
any or all of the Mortgage Loans
serviced hereunder, in connection with a
Pass-Through Transfer or an Agency
Transfer as set forth in Section 7.01,
including, but not limited to, (i) a
Fannie Mae Mortgage Selling and Servicing
Contract, a Pool Purchase Contract,
and any and all servicing agreements and
tri-party agreements reasonably
required by Fannie Mae with respect to a
Fannie Mae Transfer, (ii) a Purchase
Contract and all purchase documents
associated therewith as set forth in the
Freddie Mac Sellers' & Servicers'
Guide, and any and all servicing agreements
and tri-party agreements reasonably
required by Freddie Mac with respect to a
Freddie Mac Transfer, and (iii) a Pooling
and Servicing Agreement and/or a
subservicing/master servicing agreement and
related custodial/trust agreement
and related documents with respect to a
Pass-Through Transfer. Such agreement or
agreements shall prescribe the rights and
obligations of the Seller in servicing
the related Mortgage Loans and shall
provide for servicing compensation to the
Seller (calculated on a weighted average
basis for all the related Mortgage
Loans as of the Reconstitution Date), net
of any guarantee fees due Fannie Mae
or Freddie Mac, if applicable, at least
equal to the Servicing Fee due the
Seller in accordance with this Agreement or
the servicing fee required pursuant
to the Reconstitution Agreement, whichever
is greater.
Reconstitution Date: The date or dates on which any or all of
the Mortgage Loans serviced under this
Agreement shall be removed from this
Agreement and reconstituted as part of an
Agency Transfer or a Pass-Through
Transfer pursuant to Section 8.01 hereof.
On such date or dates, the Mortgage
Loans transferred shall cease to be covered
by this Agreement and the Seller's
servicing responsibilities (but not its
obligations as Seller and originator
hereunder) shall cease under this Agreement
with respect to the related
transferred Mortgage Loans.
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REMIC: A "real estate mortgage investment conduit" within the
meaning
of Section 860D of the Code.
REMIC Documents: The document or documents creating and governing
the
administration of a REMIC.
REMIC Eligible Mortgage Loan: A Mortgage Loan held by a REMIC
which
satisfies and/or complies with all
applicable REMIC Provisions.
REMIC Provisions: Provisions of the federal income tax law relating
to
a REMIC, which appear at Section 860A
through 86OG of Subchapter M of Chapter 1,
Subtitle A of the Code, and related
provisions, and regulations, rulings or
pronouncements promulgated thereunder, as
the foregoing may be in effect from
time to time.
Remittance Date: The 18th day (or if such 18th day is not a
Business
Day, the first Business Day immediately
preceding) of any month.
REO Disposition: The final sale by the Seller of any REO
Property.
REO Disposition Proceeds: All amounts received with respect to an
REO
Disposition pursuant to Section 5.17.
REO Property: A Mortgaged Property acquired by the Seller on behalf
of
the Purchaser through foreclosure or by
deed in lieu of foreclosure, as
described in Section 5.17.
Repurchase Price: With respect to any Mortgage Loan, a price equal
to
(a) the Stated Principal Balance of the
Mortgage Loan plus (b) interest on such
Stated Principal Balance at the Mortgage
Interest Rate from the date on which
interest has last been paid and distributed
to the Purchaser to the date of
repurchase, less amounts received, if any,
plus amounts advanced, if any, by any
servicer, in respect of such repurchased
Mortgage Loan.
SAIF: The Savings Association Insurance Fund, or any successor
thereto.
Securities Act of 1933 or the 1933 Act: The Securities Act of 1933,
as
amended.
Second Lien Mortgage Loan: A Mortgage Loan secured by a second lien
on
the related Mortgaged Property.
Seller: Greenpoint Mortgage Funding Inc. and its successors and
assigns.
Servicing Advances: All customary, reasonable and necessary "out
of
pocket" costs and expenses other than
Monthly Advances (including reasonable
attorneys' fees and disbursements) incurred
in the performance by the Seller of
its servicing obligations, including, but
not limited to, the cost of (a) the
preservation, restoration, protection and
inspection of the Mortgaged Property,
(b) any enforcement or judicial
proceedings, including foreclosures, (c) the
management and liquidation of any REO
Property and (d) compliance with the
obligations under Section 5.01. 5.02, 5.08,
5.11, 5.14 and 5.15.
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Servicing Fee: With respect to each Mortgage Loan, the amount of
the
annual fee the Purchaser shall pay to the
Seller, which shall, for a period of
one full month, be equal to one-twelfth of
the product of (a) the Servicing Fee
Rate and (b) the outstanding principal
balance of such Mortgage 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 Mortgage 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, Condemnation or
Insurance Proceeds) of such Monthly Payment
collected by the Seller.
Servicing Fee Rate: 0.25% per annum.
Servicing File: With respect to each Mortgage Loan, the file
retained
by the Seller consisting of originals of
all documents in the Mortgage File
which are not delivered to the Custodian
and copies of the Mortgage Loan
Documents listed in Exhibit B the originals
of which are delivered to the
Custodian pursuant to Section 2.03.
Servicing Officer: Any officer of the Seller involved in or
responsible
for, the administration and servicing of
the Mortgage Loans whose name appears
on a list of servicing officers furnished
by the Seller to the Purchaser upon
request, as such list may from time to time
be amended.
Stated Principal Balance: As to each Mortgage Loan, (a) the
principal
balance of the Mortgage Loan at the related
Cut-off Date after giving effect to
payments of principal received on or before
such date, minus (b) all amounts
previously distributed to the Purchaser
with respect to the related Mortgage
Loan representing payments or recoveries of
principal or advances in lieu
thereof.
Tax Returns: The federal income tax return on Internal Revenue
Service
Form 1066, U.S. Real Estate Mortgage
Investment Conduit Income Tax Return,
including Schedule Q thereto, Quarterly
Notice to Residual Interest Holders of
REMIC Taxable Income or Net Loss
Allocation, or any successor forms, to be filed
on behalf of any REMIC under the REMIC
Provisions, together with any and all
other information, reports or returns that
may be required to be furnished to
the certificate holders under a REMIC or
filed with the Internal Revenue Service
or any other governmental taxing authority
under any applicable provisions of
federal, state or local tax laws.
Texas Home Equity Loan: An extension of credit described in
Section
50(a)(6), Article XVI of the Texas
Constitution.
Underwriting Guidelines. The underwriting guidelines of the
Seller
attached as Annex 3 to the related
Acknowledgment and Conveyance Agreement.
Whole Loan Transfer: The sale or transfer of some or all of the
Mortgage Loans to a third party purchaser
in a whole loan transaction pursuant
to a loan purchase, warranties and
servicing agreement or a participation and
servicing agreement, or similar agreement,
retaining the Seller as "servicer"
thereunder.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS; CUSTODIAL AGREEMENT;
DELIVERY OF DOCUMENTS
Section 2.01
Conveyance of Mortgage Loans; Possession of Mortgage
Files; Maintenance of Servicing Files.
On each Closing Date, the Seller, simultaneously with the execution
and
delivery of the related Acknowledgment and
Conveyance Agreement, does hereby
sell, transfer, assign, set over and convey
to the Purchaser, without recourse,
but subject to the terms of this Agreement,
all right, title and interest of the
Seller in and to the Mortgage Loans
included in the related Mortgage Loan
Package, together with Mortgage Files and
all rights and obligations arising
under the documents contained therein for
each Mortgage Loan. Pursuant to
Section 2.03 hereof, on or prior to each
Closing Date, the Seller shall deliver
the Mortgage File for each Mortgage Loan
included in the related Mortgage Loan
Package to the Purchaser or its designee.
The contents of each Servicing File
not delivered to the Purchaser are and
shall be held in trust by the Seller for
the benefit of Purchaser as the owner
thereof. The Seller's possession of any
portion of the Servicing File is at the
will of the Purchaser for the sole
purpose of facilitating servicing of the
related Mortgage Loan, and such
retention and possession by the Seller
shall be in a custodial capacity only.
The ownership of each Mortgage Note,
Mortgage, and the contents of the Mortgage
File and Servicing File is vested in the
Purchaser and the ownership of all
records and documents with respect to the
related Mortgage Loan prepared by or
which come into the possession of the
Seller shall immediately vest in the
Purchaser and shall be retained and
maintained, in trust, by the Seller at the
will of the Purchaser in such custodial
capacity only. The Servicing File
retained by the Seller shall be segregated
from the other books and records of
the Seller and shall be appropriately
marked to clearly reflect the sale of the
related Mortgage Loan to the Purchaser. The
Seller shall release from its
custody the contents of any Servicing File
retained by it only in accordance
with the written instructions from the
Purchaser, unless such release is
required as incidental to the Seller's
servicing the Mortgage Loans pursuant
hereto or is in connection with a
repurchase of any Mortgage Loan pursuant
hereto.
Section 2.02 Books and Records; Transfers of Mortgage Loans.
Record title to each Mortgage and the related Mortgage Note as of
the
applicable Closing Date shall be in the
name of the Purchaser or as Purchaser
shall designate. All rights arising out of
the Mortgage Loans including, but not
limited to, all funds received by the
Seller after the related Cut-off Date on
or in connection with a Mortgage Loan shall
be vested in the Purchaser;
provided, however, that all funds received
on or in connection with a Mortgage
Loan shall be received and held by the
Seller in trust for the benefit of the
Purchaser as the owner of the Mortgage
Loans for the sole purpose of
facilitating the servicing and the
supervision of the servicing of the Mortgage
Loans.
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The sale of each Mortgage Loan shall be reflected on the
Seller's
balance sheet and other financial
statements as a sale of assets by the Seller.
The Seller shall be responsible for
maintaining, and shall maintain, a complete
set of books and records for each Mortgage
Loan which shall be marked clearly to
reflect the ownership of each Mortgage Loan
by the Purchaser. In particular, the
Seller shall maintain in its possession,
available for inspection by the
Purchaser, or its designee and shall
deliver to the Purchaser upon demand,
evidence of compliance with all federal,
state and local laws, rules and
regulations, including but not limited to
documentation as to the method used in
determining the applicability of the
provisions of the Flood Disaster Protection
Act of 1973, as amended, to the Mortgaged
Property, documentation evidencing
insurance coverage and periodic inspection
reports as required by Section 5.14.
To the extent that original documents are
not required for purposes of
realization of Liquidation Proceeds,
Condemnation Proceeds or Insurance
Proceeds, documents maintained by the
Seller may be in the form of microfilm or
microfiche or such other reliable means of
recreating original documents,
including but not limited to, optical
imagery techniques.
The Seller shall maintain with respect to each Mortgage Loan and
shall
make available for inspection by any
Purchaser or its designee the related
Servicing File during the time the
Purchaser retains ownership of a Mortgage
Loan and thereafter in accordance with
applicable laws and regulations. Section
2.03 Custodial Agreement; Delivery of
Documents.
No later than the date set forth in the related Purchase Price
and
Terms Agreement, the Seller shall deliver
to the Custodian those Mortgage Loan
Documents as required by this Agreement
with respect to each Mortgage Loan
included in the related Mortgage Loan
Package, a list of which is attached as
Exhibit B hereto. On or prior to the
related Closing Date, the Custodian shall
have certified its receipt of all such
Mortgage Loan Documents required to be
delivered pursuant to the Custodial
Agreement, as evidenced by the initial
certification of the Custodian in the form
annexed to the Custodial Agreement.
The Purchaser shall be responsible for
maintaining the Custodial Agreement and
shall pay all fees and expenses of the
Custodian. On the related Closing Date,
the Seller shall release any interest that
it has in the Mortgage Loan Documents
upon its receipt of the Purchase Price for
the Mortgage Loans. Within thirty
(30) days of receipt by the Seller of any
notice from the Purchaser or the
Custodian that any of the Mortgage Loan
Documents is missing, does not appear
regular on its face (i.e., is mutilated,
damaged, defaced, torn or otherwise
physically altered) or appears to be
unrelated to the Mortgage Loans identified
in the Mortgage Loan Schedule (each, a
"Material Defect"), the Seller shall cure
such Material Defect (and, in such event,
the Seller shall provide the Purchaser
with an Officer's Certificate confirming
that such cure has been effected). If
the Seller does not so cure such Material
Defect, it shall, if such Material
Defect would under Accepted Servicing
Practices reasonably be expected to result
in a loss, repurchase the related Mortgage
Loan at the Repurchase Price. A loss
shall be deemed to be attributable to the
failure of the Seller to cure a
Material Defect if, as determined by the
Purchaser acting in good faith, absent
such Material Defect, such loss would not
have been incurred. In addition to
such repurchase obligation, 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,
judgments, and other costs and
expenses resulting from any missing,
mutilated or improper Mortgage Loan
Document, or any claim, demand, defense or
assertion based on or grounded upon,
or resulting therefrom, as well as for any
expenses reasonably incurred by the
Purchaser in enforcing its remedies
hereunder in connection with any missing,
mutilated or improper Mortgage Loan
Document.
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<PAGE>
The Seller shall forward to the Custodian original documents
evidencing
an assumption, modification, consolidation
or extension of any Mortgage Loan
entered into in accordance with Section
5.01 or 7.01 within one week of their
execution, provided, however, that the
Seller shall provide the Custodian and
the Purchaser or its designee with a
certified true copy of any such document
submitted for recordation within one week
of its execution, and shall provide
the original of any document submitted for
recordation or a copy of such
document certified by the appropriate
public recording office to be a true and
complete copy of the original within sixty
days of its submission for
recordation.
The Seller shall deliver a final Mortgage Loan Schedule for the
Mortgage Loans included in any Mortgage
Loan Package to be purchased on any
Closing Date to the Purchaser no later than
the date set forth in the related
Purchase Price and Terms Agreement.
ARTICLE III
PURCHASE PRICE
The Purchase Price shall be the percentage of par as stated in
the
related Purchase Price and Terms Agreement
(subject to the adjustments as
provided therein), multiplied by the
aggregate Stated Principal Balance of the
Mortgage Loans included in the related
Mortgage Loan Package. Notwithstanding
the foregoing, if a Mortgage Loan prepays
in full between the related Cut-off
Date and the related Closing Date,
inclusive, the Seller shall either remove
such Mortgage Loan from the Mortgage Loan
Schedule or reimburse the Purchaser
for the premium over par which the
Purchaser paid within five (5) days of the
related Closing Date. In addition,
Purchaser will not purchase any Mortgage Loan
that has not made a payment as of the date
set forth in the related Purchase
Price and Terms Agreement. The initial
principal amount of the Mortgage Loans
shall be the aggregate principal balance of
such Mortgage Loans, so computed as
of the related Cut-off Date. On each
Closing Date, the Purchaser shall deduct
from the Purchase Price proceeds certain
costs and expenses set forth in Article
XIII or in the related Purchase Price and
Terms Agreement.
In
addition to the Purchase Price as described above, the
Purchaser
shall pay to the Seller, on the related
Closing Date, accrued interest on the
initial principal amount of the Mortgage
Loans at the weighted average Mortgage
Interest Rate from the date interest was
last received on the related Mortgage
Loan through the day prior to the related
Closing Date, inclusive.
The Purchase Price shall be paid on the related Closing Date by
wire
transfer of immediately available federal
funds.
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<PAGE>
The Purchaser shall be entitled to (i) all principal received after
the
related Cut-off Date, (ii) all other
recoveries of late charges, assumption fees
or other charges collected after the
related Cut-off Date, and (iii) all
payments of interest on the Mortgage Loans
at the Mortgage Interest Rate. The
principal balance of each Mortgage Loan as
of the related Cut-off Date is
determined after application of payments of
principal received on or before the
related Cut-off Date. All payments of
principal and interest (minus interest at
the Servicing Fee Rate) due on the first
day of the month after the related
Cut-off Date shall belong to the
Purchaser.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES;
REMEDIES AND BREACH
Section 4.01 Seller
Representations and Warranties.
The Seller represents and warrants to the Purchaser that as of
each
Closing Date:
(a) Due
Organization and Authority. The Seller is a New York
corporation duly organized, validly
existing and in good standing under the laws
of the State of New York and has all
licenses necessary to carry on its business
as now being conducted and is licensed,
qualified and in good standing in each
state where a Mortgaged Property is located
if the laws of such state require
licensing or qualification in order to
conduct business of the type conducted by
the Seller, and in any event the Seller is
in compliance with the laws of any
such state to the extent necessary to
ensure the enforceability of the related
Mortgage Loan and the servicing of such
Mortgage Loan in accordance with the
terms of this Agreement; the Seller has the
full corporate power and authority
to execute and deliver this Agreement and
to perform in accordance herewith; the
execution, delivery and performance of this
Agreement (including all instruments
of transfer to be delivered pursuant to
this Agreement) by the Seller and the
consummation of the transactions
contemplated hereby have been duly and validly
authorized; this Agreement evidences the
valid, binding and enforceable
obligation of the Seller; and all requisite
corporate action has been taken by
the Seller to make this Agreement valid and
binding upon the Seller in
accordance with its terms;
(b) Ordinary Course of Business. The consummation of the
transactions
contemplated by this Agreement are in the
ordinary course of business of the
Seller, and the transfer, assignment and
conveyance of the Mortgage Notes and
the Mortgages by the Seller pursuant to
this Agreement are not subject to the
bulk transfer or any similar statutory
provisions in effect in any applicable
jurisdiction;
(c) No Conflicts. Neither the execution and delivery of this
Agreement,
the acquisition of the Mortgage Loans by
the Seller, the sale of the Mortgage
Loans to the Purchaser or the transactions
contemplated hereby, nor the
fulfillment of or compliance with the terms
and conditions of this Agreement,
will conflict with or result in a breach of
any of the terms, conditions or
provisions of the Seller's charter or
by-laws or any legal restriction or any
agreement or instrument to which the Seller
is now a party or by which it is
bound, or constitute a default or result in
an acceleration under any of the
foregoing, or result in the violation of
any law, rule, regulation, order,
judgment or decree to which the Seller or
its property is subject, or impair the
ability of the Purchaser to realize on the
Mortgage Loans, or impair the value
of the Mortgage Loans;
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<PAGE>
(d) Ability to Perform. 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. The Seller is
solvent and the sale of the Mortgage
Loans will not cause the Seller to become
insolvent. The sale of the Mortgage
Loans is not undertaken with the intent to
hinder, delay or defraud any of the
Seller's creditors.;
(e) No Litigation Pending. There is no action, suit, proceeding
or
investigation pending or threatened against
the Seller which, either in any one
instance or in the aggregate, may result in
any material adverse change in the
business, operations, financial condition,
properties or assets of the Seller,
or in any material impairment of the right
or ability of the Seller to carry on
its business substantially as now
conducted, or in any material liability on the
part of the Seller, or which would draw
into question the validity of this
Agreement or the Mortgage Loans or of any
action taken or to be taken in
connection with the obligations of the
Seller contemplated herein, or which
would be likely to impair materially the
ability of the Seller to perform under
the terms of this Agreement;
(f) No Consent Required. 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 Mortgage Loans, the
delivery of a portion of the Mortgage Files
to the Custodian or the sale of the
Mortgage Loans to the Purchaser or the
consummation of the transactions
contemplated by this Agreement, or if required,
such approval has been obtained prior to
the related Closing Date;
(g) Selection Process. The Mortgage Loans were not
intentionally
selected in a manner so as to affect
adversely the interests of the Purchaser;
(h) No Untrue
Information. Neither this Agreement nor any statement,
report or other document furnished or to be
furnished pursuant to this Agreement
or in connection with the transactions
contemplated hereby contains any untrue
statement of fact or omits to state a fact
necessary to make the statements
contained therein not misleading;
(i) Sale Treatment. The Seller has determined that the disposition
of
the Mortgage Loans pursuant to this
Agreement will be afforded sale treatment
for accounting and tax purposes;
(j) No Commissions to Third Parties. The Seller has not dealt with
any
broker or agent or anyone else who might be
entitled to a fee or commission in
connection with this transaction other than
the Purchaser;
(k) Financial Statements. The Seller has delivered to the
Purchaser
financial statements as to its last three
complete fiscal years and any later
quarter ended more than sixty (60) days
prior to the execution of this
Agreement. All such financial statements
fairly present the pertinent results of
operations and changes in financial
position at the end of each such period of
the Seller and its subsidiaries and have
been prepared in accordance with
generally accepted accounting principles
consistently applied throughout the
periods involved, except as set forth in
the notes thereto. There has been no
change in the business, operations,
financial condition, properties or assets of
the Seller since the date of the Seller's
financial statements that would have a
material adverse effect on its ability to
perform its obligations under this
Agreement. The Seller has completed any
forms requested by the Purchaser in a
timely manner and in accordance with the
provided instructions;
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<PAGE>
(l) Fair Consideration. The consideration received by the Seller
upon
the sale of the Mortgage Loans under this
Agreement constitutes fair
consideration and reasonably equivalent
value for the Mortgage Loans;
(m) MERS. The Seller is a member of MERS 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
Mortgage Loans for as long as such
Mortgage Loans are registered with MERS;
and
(n) Ability to Service. The Seller is an approved servicer of
conventional residential mortgage loans for
Fannie Mae and Freddie Mac, with the
facilities, procedures, and experienced
personnel necessary for the sound
servicing of mortgage loans of the same
type as the Mortgage Loans. The Seller
is in good standing to service mortgage
loans for Fannie Mae and Freddie Mac,
and no event has occurred, including but
not limited to a change in insurance
coverage, which would make the Seller
unable to comply with Fannie Mae and
Freddie Mac eligibility requirements or
which would require notification to
Fannie Mae or Freddie Mac, as applicable;
and
(o) Reasonable Servicing Fee. The Seller acknowledges and agrees
that
the Servicing Fee, as calculated at the
Servicing Fee Rate, represents
reasonable compensation for performing such
services and that the entire
Servicing Fee shall be treated by the
Seller, for accounting and tax purposes,
as compensation for the servicing and
administration of the Mortgage Loans
pursuant to this Agreement. Section 4.02
Representations and Warranties
Regarding Individual Mortgage Loans.
As to each Mortgage Loan, the Seller hereby represents and warrants
to
the Purchaser that as of the related
Closing Date:
(a) Mortgage Loans as Described. The information set forth in
the
related Mortgage Loan Schedule is complete,
true and correct in all material
respects;
(b) Payments Current. All payments required to be made up to
the
related Closing Date on the Mortgage Loan
under the terms of the Mortgage Note
have been made and credited. No payment
required under the Mortgage Loan is
delinquent nor has any payment under the
Mortgage Loan been delinquent for 30
days or more at any time for the twelve
months preceding the Closing Date. The
first and second Monthly Payments have been
made with respect to the Mortgage
Loan on its Due Date or within the grace
period, all in accordance with the
terms of the related Mortgage Note;
(c) No Outstanding Charges. There are no defaults in complying with
the
terms of the Mortgage, and all taxes,
governmental assessments, insurance
premiums, water, sewer and municipal
charges, leasehold payments or ground rents
which previously became due and owing have
been paid, or an escrow of funds has
been established in an amount sufficient to
pay for every such item which
remains unpaid and which has been assessed
but is not yet due and payable. The
Seller has not advanced funds, or induced,
solicited or knowingly received any
advance of funds by a party other than the
Mortgagor, directly or indirectly,
for the payment of any amount required
under the Mortgage Loan, except for
interest accruing from the date of the
Mortgage Note or date of disbursement of
the Mortgage Loan proceeds, whichever is
earlier, to the day which precedes by
one month the Due Date of the first
installment of principal and interest;
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<PAGE>
(d) Original Terms Unmodified. The terms of the Mortgage Note
and
Mortgage have not been impaired, waived,
altered or modified in any respect,
except by a written instrument which has
been recorded, if necessary to protect
the interests of the Purchaser and which
has been delivered to the Purchaser.
The substance of any such waiver,
alteration or modification has been approved
by any title insurer, to the extent
required by the policy, and its terms are
reflected on the related Mortgage Loan
Schedule. No Mortgagor has been released,
in whole or in part, except in connection
with an assumption agreement approved
by any related title insurer, to the extent
required by the policy, and which
assumption agreement is part of the
Mortgage Loan File delivered to the
Purchaser and the terms of which are
reflected in the related Mortgage Loan
Schedule;
(e) No Defenses. The Mortgage Loan is not subject to any right
of
rescission, set-off, counterclaim or
defense, including without limitation the
defense of usury, nor will the operation of
any of the terms of the Mortgage
Note or the Mortgage, or the exercise of
any right thereunder, render either the
Mortgage Note or the Mortgage
unenforceable, in whole or in part, or subject to
any right of rescission, set-off,
counterclaim or defense, including without
limitation the defense of usury, and no
such right of rescission, set-off,
counterclaim or defense has been asserted
with respect thereto, and no Mortgagor
was a debtor in any state or federal
bankruptcy or insolvency proceeding within
the 24 months preceding the origination of
the Mortgage Loan;
(f) Hazard Insurance. Pursuant to the terms of the Mortgage,
all
buildings or other improvements upon the
Mortgaged Property are insured by a
generally acceptable insurer 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
Fannie Mae and Freddie Mac. If upon
origination of the Mortgage Loan, the
Mortgaged Property was in an area
identified in the Federal Register by the
Federal Emergency Management Agency as
having special flood hazards a
life-of-loan flood insurance policy meeting
the requirements of the current
guidelines of the Federal Flood Insurance
Administration is in effect which
policy conforms to the requirements of
Fannie Mae and Freddie Mac. Such flood
insurance shall be with an Approved Flood
Policy Insurer. All individual
insurance policies contain a standard
mortgagee clause naming the Seller and its
successors and assigns as mortgagee, and
all premiums thereon have been paid.
The Mortgage obligates the Mortgagor
thereunder to maintain the hazard insurance
policy at the Mortgagor's cost and expense,
and on the Mortgagor's failure to do
so, authorizes the holder of the Mortgage
to obtain and maintain such insurance
at such Mortgagor's cost and expense, and
to seek reimbursement therefor from
the Mortgagor. Where required by state law
or regulation, the Mortgagor has been
given an opportunity to choose the carrier
of the required hazard insurance,
provided the policy is not a "master" or
"blanket" hazard insurance policy
covering the common facilities of a planned
unit development. The hazard
insurance policy is the valid and binding
obligation of the insurer, is in full
force and effect, and will be in full force
and effect and inure to the benefit
of the Purchaser upon the consummation of
the transactions contemplated by this
Agreement. The Seller has not engaged in,
and has no knowledge of the
Mortgagor's or any subservicer's having
engaged in, any act or omission which
would impair the coverage of any such
policy, the benefits of the endorsement
provided for herein, or the validity and
binding effect of either, including,
without limitation, no unlawful fee,
commission, kickback or other unlawful
compensation or value of any kind has been
or will be received, retained or
realized by any attorney, firm or other
person or entity, and no such unlawful
items have been received, retained or
realized by the Seller;
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<PAGE>
(g) Compliance with Applicable Laws. Any and all requirements of
any
federal, state or local law including,
without limitation, usury,
truth-in-lending, real estate settlement
procedures, consumer credit protection,
equal credit opportunity or disclosure laws
applicable to the Mortgage Loan have
been complied with, and the Seller shall
maintain in its possession, available
for the Purchaser's inspection, and shall
deliver to the Purchaser on the
related Closing Date, evidence of
compliance with all such requirements;
(h) No Satisfaction of Mortgage. The Mortgage has not been
satisfied,
canceled, 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 release,
cancellation, subordination or rescission.
The Seller has not waived the
performance by the Mortgagor of any action,
if the Mortgagor's failure to
perform such action would cause the
Mortgage Loan to be in default, nor has the
Seller waived any default resulting from
any action or inaction by the
Mortgagor;
(i) Location and Type of Mortgaged Property. The Mortgaged Property
is
a fee simple property located in the state
identified in the related Mortgage
Loan Schedule and consists of a single
parcel of real property with a detached
single family residence erected thereon, a
two- to four-family dwelling, an
individual condominium unit in a low-rise
condominium project, an individual
unit in a planned unit development or a
manufactured dwelling permanently
affixed to the ground, provided, however,
that any condominium unit or planned
unit development shall conform with the
applicable Underwriting Guidelines
regarding such dwellings and that no
residence or dwelling is a mobile home. No
portion of the Mortgaged Property is used
for commercial purposes;
(j) Valid First or Second Lien. With respect to any first lien
Mortgage
Loan, the related Mortgage is a valid,
subsisting, enforceable and perfected
first lien on the Mortgaged Property and,
with respect to any Second Lien
Mortgage Loan, the related Mortgage is a
valid, subsisting, enforceable and
perfected Second Lien on the Mortgaged
Property, including all buildings on the
Mortgaged Property and all installations
and mechanical, electrical, plumbing,
heating and air conditioning systems
located in or annexed to such buildings,
and all additions, alterations and
replacements made at any time with respect to
the foregoing. Such lien is free and clear
of all adverse claims, liens and
encumbrances having priority over the First
Lien or second lien, as applicable,
of the Mortgage subject only to:
(i) with respect to any Second Lien Mortgage Loan, the related
First
Lien,
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(ii) the lien of current real property taxes and assessments not
yet
due and payable,
(iii) covenants, conditions and restrictions, rights of way,
easements
and other matters of the public record as
of the date of recording acceptable to
mortgage lending institutions generally and
specifically referred to in the
lender's title insurance policy delivered
to the originator of the Mortgage Loan
and (A) referred to or to otherwise
considered in the appraisal made for the
originator of the Mortgage Loan or (B)
which do not adversely affect the
appraised value of the Mortgaged Property
set forth in such appraisal; and
(iv) 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.
(k) Any security agreement, chattel mortgage or equivalent
document
related to and delivered in connection with
the Mortgage Loan establishes and
creates a valid, subsisting and enforceable
first lien and first 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
Mortgage Loan, subject to a mortgage,
deed of trust, deed to secure debt or other
security instrument creating a lien
subordinate to the lien of the
Mortgage;
(l) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage
are genuine, and each is the legal, valid
and binding obligation of the maker
thereof enforceable in accordance with its
terms. All parties to the Mortgage
Note and the Mortgage and any other related
agreement had legal capacity to
enter into the Mortgage Loan and to execute
and deliver the Mortgage Note and
the Mortgage and any other related
agreement, and the Mortgage Note and the
Mortgage and any other related agreement
have been duly and properly executed by
such parties. The documents, instruments
and agreements submitted for loan
underwriting were not falsified and contain
no untrue statement of material fact
or omit to state a material fact required
to be stated therein or necessary to
make the information and statements therein
not misleading. No fraud was
committed in connection with the
origination of the Mortgage Loan. The Seller
has reviewed all of the documents
constituting the Servicing File and has made
such inquiries as it deems necessary to
make and confirm the accuracy of the
representations set forth herein;
(m) LTV, PMI Policy. No Mortgage Loan has a LTV equal to or
greater
than as is set forth in the related
Purchase Price and Terms Agreement. The
original LTV of the Mortgage Loan either
was not more than 80% or the excess
over 75% is and will be insured as to
payment defaults by a PMI Policy until the
LTV of such Mortgage Loan is reduced to
80%. All provisions of such PMI Policy
have been and are being complied with, such
policy is in full force and effect,
and all premiums due thereunder have been
paid. No action, inaction, or event
has occurred and no state of facts exists
that has, or will result in the
exclusion from, denial of, or defense to
coverage. Any Mortgage Loan subject to
a PMI Policy obligates the Mortgagor
thereunder to maintain the PMI Policy and
to pay all premiums and charges in
connection therewith. The Mortgage Interest
Rate for the Mortgage Loan as set forth on
the related Mortgage Loan Schedule is
net of any such insurance premium;
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<PAGE>
(n) Full Disbursement of Proceeds. The Mortgage Loan has been
closed
and the proceeds of the Mortgage Loan have
been fully disbursed and there is no
requirement for future advances thereunder,
and any and all requirements as to
completion of any on-site or off-site
improvement and as to disbursements of any
escrow funds therefor have been complied
with. All costs, fees and expenses
incurred in making or closing the Mortgage
Loan and the recording of the
Mortgage were paid, and the Mortgagor is
not entitled to any refund of any
amounts paid or due under the Mortgage Note
or Mortgage;
(o)
Ownership. The Seller is the sole owner of record and holder of
the
Mortgage Loan. The Mortgage Loan is not
assigned or pledged, and the Seller has
good and marketable title thereto, and has
full right to transfer and sell the
Mortgage Loan therein to the Purchaser free
and clear of any encumbrance,
equity, participation interest, lien,
pledge, charge, claim or security
interest, and has full right and authority
subject to no interest or
participation of, or agreement with, any
other party, to sell and assign each
Mortgage Loan pursuant to this
Agreement;
(p) Doing Business. All parties which have had any interest in
the
Mortgage Loan, whether as mortgagee,
assignee, pledgee or otherwise, are (or,
during the period in which they held and
disposed of such interest, were) (1) in
compliance with any and all applicable
licensing requirements of the laws of the
state wherein the Mortgaged Property is
located, and (2) organized under the
laws of such state, or (3) qualified to do
business in such state, or (4)
federal savings and loan associations or
national banks having principal offices
in such state, or (5) not doing business in
such state; (q) Loan-to-Value Ratio.
No Mortgage Loan has an LTV of greater than
as set forth in the related Purchase
Price and Terms Agreement. No Second Lien
Mortgage Loan has a CLTV of greater
than 100%;
(r) Title Insurance. The Mortgage Loan is covered by an ALTA
lender's
title insurance policy or other generally
acceptable form of policy of insurance
acceptable to Fannie Mae or Freddie Mac,
issued by a title insurer acceptable to
Fannie Mae or Freddie Mac and qualified to
do business in the jurisdiction where
the Mortgaged Property is located, insuring
the Seller, its successors and
assigns, as to the First Lien of the
Mortgage in the original principal amount
of the Mortgage Loan subject only to the
exceptions contained in clauses (i),
(ii), (iii) and (iv) of paragraph (j) of
this Section 4.02. Where required by
state law or regulation, the Mortgagor has
been given the opportunity to choose
the carrier of the required mortgage title
insurance. Additionally, such
lender's title insurance policy
affirmatively insures ingress and egress, 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 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 Mortgage,
including the Seller, has done, by act or
omission, anything which would impair the
coverage of such lender's title
insurance policy including without
limitation, no unlawful fee, commission,
kickback or other unlawful compensation or
value of any kind has been or will be
received, retained or realized by any
attorney, firm or other person or entity,
and no such unlawful items have been
received, retained or realized by the
Seller;
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<PAGE>
(s) No Defaults. There is no default, breach, violation or event
of
acceleration existing under the Mortgage or
the Mortgage Note or related
documents and no event which, with the
passage of time or with notice and the
expiration of any applicable grace or cure
period, would constitute a default,
breach, violation or event of acceleration,
and neither the Seller nor any of
its predecessors have waived any default,
breach, violation or event of
acceleration. With respect to each Second
Lien Mortgage Loan, (i) the First Lien
is in full force and effect, (ii) there is
no default, breach, violation or
event of acceleration existing under such
prior mortgage or the related mortgage
note, (iii) no event which, with the
passage of time or with notice and the
expiration of any grace or cure period,
would constitute a default, breach,
violation or event of acceleration
thereunder, and either (A) the prior mortgage
contains a provision which allows or (B)
applicable law requires, the mortgagee
under the Second Lien Mortgage Loan to
receive notice of, and affords such
mortgagee an opportunity to cure any
default by payment in full or otherwise
under the prior mortgage;
(t) No
Mechanics' Liens. 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 the law could give
rise to such liens) affecting the
related Mortgaged Property which are or may
be liens prior to, or equal or
coordinate with, the lien of the related
Mortgage;
(u) Location of Improvements; No Encroachments. All improvements
which
were considered in determining the
Appraised Value of the Mortgaged Property lay
wholly within the boundaries and building
restriction lines of the Mortgaged
Property, no improvements on adjoining
properties to which value was assigned
encroach upon the Mortgaged Property;
further, the value of the Mortgaged
Property is not diminished by any
improvements on adjoining properties which
encroach the Mortgaged Property. No
improvement located on or being part of the
Mortgaged Property (upon which value was
given in determining the Appraised
Value) is in violation of any applicable
zoning law or regulation; provided,
that in no event shall a legal
nonconforming use of the Mortgaged Property be
considered a violation of any such zoning
law or regulation.
(v) Origination; Payment Terms. Principal payments on the Mortgage
Loan
commenced no more than sixty (60) days
after the funds were disbursed in
connection with the Mortgage Loan. At the
time the Mortgage Loan was originated,
the originator was a mortgagee approved by
the Secretary of Housing and Urban
Development pursuant to Sections 203 and
211 of the National Housing Act or a
savings and loan association, a savings
bank, a commercial bank or similar
banking institution which is supervised and
examined by a Federal or State
authority. The Mortgage Interest Rate is
(i) with respect to fixed rate Mortgage
Loans, the fixed interest rate set forth in
the Mortgage Note and (ii) with
respect to ARM Mortgage Loans, adjusted on
each Interest Rate Adjustment Date
pursuant to the Mortgage Loan Documents and
rounded as required under Accepted
Servicing Practices and subject to the
Mortgage Interest Rate Cap, the Periodic
Rate Cap and the Lifetime Rate Cap. Except
with respect to any balloon Mortgage
Loan as indicated on the related Mortgage
Loan Schedule, the Mortgage Note is
payable in equal monthly installments of
principal and interest, with interest
calculated and payable in arrears,
sufficient to amortize the Mortgage Loan
fully by the stated maturity date, over an
original term of not more than thirty
years from commencement of amortization.
The Mortgage Interest Rate, as well as
the Lifetime Rate Cap, the Periodic Rate
Cap and the Mortgage Interest Rate Cap,
are as set forth on the Mortgage Loan
Schedule. No ARM Mortgage Loan contains
terms whereby the Mortgagor is permitted to
convert the Mortgage Loan to a fixed
rate Mortgage Loan, no ARM Mortgage Loan
contains a negative amortization
provision and no ARM Mortgage Loan contains
a rounding feature. All of the ARM
Mortgage Loans contain an interest rate
provision that requires a lookback of 45
days. With respect to each Mortgage Loan
Package, the Mortgage Loan Schedule
does not contain more than one Mortgage
Loan with the same Mortgagor;
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<PAGE>
(w) Customary Provisions. The Mortgage contains 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, (i) in the case of a
Mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise by
judicial or nonjudicial foreclosure. Upon
default by an Mortgagor on a Mortgage
Loan and foreclosure on, or trustee's sale
of, the Mortgaged Property pursuant
to the proper procedures, the holder of the
Mortgage Loan will be able to
deliver good and merchantable title to the
Mortgaged Property. There is no
homestead or other exemption available to
the Mortgagor which would interfere
with the right to sell the Mortgaged
Property at a trustee's sale or the right
to foreclose the Mortgage subject to
applicable federal and state laws and
judicial precedent with respect to
bankruptcy and right of redemption;
(x) Conformance with Underwriting Guidelines. Each Mortgage Loan
fully
conforms to all underwriting guidelines and
other requirements of Fannie Mae and
Freddie Mac other than with respect to the
original principal amount. The
Mortgage Loan was underwritten in
accordance with the Underwriting Guidelines in
effect at the time the Mortgage Loan was
originated. The Mortgage Note and
Mortgage are on forms acceptable to
participants in the secondary mortgage
market for similar types of Mortgage
Loans;
(y) Occupancy of the Mortgaged Property. As of the related Closing
Date
the Mortgaged Property will be 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 and fire underwriting
certificates, have been made or obtained from
the appropriate authorities;
(z) No Additional Collateral. The Mortgage 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 the "Valid Lien"
representation above.
(aa) Deeds of Trust. In the event the Mortgage constitutes a deed
of
trust, a trustee, authorized and 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 Purchaser to the
trustee under the deed of trust, except in
connection with a trustee's sale
after default by the Mortgagor.
(bb) Acceptable Investment. The Seller has no knowledge of any
circumstances or conditions with respect to
the Mortgage, the Mortgaged
Property, the Mortgagor or the Mortgagor's
credit standing that can reasonably
be expected to cause private institutional
investors to regard the Mortgage Loan
as an unacceptable investment, cause the
Mortgage Loan to become delinquent, or
adversely affect the value or marketability
of the Mortgage Loan;
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<PAGE>
(cc) Delivery of Mortgage Documents. The Mortgage Note, the
Mortgage,
the Assignment of Mortgage and any other
documents required to be delivered by
the Seller under this Agreement have been
delivered to the Purchaser or its
designee. The Seller is in possession of a
complete, true and accurate Mortgage
File in compliance with Exhibit B hereto,
except for such documents the
originals of which have been delivered to
the Purchaser or its designee;
(dd) Condominiums/Planned Unit Developments/Manufactured Dwellings.
If
the Mortgaged Property is a condominium
unit or a planned unit development
(other than a de minimus planned unit
development) such condominium or planned
unit development project meets the related
Underwriting Guidelines. With respect
to each Mortgage Loan secured by a
manufactured home: (i) the manufactured home
is permanently affixed to a foundation
which is suitable for the soil conditions
of the site; (ii) all foundations, both
perimeter and interior, have footings
that are located below the frost line;
(iii) any wheels, axles and trailer
hitches are removed from the manufactured
home; (iv) the Mortgage Loan is
covered under a standard real estate title
insurance policy or attorney's title
opinion or certificate that identified the
manufactured home as part of the real
property and insures or indemnifies against
any loss if the manufactured home is
determined not to be part of the real
property. In no event shall any Mortgage
Loan be secured by a mobile home;
(ee) Due on Sale. Each Mortgage, together with any such documents
as
may be required under applicable law,
contains an enforceable provision for the
acceleration of the payment of the unpaid
principal balance of the Mortgage Loan
in the event that the Mortgaged Property is
sold or transferred without the
prior written consent of the mortgagee
thereunder, at the option of the
mortgagee;
(ff) Transfer of Mortgage Loans. If the Mortgage Loan is not a
MERS
Mortgage Loan, each of the Mortgage and the
Assignment of Mortgage (upon the
insertion of the assignee's name) is in
recordable form and is acceptable for
recording under the laws of the
jurisdiction in which the Mortgaged Property is
located, and each Mortgage has been
delivered to the appropriate recorder's
office for recording;
(gg) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not
contain provisions pursuant to which
Monthly Payments are paid or partially paid
with funds deposited in any separate
account established by the Seller, the
Mortgagor or anyone on behalf of the
Mortgagor, or paid by any source other than
the Mortgagor, nor does it contain
any other similar provisions currently in
effect which may constitute a
"buydown" provision. The Mortgage Loan is
not a graduated payment mortgage loan
and the Mortgage Loan does not have a
shared appreciation or other contingent
interest feature;
(hh) Consolidation of Future Advances. Any future advances made to
the
Mortgagor prior to the related 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 readjustment feature or rate
and single repayment term. The lien of the
Mortgage securing the consolidated
principal amount is expressly insured as
having the lien priority as indicated
on the Mortgage Loan Schedule by a title
insurance policy, an endorsement to the
policy insuring the mortgagee's
consolidated interest or by other title evidence
acceptable to Purchaser, Fannie Mae or
Freddie Mac. The consolidated principal
amount does not exceed the original
principal amount of the Mortgage Loan;
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<PAGE>
(ii) Mortgaged Property Undamaged; No Condemnation Proceedings.
There
is no proceeding pending or threatened for
the total or partial condemnation of
the Mortgaged Property. The Mortgaged
Property is undamaged by waste, fire,
earthquake or earth movement, windstorm,
flood, tornado or other casualty so as
to affect adversely the value of the
Mortgaged Property as security for the
Mortgage Loan or the use for which the
premises were intended;
(jj) Collection Practices; Escrow Payments. The origination and
collection practices used with respect to
the Mortgage Loan have been in
accordance with Accepted Servicing
Practices, in all respects in compliance with
all applicable laws and regulations and in
all material respects proper and
prudent in the mortgage origination and
servicing business. With respect to
escrow deposits and Escrow Payments, all
such payments are in the possession of
the Seller and there exist no deficiencies
in connection therewith for which
customary arrangements for repayment
thereof have not been made. All Escrow
Payments have been collected in full
compliance with state and federal law. An
escrow of funds is not prohibited by
applicable law and has been established in
an amount sufficient to pay for every item
which remains unpaid and which has
been assessed but is not yet due and
payable. No escrow deposits or Escrow
Payments or other charges or payments due
the Seller have been capitalized under
the Mortgage or the Mortgage Note. With
respect to each ARM Mortgage Loan, all
Mortgage Interest Rate adjustments have
been made in strict compliance with
federal law and the terms of the Mortgage
Note. The index used for the
adjustment of the Mortgage Interest Rate on
each ARM Mortgage Loan is the Index;
(kk) Insurance. The Seller has caused or will cause to be performed
any
and all acts required to preserve the
rights and remedies of the Purchaser in
any insurance policies applicable to the
Mortgage Loans including, without
limitation, any necessary notifications of
insurers, assignments of policies or
interests therein, and establishments of
coinsured, joint loss payee and
mortgagee rights in favor of the Purchaser;
No action, inaction, or event has
occurred and no state of fact exists or has
existed that has resulted or will
result in the exclusion from, denial of, or
defense to coverage under any
applicable pool insurance policy, special
hazard insurance policy, PMI Policy or
bankruptcy bond, irrespective of the cause
of such failure of coverage. In
connection with the placement of any such
insurance, no commission, fee, or
other compensation has been or will be
received by the Seller or any designee of
the Seller or any corporation in which the
Seller or any officer, director, or
employee had a financial interest at the
time of placement of such insurance;
(ll) Appraisal. The Mortgage File contains an appraisal of the
related
Mortgage Property signed prior to the
approval of the Mortgage Loan application
by a Qualified Appraiser;
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<PAGE>
(mm) Soldiers' and Sailors' Relief Act. The Mortgagor has not
notified
the Seller, and the Seller has no knowledge
of any relief requested or allowed
to the Mortgagor under the Soldiers' and
Sailors' Civil Relief Act of 1940;
(nn) Environmental Matters. The Mortgaged Property is free from any
and
all toxic or hazardous substances and there
exists no violation of any local,
state or federal environmental law, rule or
regulation. There is no pending
action or proceeding directly involving any
Mortgaged Property of which the
Seller is aware in which compliance with
any environmental law, rule or
regulation is an issue; and to the best of
the Seller's knowledge, nothing
further remains to be done to satisfy in
full all requirements of each such law,
rule or regulation consisting a
prerequisite to use and enjoyment of said
property;
(oo) Mortgagor Acknowledgment. The Mortgagor has executed a
statement
to the effect that the Mortgagor has
received all disclosure materials required
by applicable law with respect to the
making of ARM Mortgage Loans. Seller shall
maintain or cause to be maintained such
statement in the Mortgage File;
(pp) No Construction Mortgage Loans. The Mortgage Loan was not made
in
connection with (i) the construction or
rehabilitation of a Mortgaged Property
or (ii) facilitating the trade-in or
exchange of a Mortgaged Property.
(qq) Selection. The Mortgage Loans were not intentionally selected
for
inclusion under this Agreement from among
Seller's mortgage loan portfolio on
any basis which would have an adverse
effect on the interests of Purchaser.
(rr) Regarding the Mortgagor. The Mortgagor is one or more
natural
persons;
(ss) Circumstances Affecting Value, Marketability or Prepayment.
No
circumstances or conditions exist with
respect to the Mortgage, the Mortgaged
Property, or the Mortgagor's credit
standing that could reasonably be expected
to adversely affect the value or the
marketability of any Mortgaged Property or
Mortgage Loan, other than the economic and
geological conditions generally and
specifically applicable to the area in
which the Mortgaged Property is located,
or cause the Mortgage Loan to become
delinquent.
(tt) Predatory Lending Regulations; High Cost Loans. None of
the
Mortgage Loans are classified as (i) "high
cost" loans under the Home Ownership
and Equity Protection Act of 1994 or (ii)
"high cost," "threshold," "covered" or
"predatory" loans under any other
applicable state, federal or local law. Each
loan at the time it was made complied in
all material respects with applicable
local, state, and federal laws, including,
but not limited to, all applicable
predatory and abusive lending laws;
(uu) Georgia Mortgage Loans. No Mortgage Loan originated
between
October 1, 2002 and March 7, 2003 (both
inclusive) and secured by a Mortgaged
Property located in the State of Georgia is
a "home loan" and is either a
"covered" or "high cost loan" as defined in
the Georgia Fair Lending Act, as
amended. No Mortgage Loan originated after
March 7, 2003 and secured by a
Mortgaged Property located in the State of
Georgia is a "home loan" and is a
"high cost loan" as defined in the Georgia
Fair Lending Act, as amended;
(vv) REMIC Status. The Mortgage Loan is a qualified mortgage
for
inclusion in a "real estate mortgage
investment conduit" for federal income tax
purposes;
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<PAGE>
(ww) Tax Service Contract. The Seller has obtained a life of
loan,
transferable real estate tax service
contract with an Approved Tax Service
Contract Provider on each Mortgage Loan and
such contract is assignable without
penalty, premium or cost to the Purchaser;
upon the initial set-up, each such
tax service contract shall contain complete
and accurate information with
respect to the Mortgage Loan and Mortgaged
Property;
(xx) Flood Certification Contract. The Seller has obtained a life
of
loan, transferable flood certification
contract with an Approved Flood Policy
Insurer for each Mortgage Loan and such
contract is assignable without penalty,
premium or cost to the Purchaser;
(yy) Genuineness of Signatures. Each of the documents in the
Mortgage
File is genuine and contains genuine
signatures. Each document that Purchaser
requires to be an original document is an
original document. All certified
copies of original documents are true
copies and meet the applicable
requirements and specifications of this
Agreement and any other written
requirements that Purchaser has reasonably
made of Seller;
(zz) No Prior Rejection. No Mortgage Loan has been previously
submitted
for purchase by the Seller to the Purchaser
and reviewed and rejected by the
Purchaser for underwriting reasons;
(aaa) No Cooperative Shares. No Mortgage Loan is secured by shares
in a
cooperative corporation;
(bbb) Qualified Mortgage Loan. Each Mortgage Loan constitutes a
qualified mortgage loan under Section
860(g)(a)(3)(A) of the Code and Treasury
Regulations Section 1.860G-2(a)(1) and
(3);
(ccc) Low Income Borrowers. Seller represents and warrants that
the
Seller currently operates and actively
participates in an on-going business (A)
to originate single family mortgage loans
("Loans") and/or (B) to make periodic
purchases of Loans from originators or
sellers, and/or (C) to issue and/or
purchase securities or bonds supported by
the Loans, a portion of which Loans
are made to borrowers who are:
(i) low income families (families with incomes 80% or less of
area
median income) living in low-income areas
(a census tract or block numbering
area in which the median income does not
exceed 80% of the area median income);
or
(ii) very low income families (families with incomes of 60% or less
of
area median income);
(ddd) Recordation. Each original Mortgage was recorded and, except
for
those Mortgage Loans subject to MERS, all
subsequent assignments of the original
Mortgage (other than the assignment to the
Purchaser) have been recorded in the
appropriate jurisdictions wherein such
recordation is necessary to perfect the
lien thereof as against creditors of the
Seller, or is in the process of
recordation;
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(eee) Convertability. No Mortgage Loan contains a provision whereby
the
Mortgagor can convert the mortgage loan to
a fixed rate instrument;
(fff) Accuracy of Statements. The information contained in the
Mortgage
Loan Schedule and all information provided
regarding delinquencies in the
Mortgage Loans are true and correct in all
material respects;
(ggg) Pool Characteristics. The pool characteristics with respect
to
the Mortgage Loans included in the related
Mortgage Loan Package are set forth
in the related Acknowledgment and
Conveyance Agreement and are true and complete
in all material respects as of the related
Closing Date;
(hhh) Origination Practices. No error, omission,
misrepresentation,
negligence, fraud or similar occurrence
with respect to a Mortgage Loan has
taken place on the part of any person
including without limitation the Seller,
the Mortgagor, any appraiser, any builder
or developer, or any other party
involved in the origination of the Mortgage
Loan or, in the application of any
insurance in relation to such Mortgage
Loan; no predatory or deceptive lending
practices or deceptive trade practices,
including, without limitation, the
extension of credit without regard to the
ability of the borrower to repay and
the extension of credit which has no
apparent benefit to the borrower, were
employed in the origination of the Mortgage
Loan. No Mortgagor was a debtor in
any state or federal bankruptcy or
insolvency proceeding at any time within
twenty-four months prior to the origination
of the Mortgage Loan, nor has any
Mortgagor had a foreclosure proceeding
commenced against such Mortgagor within
twenty-four months prior to origination of
the Mortgage Loan;
(iii) Compliance with
Anti-Money Laundering Laws. The Seller has
complied with all applicable anti-money
laundering laws and regulations,
including without limitation the USA
Patriot Act of 2001 (collectively, the
"Anti-Money Laundering Laws"); the Seller
has established an anti-money
laundering compliance program as required
by the Anti-Money Laundering Laws, has
conducted the requisite due diligence in
connection with the origination of each
Mortgage Loan for purposes of the
Anti-Money Laundering Laws, including with
respect to the legitimacy of the applicable
Mortgagor and the origin of the
assets used by the said Mortgagor to
purchase the property in question, and
maintains, and will maintain, sufficient
information to identify the applicable
Mortgagor for purposes of the Anti-Money
Laundering Laws;
(jjj) Simple Interest Mortgage Loans. None of the Mortgage Loans
are
simple interest Mortgage Loans;
(kkk) Single Premium Credit Life Insurance. None of the proceeds of
the
Mortgage Loan were used to finance
single-premium credit life insurance
policies;
(lll) Credit Reporting. The Seller has fully furnished in
accordance
with the Fair Credit Reporting Act and its
implementing regulations, accurate
and complete information on the Mortgagor
credit files to Equifax, Experian and
Trans Union Credit Information Company on a
monthly basis;
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(mmm) FICO Scores. The FICO score of each Mortgage Loan is not
less
than what is set forth on the related
Mortgage Loan Schedule;
(nnn) Prepayment Fee. With respect to each Mortgage Loan that has
a
prepayment fee feature, each such
prepayment fee is enforceable and will be
enforced by the Seller through the related
Closing Date, and each prepayment fee
is permitted pursuant to federal, state and
local law and does not exceed the
maximum amount permitted under applicable
law. With respect to each Mortgage
Loan that contains a prepayment fee, such
prepayment fee is set forth on the
related Mortgage Loan Schedule;
(ooo) Lost Instrument Affidavits. In the event any Mortgage
File
contains a lost note affidavit in lieu of a
Mortgage Note, such lost note
affidavit, when assigned, will be
sufficient to effect the transfer of title to
the related Mortgage Loan, without the need
for a judicial proceeding,
administrative action, court or regulatory
order, or similar action or order;
and
(ppp) Second Lien Mortgage Loans.
(i) Either (A) no consent for the Second Lien Mortgage Loan is
required
by the holder of the related first lien or
(B) such consent has been obtained
and is contained in the Mortgage File;
(ii) With respect to any Second Lien Mortgage Loan, the Seller has
not
received notice of: (A) any proceeding for
the total or partial condemnation of
any Mortgaged Property, (B) any subsequent,
intervening mortgage, lien,
attachment, lis pendens or other
encumbrance affecting any Mortgaged Property or
(C) any default under any mortgage, lien or
other encumbrance senior to each
Mortgage;
(iii) With respect to any Second Lien Mortgage Loan, where required
or
customary in the jurisdiction in which the
Mortgaged Property is located, the
original lender has filed of record a
request for notice of any action by the
senior lienholder under the related First
Lien, and the original lender has
notified any senior lienholder in writing
of the existence of the Second Lien
Mortgage Loan and requested notification of
any action to be taken against the
Mortgagor by the senior lienholder;
(iv) No Second Lien Mortgage Loan is a "home equity line of credit"
or
Texas Home Equity Loan; and
(v) As of the related Closing Date, the Seller has not received
a
notice of default of a First Lien which has
not been cured.
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Section 4.03 Remedies for Breach of Representations and
Warranties.
It is understood and agreed that the representations and warranties
set
forth in Sections 4.01 and 4.02 shall
survive the sale of the Mortgage Loans to
the Purchaser and the delivery of the
Mortgage Loan Documents to the Custodian
and shall inure to the benefit of the
Purchaser or the Seller, as the case may
be, notwithstanding any restrictive or
qualified endorsement on any Mortgage
Note or Assignment of Mortgage or the
examination or failure to examine any
Mortgage File. Upon discovery by 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 Mortgage Loans or
the interest of the Purchaser, or
which materially and adversely affects the
interests of Purchaser in the related
Mortgage Loan in the case of a
representation and warranty relating to a
particular Mortgage Loan (in the case of
any of the foregoing, a "Breach"), the
party discovering such Breach shall give
prompt written notice to the others.
With respect to those representations and warranties which are made
to
the best of the Seller's knowledge, if it
is discovered by the Seller or the
Purchaser that the substance of such
representation and warranty is inaccurate
and such inaccuracy materially and
adversely affects the value of the related
Mortgage Loan or the interest of the
Purchaser (or which materially and
adversely affects the value of a Mortgage
Loan or the interests of the Purchaser
in the related Mortgage Loan in the case of
a representation and warranty
relating to a particular Mortgage Loan),
notwithstanding the Seller's lack of
knowledge with respect to the substance of
such representation and warranty,
such inaccuracy shall be deemed a breach of
the applicable representation and
warranty.
Upon discovery by either party of a Breach of any representation
or
warranty, the party discovering such Breach
shall give prompt written notice to
the other party. Within 60 days of the
earlier of either discovery by or notice
to the Seller of any Breach of a
representation or warranty, the Seller shall
use its best efforts promptly to cure such
Breach in all material respects and,
if such Breach cannot be cured, the Seller
shall, at the Purchaser's option,
repurchase such Mortgage Loan at the
Repurchase Price. In the event that a
Breach shall involve any representation or
warranty set forth in Section 4.02,
and such Breach cannot be cured within 60
days of the earlier of either
discovery by or notice to the Seller of
such Breach, all of the Mortgage Loans
shall, at the Purchaser's option, be
repurchased by the Seller at the Repurchase
Price.
Any repurchase of a Mortgage Loan or Loans pursuant to the
foregoing
provisions of this Section 4.03 shall be
accomplished by deposit in the
Custodial Account of the amount of the
Repurchase Price for distribution to
Purchaser on the next scheduled Remittance
Date, after deducting therefrom any
amount received in respect of such
repurchased Mortgage Loan or Loans and being
held in the Custodial Account for future
distribution.
At the time of repurchase, the Purchaser and the Seller shall
arrange
for the reassignment of the Deleted
Mortgage Loan to the Seller and the delivery
to the Seller of any documents held by the
Custodian relating to the Deleted
Mortgage Loan. In the event of a
repurchase, the Seller shall, simultaneously
with such reassignment, give written notice
to the Purchaser and any servicer of
the Mortgage Loans that such repurchase has
taken place, and the Mortgage Loan
Schedule shall be deemed amended to reflect
the withdrawal of the Deleted
Mortgage Loan from this Agreement. For the
month of repurchase, distributions to
Purchaser shall include the Monthly Payment
due on any Deleted Mortgage Loan in
the month of repurchase, and the Seller
shall thereafter be entitled to retain
all amounts subsequently received by the
Seller in respect of such Deleted
Mortgage Loan.
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In addition to such repurchase obligation, the Seller shall
indemnify
the Purchaser and hold it harmless against
any losses, damages, penalties,
fines, forfeitures, including without
limitation, reasonable and necessary legal
fees and related costs, judgments, and
other costs and expenses resulting from
any claim, demand, defense or assertion
based on or grounded upon, or resulting
from, a Breach of the Seller
representations and warranties contained in this
Agreement. It is understood and agreed that
the obligations of the Seller set
forth in this Section 4.03 to cure or
repurchase a defective Mortgage Loan and
to indemnify the Purchaser as provided in
this Section 4.03 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 Sections 4.01 and 4.02
shall accrue as to any Mortgage Loan upon
(i) discovery of such Breach by the
Purchaser or notice thereof by the Seller
to the Purchaser, (ii) failure by the
Seller to cure such Breach within the
applicable cure period or repurchase such
Mortgage Loan as specified above, and (iii)
demand upon the Seller by the
Purchaser for compliance with this
Agreement.
With respect to any Mortgage Loan, if the related Mortgagor is 30
or
more days delinquent with respect to the
Mortgage Loan's first and second
Monthly Payments due to the Purchaser, the
Seller shall, upon receipt of notice
from the Purchaser, promptly repurchase
such Mortgage Loan from the Purchaser in
accordance with this Section; provided,
that no right to cure set forth herein
shall apply.
Notwithstanding any provision to the contrary, in the event that
a
Mortgage Loan is prepaid in full within
sixty days of the related Closing Date,
the Seller shall pay to the Purchaser the
purchase price premium paid by the
Purchaser for the Mortgage Loan, reduced by
any prepayment penalty fees received
from the borrower and remitted to the
Purchaser; provided, however, in the event
that the Purchaser or a subsequent servicer
forgives the related prepayment
penalty and still satisfies the Mortgage
Loan, the Seller shall pay to the
Purchaser the purchase price premium paid
by the Purchaser for the Mortgage
Loan, reduced by the forgiven prepayment
penalty amount.
Section 4.04 Post Closing Due Diligence.
From the
related Closing Date to a period not to exceed 30 days after
the such Closing Date, the Purchaser shall
have the right to review the Mortgage
Files and obtain BPOs on the Mortgaged
Properties relating to the Mortgage Loans
purchased on such Closing Date, with the
results of such Mortgage File and BPO
reviews to be communicated to the Seller
for a period up to 30 days after such
Closing Date. In addition, the Purchaser
shall have the right to reject any
Mortgage Loan which in the Purchaser's sole
determination (i) fails to conform
to the Underwriting Guidelines or prudent
secondary market underwriting
guidelines for similar Mortgage Loans, (ii)
is not an acceptable credit risk,
(iii) was underwritten without verification
of the borrower's income and assets
and there is no credit report or credit
score in the Mortgage File or (iv) the
value of the Mortgaged Property pursuant to
any BPO obtained by the Purchaser is
less than 85% or the lesser of (A) the
original appraised value of the Mortgaged
Property or (B) the purchase price of the
Mortgaged Property as of the date of
origination. In the event that the
Purchaser so rejects any Mortgage Loan, the
Seller shall repurchase the rejected
Mortgage Loan at the Repurchase Price in
the manner prescribed in Section 4.03 upon
receipt of notice from the Purchaser
of the rejection of such Mortgage Loan. Any
rejected Mortgage Loan shall be
removed from the terms of this Agreement.
The Seller shall make available all
files required by Purchaser in order to
complete its review. Any review
performed by the Purchaser prior to the
Closing Date does not limit the
Purchaser's rights or the Seller's
obligations under this Agreement thereafter.
Notwithstanding that a Mortgage Loan is
underwritten pursuant to the related
Underwriting Guidelines, if a Mortgage Loan
is underwritten without verification
of the borrower's income and assets and
there is no credit report and credit
score, the Purchaser has the right to
reject such Mortgage Loan.
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Section 4.05 Restrictions and Requirements Applicable in the Event
that
a Mortgage Loan is Acquired by a REMIC.
In the event that any Mortgage Loan is held by a REMIC,
notwithstanding
any contrary provision of this Agreement,
the following provisions shall be
applicable to such Mortgage Loan:
(a) Repurchase of Mortgage Loans.
With respect to any Mortgage Loan that is not in default or as to
which
no default is imminent, no purchase or
substitution pursuant to Section 4.03 or
7.02 shall be made, unless, if so required
by the applicable REMIC Documents the
Seller has obtained an Opinion of Counsel
to the effect that such purchase will
not (i) result in the imposition of taxes
on "prohibited transactions" of such
REMIC (as defined in Section 860F of the
Code) or otherwise subject the REMIC to
tax, or (ii) cause the REMIC to fail to
qualify as a REMIC at any time.
(b) Tax Returns.
(i) With respect to the Mortgage Loans serviced by the Seller
under
this Agreement, the Seller covenants and
agrees that it shall cooperate and
provide any and all information to enable
the trustee or other responsible party
to perform all of the following duties: (1)
prepare, file and sign all Tax
Returns using a calendar year as the
taxable year for the REMIC and the accrual
method of accounting when and as required
by the REMIC Provisions and other
applicable federal income tax laws; (2)
make an election, on behalf of the REMIC
to be treated as a REMIC on the Tax Returns
of the REMIC for its first taxable
year, in accordance with the REMIC
Provisions; (3) prepare and file or cause to
be prepared and filed, and deliver, any and
all Tax Returns, information
statements or other filings required to be
delivered to any governmental taxing
authority, or to any owner thereunder,
pursuant to any applicable federal, state
or local tax law with respect to the REMIC
or the certificates issued thereunder
and the transactions contemplated thereby;
(4) cause to be provided to the owner
thereunder such data necessary for their
original issue discount computations
and market discount computations with
respect to the certificates issued
thereunder for federal income tax purposes
as the owner thereunder may
reasonably request from time to time; (5)
conduct the affairs of the REMIC so as
to maintain the status thereof as a REMIC
under the REMIC Provisions; (6) not
knowingly or intentionally take any action
or omit to take any action that would
cause the termination of the REMIC status
of the REMIC; (7) make any election
required by the REMIC Provisions to treat
as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code
all property that the REMIC has
acquired or will acquire that may qualify
as such foreclosure property; (8)
cause to be provided notice to the holders
of any certificates issued thereunder
of the existence of the restrictions on
transfers and exchange provided under
the REMIC documents; (9) cause to be
provided information necessary for the
computation of tax imposed on the transfer
of a residual certificate issued
thereunder to a Disqualified Organization,
or an agent of a Disqualified
Organization, provided that the reasonable
cost of computing and furnishing such
information may be charged to the person
liable for such tax; and (9) in a
timely manner cause to be paid the amount
of any and all federal, state and
local taxes imposed on the REMIC or its
respective assets or transactions
including, without limitation, (i)
"prohibited transaction" penalty taxes as
defined in Section 860F of the Code, if,
when and as the same shall be due and
payable, (ii) any tax on contributions to a
REMIC after the closing date of such
REMIC imposed under Section 860G(d) of the
Code and (iii) any tax on "net income
from foreclosure property" as defined in
Section 860G(c) of the Code.
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(ii) Within 30 days after the closing date of any REMIC, if so
required
by the applicable REMIC Documents, the
Seller shall cooperate and provide any
and all information necessary or helpful to
enable the trustee or other
responsible party to prepare and file with
the Internal Revenue Service Form
8811, "Information Return for Real Estate
Mortgage Investment Conduits (REMIC)
and Issuers of Collateralized Debt
Obligations" for the REMIC. The trustee or
other responsible party shall sign such
returns and is hereby indemnified and
held harmless by the Seller with respect to
any tax or liability arising from
the trustee's or other responsible party's
signing such information returns to
the extent that such tax or liability
results from information provided by or on
behalf of the Seller or information that
should have been provided by or on
behalf of the Seller.
(c) General Servicing Obligations.
The Seller shall sell any REO Property within three years after
its
acquisition by the REMIC unless (i) the
Seller applies for an extension of such
three-year period from the Internal Revenue
Service pursuant to the REMIC
Provisions and Code Section 856(e)(3), in
which event such REO Property shall be
sold within the applicable extension
period, or (ii) the Seller obtains for the
Purchaser an Opinion of Counsel, addressed
to the Purchaser and the Seller, to
the effect that the holding by the REMIC of
such REO Property subsequent to such
three year period will not result in the
imposition of taxes on "prohibited
transactions" as defined in Section 860F of
the Code or cause the REMIC to fail
to qualify as a REMIC under the REMIC
Provisions or comparable provisions of
relevant state laws at any time. The Seller
shall manage, conserve, protect and
operate each REO Property for the Purchaser
solely for the purpose of its prompt
disposition and sale in a manner which does
not cause such REO Property to fail
to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) or
result in the receipt by the REMIC of any
"income from non-permitted assets"
within the meaning of Section 860F(a)(2)(B)
of the Code or any "net income from
foreclosure property" which is subject to
taxation under Section 860G(a)(1) of
the Code. Pursuant to its efforts to sell
such REO Property, the Seller shall
either itself or through an agent selected
by the Seller protect and conserve
such REO Property in the same manner and to
such extent as is customary in the
locality where such REO Property is located
and may, incident to its
conservation and protection of the
interests of the Purchaser, rent the same, or
any part thereof, as the Seller deems to be
in the best interest of the Seller
and the Purchaser for the period prior to
the sale of such REO Property;
provided, however, that any rent received
or accrued with respect to such REO
Property qualifies as "rents from real
property" as defined in Section 856(d) of
the Code.
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(d) Additional Covenants.
In addition to the provision set forth in this Section 5.05(d), if
a
REMIC election is made with respect to the
arrangement under which any of the
Mortgage Loans or REO Properties are held,
then, with respect to such Mortgage
Loans and/or REO Properties, and
notwithstanding the terms of this Agreement,
the Seller shall not ta
