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Exhibit 99.12
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LEHMAN BROTHERS BANK, FSB
Purchaser
and
GREENPOINT MORTGAGE FUNDING INC.
Seller
-----------------------------------------
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
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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
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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").
WITNESSETH:
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
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(Special Servicing Option) or to Freddie
Mac under its Freddie Mac Cash Program
or Gold PC Program, retaining the Seller as
"servicer thereunder".
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 Note, 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.
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
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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,
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mortgage pass-through transaction, retaining the Seller as "servicer"
(with or
without a Master Servicer) thereunder.
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.
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
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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
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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.
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.
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
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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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(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
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<PAGE>
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;
(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
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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;
(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
-18-
<PAGE>
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;
(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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<PAGE>
(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
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<PAGE>
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;
(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
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<PAGE>
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;
(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
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<PAGE>
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;
(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;
(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;
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<PAGE>
(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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(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.
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
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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.
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
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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
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<PAGE>
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.
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
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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.
(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
