<PAGE>
Exhibit 10.2(C)
EXECUTION COPY
================================================================================
MORTGAGE LOAN FLOW PURCHASE, SALE & SERVICING AGREEMENT
dated as of August 1, 2005
between
BANK OF AMERICA, NATIONAL ASSOCIATION
Purchaser
and
PHH MORTGAGE CORPORATION
and
BISHOP'S GATE RESIDENTIAL MORTGAGE TRUST
(formerly known as CENDANT RESIDENTIAL MORTGAGE TRUST)
Sellers
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
DEFINITIONS.......................................................................................2
Section 1.01 Defined
Terms.....................................................................2
ARTICLE II SALE AND CONVEYANCE OF MORTGAGE LOANS; POSSESSION
OF MORTGAGE FILES; BOOKS AND RECORDS; DELIVERY OF
MORTGAGE LOAN
DOCUMENTS.....................................................................16
Section 2.01 Sale and
Conveyance of Mortgage
Loans............................................16
Section 2.02 Possession of
Mortgage
Files.....................................................18
Section 2.03 Books and
Records................................................................18
Section 2.04 Defective
Documents; Delivery of Mortgage Loan
Documents.........................19
Section 2.05 Transfer of
Mortgage
Loans.......................................................21
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SELLER; REPURCHASE AND SUBSTITUTION; REVIEW OF
MORTGAGE
LOANS..............................................................................22
Section 3.01 Representations
and Warranties of each
Seller....................................22
Section 3.02 Representations
and Warranties of the
Servicer...................................25
Section 3.03 Representations
and Warranties as to Individual Mortgage
Loans............................................................................26
Section 3.04 Repurchase and
Substitution......................................................38
Section 3.05 Certain
Covenants of each Seller and the
Servicer................................40
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
AND CONDITIONS PRECEDENT TO
FUNDING.........................................................42
Section 4.01 Representations
and
Warranties...................................................42
Section 4.02 Conditions
Precedent to
Closing..................................................43
ARTICLE V ADMINISTRATION AND SERVICING OF MORTGAGE
LOANS...................................................43
Section 5.01 PHH Mortgage to
Act as Servicer; Servicing Standards;
Additional Documents; Consent of the
Purchaser...................................43
Section 5.02 Collection of
Mortgage Loan
Payments.............................................46
Section 5.03 Notice of
Foreclosure
Sale.......................................................47
Section 5.04 Establishment of
Collection Account; Deposits in Collection
Account..........................................................................47
Section 5.05 Permitted
Withdrawals from the Collection
Account................................48
Section 5.06 Establishment of
Escrow Accounts; Deposits in
Escrow.............................49
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 5.07 Permitted
Withdrawals From Escrow
Accounts.......................................49
Section 5.08 Payment of
Taxes, Insurance and Other Charges; Maintenance
of Primary Insurance Policies; Collections
Thereunder............................50
Section 5.09 Transfer of
Accounts.............................................................51
Section 5.10 Maintenance of
Hazard
Insurance..................................................51
Section 5.11
Reserved.........................................................................53
Section 5.12 Fidelity Bond;
Errors and Omissions
Insurance....................................53
Section 5.13 Realization Upon
Specially Serviced Mortgage Loans and
REO
Properties...................................................................54
Section 5.14 Management of
REO
Properties.....................................................56
Section 5.15 Sale of REO
Properties...........................................................57
Section
5.16
Investment of Funds in the Collection
Account....................................58
Section 5.17
MERS.............................................................................58
Section 5.18 Pledged Asset
Mortgage
Loans.....................................................59
Section 5.19
Inspections......................................................................63
Section 5.20 Restoration of
Mortgaged
Property................................................63
Section 5.21 Real Estate
Owned
Reports........................................................64
Section 5.22 Reports of
Foreclosures and Abandonments of Mortgaged
Property.........................................................................64
Section 5.23 Notification of
Adjustments......................................................64
Section 5.24 Disaster
Recovery/Business Continuity
Plan.......................................65
Section 5.25 Fair Credit
Reporting
Act........................................................65
ARTICLE VI REPORTS; REMITTANCES;
ADVANCES..................................................................65
Section 6.01
Remittances......................................................................65
Section 6.02 Automated
Servicing Systems and Statements to
Purchaser..........................66
Section 6.03 Monthly Advances
by the
Servicer.................................................67
Section 6.04 Non-recoverable
Advances.........................................................68
Section 6.05 Officer's
Certificate............................................................68
ARTICLE VII GENERAL SERVICING
PROCEDURE....................................................................68
Section 7.01 Enforcement of
Due-on-Sale Clauses, Assumption
Agreements.......................................................................68
Section 7.02 Satisfaction of
Mortgages and Release of Mortgage
Files..........................69
Section 7.03 Servicing
Compensation...........................................................70
Section 7.04 Annual Statement
as to
Compliance................................................70
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 7.05 Annual
Independent Certified Public Accountants' Servicing
Report...........................................................................70
Section 7.06 Purchaser's
Right to Examine Servicer
Records....................................71
Section 7.07 Compliance with
REMIC
Provisions.................................................71
ARTICLE VIII REPORTS TO BE PREPARED BY THE SERVICER; SERVICER TO
COOPERATE.................................71
Section 8.01 Financial
Statements.............................................................71
Section 8.02 Provision of
Information.........................................................72
Section 8.03 Cooperation with
Third-party Service
Providers...................................72
ARTICLE IX THE
SELLERS.....................................................................................72
Section 9.01 Indemnification;
Third Party
Claims..............................................72
Section 9.02 Merger or
Consolidation of the
Seller............................................73
Section 9.03 Limitation on
Liability of the Sellers and
Others................................73
Section 9.04 Servicer Not to
Resign...........................................................74
ARTICLE X
DEFAULT..........................................................................................74
Section 10.01 Events of
Default................................................................74
ARTICLE XI
TERMINATION.....................................................................................76
Section 11.01 Term and
Termination.............................................................76
Section 11.02
Survival.........................................................................76
ARTICLE XII GENERAL
PROVISIONS.............................................................................76
Section 12.01 Successor to the
Servicer........................................................76
Section 12.02 Governing
Law....................................................................77
Section 12.03
Notices..........................................................................78
Section 12.04 Severability of
Provisions.......................................................78
Section 12.05
Schedules and
Exhibits...........................................................78
Section 12.06 General Interpretive
Principles..................................................78
Section 12.07 Waivers and
Amendments, Noncontractual Remedies;
Preservation of
Remedies.........................................................79
Section 12.08
Captions.........................................................................79
Section 12.09 Counterparts;
Effectiveness......................................................79
Section 12.10 Entire Agreement;
Amendment......................................................80
Section 12.11 Further
Assurances...............................................................80
Section 12.12 Intention of the
Seller..........................................................80
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 12.13 Relationship of
Parties..........................................................80
Section 12.14 Successors and
Assigns...........................................................80
Section 12.15 Solicitation of
Mortgagor........................................................81
Section 12.16 Confidential
Information.........................................................81
Section 12.17 Equal
Opportunity................................................................82
Section 12.18 Reproduction of
Documents........................................................82
Section 12.19 Purchase Price and
Terms
Letter..................................................82
</TABLE>
iv
<PAGE>
Schedules
A.
Mortgage Loan Schedule
B.
Contents of Mortgage File
B-1 Legal
Documents
B-2 Credit
Documents
C.
PHH
Guide
Exhibits
Exhibit 2.05 Form of
Assignment, Assumption and Recognition Agreement
Exhibit 5.01(a)
Limited Power of Attorney
Exhibit 5.01(b)
Workout compensation
Exhibit 5.03 Form of
Notice of Foreclosure
Exhibit 5.04 Form of
Collection Account Letter Agreement
Exhibit 5.06 Form of
Escrow Account Letter Agreement
Exhibit 6.02 Servicer
Requirements
Exhibit 6.02(a)
Report P-139 -- Monthly Statement of Mortgage Accounts
Exhibit 6.02(b)
Report S-50Y -- Private Pool Detail Report
Exhibit 6.02(c)
Report S-213 -- Summary of Curtailments Made Remittance Report
Exhibit 6.02(d)
Report S-214 -- Summary of Paid in Full Remittance Report
Exhibit 6.02(e)
Report S-215 -- Consolidation of Remittance Report
Exhibit 6.02(f)
Report T-62C -- Monthly Accounting Report
Exhibit 6.02(g)
Report T-62E -- Liquidation Report
Exhibit 6.02(h)
Report P-4DL -- Delinquency Report
Exhibit 6.02(i)
Report P-195 -- Delinquency Report
Exhibit 9
Form of Officer's Certificate
Exhibit 10
Form of Warranty Bill of Sale
Exhibit 11
Form of Sarbanes-Oxley Certification
<PAGE>
MORTGAGE LOAN FLOW PURCHASE, SALE & SERVICING AGREEMENT
This
Mortgage Loan Flow Purchase, Sale & Servicing Agreement,
dated as of
August 1, 2005, is entered into between Bank of America,
National Association,
as the Purchaser ("Purchaser"), PHH Mortgage Corporation ("PHH
Mortgage"), as a
Seller and as Servicer, and Bishop's Gate Residential
Mortgage Trust
(formerly
known as Cendant
Residential Mortgage
Trust) (the "Trust,"
together with PHH
Mortgage, the "Sellers" and individually, each a "Seller"), as a
Seller.
PRELIMINARY STATEMENT
1. PHH Mortgage
is engaged in the
business, inter alia, of making loans to
individuals, the
repayment of which is secured by a first lien mortgage on such
individuals'
residences (each, a "Mortgage Loan"). The Trust is engaged in the
business of purchasing such Mortgage Loans from PHH Mortgage and
selling same to
investors.
2. Purchaser is
engaged in the business, inter alia, of purchasing Mortgage
Loans for its own account.
3. PHH Mortgage has established certain terms, conditions and loan programs,
as
described in the PHH
Investor Manual (the
"PHH Guide"),
which may be
updated
from time to time, and
Purchaser is willing to purchase
Mortgage Loans that
comply with
the terms of such terms, conditions and loan programs. The
applicable provisions
of the current PHH Guide are attached hereto as Schedule
C.
4. Purchaser and Sellers desire to establish a flow program whereby
PHH Mortgage
will make Mortgage Loans which meet the applicable provisions of the PHH Guide,
and Purchaser will, on
a regular basis,
purchase such Mortgage
Loans from PHH
Mortgage or the Trust,
as applicable,
provided the parties agree on the price,
date and other conditions or considerations as set forth in this
Agreement.
5. Following any purchase of the Mortgage Loans from the Sellers,
the Purchaser
may desire to sell some or all of the Mortgage Loans to one or more purchasers
in a whole loan
sale or a public or private, rated or unrated mortgage
securitization transaction.
6. Purchaser
and Sellers wish to
prescribe the terms and manner of purchase by
the Purchaser and sale by the Sellers of the Mortgage Loans,
and the management
and servicing
of the Mortgage
Loans by PHH
Mortgage, as the Servicer (the
"Servicer"), in this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements
hereinafter set forth,
and for other good and valuable consideration, the receipt and
adequacy of which
is hereby acknowledged, the Purchaser and the Sellers agree as
follows:
1
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.01 Defined
Terms. Whenever used in this Agreement, the following
words and phrases shall have the following meaning specified in
this Article:
"Affiliate": When used
with reference to a
specified Person,
any Person
that (i) directly or indirectly controls or is controlled by or is
under common
control with the specified Person, (ii) is an officer of, partner in
or trustee
of, or serves in a similar capacity with respect to, the
specified person or of
which the specified Person is an officer, partner or trustee, or
with respect to
which the specified
Person serves in a similar capacity, or (iii) directly or
indirectly is the
beneficial
owner of 10% or more of any class of equity
securities of the specified Person or of which the specified
person is directly
or indirectly the owner of 10% or more of any class of equity
securities.
"Agreement": This
Mortgage Loan Flow Purchase, Sale & Servicing Agreement
between the Purchaser and the Sellers.
"ALTA": The American Land Title Association or any successor
thereto.
"Appraised Value": With respect to any Mortgaged Property, the lesser of:
(i) the value thereof
as determined
by an appraisal or a
PHH approved AVM (as
defined in the PHH Guide) made for the originator of the Mortgage Loan at the
time of origination
of the Mortgage
Loan by an appraiser
who met the
minimum
requirements of Fannie
Mae and Freddie Mac and (ii) the purchase price paid for
the related
Mortgaged Property by the Mortgagor with the proceeds of the
Mortgage Loan;
provided that, in the case of a Refinanced Mortgage Loan, such
value of the Mortgaged
Property shall be based solely upon the value determined
by an appraisal or a PHH approved AVM (as defined in the PHH Guide)
made for the
originator of such
Refinanced Mortgage
Loan at the time of origination of such
Refinanced Mortgage
Loan by an appraiser
who met the minimum
requirements of
Fannie Mae and Freddie Mac.
"ARM
Loan": An "adjustable
rate" Mortgage Loan,
the Note Rate of which is
subject to periodic
adjustment in
accordance
with the terms of the
Mortgage
Note.
"Assignment": An individual assignment of a 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
of
record the sale or transfer of the Mortgage Loan to the Purchaser or, in the
case of a MERS Mortgage Loan, an electronic transmission to MERS, identifying
a
transfer of ownership of the related Mortgage to the Purchaser or
its designee.
"Assignment,
Assumption and
Recognition
Agreement":
The agreement
substantially in the form of Exhibit 2.05 attached hereto.
"Assignment of Proprietary Lease": With respect to a Cooperative
Loan, an
assignment of
the Proprietary Lease sufficient under the laws of the
jurisdiction wherein
the related Cooperative Unit is located to reflect the
assignment of such Proprietary Lease.
2
<PAGE>
"Assignment of Recognition Agreement": With respect to a Cooperative
Loan,
an assignment of the
Recognition
Agreement sufficient under the laws of the
jurisdiction wherein
the related Cooperative Unit is located to reflect the
assignment of such Recognition Agreement.
"AVM": Automated Value Model. Electronic system to calculate the
estimated
property value from a provider that has been approved by the
Seller.
"Bankruptcy Code":
The Bankruptcy Reform Act of 1978 (11 U.S.C.
ss.ss.
101-1330), as amended,
modified, or supplemented from time to time, and any
successor statute,
and all rules and
regulations
issued or promulgated in
connection therewith.
"Business Day": Any day other than (i) a Saturday or Sunday,
or (ii) a day
on which the Federal Reserve or banking institutions are
closed.
"Code": The Internal Revenue Code of 1986, as amended.
"Collection Account": The separate Eligible Account or accounts
created and
maintained pursuant
to Section
5.04 which
shall be entitled "PHH Mortgage
Corporation, as servicer and custodian for the Purchaser of
Mortgage Loans under
the Mortgage Loan Flow Purchase, Sale & Servicing Agreement,
dated as of August
1, 2005.
"Condemnation
Proceeds": All awards
or settlements in respect of a taking
of an entire Mortgaged
Property or a part
thereof by exercise of
the power of
eminent domain or condemnation.
"Consent": A
document executed by the Cooperative Corporation (i)
consenting to the
sale of the
Cooperative
Unit to the Mortgagor and (ii)
certifying that all maintenance charges relating to the Cooperative
Unit have
been paid.
"Control Agreement":
With respect to each Pledged Asset Mortgage Loan, the
Pledged Collateral Account Control Agreement between the guarantor
or mortgagor,
as applicable, and the
related Pledged Asset
Servicer, pursuant to which the
guarantor or
mortgagor, as
applicable,
has granted a security
interest in a
Securities Account.
"Cooperative
Corporation": With
respect to any Cooperative Loan, the
cooperative apartment
corporation
that holds legal title to the related
Cooperative Project and grants occupancy rights to units therein to
stockholders
through Proprietary Leases or similar arrangements.
"Cooperative Lien Search": A search for (a) federal tax
liens, mechanics'
liens, lis pendens, judgments of record or otherwise against (i)
the Cooperative
Corporation and (ii)
the seller of the Cooperative Unit, (b) filings of
Financing Statements
and (c) the
deed of the
Cooperative
Project into the
Cooperative Corporation.
"Cooperative Loan": A
Mortgage Loan that is secured by a first lien on and
a perfected security interest in Cooperative Shares and the related
Proprietary
Lease granting
exclusive rights to
occupy the related
Cooperative Unit in the
building owned by the related Cooperative Corporation.
3
<PAGE>
"Cooperative Pledge
Agreement":
The specific
agreement creating a
first
lien on and pledge of the Cooperative Shares and the appurtenant Proprietary
Lease securing a Cooperative Loan.
"Cooperative Project":
With respect to any Cooperative Loan, all real
property and
improvements
thereto and rights
therein and thereto
owned by a
Cooperative Corporation including without limitation the land,
separate dwelling
units and all common elements.
"Cooperative Shares":
With respect to any
Cooperative Loan, the shares of
stock issued by a Cooperative Corporation and allocated to a Cooperative
Unit
and represented by a stock certificates.
"Cooperative Unit":
With respect to any
Cooperative Loan, a specific unit
in a Cooperative Project.
"Credit Documents": Those documents, comprising part of the Mortgage
File,
required of the
Mortgagor, as
described in Section 2 (Specific
Loan Program
Guidelines) of the PHH Guide. The Credit Documents are specified on
Schedule B-2
hereto.
"Custodial Agreement":
The agreement governing the retention of the
originals of each Mortgage Note, Mortgage, Assignment and other Legal
Documents
among the Purchaser, the Servicer and the Custodian.
"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 provided therein.
"Cut-off Date": The first day of the month in which the respective
Funding
Date occurs.
"Defective Mortgage Loan": As defined in Section 3.04.
"Deleted Mortgage
Loan": A Mortgage Loan replaced or to be replaced with a
Qualified Substitute Mortgage Loan.
"Determination Date":
The 16th day of each
calendar month,
commencing on
the 16th day of the month following the Funding Date, or, if such 16th day is
not a Business Day, the Business Day immediately preceding such
16th day.
"Due
Date": With
respect to any
Mortgage Loan, the day of the month on
which each Monthly Payment is due thereon, exclusive of any days of
grace.
"Due
Period": With respect
to each Remittance
Date, the calendar month
occurring in the month preceding such Remittance Date.
"Eligible Account":
Either (i) an account
or accounts that are maintained
with a federal or state chartered depository institution or trust company
the
short-term unsecured
debt obligations of which (or, in the case of a depository
institution or trust
company that is the principal subsidiary of a holding
company, the
debt obligations of such holding company) have the highest
short-term ratings of
each Rating
Agency at the time any
amounts are held
on
4
<PAGE>
deposit therein,
(ii) a trust
account or accounts
maintained
with the trust
department of a
federal or state
chartered depository institution or trust
company, acting in its
fiduciary capacity or (iii) an account or accounts
maintained with a
federal or state
chartered depository
institution or
trust
company that meet the depository requirements of Fannie Mae or
Freddie Mac.
"Environmental
Assessment": A "Phase
I" environmental assessment of a
Mortgaged Property
prepared by an
Independent
Person who regularly
conducts
environmental
assessments and who
has any necessary
license(s)
required by
applicable law
and has five years experience in conducting environmental
assessments.
"Environmental Conditions Precedent to Foreclosure": As defined in Section
5.13.
"Environmental Laws":
All federal, state, and local statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees or other
governmental
restrictions relating to the environment or to emissions,
discharges or releases
of pollutants,
contaminants
or industrial,
toxic or hazardous
substances or
wastes into the environment, including ambient air, surface water,
ground water,
or land, or otherwise
relating to the
manufacture,
processing,
distribution,
use, treatment,
storage,
disposal, transport or handling of pollutants,
contaminants or
industrial,
toxic or hazardous substances or wastes or the
cleanup or other remediation thereof.
"Escrow Account":
The separate
Eligible Account or accounts created
and
maintained pursuant
to Section
5.06 which
shall be entitled "PHH Mortgage
Corporation, as servicer and custodian for the Purchaser under the
Mortgage Loan
Flow Purchase, Sale & Servicing Agreement, dated as of August
1, 2005.
"Escrow Payments":
The amounts constituting ground rents, taxes,
assessments, mortgage insurance premiums, fire and hazard insurance
premiums and
other payments
required to be escrowed by the Mortgagor with the mortgagee
pursuant to any Mortgage Loan.
"Estoppel Letter":
A document
executed by the Cooperative Corporation
certifying, with
respect to a Cooperative Unit, (i) the appurtenant Proprietary
Lease will be in full force and effect as of the date of issuance
thereof, (ii)
the related Stock
Certificate was
registered in the
Mortgagor's name and
the
Cooperative
Corporation has not been notified of any lien upon, pledge of,
levy
of execution
on or disposition of such Stock Certificate, and (iii) the
Mortgagor is not in
default under the
appurtenant
Proprietary
Lease and all
charges due the Cooperative Corporation have been paid.
"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
organization.
"Fannie Mae
Guide": The Fannie Mae Selling
Guide and Servicing Guide,
collectively, in effect on and after the Funding Date.
"FDIC": The
Federal Deposit Insurance Corporation or any successor
organization.
5
<PAGE>
"Fidelity Bond": A fidelity bond to be maintained by the Servicer
pursuant
to Section 5.12.
"Financing Statement":
A financing statement
in the form of a UCC-1 filed
pursuant to the Uniform Commercial Code to perfect a security
interest in the
Cooperative Shares and Pledge Instruments.
"Financing Statement
Change": A financing statement in the form of a UCC-3
filed to continue,
terminate, release,
assign or amend an
existing Financing
Statement. "Freddie
Mac": The Federal Home Loan Mortgage
Corporation
or any
successor organization.
"Freddie Mac Servicing
Guide": The Freddie Mac Sellers' and Servicers'
Guide in effect on and after the Funding Date.
"Funding Date": Each date that Purchaser purchases Mortgage Loans from
the
Sellers hereunder.
"Gross Margin": With
respect to each ARM Loan, the fixed percentage added
to the Index on each Rate Adjustment Date, as specified in each
related Mortgage
Note and listed in the Mortgage Loan Schedule.
"HUD": The United States Department of Housing and Urban
Development,
or
any successor thereto
and including the Federal Housing Commissioner and the
Secretary of Housing
and Urban Development where appropriate under the FHA
Regulations.
"Independent": With
respect to any specified Person, such Person who: (i)
does not have any direct financial interest or any material indirect
financial
interest in the
applicable Mortgagor,
the Sellers,
the Purchaser, or their
Affiliates; and
(ii) is not
connected with the applicable Mortgagor, the
Sellers, the Purchaser, or their respective Affiliates as an
officer, employee,
promoter, underwriter,
trustee, member, partner, shareholder, director, or
Person performing similar functions.
"Index": With respect
to each ARM Loan, on each Rate Adjustment Date, the
applicable rate index set forth on the Mortgage Loan Schedule,
which shall be an
index described on such Mortgage Loan Schedule.
"Insolvency Proceeding": With respect to any Person: (i)
any case, action,
or proceeding with respect to such Person before any court or other
governmental
authority relating
to bankruptcy, reorganization, insolvency, liquidation,
receivership, dissolution, winding-up, or relief of debtors; or
(ii) any general
assignment for the benefit of creditors, composition, marshaling of assets for
creditors, or other,
similar arrangement in
respect of the creditors generally
of such Person or any
substantial portion of
such Person's
creditors; in any
case undertaken under
federal, state or
foreign law, including
the Bankruptcy
Code.
6
<PAGE>
"Insurance Proceeds":
Proceeds of any
Primary Insurance Policy, title
policy, hazard policy
or other insurance
policy covering a Mortgage Loan, if
any, to the extent such proceeds are not to be applied to the
restoration of the
related Mortgaged
Property or released
to the Mortgagor in accordance with the
procedures that the
Servicer would follow in servicing mortgage loans held for
its own or its Affiliates' account or managed by it for third-party
institutional investors.
"Interest Only Mortgage Loan": A Mortgage Loan that only requires
payments
of interest for a period of time specified in the related Mortgage
Note.
"Legal Documents":
Those documents,
comprising part of the Mortgage File,
set forth in Schedule B-1 of this Agreement.
"Lender-Paid Mortgage
Insurance Rate": With
respect to any Mortgage Loan,
the Lender-Paid Mortgage Insurance Rate for any "lender-paid"
Primary Insurance
Policy shall be a per
annum rate equal to the percentage indicated on the
Mortgage Loan Schedule.
"Liquidation
Proceeds":
Amounts, other
than Insurance Proceeds and
Condemnation Proceeds,
received
by the Servicer in connection with the
liquidation of a defaulted Mortgage Loan through trustee's sale, foreclosure
sale or otherwise,
other than amounts received following the acquisition of
an
REO Property in accordance with the provisions hereof.
"Loan-to-Value Ratio"
or "LTV": With
respect to any
Mortgage Loan,
the
original principal
balance of such Mortgage Loan divided by the Appraised Value
of the related Mortgaged Property, subject to any applicable law
for calculating
the LTV. The
Loan-to-Value Ratio of
any Pledged Asset
Mortgage Loan shall
be
calculated by reducing the principal balance of such Pledged Asset
Mortgage Loan
by the amount of the Original Pledged Asset Requirement with respect to such
Mortgage Loan.
This is referred to in the PHH Guide as the effective
loan-to-value.
"MAI
Appraiser":
With respect to any real property, a member of the
American Institute
of Real Estate Appraisers with a minimum of 5 years of
experience appraising real property of a type similar to the real
property being
appraised and located in the same geographical area as the real property
being
appraised.
"MERS": Mortgage
Electronic
Registration
Systems, Inc., a Delaware
corporation, or any successor in interest thereto.
"MERS Eligible
Mortgage Loan": Any Mortgage Loan that under applicable law
and investor
requirements is recordable in the name of MERS in the
jurisdiction
in which the related Mortgaged Property is located.
"MERS Mortgage Loan":
Any Mortgage Loan as to which the related Mortgage,
or an Assignment, has been recorded in the name of MERS, as agent
for the holder
from time to time of the Mortgage Note.
"Maximum Rate": With respect to each ARM Loan, the rate per annum
set forth
in the related
Mortgage Note as the maximum Note Rate thereunder. The Maximum
Rate as to each ARM Loan is set forth on the related Mortgage Loan
Schedule.
7
<PAGE>
"Minimum Rate": With respect to each ARM Loan, the rate per annum
set forth
in the related
Mortgage Note as the minimum Note Rate thereunder. The Minimum
Rate as to each ARM Loan is set forth on the related Mortgage Loan
Schedule. The
floor in all cases will never be less than the Gross Margin.
"Monthly Advance":
The aggregate amount of the advances made by the
Servicer on any
Remittance
Date pursuant to and as more fully
described in
Section 6.03.
"Monthly Payment": The
scheduled monthly payment of principal and interest
on a Mortgage Loan
which is payable by a Mortgagor under the related Mortgage
Note.
"Mortgage": The
mortgage, deed of trust or other
instrument
securing a
Mortgage Note,
which creates a first lien on either (i) with respect to a
Mortgage Loan other than a Cooperative Loan, an unsubordinated estate in fee
simple in real
property or (ii) with respect to a Cooperative Loan, the
Proprietary Lease and related Cooperative Shares, which in either case secures
the Mortgage Note.
"Mortgaged Property":
With respect to a Mortgage Loan, the underlying real
property securing
repayment of a Mortgage Note, consisting of a fee simple
estate.
"Mortgage File":
With respect to a particular Mortgage Loan, those
origination and servicing documents, escrow documents, and other documents as
are specified
on Schedule
B-1 and B-2 to this
Agreement.
Subject to Section
2.03, these
documents shall be stored in a secure manner using paper or
electronic storage.
"Mortgage Loan":
Each individual mortgage loan or Cooperative Loan
(including all documents included in the Mortgage File
evidencing the same, all
Monthly Payments,
Principal Prepayments, Insurance Proceeds, Condemnation
Proceeds, Liquidation Proceeds, and other proceeds relating
thereto, and any and
all rights,
benefits, proceeds and obligations arising therefrom or in
connection therewith)
which is the subject
of this Agreement
and the related
Purchase Price and
Terms Letter. The
Mortgage Loans subject
to this Agreement
shall be identified on Mortgage Loan Schedules prepared in connection with
each
Funding Date.
"Mortgage Loan
Schedule": The list of
Mortgage Loans
identified on each
Funding Date that sets forth the information with respect to each Mortgage
Loan
that is specified on
Schedule A hereto (as amended from time to time to reflect
the addition of any
Qualified Substitute Mortgage Loans). A Mortgage Loan
Schedule will be prepared for each Funding Date.
"Mortgage Note":
The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
"Mortgagor": The obligor on a Mortgage Note.
"Negative Amortization": That portion of interest accrued
at the Note Rate
in any month which exceeds the Monthly Payment on the related
Mortgage Loan for
such month and which,
pursuant to the terms of the Mortgage Note, is added to
the principal balance of the Mortgage Loan.
8
<PAGE>
"Non-recoverable
Advance": As of any
date of determination,
any Monthly
Advance or Servicing Advance previously made or any Monthly Advance
or Servicing
Advance proposed to be
made in respect of a Mortgage Loan which, in the good
faith judgment of the Servicer and in accordance with the servicing
standard set
forth in Section 5.01, will not or, in the case of a proposed
advance, would not
be ultimately
recoverable
pursuant to Section 5.05 (3) or (4) hereof. The
determination by the Servicer that it has made a Non-recoverable
Advance or that
any proposed
advance would constitute a Non-recoverable Advance shall be
evidenced by an Officer's Certificate satisfying the requirements of Section
6.04 hereof and delivered to the Purchaser on or before the
Determination
Date
in any month.
"Note Rate":
With
respect to any Mortgage Loan at any time any
determination thereof
is to be made, the annual rate at which interest accrues
thereon.
"Offering Materials": All documents, tapes, or other materials relating
to
the Mortgage Loans provided by Seller to Purchaser prior to
Purchaser submitting
its bid to purchase the Mortgage Loans.
"Officers'
Certificate": A
certificate
signed by (i) the
President or a
Vice President
and (ii) the Treasurer
or the Secretary or one of the Assistant
Treasurers or
Assistant Secretaries of the Servicer, and delivered by the
Servicer to the Purchaser as required by this Agreement.
"Original Pledged
Asset Requirement": With respect to any Pledged
Asset
Mortgage Loan, an amount equal to the Pledged Assets required at
the time of the
origination of such Pledged Asset Mortgage Loan. Even though for other purposes
the Original Pledged Asset Requirement may actually exceed
thirty percent (30%)
of the original
principal balance of a
Pledged Asset Mortgage Loan, solely for
purposes of the Required Surety Payment, the Original Pledged Asset
Requirement
for a Pledged Asset
Mortgage Loan will be
deemed not to exceed thirty percent
(30%) of its original principal balance.
"Payment Adjustment
Date": With respect to
each ARM Loan or Interest Only
Mortgage Loan,
the date on which
Monthly Payments shall be adjusted. With
respect to each ARM,
Payment Adjustment
Date shall occur on
the date which is
eleven months
from the first payment date for the Mortgage Loan, unless
otherwise specified in
the Mortgage Note, and on each anniversary of such first
Payment Adjustment Date.
"Payoff": With
respect to any
Mortgage Loan, any payment or recovery
received in advance of the last scheduled Due Date of such Mortgage
Loan, which
payment or recovery
consists of principal in an amount equal to the outstanding
principal balance of
such Mortgage
Loan, all accrued and unpaid prepayment
penalties, premiums,
and/or interest with respect thereto, and all other unpaid
sums due with respect to such Mortgage Loan.
"Periodic Rate Cap":
With respect to each ARM Loan, the maximum or minimum
permissible percentage
increases and decreases in the Note Rate on any Rate
Adjustment Date determined in accordance with the related Mortgage
Note.
"Permitted Investments": Investments that mature, unless payable on
demand,
not later than the Business Day preceding the related Remittance
Date; provided
that such investments shall only consist of the following:
9
<PAGE>
(i) direct obligations
of, or obligations fully guaranteed as to
principal and
interest
by, the United States or any agency or
instrumentality
thereof, provided such
obligations are backed by the full
faith and credit of the United States;
(ii) repurchase
obligations
(the collateral for which is held by
a
third party) with
respect to any
security described in
clause (i) above,
provided that the long-term unsecured obligations of the party agreeing
to
repurchase such
obligations are at the time rated by each Rating Agency in
one
of its two highest rating categories;
(iii) certificates of deposit, time deposits and bankers'
acceptances
of
any bank or trust
company incorporated
under the laws of the United
States or any state, provided that the long-term unsecured debt
obligations
of
such bank or trust company (or, in the case of the principal
depository
institution of a
depository institution
holding company, the long-term
unsecured debt obligations of the depository institution holding company)
at
the date of acquisition thereof have been rated by each Rating
Agency in
one
of its two highest rating categories;
(iv) commercial paper (having original maturities of not more than
365
days) of any corporation incorporated under the laws of the United
States
or
any state thereof
which on the date of
acquisition
has been rated by
each
Rating Agency in its highest rating category; and
(v) any other
demand, money market or time deposit account or
obligation, or interest-bearing or other security or investment,
acceptable
to
the Purchaser (such acceptance evidenced in writing);
provided further that "Permitted Investments" shall not include any
instrument
described hereunder
which evidences either the right to receive (a) only
interest with respect to the obligations underlying such instrument or (b)
both
principal and
interest payments derived from obligations underlying such
instrument and
the interest and principal payments with respect to such
instrument provide a
yield to maturity at par greater than 120% of the yield to
maturity at par of the underlying obligations.
"Person": Any
individual,
corporation,
limited
liability company,
partnership,
joint venture,
association,
joint-stock
company,
trust,
unincorporated organization or government or any agency or
political subdivision
thereof.
"PHH
Guide": As defined in paragraph 3 of the Preliminary Statement to
this
Agreement.
"Pledge Agreements": Each Control Agreement and Pledged Asset
Agreement for
each Pledged Asset Mortgage Loan.
"Pledged Assets":
With respect to any
Pledged Asset Mortgage
Loan, the
related Securities
Account and the
financial assets held
therein subject to a
security interest pursuant to the related Pledged Asset
Agreement.
10
<PAGE>
"Pledged Asset Agreement": With respect to each Pledged
Asset Mortgage
Loan, the Pledge Agreement for Securities Account between the related
Mortgagor
and the related Pledged Asset Servicer pursuant to which such Mortgagor
granted
a security interest in
the related securities
and other financial
assets held
therein.
"Pledged Asset
Mortgage Loan": Each Mortgage Loan as to which Pledged
Assets, in the form of
a security interest in
the Securities
Account and the
financial assets held
therein and having a value, as of the date of origination
of such Mortgage Loan, of at least equal to the related
Original Pledged Asset
Requirement, were
required to be
provided at the
closing thereof, which is
subject to the terms of this Agreement from time to time.
"Pledged Asset
Servicer": The entity
responsible for
administering
and
servicing the Pledged
Assets with respect to a Pledged Asset Mortgage Loan, as
identified in the Purchase Price and Terms Letter.
"Pledged Asset
Servicing Agreement": With respect to each Pledged
Asset
Mortgage Loan, the Agreement between the related Pledged Asset
Servicer and PHH,
including any exhibits
thereto, pursuant to
which such Pledged Asset Servicer
shall service and administer the related Pledged Assets.
"Pledge Instruments":
With respect to each
Cooperative
Loan, the Stock
Power, the Assignment
of the Proprietary
Lease, the Assignment of the Mortgage
Note and the Cooperative Pledge Agreement.
"Prepaid Monthly
Payment": Any Monthly Payment received prior to its
scheduled Due Date and which is intended to be applied to a
Mortgage Loan on its
scheduled Due Date.
"Prepayment Interest
Shortfall Amount":
With respect to any Mortgage Loan
that was subject to a
voluntary (not
including discounted payoffs and short
sales) Principal
Prepayment in full or in part during any Principal Prepayment
Period, the
amount, if any, by which one month's interest at the related
Remittance Rate on such Principal Prepayment exceeds the amount of
interest paid
in connection with such Principal Prepayment.
"Prepayment Penalty":
With respect to a Prepayment Penalty Loan, the
prepayment charge or
penalty interest
required to be paid by
the Mortgagor in
connection with a
prepayment of the related Mortgage Loan, as provided in the
related Mortgage Note or Mortgage, and as specified on the related
Mortgage Loan
Schedule.
"Prepayment Penalty
Loan": Each Mortgage Loan identified on the related
Mortgage Loan Schedule with respect to which the Mortgagor must pay
a Prepayment
Penalty in connection with a Principal Prepayment.
"Primary Insurance
Policy": Each primary policy of mortgage
insurance in
effect with respect to a Mortgage Loan and as so indicated on the
Mortgage Loan
Schedule, or any
replacement policy
therefor obtained by the Servicer pursuant
to Section 5.08.
11
<PAGE>
"Principal
Prepayment": Any
payment or other
recovery of principal
on a
Mortgage Loan
(including a Payoff),
other than a Monthly
Payment or a Prepaid
Monthly Payment
which is received in advance of its scheduled Due Date,
including any prepayment penalty or premium thereon, which is not
accompanied by
an amount of interest
representing scheduled
interest due on any date or dates
in any month or
months subsequent to the month of prepayment and which is
intended to reduce the principal balance of the Mortgage Loan.
"Principal Prepayment
Period": The Due Period preceding the related
Remittance Date.
"Proprietary Lease":
The lease on a Cooperative Unit evidencing the
possessory interest of
the owner of the Cooperative Shares in such Cooperative
Unit.
"Purchase Price": As to each Mortgage Loan to be sold hereunder,
the price
set forth in the Mortgage Loan Schedule and the related Purchase
Price and Terms
Letter.
"Purchase Price
and Terms Letter": With respect to each purchase of
Mortgage Loans
hereunder,
that certain
letter agreement setting forth the
general terms and conditions of such transaction and identifying the Mortgage
Loans to be purchased
thereunder by and between the Sellers and the Purchaser,
which will be in a form mutually acceptable to the parties.
"Purchaser": Bank of
America, National
Association,
or its successor
in
interest or any successor under this Agreement appointed as herein
provided.
"Purchaser's Account":
The account of the Purchaser at a bank or other
entity most recently
designated
in a written
notice by the
Purchaser to the
Sellers as the "Purchaser's Account."
"Qualified Mortgage
Insurer": A mortgage guaranty insurance
company duly
qualified as such under the laws of the states in which the
Mortgaged Properties
are located if such qualification is necessary to issue the
applicable insurance
policy or bond, duly
authorized
and licensed in such states to
transact the
applicable insurance business and to write the insurance provided,
and approved
as an insurer by Fannie Mae or Freddie Mac (or with a different
rating as may be
required by a Rating
Agency in connection
with a Securitization in order to
achieve the desired ratings for the securities to be issued).
"Qualified
Substitute
Mortgage Loan": A Mortgage Loan substituted by a
Seller for a Deleted Mortgage Loan which must, on the date of such
substitution,
(i) have an
outstanding principal
balance, after deduction of all scheduled
payments due and
received in the month of substitution (or in the case of a
substitution of more
than one Mortgage Loan
for a Deleted Mortgage
Loan, an
aggregate principal
balance), not in
excess of the Unpaid Principal Balance of
the Deleted Mortgage
Loan and not less than ninety percent (90%) of the Unpaid
Principal Balance of
the Deleted Mortgage
Loan (the amount of any shortfall to
be distributed
by the applicable Seller to the Purchaser in the month of
substitution), (ii)
have a remaining term to maturity not greater than (and not
more than one year less than) that of the Deleted Mortgage Loan, (iii) have a
Note Rate not less than (and not more than one percentage point greater than)
the Note Rate of the Deleted Mortgage Loan, (iv) with respect
to each ARM Loan,
have a Minimum Rate not less than that of the Deleted Mortgage Loan, (v) with
respect to each ARM Loan, have a Maximum Rate not less than
that of the Deleted
Mortgage Loan and not
more than two (2)
percentage points
above that of the
Deleted Mortgage Loan,
(vi) with respect to
each ARM Loan, have a Gross Margin
not less than that of the Deleted Mortgage Loan, (vii) with respect
to each ARM
12
<PAGE>
Loan, have a
Periodic Rate Cap equal to that of the
Deleted Mortgage Loan,
(viii) have a Loan-to-Value Ratio at the time of substitution
equal to or less
than the Loan-to-Value Ratio of the Deleted Mortgage Loan at the time of
substitution, (ix)
with respect to each ARM Loan, have the same Rate Adjustment
Date as that of the Deleted Mortgage Loan, (x) with respect to each ARM
Loan,
have the same Index as that of the Deleted Mortgage Loan, (xi) comply as of
the
date of substitution with each representation and warranty set
forth in Sections
3.01, 3.02 and 3.03, (xii) be in the same or higher credit grade
category as the
Deleted Mortgage
Loan and (xiii)
have the same
prepayment
penalty term and
calculation.
"Rate Adjustment
Date": With respect to each ARM Loan, the
date on which
the Note Rate adjusts.
"Rating Agency":
Standard & Poor's
Ratings Services, a division of The
McGraw-Hill Companies, Inc., Moody's Investors Service, Inc., and
Fitch, Inc.
"Recognition Agreement": An agreement among a Cooperative
Corporation,
a
lender and a Mortgagor
with respect to a Cooperative Loan whereby such parties
(i) acknowledge that
such lender may make, or intends to make, such Cooperative
Loan, and (ii) make certain agreements with respect to such
Cooperative Loan.
"Record Date": The close of business of the first Business Day of
the month
of the related Remittance Date.
"Refinanced Mortgage
Loan": A Mortgage Loan that was made to a
Mortgagor
who owned the Mortgaged Property prior to the origination
of such Mortgage Loan
and the proceeds
of which were used in
whole or part to
satisfy an
existing
mortgage.
"Reg
AB": Shall have the meaning assigned to such term in Section
3.05.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of
Section 860D of the Internal Revenue Code or any similar tax
vehicle providing
for the pooling of assets (such as a Financial Asset Security
Investment Trust).
"Remittance Date": The
18th day of each calendar month, commencing on the
18th day of the month following the month in which the Funding Date
occurs, or,
if such 18th day is
not a Business
Day, then the Business Day immediately
preceding such 18th day.
"Remittance Rate":
With respect to each
Mortgage Loan,
the related Note
Rate minus the Servicing Fee Rate.
"REO
Disposition": The final sale by the Servicer of any REO
Property.
"REO
Disposition
Proceeds":
All amounts received
with respect to any REO
Disposition.
"REO
Property": A Mortgaged
Property acquired by the Servicer on behalf of
the Purchaser as described in Section 5.14.
13
<PAGE>
"Repurchase Price":
As to (a) any
Defective Mortgage
Loan required to be
repurchased hereunder
with respect to which a breach occurred or (b) any
Mortgage Loan required to be repurchased pursuant to Section 3.04
and/or Section
7.02, a price
equal to (i) (A) for
claims for which
notice has been
provided
within twelve (12) months following the related Funding Date, the
product of the
Unpaid Principal Balance of such Mortgage Loan at the time of
repurchase, times
the greater of (x) the purchase price percentage used to calculate the
Purchase
Price, or (y) 100%,
and (B) for claims for which notice has been provided after
twelve (12) months
following the related
Funding Date,
the Unpaid
Principal
Balance of the Mortgage Loan plus (ii) interest on such Unpaid
Principal Balance
at the Remittance
Rate from the date on
which interest has
last been paid and
distributed to the
Purchaser to the last day of the month in which such
repurchase occurs,
less amounts received or advanced in respect of such
repurchased Mortgage
Loan which are being
held in the Collection
Account for
distribution in the month of repurchase, plus all costs and
expenses incurred by
the Purchaser
arising out of or based upon such breach, including without
limitation, costs and
expenses incurred in
the enforcement
of the applicable
Seller's repurchase obligation hereunder plus (iii) with respect to
any Mortgage
Loan subject to a Securitization, any costs and damages incurred by
the related
trust in connection with any violation by such Mortgage Loan of any
predatory or
abusive lending law.
"Required Surety
Payment": With respect to any defaulted Pledged Asset
Mortgage Loan for which a claim is payable under the related Surety Bond under
the procedures
referred to herein,
the lesser of (i) the principal portion of
the realized loss with
respect to such
Mortgage Loan and (ii)
the excess, if
any, of (a) the amount of Pledged Assets required at origination
with respect to
such Mortgage Loan (but not more than 30% of the original
principal balance of
such Mortgage Loan)
over (b) the net proceeds realized by the related
Pledged
Asset Servicer from the related Pledged Assets.
"Scheduled Principal
Balance": With respect
to any Mortgage Loan, (i) the
outstanding principal
balance as of the Funding Date after application of
principal payments
due on or before such
date whether or not
received, minus
(ii) all amounts
previously remitted
to the Purchaser with respect to such
Mortgage Loan representing (a) payments or other recoveries of
principal, or (b)
advances of principal made pursuant to Section 6.03.
"Securities Account": With respect to any Pledged Asset Mortgage
Loans, the
account, together with the financial assets held therein, that is
the subject of
the related Pledged Asset Agreement.
"Securitization":
Shall have the meaning
assigned to such term in Section
3.05.
"Sellers": PHH Mortgage Corporation, a New Jersey corporation and
Bishop's
Gate Residential
Mortgage Trust (formerly known as Cendant Residential Mortgage
Trust), a Delaware
business trust, or their successors in interest or any
successor under this Agreement appointed as herein provided.
"Servicer": PHH Mortgage Corporation, a New Jersey corporation.
14
<PAGE>
"Servicing Advances":
All "out of
pocket" costs and expenses that are
customary, reasonable
and necessary
which are incurred by
the Servicer in the
performance of
its servicing obligations hereunder, including (without
duplication) (i)
reasonable
attorneys'
fees and (ii) the cost of (a) the
preservation,
restoration and
protection of the
Mortgaged Property,
(b) any
enforcement or judicial proceedings, including foreclosures, (c) the
servicing,
management and liquidation of any Specially Serviced Mortgaged Loans and/or
any
REO Property, and (d)
compliance with the Servicer's obligations under Section
5.08.
"Servicing Event": Any of the following events with respect to any
Mortgage
Loan: (i) any
Monthly Payment being more than 60 days
delinquent;
(ii) any
filing of an Insolvency Proceeding by or on behalf of the related
Mortgagor, any
consent by or on behalf of the related Mortgagor to the filing of an
Insolvency
Proceeding against
such Mortgagor, or any admission by or on behalf of
such
Mortgagor of its
inability to pay such
Person's debts generally as the same
become due; (iii) any
filing of an
Insolvency Proceeding
against the
related
Mortgagor that remains undismissed or unstayed for a period of 60
days after the
filing thereof; (iv) any issuance of any attachment or execution
against, or any
appointment of a
conservator,
receiver or liquidator
with respect to, all
or
substantially all of
the assets of the related Mortgagor or with respect to any
Mortgaged Property; (v) any receipt by the Servicer of notice of
the foreclosure
or proposed foreclosure of any other lien on the related Mortgaged
Property; or
(vi) any proposal of a material modification (as reasonably determined by the
Seller) to such
Mortgage Loan due to a
default or imminent
default under such
Mortgage Loan.
"Servicing Fee": The annual fee, payable monthly to the Servicer
out of the
interest portion of the Monthly Payment and or Payoff actually
received on each
Mortgage Loan.
The Servicing Fee with respect to each
Mortgage Loan for
any
calendar month (or a
portion thereof)
shall be 1/12 of the
product of (i) the
Unpaid Principal
Balance of the
Mortgage Loan and (ii)
the Servicing Fee Rate
applicable to such Mortgage Loan.
"Servicing Fee
Rate": With respect to each Mortgage Loan, the rate
specified on the Mortgage Loan Schedule.
"Servicing
Officer": Any
officer of the Servicer involved in, or
responsible for, the
administration
and servicing of the
Mortgage Loans whose
name appears on a written list of servicing officers furnished by the Servicer
to the Purchaser upon request therefor by the Purchaser,
as such list may
from
time to time be amended.
"Specially Serviced Mortgage
Loan": A Mortgage Loan as to which a Servicing
Event has occurred and is continuing.
"Stock Certificate":
With respect to a
Cooperative Loan, the certificates
evidencing ownership
of the Cooperative Shares issued by the Cooperative
Corporation.
"Stock Power":
With respect to a
Cooperative
Loan, an assignment of
the
Stock Certificate
or an assignment of the Cooperative Shares issued by the
Cooperative Corporation.
"Subservicer": Any
Person with which the Servicer has entered into a
Subservicing Agreement, provided that such Person is a Fannie Mae
or Freddie Mac
approved
seller/servicer in good standing and no event has occurred,
including
but not limited to a change in insurance coverage, that would make it unable to
comply with the
eligibility
for seller/servicers imposed by Fannie Mae or
Freddie Mac.
15
<PAGE>
"Subservicing
Agreement": Any
subservicing agreement (which, in the event
the Subservicer is an affiliate of the Servicer, need not be in
writing) between
the Servicer and any Subservicer relating to servicing and/or
administration of
certain Mortgage Loans as provided in Section 5.01(3).
"Surety Bond": With respect to each Pledged Asset Mortgage Loan,
the surety
bond issued by the
related Surety Bond Issuer covering such Pledged Asset
Mortgage Loan.
"Surety Bond Issuer": With respect to each Pledged Asset Mortgage
Loan, the
surety bond issuer for
the related Surety
Bond covering
such Pledged Asset
Mortgage Loan, as identified in the Purchase Price and Terms
Letter.
"Uniform Commercial
Code": The Uniform Commercial Code as in effect on the
date hereof in the State of New York; provided that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or
non-perfection
of the security interest in any collateral is governed by the
Uniform Commercial
Code as in effect in a
jurisdiction other
than New York,
"Uniform
Commercial
Code" shall
mean the Uniform Commercial Code as in effect in such other
jurisdiction for
purposes of the provisions hereof relating to such
perfection
or effect of perfection or non-perfection.
"Unpaid Principal Balance": With respect to any Mortgage Loan, at
any time,
the actual outstanding principal balance then payable by the
Mortgagor under the
terms of the related Mortgage Note including any cumulative Negative
Amortization.
"VA": The United States Department of Veterans Affairs.
"Warranty Bill of
Sale": A warranty bill of sale with respect to the
Mortgage Loans purchased on a Funding Date in the form annexed
hereto as Exhibit
10.
ARTICLE II
SALE AND CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE
FILES; BOOKS AND RECORDS; DELIVERY OF MORTGAGE LOAN DOCUMENTS
Section 2.01 Sale and
Conveyance of Mortgage Loans.
--------------------------------------
Seller agrees to sell and Purchaser agrees to purchase,
from time to time,
those certain Mortgage
Loans identified in a Mortgage Loan
Schedule, at the
price and on the terms set forth herein and in the related
Purchase Price and
Terms Letter.
Purchaser, on any
Funding Date,
shall be obligated to
purchase
only such Mortgage
Loans set forth in the
applicable Mortgage
Loan Schedule,
which shall be
delivered by the Sellers to the Purchaser no later than 5
Business Days
prior to the
related Funding Date, subject to the terms and
conditions of this Agreement and the related Purchase Price and
Terms Letter.
The
closing shall, at Purchaser's option be either: by telephone,
confirmed
by letter or wire as the parties shall agree; or conducted in person at such
place as the parties
shall agree. On the
Funding Date and subject to the terms
and conditions of this Agreement, each Seller will sell, transfer,
assign, set
over and convey to the Purchaser, without recourse except as set forth in
this
Agreement, and the Purchaser will purchase, all of the right, title
and interest
of the applicable
Seller in and to the
Mortgage Loans being conveyed by it
hereunder, as identified on the Mortgage Loan Schedule.
16
<PAGE>
Examination of the
Mortgage Files may be made by Purchaser or its designee
as follows. No later than 5 Business Days prior to the Funding
Date, Seller will
deliver to Purchaser or its Custodian, Legal Documents required pursuant to
Schedule B-1.
The Custodian shall be required to certify its receipt of
the
Legal Documents
required to be
delivered pursuant to
the Custodial
Agreement
prior to the related Funding Date, as evidenced by the initial
certification of
the Custodian in the form annexed to the Custodial Agreement. Upon Purchaser's
request, Seller shall
make the Credit
Documents available in
either original
paper form or, subject
to Section 2.03,
electronic imaged
format to Purchaser
for review, at Seller's place of business and during reasonable
business hours.
If Purchaser makes such examination prior to the Funding Date and
identifies any
Mortgage Loans that do not conform to the PHH Guide, such Mortgage
Loans will be
deleted from the Mortgage Loan Schedule at Purchaser's discretion. Purchaser
may, at its option and
without notice to
Seller, purchase
all or part of the
Mortgage Loans
without conducting any partial or complete examination. In
addition to any rights
granted to the
Purchaser hereunder to
underwrite
the
Mortgage Loans and review the Legal Documents and Credit
Documents prior to
the
Funding Date, the Purchaser shall be entitled to conduct a due
diligence review
of the Mortgage Files in accordance with the timetable and any
additional terms
and conditions set
forth in the Purchase Price and Terms Letter. The fact that
Purchaser has
conducted or has failed to conduct any partial or complete
examination of the
Mortgage Loan files shall not affect Purchaser's rights to
demand repurchase, substitution or other relief as provided
herein.
On
the Funding Date and in accordance with the terms herein, Purchaser
will
pay to Seller
by 3:00 p.m. Eastern Standard Time, by wire transfer of
immediately available funds, the Purchase Price, together with
interest, if any,
accrued from the Cut-off Date through the day immediately
preceding the
Funding
Date, according
to the instructions to be provided, respectively, by PHH
Mortgage and the Trust. Seller, simultaneously with the payment of
the Purchase
Price, shall
execute and deliver to Purchaser a Warranty Bill of Sale with
respect to the Mortgage Loans in the form annexed hereto as Exhibit
10.
Purchaser shall be
entitled to all scheduled principal due after the
Cut-off Date, all other recoveries of principal collected after the
Cut-off Date
and all payments of
interest on the
Mortgage Loans (minus
that portion of any
such payment
which is allocable to the period prior to the Cut-off Date).
Notwithstanding the
foregoing, on the
first Remittance Date
after the Funding
Date the Purchaser
shall be entitled to
receive the interest
accrued from the
Cut-off Date
through the day immediately preceding the Funding Date. The
principal balance of
each Mortgage
Loan as of the Cut-off
Date is determined
after application
of payments of
principal due on or before the Cut-off
Date
whether or not
collected.
Therefore,
payments of scheduled principal and
interest prepaid for a
due date beyond the Cut-off Date shall not be applied to
the principal balance
as of the Cut-off Date. Such prepaid amounts shall be the
property of
Purchaser.
Seller shall hold any such prepaid amounts for the
benefit of Purchaser
for subsequent
remittance
by Seller to
Purchaser.
All
scheduled payments of
principal due on or before the Cut-off Date and collected
by Servicer after the Cut-off Date shall belong to Seller.
17
<PAGE>
Section 2.02
Possession of Mortgage Files.
-----------------------------
Upon
the sale of any Mortgage Loan, the ownership of such Mortgage
Loan,
including the Mortgage Note, the Mortgage, the contents of the related
Mortgage
File and all rights,
benefits, payments, proceeds and obligations arising
therefrom or in connection therewith, shall then be vested in the
Purchaser, and
the ownership of all
records and documents
with respect to such
Mortgage Loan
prepared by or which come into the possession of the Seller shall immediately
vest in the Purchaser
and, to the extent retained by the Seller, shall be
retained and maintained, in trust, by the Seller at the will of the
Purchaser in
a custodial capacity
only. The contents of
such Mortgage File not delivered to
the Purchaser
are and shall be held
in trust by the Seller for the benefit of
the Purchaser as the owner thereof and the Sellers'
possession of the
contents
of each Mortgage
File so retained is at
the will of the Purchaser for the sole
purpose of
servicing the related Mortgage Loan, and such retention and
possession by the Seller is in a custodial capacity only. Mortgage Files shall
be maintained
by the Seller and the books and
records of the Seller shall
clearly reflect the
sale of the related
Mortgage Loan to the
Purchaser. Each
Seller shall release
from its custody of the contents of any Mortgage File only
in accordance with written instructions from the Purchaser, except where such
release is required as
incidental to the
Servicer's servicing
of the Mortgage
Loans or is in connection with a repurchase or substitution of any
such Mortgage
Loan pursuant to Section 3.04.
Any
documents released to
a Seller or the Servicer in connection with the
foreclosure or
servicing of any
Mortgage Loan shall be
held by such Person in
trust for the benefit of the Purchaser in accordance with this Section 2.02.
Such Person shall return to the Purchaser such documents when such
Person's need
therefor in connection
with such foreclosure or servicing no longer exists
(unless sooner requested by the Purchaser); provided that, if such
Mortgage Loan
is liquidated,
then, upon the delivery by a Seller or the Servicer to the
Purchaser of a request
for the release of such documents and a certificate
certifying as to such liquidation, the Purchaser shall promptly
release and, to
the extent necessary, deliver to such Person such documents.
Section 2.03 Books and
Records.
------------------
From
and after the sale of the Mortgage Loans to the Purchaser all rights
arising out of the
Mortgage Loans, including, but not limited to, all funds
received on or in connection with the Mortgage Loans, shall be
received and held
by the Sellers
in trust for the benefit of the Purchaser as owner of the
Mortgage Loans, and the Sellers, if applicable, shall retain record
title to the
related Mortgages
for the sole purpose
of facilitating
the servicing and
the
supervision of the servicing of the Mortgage Loans.
The
sale of each
Mortgage Loan shall be reflected on the applicable
Seller's balance sheet and other financial statements, tax returns and business
records as a sale of
assets by the
applicable Seller.
Each Seller shall be
responsible for
maintaining, and shall
maintain, a complete set of books and
records for the
Mortgage Loans it
conveyed to the
Purchaser,
which shall be
clearly marked to
reflect the sale of each Mortgage Loan to the Purchaser and
the ownership of each Mortgage Loan by the Purchaser. In
particular, each 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,
and
requirements of
Fannie Mae or Freddie Mac, including but not limited to
18
<PAGE>
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 and periodic inspection reports as required by
Section 5.19.
To the extent
that original documents are not required for purposes of
realization of Liquidation Proceeds or Insurance Proceeds,
documents
maintained
by the Sellers
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 so long as the Sellers comply with the requirements
of Fannie Mae or Freddie Mac.
Section 2.04 Defective
Documents; Delivery of Mortgage Loan Documents.
---------------------------------------------------------
If,
subsequent to the
related Funding Date, the Purchaser or either Seller
finds any document or
documents constituting
a part of a Mortgage
File to be
defective or missing in any material respect (in this Section 2.04,
a "Defect"),
the party discovering
such Defect shall
promptly so notify the
other parties.
Any Mortgage that is
not executed as required or does not strictly comply with
all material legal
requirements shall be deemed to have a Defect. If the Defect
pertains to the Mortgage Note or the Mortgage, then the applicable Seller
shall
have a period of 60 days within which to correct or cure any such
defect after
the earlier of such Seller's discovery of same or such Seller
being notified of
same. If such Defect can ultimately be cured but is not
reasonably
expected to
be cured within such 60 day period, such Seller shall have such
additional time
as is reasonably determined by the Purchaser to cure or correct
such Defect, but
not to exceed an
additional 45 days,
provided that such Seller has commenced
curing or correcting such Defect and is diligently pursuing same. If the Defect
pertains to any other document constituting a part of a Mortgage
File, then such
Seller shall have a
period of 60 days within which to correct or cure any
such
Defect after the earlier of such Seller's discovery of same or such
Seller being
notified of same. If such Defect can ultimately be cured but is not
reasonably
expected to be cured within the 60 day period, then such Seller shall have
such
additional time as is reasonably determined by the Purchaser to
cure or correct
such Defect, but not
to exceed an additional 45 days, provided such Seller has
commenced curing or correcting such Defect and is diligently
pursuing same. PHH
Mortgage hereby
covenants and agrees that, if any material defect cannot be
corrected or cured,
the related Mortgage Loan shall automatically constitute,
upon the expiration of the applicable cure period described above and without
any further action by any other party, a Defective Mortgage Loan,
whereupon PHH
Mortgage shall
repurchase
such Mortgage Loan by paying to the Purchaser
the
Repurchase Price therefor in accordance with Section 3.04.
The
applicable
Seller will, with respect to each Mortgage Loan to be
purchased by the
Purchaser,
deliver and release to the Purchaser the Legal
Documents as set forth in Section 2.01. If the applicable
Seller cannot
deliver
an original Mortgage with evidence of recording thereon, original assumption,
modification and substitution agreements with evidence of
recording thereon
or
an original intervening assignment with evidence of recording
thereon within the
applicable time
periods, then such Seller shall promptly deliver to the
Purchaser such
original Mortgages and
original intervening
assignments
with
evidence of recording
indicated thereon
upon receipt
thereof from the
public
recording official,
except in cases
where the original Mortgage or original
intervening
assignments are retained permanently by the recording
office, in
which case, such
Seller shall deliver a
copy of such Mortgage
or intervening
assignment, as the
case may be, certified to be a true and complete copy of the
recorded original
thereof by the local public recording official. If the
19
<PAGE>
applicable Seller
cannot deliver the original security instrument or if an
original intervening
assignment has been
lost, then the applicable Seller will
deliver a copy of such security instrument or intervening
assignment,
certified
by the local public
recording official.
If the original title
policy has been
lost, the applicable Seller will deliver a duplicate original title
policy.
If
the original
Mortgage was not delivered pursuant to the preceding
paragraph, then the
applicable
Seller shall use its best efforts to
promptly
secure the delivery
of such originals and shall cause such originals to be
delivered to the Purchaser promptly upon receipt thereof.
Notwithstanding
the
foregoing, if the
original Mortgage,
original assumption,
modification,
and
substitution
agreements, the
original of any
intervening
assignment
or the
original policy of title insurance is not so delivered to
the Purchaser
within
180 days following the Funding Date, then, upon written notice by the
Purchaser
to PHH Mortgage,
the Purchaser may, in its sole discretion, then elect (by
providing written
notice to PHH
Mortgage) to treat such Mortgage Loan as a
Defective Mortgage
Loan, whereupon PHH
Mortgage shall repurchase such Mortgage
Loan by paying to the Purchaser the Repurchase Price therefor in
accordance with
Section 3.04. It is
understood
that from time to time
certain local
recorder
offices become
backlogged with
document volume.
It is agreed that the
Seller
will provide an Officer's Certificate to document that the
Seller has performed
all necessary tasks to insure delivery of the required documentation within 180
days and the delay beyond 180 is caused by the backlog. If the
delay exceeds 360
days, regardless of
the backlog the
Purchaser may elect to either collect the
documents with its own
resources with the reasonable cost and expense to be
borne by the Seller or treat such Mortgage Loan as a Defective
Mortgage Loan,
whereupon PHH Mortgage
shall repurchase such Mortgage Loan by paying to the
Purchaser the
Repurchase Price
therefor in accordance
with Section 3.04.
The
fact that the
Purchaser has
conducted or failed to conduct any partial or
complete examination
of the Mortgage Files shall not affect its right to demand
repurchase or any other remedies provided in this Agreement.
At
the Purchaser's
request, the
Assignments shall be promptly recorded in
the name of the Purchaser or in the name of a Person designated by
the Purchaser
in all appropriate
public offices for real property records. If any such
Assignment is lost or returned unrecorded because of a defect
therein, then the
applicable Seller
shall promptly prepare
a substitute
Assignment to cure such
defect and
thereafter
cause each such
Assignment
to be duly
recorded. All
recording fees related to such a one-time recordation of the Assignments by a
Seller shall be paid by the applicable Seller.
In
addition to the foregoing, in connection with the assignment of any
MERS
Mortgage Loan or MERS Eligible Mortgage Loan, the Sellers agree
that on or prior
to each Funding
Date it will
cause, at its own expense, the MERS System to
indicate that the related Mortgage Loans have been assigned by the
applicable
Seller to the
Purchaser in
accordance with this
Agreement by entering
in the
MERS System
the information required by the MERS System to identify the
Purchaser as owner of such Mortgage Loans. The Sellers further agree that
they
will not alter the information referenced in this paragraph with
respect to any
Mortgage Loan during the term of this Agreement unless and until such Mortgage
Loan is repurchased in accordance with the terms of this
Agreement.
20
<PAGE>
Section 2.05 Transfer
of Mortgage Loans.
---------------------------
Subject to the
provisions of this Section 2.05, the Purchaser shall have
the right, without
the consent of the Sellers, at any time and from time to
time, to assign any of
the Mortgage
Loans and all or any
part of its interest
under this Agreement
and designate any person to exercise
any rights of the
Purchaser hereunder,
and the assignees or
designees shall accede to the rights
and obligations
hereunder of the Purchaser with respect to such Mortgage Loans.
The Sellers recognize that the Mortgage Loans may be divided into
"packages" for
resale ("Mortgage Loan Packages").
All
of the provisions of this Agreement shall inure to the benefit of
the
Purchaser and any such
assignees or designees. All references to the
Purchaser
shall be deemed to include its assignees or designees. Utilizing resources
reasonably available
to the Seller without incurring any cost except the
Seller's overhead and employees' salaries, the applicable Seller
shall cooperate
in any such assignment of the Mortgage Loans and this Agreement; provided that
the Purchaser
shall bear all third party costs associated with any such
assignment of the
Mortgage Loans and
this Agreement
other than such
Seller's
overhead or employees' salaries.
The
Servicer and Purchaser agree that in no event will the
Servicer be
required to remit funds or make available via Servicer's website remittance
reports to more
than four (4)
Persons (not including the Servicer or any
Affiliate or transferee thereof) at any given time with
respect to any Mortgage
Loans sold on a particular Funding Date.
The
Servicer and the Purchaser acknowledge that the Servicer shall
continue
to remit payments to the Purchaser on the Remittance Date after the transfer of
the Mortgage
Loans, unless the Servicer was notified in writing of the new
record owner of the Mortgage Loans 3 Business Days prior to the
Record Date, in
which case, the
Servicer shall remit to the new record
owner (or trustee
or
master servicer, as the case may be) of the Mortgage Loans.
Any
prospective
assignees of the Purchaser who have entered into a
commitment to purchase any of the Mortgage Loans may review and underwrite the
Servicer's servicing and origination operations, upon reasonable
prior notice to
the Servicer, and the Servicer shall cooperate with such review and
underwriting
to the extent such prospective assignees request information or documents that
are reasonably
available and can be produced without unreasonable expense or
effort. The Servicer shall make the Mortgage Files related to the
Mortgage Loans
held by the Servicer available at the Servicer's principal
operations center for
review by any such
prospective assignees
during normal business hours upon
reasonable prior notice to the Servicer (in no event less than
fifteen (15) days
prior notice).
The Servicer may, in its sole discretion, require that such
prospective assignees
sign a confidentiality agreement with respect to such
information disclosed
to the prospective assignee which is not available to the
public at large and a release agreement with respect to its activities on the
Servicer's premises.
The
Servicer shall keep at its servicing office books and records in
which,
subject to such reasonable regulations as it may prescribe,
the Servicer shall
note transfers of Mortgage Loans. The Purchaser may, subject to the terms of
this Agreement,
sell and transfer, in whole or in part, any or all of the
Mortgage Loans;
provided that no such
sale and transfer
shall be binding upon
the Servicer unless
such transferee
shall agree in writing
to an Assignment,
21
<PAGE>
Assumption and Recognition Agreement, in substantially the form of
Exhibit 2.05
attached hereto,
and an executed copy of such Assignment, Assumption and
Recognition Agreement
shall have been
delivered to the Servicer. The Servicer
shall evidence its
acknowledgment of any transfers of the Mortgage Loans to any
assignees of
the Purchaser by executing such Assignment, Assumption and
Recognition Agreement.
The Servicer shall mark its books and records to reflect
the ownership of the
Mortgage Loans by any such assignees, and the previous
Purchaser shall be
released from its obligations hereunder accruing after the
date of transfer to the extent such obligations relate to Mortgage
Loans sold by
the Purchaser. This
Agreement shall be binding upon and inure to the benefit of
the Purchaser and the
Servicer and their
permitted successors,
assignees and
designees.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER;
REPURCHASE AND SUBSTITUTION; REVIEW OF MORTGAGE LOANS
Section 3.01
Representations and Warranties of each Seller.
----------------------------------------------
Each
Seller, as to itself, represents, warrants and covenants to the
Purchaser that as of each Funding Date or as of such date
specifically
provided
herein:
(1) Due Organization.
The Seller is an entity duly organized, validly existing
and in good standing under the laws of its jurisdiction of
organization, and has
all licenses
necessary to carry on
its business
now being conducted and is
licensed, qualified
and in good standing
under the laws of each
state where a
Mortgaged Property is
located or is otherwise exempt under applicable law
from
such qualification
or is otherwise not
required under applicable law to effect
such qualification;
no demand for such qualification has been made upon the
Seller by any state having jurisdiction and in any event the Seller is or
will
be in compliance
with the laws of any
such state to the
extent necessary
to
enforce each
Mortgage Loan and with respect to PHH Mortgage, service each
Mortgage Loan in accordance with the terms of this Agreement.
(2) Due Authority.
The Seller had the
full power and authority and legal right
to originate the Mortgage Loans that it originated, if any, and to acquire the
Mortgage Loans that it acquired. The Seller has the full power and
authority to
hold each Mortgage Loan, to sell each Mortgage Loan and to execute,
deliver and
perform, and to enter into and consummate, all transactions
contemplated by this
Agreement. The
Seller has duly authorized the execution, delivery and
performance of this
Agreement, has duly
executed and delivered this Agreement,
and this Agreement,
assuming due
authorization,
execution and delivery by the
Purchaser, constitutes
a legal, valid and binding obligation of the Seller,
enforceable against
it in accordance with its terms, subject to applicable
bankruptcy,
reorganization, receivership,
conservatorship,
insolvency,
moratorium and other laws relating to or affecting creditors' rights generally
or the rights of
creditors of banks and
to the general
principles
of equity
(whether such enforceability is considered in a proceeding in
equity or at law).
(3) No Conflict. The
execution and delivery of this Agreement, the acquisition
or origination, as
applicable, of the Mortgage Loans by the Seller, the sale of
the Mortgage Loans, the consummation of the transactions
contemplated hereby, or
the fulfillment
of or compliance with the terms and conditions of this
Agreement, will not
conflict with or result in a breach of any
of the terms,
22
<PAGE>
conditions or provisions of the Seller's organizational
documents and bylaws
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;
(4) Ability to Perform; Solvency. 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
to hinder, delay or defraud any of the Seller's
creditors;
(5) No Material
Default. Neither the Seller nor any of its
Affiliates
is in
material default under any agreement, contract, instrument or indenture of any
nature whatsoever to
which the Seller or any of its Affiliates is a party or by
which it (or any of its assets) is bound, which default would have a material
adverse effect on the
ability of the Seller
to perform under this
Agreement,
nor, to the best of the Seller's knowledge, has any event occurred which,
with
notice, lapse
of time or both,
would constitute a default under any such
agreement, contract,
instrument or indenture and have a material adverse effect
on the ability of the Seller to perform its obligations under this
Agreement;
(6) Financial Statements. PHH Mortgage has delivered to the
Purchaser financial
statements as to its
fiscal year ended December 31, 2004. Except as has
previously been
disclosed to the Purchaser in writing: (a) such financial
statements fairly
present the results of
operations
and changes in
financial
position for such period and the financial position at the end of
such period of
PHH Mortgage and its subsidiaries; and (b) such financial
statements are
true,
correct and complete
as of their
respective
dates 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. The
Trust has delivered to the Purchaser financial statements dated as of
December
31, 2004 (the "Trust
Financials") and such Trust Financials fairly present the
results of operations and changes in financial position for such period and
the
financial position
at the end of
such period of the Trust. Except as has
previously been disclosed to the Purchaser in writing, there has been no change
in such Trust
Financials
since their date and the Trust is not aware of
any
errors or omissions therein;
(7) No Change in Business. There has been no change in the
business, operations,
financial condition,
properties or assets of the applicable Seller since (i) in
the case of PHH Mortgage, the date of its financial
statements and (ii) in
the
case of the Trust, the date of delivery of the Trust Financials,
that would have
a material adverse effect on the ability of the applicable Seller
to perform its
obligations under this Agreement;
(8) No Litigation Pending. There is no action, suit, proceeding or
investigation
pending or, to the
best of the Seller's
knowledge,
threatened,
against the
Seller, which,
either in any one
instance or in the
aggregate, if
determined
adversely to the Seller would adversely affect the sale of the
Mortgage Loans to
the Purchaser or the execution, delivery or enforceability of this
Agreement or
result in any material
liability of the Seller, or draw into question the
validity of this Agreement, or have a material adverse effect on the
financial
condition of the Seller;
23
<PAGE>
(9) 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,
the delivery of the Mortgage Files to the Purchaser, 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
Funding Date;
(10) Ordinary
Course of Business. The consummation of the transactions
contemplated by this
Agreement is 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;
(11) No Broker. 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;
(12) No Untrue Information. Neither this Agreement nor any
statement, report or
other agreement, document or instrument furnished or to be
furnished pursuant to
this Agreement
contains or will contain any materially untrue statement of
fact
or omits or will omit to state a fact necessary to make the
statements contained
therein not misleading.
(13) Non-solicitation. In the event the Seller chooses to solicit
any Mortgagors
(in writing or otherwise) to refinance any of the Mortgage Loans
during the term
of this Agreement,
such solicitations shall be directed at all of Seller's
customers and will not be exclusively directed towards the Mortgagors
relating
to the Mortgage Loans sold hereunder;
(14) Privacy.
The Seller
agrees and acknowledges that as to all nonpublic
personal information
received or obtained
by it with respect to any Mortgagor:
(a) such information
is and shall be held by Seller
in accordance with all
applicable law,
including but not limited to the privacy
provisions
of the
Gramm-Leach Bliley Act; (b) such information is in connection with
a proposed or
actual secondary
market sale related to
a transaction
of the Mortgagor for
purposes of 16
C.F.R.ss.313.14(a)(3);
and (c) Seller is hereby prohibited from
disclosing or using
any such information
other than to carry
out the express
provisions of this Agreement, or as otherwise permitted by
applicable law;
(15) Selection Process. The Mortgage Loans will be selected on such
Funding Date
from among the
outstanding
fixed and adjustable rate one- to four-family
mortgage loans in the
Seller's portfolio at such Funding Date as
to which the
representations and
warranties set forth in Section 3.03 could be made and such
selection will not be
made in a manner so as to affect adversely the interests
of the Purchaser;
(16) 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;
24
<PAGE>
(17) Anti-Money
Laundering
Law Compliance. 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;
(18) Securities
Law Compliance. Neither the Seller nor anyone
acting on its
behalf has offered,
transferred, pledged,
sold or otherwise disposed of any
Mortgage Loans, any interest in any Mortgage Loans or any other
similar security
to, or solicited any offer to buy or accept a transfer, pledge or other
disposition of any
Mortgage Loans,
any interest in any
Mortgage Loans or
any
other similar security from, or otherwise approached or negotiated with
respect
to any Mortgage Loans,
any interest in any
Mortgage Loans or any other similar
security with, any
person in any manner,
or made any general
solicitation by
means of general
advertising or in any other manner, or taken any other action
which would constitute a distribution of the Mortgage Loans under
the Securities
Act of 1933 or which
would render
the disposition of any Mortgage Loans a
violation of Section 5
of the Securities
Act of 1933 or require
registration
pursuant thereto,
nor will it act, nor
has it authorized or
will it authorize
any person to act, in such manner with respect to the Mortgage
Loans; and
(19) Fair Consideration. The consideration received by the
Seller upon the sale
of the Mortgage Loans under this Agreement shall constitute fair consideration
and reasonably equivalent value for the Mortgage Loans.
Section 3.02
Representations and Warranties of the Servicer.
-----------------------------------------------
The
Servicer represents
warrants and covenants to the Purchaser that as of
the Funding Date or as of such date specifically provided
herein:
(1) Ability to Service. The Servicer is an approved
seller/servicer for
Fannie
Mae and Freddie Mac and is a mortgagee approved by the Secretary of
Housing and
Urban Development
pursuant to Section
203 of the National
Housing Act,
with
facilities, procedures
and experienced personnel necessary for the servicing of
mortgage loans of the
same type as the
Mortgage Loans.
No event has
occurred
that would make the
Servicer unable to
comply with
Fannie Mae or Freddie
Mac
eligibility requirements or that would require notification to
either Fannie Mae
or Freddie Mac;
(2) Reasonable
Servicing Fee. The Servicer acknowledges and agrees that the
Servicing Fee represents reasonable compensation for performing such services
and that the
entire Servicing Fee shall be treated by the Servicer, for
accounting and
tax purposes, as compensation for the servicing and
administration of the Mortgage Loans pursuant to this
Agreement;
25
<PAGE>
(3) No Litigation Pending. There is no action, suit, proceeding or
investigation
pending or, to the best of the Servicer's knowledge, threatened, against the
Servicer which,
either in any one
instance or in the aggregate, if determined
adversely to the Servicer would adversely affect the ability of the Servicer
to
service the Mortgage Loans hereunder in accordance with the terms
hereof or have
a material adverse effect on the financial condition of the
Servicer;
(4) Collection
Practices. The
collection
practices used by the
Servicer with
respect to each
Mortgage Note and
Mortgage have been in
all respects
legal,
proper and prudent in the mortgage servicing business;
(5) MERS. The Servicer 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.
By the end of the month in which the related Funding Date
occurs, the Servicer
has provided the Custodian and the Purchaser with a MERS
report reflecting
the Purchaser as the Investor on MERS with
respect to each
MERS Mortgage Loan and no Person as Interim Funder for each MERS
Mortgage Loan;
(6) Non-solicitation.
In the event the Servicer chooses to solicit any
Mortgagors (in writing
or otherwise)
to refinance
any of the Mortgage
Loans
during the term of this Agreement, such solicitations shall be directed at all
of the Servicer's
customers and will not
be exclusively
directed towards
the
Mortgagors relating to the Mortgage Loans sold hereunder; and
(7) Privacy.
The Servicer
agrees and
acknowledges
that as to all
nonpublic
personal information
received or obtained
by it with respect to any Mortgagor:
(a) such information
is and shall be held
by Servicer in
accordance with
all
applicable law,
including but not limited to the privacy
provisions
of the
Gramm-Leach Bliley Act; (b) such information is in connection with
a proposed or
actual secondary
market sale related to
a transaction
of the Mortgagor for
purposes of 16 C.F.R.ss.313.14(a)(3); and (c) Servicer is hereby
prohibited from
disclosing or using
any such information
other than to carry
out the express
provisions of this Agreement, or as otherwise permitted by
applicable law.
Section 3.03
Representations and
Warranties as to Individual Mortgage
--------------------------------------------------------
Loans.
-----
With
respect to each Mortgage Loan, the applicable Seller hereby makes the
following representations and warranties to the Purchaser on which
the Purchaser
specifically relies in
purchasing such Mortgage Loan. Such representations and
warranties speak as of
the Funding Date unless otherwise indicated, but shall
survive any subsequent
transfer, assignment or conveyance of such Mortgage
Loans:
(1) Mortgage Loan as
Described. Such
Mortgage Loan complies with the terms and
conditions set forth herein, and all of the information set forth with
respect
thereto on the Mortgage Loan Schedule and electronic data file is
complete, true
and correct in all material respects;
(2) Complete Mortgage Files. The instruments and documents
specified in
Section
2.02 with respect to such Mortgage Loan have been delivered to the Purchaser in
compliance with the requirements of Article II. The Seller is in
possession of a
Mortgage File respecting such Mortgage Loan, except for such documents as
have
been previously
delivered to the
Purchaser or its
Custodian.
All documents
required to be
included in the
Mortgage File shall be
complete, executed as
26
<PAGE>
required and in compliance with applicable law. With respect to each
Mortgage
Loan for which a lost note affidavit has been delivered to the Custodian in
place of the original
Mortgage Note, if such Mortgage Loan is subsequently in
default, the
enforcement of such Mortgage Loan or of the related Mortgage by
or
on behalf of the
Purchaser will not be
affected by the absence of the original
Mortgage Note;
(3) Owner of Record.
The Mortgage relating
to such Mortgage Loan has been duly
recorded in (or sent for recording to) the appropriate recording
office, and the
applicable Seller or
Servicer is the owner of record of such Mortgage Loan and
the indebtedness evidenced by the related Mortgage Note;
(4) Payments Current.
All payments required
to be made up to and including the
Funding Date for such
Mortgage Loan under
the terms of the Mortgage Note have
been made, such that such Mortgage Loan is not delinquent 30 days
or more on the
Funding Date;
and, if the
Mortgage Loan is a Pledged Asset Mortgage Loan,
neither the Mortgage Loan nor the related Pledged Assets has been dishonored.
Unless otherwise
disclosed in the Offering Materials or the Mortgage Loan
Schedule, there has
been no delinquency,
exclusive of any
period of grace, in
any payment by the Mortgagor thereunder during the twelve months preceding
the
Funding Date; and, if
the Mortgage Loan is a Cooperative Loan, no foreclosure
action or private or public sale under the Uniform Commercial Code
has ever been
threatened or commenced with respect to the Cooperative Loan;
(5) No Outstanding Charges. There are no delinquent taxes, governmental
assessments, insurance
premiums, water, sewer
or municipal charges,
including
assessments payable in
future installments
or any other charge
affecting the
lien priority of the
related Mortgaged
Property. The Seller has not advanced
funds, or induced,
or solicited directly or indirectly, 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 later, to
the day which precedes
by one month the Due Date of the
first installment of principal and interest;
(6) Original Terms
Unmodified. The terms
of the Mortgage Note and the Mortgage
related to such
Mortgage Loan (and the Proprietary Lease and the Pledge
Instruments with respect to each Cooperative Loan, and the Pledged Assets
with
respect to each Pledged Asset Mortgage Loan) have not been impaired, waived,
altered or modified in any material respect, except as specifically
set forth in
the related Mortgage Loan Schedule;
(7) No Defenses. The
Mortgage Note and the
Mortgage related to
such Mortgage
Loan (and the Cooperative Pledge Agreement related to each
Cooperative Loan, and
the related Pledge
Agreement with respect
to each Pledged Asset Mortgage Loan)
are not subject to any right of rescission, set-off, counterclaim or defense,
including the defense
of usury, nor will the
operation of any of
the terms of
such Mortgage
Note and such
Mortgage (or the
related Pledge
Agreement with
respect to each
Pledged Asset
Mortgage Loan), or the exercise of any right
thereunder, render
such Mortgage (or the related Pledge Agreement with respect
to each Pledged Asset
Mortgage Loan) unenforceable, in whole or in part, or
subject to any right of rescission, set-off or defense, including
the defense of
usury and no such right of rescission, set-off or defense has been
asserted with
respect thereto;
27
<PAGE>
(8) Hazard Insurance.
(a) All buildings upon the Mortgaged Property related to
such Mortgage Loan are insured by an insurer acceptable to Fannie
Mae or Freddie
Mac against loss by fire, hazards of extended coverage and such
other hazards as
are customary in the area where such Mortgaged Property is located,
pursuant to
insurance policies
conforming to the
requirements
of Section 5.10.
All such
insurance policies
(collectively,
the "hazard
insurance policy") contain a
standard mortgagee
clause naming the
originator of such
Mortgage Loan, its
successors and
assigns, as mortgagee.
Such policies are the
valid and binding
obligations of the insurer, and all premiums thereon due to date
have been paid.
The related Mortgage
obligates the
Mortgagor thereunder to maintain all
such
insurance at such Mortgagor's cost and expense, and on such Mortgagor's
failure
to do so, authorizes
the holder of such
Mortgage to maintain such insurance at
such Mortgagor's cost and expense and to seek reimbursement therefor from such
Mortgagor; or (b) in
the case of a condominium or unit in a planned unit
development ("PUD")
project that is not
covered by an individual policy, the
condominium or PUD
project is covered by
a "master" or
"blanket" policy and
there exists and is in the Mortgage File a certificate of insurance
showing that
the individual
unit that secures the first mortgage is covered under such
policy. Such insurance
policy contains a
standard mortgagee
clause naming the
originator of such Mortgage Loan (and its successors and assigns), as insured
mortgagee. Such
policies are the valid and binding obligations of the insurer,
and all premiums
thereon have been paid. Each insurance policy described above
provides for advance
notice to the Seller or Servicer if the policy is canceled
or not renewed,
or if any other
change that
adversely affects the Seller's
interests is made; the
certificate
includes the types and
amounts of coverage
provided, describes
any endorsements
that are part of the
"master" policy and
would be acceptable
pursuant to the Fannie
Mae Guide or Freddie Mac Servicing
Guide;
(9) Compliance With Applicable Laws. All requirements of any federal,
state or
local law (including usury, truth in lending, real estate
settlement procedures,
consumer credit
protection,
predatory
and abusive lending, equal credit
opportunity or disclosure laws) applicable to the origination and
servicing of
such Mortgage
Loan have been complied with in all material respects. The
Mortgagor received all
disclosure
materials required by applicable
law with
respect to the making of mortgage loans of the same type as the
Mortgage Loan
and, if the Mortgage Loan is a Refinanced Mortgage Loan, rescission materials
required by applicable
laws, and the Seller shall maintain in its possession,
available for the
Purchaser's
inspection,
and shall deliver to
the Purchaser
upon demand, evidence of compliance with all such requirements. All
inspections,
licenses and
certificates
required to be made or
issued with
respect to all
occupied portions of
the Mortgaged
Property and, with respect to the use
and
occupancy of the same, including, but not limited to, certificates
of occupancy,
have been made or obtained from the appropriate authorities;
(10) No Fraud. No error or omission, misrepresentation, negligence or fraud in
respect of such
Mortgage Loan has taken place on the part of any
Person in
connection with the origination and servicing of such Mortgage
Loan.
(11) No Satisfaction of Mortgage. The Mortgage related to such
Mortgage Loan has
not been satisfied, canceled, subordinated or rescinded, in whole
or in part, or
rescinded, and the
related Mortgaged
Property has not been
released from the
lien of such Mortgage, in whole or in part, nor has any instrument
been executed
that would effect any such release, cancellation, subordination or
rescission;
28
<PAGE>
(12) Valid First Lien.
The Mortgage, including any Negative Amortization,
related to such Mortgage Loan is a valid, subsisting and enforceable
perfected
first lien on the related Mortgaged Property, including all improvements on
the
related Mortgaged
Property, which
Mortgaged Property is
free and clear of any
encumbrances and liens
having priority over the first lien of the Mortgage
subject only
to (a) the lien of current real estate taxes and special
assessments not yet due and payable, (b) covenants, conditions and
restrictions,
rights of way,
easements and other
matters of the public record as of the date
of recording
of such Mortgage which are acceptable to mortgage lending
institutions
generally, are
referred to in the lender's title insurance policy
and do not adversely
affect the market
value or intended use of the related
Mortgaged Property,
and (c) other matters to which like properties are commonly
subject which do not individually or in the aggregate materially interfere with
the benefits of the
security intended to be provided by such
Mortgage or the
use, enjoyment, or
market value of the related Mortgaged Property; with respect
to each Cooperative
Loan, each Cooperative
Pledge Agreement
creates a valid,
enforceable and subsisting first security interest in the collateral
securing
the related
Mortgage Note subject only to (a) the lien of the related
Cooperative
Corporation for unpaid
assessments
representing the obligor's pro
rata share of the Cooperative Corporation's payments for its blanket
mortgage,
current and future real property taxes, insurance premiums,
maintenance fees and
other assessments
to which like
collateral is commonly
subject and (b)
other
matters to which like
collateral is commonly
subject which do not
materially
interfere with the
benefits of the security intended to be provided by the
Cooperative
Pledge Agreement;
provided,
however,
that
the appurtenant
Proprietary Lease may
be subordinated or
otherwise subject to
the lien of any
mortgage on the Cooperative Project.
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;
(13) Validity of Documents. The Mortgage Note and the Mortgage
related to such
Mortgage Loan
(and the Cooperative Pledge Agreement with respect to each
Cooperative Loan)
are genuine and each is the legal, valid and binding
obligation of the
maker thereof,
enforceable
in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization or
other similar laws
affecting the
enforcement of
creditors'
rights generally
and general
equitable principles (regardless whether such
enforcement is considered in a proceeding in equity or at law);
(14) Valid Execution
of Documents.
All parties to the
Mortgage Note and the
Mortgage related to
such Mortgage
Loan had legal
capacity to enter into
such
Mortgage Loan and to
execute and deliver
the related Mortgage Note and the
related Mortgage and
the related Mortgage
Note and the related
Mortgage have
been duly and properly executed by such parties; with respect to each
Cooperative Loan,
all parties to the
Mortgage Note and the
Mortgage Loan had
legal capacity to execute and deliver the Mortgage Note, the
Cooperative Pledge
Agreement, the
Proprietary Lease, the
Stock Power, the Recognition Agreement,
the Financing
Statement and the Assignment of Proprietary Lease and such
documents have been duly and properly executed by such parties;
each Stock Power
29
<PAGE>
(i) has all signatures
guaranteed or (ii) if all signatures are not guaranteed,
then such Cooperative
Shares will be transferred by the stock transfer agent of
the Cooperative Corporation if the Seller undertakes to convert the
ownership of
the collateral securing the related Cooperative Loan;
(15) Full Disbursement
of Proceeds. Such Mortgage Loan has closed and the
proceeds of such
Mortgage Loan have been fully disbursed prior to the Funding
Date; [provided that,
with respect to any
Mortgage Loan originated within the
previous 120 days, alterations and repairs with respect to the
related Mortgaged
Property or any part
thereof may have
required an escrow of funds in an amount
sufficient to pay for all outstanding work within 120 days of the
origination of
such Mortgage Loan,
and, if so, such funds are held in escrow by the Seller,
a
title company or other escrow agent;]
(16) Ownership. The Mortgage Note and the Mortgage related to such
Mortgage Loan
have not been
assigned, pledged or
otherwise transferred by the applicable
Seller, in whole or in
part, and the Seller has good and marketable title
thereto, and the
Seller is the sole
owner thereof (and with respect to any
Cooperative Loan, the sole owner of the related Cooperative Pledge
Agreement)and
has full right and
authority to transfer and sell such Mortgage Loan, and is
transferring such
Mortgage Loan to the Purchaser free and clear of any
encumbrance, equity, lien, pledge, charge, claim or security
interest;
(17) Doing Business.
All parties that have
had any interest in
such Mortgage
Loan, whether as mortgagee, assignee, pledgee or otherwise,
are (or, during the
period in which they held and disposed of such interest, were) in compliance
with any and all
applicable licensing
requirements
of the laws of the
state
wherein the related Mortgaged Property is located;
(18) Title Insurance.
(a) Such Mortgage Loan is covered by an ALTA
lender's
title insurance policy
or short form title policy acceptable to Fannie Mae and
Freddie Mac (or, in jurisdictions where ALTA policies are not
generally approved
for use, a lender's title insurance policy acceptable to Fannie Mae and
Freddie
Mac), issued by a
title insurer
acceptable
to Fannie Mae and
Freddie Mac and
qualified to do
business in the jurisdiction where the related Mortgaged
Property is located,
insuring (subject to
the exceptions
contained in clauses
(12)(a) and (b) above) the Seller or Servicer, its successors and assigns as
to
the first priority lien of the related Mortgage in the original
principal amount
of such Mortgage Loan including any Negative Amortization and in
the case of ARM
Loans, against any
loss by reason of the invalidity or unenforceability of the
lien resulting from the provisions of such Mortgage providing for adjustment to
the applicable Note Rate and Monthly Payment. Additionally, either
such lender's
title insurance policy affirmatively insures that there is ingress
and egress to
and from the Mortgaged Property or the Seller warrants that there
is ingress and
egress to and from the
Mortgaged Property
and the lender's title insurance
policy affirmatively
insures against encroachments by or upon the related
Mortgaged Property or
any interest therein
or any other adverse
circumstance
that either is disclosed or would have been disclosed by an
accurate survey. The
originator of the
Mortgage Loan,
its successor and/or assignee is the sole
insured of such
lender's title insurance policy, and such lender's title
insurance policy is in
full force
and effect and will be in full force and
effect upon the consummation of the transactions contemplated by this Agreement
and will inure to the
benefit of the
Purchaser without
any further act. No
claims have been made under such lender's title insurance policy, neither the
Seller, nor to the best of Seller's knowledge, any prior holder of the
related
30
<PAGE>
Mortgage has done, by
act or omission,
anything that would impair the coverage
of such lender's insurance policy, and there is no act, omission,
condition, or
information that would
impair the coverage of such lender's insurance policy;
(b) The mortgage
title insurance policy covering each unit mortgage in a
condominium or PUD project related to such Mortgage Loan meets all
requirements
of Fannie Mae and Freddie Mac;
(19) No Defaults.
(a) There is no default, breach, violation or event of
acceleration existing
under the Mortgage, the Mortgage Note (or the related
Pledge Agreement with respect to each Pledged Asset Mortgage Loan),
or any other
agreements, documents,
or instruments related
to such Mortgage Loan; (b) there
is no event that, with the lapse of time, the giving of notice,
or both, would
constitute such a default, breach, violation or event of
acceleration; (c)
the
Mortgagor(s) with
respect to such Mortgage Loan is not the subject of an
Insolvency Proceeding; (d) no event of acceleration has previously
occurred, and
no notice of default has been sent, with respect to such Mortgage
Loan; (e) in
no event has the Seller waived any of its rights or
remedies in respect of
any
default, breach,
violation or event of
acceleration
under the Mortgage,
the
Mortgage Note (or the
related Pledge
Agreement with respect to each Pledged
Asset Mortgage Loan), or any other agreements, documents, or
instruments related
to such Mortgage Loan; and (f) with respect to each Cooperative Loan, there is
no default in complying with the terms of the Mortgage
Note, the Cooperative
Pledge Agreement
and the Proprietary Lease and all maintenance charges and
assessments (including
assessments payable in
the future
installments,
which
previously became due
and owing) have been
paid, and the Seller
has the right
under the terms of the Mortgage Note, Cooperative Pledge Agreement and
Recognition Agreement
to pay any maintenance charges or assessments owed by the
Mortgagor;
(20) No Mechanics'
Liens. As of the date
of origination of such Mortgage Loan,
there were no
mechanics' or similar
liens, except such
liens as are expressly
insured against by a title insurance policy, or claims that have been
filed for
work, labor or material (and no rights are outstanding that under
law could give
rise to such lien) affecting the related Mortgaged Property that are or may be
liens prior to, or equal or coordinate with, the lien of the
related Mortgage;
(21) Location of Improvements; No Encroachments. As of the date of origination
of such Mortgage Loan, all improvements that were considered in
determining the
Appraised Value
of the related Mortgaged Property lay wholly within the
boundaries and building restriction lines of such Mortgaged
Property, and no
improvements on
adjoining properties
encroach upon such Mortgaged Property
except as permitted
under the terms of the Fannie Mae Guide and the Freddie Mac
Servicer Guide; no improvement located on or part of any
Mortgaged Property
is
in violation of any applicable zoning law or regulation,
and all inspections,
licenses and
certificates
required to be made or
issued with
respect to all
occupied portions of
such Mortgaged
Property, and with
respect to the use and
occupancy of the same,
including certificates
of occupancy, have
been made or
obtained from the appropriate authorities;
(22) Origination;
Payment Terms. Except
with respect to Interest Only Mortgage
Loans, principal
payments on such
Mortgage Loan
commenced or will commence no
more than 60 days after funds were disbursed in connection with such Mortgage
Loan. If the interest
rate on the related
Mortgage Note is adjustable, the
adjustment is
based on the Index set forth on the related Mortgage Loan
Schedule. The Mortgage
Loans have an original term to maturity of not more than
30 years, with
interest payable on
the first day of each month in arrears, in
31
<PAGE>
accordance with the
payment terms described on the related Mortgage Loan
Schedule. As to each
ARM Loan on each applicable Adjustment Date, the Mortgage
Interest Rate has been
or will be adjusted
to equal the sum of
the Index plus
the applicable
Gross Margin, rounded up or down to the
nearest multiple of
0.125% indicated
by the Mortgage Note; provided that the Note Rate has not
increased or
decreased and will not increase or decrease by more than the
Periodic Interest Rate
Cap on any Adjustment
Date, and has not, nor will it in
any event, exceed the
maximum Note Rate or
be lower than the minimum Note Rate
listed on the Mortgage Loan Schedule for such Mortgage Loan. As to
each ARM Loan
(other than a Mortgage Loan subject to Negative Amortization or an
Interest Only
Mortgage Loan),
each Mortgage Note requires a monthly payment which is
sufficient, during the period prior to the first adjustment to the
Note Rate, to
fully amortize the
outstanding
principal balance as of the first day of
such
period over the then remaining term of such Mortgage Note and to
pay interest at
the related Note Rate.
As to each Mortgage
Note relating to an Interest Only
Mortgage Loan, each
Mortgage Note requires a monthly payment, commencing with
the first monthly
payment after the end
of the interest only period, which is
sufficient to amortize
the outstanding
principal balance fully over the then
remaining term of such
Mortgage Note. As to
each ARM Loan, if the related Note
Rate changes
on a Payment
Adjustment
Date, the then outstanding principal
balance will be reamortized over the remaining life of such
Mortgage Loan. With
respect to any
Mortgage Loan
subject to
Negative Amortization the Monthly
Payments are sufficient during the period following each Payment
Adjustment Date
to fully amortize the outstanding principal balance as of the first
day of such
period (including any Negative Amortization) over the original term thereof
in
accordance with the terms and conditions set forth in the Mortgage
Note;
(23) Due On Sale.
Except as noted otherwise on the Mortgage Loan Schedule,
the
related Mortgage contains the usual and customary "due-on-sale" clause or other
similar provision for
the acceleration of
the payment of the Unpaid Principal
Balance of such Mortgage Loan if the related Mortgaged Property or any interest
therein is sold or
transferred
without the prior consent of the mortgagee
thereunder;
(24) Prepayment
Penalty. Except as noted otherwise on the Mortgage Loan
Schedule, such
Mortgage Loan is not subject to any
Prepayment
Penalty. All
information on the Mortgage Loan Schedule and electronic
data file delivered
to
the Purchaser
regarding any Prepayment Penalty is complete and accurate
in all
material respects and each Prepayment Penalty is permissible and
enforceable in
accordance with its
terms under applicable
law. No Mortgage Loan originated on
or after October 1, 2002 provides for the payment of a Prepayment
Penalty beyond
the three-year term
following the origination of the Mortgage Loan. No Mortgage
Loan originated
prior to such date
provides for the payment of a Prepayment
Penalty beyond the
five-year term
following the
origination
of the Mortgage
Loan. The Prepayment Penalty is disclosed to the Mortgagor in the
loan documents
pursuant to applicable state and federal law;
(25) Mortgaged Property Undamaged; No Condemnation. As of the Funding Date, the
related Mortgaged
Property (and with respect to a Cooperative Loan, the related
Cooperative Project
and Cooperative Unit)
is free of material damage and waste
and there is no proceeding pending for the total or partial condemnation
thereof;
32
<PAGE>
(26) Customary
Provisions.
The related Mortgage contains customary and
enforceable provisions that render the rights and remedies of the
holder thereof
adequate for the
realization
against the related Mortgaged Property of the
benefits of the
security provided thereby, including, (a) in the case of a
Mortgage designated as
a deed of trust, by
trustee's sale, and (b) in the case
of a Mortgage, otherwise by judicial foreclosure;
(27) Conformance
With
Underwriting
Standards.
Such
Mortgage Loan was
underwritten in accordance with the PHH Guide;
(28) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged
Property on forms and with riders approved by Fannie Mae and
Freddie Mac, signed
prior to the approval of such Mortgage Loan application by an appraiser, duly
appointed by the originator of such Mortgage Loan, whose compensation is not
affected by the approval or disapproval of such Mortgage Loan and who met the
minimum qualifications
of Fannie Mae and Freddie Mac for appraisers. Each
appraisal of the
Mortgage Loan was made in accordance with the relevant
provisions of the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989. In accordance
with specified
programs Seller may
utilize an approved
AVM in lieu of an appraisal;
(29) Deeds of Trust. If the related Mortgage constitutes a deed of
trust, then a
trustee, duly qualified under applicable law to serve as such, has
been properly
designated and currently so serves and is named in such Mortgage,
and no fees or
expenses are or will become payable by the Purchaser to the trustee under
such
deed of trust, except
in connection with a
trustee's sale after default by the
related Mortgagor;
(30) LTV; Primary
Mortgage Insurance Policy. Except with respect to Pledged
Asset Mortgage
Loans and any loan program as defined in the PHH Guide not
requiring Primary Mortgage Insurance, if such Mortgage Loan had a
Loan-to-Value
Ratio of more than 80% at origination, such Mortgage Loan is and
will be subject
to a Primary Insurance
Policy issued by a
Qualified Mortgage
Insurer, which
insures the Seller or Servicer, its successors and assigns and
insured's in the
amount set
forth on the
Mortgage Loan Schedule; provided that, a Primary
Mortgage Insurance
Policy will not be
required for any Cooperative Loan if (i)
the proceeds of such
Cooperative Loan were
used to purchase a Cooperative Unit
at the "insider's
price" when the
building was converted to a Cooperative
Corporation, (ii) the value of the Cooperative Unit for purposes of
establishing
the LTV at origination was such "insider's price", (iii) the
principal amount of
the Cooperative
Loan at origination
was not more than 100%
of such "insider's
price" and (iv) the LTV at origination, as calculated using the Appraised
Value
at origination,
was less than or equal
to 80%. All provisions
of such Primary
Insurance Policy have
been and are being complied with, such policy is in full
force and effect, and
all premiums due
thereunder have been
paid. Any related
Mortgage subject
to any such Primary Insurance Policy (other than a
"lender-paid" Primary
Insurance Policy)
obligates the Mortgagor thereunder to
maintain such
insurance for the time period required by law and to pay all
premiums and charges in connection therewith. As of the date of
origination, the
Loan-to-Value Ratio of
such Mortgage
Loan is as specified
in the applicable
Mortgage Loan Schedule;
(31) Occupancy. The related Mortgaged Property (or with respect to
a Cooperative
Loan, the related
Cooperative Unit) is
lawfully occupied
under applicable law
and all inspections,
licenses and
certificates
required to be made or
issued
with respect to all occupied portions of the Mortgaged Property (or
with respect
to a Cooperative Loan,
the related
Cooperative Unit) and,
with respect to the
use and occupancy of
the same, including
but not limited to
certificates
of
occupancy, have been made or obtained from the appropriate
authorities;
33
<PAGE>
(32) Supervision and Examination by a Federal or State Authority.
Each Mortgage
Loan either
was (a) closed in the
name of PHH Mortgage,
or (b) closed in
the
name of another entity that is either a savings and loan
association, a
savings
bank, a commercial bank, credit union, insurance company or similar
institution
which is supervised and examined by a federal or state authority,
or a mortgagee
approved by the Secretary of Housing and Urban Development
pursuant to
Sections
203 and 211 of the National Housing Act (a "HUD Approved
Mortgagee"), and was so
at the time such
Mortgage Loan was
originated
(PHH Mortgage or such other
entity, the
"Originator") or (c)
closed in the name of a loan broker under the
circumstances
described in
the following sentence. PHH Mortgage is a HUD
Approved Mortgagee. If
such Mortgage Loan was originated through a loan broker,
such Mortgage Loan met
the Originator's
underwriting
criteria at the time
of
origination and was originated in accordance with the Originator's
policies and
procedures and the
Originator acquired
such Mortgage Loan from the loan broker
contemporaneously with
the origination
thereof. The Mortgage Loans that the
Trust is selling to Purchaser were originated by PHH Mortgage or on behalf
of
PHH Mortgage by an entity meeting the requirements of clause (b) or (c) above
and subsequently assigned to the Trust.
(33) Adjustments.
All of the terms of
the related Mortgage
Note pertaining to
interest rate
adjustments,
payment
adjustments
and adjustments of the
outstanding principal balance, if any, are enforceable and such
adjustments will
not affect
the priority of the lien of the related Mortgage; all such
adjustments on such Mortgage Loan have been made properly and in
accordance with
the provisions of such Mortgage Loan;
(34) Insolvency
Proceedings; The
Servicemembers Civil
Relief Act. The related
Mortgagor (1) is not the subject of any Insolvency Proceeding; and (2) has not
requested any relief allowed to such Mort
