<PAGE>
Exhibit 99.7
MORTGAGE LOAN FLOW PURCHASE, SALE & SERVICING AGREEMENT
dated as of March 27, 2001
between
MERRILL LYNCH MORTGAGE CAPITAL INC., Purchaser
and
CENDANT MORTGAGE CORPORATION and
BISHOP'S GATE RESIDENTIAL MORTGAGE TRUST
(formerly known as CENDANT RESIDENTIAL MORTGAGE TRUST)
Sellers
<PAGE>
<TABLE>
<S>
<C>
<C>
ARTICLE I:
DEFINITIONS.................................................................................
1
Section 1.01 Defined
Terms........................................................................
1
ARTICLE II: SALE AND CONVEYANCE OF MORTGAGE
LOANS;POSSESSION OF MORTGAGE FILES; BOOKS AND RECORDS;
DELIVERY OF MORTGAGE LOAN
DOCUMENTS........................................................
8
Section 2.01 Sale and Conveyance of
Mortgage Loans................................................
8
Section 2.02 Possession of Mortgage
Files.........................................................
9
Section 2.03 Books and
Records....................................................................
10
Section 2.04 Defective Documents;
Delivery of Mortgage Loan Documents.............................
10
Section 2.05 Transfer of Mortgage
Loans...........................................................
11
ARTICLE III: REPRESENTATIONS, WARRANTIES
AND COVENANTS OF THE SELLER; REPURCHASE; REVIEW OF MORTGAGE
LOANS.....................................................................................
12
Section 3.01 Representations and
Warranties of each Seller........................................
12
Section 3.02 Representations and
Warranties of the Servicer.......................................
13
Section 3.03 Representations and
Warranties as to Individual Mortgage Loans.......................
14
Section 3.04
Repurchase...........................................................................
19
Section 3.05 Certain Covenants of each
Seller and the Servicer....................................
20
ARTICLE IV: REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER AND CONDITIONS PRECEDENT TO FUNDING........
21
Section 4.01 Representations and
Warranties.......................................................
21
Section 4.02 Conditions Precedent to
Closing......................................................
22
ARTICLE V: ADMINISTRATION AND SERVICING OF
MORTGAGE LOANS..............................................
23
Section 5.01 Cendant Mortgage to Act as
Servicer; Servicing Standards:
Additional Documents. Consent of the
Purchaser....................................... 23
Section 5.02 Collection of Mortgage Loan
Payments.................................................
24
Section 5.03 Reports for Specially
Serviced Mortgage Loans and Foreclosure Sales..................
25
Section 5.04 Establishment of Collection
Account; Deposits in Collection Account..................
25
Section 5.05 Permitted Withdrawals from
the Collection Account....................................
26
Section 5.06 Establishment of Escrow
Accounts: Deposits in Escrow.................................
27
Section 5.07 Permitted Withdrawals From
Escrow Accounts...........................................
27
Section 5.08 Payment of Taxes, Insurance
and Other Charges:
Maintenance of Primary Insurance Policies; Collections
Thereunder.................... 27
Section 5.09 Transfer of
Accounts.................................................................
28
Section 5.10 Maintenance of Hazard
Insurance......................................................
28
Section 5.11 Maintenance of Mortgage
Impairment Insurance Policy..................................
29
Section 5.12 Fidelity Bond; Errors and
Omissions Insurance........................................
29
Section 5.13 Management of REO
Properties.........................................................
30
Section 5.14 Sale of Specially Serviced
Mortgage Loans and REO Properties.........................
31
Section 5.15 Realization Upon Specially
Serviced Mortgage Loans and REO Properties................
32
</TABLE>
<PAGE>
<TABLE>
<S>
<C>
<C>
Section 5.16 Investment of Funds in the
Collection Account........................................
33
ARTICLE VI: REPORTS; REMITTANCES;
ADVANCES.............................................................
34
Section 6.01
Remittances..........................................................................
34
Section 6.02
Reporting............................................................................
34
Section 6.03 Monthly Advances by the
Servicer.....................................................
34
Section 6.04
Non-recoverable-Advances.............................................................
35
Section 6.05 Itemization of Servicing
Advances....................................................
35
Section 6.06 Officer's
Certificate................................................................
35
ARTICLE VII: GENERAL SERVICING
PROCEDURE...............................................................
35
Section 7.01 Enforcement of Due-on-Sale
Clauses, Assumption Agreements............................
35
Section 7.02 Satisfaction of Mortgages
and Release of Mortgage Files..............................
36
Section 7.03 Servicing
Compensation...............................................................
37
Section 7.04 Annual Statement as to
Compliance....................................................
37
Section 7.05 Annual Independent Certified
Public Accountants' Servicing Report....................
37
Section 7.06 Purchaser's Right to Examine
Servicer Records........................................
37
ARTICLE VIII: REPORTS TO BE PREPARED BY THE
SERVICER...................................................
38
Section 8.01 The Servicer's Reporting
Requirements................................................
38
Section 8.02 Financial
Statements.................................................................
38
ARTICLE IX: THE
SELLERS................................................................................
38
Section 9.01 Indemnification; Third Party
Claims..................................................
39
Section 9.02 Merger or Consolidation of
the Seller................................................
39
Section 9.03 Limitation on Liability of
the Sellers and Others....................................
39
Section 9.04 Servicer Not to
Resign...............................................................
40
ARTICLE X:
DEFAULT.....................................................................................
40
Section 10.01 Events of
Default....................................................................
40
ARTICLE XI:
TERMINATION................................................................................
41
Section 11.01 Term and
Termination.................................................................
41
Section 11.02
Survival.............................................................................
41
ARTICLE XII: GENERAL
PROVISIONS........................................................................
42
Section 12.01 Successor to the
Servicer............................................................
42
Section 12.02 Governing
Law........................................................................
42
Section 12.03
Notices..............................................................................
42
Section 12.04 Severability of
Provisions...........................................................
42
Section 12.05 Schedules and
Exhibits...............................................................
42
Section 12.06 General Interpretive
Principles......................................................
42
Section 12.07 Waivers and Amendments,
Noncontractual Remedies Preservation of Remedies.............
43
Section 12.08
Captions.............................................................................
43
</TABLE>
<PAGE>
<TABLE>
<S>
<C>
<C>
Section 12.09 Counterparts;
Effectiveness..........................................................
43
Section 12.10 Entire Agreement;
Amendment..........................................................
43
Section 12.11 Further
Assurances...................................................................
44
</TABLE>
Schedules
A. Mortgage Loan Schedule
B. Content of Mortgage File
B-1 Purchaser's
Mortgage File
B-2 Servicer's
Mortgage File
B-3 Credit
Documents
C. Cendant Guidelines and
Restrictions
Exhibits
Exhibit 2.05 Form of Assignment,
Assumption and Recognition Agreement
Exhibit 5.03(a) Report P-4DL
Exhibit 5.03(b) Report S-5L2
Exhibit 5.03(c) Form of Notice of
Foreclosure
Exhibit 5.041 Form of Collection Account
Certification
Exhibit 5.042 Form of Collection Account
Letter Agreement
Exhibit 5.06-1 Form of Escrow Account
Certification
Exhibit 5.06-2 Form of Escrow Account Letter
Agreement
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 8.01 Report P-195
Delinquency Report
Exhibit 9 Form
of Officer's Certificate
Exhibit 10 Form of
Warranty Bill of Sale
<PAGE>
MORTGAGE LOAN FLOW PURCHASE, SALE & SERVICING AGREEMENT
This Mortgage
Loan Flow Purchase, Sale & Servicing Agreement, dated as of
March 27, 2001, is entered into between
Merrill Lynch Mortgage Capital Inc., as
the Purchaser ("Purchaser"), Cendant
Mortgage Corporation ("Cendant Mortgage")
and Bishop's Gate Residential Mortgage
Trust (formerly known as Cendant
Residential Mortgage Trust) (the "Trust,"
together with Cendant Mortgage, the
"Sellers" and individually, each a
"Seller"), as the Sellers.
PRELIMINARY STATEMENT
(1) Cendant 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 Cendant
Mortgage and
selling same to investors.
(2) Purchaser is engaged in the
business, inter alia, of purchasing Mortgage
Loans for its
own account.
(3) Cendant Mortgage has established
certain terms, conditions and loan
programs, as
described in Cendant Mortgage's Program and Underwriting
Guidelines (the
"CENDANT GUIDE") 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 Cendant Guide are attached
hereto as
Schedule C.
(4) Purchaser and Sellers desire to
establish a flow program whereby Cendant
Mortgage will
make Mortgage Loans which meet the applicable provisions of
the Cendant
Guide, and Purchaser will, on a regular basis, purchase such
Mortgage Loans
from Cendant 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) 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 Cendant Mortgage, as the
Servicer (the
"Servicer"), in this Agreement.
NOW, THEREFORE, in consideration of the
mutual agreements hereinafter set forth,
the Purchaser and the Sellers agree as
follows:
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.
<PAGE>
"Appraised
Value": With respect to any Mortgaged Property, the lesser of
(i) the value thereof as determined by an
appraisal made for the originator of
the Mortgage Loan at the time of
origination of the Mortgage Loan by an
appraiser who met the minimum requirements
of FNMA and FHLMC; or (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 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 FNMA and FHLMC.
"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.
"Bankruptcy
Code": The Bankruptcy Reform Act of 1978 (11 U.S.C. Sections
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 is closed.
"Cendant Guide":
As defined in paragraph 3 of the Preliminary Statement to
this Agreement.
"Code": The
Internal Revenue Code of 1986, as amended.
"Collection
Account": The separate trust account or accounts created and
maintained pursuant to Section 5.04 which
shall be entitled "Cendant Mortgage
Corporation, as servicer and custodian for
the Purchaser of Mortgage Loans under
the Mortgage Loan Flow Purchase, Sale &
Servicing Agreement, dated as of March
27, 2001."
"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.
"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 Cendant Guide. The
Credit Documents are specified on Schedule
B-3 hereto.
"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(3).
"Determination
Date": The 15th day of each calendar month, commencing on
the 15th day of the month following the
Funding Date, or, if such 15th day is
not a Business Day, the Business Day
immediately preceding such 15th 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.
"Eligible
Account": One or more accounts (i) that are maintained with a
depository institution the long-term
unsecured debt obligations of which have
been rated by each Rating Agency in one of
its two highest rating categories at
the time of any deposit therein, (ii) that
are trust accounts with any
depository institution held by the
depository institution in its capacity as a
corporate trustee, or (iii) the deposits in
which are insured by the FDIC (to
the limits established by the FDIC) and the
uninsured deposits in which are
otherwise secured such that the
-2-
<PAGE>
Purchaser has a claim with respect to the
funds in such accounts or a perfected
first security interest against any
collateral securing such funds that is
superior to claims of any other depositors
or creditors of the depository
institution with which such accounts are
maintained. In addition, solely with
respect to Mortgage Loans which are not
part of a securitization, "Eligible
Account" shall include any accounts that
meet the standards established from
time to time by FNMA for eligible custodial
depositories.
"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
5.15.
"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 trust account or accounts created and
maintained pursuant to Section 5.06 which
shall be entitled "Cendant Mortgage
Corporation, as servicer and custodian for
the Purchaser under the Mortgage Loan
Flow Purchase, Sale & and-Servicing
Agreement, dated as of March 27, 2001 (as
amended), and various mortgagors."
"Escrow
Payments": The amounts constituting ground rents, taxes,
assessments, water rates, 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.
"Event of
Default": Any one of the conditions or circumstances enumerated
in Section 10.01.
"FDIC": The
Federal Deposit Insurance Corporation or any successor
organization.
"FHLMC": The
Federal Home Loan Mortgage Corporation (also known as Freddie
Mac) or any successor organization.
"FHLMC Servicing Guide": The
FHLMC/Freddie Mac Sellers' and Servicers'
Guide in effect on and after the Funding
Date.
"Fidelity Bond":
A fidelity bond to be maintained by the Servicer pursuant
to Section 5.12.
"FNMA": The
Federal National Mortgage Association (also known as Fannie
Mae) or any successor organization.
"FNMA Guide":
The FNMA/Fannie Mae Selling Guide and the Servicing Guide,
collectively, in effect on and after the
Funding Date.
"Funding Date":
Each date (up to four per month) 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.
"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 (b) is not connected with
the applicable Mortgagor, the Sellers,
the Purchaser, or their
-3-
<PAGE>
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.
"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.
"Legal
Documents": Those documents, comprising part of the Mortgage
File,
set forth in Schedule B-1 of this
Agreement.
"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 lesser of the
Appraised Value of the related Mortgaged
Property or the purchase price.
"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.
"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.
"Monthly
Period": Initially, the period from the Funding Date through to
and including the first Record Date during
the term hereof, and, thereafter, the
period commencing on the day after each
Record Date during the term hereof and
ending on the next succeeding Record Date
during the term hereof (or, if
earlier, the date on which this Agreement
terminates).
"Mortgage": The
mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first lien
on an unsubordinated estate in fee
simple in real property securing 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-3 to
this
-4-
<PAGE>
Agreement and any additional documents
required to be added to the Mortgage File
pursuant to the related Purchase Price and
Terms Letter.
"Mortgage Loan":
Each individual mortgage 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. 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.
"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.
"Payment
Adjustment Date": The date on which Monthly Payments shall be
adjusted. 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.
"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:
(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;
-5-
<PAGE>
(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.
"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.
"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.
"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.
"Purchase Price
and Terms Letter": With respect to any pool of Mortgage
Loans purchased and sold on any Funding
Date, the letter agreement between the
Purchaser and Seller (including any
exhibits, schedules and attachments
thereto), setting forth the terms and
conditions of such transaction and
describing the Mortgage Loans to be
purchased by the Purchaser on such Funding
Date. A Purchase Price and Terms Letter may
relate to more than one pool of
Mortgage Loan to be purchased on one or
more Funding Dates hereunder.
"Purchaser":
Merrill Lynch Mortgage Capital Inc., 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."
"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.
"Qualified
Mortgage Insurer": American Guaranty Corporation, Commonwealth
Mortgage Assurance Company, General
Electric Mortgage Insurance Companies,
Mortgage Guaranty Insurance Corporation,
PMI
-6-
<PAGE>
Mortgage Insurance Company, Republic
Mortgage Insurance Company or United
Guaranty Residential Insurance
Corporation.
"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, Moody's Investors
Service, Inc., and Fitch, Inc.
"Record Date":
The close of business of the last Business Day of the month
immediately preceding 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.
"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 Funding
Date, or, if such 18th day is not a
Business Day, then the next 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 Property":
A Mortgaged Property acquired by the Servicer on behalf of
the Purchaser as described in Section
5.13.
"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, an amount equal to the Unpaid
Principal Balance of such Mortgage Loan at
the time of repurchase; plus (2) interest
on such Mortgage Loan at the
applicable Note Rate from the last date
through which interest has been paid and
distributed to the Purchaser hereunder to
the date of repurchase; minus (3) any
amounts received in respect of such
Defective Mortgage Loan which are being held
in the Collection Account for future
remittance.
"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.
"Sellers":
Cendant 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":
Cendant Mortgage Corporation, a New Jersey corporation.
"Servicer's
Mortgage File": The documents pertaining to a particular
Mortgage Loan which are specified on
Exhibit B-2 attached hereto and any
additional documents required to be
included or added to the "Servicer's
Mortgage File" pursuant to this
Agreement.
-7-
<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;
(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; or (vii) in the reasonable
judgment of the Servicer, the
occurrence, or likely occurrence within 60
days, of a payment default with
respect to such Mortgage Loan that is
likely to remain uncured by the related
Mortgagor within 60 days thereafter.
"Servicing Fee":
The annual fee, payable monthly to the Servicer out of the
interest portion of the Monthly Payment
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 Scheduled Principal
Balance of the Mortgage Loan and (ii) the
Servicing Fee Rate applicable to such
Mortgage Loan.
"Servicing Fee
Rate": (i) with respect to any ARM Loan, 0.375% per annum;
provided that, prior to the first Rate
Adjustment Date with respect to any such
Mortgage Loan, such rate may be, at the
Servicer's option, not less than 0.25%
per annum; and (ii) with respect to any
Mortgage Loan other than an ARM Loan,
0.25% per annum.
"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.
"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.
"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
-8-
<PAGE>
Loans set forth in the applicable Mortgage
Loan Schedule, subject to the terms
and conditions of this Agreement and the
related Purchase Price and Terms
Letter.
Purchaser will
purchase Mortgage Loan(s) from Seller, up to four (4) times
per month on such Funding Dates as may be
agreed upon by Purchaser and Seller.
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.
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. Upon Purchaser's request,
Seller shall make the Credit Documents
available 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
Cendant 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. 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 wire transfer of
immediately available funds, the Purchase
Price, together with interest, if any
accrued but unpaid by the Borrower from
the Cut-off Date through the day
immediately preceding the Funding Date,
according to the instructions to be
provided, respectively, by Cendant 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). 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 Seller after the Cut-off Date shall
belong to Seller.
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 separately from the other
books and records of the Seller. 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
of any such Mortgage Loan pursuant
to Section 3.04.
-9-
<PAGE>
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.
The sale of each
of its Mortgage Loans shall be reflected on the applicable
Seller's balance sheet and other financial
statements 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.
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. If
the Defect pertains to the Mortgage Note or
the Mortgage, then the applicable
Seller shall have a period of 45 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 45 day
period, such Seller shall have such
additional time as is reasonably determined
by the Purchaser to cure or correct
such Defect 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 90 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 90 day period, then
such Seller shall have such additional
time as is reasonably determined by the
Purchaser to cure or correct such Defect
provided such Seller has commenced curing
or correcting such Defect and is
diligently pursuing same. Cendant 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 Cendant
Mortgage shall repurchase such
Mortgage Loan by paying to the Purchaser
the Repurchase Price therefor in
accordance with Section 3.04(3).
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.
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 Cendant Mortgage, the Purchaser may, in
its sole discretion, then elect (by
providing written notice to Cendant
Mortgage) to treat such Mortgage Loan as a
Defective Mortgage Loan, whereupon Cendant
Mortgage shall repurchase such
Mortgage Loan by paying to the Purchaser
the Repurchase Price therefor in
accordance with Section 3.04(3). It is
understood that from time to
-10-
<PAGE>
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 collect the documents with its own
resources with the reasonable cost and
expense to be borne by the Seller. 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 to or
by a Seller shall be paid by the applicable
Seller.
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 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
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 prior to
the immediately preceding 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 5 Business 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,
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
-11-
<PAGE>
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; 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 Cendant Mortgage, service each Mortgage Loan in
accordance with
the terms of this Agreement.
(2) Due Authority. The Seller had the
fill 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, conditions or provisions oL 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. 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;
(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
-12-
<PAGE>
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. Cendant
Mortgage has delivered to the Purchaser
financial
statements as to its fiscal year ended December 31, 1999.
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 Cendant 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, 1999 and a copy
of
its Offering
Circular dated May 21, 1998 (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 Cendant 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;
(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;
and
(12) No Untrue Information. Neither this
Agreement nor any statement, report or
other agreement,
document or instrument famished or to be famished 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.
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:
-13-
<PAGE>
(1) Ability to Service. The Servicer
is an approved seller/servicer for FNMA
and FHLMC in
good standing 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
FNMA or FHLMC eligibility requirements or that would require
notification to
either FNMA or FHLMC;
(2) 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; and
(3) Collection Practices. The
collection practices used by the Servicer and any
prior servicer
with respect to each Mortgage Note and Mortgage have been in
all respects
legal, proper and prudent in the mortgage servicing business.
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 is 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;
(3) Owner of Record. The Mortgage
relating to such Mortgage Loan has been duly
recorded in 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. 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;
(5) No Outstanding Charges. There are
no delinquent taxes, insurance premiums,
assessments,
including assessments payable in future installments, or other
outstanding
charges affecting the Mortgaged Property related to such
Mortgage
Loan;
(6) Original Terms Unmodified. The
terms of the Mortgage Note and the Mortgage
related to such
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 are not
subject to any right of rescission, set-off 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 exercise of any right
thereunder,
render such Mortgage unenforceable, in whole or in part, or
subject to any
right of rescission, set-off or defense,
-14-
<PAGE>
including the
defense of usury and no such right of rescission, set-off or
defense has been
asserted with respect thereto;
(8) Hazard Insurance. (a) All
buildings upon the Mortgaged Property related to
such Mortgage
Loan are insured by an insurer acceptable to FNMA or FHLMC
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 either
Section 5.10 or
Section 5.11. 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 Servicer's Mortgage File a
certificate of
insurance showing that the individual unit that secures the
first mortgage
is covered under such policy. The 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.
The insurance policy 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 FNMA 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, equal credit opportunity or
disclosure laws)
applicable to the origination and servicing of such
Mortgage Loan
have been complied with in all material respects;
(10) No Satisfaction of Mortgage. The
Mortgage related to such Mortgage Loan has
not been
satisfied, canceled or subordinated, 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;
(11) 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;
(12) Validity of Documents. The Mortgage
Note and the Mortgage related to such
Mortgage 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);
(13) 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
-15-
<PAGE>
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;
(14) 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;
(15) 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 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;
(16) 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;
(17) Title Insurance. (a) Such Mortgage
Loan is covered by an ALTA lender's
title insurance
policy or short form title policy acceptable to FNMA and
FHLMC (or, in
jurisdictions where ALTA policies are not generally approved
for use, a
lender's title insurance policy acceptable to FNMA and FHLMC),
issued by a
title insurer acceptable to FNMA and FHLMC and qualified to do
business in the
jurisdiction where the related Mortgaged Property is
located,
insuring (subject to the exceptions contained in clauses
(11)(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 Seller or
Servicer 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, no prior holder of the related Mortgage
(including the
Seller) 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 FNMA and FHLMC;
(18) No Defaults. (a) There is no default,
breach, violation or event of
acceleration
existing under the Mortgage, the Mortgage Note, or any other
agreements,
documents, or instruments related to such Mortgage Loan; (b) to
the best of the
Seller's knowledge, 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 (1) not in default under any other
Mortgage Loan or
(2) 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; and (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 any
other agreements, documents, or instruments related to such
Mortgage
Loan;
-16-
<PAGE>
(19) 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;
(20) 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 FNMA Guide and the
FHLMC Selling
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;
(21) Origination; Payment Terms. 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 related Mortgage Note is payable
on the first day
of each month in arrears, in accordance with the payment
terms described
on the related Mortgage Loan Schedule. 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 last 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;
(22) 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;
(23) Prepayment Penalty. Except as noted
otherwise on the Mortgage Loan
Schedule, such
Mortgage Loan is not subject to any Prepayment Penalty;
(24) Mortgaged Property Undamaged No
Condemnation. As of the Funding Date, the
related
Mortgaged Property is free of material damage and waste and
there
is no proceeding
pending for the total or partial condemnation thereof;
(25) 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;
(26) Conformance With Underwriting
Standards. Such Mortgage Loan was
underwritten in
accordance with the Cendant Guide;
(27) Appraisal. The Mortgage File contains
an appraisal of the related Mortgaged
Property on
forms and with riders approved by FNMA and FHLMC, 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 FNMA and FHLMC 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;
-17-
<PAGE>
(28) Deeds of Trust. If the related
Mortgage constitutes a dee
