Exhibit 99.1
FIELDSTONE MORTGAGE
INVESTMENT CORPORATION,
as
Purchaser,
and
FIELDSTONE INVESTMENT
CORPORATION,
as
Seller,
MORTGAGE LOAN PURCHASE
AGREEMENT
Dated as of
[ ],
2005
Adjustable Rate Mortgage Loans
MORTGAGE LOAN PURCHASE AGREEMENT (the
“Agreement”), dated as of
[ ],
2005, between FIELDSTONE INVESTMENT CORPORATION (the
“Seller”) and FIELDSTONE MORTGAGE INVESTMENT
CORPORATION (the “Purchaser” or the
“Depositor”).
W
I
T N E S S E T
H
WHEREAS, the Seller is the owner of the notes
or other evidence of indebtedness (the “Mortgage
Notes”) so indicated on Schedule I hereto referred to
below, and Related Documents (as defined below) (collectively, the
“Mortgage Loans”);
WHEREAS, the Seller as of the date hereof owns
the mortgages (the “Mortgages”) on the properties (the
“Mortgaged Properties”) securing such Mortgage Loans,
including rights to (a) any property acquired by foreclosure or
deed in lieu of foreclosure or otherwise and (b) the proceeds of
any insurance policies covering the Mortgage Loans or the Mortgaged
Properties or the obligors on the Mortgage Loans;
WHEREAS, the parties hereto desire that the
Seller sell the Mortgage Loans to the Purchaser pursuant to the
terms of this Agreement;
WHEREAS, the Purchaser will assign to
Fieldstone Mortgage Investment Trust, Series 2004-5 (the
“Trust” or the “Issuer”) all of its rights
against the Seller pursuant to this Agreement as described herein
pursuant to the terms of a Transfer and Servicing Agreement dated
as of November 1, 2004 (the “Transfer and Servicing
Agreement”) among the Purchaser, the Trust,
[ ],
as master servicer and trust administrator,
[ ],
as indenture trustee, Fieldstone Servicing Corp., as servicer, the
Seller, and
[ ],
as subservicer; and
WHEREAS, the Trust will pledge to the Indenture
Trustee all of its rights against the Seller pursuant to this
Agreement and the Transfer and Servicing Agreement as described
herein and therein, respectively, pursuant to the terms of an
Indenture dated as of
[ ],
2005 (the “Indenture”) among the Trust, the Trust
Administrator and the Indenture Trustee.
NOW, THEREFORE, in consideration of the mutual
covenants herein contained, the parties hereto agree as
follows:
SECTION 1.1.
Definitions . All capitalized terms used but not
defined herein shall have the meanings assigned thereto in the
Transfer and Servicing Agreement.
SECTION 2.1.
Sale of Mortgage Loans . The Seller, concurrently with
the execution and delivery of this Agreement, does hereby sell,
assign, set over, and otherwise convey to the
Purchaser, without recourse, all of its right,
title and interest in (other than any servicing rights relating to
the Mortgage Loans), to and under the following, whether now
existing or hereafter acquired and wherever located: (i) the
Mortgage Loans, including the related Cut-off Date Balance, all
payments in respect of the Mortgage Loans received after the
Cut-off Date (exclusive of payments in respect of principal and
interest on the delinquent Mortgage Loans due prior to the Cut-off
Date and received thereafter); (ii) property which secured a
Mortgage Loan and which has been acquired by foreclosure or deed in
lieu of foreclosure; (iii) the interest of the Seller in any
insurance policies in respect of the Mortgage Loans; (iv) all
rights under any guaranty and/or additional security agreement
executed in connection with a Mortgage Loan; and (v) all proceeds
of the foregoing.
SECTION 2.2.
Obligations of Seller Upon Sale . In connection with
any transfer pursuant to Section 2.1 hereof, the Seller
further agrees, at its own expense, on or prior to the Closing
Date, (a) to indicate in its books and records, other than for
accounting and federal income tax purposes, that the Mortgage Loans
have been sold to the Owner Trustee, as assignee of the Purchaser
pursuant to this Agreement and (b) to deliver to the Purchaser a
computer file containing a true and complete list of all such
Mortgage Loans specifying for each such Mortgage Loan, as of the
related Cut-off Date, (i) its account number and (ii) the Cut-off
Date Balance. Such file shall also be marked as
Schedule I to this Agreement and is hereby incorporated into
and made a part of this Agreement.
In
connection with any conveyance by the Seller, the Seller shall on
behalf of the Purchaser, the Depositor and the Issuer deliver to,
and deposit with the Custodian, as custodian on behalf of the
Indenture Trustee, as assignee of the Purchaser, on or before the
Closing Date (except as noted below) the documents or instruments
with respect to each Mortgage Loan (collectively, the
“Mortgage File” or, other than the Mortgage Note, the
“Related Documents”) listed in Section 2.01(b) of
the Transfer and Servicing Agreement.
The
parties hereto intend that the transaction set forth herein be a
sale for all purposes other than accounting and federal income tax
purposes by the Seller to the Purchaser of all the Seller’s
right, title and interest in and to the Mortgage Loans and other
property described above. In the event the transaction set
forth herein is deemed not to be a sale, the Seller hereby grants
to the Purchaser a security interest in all of the Seller’s
right, title and interest in, to and under the Mortgage Loans and
the Related Documents and other property described above, whether
now existing or hereafter created, to secure all of the
Seller’s obligations hereunder; and this Agreement shall
constitute a security agreement under applicable law. The
parties hereto intend that for federal income tax purposes the
transaction set forth herein be treated not as a sale, but as
though the Seller retained the tax ownership of the Mortgage Loans
through the Trust as a disregarded entity with the Seller as the
borrower under the Notes.
SECTION 2.3.
Payment of Purchase Price for the Mortgage Loans . In
consideration of the sale of the Mortgage Loans from the Seller to
the Purchaser and the payment of [the Expense Reimbursement Amount
(as defined below)] [Note:
Is this still required for an affiliated depositor?] on
the Closing Date, the Purchaser agrees to pay to the Seller on the
Closing Date by transfer of immediately available funds, an amount
equal to
$[ ]
(the “Purchase Price”). [In addition, the Seller
shall pay to the Purchaser an expense reimbursement amount of
$[ ]
(the “Expense Reimbursement Amount”),] and to transfer
to the Seller or one of
2
its
Affiliates on the Closing Date the Ownership Certificate.
[The Expense Reimbursement Amount shall reimburse the Purchaser
for, among other things, the current Securities and Exchange
Commission registration statement fees for the amount of registered
securities issued on the Closing Date.] The Seller shall pay,
and be billed directly for, all expenses incurred by the Purchaser
in connection with the issuance of the Notes, including, without
limitation, printing fees incurred in connection with the
prospectus relating to the Notes, blue sky registration fees and
expenses, fees and expenses of [Counsel to the Issuer], fees of the
rating agencies requested to rate the Notes, accountant’s
fees and expenses, Custodian fees, loan level due diligence fees,
the fees and expenses of the Indenture Trustee and the Owner
Trustee and other out-of-pocket costs, if any. [If the
Purchaser shall determine that the Expense Reimbursement Amount is
not sufficient to reimburse the Purchaser for all expenses incurred
by it that are subject to reimbursement by the Seller hereunder as
described above, the Seller shall promptly reimburse the Purchaser
for such additional amounts upon notice by the Purchaser to the
Seller. If the Purchaser shall determine that the Expense
Reimbursement Amount exceeds the amount necessary to reimburse the
Purchaser for all expenses incurred by it that are subject to
reimbursement by the Seller hereunder as described above, the
Purchaser shall reimburse the Seller for such additional
amounts.]
SECTION 3.1.
Seller Representations and Warranties . The Seller
represents and warrants to the Purchaser as of the Closing Date
that:
(i)
the Seller is a Maryland corporation, duly organized validly
existing and in good standing under the laws of the State of
Maryland, and has the corporate power to own its assets and to
transact the business in which it is currently engaged. The
Seller is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction in which the character
of the business transacted by it or any properties owned or leased
by it requires such qualification and in which the failure so to
qualify would have a material adverse effect on the business,
properties, assets, or condition (financial or other) of the
Seller;
(ii)
the Seller has the corporate power and authority to make, execute,
deliver and perform this Agreement and all of the transactions
contemplated under the Agreement, including the power, authority
and capacity to hold and sell each Mortgage Loan, and has taken all
necessary corporate action to authorize the execution, delivery and
performance of this Agreement. When executed and delivered,
this Agreement will constitute the legal, valid and binding
obligation of the Seller enforceable in accordance with its terms,
except as enforcement of such terms may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of
creditors’ rights generally and by the availability of
equitable remedies;
(iii)
the Seller is not required to obtain the consent of any other party
or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority,
bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement, except
for such consent,
3
license, approval or authorization, or
registration or declaration, as shall have been obtained or filed,
as the case may be, prior to the Closing Date;
(iv)
it is not in violation of, and the execution, delivery and
performance of this Agreement by the Seller will not violate, any
provision of any existing law or regulation or any order or decree
of any court or any order or decree of any federal, state or
municipal governmental agency applicable to the Seller or any
provision of the articles of incorporation or bylaws of the Seller,
or constitute a material breach of any mortgage, indenture,
contract or other agreement to which the Seller is a party or by
which the Seller may be bound;
(v)
no litigation or administrative proceeding of or before any court,
tribunal or governmental body is currently pending, or to the
knowledge of the Seller threatened, against the Seller or any of
its properties or with respect to this Agreement which in the
opinion of the Seller has a reasonable likelihood of resulting in a
material adverse effect on the transactions contemplated by this
Agreement;
(vi)
the Seller has been organized in conformity with the requirements
for qualification as a REIT; the Seller has filed with its federal
income tax return for its taxable year ended December 31,
2003, an election to be treated as a REIT for federal income tax
purposes; and the Seller currently qualifies as, and it proposes to
operate in a manner that will enable it to continue to qualify as a
REIT;
(vii)
the Mortgage Loans are not being transferred by the Seller with any
intent to hinder, delay or defraud any creditors of the
Seller;
(viii)
immediately prior to the delivery of each Mortgage Loan, the
related Mortgage was held of record solely for the account of the
Seller and the Seller was the owner of the related Mortgage Note,
in the event that it retains record title, it shall retain such
record title to each Mortgage, each related Mortgage Note and the
related Mortgage Files with respect thereto in trust for the
Purchaser or its assignee as the owner thereof and only for the
purpose of servicing or supervising the servicing of each such
Mortgage Loan;
(ix)
the consummation of the transactions contemplated by this Agreement
are in the Seller’s ordinary course of business, and the
transfer, assignment and conveyance of the Mortgage Notes and the
Mortgages by it pursuant to this Agreement are not subject to the
bulk transfer or any similar statutory provisions; and
(x)
the written statements, reports and other documents prepared and
furnished or to be prepared and furnished by the Seller pursuant to
this Agreement or in connection with the transactions contemplated
hereby taken in the aggregate do not contain any untrue statement
of material fact or omit to state a material fact necessary to make
the statements contained therein not misleading.
It
is understood and agreed that the representations and warranties
set forth in this Section 3.1 shall survive the sale and
assignment of the Mortgage Loans to the Purchaser.
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SECTION 3.2.
Seller Representations and Warranties Relating to the Mortgage
Loans . The Seller represents and warrants to the
Purchaser as of the Closing Date that:
(i)
the information set forth in the Mortgage Loan
Schedule relating to the Mortgage Loans is true and correct in
all material respects as of the related Cut-off Date;
(ii)
as of the Closing Date, the Mortgage File relating to each Mortgage
Loan contains each of the documents and instruments specified to be
included therein;
(iii)
the Seller has received a written acknowledgment from the Custodian
that the Custodian is acting solely as agent of the Indenture
Trustee;
(iv)
each Mortgaged Property is improved by a one- to four-family single
family residential dwelling. No Mortgaged Property is a
mobile home. No Mortgaged Property securing any Mortgage
Loans is a manufactured home;
(v)
each Mortgage Loan is a closed-end mortgage loan and all amounts
due under the related Mortgage Note have been advanced. Each
Mortgage Loan has an original term to maturity from the date on
which the first Scheduled Payment is due of not more than 30
years. Each mortgage note calls for a scheduled payment of
principal and interest that, once it enters its amortization
period, is sufficient to fully amortize the original Principal
Balance of the Mortgage Loan in equal monthly installments by its
maturity date;
(vi)
each Mortgage Note in respect of a Mortgage Loan provides for level
monthly payments sufficient to fully amortize the principal balance
of such Mortgage Note on its maturity date, except for no more than
[ ]% of the
Mortgage Loans (by Cut-off Date Balance) which provide for payments
of interest only during the [first] five years of the Mortgage Loan
before adjusting to a fully amortizing Mortgage Loan over the
remaining term;
(vii)
each lien that attached to a Mortgage Loan immediately prior to the
transfer and assignment contemplated in this Agreement has been
released and immediately prior to the transfer and assignment
contemplated in this Agreement, the Seller held good, marketable
and indefeasible title to, and was the sole owner and holder of,
each Mortgage Loan subject to no liens; the Seller has full right
and authority under all governmental and regulatory bodies having
jurisdiction over the Seller, subject to no interest or
participation of, or agreement with, any party, to sell and assign
the same pursuant to this Agreement; and immediately upon the
transfer and assignment therein contemplated, the Seller shall have
transferred all of its right, title and interest in and to each
Mortgage Loan to the Purchaser;
(viii)
the Mortgage Notes constitute “instruments” within the
meaning of the New York UCC;
(ix)
the Seller has not authorized the filing of and is not aware of any
financing statements against the Seller that include a description
of collateral covering the Mortgage Loans other than any financing
statement relating to the security interest
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granted to the Purchaser under this
Agreement. The Seller is not aware of any judgment or tax
lien filings against it;
(x)
except in the case of Cooperative Loans, if any, each Mortgage
requires all buildings or other improvements on the related
Mortgaged Property to be insured by a generally acceptable insurer
against loss by fire, hazards of extended coverage and such other
hazards as are customary in the area where the related Mortgaged
Property is located pursuant to insurance policies conforming to
the requirements of the guidelines of FNMA or FHLMC. If upon
origination of the Mortgage Loan, the Mortgaged Property was in an
area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards (and such flood
insurance has been made available) a flood insurance policy meeting
the requirements of the current guidelines of the Federal Flood
Insurance Administration is in effect which policy conforms to the
requirements of the current guidelines of the Federal Flood
Insurance Administration. Each Mortgage obligates the related
Mortgagor thereunder to maintain the hazard insurance policy at the
Mortgagor’s cost and expense, and on the Mortgagor’s
failure to do so, authorizes the holder of the Mortgage to obtain
and maintain such insurance at such Mortgagor’s cost and
expense, and to seek reimbursement therefor from the
Mortgagor. Where required by state law or regulation, each
Mortgagor has been given an opportunity to choose the carrier of
the required hazard insurance; provided the policy is not a
“master” or “blanket” hazard insurance
policy covering the common facilities of a planned unit
development. The hazard insurance policy is the valid and
binding obligation of the insurer, is in full force and effect, and
will be in full force and effect and inure to the benefit of the
Purchaser upon the consummation of the transactions contemplated by
this Agreement;
(xi)
each Mortgage has not been satisfied, cancelled, subordinated or
rescinded, in whole or in part, and (a) the Mortgaged Property has
not been released from the lien of the Mortgage, in whole or in
part, nor has any instrument been executed that would effect any
such release, cancellation, subordination or rescission and (b) no
Mortgagor has been released, in whole or in part, from its
obligations under the related Mortgage Note;
(xii)
each Mortgage evidences a valid, subsisting, enforceable and
perfected first lien on the related Mortgaged Property. The
lien of the Mortgage is subject only to: (1) liens of current real
property taxes and assessments not yet due and payable and, if the
related Mortgaged Property is a condominium unit, any lien for
common charges permitted by statute, (2) covenants, conditions and
restrictions, rights of way, easements and other matters of public
record as of the date of recording of such Mortgage acceptable to
mortgage lending institutions in the area in which the related
Mortgaged Property is located and specifically referred to in the
lender’s Title Insurance Policy or attorney’s opinion
of title and abstract of title delivered to the originator of such
Mortgage Loan, and (3) such 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 the Mortgage. Any security
agreement, chattel mortgage or equivalent document related to, and
delivered to the Indenture Trustee in connection with, a Mortgage
Loan establishes a valid, subsisting and enforceable first
6
lien on the property described therein and the
Purchaser has full right to sell and assign the same to the
Indenture Trustee;
(xiii)
except with respect to liens released immediately prior to the
transfer herein contemplated, each Mortgage Note and related
Mortgage have not been assigned or pledged and immediately prior to
the transfer and assignment herein contemplated, the Seller was the
sole owner and holder of, each Mortgage Loan subject to no liens,
charges, mortgages, claims, participation interests, equities,
pledges or security interests of any nature, encumbrances or rights
of others (collectively, a “Lien”); the Seller has full
right and authority under all governmental and regulatory bodies
having jurisdiction over the Seller, subject to no interest or
participation of, or agreement with, any party, to sell and assign
the same pursuant to this Agreement; and immediately upon the
transfer and assignment herein contemplated, the Seller shall have
transferred all of its right, title and interest in and to each
Mortgage Loan to the Purchaser (or its assignee);
(xiv)
no Mortgage Loan was more than one calendar month delinquent as of
the Cut-off Date; the Seller has not advanced funds to, or induced,
solicited or knowingly received any advance of funds from a party
other than the owner of the Mortgaged Property subject to the
Mortgage, directly or indirectly, for the payment of any amount
required by the Mortgage Loan;
(xv)
there is no delinquent tax, fee or assessment lien on any Mortgaged
Property, and each Mortgaged Property is free of material damage
and is in good repair;
(xvi)
no Mortgage Loan is 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 any Mortgage Note or Mortgage,
or the exercise of any right thereunder, render either the Mortgage
Note or the Mortgage unenforceable in whole or in part, or subject
to any right of rescission, set-off, counterclaim or defense,
including the defense of usury, and no such right of rescission,
set-off, counterclaim or defense has been asserted with respect
thereto;
(xvii)
none of the Mortgage Loans are retail installment contracts for
goods or services or are home improvement loans for goods or
services, which would be either “consumer credit
contracts” or “purchase money loans” as such
terms are defined in 16 C.F.R. § 433.1;
(xviii)
no Mortgagor has or will have a claim or defense against the Seller
or any assignor or assignee of the Seller under any express or
implied warranty with respect to goods or services provided in
connection with any Mortgage Loan;
(xix)
the Mortgage, the Mortgage Note and the other Related Documents
contain the entire agreement of the parties and all obligations of
the Seller under the related Mortgage Loan, and no other agreement
defines, modifies or expands the obligations of the Seller under
the Mortgage Loan;
(xx)
there is no mechanics’ lien or claim for work, labor or
material affecting any Mortgaged Property which is or may be a lien
prior to, or equal or coordinate with,
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the
lien of the related Mortgage, and no rights are outstanding that
under law could give rise to such a lien except those which are
insured against by the title insurance policy referred to in
Section 3.2(xii) below;
(xxi)
each Mortgage Loan at the time it was made complied with, and each
Mortgage Loan at all times was serviced in compliance with, in each
case, in all material respects, applicable local, state and federal
laws and regulations, including, without limitation, usury, equal
credit opportunity, consumer credit, truth-in-lending, disclosure
laws and predatory and abusive lending laws;
(xxii)
with respect to each Mortgage Loan, either (a) a lender’s
title insurance policy, issued in standard American Land Title
Association or California Land Title Association form, or other
form acceptable in a particular jurisdiction, by a title insurance
company authorized to transact business in the state in which the
related Mortgaged Property is situated in an amount at least equal
to the original principal balance of such Mortgage Loan insuring
the mortgagee’s interest under the related Mortgage Loan as
the holder of a valid first mortgage lien of record on the real
property described in the Mortgage, subject only to the exceptions
of the character referred to in Section 3.2(xii) above, was
valid and in full force and effect on the date of the origination
of such Mortgage Loan and as of the Closing Date or (b) an
attorney’s opinion of title was prepared in connection with
the origination of such Mortgage Loan;
(xxiii)
the improvements upon each Mortgaged Property are covered by a
valid and existing hazard insurance policy with a generally
acceptable carrier that provides for fire and extended coverage
representing coverage described in the Section of the Transfer
and Servicing Agreement entitled “Standard Hazard and Flood
Insurance Policies”;
(xxiv)
a flood insurance policy is in effect with respect to each
Mortgaged Property with a generally acceptable carrier in an amount
representing coverage described in the Section of the Transfer
and Servicing Agreement entitled “Standard Hazard and Flood
Insurance Policies”, if and to the extent required by such
Section of the Transfer and Servicing Agreement;
(xxv)
each Mortgage Note and the related Mortgage are genuine, and each
Mortgage and Mortgage Note is the legal, valid and binding
obligation of the related Mortgagor and is enforceable in
accordance with its terms, except only as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors’
rights generally and by general principles of equity (whether
considered in a proceeding or action in equity or at law), and all
parties to each Mortgage Loan and the Mortgagee had full legal
capacity to execute all Mortgage Loan documents and to convey the
estate therein purported to be conveyed. The Mortgagor is a
natural person who is a party to the Mortgage Note and the Mortgage
in an individual capacity, and not in the capacity of a trustee or
otherwise;
(xxvi)
no more than [ ]% of the
Mortgage Loa
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