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Exhibit 4.2
ASSET BACKED FUNDING CORPORATION
as Purchaser
and
BANK OF AMERICA, NATIONAL ASSOCIATION
as Seller
MORTGAGE LOAN PURCHASE AGREEMENT
Fixed and Adjustable Rate Mortgage Loans
ABFC 2006-OPT3 Trust
Asset-Backed Certificates, Series 2006-OPT3
Dated as of October 1, 2006
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS...........................................................
Section 1.01.
Definitions...................................................
ARTICLE II SALE OF MORTGAGE LOANS; PAYMENT OF PURCHASE
PRICE....................
Section 2.01. Sale of Mortgage
Loans........................................
Section 2.02. Obligations of Seller Upon
Sale...............................
Section 2.03. Payment of Purchase Price for the Mortgage
Loans..............
Section 2.04. Regulation AB
Compliance......................................
ARTICLE III REPRESENTATIONS AND WARRANTIES; REMEDIES FOR
BREACH.................
Section 3.01. Representations and Warranties Relating to the
Mortgage Loans................................................
Section 3.02. Seller Representations and
Warranties.........................
ARTICLE IV SELLER'S
COVENANTS...................................................
Section 4.01. Covenants of the
Seller.......................................
ARTICLE V
TERMINATION...........................................................
Section 5.01.
Termination...................................................
ARTICLE VI MISCELLANEOUS
PROVISIONS.............................................
Section 6.01.
Amendment.....................................................
Section 6.02. Governing
Law.................................................
Section 6.03.
Notices.......................................................
Section 6.04. Severability of
Provisions....................................
Section 6.05.
Counterparts..................................................
Section 6.06. Further
Agreements............................................
Section 6.07. Intention of the
Parties......................................
Section 6.08. Successors and Assigns; Assignment of this
Agreement..........
Section 6.09.
Survival......................................................
Schedule I Mortgage Loan Schedule
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MORTGAGE LOAN PURCHASE AGREEMENT, dated as of October 1, 2006
(the
"Agreement"), between BANK OF AMERICA, NATIONAL ASSOCIATION ("Bank
of America"
or the "Seller") and ASSET BACKED FUNDING CORPORATION (the
"Purchaser").
W I T N E S S E T H:
WHEREAS, pursuant to the Flow Sale and Servicing Agreement (the
"Sale and
Servicing Agreement"), dated as of July 28, 2006, by and among Bank
of America,
as the purchaser, Option One Mortgage Corporation, as company and
seller
("Option One"), and Option One Owner Trust 2001-1A, Option One
Owner Trust
2001-1B, Option One Owner Trust 2001-2, Option One Owner Trust
2002-3, Option
One Owner Trust 2003-4, Option One Owner Trust 2003-5, Option One
Owner Trust
2005-6, Option One Owner Trust 2005-7, Option One Owner Trust
2005-8 and Option
One Owner Trust 2005-9 (collectively, the "Option One Owner
Trusts"), as
sellers, and the related Memorandum of Sale, dated September 27,
2006 (the
"Memorandum of Sale"), among Bank of America, Option One and the
Option One
Owner Trusts, the Seller is the owner of either the notes or other
evidence of
indebtedness (the "Mortgage Notes") or other evidence of ownership
so indicated
on Schedule I hereto, and the other documents or instruments
constituting the
Mortgage File (collectively, the "Mortgage Loans");
WHEREAS, the Seller, as of the date hereof, owns the mortgages
(the
"Mortgages") on the related real properties (the "Mortgaged
Properties")
securing such Mortgage Loans, including rights (a) to any property
acquired by
foreclosure or deed in lieu of foreclosure or otherwise, and (b) to
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 and the Purchaser purchase the Mortgage Loans from
the Seller
pursuant to the terms of this Agreement; and
WHEREAS, pursuant to the terms of a Pooling and Servicing
Agreement, dated
as of October 1, 2006 (the "Pooling and Servicing Agreement"),
among the
Purchaser, as depositor, Option One, as servicer, and Wells Fargo
Bank, N.A., as
trustee (the "Trustee"), the Purchaser will convey the Mortgage
Loans to ABFC
2006-OPT3 Trust.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.
All capitalized terms used but not defined herein shall have the
meanings
assigned thereto in the Pooling and Servicing Agreement.
ARTICLE II
SALE OF MORTGAGE LOANS; PAYMENT OF PURCHASE PRICE
Section 2.01. Sale of Mortgage Loans.
The Seller does hereby agree to and does hereby sell, assign, set
over,
and otherwise convey to the Purchaser, without recourse, on the
Closing Date (i)
all of its right, title and interest in and to each Mortgage Loan
and the
related Cut-off Date Principal Balance thereof, including any
Related Documents;
(ii) all payments on or collections in respect of the Mortgage
Loans due after
the Cut-off Date; (iii) property which secured such Mortgage Loan
and which has
been acquired by foreclosure or deed in lieu of foreclosure; (iv)
its interest
in any insurance policies in respect of the Mortgage Loans; (v) the
rights of
the Seller under the Consulting Agreement; and (vii) all proceeds
of any of the
foregoing.
Section 2.02. Obligations of Seller Upon Sale.
In connection with any transfer pursuant to Section 2.01 hereof,
the
Seller further agrees, at its own expense, on or prior to the
Closing Date, (x)
to indicate in its books and records that the Mortgage Loans have
been sold to
the Purchaser pursuant to this Agreement and (y) to deliver to the
Purchaser and
the Trustee a computer file containing a true and complete list of
all the
Mortgage Loans specifying, among other things, for each Mortgage
Loan, as of the
Cut-off Date, its account number and Cut-off Date Principal
Balance. Such file
(the "Mortgage Loan Schedule"), which is set forth on Exhibit D to
the Pooling
and Servicing Agreement, 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 such transfer and assignment of the Mortgage
Loans, the
Seller shall, on behalf of the Purchaser, deliver and deposit with
the Trustee,
the following documents or instruments (with respect to each
Mortgage Loan, a
"Mortgage File") with respect to each Mortgage Loan so transferred
and assigned:
(i) the original Mortgage Note, including any riders thereto,
endorsed in blank, or with respect to any lost Mortgage Note, a
Lost Note
Affidavit, together with a copy of the related Mortgage Note;
(ii) the original Mortgage with evidence of recording thereon
including any riders thereto, and the original recorded power of
attorney,
if the Mortgage was executed pursuant to a power of attorney,
with
evidence of recording thereon or, if such Mortgage or power of
attorney
has been submitted for recording but has not been returned from
the
applicable public recording office, has been lost or is not
otherwise
available, a copy of such Mortgage or power of attorney, as the
case may
be, certified to be a true and complete copy of the original
submitted for
recording;
(iii) an original Assignment of Mortgage, in form and substance
acceptable for recording. The Mortgage shall be assigned in
blank;
(iv) an original copy of any intervening assignment of Mortgage
showing a complete chain of assignments;
(v) the original or a certified copy of the lender's title
insurance
policy; and
(vi) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any.
If any of the documents referred to in Section 2.02(ii), (iii) or
(iv)
above has as of the Closing Date been submitted for recording but
either (x) has
not been returned from the applicable public recording office or
(y) has been
lost or such public recording office has retained the original of
such document,
the obligations of the Seller to deliver such documents shall be
deemed to be
satisfied upon (1) delivery to the Trustee no later than the
Closing Date, of a
copy of each such document certified by Option One, the Seller,
title company,
escrow agent or closing attorney in the case of (x) above or the
applicable
public recording office in the case of (y) above to be a true and
complete copy
of the original that was submitted for recording and (2) if such
copy is
certified by the Seller, delivery to the Trustee, promptly upon
receipt thereof
of either the original or a copy of such document certified by the
applicable
public recording office to be a true and complete copy of the
original. If the
original lender's title insurance policy was not delivered pursuant
to Section
2.02(v) above, the Seller shall deliver or cause to be delivered to
the Trustee,
a written commitment or interim binder or preliminary report of
title issued by
the title insurance or escrow company, with the original to be
delivered to the
Trustee, promptly upon receipt thereof. The Seller shall deliver or
cause to be
delivered to the Trustee promptly upon receipt thereof any other
documents
constituting a part of a Mortgage File received with respect to any
Mortgage
Loan, including, but not limited to, any original documents
evidencing an
assumption or modification of any Mortgage Loan. The Assignments
referred to in
Section 2.02(iii) above are not required to be recorded by the
Seller.
Upon discovery or receipt of notice of any materially defective
document
in, or that a document is missing from, a Mortgage File, or is
materially
mutilated, damaged or torn, the Seller shall have 120 days to cure
such defect
or deliver such missing document to the Trustee (or 90 days after
the earlier of
Seller's discovery or receipt of notification if such defect would
cause the
related Mortgage Loan not to be a "qualified mortgage" for REMIC
purposes) or
150 days following the Closing Date, in the case of missing
Mortgages or
Assignments of Mortgage, or deliver such missing document to the
Trustee. If the
Seller does not cure such defect or deliver such missing document
within such
time period, the Seller shall either repurchase or substitute for
such Mortgage
Loan in accordance with Section 2.03 of the Pooling and Servicing
Agreement.
It is understood and agreed that the obligations of the Seller set
forth
in this Section 2.02 to cure, repurchase or substitute for a
defective Mortgage
Loan constitute the sole remedies of the Purchaser respecting a
defective or
missing document.
The Purchaser hereby acknowledges its acceptance of all right,
title and
interest to the Mortgage Loans and other property, now existing and
hereafter
created, conveyed to it pursuant to Section 2.01.
The parties hereto intend that the transaction set forth herein be
a sale
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 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 Seller and the Purchaser shall, to the
extent
consistent with this Agreement, take such actions as may be
necessary to ensure
that, if this Agreement were deemed to create a security interest
in the
Mortgage Loans, such security interest would be deemed to be a
perfected
security interest of first priority under applicable law and will
be maintained
as such throughout the term of the Pooling and Servicing
Agreement.
Section 2.03. Payment of Purchase Price for the Mortgage Loans.
In consideration of the sale of the Mortgage Loans from the Seller
to the
Purchaser on the Closing Date, the Purchaser agrees (i) to pay to
the Seller on
the Closing Date by transfer of immediately available funds, as
directed by the
Seller, an amount equal to $[_______], and (ii) to deliver to or at
the
direction of the Seller on the Closing Date, a 100% interest in
each of the
Class R Certificates and the Class R-X Certificates (clauses (i)
and (ii)
together, the "Purchase Price"). The Seller shall pay, and be
billed directly
for, all reasonable expenses incurred by the Purchaser in
connection with the
issuance of the Certificates, including, without limitation,
printing fees
incurred in connection with the prospectus relating to the
Certificates, blue
sky registration fees and expenses, fees and reasonable expenses of
Purchaser's
counsel, fees of the rating agencies requested to rate the
Certificates,
accountant's fees and expenses and the fees and expenses of the
Trustee and
other out-of-pocket costs, if any.
Section 2.04. Regulation AB Compliance.
For so long as the Trustee is required to file any report with
the
Commission pursuant to Section 3.31 of the Pooling and Servicing
Agreement, the
Seller shall furnish to the Trustee, on each Distribution Date,
the
"significance estimate" of the Interest Rate Swap Agreement, in
each case
calculated in accordance with Item 1115 of Regulation AB as of such
Distribution
Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH
Section 3.01. Representations and Warranties Relating to the
Mortgage Loans.
The representations and warranties with respect to the Mortgage
Loans in
the Sale and Servicing Agreement were made as of the dates of the
Memorandum of
Sale. The Seller's right, title and interest in such
representations and
warranties and the remedies in connection therewith have been
assigned to the
Purchaser pursuant Section 2.01 hereof. To the extent that any
fact, condition
or event with respect to a Mortgage Loan constitutes a breach of
both (i) a
representation or warranty of Option One under the Sale and
Servicing Agreement
and (ii) a representation or warranty of the Seller under this
Agreement (other
than Section 3.01(xi) and (xix) below), the only right or remedy of
the
Purchaser shall be the right to enforce the obligations of Option
One under any
applicable representation or warranty made by it. The Purchaser
acknowledges and
agrees that the representations and warranties of the Seller in
this Section
3.01 are applicable only to facts, conditions or events that do not
constitute a
breach of any representation or warranty made by Option One in the
Sale and
Servicing Agreement. The Seller shall have no obligation or
liability with
respect to any breach of a representation or warranty made by it
with respect to
the Mortgage Loans (other than the representations and warranties
made in
Sections 3.01(xi) and (xix) below) if the fact, condition or event
constituting
such breach also constitutes a breach of a representation or
warranty made by
Option One in the Transfer Agreement, without regard to whether
Option One
fulfills its contractual obligations in respect of such
representation or
warranty. If, however, Option One fails to reimburse the Trustee
for any costs
or damages incurred by the Trust in connection with a breach of
Option One's
representations and warranties with respect to abusive or predatory
lending laws
set forth in Section 3.02 of the Underlying Sale Agreement (such
amount, the
"Reimbursement Amount"), the Seller shall pay the Reimbursement
Amount to the
Trust. The Reimbursement Amount shall be delivered to Option One
for deposit
into the Collection Account within ten (10) days from the date the
Seller was
notified by the Trustee of the amount of such costs and damages.
Subject to the
foregoing, the Seller represents and warrants upon delivery of the
Mortgage
Loans to the Purchaser hereunder, as to each, that:
(i) The information set forth with respect to the Mortgage Loans
on
the Mortgage Loan Schedule attached hereto as Schedule I provides
an
accurate listing of the Mortgage Loans, and the information with
respect
to each Mortgage Loan on the Mortgage Loan Schedule is true and
correct in
all material respects at the date or dates on which such
information is
given;
(ii) No Mortgage Loan was 30 days or more contractually
delinquent
as of the Cut-off Date. The Seller has not waived any default,
breach,
violation or event of acceleration, and the Seller has not taken
any
action to waive any default, breach, violation or event of
acceleration,
with respect to any Mortgage Loan;
(iii) There are no delinquent taxes, assessments that could become
a
lien prior to the related Mortgage or insurance premiums affecting
the
related Mortgaged Property;
(iv) Each Mortgage has not been satisfied, canceled, subordinated
or
rescinded, in whole or in part, and the related 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
satisfaction,
cancellation, subordination, rescission or release;
(v) Other than any Mortgage Loan that is less than 30 days
contractually delinquent as of the Cut-off Date, there is no
material
default, breach, violation or event of acceleration existing under
any
Mortgage or the related Mortgage Note and no event which, with the
passage
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