Exhibit 10.2(a)
EXECUTION COPY
BANK OF AMERICA, NATIONAL ASSOCIATION
PURCHASER
AND
OPTEUM FINANCIAL SERVICES, LLC
COMPANY
MORTGAGE LOAN SALE AND SERVICING AGREEMENT
DATED AS SEPTEMBER 1, 2006
RESIDENTIAL MORTGAGE LOANS
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
.....................................................
1
ARTICLE II AGREEMENT TO PURCHASE; PURCHASE PRICE; CONVEYANCE OF
MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES; MAINTENANCE OF
SERVICING FILES; BOOKS AND RECORDS; CUSTODIAL AGREEMENT;
DELIVERY OF DOCUMENTS; CLOSING CONDITIONS ......................
15
Section 2.01
Agreement to Purchase; Purchase Price.....................
15
Section 2.02
Books and Records; Transfers of Mortgage Loans............
16
Section 2.03
Custodial Agreement; Delivery of Documents................
17
Section 2.04
Quality Control Procedures................................
19
Section 2.05
Closing Conditions........................................
19
ARTICLE III REPRESENTATIONS AND WARRANTIES REMEDIES AND
BREACH.............
20
Section 3.01
Company Representations and Warranties....................
20
Section 3.02
Representations and Warranties Regarding Individual
Mortgage Loans............................................
24
Section 3.03
Repurchase................................................
32
Section 3.04
Repurchase of Mortgage Loans With Early Payment
Defaults..................................................
34
Section 3.05
Purchase Price Protection.................................
34
Section 3.06
Representations and Warranties of the Purchaser...........
34
ARTICLE IV ADMINISTRATION AND SERVICING OF MORTGAGE
LOANS..................
36
Section 4.01
Company to Act as Servicer................................
36
Section 4.02
Liquidation of Mortgage Loans.............................
37
Section 4.03
Collection of Mortgage Loan Payments......................
38
Section 4.04
Establishment of and Deposits to Custodial Account........
39
Section 4.05
Permitted Withdrawals From Custodial Account..............
40
Section 4.06
Establishment of and Deposits to Escrow Account...........
41
Section 4.07
Permitted Withdrawals From Escrow Account.................
42
Section 4.08
Payment of Taxes, Insurance and Other Charges.............
43
Section 4.09
Transfer of Accounts......................................
43
Section 4.10
Maintenance of Hazard Insurance...........................
43
Section 4.11
Maintenance of Mortgage Impairment Insurance..............
45
Section 4.12
Maintenance of Fidelity Bond and Errors and Omissions
Insurance.................................................
45
Section 4.13
Inspections...............................................
46
Section 4.14
Restoration of Mortgaged Property.........................
46
Section 4.15
Maintenance of PMI Policy; Claims.........................
47
Section 4.16
Title, Management and Disposition of REO Property.........
48
Section 4.17
Real Estate Owned Reports.................................
49
i
Section 4.18
Liquidation Reports.......................................
49
Section 4.19
Reports of Foreclosures and Abandonments of Mortgaged
Property..................................................
49
Section 4.20
Application of Buydown Funds..............................
50
Section 4.21
Notification of Adjustments...............................
50
Section 4.22
Modifications, Waivers, Amendments and Consents...........
51
Section 4.23
Disaster Recovery/Business Continuity Plan................
52
Section 4.24
Fair Credit Reporting Act.................................
52
ARTICLE V PAYMENTS TO
PURCHASER............................................
53
Section 5.01
Remittances...............................................
53
Section 5.02
Automated Servicing Systems and Statements to Purchaser...
53
Section 5.03
Monthly Advances by Company...............................
54
ARTICLE VI GENERAL SERVICING
PROCEDURES....................................
54
Section 6.01
Due-on-Sale Provision and Assumptions.....................
54
Section 6.02
Satisfaction of Mortgages and Release of Mortgage Files...
55
Section 6.03
Servicing Compensation....................................
56
Section 6.04
Annual Statement as to Compliance.........................
56
Section 6.05
Annual Independent Public Accountants' Servicing Report...
56
Section 6.06
Right to Examine Company Records..........................
56
Section 6.07
Compliance with REMIC Provisions..........................
56
ARTICLE VII COMPANY TO
COOPERATE...........................................
57
Section 7.01
Provision of Information..................................
57
Section 7.02
Financial Statements; Servicing Facility..................
57
ARTICLE VIII THE
COMPANY...................................................
58
Section 8.01
Indemnification; Third Party Claims.......................
58
Section 8.02
Merger or Consolidation of the Company....................
58
Section 8.03
Limitation on Liability of Company and Others.............
59
Section 8.04
Limitation on Resignation and Assignment by Company.......
59
ARTICLE IX WHOLE LOAN TRANSFERS AND
SECURITIZATIONS........................
60
Section 9.01
Removal of Mortgage Loans from Inclusion Under this
Agreement Upon the Pass-Through...........................
60
ARTICLE X DEFAULT
.........................................................
62
Section 10.01 Events of
Default.........................................
62
Section 10.02 Waiver of
Defaults........................................
63
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ARTICLE XI
TERMINATION.....................................................
63
Section 11.01
Termination...............................................
63
ARTICLE XII MISCELLANEOUS
PROVISIONS.......................................
64
Section 12.01 Successor to
Company......................................
64
Section 12.02
Amendment.................................................
65
Section 12.03 Governing
Law.............................................
65
Section 12.04
[Reserved]................................................
66
Section 12.05 Duration of
Agreement.....................................
66
Section 12.06
Notices...................................................
66
Section 12.07 Severability of
Provisions................................
66
Section 12.08 Relationship of
Parties...................................
67
Section 12.09 Execution; Successors and
Assigns.........................
67
Section 12.10 Recordation of Assignments of
Mortgage....................
67
Section 12.11 Assignment by
Purchaser...................................
67
Section 12.12 Solicitation of
Mortgagor.................................
67
Section 12.13 Further
Agreements........................................
68
Section 12.14 Confidential
Information..................................
68
Section 12.15
Counterparts..............................................
68
Section 12.16
Exhibits..................................................
68
Section 12.17 General Interpretive
Principles...........................
69
Section 12.18 Reproduction of
Documents.................................
69
Section 12.19 Purchase Price and Terms
Letter...........................
69
EXHIBITS
Exhibit A
Form of Mortgage Loan Schedule
Exhibit B
Contents of Each Mortgage File
Exhibit C
Form of Custodial Agreement
Exhibit D
Form of Assignment, Assumption and Recognition Agreement
Exhibit E
[Reserved]
Exhibit F
[Reserved]
Exhibit G
[Reserved]
Exhibit H
[Reserved]
Exhibit I
Form of Memorandum of Sale
Exhibit J
Servicer Requirements
Exhibit K
[Reserved]
Addendum I
Regulation AB Compliance Addendum to Mortgage Loan Sale and
Servicing Agreement
iii
This is a Mortgage Loan Sale and Servicing Agreement for adjustable
and
fixed rate residential first mortgage loans, dated and effective as
of September
1, 2006, and is executed between Bank of America, National
Association, as
purchaser (the "Purchaser"), Opteum Financial Services, LLC, as
seller and
servicer (the "Company").
WITNESSETH
WHEREAS, the Purchaser has agreed to purchase from time to time
from the
Company and the Company has agreed to sell from time to time to the
Purchaser
first lien fixed- and adjustable-rate mortgage loans;
WHEREAS, the Mortgage Loans will be sold by the Company and
purchased by
the Purchaser as pools or groups of whole loans, servicing retained
(each, a
"Mortgage Loan Package") on the various Closing Dates as provided
herein; and
WHEREAS, each of the Mortgage Loans will be secured by a mortgage,
deed of
trust or other security instrument creating a first lien on a
residential
dwelling located in the jurisdiction indicated on the related
Mortgage Loan
Schedule for the related Mortgage Loan Package, which will be
annexed to a
Memorandum of Sale (as defined herein) on the related Closing Date;
and
WHEREAS, the Purchaser and the Company wish to prescribe the manner
of
purchase of the Mortgage Loans and the conveyance, servicing and
control of the
Mortgage Loans; and
WHEREAS, following any purchase of the Mortgage Loans from the
Company, the
Purchaser may desire to sell some or all of the Mortgage Loans to
one or more
purchasers as a whole loan transfer, agency transfer or a public or
private,
rated or unrated mortgage pass-through transaction;
NOW, THEREFORE, in consideration of the mutual agreements
hereinafter set
forth, and for other good and valuable consideration, the receipt
and adequacy
of which is hereby acknowledged, the Purchaser and the Company
agree as follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the
content
otherwise requires, shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan,
procedures
(including collection procedures) that comply with applicable
federal, state and
local law and that the Company customarily employs and exercises
through a
subservicer in servicing and administering mortgage loans for its
own account
and that are in accordance with the accepted mortgage servicing
practices of
prudent mortgage lending institutions which service mortgage loans
of the same
type as the Mortgage Loans in the jurisdiction where the related
Mortgaged
Property is located.
Adjustable Rate Mortgage Loan: A Mortgage Loan that contains a
provision
pursuant to which the Mortgage Interest Rate is adjusted
periodically.
Adjustment Date: As to each Adjustable Rate Mortgage Loan, the date
on
which the Mortgage Interest Rate is adjusted in accordance with the
terms of the
related Mortgage Note and Mortgage.
Agreement: This Mortgage Loan Sale and Servicing Agreement and all
amendments hereof and supplements hereto.
ALTA: The American Land Title Association or any successor thereto.
Appraisal: A written appraisal of a Mortgaged Property made by a
Qualified
Appraiser, which appraisal must be written, in form and substance,
to Fannie Mae
and Freddie Mac standards, and satisfy the requirements of Title XI
of the
Financial Institution, Reform, Recovery and Enforcement Act of 1989
and the
regulations promulgated thereunder, in effect as of the date of the
appraisal.
Appraised Value: With respect to any Mortgage Loan, the lesser of
(i) the
value set forth on the Appraisal made in connection with the
origination of the
related Mortgage Loan, or (ii) the purchase price paid for the
Mortgaged
Property; provided, however, that in the case of a refinanced
Mortgage Loan,
such value shall be based solely on the Appraisal made in
connection with the
origination of such Mortgage Loan.
Approved Flood Policy Insurer: An insurer that meets the guidelines
of the
Federal Insurance Administration.
Assignment, Assumption and Recognition Agreement: The agreement
substantially in the form of Exhibit D attached hereto.
Assignment of Mortgage: With respect to each Mortgage Loan which is
not a
MERS Mortgage Loan, an assignment of the Mortgage, notice of
transfer or
equivalent instrument in recordable form, sufficient under the laws
of the
jurisdiction wherein the related Mortgaged Property is located to
reflect the
sale of the Mortgage to the Purchaser.
BIF: The Bank Insurance Fund, or any successor thereto.
Business Day: Any day other than (i) a Saturday or Sunday, or (ii)
a day on
which banking and savings and loan institutions in the State of New
York or the
state in which the Company's servicing operations are located are
authorized or
obligated by law or executive order to be closed.
Buydown Agreement: An agreement between the Company and a
Mortgagor, or an
agreement among the Company, a Mortgagor and a seller of a
Mortgaged Property or
a third party with respect to a Mortgage Loan which provides for
the application
of Buydown Funds.
Buydown Funds: In respect of any Buydown Mortgage Loan, any amount
contributed by the seller of a Mortgaged Property subject to a
Buydown Mortgage
Loan, the buyer of such
2
property, the Company or any other source, plus interest earned
thereon, in
order to enable the Mortgagor to reduce the payments required to be
made from
the mortgagor's funds in the early years of a Mortgage Loan.
Buydown Mortgage Loan: Any Mortgage Loan in respect of which,
pursuant to a
Buydown Agreement, (i) the Mortgagor pays less than the full
monthly payments
specified in the Mortgage Note for a specified period, and (ii) the
difference
between the payments required under such Buydown Agreement and the
Mortgage Note
is provided from Buydown Funds.
Buydown Period: The period of time when a Buydown Agreement is in
effect
with respect to a related Buydown Mortgage Loan.
Closing Date: With respect to a Mortgage Loan Package, the date or
dates,
set forth in the related Memorandum of Sale, on which the Purchaser
will
purchase and the Company will sell the Mortgage Loans identified
therein.
Code: The Internal Revenue Code of 1986, as it may be amended from
time to
time or any successor statute thereto, and applicable U.S.
Department of the
Treasury regulations issued pursuant thereto.
Company: Opteum Financial Services, LLC, or its successor in
interest or
assigns, or any successor to the Company under this Agreement
appointed as
herein provided.
Company Employees: As defined in Section 4.13.
Compensating Interest: With respect to each Remittance Date and any
Principal Prepayment occurring during the portion of the Principal
Prepayment
Period occurring the month preceding such Remittance date, an
amount equal to
the lesser of (a) the aggregate Prepayment Interest Shortfall on
the Mortgage
Loans for the related Principal Prepayment Period and (b) the sum
of (i) the
Servicing Fee paid to, or retained by, the Servicer in respect of
such
Remittance Date and (ii) any Prepayment Interest Excess in respect
of such
Remittance Date.
Condemnation Proceeds: All awards or settlements in respect of a
Mortgaged
Property, whether permanent or temporary, partial or entire, by
exercise of the
power of eminent domain or condemnation, to the extent not required
to be
released to a Mortgagor in accordance with the terms of the related
Mortgage
Loan Documents.
Consumer Information: Any personally identifiable information in
any form
(written or electronic) relating to a Mortgagor, including, but not
limited to:
a Mortgagor's name, address, telephone number, Mortgage Loan
number, Mortgage
Loan payment history, delinquency status, or payment information;
the fact that
the Mortgagor has a relationship with the Company or the originator
of the
related Mortgage Loan; and any other non-public personally
identifiable
information.
Co-op Shares: Shares issued by private non-profit housing
corporations.
Custodial Account: The separate account or accounts created and
maintained
pursuant to Section 4.04.
3
Custodial Agreement: The agreement governing the retention of the
originals
of each Mortgage Note, Mortgage, Assignment of Mortgage and other
Mortgage Loan
Documents, a form of which is annexed hereto as Exhibit C.
Custodian: The custodian under the Custodial Agreement, or its
successor in
interest or assigns, or any successor to the Custodian under the
Custodial
Agreement as provided therein.
Cut-off Date: With respect to each Mortgage Loan, the first day of
the
month of the related Closing Date as set forth in the related
Purchase Price and
Terms Letter.
Deleted Mortgage Loan: A Mortgage Loan which is repurchased by the
Company
in accordance with the terms of this Agreement and which is, in the
case of a
substitution pursuant to Section 3.03, replaced or to be replaced
with a
Qualified Substitute Mortgage Loan.
Depositor: The depositor, as such term is defined in Regulation AB,
with
respect to any Securitization Transaction.
Determination Date: The eighteenth calendar day of each month (or
if such
eighteenth day is not a Business Day, the next immediately
preceding Business
Day).
Due Date: The first day of the month on which the Monthly Payment
is due on
a Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to each Remittance Date, the period
commencing on
the second day of the month preceding the month of the Remittance
Date and
ending on the first day of the month of the Remittance Date.
Errors and Omissions Insurance Policy: An errors and omissions
insurance
policy to be maintained by the Company pursuant to Section 4.12.
Escrow Account: The separate account or accounts created and
maintained
pursuant to Section 4.06.
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer
rents,
municipal charges, mortgage insurance premiums, fire and hazard
insurance
premiums, condominium charges, and any other payments required to
be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any
other related
document.
Event of Default: Any one of the conditions or circumstances
enumerated in
Section 10.01.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Fannie Mae: The entity formerly known as Federal National Mortgage
Association (FNMA), or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
4
Fidelity Bond: A fidelity bond to be maintained by the Company
pursuant to
Section 4.12.
First Remittance Date: October 19, 2006.
Freddie Mac: The entity formerly known as the Federal Home Loan
Mortgage
Corporation (FHLMC), or any successor thereto.
GAAP: Generally accepted accounting procedures, consistently
applied.
Gross Margin: With respect to each Adjustable Rate Mortgage Loan,
the fixed
percentage amount set forth in the related Mortgage Note which is
added to the
Index in order to determine the related Mortgage Interest Rate, as
set forth in
the Mortgage Loan Schedule.
Index: With respect to any Adjustable Rate Mortgage Loan, the index
identified on the Mortgage Loan Schedule and set forth in the
related Mortgage
Note for the purpose of calculating interest therein.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related
Mortgaged Property.
Interim Funder: With respect to each MERS Designated Mortgage Loan,
the
Person named on the MERS System as the interim funder pursuant to
the MERS
Procedures Manual.
Investor: With respect to each MERS Designated Mortgage Loan, the
Person
named on the MERS System as the investor pursuant to the MERS
Procedures Manual.
Liquidation Proceeds: Cash received in connection with the
liquidation of a
defaulted Mortgage Loan, whether through the sale or assignment of
such Mortgage
Loan, trustee's sale, foreclosure sale or otherwise, or the sale of
the related
Mortgaged Property if the Mortgaged Property is acquired in
satisfaction of the
Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the
ratio of
the original loan amount of the Mortgage Loan at its origination
(unless
otherwise indicated) to the Appraised Value of the Mortgaged
Property.
LPMI Policy: A lender paid policy of mortgage guaranty insurance
issued by
a Qualified Insurer, with respect to certain Mortgage Loans.
Manufactured Home: A single family residential unit that is
constructed in
a factory in sections in accordance with the Federal Manufactured
Home
Construction and Safety Standards adopted on July 15, 1976, by the
Department of
Housing and Urban Development ("HUD Code"), as amended in 2000,
which preempts
state and local building codes. Each unit is identified by the
presence of a HUD
Plate/Compliance Certificate label. The sections are then
transported to the
site and joined together and affixed to a pre-built permanent
foundation (which
satisfies the manufacturer's requirements and all state, county,
and local
building codes and regulations). The manufactured home is built on
a
non-removable, permanent frame chassis that supports the complete
unit of walls,
floors, and roof. The underneath part of the home may have
5
running gear (wheels, axles, and brakes) that enable it to be
transported to the
permanent site. The wheels and hitch are removed prior to anchoring
the unit to
the permanent foundation. The manufactured home must be classified
as real
estate and taxed accordingly. The permanent foundation may be on
land owned by
the mortgager or may be on leased land.
Master Servicer: With respect to any Securitization Transaction,
the
"master servicer," if any, identified in the related transaction
documents.
Memorandum of Sale: With respect to each Mortgage Loan and the
Mortgage
Loan Package, the memorandum of sale, substantially in the form of
Exhibit I
attached hereto, confirming the sale by Company and the purchase by
Purchaser of
the Mortgage Loan Package on the related Closing Date.
MERS: MERSCORP, Inc., its successors and assigns.
MERS Designated Mortgage Loan: A Mortgage Loan for which (a) the
Company
has designated or will designate MERS as, and has taken or will
take such action
as is necessary to cause MERS to be, the mortgagee of record, as
nominee for the
Company, in accordance with MERS Procedures Manual and (b) the
Company has
designated or will designate the Custodian as the Investor on the
MERS System.
MERS Procedures Manual: The MERS Procedures Manual, as it may be
amended,
supplemented or otherwise modified from time to time.
MERS Report: The report from the MERS System listing MERS
Designated
Mortgage Loans and other information.
MERS System: MERS mortgage electronic registry system, as more
particularly
described in the MERS Procedures Manual.
Monthly Advance: The portion of each Monthly Payment that is
delinquent
with respect to each Mortgage Loan at the close of business on the
Determination
Date required to be advanced by the Company pursuant to Section
5.03 on the
Business Day immediately preceding the Remittance Date of the
related month.
Monthly Payment: The scheduled monthly payment of principal and
interest
and, in the case of an interest only Mortgage Loan, interest on a
Mortgage Loan.
Moody's: Moody's Investors Service, Inc.
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 or leasehold estate in real property securing the Mortgage
Note.
Mortgage File: The items pertaining to a particular Mortgage Loan
referred
to in Exhibit B annexed hereto, and any additional documents
required to be
added to the Mortgage File pursuant to this Agreement.
6
Mortgage Impairment Insurance Policy: A mortgage impairment or
blanket
hazard insurance policy as described in Section 4.11.
Mortgage Interest Rate: The annual rate of interest borne on a
Mortgage
Note in accordance with the provisions of the Mortgage Note.
Mortgage Loan: An individual Mortgage Loan which is the subject of
this
Agreement, each Mortgage Loan originally sold and subject to this
Agreement
being identified on the Mortgage Loan Schedule annexed to the
related Memorandum
of Sale, which Mortgage Loan includes without limitation the
Mortgage File, the
Monthly Payments, Principal Prepayments, Liquidation Proceeds,
Condemnation
Proceeds, Insurance Proceeds, REO Disposition Proceeds and all
other rights,
benefits, proceeds and obligations arising from or in connection
with such
Mortgage Loan.
Mortgage Loan Documents: The documents referred to in Exhibit B as
items 1
through 11.
Mortgage Loan Package: The pool or group of whole loans purchased
on a
Closing Date, as described in the Mortgage Loan Schedule annexed to
the related
Memorandum of Sale.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan,
the
annual rate of interest remitted to the Purchaser, which shall be
equal to the
related Mortgage Interest Rate minus the Servicing Fee Rate and the
applicable
premium rate on the LPMI Policy, if applicable.
Mortgage Loan Schedule: With respect to each Mortgage Loan Package,
the
schedule of Mortgage Loans substantially in the form attached as
Exhibit A
hereto and annexed to the related Memorandum of Sale (and delivered
in
electronic format to the Purchaser), such schedule setting forth
the following
information with respect to each Mortgage Loan in the related
Mortgage Loan
Package:
(1) the Company's Mortgage Loan number;
(2) Mortgagor's name (including any co-mortgagors);
(3) the full street address, city, state and zip code of the
Mortgaged
Property;
(4) the Mortgagor's FICO score;
(5) a code indicating whether the loan was originated through a
correspondent, retail, or wholesale channel;
(6) a code identifying the related Underwriting Guidelines used in
connection with the origination of the related Mortgage Loan;
(7) the number of units for all Mortgaged Properties;
7
(8) a code indicating whether the Mortgaged Property is a single
family residence, two-family residence, three-family residence,
four-family
residence, PUD, townhouse or condominium or secured by Co-op
Shares;
(9) the Mortgage Interest Rate as of the Cut-off Date;
(10) the initial Mortgage Interest Rate;
(11) the current Mortgage Loan Remittance Rate;
(12) the initial Monthly Payment;
(13) the Monthly Payment as of the Cut-off Date;
(14) the date the Mortgage Loan was originated or acquired by the
Company;
(15) the principal balance of the Mortgage Loan as of the Cut-off
Date
after deduction of payments of principal due on or before the
Cut-off Date
whether or not collected;
(16) the date on which the first Monthly Payment was due;
(17) the last payment date on which a payment was applied;
(18) the original term to maturity or the remaining months to
maturity
from the related Cut-off Date, in any case based on the original
amortization schedule, and if different, the maturity expressed in
the same
manner but based on the actual amortization schedule;
(19) the scheduled maturity date;
(20) the Loan-to-Value Ratio;
(21) a code indicating the type of Adjustable Rate Mortgage Loan
(i.e.
3/1, 5/1, 7/1, etc.);
(22) the Gross Margin;
(23) the Index;
(24) Adjustment Dates and the next Adjustment Date;
(25) the lifetime Mortgage Interest Rate cap and Periodic Caps;
(26) a code indicating the name of the issuer of the LPMI/PMI
Policy,
if any, and the applicable premium rate on any LPMI Policy;
(27) a code indicating whether the Mortgage Loan is a Buydown
Mortgage
Loan;
8
(28) a code indicating whether such Mortgage Loan provides for a
Prepayment Penalty and, if applicable, the Prepayment Penalty
period for
such loan;
(29) a code indicating whether the Mortgaged Property is
owner-occupied or investor property;
(30) a code reflecting the documentation type;
(31) loan purpose;
(32) the Appraised Value; and
(33) the applicable Servicing Fee Rate.
With respect to the Mortgage Loans in the aggregate in the related
Mortgage Loan Package, the respective Mortgage Loan Schedule shall
set
forth the following information, as of the Cut-Off Date:
(i) the number of Mortgage Loans;
(ii) the current aggregate outstanding principal balance of the
Mortgage Loans;
(iii) the weighted average Mortgage Interest Rate of the Mortgage
Loans; and
(iv) the weighted average months to maturity of the Mortgage Loans.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
Mortgaged Property: The real property, including any improvements,
securing
repayment of the debt evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
Negative Amortization: A gradual increase in the mortgage debt that
occurs
when the monthly fixed installment is not sufficient for full
application to
both principal and interest. The interest shortage is added to the
unpaid
principal balance to create "negative" amortization.
Nonrecoverable Advance: Any Monthly Advance previously made or
proposed to
be made in respect of a Mortgage Loan by the Company which, in the
good faith
judgment of the Company, will not or, in the case of a proposed
Monthly Advance
or Servicing Advance would not, be ultimately recoverable by the
Company from
the related Mortgagor, Liquidation Proceeds, Condemnation Proceeds,
Insurance
Proceeds, REO Disposition Proceeds or otherwise. The determination
by the
Company that it has made a Nonrecoverable Advance shall be
evidenced by a
certificate signed by two officers of the Company and delivered to
the
Purchaser.
OCC: The Office of the Comptroller of the Currency.
9
Officer's Certificate: A certificate signed by the Chairman of the
Board or
the Vice Chairman of the Board or the President, a Senior Vice
President, a
First Vice President, a Vice President or an Assistant Vice
President and by the
Treasurer or the Secretary or one of the Assistant Treasurers or
Assistant
Secretaries of the Company, and delivered to the Purchaser as
required by this
Agreement.
Opinion of Counsel: A written opinion of counsel, who may be an
employee of
the Company, reasonably acceptable to the Purchaser.
Originator: With respect to any Mortgage Loan, the entity that (i)
took the
Mortgagor's loan application (ii) processed the Mortgagor's loan
application, or
(iii) closed and/or funded the Mortgagor's Mortgage Loan.
Periodic Interest Rate Cap: As to each Adjustable Rate Mortgage
Loan, the
maximum increase or decrease in the Mortgage Interest Rate on any
Adjustment
Date pursuant to the terms of the Mortgage Note.
Person: Any individual, corporation, partnership, joint venture,
limited
liability company, association, joint-stock company, trust,
unincorporated
organization, government or any agency or political subdivision
thereof.
PMI Policy: A policy of primary mortgage guaranty insurance issued
by a
Qualified Insurer, as required by this Agreement with respect to
certain
Mortgage Loans.
Prepayment Interest Excess: With respect to each Remittance Date
and each
Mortgage Loan that was subject of a Principal Prepayment during the
portion of
the related Principal Prepayment Period beginning on the first day
of the
calendar month in which such Remittance Date occurs through the end
of the
Principal Prepayment Period relating to such Remittance Date, an
amount equal to
interest (to the extent received) at the applicable Mortgage Loan
Remittance
Rate on the amount of such Principal Prepayment for the number of
days
commencing on the first day of the calendar month in which such
Remittance Date
occurs and ending on the date on which such Principal Prepayment is
so applied.
The Company shall be entitled to retain any Prepayment Interest
Excess not
required to cover Compensating Interest Payments.
Prepayment Interest Shortfall: With respect to any Remittance Date,
for
each Mortgage Loan that was the subject of a Principal Prepayment
during the
portion of the related Principal Prepayment Period occurring
between the first
day of the related Principal Prepayment Period and the last day of
the calendar
month preceding the month in which such Remittance Date occurs, an
amount equal
to interest at the applicable Mortgage Loan Remittance Rate on the
amount of
such Principal Prepayment for the number of days commencing on the
date on which
the prepayment is applied and ending on the last day of the
calendar month
preceding such Remittance Date.
Prepayment Premium: Payments received on a Mortgage Loan as a
result of a
Principal Prepayment hereon, not otherwise due thereon in respect
of principal
or interest, which are intended to be a disincentive to prepayment.
10
Prepayment Premium Loan: A Mortgage Loan with respect to which the
Mortgagor must pay a Prepayment Premium in connection with a
Principal
Prepayment.
Prime Rate: The prime rate announced to be in effect from time to
time, as
published as the average rate in The Wall Street Journal.
Principal Prepayment: Any payment or other recovery of principal on
a
Mortgage Loan which is received in advance of its scheduled Due
Date, including
any Prepayment Premium, if applicable, thereon and which is not
accompanied by
an amount of interest representing scheduled interest due on any
date or dates
in any month or months subsequent to the month of prepayment.
Principal Prepayment Period: With respect to each Remittance Date,
the
period that commences on and includes the 14th day of the month
immediately
preceding the month in which such Remittance Date occurs (or from
the Cut-off
Date, in the case of the first Principal Prepayment Period) and
ends on and
includes the 13th day of the month in which such Remittance Date
occurs.
Purchase Price: The price paid on the Closing Date by the Purchaser
to the
Company for the Mortgage Loans, as calculated as set forth in the
related
Purchase Price and Terms Letter.
Purchase Price and Terms Letter: The letter agreement between the
Company
and the Purchaser entered into prior to the related Closing Date
relating to the
sale of one or more Mortgage Loan Packages.
Purchaser: Bank of America, National Association, or its successor
in
interest or any successor or assignee to the Purchaser under this
Agreement as
herein provided.
Qualified Appraiser: An appraiser who had no interest, direct or
indirect
in the Mortgaged Property or in any loan made on the security
thereof, and whose
compensation was not affected by the approval or disapproval of the
Mortgage
Loan, and such appraiser and the appraisal made by such appraiser
both satisfied
the requirements of Title XI of the Financial Institution Reform,
Recovery, and
Enforcement Act and the regulations promulgated thereunder, all as
in effect on
the date the Mortgage Loan was originated.
Qualified Depository: Either (i) an account or accounts maintained
with a
federal or state chartered depository institution or trust company
the
short-term unsecured debt obligations of which (or, in the case of
a depository
institution or trust company that is the principal subsidiary of a
holding
company, the debt obligations of such holding company) have the
highest
short-term ratings of each Rating Agency at the time any amounts
are held on
deposit therein, or (ii) a trust account or accounts maintained
with the trust
department of a federal or state chartered depository institution
or trust
company, acting in its fiduciary capacity.
Qualified Insurer: A mortgage guaranty insurance company duly
authorized
and licensed where required by law to transact mortgage guaranty
insurance
business and approved as an insurer by Fannie Mae and Freddie Mac.
11
Qualified Substitute Mortgage Loan: A mortgage loan eligible to be
substituted by the Company for a Deleted Mortgage Loan which must,
on the date
of such substitution be approved by the Purchaser and (i) have an
outstanding
principal balance, after deduction of all scheduled payments due in
the month of
substitution (or in the case of a substitution of more than one
mortgage loan
for a Deleted Mortgage Loan, an aggregate principal balance), not
in excess of
the Stated Principal Balance of the Deleted Mortgage Loan; (ii)
have a Mortgage
Loan Remittance Rate not less than, and not more than 2% greater
than, the
Mortgage Loan Remittance Rate of the Deleted Mortgage Loan; (iii)
have a
remaining term to maturity not greater than and not more than one
year less than
that of the Deleted Mortgage Loan; (iv) comply with each
representation and
warranty set forth in Sections 3.01 and 3.02; (v) be of the same
type as the
Deleted Mortgage Loan; (vi) have a Gross Margin not less than that
of the
Deleted Mortgage Loan; (vii) have the same Index as the Deleted
Mortgage Loan;
(viii) will have a FICO score not less than that of the Deleted
Mortgage Loan;
(ix) have an LTV not greater than that of the Deleted Mortgage
Loan; (x) have a
Prepayment Premium with a term and an amount at least equal to the
Prepayment
Premium of the Deleted Mortgage Loan; (xi) be a first lien Mortgage
Loan, and
(xii) have a Company credit grade not lower in quality than that of
the Deleted
Mortgage Loan.
Rating Agency: Each of Fitch Ratings, Moody's and S&P, or any
successor
thereto.
Reconstitution Agreement: The agreement or agreements entered into
by the
Company and the Purchaser and/or certain third parties on the
Reconstitution
Date or Dates with respect to any or all of the Mortgage Loans
serviced
hereunder, in connection with a Whole Loan Transfer or
Securitization.
Reconstitution Date: The date prior to the end of the three (3)
month
period following the related Closing Date on which any or all of
the Mortgage
Loans serviced under this Agreement shall be removed from this
Agreement and
reconstituted as part of a Securitization or Whole Loan Transfer
pursuant to
Section 9.01 hereof. The Reconstitution Date shall be such date
prior to the end
of the three (3) month period following the related Closing Date on
which the
Purchaser and the subsequent purchaser or transferee of the related
Mortgage
Loans shall designate.
Record Date: The close of business of the last Business Day of the
month
preceding the month of the related Remittance Date.
Regulation AB Compliance Addendum: Addendum I attached hereto and
incorporated herein by reference thereto.
REMIC: A "real estate mortgage investment conduit" within the
meaning of
Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating
to a
REMIC, which appear at Section 860A through 860G of Subchapter M of
Chapter 1,
Subtitle A of the Code, and related provisions, and regulations,
rulings or
pronouncements promulgated thereunder, as the foregoing may be in
effect from
time to time.
12
Remittance Date: The 19th day (or if such 19th day is not a
Business Day,
the first Business Day immediately preceding such 19th day) of any
month,
beginning with the First Remittance Date.
REO Disposition: The final sale by the Company of any REO Property.
REO Disposition Proceeds: All amounts received with respect to an
REO
Disposition pursuant to Section 4.16.
REO Property: A Mortgaged Property acquired by the Company on
behalf of the
Purchaser through foreclosure or by deed in lieu of foreclosure, as
described in
Section 4.16.
Repurchase Price: With respect to any Mortgage Loan, a price equal
to (i)
(A) prior to the date which is twelve (12) months following the
Closing Date,
the product of the Stated Principal Balance of such Mortgage Loan
times the
greater of (x) the Purchase Price Percentage reduced by an amount
equal to the
purchase price premium in excess of par paid by the Purchaser
multiplied by a
fraction, the numerator of which is equal to the number of months
that have
passed since the related Closing Date and the denominator of which
is equal to
twelve (12), or (y) 100%, and (B) thereafter, the Stated Principal
Balance of
the Mortgage Loan plus (ii) interest on such Stated Principal
Balance at the
Mortgage Loan Interest Rate from the date on which interest has
last been paid
and distributed to the Purchaser to the last day of the month in
which such
repurchase occurs, less amounts received or advanced in respect of
such
repurchased Mortgage Loan which are being held in the Custodial
Account for
distribution in the month of repurchase plus the amount of any
advances owed to
any servicer, plus all costs and expenses incurred by the Purchaser
or any
servicer arising out of or based upon such breach, including
without limitation,
costs and expenses incurred in the enforcement of the Company's
repurchase
obligation hereunder plus (iii) with respect to any Mortgage Loan
subject to a
Securitization, any costs and damages incurred by the related trust
in
connection with any violation by such Mortgage Loan of any
predatory or abusive
lending law.
RESPA: The Real Estate Settlement Procedures Act, as amended.
SAIF: The Savings Association Insurance Fund, or any successor
thereto.
S&P: Standard & Poor's Ratings Services, a division of The
McGraw-Hill
Companies, Inc., or any successor thereto.
Securities Act: The Securities Act of 1933, as amended.
Securitization: Any transaction involving either (1) a sale or
other
transfer of some or all of the Mortgage Loans directly or
indirectly by the
Purchaser to an issuing entity in connection with an issuance of
publicly
offered or privately placed, rated or unrated mortgage-backed
securities or (2)
an issuance of publicly offered or privately placed, rated or
unrated
securities, the payments on which are determined primarily by
reference to one
or more portfolios of residential mortgage loans consisting, in
whole or in
part, of some or all of the Mortgage Loans.
Servicing Advances: All customary, reasonable and necessary "out of
pocket"
costs and expenses (including reasonable attorney's fees and
disbursements)
other than Monthly Advances
13
incurred in the performance by the Company of its servicing
obligations,
including, but not limited to, the cost of (a) the preservation,
restoration and
protection of the Mortgaged Property, (b) any enforcement or
judicial
proceedings, including foreclosures, (c) the management and
liquidation of any
REO Property and (d) compliance with the obligations under Section
4.08.
Servicing Fee: With respect to each Mortgage Loan, the amount of
the annual
fee the Purchaser shall pay to the Company, which shall, for a
period of one
full month, be equal to one-twelfth of the product of (a) the
applicable
Servicing Fee Rate and (b) the outstanding principal balance of
such Mortgage
Loan. Such fee shall be payable monthly, computed on the basis of
the same
principal amount and period respecting which any related interest
payment on a
Mortgage Loan is computed. The obligation of the Purchaser to pay
the Servicing
Fee is limited to, and the Servicing Fee is payable solely from,
the interest
portion (including recoveries with respect to interest from
Liquidation
Proceeds, Condemnation Proceeds and Insurance Proceeds to the
extent permitted
by Section 4.05) of such Monthly Payment collected by the Company,
or as
otherwise provided under Section 4.05.
Servicing Fee Rate: With respect to each Mortgage Loan, the per
annum rate
specified for such Mortgage Loan set forth on the Mortgage Loan
Schedule or if
not specified thereon, in the Purchase Price and Terms Letter.
Servicing File: With respect to each Mortgage Loan, the file
retained by
the Company consisting of originals or copies, which may be imaged
copies, of
all documents in the Mortgage File which are not delivered to the
Custodian and
copies of the Mortgage Loan Documents listed in the Custodial
Agreement the
originals of which are delivered to the Custodian pursuant to
Section 2.03.
Servicing Officer: Any officer of the Company involved in or
responsible
for the administration and servicing of the Mortgage Loans whose
name appears on
a list of servicing officers furnished by the Company to the
Purchaser upon
request, as such list may from time to time be amended.
Stated Principal Balance: As to each Mortgage Loan, (i) the
principal
balance of the Mortgage Loan as of the first day of the month for
which such
calculation is being made after giving effect to payments of
principal due on or
before such date, whether or not received, minus (ii) all amounts
previously
distributed to the Purchaser with respect to the related Mortgage
Loan
representing payments or recoveries of principal or advances in
lieu thereof.
Subservicer: Any Person with which the Company has entered into a
Subservicing Agreement and which is responsible for the performance
(whether
directly or through Subservicers or Subcontractors) of a
substantial portion of
the material servicing functions required to be performed by the
Company under
this Agreement or any Reconstitution Agreement that are identified
in Item
1122(d) of Regulation AB, provided that such Person is a Fannie Mae
or Freddie
Mac approved seller/servicer in good standing and no event has
occurred,
including but not limited to a change in insurance coverage, that
would make it
unable to comply with the eligibility for seller/servicers imposed
by Fannie Mae
or Freddie Mac.
14
Subservicing Agreement: Any subservicing agreement (which, in the
event the
Subservicer is an affiliate of the Company, need not be in writing)
between the
Company and any Subservicer relating to servicing and/or
administration of
certain Mortgage Loans as provided in Section 3.01(b).
Underwriting Guidelines: The written underwriting guidelines of the
Company
or the applicable correspondent seller provided by the Company to
the Purchaser,
in each case with respect to the mortgage loans similar to the
Mortgage Loans,
as the same shall be updated from time to time.
Whole Loan Transfer: Any sale or transfer of some or all of the
Mortgage
Loans by the Purchaser to a third party which sale or transfer is
not a
Securitization.
ARTICLE II
AGREEMENT TO PURCHASE; PURCHASE PRICE; CONVEYANCE OF MORTGAGE
LOANS; POSSESSION
OF MORTGAGE FILES; MAINTENANCE OF SERVICING FILES; BOOKS AND
RECORDS; CUSTODIAL
AGREEMENT; DELIVERY OF DOCUMENTS; CLOSING CONDITIONS
Section 2.01 Agreement to Purchase; Purchase Price.
(A)
Agreement to Purchase
In exchange for the payment of the Purchase Price to the Company on
the
related Closing Date, the Company agrees to sell and the Purchaser
agrees to
purchase, without recourse but subject to the terms of this
Agreement, on a
servicing retained basis, all the right, title and interest of the
Company in
and to the Mortgage Loans in a Mortgage Loan Package having an
aggregate Stated
Principal Balance on the related Cut-off Date in an amount as set
forth in the
related Purchase Price and Terms Letter, or in such other amount as
agreed by
the Purchaser and the Company as evidenced by the aggregate Stated
Principal
Balance of the Mortgage Loan Package accepted by the Purchaser on
the related
Closing Date. The Company shall deliver the Mortgage Loan Schedule
for the
Mortgage Loan Package to be purchased on the related Closing Date
to the
Purchaser at least three (3) Business Days prior to such Closing
Date.
(B)
Purchase Price
The Purchase Price for each Mortgage Loan Package shall be the
percentage
of par as stated in or as otherwise calculated pursuant to the
related Purchase
Price and Terms Letter (subject to adjustment as provided therein),
plus accrued
interest on the aggregate Stated Principal Balance of the Mortgage
Loan Package
at the weighted average Mortgage Loan Remittance Rate from the
related Cut-off
Date through the day prior to the related Closing Date, inclusive.
The initial
principal amount of the Mortgage Loans shall be the aggregate
Stated Principal
Balance of the Mortgage Loans, so computed as of the related
Cut-off Date, after
application of scheduled payments of principal due on or before the
related
Cut-off Date, whether or not collected. Such payments shall be made
to the
account designated by the Company by wire transfer in immediately
available
funds.
15
The Purchaser shall be entitled to (1) all scheduled principal due
after
the related Cut-off Date, (2) all other recoveries of principal
collected on or
after the related Cut-off Date (provided, however, that all
scheduled payments
of principal due on or before the related Cut-off Date and
collected by the
Company or any successor servicer after the related Cut-off Date
shall belong to
the Company), (3) all payments of interest on the Mortgage Loans at
the Mortgage
Loan Remittance Rate (minus that portion of any such payment that
is allocable
to the period prior to the related Cut-off Date) and (4) all
Prepayment
Premiums. The Stated Principal Balance of each Mortgage Loan as of
the related
Cut-off Date is determined after application of payments of
principal due on or
before the related Cut-off Date whether or not collected together
with any
unscheduled principal prepayments collected prior to the related
Cut-off Date,
provided, however, that 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 (minus interest at the
Servicing
Fee Rate) shall be the property of the Purchaser. The Company shall
deposit any
such prepaid amounts into the Custodial Account for the benefit of
the
Purchaser.
(C) Possession of Mortgage Files; Maintenance of Servicing Files
The contents of each Servicing File are and shall be held in trust
by the
Company for the benefit of the Purchaser as the owner thereof.
Possession of
each Servicing File by the Company is at the will of the Purchaser
for the sole
purpose of servicing the related Mortgage Loan, and such retention
and
possession by the Company is in a custodial capacity only. Upon the
sale of the
Mortgage Loans the ownership of each Mortgage Note, the related
Mortgage and the
related Mortgage File and Servicing File shall vest immediately in
the
Purchaser, and the ownership of all records and documents with
respect to the
related Mortgage Loan prepared by or which come into the possession
of the
Company shall vest immediately in the Purchaser and shall be
retained and
maintained by the Company, in trust, at the will of the Purchaser
and only in
such custodial capacity. The Company shall release its custody of
the contents
of any Servicing File only in accordance with written instructions
from the
Purchaser, unless such release is required as incidental to the
Company's
servicing of the Mortgage Loans or is in connection with a
repurchase of any
Mortgage Loan pursuant to Section 3.03 or 6.02.
Section 2.02 Books and Records; Transfers of Mortgage Loans.
From and after the sale of the Mortgage Loans to the Purchaser all
rights
arising out of the Mortgage Loans, including, but not limited to,
all funds
received on or in connection with the Mortgage Loans, shall be
received and held
by the Company in trust for the benefit of the Purchaser as owner
of the
Mortgage Loans, and the Company, if applicable, shall retain record
title to the
related Mortgages for the sole purpose of facilitating the
servicing and the
supervision of the servicing of the Mortgage Loans.
The sale of each Mortgage Loan shall be reflected on the Company's
balance
sheet and other financial statements, tax returns and business
records as a sale
of assets by the Company. The Company shall be responsible for
maintaining, and
shall maintain, a complete set of books and records for each
Mortgage Loan,
which shall be marked clearly to reflect the ownership of each
Mortgage Loan by
the Purchaser. In particular, the Company shall maintain in its
possession, and
shall deliver to the Purchaser within ten (10) Business Days of
demand, evidence
16
of compliance with all federal, state and local laws, rules and
regulations. To
the extent that original documents are not required for purposes of
realization
of Liquidation Proceeds or Insurance Proceeds, documents maintained
by the
Company may be in the form of microfilm or microfiche or such other
reliable
means of recreating original documents, including but not limited
to, optical
imagery techniques that conform to Accepted Servicing Practices.
The Company shall maintain with respect to each Mortgage Loan and
shall
make available for inspection by the Purchaser or its designee the
related
Servicing File during the time the Purchaser retains ownership of a
Mortgage
Loan and thereafter in accordance with applicable laws and
regulations.
The Company shall keep at its servicing office books and records in
which,
subject to such reasonable regulations as it may prescribe, the
Company shall
note transfers of Mortgage Loans. No transfer of a Mortgage Loan
may be made
unless such transfer is in compliance with the terms hereof. For
the purposes of
this Agreement, the Company shall be under no obligation to deal
with any person
with respect to this Agreement or the Mortgage Loans unless the
books and
records show such person as the owner of the Mortgage Loan. The
Purchaser may,
subject to the terms of this Agreement, sell and transfer one or
more of the
Mortgage Loans. The Purchaser shall advise the Company of any such
transfer.
Upon receipt of notice of the transfer, the Company shall mark its
books and
records to reflect the ownership of the Mortgage Loans of such
assignee, and
shall release the previous Purchaser from its obligations hereunder
with respect
to the Mortgage Loans sold or transferred. If the Company receives
notification
of a transfer less than ten (10) Business Days before the last
calendar day of
the month, the Company's duties to remit and report as required by
Article V
shall begin with the next Due Period. The Company acknowledges it
has been
notified with respect to the first transfer after the initial
Closing Date.
Section 2.03 Custodial Agreement; Delivery of Documents.
Pursuant to the related Custodial Agreement the Company will, with
respect
to each Mortgage Loan, deliver and release the Mortgage Loan
Documents to the
Custodian at least ten (10) Business Days prior to the related
Closing Date. In
addition, in connection with the assignment of any MERS Designated
Mortgage
Loan, the Company agrees that on or prior to each Closing Date it
may cause, at
its own expense, the MERS System to indicate that the related
Mortgage Loans
have been assigned by the Company to the Purchaser in accordance
with this
Agreement by entering in the MERS System the information required
by the MERS
System to identify the Purchaser as owner of such Mortgage Loans.
The Company
further agrees that it will not alter the information referenced in
this
paragraph with respect to any Mortgage Loan during the term of this
Agreement
unless and until such Mortgage Loan is repurchased in accordance
with the terms
of this Agreement.
The Custodian shall be required to certify its receipt of the
Mortgage Loan
Documents required to be delivered pursuant to the Custodial
Agreement prior to
the related Closing Date, as evidenced by the initial certification
of the
Custodian in the form annexed to the Custodial Agreement. The
Company shall be
responsible for recording the Assignments of Mortgage, if
necessary, in
accordance with Accepted Servicing Practices and this Agreement.
The Purchaser
shall be responsible for the initial and on-going fees and expenses
of the
Custodian.
17
All recording fees and other costs associated with the recording of
Assignments of Mortgage and other relevant documents to the
Purchaser or its
designee will be borne by the Company. For Mortgage Loans not
registered under
the MERS System, if the Purchaser requests that the related
Assignments of
Mortgage be recorded, the Company shall cause such Assignments of
Mortgage which
were delivered in blank to be completed and to be recorded. The
Company shall be
required to deliver such Assignments of Mortgage for recording
within thirty
(30) days of the date on which the Company is notified that
recording will be
required pursuant to this Section 2.03. The Company shall furnish
the Custodian
with a copy of each Assignment of Mortgage submitted for recording.
In the event
that any such Assignment is lost or returned unrecorded because of
a defect
therein, the Company shall promptly have a substitute Assignment of
Mortgage
prepared or have such defect cured, as the case may be, and
thereafter cause
such Assignment of Mortgage to be duly recorded.
Except as otherwise provided in this Section 2.03, upon discovery
or
receipt of notice of any materially defective Mortgage Loan
Document, or that a
Mortgage Loan Document is missing, the Company shall have ninety
(90) days to
cure such defect or deliver such missing document to the Custodian.
Any Mortgage
that is not executed as required or does not strictly comply with
all legal
requirements shall be deemed to be materially defective. If the
Company does not
cure such defect or deliver such missing document within such time
period, the
Company shall either repurchase or substitute for such Mortgage
Loan in
accordance with Section 3.03.
The Company shall forward to the Custodian original documents
evidencing an
assumption, modification, consolidation or extension of any
Mortgage Loan
entered into in accordance with Section 4.01 or 6.01 within one
week of their
execution, provided, however, that the Company shall provide the
Custodian with
a certified true copy of any such document submitted for
recordation within ten
(10) Business Days of its execution, and shall provide the original
of any
document submitted for recordation or a copy of such document
certified by the
appropriate public recording office to be a true and complete copy
of the
original within ninety (90) days of its submission for recordation.
If the original or a copy certified by the appropriate recording
office of
any document submitted for recordation to the appropriate public
recording
office is not so delivered to the Custodian 240 days following the
related
Closing Date, and if the Company does not cure such failure within
ninety (90)
days after receipt of written notification of such failure from the
Purchaser,
the related Mortgage Loan shall, upon the request of the Purchaser,
be
repurchased by the Company at a price and in the manner specified
in Section
3.03.
In the event the public recording office is delayed in returning
any
original document, the Company shall deliver to the Custodian
within 240 days of
its submission for recordation, a copy of such document and an
Officer's
Certificate, which shall (i) identify the recorded document; (ii)
state that the
recorded document has not been delivered to the Custodian due
solely to a delay
by the public recording office, (iii) state the amount of time
generally
required by the applicable recording office to record and return a
document
submitted for recordation, and (iv) specify the date the applicable
recorded
document will be delivered to the Custodian. The Company will be
required to
deliver the document to the Custodian by the date specified in (iv)
above. An
extension of the date specified in (iv) above may be requested from
the
Purchaser, which consent
18
shall not be unreasonably withheld. However, if the Company cannot
deliver such
original or clerk-certified copy of any document submitted for
recordation to
the appropriate public recording office within the specified time
for any
reason, within sixty (60) days after receipt of written
notification of such
failure from the Purchaser, the Company shall repurchase the
related Mortgage
Loan at the price and in the manner specified in Section 3.03.
In addition to any rights granted to the Purchaser hereunder to
underwrite
the Mortgage Loans and review the Mortgage Loan Documents prior to
the Closing
Date, the Purchaser shall be entitled to conduct a due diligence
review of the
Mortgage Files in accordance with the timetable and any additional
terms and
conditions set forth in the Purchase Price and Terms Letter. Such
underwriting
by the Purchaser or its designee shall not impair or diminish the
rights of the
Purchaser or any of its successors under this Agreement with
respect to a breach
of the representations and warranties contained in this Agreement.
The fact that
the Purchaser or its designee has conducted or has failed to
conduct any partial
or complete examination of the Mortgage Files shall not affect the
Purchaser's
or any of its successors' rights to demand repurchase or other
relief or remedy
provided for in this Agreement.
Section 2.04 Quality Control Procedures.
The Company shall have an internal quality control program that
verifies,
on a regular basis, the existence and accuracy of the legal
documents, credit
documents, property appraisals, and underwriting decisions. The
program shall
include evaluating and monitoring the overall quality of the
Company's loan
production and the servicing activities of the Company. The Company
shall make
available upon request of the Purchaser information regarding its
quality
control program.
Section 2.05 Closing Conditions.
The closing for the purchase and sale of each Mortgage Loan Package
shall
take place on the respective Closing Date. The closing shall be
either by
telephone, confirmed by letter or wire as the parties shall agree,
or conducted
in person, at such place as the parties may agree.
The closing for each Mortgage Loan Package shall be subject to the
satisfaction of each of the following conditions:
(a) with respect to the Purchaser's obligations to close:
(i) the Company shall have delivered to the Purchaser and the
Custodian the related Mortgage Loan Schedule and an electronic data
file
containing information on a loan-level basis;
(ii) all of the representations and warranties of the Company under
this Agreement shall be true and correct as of the related Closing
Date
(or, with respect to Section 3.02, such other date specified
therein) in
all material respects and no default shall have occurred hereunder
which,
with notice or the passage of time or both, would constitute an
Event of
Default hereunder;
19
(iii) the Purchaser shall have received from the Custodian an
initial
certification with respect to its receipt of the Mortgage Loan
Documents
for the related Mortgage Loans;
(iv) the Purchaser shall have received executed copies of the
related
Memorandum of Sale, the related Purchase Price and Terms Letter and
a
funding memorandum setting forth the Purchase Price(s), and the
accrued
interest thereon, for the Mortgage Loan Package, in each case
executed on
behalf of the Company; and
(v) all other terms and conditions of this Agreement, the related
Memorandum of Sale and the related Purchase Price and Terms Letter
to be
satisfied by the Company shall have been complied with in all
material
respects; and
(b) with respect to the Company's obligations to close:
(i) the Company shall have received a copy of the initial
certification of the Custodian with respect to its receipt of the
Mortgage
Loan Documents for the related Mortgage Loans;
(ii) the Company has received executed copies of the related
Memorandum of Sale, the related Purchase Price and Terms Letter and
a
funding memorandum setting forth the Purchase Price(s), and accrued
interest thereon, for the Mortgage Loan Package, in each case
executed on
behalf of the Purchaser; and
(iii) all terms and conditions of this Agreement, the related
Memorandum of Sale and the related Purchase Price and Terms Letter
to be
satisfied by the Purchaser shall have been materially complied
with.
Upon satisfaction of the foregoing conditions, the Purchaser shall
pay to
the Company on such Closing Date the Purchase Price for the related
Mortgage
Loan Package, including accrued interest pursuant to Section 2.01
of this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH
Section 3.01 Company Representations and Warranties.
The Company hereby represents and warrants to the Purchaser that,
as of the
related Closing Date:
(a)
Due Organization and Authority.
The Company is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of
Delaware
and has all licenses necessary to carry on its business as now
being
conducted and is in good standing in each state where a Mortgaged
Property is located and, in any event, the Company is in compliance
with the laws of any such state to the extent necessary
20
to ensure the enforceability of the related Mortgage Loan in
accordance with the terms of this Agreement; the Company has the
full
power and authority to execute and deliver this Agreement and to
perform in accordance herewith; the execution, delivery and
performance of this Agreement (including all instruments of
transfer
to be delivered pursuant to this Agreement) by the Company and the
consummation of the transactions contemplated hereby have been duly
and validly authorized; this Agreement evidences the valid, binding
and enforceable obligation of the Company; and all requisite action
has been taken by the Company to make this Agreement valid and
binding
upon the Company in accordance with its terms;
(b)
Ordinary Course of Business.
The consummation of the transactions contemplated by this Agreement
are in the ordinary course of business of the Company, who is in
the
business of selling loans, and the transfer, assignment and
conveyance
of the Mortgage Notes and the Mortgages by the Company pursuant to
this Agreement are not subject to the bulk transfer or any similar
statutory provisions in effect in any applicable jurisdiction;
(c)
No Conflicts.
Neither the execution and delivery of this Agreement, the
acquisition
of the Mortgage Loans by the Company, the sale of the Mortgage
Loans
to the Purchaser or the transactions contemplated hereby, nor the
fulfillment of or compliance with the terms and conditions of this
Agreement will conflict with or result in a breach of any of the
organizational documents of the Company or any legal restriction or
any agreement or instrument to which the Company is now a party or
by
which it is bound, or constitute a default or result in the
violation
of any law, rule, regulation, order, judgment or decree to which
the
Company or its property is subject, or impair the ability of the
Purchaser to realize on the Mortgage Loans, or impair the value of
the
Mortgage Loans;
(d)
Ability to Service.
The Company or its Subservicer is an approved seller/servicer of
conventional residential mortgage loans for Fannie Mae or Freddie
Mac,
with the facilities, procedures, and experienced personnel
necessary
for the sound servicing of mortgage loans of the same type as the
Mortgage Loans. The Company is a HUD approved mortgagee pursuant to
Section 203 of the National Housing Act and is in good standing to
sell mortgage loans to and service mortgage loans for Fannie Mae or
Freddie Mac;
(e)
Reasonable Servicing Fee; Fair Consideration.
The Company acknowledges and agrees that the Servicing Fee
represents
reasonable compensation for performing such services and that the
entire Servicing Fee shall be treated by the Company, for
accounting
and tax purposes, as compensation for the servicing and
administration
of the Mortgage Loans
21
pursuant to this Agreement. The consideration received by the
Company
upon the sale of the Mortgage Loans under this Agreement shall
constitute fair consideration and reasonably equivalent value for
the
Mortgage Loans;
(f)
Ability to Perform; Solvency.
The Company does not believe, nor does it have any reason or cause
to
believe, that it cannot perform each and every covenant contained
in
this Agreement. The Company is solvent and the sale of the Mortgage
Loans will not cause the Company to become insolvent. The sale of
the
Mortgage Loans is not undertaken to hinder, delay or defraud any of
the Company's creditors;
(g)
No Litigation Pending.
There is no action, suit, proceeding or investigation pending or to
its knowledge threatened against the Company which, either in any
one
instance or in the aggregate, may result in any material adverse
change in the business, operations, financial condition, properties
or
assets of the Company, or in any material impairment of the right
or
ability of the Company to carry on its business substantially as
now
conducted, or in any material liability on the part of the Company,
or
which would draw into question the validity of this Agreement or
the
Mortgage Loans or of any action taken or to be contemplated herein,
or
which would be likely to impair materially the ability of the
Company
to perform under the terms of this Agreement;
(h)
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 Company of or compliance by the Company with
this Agreement or the sale of the Mortgage Loans as evidenced by
the
consummation of the transactions contemplated by this Agreement, or
if
required, such consent, approval, authorization or order has been
obtained prior to the related Closing Date;
(i)
Selection Process.
The Mortgage Loans will be selected on such Closing Date from among
the outstanding fixed and adjustable rate one- to four-family
mortgage
loans in the Company's portfolio at such Closing Date as to which
the
representations and warranties set forth in Section 3.02 could be
made
and such selection will not be made in a manner so as to affect
adversely the interests of the Purchaser;
(j)
No Untrue Information.
Neither this Agreement nor any written report furnished by the
Company
pursuant to this Agreement or in connection with the transactions
contemplated hereby contains any untrue material statement of fact
or
omits to state a material fact necessary to make the statements
contained therein not misleading;
22
(k)
Sale Treatment.
The Company has determined that the disposition of the Mortgage
Loans
pursuant to this Agreement will be afforded sale treatment for
accounting and tax purposes;
(l)
No Material Change.
There has been no material adverse change in the business,
operations
or financial condition of the Company since the date of the
Company's
most recent financial statements;
(m)
No Brokers' Fees.
The Company has not dealt with any broker, investment banker, agent
or
other Person, other than the Purchaser and its affiliates, that may
be
entitled to any commission or compensation in the connection with
the
sale of the Mortgage Loans;
(n)
Anti-Money Laundering Law and OFAC Compliance.
The Company has complied with all applicable anti-money laundering
laws and regulations, including without limitation the USA Patriot
Act
of 2001 (collectively, the "Anti-Money Laundering Laws"); the
Company
has established an anti-money laundering compliance program as
required by the Anti-Money Laundering Laws, has conducted the
requisite due diligence in connection with the origination of each
Mortgage Loan for purposes of the Anti-Money Laundering Laws,
including with respect to the legitimacy of the applicable
Mortgagor
and the origin of the assets used by the said Mortgagor to purchase
the property in question, and maintains, and will maintain,
sufficient
information to identify the applicable Mortgagor for purposes of
the
Anti-Money Laundering Laws. No Mortgage Loan is subject to
nullification pursuant to Executive Order 13224 (the "Executive
Order") or the regulations promulgated by the Office of Foreign
Assets
Control of the United States Department of the Treasury (the "OFAC
Regulations") or in violation of the Executive Order or the OFAC
Regulations, and no Mortgagor is subject to the provisions of such
Executive Order or the OFAC Regulations nor listed as a "blocked
person" for purposes of the OFAC Regulations;
(o)
Securities Law Compliance.
Neither the Company nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of any Mortgage
Loans, any interest in any Mortgage Loans or any other similar
security to, or solicited any offer to buy or accept a transfer,
pledge or other disposition of any Mortgage Loans, any interest in
any
Mortgage Loans or any other similar security from, or otherwise
approached or negotiated with respect to any Mortgage Loans, any
interest in any Mortgage Loans or any other similar security with,
any
person in any manner, or made any general solicitation by means of
general advertising or in any other
23
manner, or taken any other action which would constitute a
distribution of the Mortgage Loans under the Securities Act or
which
would render the disposition of any Mortgage Loans a violation of
Section 5 of the Securities Act or require registration pursuant
thereto, nor will it act, nor has it authorized or will it
authorize
any person to act, in such manner with respect to the Mortgage
Loans;
(p)
MERS.
The Company is in good standing, and will comply in all material
respects with the rules and procedures of MERS in connection with
the
servicing of the MERS Designated Mortgage Loans. On or within ten
(10)
Business Days following the related Closing Date, the Company has
provided the Custodian and the Purchaser with a MERS Report
reflecting
the Purchaser as the Investor on the MERS System with respect to
each
MERS Designated Mortgage Loan and no Person as Interim Funder for
each
MERS Designated Mortgage Loan; and
(q)
Compliance with the FACT Act.
As of the Closing Date, the sale or transfer of each Mortgage Loan
by
the Company complies with all applicable federal, state and local
laws, rules and regulations governing such sale or transfer,
including
without limitation, the Fair and Accurate Transactions Act (the
"FACT
Act") and the Fair Credit Reporting Act, each as may be amended
from
time to time, and the Company has not received any actual or
constructive notice of any identity theft in connection with such
Mortgage Loan.
Section 3.02 Representations and Warranties Regarding Individual
Mortgage Loans.
As to each Mortgage Loan, the Company hereby represents and
warrants to the
Purchaser that as of the related Closing Date:
(a) the information set forth in the Mortgage Loan Schedule hereto
is true
and correct in all material respects; provided, however, that the
Company makes
no representation with respect to any field in the related Mortgage
Loan
Schedule regarding the occupancy of the property other than to
confirm that the
stated occupancy was made by the related Mortgagor in the related
loan
application;
(b) immediately prior to the transfer to the Purchaser, the Company
was the
sole owner of beneficial title and holder of, and had good title
to, each
Mortgage and Mortgage Note relating to the Mortgage Loans and is
conveying the
same free and clear of any and all liens, claims, encumbrances,
participation
interests, equities, pledges, charges or security interests of any
nature and
the Company has full right and authority to sell or assign the same
pursuant to
this Agreement;
(c) no selection procedure reasonably believed by the Company to be
adverse
to the interests of the Purchaser was utilized in selecting the
Mortgage Loans;
24
(d) each Mortgage Loan constitutes a "qualified mortgage" under
Section
860G(a)(3)(A) of the Code and Treasury Regulation Section
1.860G-2(a)(1);
(e) as of the Cut-off Date, no Mortgage Loan is 30 or more days
past due.
The Company has not advanced funds, or induced, solicited or
knowingly received
any advance of funds from a party other than the owner of the
related Mortgaged
Property, directly or indirectly, for the payment of any amount
required by the
Mortgage Note or Mortgage;
(f) there are no delinquent taxes or assessment liens against the
related
Mortgaged Property;
(g) no default, breach, violation or waiver exists under the
mortgage
documents, and no modifications to the mortgage documents have been
made that
have not been reflected in the Mortgage Loan Schedule;
(h) all buildings upon, or comprising part of, the Mortgaged
Property are
insured by an insurer acceptable to Fannie Mae and Freddie Mac
against loss by
fire, hazards of extended coverage and such other hazards as are
customary in
the area where the Mortgaged Property is located, and such insurer
is licensed
to do business in the state where the Mortgaged Property is
located. All such
insurance policies contain a standard mortgagee clause naming the
originator,
its successors and assigns as mortgagee and Company has received no
notice that
all premiums thereon have not been paid. The amount of the Mortgage
Loan covered
by these insurance policies is in accordance with the standards of
Fannie Mae or
Freddie Mac. If upon origination of the Mortgage Loan, the
Mortgaged Property
was, or was subsequently deemed to be, 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), which
require under
applicable law that a flood insurance policy meeting the
requirements of the
current guidelines of the Federal Insurance Administration (or any
successor
thereto) be obtained, such flood insurance policy is in effect
which policy is
with a generally acceptable carrier in an amount representing
coverage not less
than the least of (A) the principal balance of the related Mortgage
Loan, (B)
the minimum amount required to compensate for damage or loss on a
replacement
cost basis, or (C) the maximum amount of insurance that is
available under the
Flood Disaster Protection Act of 1973. The Mortgage obligates the
Mortgagor
thereunder to maintain all such insurance at Mortgagor's cost and
expense and,
on the Mortgagor's failure to do so, authorizes the holder of the
Mortgage to
maintain such insurance at Mortgagor's cost and expense and to
obtain
reimbursement therefor from the Mortgagor. Each such insurance
policy is the
valid and binding obligation of the insurer and is in full force
and effect.;
(i) all parties which have had any interest in the Mortgage Loan,
whether
as mortgagee, assignee, pledgee or otherwise, are (or, during the
period in
which they held and disposed of such interest, were) in compliance
with any and
all applicable licensing requirements of the laws of the state
wherein the
Mortgaged Property is located.;
(j) as of the Closing Date, there is no mechanics' lien or claim
for work,
labor or material affecting the Mortgaged Property except those
which are
insured against by the title insurance policy;
25
(k) as of the Closing Date, there is no valid offset, defense or
counterclaim to any Mortgage Note or Mortgage, and, to the best of
the Company's
knowledge or the knowledge of the related servicer, no such offset,
defense or
counterclaim has been asserted with respect thereto;
(l) as of the Closing Date, the physical property subject to any
Mortgage
is free of material damage and is in good repair and there is no
proceeding for
the total or partial condemnation thereof;
(m) all improvements which were considered in determining the
appraised
value of the related Mortgaged Property lay wholly within the
boundaries and
building restriction lines of the Mortgaged Property, and no
improvements on
adjoining properties encroach upon the Mortgaged Property;
(n) as of the date the Mortgage Loan was either originated or
acquired by
the Company, no improvement located on or being part of the
Mortgaged Property
was in violation of any applicable zoning and subdivision laws or
ordinances;
(o) to the best of the Company's knowledge, all inspections,
licenses and
certificates required to be made or issued with respect to all
occupied portions
of the Mortgaged Property and, with respect to the use and
occupancy of the
same, including but not limited to certificates of occupancy, have
been made or
obtained from the appropriate authorities;
(p) with respect to each Mortgage Loan, the related Mortgaged
Property is
lawfully permitted to be occupied under applicable law;
(q) each Mortgage Loan was underwritten in accordance with the
applicable
Underwriting Guidelines and policies of the related Originator
(subject to
approved variances and exceptions in connection with compensating
factors
consistent with customary practices and policies of the Company).
The Company
has no knowledge of any fact that should have led it to expect at
the time of
the initial creation of an interest in the Mortgage Loan that such
Mortgage Loan
would not be paid in full when due;
(r) each original Mortgage has been recorded or is in the process
of being
recorded in the appropriate jurisdictions wherein such recordation
is required
to perfect the lien thereof for the benefit of the Purchaser;
(s) if an Assignment of Mortgage is included in the Mortgage File,
such
Assignment of Mortgage is in recordable form and is acceptable for
recording
under the laws of the jurisdiction in which the Mortgaged Property
is located;
(t) the related Mortgage File contains each of the documents and
instruments specified;
(u) the Mortgage Loans are being serviced in accordance with
Accepted
Servicing Practices and the Mortgage Note and all escrow deposits
and Escrow
Payments, if any, are in the possession of, or under the control
of, the Company
or its Subservicer and have been collected and handled in full
compliance with
RESPA and other state and federal laws.;
26
(v) the Mortgage Note and the Mortgage have not been altered or
modified in
any material respect, except by a written instrument which has been
recorded,
and the substance of any such alteration or modification has been
approved by
the title insurer, to the extent required by the related policy. No
instrument
of alteration or modification has been executed by the Company or
any other
person in the chain of title from the Company, and no Mortgagor has
been
released, in whole or in part, except in connection with an
assumption agreement
approved by the title insurer;
(w) the Mortgage has not been satisfied, subordinated, rescinded or
canceled, in whole or in part, and the Mortgaged Property has not
been released
from the lien of the Mortgage, in whole or in part, nor has any
instrument been
executed that would effect any such satisfaction, subordination,
rescission,
cancellation or release;
(x) the Mortgage Loan is covered by an ALTA lender's title
insurance
policy, acceptable to Fannie Mae or Freddie Mac, or other generally
acceptable
form of policy of insurance acceptable to Fannie Mae or Freddie
Mac, issued by a
title insurer acceptable to Fannie Mae or Freddie Mac, insuring the
Company, its
successors and assigns, as to the first priority lien of the
Mortgage in the
original principal amount of the Mortgage Loan. The Company, its
successors and
assigns, are the sole insureds of such lender's title insurance
policy for each
Mortgage Loan, and such lender's title insurance policy is valid
and remains in
full force and effect and will be in full force and effect upon the
sale of the
Mortgage Loan to the Purchaser. Such lender's title insurance
policy is valid
and remains in full force and effect;
(y) the Mortgaged Property consists of a contiguous parcel of real
property
with single-family residence erected thereon, or a two- to four-
family
dwelling, or an individual condominium unit, or an individual unit
in a planned
unit development or a de minimis planned unit development. The
Mortgaged
Property does not consist of any of the following property types:
(a)
co-operative units, (b) mobile homes and (c) manufactured homes (as
defined in
the Fannie Mae Originator-Servicer's Guide), except when the
appraisal indicates
that the home is of comparable construction to a stick or beam
construction
home, is readily marketable, has been permanently affixed to the
site and is not
in a mobile home "park." The Mortgaged Property is either a fee
simple estate or
a residential lease. If any of the Mortgage Loans are secured by a
leasehold
interest, with respect to each leasehold interest: the use of
leasehold estates
for residential properties is an accepted practice in the area
where the related
Mortgaged Property is located; residential property in such area
consisting of
leasehold estates is readily marketable; the lease is recorded and
no party is
in any way in breach of any provision of such lease; the leasehold
is in full
force and effect and is not subject to any prior lien or
encumbrance by which
the leasehold could be terminated or subject to any charge or
penalty; and the
remaining term of the lease does not terminate less than ten years
after the
maturity date of such Mortgage Loan;
(z) the Mortgage File contains an appraisal of the related
Mortgaged
Property which satisfied the standards of Fannie Mae and Freddie
Mac and was
made and signed, prior to the approval of the Mortgage Loan
application, by a
qualified appraiser, duly appointed by the Company, who had no
interest, direct
or indirect in the Mortgaged Property or in any loan made on the
security
thereof, whose compensation is not affected by the approval or
disapproval of
the Mortgage Loan and who met the minimum qualifications of Fannie
Mae and
Freddie Mac. Each
27
appraisal of the Mortgage Loan was made in accordance with the
relevant
provisions of the Financial Institutions Reform, Recovery, and
Enforcement Act
of 1989;
(aa) in the event the Mortgage constitutes a deed of trust, a
trustee, duly
qualified under applicable law to serve as such, has been properly
designated
and currently so serves and is named in the Mortgage, and no fees
or expenses
are or will become payable by the Purchaser to the trustee under
the deed of
trust, except in connection with a trustee's sale after default by
the
Mortgagor;
(bb) [Reserved]
(cc) the Mortgage is a legal, valid, existing and enforceable first
lien on
the Mortgaged Property, including all improvements on the Mortgaged
Property, if
any, subject only to (1) the lien of current real property taxes
and assessments
not yet due and payable, (2) covenants, conditions and
restrictions, rights of
way, easements and other matters of the public record as of the
date of
recording being acceptable to mortgage lending institutions
generally and
specifically referred to in the lender's title insurance policy
delivered to the
originator of the Mortgage Loan and which do not materially and
adversely affect
the Appraised Value of the Mortgaged Property and (3) other matters
to which
like properties are commonly subject which do not materially and
adversely
affect the benefits of the security intended to be provided by the
Mortgage. The
Company has full right to sell and assign the Mortgage to the
Purchaser;
(dd) each Mortgagor who is a party to the Mortgage Note is a
natural person
or a living trust;
(ee) all requirements of any federal, state or local law (including
usury,
truth in lending, real estate settlement procedures, consumer
credit protection,
equal credit opportunity, disclosure or recording, predatory and
abusive lending
laws) applicable to the acquisition, origination and servicing of
such Mortgage
Loan have been complied with in all material respects;
(ff) none of the Mortgage Loans are (a) loans subject to 12 CFR
Part
226.31, 12 CFR Part 226.32 or 12 CFR Part 226.34 of Regulation Z,
the regulation
implementing TILA, which implements the Home Ownership and Equity
Protection Act
of 1994, as amended ("HOEPA"), (b) loans subject to, or in
violation of, any
applicable state or local law, ordinance or regulation similar to
HOEPA or (c)
classified and/or defined as a "high cost home loan" under any
federal, state or
local law; the Company has implemented and conducted compliance
procedures to
determine if each Mortgage Loan is "high-cost" home loan under the
applicable
laws;
(gg) none of the Mortgage Loans secured by Mortgaged Property in
the States
of Georgia, New York, Arkansas, Kentucky and Florida is a "high
cost home loan"
as defined in the Georgia Fair Lending Act, as amended (the
"Georgia Act"), the
Arkansas Home Loan Protection Act, as amended (the "Arkansas Act"),
Kentucky
Revised Statutes Section 360.100, as amended (the "Kentucky Act"),
the Florida
Home Loan Protection Act Section 494.007 (the "Florida Act"), and
the New York
Predatory Lending Law, codified as N.Y. Banking Law Section 6-I,
N.Y. Gen. Bus.
Law Section 771-a, and N.Y. Real Prop. Acts Law Section 1302
(together, the "New
York Act"), respectively;
28
(hh) none of the Mortgage Loans are subject to the New York Act;
none of
the Mortgage Loans secured by Mortgaged Property in the District of
Columbia is
a "covered loan" as defined in the District of Columbia Home Loan
Protection Act
Section 26-1151.01 (the "D.C. Act"); none of the Mortgage Loans
secured by
Mortgaged Property in Maine is a "high-rate, high-fee mortgage" as
defined in
Maine Consumer Credit Code -- Truth In Lending Section 8-103 (the
"Maine Act");
none of the Mortgage Loans secured by Mortgaged Property in Nevada
is a "home
loan" as defined in Nevada Revised Statutes title 52, as amended by
Assembly
Bill No. 284, 72nd Session (Nevada 2003) (the "Nevada Act"); and
all the
Mortgage Loans that are subject to the Georgia Act, the New York
Act, the
Arkansas Act, the Kentucky Act, the Florida Act, the D.C. Act, the
Maine Act and
the Nevada Act comply with the requirements of each such
legislation;
(ii) each Prepayment Premium is enforceable and was originated in
compliance with all applicable federal, state, and local laws;
(jj) each Mortgage Loan was originated by a savings and loan
association,
savings bank, commercial bank, credit union, insurance company, or
similar
institution which is supervised and examined by a federal or state
authority, or
by a mortgagee approved by the Secretary of Housing and Urban
Development
pursuant to sections 203 and 211 of the National Housing Act, all
within the
meaning of Section 3(a)(41) of the Securities Exchange Act of 1934,
as amended.
(kk) no Mortgage Loan is a High Cost Loan or Covered Loan, as
applicable
(as such terms are defined in the then current Standard &
Poor's LEVELS(R)
Glossary, which is now Version 5.7, Appendix E) and no Mortgage
Loan originated
on or after October 1, 2002 through March 7, 2003 is governed by
the "Georgia
Fair Lending Act";
(ll) to the best of the Company's knowledge, there is no breach,
default,
violation or event of acceleration existing under the Mortgage or
the Mortgage
Note and no event which, with the passage of time or with notice
and the
expiration of any grace or cure period, would constitute a default,
breach,
violation or event of acceleration. Neither the Company nor its
predecessors
have waived any default, breach, violation or event of
acceleration;
(mm) the related Mortgage Note and Mortgage 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 by general equity
principles
(regardless of whether such enforcement is considered in a
proceeding in equity
or at law). To the best of Company's knowledge, all parties to the
Mortgage Note
and Mortgage had legal capacity to execute the Mortgage Note and
Mortgage and
each Mortgage Note and Mortgage have been duly and properly
executed by such
parties;
(nn) the proceeds of each Mortgage Loan have been fully disbursed,
and
except with respect to any escrow holdbacks as approved by the
related
originator, there is no requirement for future advances thereunder
and any and
all requirements as to completion of any on-site or off-site
improvements and as
to disbursement from any escrow funds therefore have been complied
with. All
costs, fees and expenses incurred in making or closing the Mortgage
Loan and the
recording of the Mortgage were paid, and, except with respect to
Buydown
Mortgage
29
Loans, the Mortgagor is not entitled to any refund of any amounts
paid or due
under the Mortgage Note or Mortgage;
(oo) the related Mortgage contains customary and enforceable
provisions
which render the rights and remedies of the holder thereof adequate
for the
realization against the Mortgaged Property of the benefits of the
security,
including (1) in the case of Mortgage designated as a deed of
trust, by
trustee's sale, and (2) otherwise by judicial foreclosure. To the
best of the
Company's knowledge, there is no homestead or other exemption
(other than under
the Servicemembers Civil Relief Act) available to a Mortgagor which
would
interfere with the right to sell the Mortgaged Property at a
trustee's sale or
the right to foreclose the Mortgage;
(pp) the Mortgage contains an enforceable provision for the
acceleration of
the payment of the unpaid principal balance of the Mortgage Loan in
the event
that the Mortgaged Property is sold or transferred without the
prior written
consent of the mortgagee thereunder, except as may be limited by
applicable law;
(qq) with respect to each adjustable-rate Mortgage Loan, all
adjustments to
the Mortgage Interest Rate and monthly payment have been done in
accordance with
the terms of the related Mortgage Note;
(rr) the information set forth in the Mortgage Loan Schedule with
respect
to the Prepayment Premiums is true and correct in all material
respects;
(ss) no foreclosure proceedings are pending against the Mortgaged
Property
and the Mortgage Loan is not subject to any pending bankruptcy or
insolvency
proceeding, and to the best of the Company's knowledge or the
knowledge of the
related servicer, no material litigation or lawsuit relating to the
Mortgage
Loan is pending;
(tt) all payments required to be made prior to the related Cut-off
Date for
the Mortgage Loan under the terms of the Mortgage Note have been
made and
credited. No payment under any Mortgage Loan has ever been 30 days
or more
delinquent.
(uu) [Reserved];
(vv) to the best of the Company's knowledge, no fraud, with respect
to a
Mortgage Loan has taken place on the part of the Company or its
employees in
connection with the origination of such Mortgage Loan or the sale
of such
Mortgage Loan to the Purchaser;
(ww) to the best of the Company's knowledge, the Mortgage Note is
not and
has not been secured by any collateral, pledged account or other
security except
the lien of the corresponding Mortgage;
(xx) to the best of the Company's knowledge, the Mortgagor has not
notified
the Company or its servicer, and neither the Company nor its
servicer has
knowledge of any relief requested by or provided to the Mortgagor
under the
Servicemembers Civil Relief Act, as amended, or any similar state
law;
30
(yy) with respect to any Mortgage Loan which is identified on the
Mortgage
Loan Schedule as a balloon mortgage loan (each, a "Balloon Mortgage
Loan"), the
Mortgage Note is payable in Monthly Payments based on a thirty (30)
or forty
(40) year amortization schedule with a final Monthly Payment
substantially
greater than the preceding Monthly Payment which is sufficient to
amortize the
remaining principal balance of the Balloon Mortgage Loan and such
final Monthly
Payment shall not be due prior to 180 months following the first
Monthly Payment
of the Balloon Mortgage Loan;
(zz) no Mortgage Loans was made in connection with the construction
of a
Mortgaged Property;
(aaa) the Mortgage Loan Documents for the related Mortgage Loans
have been
delivered to the Custodian. The Company is in possession of a
complete Mortgage
File for each Mortgage Loan in compliance with Exhibit B, except
for such
documents the originals of which have been delivered to the
Custodian. All
documents required to be included in the Mortgage File shall be
complete,
executed as required and in compliance with applicable law. With
respect to each
Mortgage Loan for which a lost note affidavit has been delivered to
the
Custodian in place of the original Mortgage Note, the related
Mortgage Note is
no longer in existence, and, if such Mortgage Loan is subsequently
in default,
the enforcement of such Mortgage Loan or of the related Mortgage by
or on behalf
of the Purchaser will not be affected by the absence of the
original Mortgage
Note;
(bbb) the Mortgaged Property is free from any and all toxic or
hazardous
substances and there exists no violation of any local, state or
federal
environmental law, rule or regulation;
(ccc) each Mortgage Loan originated in the state of Texas pursuant
to
Article XVI, Section 50(a)(6) of the Texas Constitution has been
originated in
compliance with the provisions of Article XVI, Section 50(a)(6) of
the Texas
Constitution, Texas Civil Statutes and the Texas Finance Code. If
the Mortgage
Loan was originated in Texas, it is not a cash-out refinancing;
(ddd) no Adjustable Rate Mortgage Loan contains a provision
permitting or
requiring conversion to a fixed interest rate Mortgage Loan;
(eee) all of the terms of the related Mortgage Note pertaining to
interest
adjustments, payment adjustments and adjustments of the outstanding
principal
balance, if any, are enforceable and such adjustments on such
Mortgage Loan have
been made properly and in accordance with the provisions of such
Mortgage Loan,
including any required notices, and such adjustments do not and
will not affect
the priority of the Mortgage lien;
(fff) interest on each Mortgage Loan is calculated on the basis of
a
360-day year consisting of twelve 30-day months; and
(ggg) the Mortgage Loans have an original term to maturity of not
more than
30 years, with interest payable in arrears on the Due Date set
forth on the
related Mortgage Loan Schedule. As to each Adjustable Rate Mortgage
Loan on each
applicable Adjustment Date, the Mortgage Interest Rate has been or
will be
adjusted to equal the sum of the Index plus the applicable Gross
Margin, rounded
up or down to the nearest multiple of 0.125% indicated by the
Mortgage Note;
provided that the Mortgage Interest Rate has not increased or
decreased and will
not increase or
31
decrease by more than the Periodic Interest Rate Cap on any
Adjustment Date, and
has not, nor will it in any event, exceed the maximum Mortgage
Interest Rate or
be lower than the minimum Mortgage Interest Rate listed on the
Mortgage Loan
Schedule for such Mortgage Loan. As to each Adjustable Rate
Mortgage Loan, if
the related Mortgage Interest Rate changes on an Adjustment Date,
the then
outstanding principal balance will be reamortized over the
remaining life of
such Mortgage Loan. No Mortgage Loan contains terms or provisions
which would
result in Negative Amortization.
Section 3.03 Repurchase.
It is understood and agreed that the representations and warranties
set
forth in Sections 3.01 and 3.02 shall survive the sale of the
Mortgage Loans to
the Purchaser and the delivery of the Mortgage Loan Documents to
the Custodian
and shall inure to the benefit of the Purchaser, notwithstanding
any restrictive
or qualified endorsement on any Mortgage Note or Assignment of
Mortgage or the
examination or failure to examine any Mortgage File. Upon discovery
by either
the Company or the Purchaser of any materially defective or missing
Mortgage
Loan Document ("Defective Document") or a breach of any of the
foregoing
representations and warranties that materially and adversely
affects the value
of a Mortgage Loan or the interest of the Purchaser in the related
Mortgage
Loan, the party discovering such Defective Document or a breach
shall give
prompt written notice to the other.
Within ninety (90) days of the earlier of either discovery by or
notice to
the Company of any Defective Document or a breach of a
representation or
warranty which materially and adversely affects the value of a
Mortgage Loan or
the interest of the Purchaser therein, the Company shall use its
best efforts
promptly to cure such breach in all material respects and, if such
Defective
Document or breach cannot be cured, the Company shall, at the
Purchaser's
option, repurchase such Mortgage Loan at the Repurchase Price. In
the event that
a breach shall involve any representation or warranty set forth in
Section 3.01,
and such breach cannot be cured within ninety (90) days of the
earlier of either
discovery by or notice to the Company of such breach, all of the
Mortgage Loans
shall, at the Purchaser's option, be repurchased by the Company at
the
Repurchase Price. However, if the breach or Defective Document
shall involve a
representation or warranty set forth in Section 3.02 and the
Company discovers
or receives notice of any such breach within ninety (90) days of
the related
Closing Date, the Company shall, if the breach or Defective
Document cannot be
cured, at the Purchaser's option and provided that the Company has
a Qualified
Substitute Mortgage Loan, rather than repurchase the Mortgage Loan
as provided
above, remove such Mortgage Loan (a "Deleted Mortgage Loan") and
substitute in
its place a Qualified Substitute Mortgage Loan or Loans, provided
that any such
substitution shall be effected not later than one hundred twenty
(120) days
after the related Closing Date. Notwithstanding any of the
foregoing, if a
breach or Defective Document would cause the Mortgage Loan to be
other than a
"qualified mortgage," as defined in Section 860G(a)(3) of the Code,
any such
repurchase or substitution must occur within forty-five (45) days
from the date
the breach or Defective Document was discovered unless such breach
is cured
during such period. In addition, for purposes of this Section 3.03,
any document
required to be included in a Mortgage File that is not executed as
required or
does not strictly comply with all legal requirements shall be
deemed to
materially and adversely affect the interests of the Purchaser.
32
If the Company has no Qualified Substitute Mortgage Loan, it shall
repurchase the deficient Mortgage Loan within ninety (90) days
after the written
notice of the breach or Defective Document. Any repurchase of a
Mortgage Loan or
Loans pursuant to the foregoing provisions of this Section 3.03
shall occur on a
date designated by the Purchaser and shall be accomplished by
deposit in the
Custodial Account of the amount of the Repurchase Price for
distribution to the
Purchaser on the next scheduled Remittance Date, after deducting
therefrom any
amount received in respect of such repurchased Mortgage Loan or
Loans and being
held in the Custodial Account for future distribution.
At the time of repurchase or substitution, the Purchaser and the
Company
shall arrange for the reassignment of the Deleted Mortgage Loan to
the Company
and the delivery to the Company of any documents held by the
Custodian relating
to the Deleted Mortgage Loan. In the event of a repurchase or
substitution, the
Company shall, simultaneously with such reassignment, give written
notice to the
Purchaser that such repurchase or substitution has taken place,
amend the
related Mortgage Loan Schedule to reflect the withdrawal of the
Deleted Mortgage
Loan from this Agreement, and, in the case of substitution,
identify a Qualified
Substitute Mortgage Loan and amend the related Mortgage Loan
Schedule to reflect
the addition of such Qualified Substitute Mortgage Loan to this
Agreement. In
connection with any such substitution, the Company shall be deemed
to have made
as to such Qualified Substitute Mortgage Loan the representations
and warranties
set forth in Sections 3.01 and 3.02 except that all such
representations and
warranties set forth in this Agreement shall be deemed made as of
the date of
such substitution. The Company shall effect such substitution by
delivering to
the Custodian for such Qualified Substitute Mortgage Loan the
documents required
by Section 2.03, with the Mortgage Note endorsed as required by
Section 2.03. No
substitution will be made in any calendar month after the
Determination Date for
such month. The Company shall deposit in the Custodial Account the
Monthly
Payment less the Servicing Fee due on such Qualified Substitute
Mortgage Loan or
Loans in the month following the date of such substitution. Monthly
Payments due
with respect to Qualified Substitute Mortgage Loans in the month of
substitution
shall be retained by the Company. With respect to any Deleted
Mortgage Loan,
distributions to the Purchaser shall include the Monthly Payment
due on any
Deleted Mortgage Loan in the month of substitution, and the Company
shall
thereafter be entitled to retain all amounts subsequently received
by the
Company in respect of such Deleted Mortgage Loan.
For any month in which the Company substitutes one or more
Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans,
the amount (if
any) by which the aggregate principal balance of all such Qualified
Substitute
Mortgage Loans as of the date of substitution is less than the
aggregate Stated
Principal Balance of all such Deleted Mortgage Loans (after
application of the
principal portion of the Monthly Payments due in the month of
substitution) (the
"Substitution Adjustment Amount") shall be deposited into the
Custodial Account
by the Company on or before the Remittance Date in the month
succeeding the
calendar month during which the related Mortgage Loan is required
to be
purchased or replaced hereunder.
In addition to such repurchase or substitution obligation, the
Company
shall indemnify the Purchaser and hold it harmless against any
losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees
and related
costs, judgments, and other costs and expenses resulting from any
claim, demand,
defense or assertion based on or grounded upon, or resulting
33
from, a breach of the representations and warranties of the Company
contained in
this Agreement. It is understood and agreed that the obligations of
the Company
set forth in this Section 3.03 to cure, substitute for or
repurchase a defective
Mortgage Loan and to indemnify the Purchaser as provided in this
Section 3.03
constitute the sole remedies of the Purchaser respecting a breach
of the
foregoing representations and warranties.
The Purchaser shall indemnify the Company and hold it harmless
against any
losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal
fees and related costs, judgments, and other costs and expenses
resulting from
any claim, demand, defense or assertion based on or grounded upon,
or resulting
from, a breach of the representations and warranties of the
Purchaser contained
in Section 3.06 of this Agreement.
Any cause of action against the Company relating to or arising out
of the
breach of any representations and warranties made in Sections 3.01
and 3.02
shall accrue as to any Mortgage Loan upon (i) discovery of such
breach by the
Purchaser or notice thereof by the Company to the Purchaser, (ii)
failure by the
Company to cure such breach or repurchase such Mortgage Loan as
specified above,
and (iii) demand upon the Company by the Purchaser for compliance
with this
Agreement.
Section 3.04 Repurchase of Mortgage Loans With Early Payment
Defaults.
If the related Mortgagor is thirty (30) days or more delinquent
with
respect to the first two (2) Monthly Payments under a Mortgage Loan
due after
the related Closing Date, the Company shall, at the Purchaser's
option and
repurchase such Mortgage Loan from the Purchaser within thirty (30)
calendar
days following receipt of notice by the Company at the Repurchase
Price.
Section 3.05 Purchase Price Protection.
With respect to any Mortgage Loan that prepays in full within the
first
thirty (30) days following the related Closing Date, then (a) with
respect to
any such Mortgage Loan that does not provide for a Prepayment
Premium, the
Company will pay to the Purchaser the premium paid by the Purchaser
in excess of
par as set forth in the related Purchase Price and Terms Letter
(the "Purchase
Premium") and (b) with respect to any such Mortgage Loan that
provides for a
Prepayment Premium, the Company shall pay to the Purchaser such
Prepayment
Premium, plus the amount, if any, by which the Purchase Premium
exceeds the
amount of such Prepayment Premium. The Company shall remit the
amounts payable
under clauses (a) and (b) above, for the benefit of the Purchaser
or any
assignee of the Purchaser, by wire transfer of immediately
available funds on
the Remittance Date following the Prepayment Period in which the
prepayment was
received by the Company.
Section 3.06 Representations and Warranties of the Purchaser
(a)
Due Organization and Authority.
The Purchaser is a national banking association duly organized,
validly existing and in good standing under the laws of the United
States and has all licenses necessary to carry on its business as
now
being conducted; the Purchaser has the
34
full power and authority to execute and deliver this Agreement and
to
perform in accordance herewith; the execution, delivery and
performance of this Agreement (including all instruments of
transfer
to be delivered pursuant to this Agreement) by the Purchaser and
the
consummation of the transactions contemplated hereby have been duly
and validly authorized; this Agreement evidences the valid, binding
and enforceable obligation of the Purchaser; and all requisite
action
has been taken by the Purchaser to make this Agreement valid and
binding upon the Purchaser in accordance with its terms;
(b)
Ordinary Course of Business.
The consummation of the transactions contemplated by this Agreement
are in the ordinary course of business of the Purchaser;
(c)
No Conflicts.
Neither the execution and delivery of this Agreement, the
acquisition
of the Mortgage Loans by the Purchaser or the transactions
contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement will conflict with or result
in
a breach of any of the organizational documents of the Purchaser or
any legal restriction or any agreement or instrument to which the
Purchaser is now a party or by which it is bound, or constitute a
default or result in the violation of any law, rule, regulation,
order, judgment or decree to which the Purchaser or its property is
subject;
(d)
Ability to Perform.
The Purchaser 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;
(e)
No Litigation Pending.
There is no action, suit, proceeding or investigation pending or to
its knowledge threatened against the Purchaser which, either in any
one instance or in the aggregate, may result in any material
adverse
change in the business, operations, financial condition, properties
or
assets of the Purchaser, or in any material impairment of the right
or
ability of the Purchaser to carry on its business substantially as
now
conducted, or in any material liability on the part of the
Purchaser,
or which would draw into question the validity of this Agreement or
of
any action taken or to be contemplated herein, or which would be
likely to impair materially the ability of the Purchaser to perform
under the terms of this Agreement; and
(f)
No Consent Required.
No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery
and performance by the Purchaser of or compliance by the Purchaser
with this Agreement or the purchase of the
35
Mortgage Loans as evidenced by the consummation of the transactions
contemplated by this Agreement, or if required, such consent,
approval, authorization or order has been obtained prior to the
Closing Date.
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 Company to Act as Servicer.
(a) The Company shall service and administer the Mortgage Loans
through its
Subservicer, Cenlar FSB, all in accordance with the terms of this
Agreement,
Accepted Servicing Practices, applicable law and the terms of the
Mortgage Notes
and Mortgages. All references to the Company as servicer contained
herein shall,
for the avoidance of doubt, mean the Company or its Subservicer. In
connection
with such servicing and administration, the Company shall have full
power and
authority, acting alone or through Subservicers, to do or cause to
be done any
and all things in connection with such servicing and administration
which the
Company may deem necessary or desirable, including, without
limitation, the
power and authority (1) to execute and deliver, on behalf of the
Purchaser,
customary consents or waivers and other instruments and documents,
(2) to
consent, with respect to the Mortgage Loans it services, to
transfers of any
Mortgaged Property and assumptions of the Mortgage Notes and
related Mortgages
(but only in the manner provided in this Agreement), (3) to collect
any
Insurance Proceeds and other Liquidation Proceeds relating to the
Mortgage Loans
it services, and (4) to effectuate foreclosure or other conversion
of the
ownership of the Mortgaged Property securing any Mortgage Loan it
services. The
Company shall represent and protect the interests of the Purchaser
in the same
manner as it protects its own interests in mortgage loans in its
own portfolio
in any claim, proceeding or litigation regarding a Mortgage Loan
and shall not
make or permit any modification, waiver or amendment of any term of
any Mortgage
Loan, except as provided pursuant to Section 4.22. Without limiting
the
generality of the foregoing, the Company shall continue, and is
hereby
authorized and empowered, to execute and deliver on behalf of
itself and the
Purchaser, all instruments of satisfaction or cancellation, or of
partial or
full release, discharge and all other comparable instruments, with
respect to
the Mortgage Loans and with respect to the Mortgaged Properties. If
reasonably
required by the Company, the Purchaser shall furnish the Company
with any powers
of attorney and other documents necessary or appropriate to enable
the Company
and its Subservicer to carry out its servicing and administrative
duties under
this Agreement.
(b) The Company may arrange for the subservicing of any Mortgage
Loan it
services by a Subservicer pursuant to a Subservicing Agreement;
provided,
however, that such subservicing arrangement and the terms of the
related
Subservicing Agreement must provide for the servicing of such
Mortgage Loan in a
manner consistent with the servicing arrangements contemplated
hereunder. The
Company shall be solely liable for all fees owed to the Subservicer
under the
Subservicing Agreement. Notwithstanding the provisions of any
Subservicing
Agreement, any of the provisions of this Agreement relating to
agreements or
arrangements between the Company and a Subservicer or reference to
actions taken
through a Subservicer or otherwise, the Company shall remain
obligated and
liable to the Purchaser for the servicing and administration of the
Mortgage
Loans it services in accordance with the provisions of this
36
Agreement without diminution of such obligation or liability by
virtue of such
Subservicing Agreements or arrangements or by virtue of
indemnification from the
Subservicer and to the same extent and under the same terms and
conditions as if
the Company alone were servicing and administering those Mortgage
Loans. All
actions of each Subservicer performed pursuant to the related
Subservicing
Agreement shall be performed as agent of the Company with the same
force and
effect as if performed directly by the Company. For purposes of
this Agreement,
the Company shall be deemed to have received any collections,
recoveries or
payments with respect to the Mortgage Loans it services that are
received by a
Subservicer regardless of whether such payments are remitted by the
Subservicer
to the Company. Any Subservicing Agreement entered into by the
Company shall
provide that it may be assumed or terminated by the Purchaser, if
the Purchaser
has assumed the duties of the Company, or by any successor
servicer, at the
Purchaser's or successor servicer's option, as applicable, without
cost or
obligation to the assuming or terminating party or its assigns. Any
Subservicing
Agreement, and any other transactions or services relating to the
Mortgage Loans
involving a Subservicer, shall be deemed to be between the Company
and such
Subservicer alone, and the Purchaser shall not be deemed parties
thereto and
shall have no claims or rights of action against, rights,
obligations, duties or
liabilities to or with respect to the Subservicer or its officers,
directors or
employees, except as set forth in Section 4.01(a).
Section 4.02 Liquidation of Mortgage Loans.
In the event that any payment due under any Mortgage Loan and not
postponed
pursuant to Section 4.01 is not paid when the same becomes due and
payable, or
in the event the Mortgagor fails to perform any other covenant or
obligation
under the Mortgage Loan and such failure continues beyond any
applicable grace
period, the Company shall take such action as (1) the Company would
take under
similar circumstances with respect to a similar mortgage loan held
for its own
account for investment, (2) shall be consistent with Accepted
Servicing
Practices, (3) the Company shall determine prudently to be in the
best interest
of the Purchaser, and (4) is consistent with any related PMI
Policy. Foreclosure
or comparable proceedings shall be initiated within one hundred
twenty (120)
days of default for Mortgaged Properties for which no satisfactory
arrangements
can be made for collection of delinquent payments unless prevented
by statutory
limitations or states whose bankruptcy laws prohibit such actions
within such
timeframe. The Company shall use its best efforts to realize upon
defaulted
Mortgage Loans in such manner as will maximize the receipt of
principal and
interest by the Purchaser, taking into account, among other things,
the timing
of foreclosure proceedings. In such connection, the Company shall
from its own
funds make all necessary and proper Servicing Advances, provided,
however, that
the Company shall not be required to expend its own funds in
connection with any
foreclosure or towards the restoration or preservation of any
Mortgaged
Property, unless it shall determine (a) that such preservation,
restoration
and/or foreclosure will increase the proceeds of liquidation of the
Mortgage
Loan to Purchaser after reimbursement to itself for such expenses
and (b) that
such expenses will be recoverable by it either through Liquidation
Proceeds
(respecting which it shall have priority for purposes of
withdrawals from the
Custodial Account pursuant to Section 4.05) or through Insurance
Proceeds
(respecting which it shall have similar priority).
Notwithstanding anything to the contrary contained herein, in
connection
with a foreclosure or acceptance of a deed in lieu of foreclosure,
in the event
the Company has
37
reasonable cause to believe that a Mortgaged Property is
contaminated by
hazardous or toxic substances or wastes, or if the Purchaser
otherwise requests
an environmental inspection or review of such Mortgaged Property,
such an
inspection or review is to be conducted by a qualified inspector.
The cost for
such inspection or review shall be borne by the Purchaser. Upon
completion of
the inspection or review, the Company shall promptly provide the
Purchaser with
a written report of the environmental inspection.
After reviewing the environmental inspection report, the Purchaser
shall
determine how the Company shall proceed with respect to the
Mortgaged Property.
In the event (a) the environmental inspection report indicates that
the
Mortgaged Property is contaminated by hazardous or toxic substances
or wastes
and (b) the Purchaser directs the Company to proceed with
foreclosure or
acceptance of a deed in lieu of foreclosure, the Company shall be
reimbursed for
all reasonable costs associated with such foreclosure or acceptance
of a deed in
lieu of foreclosure and any related environmental clean up costs,
as applicable,
from the related Liquidation Proceeds, and/or Insurance Proceeds,
or if the
Liquidation Proceeds and/or Insurance Proceeds are insufficient to
fully
reimburse the Company, the Company shall be entitled to be
reimbursed from
amounts in the Custodial Account pursuant to Section 4.05 hereof.
In the event
the Purchaser directs the Company not to proceed with foreclosure
or acceptance
of a deed in lieu of foreclosure, the Company shall be reimbursed
for all
Servicing Advances made with respect to the related Mortgaged
Property from the
Custodial Account pursuant to Section 4.05 hereof.
Section 4.03 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest
on all
Mortgage Loans are paid in full, in accordance with this Agreement
and Accepted
Servicing Standards, the Company through its subservicer shall
proceed
diligently to collect all payments due under each of the Mortgage
Loans when the
same shall become due and payable and shall take special care in
ascertaining
and estimating Escrow Payments and all other charges that will
become due and
payable with respect to the Mortgage Loan and the Mortgaged
Property, to the end
that the installments payable by the Mortgagors will be sufficient
to pay such
charges as and when they become due and payable.
Consistent with the foregoing, the Company may in its discretion
(i) waive
any late payment charge with respect to a Mortgage Loan it services
and (ii)
extend the due dates for payments due on a Mortgage Note for a
period not
greater than 120 days; provided, however, that the Company cannot
extend the
maturity of any such Mortgage Loan past the date on which the final
payment is
due on the latest maturing Mortgage Loan as of the related Cut-off
Date. In the
event of any such arrangement, the Company shall make Monthly
Advances on the
related Mortgage Loan in accordance with the provisions of Section
5.03 during
the scheduled period in accordance with the amortization schedule
of such
Mortgage Loan without modification thereof by reason of such
arrangements. The
Company shall not be required to institute or join in litigation
with respect to
collection of any payment (whether und
