Exhibit 99.11(b)
EXECUTION COPY
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THIRD AMENDED AND RESTATED MORTGAGE
LOAN FLOW PURCHASE,
SALE & SERVICING AGREEMENT
dated as of January 1, 2006
between
MORGAN STANLEY MORTGAGE CAPITAL INC.,
Purchaser
and
PHH MORTGAGE CORPORATION
(formerly known as
CENDANT MORTGAGE CORPORATION),
and
BISHOP'S GATE RESIDENTIAL MORTGAGE TRUST
(formerly known as
CENDANT RESIDENTIAL MORTGAGE TRUST),
Sellers
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.01
Defined Terms..............................................1
ARTICLE II
SALE AND CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE
FILES; BOOKS AND RECORDS; DELIVERY OF MORTGAGE LOAN DOCUMENTS
Section 2.01
Sale and Conveyance of Mortgage Loans.....................20
Section 2.02
Possession of Mortgage Files..............................21
Section 2.03
Books and Records.........................................22
Section 2.04
Defective Documents; Delivery of Mortgage Loan
Documents.............................................22
Section 2.05
Transfer of Mortgage Loans................................24
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER;
REPURCHASE AND SUBSTITUTION; REVIEW OF MORTGAGE LOANS
Section 3.01
Representations and Warranties of each Seller.............25
Section 3.02
Representations and Warranties of the Servicer............28
Section 3.03
Representations and Warranties as to Individual
Mortgage Loans........................................29
Section 3.04
Repurchase and Substitution...............................45
Section 3.05
Removal of Mortgage Loans from Inclusion Under this
Agreement Upon an Agency Transfer, Whole-Loan
Transfer or a Securitization Transaction on One
or More Reconstitution
Dates..........................47
Section 3.06
Review of Mortgage Loans..................................50
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER AND CONDITIONS PRECEDENT TO FUNDING
Section 4.01
Representations and Warranties............................51
Section 4.02
Conditions Precedent to Closing...........................53
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ARTICLE V
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 5.01
PHH Mortgage to Act as Servicer; Servicing Standards;
Additional Documents; Consent of the Purchaser.........55
Section 5.02
Collection of Mortgage Loan Payments......................57
Section 5.03
Notice of Specially Serviced Mortgage Loans and
Foreclosure Sale......................................57
Section 5.04
Establishment of Collection Account; Deposits in
Collection Account....................................58
Section 5.05
Permitted Withdrawals from the Collection Account.........59
Section 5.06
Establishment of Escrow Accounts; Deposits in Escrow......60
Section 5.07
Permitted Withdrawals From Escrow Accounts................60
Section 5.08
Payment of Taxes, Insurance and Other Charges;
Maintenance of Primary Insurance Policies;
Collections Thereunder................................61
Section 5.09
Transfer of Accounts......................................62
Section 5.10
Maintenance of Hazard Insurance...........................62
Section 5.11
Maintenance of Mortgage Impairment Insurance Policy.......64
Section 5.12
Fidelity Bond; Errors and Omissions Insurance.............64
Section 5.13
Management of REO Properties..............................65
Section 5.14
Sale of Specially Serviced Mortgage Loans and REO
Properties............................................66
Section 5.15
Realization Upon Specially Serviced Mortgage Loans and
REO Properties........................................67
Section 5.16
Investment of Funds in the Collection Account.............69
Section 5.17
MERS......................................................70
Section 5.18
Pledged Asset Mortgage Loans..............................70
Section 5.19
Inspections...............................................74
Section 5.20
Transfer of Servicing.....................................74
Section 5.21
Fair Credit Reporting Act.................................76
ARTICLE VI
REPORTS; REMITTANCES; ADVANCES
Section 6.01
Remittances...............................................76
Section 6.02
Reporting.................................................77
Section 6.03
Monthly Advances by the Servicer..........................77
Section 6.04
Non-recoverable Advances..................................78
Section 6.05
Itemization of Servicing Advances.........................78
Section 6.06
Officers' Certificate.....................................78
Section 6.07
Compliance with REMIC Provisions..........................78
ARTICLE VII
GENERAL SERVICING PROCEDURES
Section 7.01
Enforcement of Due-on-Sale Clauses, Assumption
Agreements............................................79
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Section 7.02
Satisfaction of Mortgages and Release of Mortgage
Files.................................................80
Section 7.03
Servicing Compensation....................................80
Section 7.04
Annual Statement as to Compliance.........................81
Section 7.05
Annual Independent Certified Public Accountants'
Servicing Report or Attestation.......................81
Section 7.06
Purchaser's Right to Examine Servicer Records.............81
ARTICLE VIII
REPORTS TO BE PREPARED BY THE SERVICER
Section 8.01
The Servicer's Reporting Requirements.....................82
Section 8.02
Financial Statements......................................82
ARTICLE IX
THE SELLERS
Section 9.01
Indemnification; Third Party Claims.......................82
Section 9.02
Merger or Consolidation of the Seller.....................83
Section 9.03
Limitation on Liability of the Sellers and Others.........84
Section 9.04
Servicer Not to Resign....................................84
ARTICLE X
DEFAULT
Section 10.01
Events of Default.........................................85
ARTICLE XI
TERMINATION
Section 11.01 Term
and Termination......................................87
Section 11.02
Survival..................................................87
ARTICLE XII
GENERAL PROVISIONS
Section 12.01
Successor to the Servicer.................................88
Section 12.02
Governing Law; Jurisdiction; Consent to Service of
Process...............................................88
Section 12.03
Notices...................................................89
Section 12.04
Severability of Provisions................................90
Section 12.05
Schedules and Exhibits....................................90
Section 12.06
General Interpretive Principles...........................90
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Section 12.07
Waivers and Amendments, Noncontractual Remedies;
Preservation of Remedies..............................91
Section 12.08
Captions..................................................91
Section 12.09
Counterparts; Effectiveness...............................91
Section 12.10
Entire Agreement; Amendment...............................91
Section 12.11
Further Assurances........................................91
Section 12.12
Intention of the Seller...................................92
Section 12.13
Waiver of Trial by Jury...................................92
ARTICLE XIII
COMPLIANCE WITH REGULATION AB
Section 13.01
Intent of the Parties; Reasonableness.....................92
Section 13.02
Additional Representations and Warranties of the
Sellers and the Servicer..............................93
Section 13.03
Information to Be Provided by each Seller or the
Servicer..............................................93
Section 13.04
Servicer Compliance Statement.............................98
Section 13.05
Report on Assessment of Compliance and Attestation........98
Section 13.06 Use
of Subservicers and Subcontractors....................99
Section 13.07
Indemnification; Remedies................................101
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Schedules
---------
A.
Mortgage Loan Schedule
B.
Contents of Mortgage File
B-1 Collateral
File
B-2 Credit
Documents
C. PHH
Guide
Exhibits
--------
Exhibit 2.05 Form of
Assignment, Assumption and Recognition Agreement
Exhibit 5.01 Workout
Compensation
Exhibit 5.03(a)
Report P4DL ? Notice for Specially Serviced Mortgage Loans
Exhibit 5.03(b)
Form of Notice of Foreclosure
Exhibit 5.04-1 Form of Collection
Account Certification
Exhibit 5.04-2 Form of Collection
Account Letter Agreement
Exhibit 5.06-1 Form of Escrow Account
Certification
Exhibit 5.06-2 Form of Escrow Account
Letter Agreement
Exhibit 6.02(a)
Report P-139 - Monthly Statement of Mortgage Accounts
Exhibit 6.02(b)
Report S-50Y - Private Pool Detail Report
Exhibit 6.02(c)
Report S-213 - Summary of Curtailments Made Remittance Report
Exhibit 6.02(d)
Report S-214 - Summary of Paid in Full Remittance Report
Exhibit 6.02(e)
Report S-215 - Consolidation of Remittance Report
Exhibit 6.02(f)
Report T-62C - Monthly Accounting Report
Exhibit 6.02(g)
Report T-62E - Liquidation Report
Exhibit 8.01 Report
P-195 - Delinquency Report
Exhibit 9
Form of Officer's Certificate
Exhibit 10
Form of Warranty Bill of Sale
Exhibit 11
Form of Sarbanes-Oxley Certification
Exhibit 12
Process Guidelines
Exhibit 13
Form of Indemnification and Contribution Agreement
Exhibit 14
Servicing Criteria to be Addressed in Assessment of Compliance
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THIRD AMENDED AND RESTATED MORTGAGE LOAN FLOW
PURCHASE, SALE & SERVICING AGREEMENT
This Third Amended and Restated Mortgage Loan Flow Purchase, Sale
&
Servicing Agreement, dated as of January 1, 2006, among Morgan
Stanley Mortgage
Capital Inc., (the "Purchaser"), PHH Mortgage Corporation (formerly
known as
Cendant Mortgage Corporation) ("PHH Mortgage") and Bishop's Gate
Residential
Mortgage Trust (formerly known as Cendant Residential Mortgage
Trust) (the
"Trust," together with Cendant Mortgage, the "Sellers" and
individually, each a
"Seller").
PRELIMINARY STATEMENT
WHEREAS, the Purchaser and the Sellers are parties to that
certain
Second Amended and Restated Mortgage Loan Flow Purchase, Sale &
Servicing
Agreement, dated as of September 1, 2005 (the "Original Purchase
Agreement"),
pursuant to which the Sellers may sell, from time to time, to the
Purchaser, and
the Purchaser may purchase, from time to time, from the Sellers,
certain
adjustable and fixed rate residential first lien mortgage loans
(the "Mortgage
Loans") on a servicing retained basis as described therein, and
which shall be
delivered in pools of whole loans on various dates as provided
therein (each, a
"Closing Date");
WHEREAS, at the present time, the Purchaser and the Sellers
desire
to amend the Original Purchase Agreement to make certain
modifications as set
forth herein;
NOW, THEREFORE, in consideration of the premises and mutual
agreements set forth herein, and for other good and valuable
consideration, the
receipt and sufficiency of which are hereby acknowledged, the
Purchaser and the
Sellers agree as follows
NOW, THEREFORE, in consideration of the mutual agreements
hereinafter set forth, the Purchaser and the Sellers agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms. Whenever used in this Agreement,
the
following words and phrases shall have the following meaning
specified in this
Article:
"Acceptance of Assignment and Assumption of Lease Agreement":
The
specific agreement creating a first lien on and pledge of the
Cooperative Shares
and the appurtenant Proprietary Lease securing a Cooperative
Loan.
"Accepted Servicing Practices": With respect to any Mortgage
Loan,
those customary mortgage servicing practices of prudent mortgage
lending
institutions which service mortgage loans of the same type as such
Mortgage Loan
in the jurisdiction where the related Mortgaged Property is
located.
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"Adjustable Rate Mortgage Loan": A Mortgage Loan purchased
pursuant
to this Agreement, the Note Rate of which is adjusted from time to
time in
accordance with the terms of the related Mortgage Note.
"Affiliate": When used with reference to a specified Person,
any
Person that (i) directly or indirectly controls or is controlled by
or is under
common control with the specified Person, (ii) is an officer of,
partner in or
trustee of, or serves in a similar capacity with respect to, the
specified
person or of which the specified Person is an officer, partner or
trustee, or
with respect to which the specified Person serves in a similar
capacity, or
(iii) directly or indirectly is the beneficial owner of 10% or more
of any class
of equity securities of the specified Person or of which the
specified person is
directly or indirectly the owner of 10% or more of any class of
equity
securities.
"Agency Transfer": The sale or transfer by Purchaser of some or
all
of the Mortgage Loans to Fannie Mae under its "Cash Purchase
Program" or its
"MBS Swap Program" (Special Servicing Option) or to Freddie Mac
under its
"Freddie Mac Cash Program" or "Gold PC Program", retaining the
Servicer as
"servicer thereunder."
"Agreement": This
Third Amended and
Restated Mortgage Loan Flow
Purchase, Sale & Servicing Agreement between the Purchaser and
the Sellers.
"ALTA": The American Land Title Association.
"Appraised Value": With respect to any Mortgaged Property, the
lesser of: (i) the value thereof as determined by an appraisal or a
PHH Mortgage
approved AVM (as defined in the PHH Guide) made for the originator
of the
Mortgage Loan at the time of origination of the Mortgage Loan by an
appraiser
who met the minimum requirements of Fannie Mae and Freddie Mac; or
(ii) the
purchase price paid for the related Mortgaged Property by the
Mortgagor with the
proceeds of the Mortgage Loan; provided that, in the case of a
Refinanced
Mortgage Loan, such value of the Mortgaged Property shall be based
solely upon
the value determined by an appraisal made for the originator of
such Refinanced
Mortgage Loan at the time of origination of such Refinanced
Mortgage Loan by an
appraiser who met the minimum requirements of Fannie Mae and
Freddie Mac.
"ARM Loan": An "adjustable rate" Mortgage Loan, the Note Rate
of
which is subject to periodic adjustment in accordance with the
terms of the
Mortgage Note.
"Assignment": An individual assignment of a Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient
under the laws
of the jurisdiction wherein the related Mortgaged Property is
located to reflect
of record the sale or transfer of the Mortgage Loan to the
Purchaser or, in the
case of a MERS Mortgage Loan, an electronic transmission to MERS,
identifying a
transfer of ownership of the related Mortgage to the Purchaser or
its designee.
"Assignment of Proprietary Lease": With respect to a
Cooperative
Loan, an assignment of the Proprietary Lease sufficient under the
laws of the
jurisdiction wherein the related Cooperative Unit is located to
reflect the
assignment of such Proprietary Lease.
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"Assignment of Recognition Agreement": With respect to a
Cooperative
Loan, an assignment of the Recognition Agreement sufficient under
the laws of
the jurisdiction wherein the related Cooperative Unit is located to
reflect the
assignment of such Recognition Agreement.
"AVM": Automated
Value Model.
Electronic
system to calculate
the
property value from a provider that has been approved by the
Seller.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (11 U.S.C.
ss.ss. 101-1330), as amended, modified, or supplemented from time
to time, and
any successor statute, and all rules and regulations issued or
promulgated in
connection therewith.
"BPO": A broker's price opinion with respect to a Mortgaged
Property.
"Business Day": Any day other than (i) a Saturday or Sunday, or
(ii)
a day on which the Federal Reserve is closed.
"PHH Guide": Shall have the meaning set forth in paragraph 3 of
the
Preliminary Statement to this Agreement.
"Closing Date": The date or dates on which the Purchaser from
time
to time shall purchase, and the Seller from time to time shall
sell, the
Mortgage Loans listed on the related Mortgage Loan Schedule.
"Code": The Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
"Collection Account": The separate trust account or accounts
created
and maintained pursuant to Section 5.04 which shall be entitled
"PHH Mortgage
Corporation, as servicer and custodian for the Purchaser of
Mortgage Loans under
the Third Amended and Restated Mortgage Loan Flow Purchase, Sale
& Servicing
Agreement, dated as of January 1, 2006."
"Commission": The United States Securities and Exchange
Commission.
"Condemnation Proceeds": All awards or settlements in respect of
a
taking of an entire Mortgaged Property or a part thereof by
exercise of the
power of eminent domain or condemnation.
"Consent": A document executed by the Cooperative Corporation
(i)
consenting to the sale of the Cooperative Unit to the Mortgagor and
(ii)
certifying that all maintenance charges relating to the Cooperative
Unit have
been paid.
"Control Agreement": With respect to each Pledged Asset
Mortgage
Loan, the Pledged Collateral Account Control Agreement between the
guarantor or
mortgagor, as applicable, and the related Pledged Asset Servicer,
pursuant to
which the guarantor or mortgagor, as applicable, has granted a
security interest
in a Securities Account.
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"Convertible Mortgage Loan": Any ARM Loan purchased pursuant to
this
Agreement as to which the related Mortgage Note permits the
Mortgagor to convert
the Note Rate on such Mortgage Loan to a fixed note rate.
"Cooperative Corporation": With respect to any Cooperative Loan,
the
cooperative apartment corporation that holds legal title to the
related
Cooperative Project and grants occupancy rights to units therein to
stockholders
through Proprietary Leases or similar arrangements.
"Cooperative Lease": With respect to a Cooperative Loan, the
lease
with respect to a dwelling unit occupied by the Mortgagor and
relating to the
stock allocated to the related dwelling unit.
"Cooperative Lien Search": A search for (a) federal tax liens,
mechanics' liens, lis pendens, judgments of record or otherwise
against (i) the
Cooperative Corporation and (ii) the seller of the Cooperative
Unit, (b) filings
of Financing Statements and (c) the deed of the Cooperative Project
into the
Cooperative Corporation.
"Cooperative Loan": A Mortgage Loan that is secured by a first
lien
on and a perfected security interest in Cooperative Shares and the
related
Proprietary Lease granting exclusive rights to occupy the related
Cooperative
Unit in the building owned by the related Cooperative
Corporation.
"Cooperative Project": With respect to any Cooperative Loan,
all
real property and improvements thereto and rights therein and
thereto owned by a
Cooperative Corporation including without limitation the land,
separate dwelling
units and all common elements.
"Cooperative Shares": With respect to any Cooperative Loan, the
shares of stock issued by a Cooperative Corporation and allocated
to a
Cooperative Unit and represented by a stock certificates.
"Cooperative Unit": With respect to any Cooperative Loan, a
specific
unit in a Cooperative Project.
"Covered Loan": A Mortgage Loan categorized as Covered pursuant
to
Appendix E of Standard & Poor's Glossary.
"Credit Documents": Those documents, comprising part of the
Mortgage
File, required of the Mortgagor, as described in Section 2
(Specific Loan
Program Guidelines) of the PHH Guide. The Credit Documents are
specified on
Schedule B-2 hereto.
"Custodial Agreement": With respect to each Mortgage Loan
purchase
hereunder, the applicable Custodial Agreement, among the Purchaser,
the Servicer
and the Custodian.
"Custodian": With respect to each Mortgage Loan purchase, the
Custodian named in the applicable Custodial Agreement, or its
successor in
interest or assigns or any successor to the Custodian under such
Custodial
Agreement as provided therein.
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"Cut-off Date" : The first day of the month in which the
respective
Funding Date occurs.
Deemed Material and Adverse Representation: Each representation
and
warranty identified as such in Section 3.03 of this Agreement.
"Defect": Shall have the meaning set forth in Section 2.04.
"Defective Mortgage Loan": Shall have the meaning set forth in
Section 3.04.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced
with a Qualified Substitute Mortgage Loan.
"Delinquent Mortgage Loan": Shall have the meaning set forth in
Section 11.01.
"Depositor": The depositor, as such term is defined in
Regulation
AB, with respect to any Securitization Transaction.
"Determination Date": The 15th day of each calendar month,
commencing on the 15th day of the month following the Funding Date,
or, if such
15th day is not a Business Day, the Business Day immediately
preceding such 15th
day.
"Due Date": With respect to any Mortgage Loan, the day of the
month
on which each Monthly Payment is due thereon, exclusive of any days
of grace.
"Due Period": With respect to each Remittance Date, the period
commencing on the second day of the month immediately preceding the
month of
such Remittance Date and ending on the first day of the month of
such Remittance
Date.
"Eligible Account": One or more accounts (i) that are
maintained
with a depository institution the long-term unsecured debt
obligations of which
have been rated by each Rating Agency in one of its two highest
rating
categories at the time of any deposit therein, (ii) that are trust
accounts with
any depository institution held by the depository institution in
its capacity as
a corporate trustee, the deposits in which are insured by the FDIC
(to the
limits established by the FDIC) and the uninsured deposits in which
are
otherwise secured such that the Purchaser has a claim with respect
to the funds
in such accounts or a perfected first security interest against any
collateral
securing such funds that is superior to claims of any other
depositors or
creditors of the depository institution with which such accounts
are maintained.
In addition, solely with respect to Mortgage Loans which are not
part of a
Securitization Transaction, "Eligible Account" shall include any
accounts that
meet the standards established from time to time by Fannie Mae or
Freddie Mac,
as applicable, for eligible custodial depositories. In the event
that the
Mortgage Loans are subject to a Securitization Transaction, the
Servicer agrees
that the definition of Eligible Account shall satisfy the rating
requirements
established by each Rating Agency which rates any of the securities
issued as
part of such Securitization Transaction.
"Environmental Assessment": A "Phase I" environmental assessment
of
a Mortgaged Property prepared by an Independent Person who
regularly conducts
environmental
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assessments and who has any necessary license(s) required by
applicable law and
has at least five years experience conducting environmental
assessments.
"Environmental Conditions Precedent to Foreclosure": Shall have
the
meaning set forth in Section 5.15.
"Environmental Laws": All federal, state, and local statutes,
laws,
regulations, ordinances, rules, judgments, orders, decrees or other
governmental
restrictions relating to the environment or to emissions,
discharges or releases
of pollutants, contaminants or industrial, toxic or hazardous
substances or
wastes into the environment, including ambient air, surface water,
ground water,
or land, or otherwise relating to the manufacture, processing,
distribution,
use, treatment, storage, disposal, transport or handling of
pollutants,
contaminants or industrial, toxic or hazardous substances or wastes
or the
cleanup or other remediation thereof.
"Escrow Account": The separate trust account or accounts created
and
maintained pursuant to Section 5.06 which shall be entitled "PHH
Mortgage
Corporation, as servicer for the Purchaser under the Third Amended
and Restated
Mortgage Loan Flow Purchase, Sale & Servicing Agreement, dated
as of January 1,
2006, and various mortgagors."
"Escrow Payments": The amounts constituting ground rents,
taxes,
assessments, water rates, mortgage insurance premiums, fire and
hazard insurance
premiums and other payments required to be escrowed by the
Mortgagor with the
mortgagee pursuant to any Mortgage Loan.
"Estoppel Letter": A document executed by the Cooperative
Corporation certifying, with respect to a Cooperative Unit, (i) the
appurtenant
Proprietary Lease will be in full force and effect as of the date
of issuance
thereof, (ii) the related Stock Certificate was registered in the
Mortgagor's
name and the Cooperative Corporation has not been notified of any
lien upon,
pledge of, levy of execution on or disposition of such Stock
Certificate, and
(iii) the Mortgagor is not in default under the appurtenant
Proprietary Lease
and all charges due the Cooperative Corporation have been paid.
"Event of Default": Any one of the conditions or circumstances
enumerated in Section 10.01.
"Exchange Act": The Securities Exchange Act of 1934, as
amended.
"Fannie Mae": The Federal National Mortgage Association or any
successor organization.
"Fannie Mae Guide": The Fannie Mae Selling Guide and the
Servicing
Guide, collectively, in effect on and after the Funding Date.
"FDIC": The Federal Deposit Insurance Corporation or any
successor
organization.
"Fidelity Bond": A fidelity bond to be maintained by the
Servicer
pursuant to Section 5.12.
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"Financing Statement": A financing statement in the form of a
UCC-1
filed pursuant to the relevant state Uniform Commercial Code to
perfect a
security interest in the Cooperative Shares and Pledge
Instruments.
"Financing Statement Change": A financing statement in the form of
a
UCC-3 filed to continue, terminate, release, assign or amend an
existing
Financing Statement.
"Foreclosure Profits": As to any Distribution Date or related
Determination Date and any Mortgage Loan, the excess, if any, of
Liquidation
Proceeds, Insurance Proceeds and proceeds from any REO Disposition
(net of all
amounts reimbursable therefrom pursuant to Section 5.13, Section
5.14 and
Section 5.15) in respect of each Mortgage Loan or REO Property for
which a Cash
Liquidation or REO Disposition occurred in the related prepayment
period over
the sum of the Unpaid Principal Balance of such Mortgage Loan or
REO Property
(determined, in the case of an REO Disposition, in accordance with
Section 5.13,
Section 5.14 and Section 5.15) plus accrued and unpaid interest at
the Mortgage
Rate on such Unpaid Principal Balance from the Due Date to which
interest was
last paid by the Mortgagor to the first day of the month following
the month in
which such Cash Liquidation or REO Disposition occurred.
"Freddie Mac": The Federal Home Loan Mortgage Corporation or
any
successor organization.
"Freddie Mac Servicing Guide": The Freddie Mac/ Freddie Mac
Sellers'
and Servicers' Guide in effect on and after the Funding Date.
"Funding Date": Each date (up to four per month) that Purchaser
purchases Mortgage Loans from the Sellers hereunder.
"Gross Margin": With respect to each ARM Loan, the fixed
percentage
added to the Index on each Rate Adjustment Date, as specified in
each related
Mortgage Note and listed in the Mortgage Loan Schedule.
"High Cost Loan": A Mortgage Loan (a) covered by the Home
Ownership
and Equity Protection Act of 1994, (b) classified as a "high cost
home,"
"threshold," "covered," (excluding New Jersey "Covered Home Loans"
as that term
was defined in clause (1) of the definition of that term in the New
Jersey Home
Ownership Security Act of 2002 that were originated between
November 26, 2003
and July 7, 2004), "high risk home," "predatory" or similar loan
under any other
applicable state, federal or local law (or a similarly classified
loan using
different terminology under a law imposing heightened regulatory
scrutiny or
additional legal liability for residential mortgage loans having
high interest
rates, points and/or fees) or (c) a Mortgage Loan categorized as
High Cost
pursuant to Appendix E of Standard & Poor's Glossary. For
avoidance of doubt,
the parties agree that this definition shall apply to any law
regardless of
whether such law is presently, or in the future becomes, the
subject of judicial
review or litigation.
"HUD": The United States Department of Housing and Urban
Development, or any successor thereto.
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"Indemnified Party": Each of the Purchaser and any Successor
Servicer and each of their present and former directors, officers,
agents,
employees, Affiliates and assignees and each Person, if any, that
controls the
Purchaser or Successor Servicer or such Affiliate within the
meaning of either
the Securities Act or the Exchange Act.
"Independent": With respect to any specified Person, such
Person
who: (i) does not have any direct financial interest or any
material indirect
financial interest in the applicable Mortgagor, the Sellers, the
Purchaser, or
their Affiliates; and (b) is not connected with the applicable
Mortgagor, the
Sellers, the Purchaser, or their respective Affiliates as an
officer, employee,
promoter, underwriter, trustee, member, partner, shareholder,
director, or
Person performing similar functions.
"Index": With respect to each ARM Loan, the applicable rate
index
set forth on the related Mortgage Note.
"Insolvency Proceeding": With respect to any Person: (i) any
case,
action, or proceeding with respect to such Person before any court
or other
governmental authority relating to bankruptcy, reorganization,
insolvency,
liquidation, receivership, dissolution, winding up, or relief of
debtors; or
(ii) any general assignment for the benefit of creditors,
composition,
marshaling of assets for creditors, or other, similar arrangement
in respect of
the creditors generally of such Person or any substantial portion
of such
Person's creditors; in any case undertaken under federal, state or
foreign law,
including the Bankruptcy Code.
"Insurance Proceeds": Proceeds of any Primary Insurance Policy,
title policy, hazard policy or other insurance policy insuring a
Mortgage Loan
or the related Mortgaged Property.
"Legal Documents": Those documents, comprising part of the
Mortgage
File, set forth in Schedule B-1 of this Agreement.
"Lender-Paid Mortgage Insurance Rate": With respect to any
Mortgage
Loan, the Lender-Paid Mortgage Insurance Rate for any "lender-paid"
Primary
Insurance Policy shall be a per annum rate equal to the percentage
indicated on
the Mortgage Loan Schedule.
"Lifetime Rate Cap": The provision of each Mortgage Note related
to
an Adjustable Rate Mortgage Loan which provides for an absolute
maximum Note
Rate thereunder. The Note Rate during the terms of each Adjustable
Rate Mortgage
Loan shall not at any time exceed the Note Rate at the time of
origination of
such Adjustable Rate Mortgage Loan by more than the amount per
annum set forth
on the related Mortgage Loan Schedule.
"Liquidation Proceeds": Amounts, other than Insurance Proceeds
and
Condemnation Proceeds, received by the Servicer in connection with
the
liquidation of a defaulted Mortgage Loan through trustee's sale,
foreclosure
sale or otherwise, other than amounts received following the
acquisition of an
REO Property in accordance with the provisions hereof.
"Loan-to-Value Ratio" or "LTV": With respect to any Mortgage
Loan,
the original principal balance of such Mortgage Loan divided by the
lesser of
the Appraised Value of
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the related Mortgaged Property or the purchase price. The
Loan-to-Value Ratio of
any Pledged Asset Mortgage Loan shall be calculated by reducing the
principal
balance of such Pledged Asset Mortgage Loan by the amount of the
Original
Pledged Asset Requirement with respect to such Mortgage Loan. This
is referred
to in the PHH Guide as the effective loan-to- value.
"Losses": Shall have the meaning set forth in Section 9.01.
"MAI Appraiser": With respect to any real property, a member of
the
American Institute of Real Estate Appraisers with a minimum of 5
years of
experience appraising real property of a type similar to the real
property being
appraised and located in the same geographical area as the real
property being
appraised.
"Maximum Rate": With
respect to each ARM Loan, the rate per annum
set forth in the related Mortgage Note as the maximum Note Rate
thereunder. The
Maximum Rate as to each ARM Loan is set forth on the related
Mortgage Loan
Schedule.
"MERS": Mortgage Electronic Registration Systems, Inc., a
Delaware
corporation, or any successor in interest thereto.
"MERS Eligible Mortgage Loan": Any Mortgage Loan that under
applicable law and investor requirements is recordable in the name
of MERS in
the jurisdiction in which the related Mortgaged Property is
located.
"MERS Mortgage Loan": Any Mortgage Loan as to which the related
Mortgage, or an Assignment, has been recorded in the name of MERS,
as agent for
the holder from time to time of the Mortgage Note.
"Minimum Rate": With respect to each ARM Loan, the rate per
annum
set forth in the related Mortgage Note as the minimum Note Rate
thereunder. The
Minimum Rate as to each ARM Loan is set forth on the related
Mortgage Loan
Schedule.
"Monthly Advance": The aggregate amount of the advances made by
the
Servicer on any Remittance Date pursuant to and as more fully
described in
Section 6.03.
"Monthly Payment": The scheduled monthly payment of principal
and
interest on a Mortgage Loan which is payable by a Mortgagor under
the related
Mortgage Note on each Due Date.
"Monthly Period": Initially, the period from the Funding Date
through to and including the first Record Date during the term
hereof, and,
thereafter, the period commencing on the day after each Record Date
during the
term hereof and ending on the next succeeding Record Date during
the term hereof
(or, if earlier, the date on which this Agreement terminates).
"Mortgage": The mortgage, deed of trust or other instrument
securing
a Mortgage Note, which creates a first lien on either (i) with
respect to a
Mortgage Loan other than a Cooperative Loan, an unsubordinated
estate in fee
simple in real property or (ii) with respect to a Cooperative Loan,
the
Proprietary Lease and related Cooperative Shares, which in either
case secures
the Mortgage Note.
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"Mortgage File": With respect to a particular Mortgage Loan,
those
origination and servicing documents, escrow documents, and other
documents as
are specified on Schedule B-1 and B-2 to this Agreement and any
additional
documents required to be added to the Mortgage File pursuant to the
related
Purchase Price and Terms Letter. These documents shall be stored in
a secure
manner using paper or electronic storage.
"Mortgage Loan": Each individual mortgage loan or Cooperative
Loan
(including all documents included in the Mortgage File evidencing
the same, all
Monthly Payments, Principal Prepayments, Insurance Proceeds,
Condemnation
Proceeds, Liquidation Proceeds, and other proceeds relating
thereto, and any and
all rights, benefits, proceeds and obligations arising therefrom or
in
connection therewith) which is the subject of this Agreement and
the related
Purchase Price and Terms Letter. The Mortgage Loans subject to this
Agreement
shall be identified on Mortgage Loan Schedules prepared in
connection with each
Funding Date.
"Mortgage Loan Schedule": The list of Mortgage Loans identified
on
each Funding Date that sets forth the information with respect to
each Mortgage
Loan that is specified on Schedule A hereto (as amended from time
to time to
reflect the addition of any Qualified Substitute Mortgage Loans and
the
withdrawal of any Deleted Mortgage Loans). A Mortgage Loan Schedule
will be
prepared for each Funding Date.
"Mortgage Note": The note or other evidence of the indebtedness of
a
Mortgagor secured by a Mortgage.
"Mortgaged Property": With respect to a Mortgage Loan, the
underlying property securing repayment of a Mortgage Note.
"Mortgagor": The obligor on a Mortgage Note.
"Negative Amortization": That portion of interest accrued at
the
Note Rate in any month which exceeds the Monthly Payment on the
related Mortgage
Loan for such month and which, pursuant to the terms of the
Mortgage Note, is
added to the principal balance of the Mortgage Loan.
"Non-recoverable Advance": As of any date of determination, any
Monthly Advance or Servicing Advance previously made or any Monthly
Advance or
Servicing Advance proposed to be made in respect of a Mortgage Loan
which, in
the good faith judgment of the Servicer and in accordance with the
servicing
standard set forth in Section 5.01, will not or, in the case of a
proposed
advance, would not be ultimately recoverable pursuant to Section
5.05 (3) or (4)
hereof. The determination by the Servicer that it has made a
Non-recoverable
Advance or that any proposed advance would constitute a
Non-recoverable Advance
shall be evidenced by an Officers' Certificate satisfying the
requirements of
Section 6.04 hereof and delivered to the Purchaser on or before
the
Determination Date in any month.
"Note Rate": With respect to any Mortgage Loan at any time any
determination thereof is to be made, the annual rate at which
interest accrues
thereon.
OCC: Office of the Comptroller of the Currency, or any
successor
thereto.
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"Offering Materials": All documents, tapes, or other materials
relating to the Mortgage Loans provided by Seller to Purchaser
prior to
Purchaser submitting its bid to purchase the Mortgage loans.
"Officers' Certificate": A certificate signed by (i) the
President
or a Vice President and (ii) the Treasurer or the Secretary or one
of the
Assistant Treasurers or Assistant Secretaries of the Servicer, and
delivered by
the Servicer to the Purchaser as required by this Agreement.
"Original Pledged Asset Requirement": With respect to any
Pledged
Asset Mortgage Loan, an amount equal to the Pledged Assets required
at the time
of the origination of such Pledged Asset Mortgage Loan. Even though
for other
purposes the Original Pledged Asset Requirement may actually exceed
thirty
percent (30%) of the original principal balance of a Pledged Asset
Mortgage
Loan, solely for purposes of the Required Surety Payment, the
Original Pledged
Asset Requirement for a Pledged Asset Mortgage Loan will be deemed
not to exceed
thirty percent (30%) of its original principal balance.
"OTS": The Office of Thrift Supervision or any successor
thereto.
"Payment Adjustment Date": The date on which Monthly Payments
shall
be adjusted. Payment Adjustment Date shall occur on the date which
is eleven
months from the first payment date for the Mortgage Loan, unless
otherwise
specified in the Mortgage Note, and on each anniversary of such
first Payment
Adjustment Date.
"Payoff": With respect to any Mortgage Loan, any payment or
recovery
received in advance of the last scheduled Due Date of such Mortgage
Loan, which
payment or recovery consists of principal in an amount equal to the
outstanding
principal balance of such Mortgage Loan, all accrued and unpaid
prepayment
penalties, premiums, and/or interest with respect thereto, and all
other unpaid
sums due with respect to such Mortgage Loan.
"Periodic Rate Cap": With respect to each ARM Loan and any Rate
Adjustment Date therefor, the number of basis points that is set
forth in the
related Mortgage Loan Schedule and in the related Mortgage Note,
which is the
maximum amount by which the Note Rate for such Mortgage Loan may
increase or
decrease on such Rate Adjustment Date.
"Periodic Rate Floor": With respect to each Adjustable Rate
Mortgage
Loan, the provision of each Mortgage Note which provides for an
absolute maximum
amount by which the Mortgage Interest Rate therein may decrease on
an Rate
Adjustment Date below the Mortgage Interest Rate previously in
effect.
"Permitted Investments": Investments that mature, unless payable
on
demand, not later than the Business Day preceding the related
Remittance Date;
provided that such investments shall only consist of the
following:
(i) direct obligations of, or obligations fully guaranteed as
to
principal
and interest by, the United States or any agency or
instrumentality thereof, provided such obligations are backed by
the full
faith and
credit of the United States;
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(ii) repurchase obligations (the collateral for which is held by
a
third
party) with respect to any security described in clause (i)
above,
provided
that the long-term unsecured obligations of the party agreeing
to
repurchase
such obligations are at the time rated by each Rating Agency in
one of its
two highest rating categories;
(iii) certificates of deposit, time deposits and bankers'
acceptances of any bank or trust company incorporated under the
laws of
the United
States or any state, provided that the long-term unsecured debt
obligations of such bank or trust company (or, in the case of
the
principal
depository institution of a depository institution holding
company,
the long-term unsecured debt obligations of the depository
institution holding company) at the date of acquisition thereof
have been
rated by each Rating
Agency in one of its two highest rating categories;
(iv) commercial paper (having original maturities of not more
than
365 days)
of any corporation incorporated under the laws of the United
States or
any state thereof which on the date of acquisition has been
rated by
each Rating Agency in its highest rating category; and
(v) any other demand, money market or time deposit account or
obligation, or interest-bearing or other security or
investment,
acceptable
to the Purchaser (such acceptance evidenced in writing);
provided further that "Permitted Investments" shall not include any
instrument
described hereunder which evidences either the right to receive (a)
only
interest with respect to the obligations underlying such instrument
or (b) both
principal and interest payments derived from obligations underlying
such
instrument and the interest and principal payments with respect to
such
instrument provide a yield to maturity at par greater than 120% of
the yield to
maturity at par of the underlying obligations.
"Person": Any individual, corporation, limited liability
company,
partnership, joint venture, association, joint-stock company,
trust,
unincorporated organization or government or any agency or
political subdivision
thereof.
"Pledge Agreements": Each Control Agreement and Pledged Asset
Agreement for each Pledged Asset Mortgage Loan.
"Pledge Instruments": With respect to each Cooperative Loan,
the
Stock Power, the Assignment of the Proprietary Lease, the
Assignment of the
Mortgage Note and the Acceptance of Assignment and Assumption of
Lease
Agreement.
"Pledged Asset Agreement": With respect to each Pledged Asset
Mortgage Loan, the Pledge Agreement for Securities Account between
the related
mortgagor and the related Pledged Asset Servicer pursuant to which
such
mortgagor granted a security interest in the related securities and
other
financial assets held therein.
"Pledged Asset Mortgage Loan": Each Mortgage Loan as to which
Pledged Assets, in the form of a security interest in the
Securities Account and
the financial assets held therein and having a value, as of the
date of
origination of such Mortgage Loan, of at least equal
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to the related Original Pledged Asset Requirement, were required to
be provided
at the closing thereof, which is subject to the terms of this
Agreement from
time to time.
"Pledged Asset Servicer": The entity responsible for
administering
and servicing the Pledged Assets with respect to a Pledged Asset
Mortgage Loan.
"Pledged Asset Servicing Agreement": With respect to each
Pledged
Asset Mortgage Loan, the Agreement between the related Pledged
Asset Servicer
and PHH Mortgage, including any exhibits thereto, pursuant to which
such Pledged
Asset Servicer shall service and administer the related Pledged
Assets.
"Pledged Assets": With respect to any Pledged Asset Mortgage
Loan,
the related Securities Account and the financial assets held
therein subject to
a security interest pursuant to the related Pledged Asset
Agreement.
"Prepaid Monthly Payment": Any Monthly Payment received prior to
its
scheduled Due Date and which is intended to be applied to a
Mortgage Loan on its
scheduled Due Date.
"Prepayment Interest Shortfall Amount": With respect to any
Mortgage
Loan that was subject to a voluntary (not including discounted
payoffs)
Principal Prepayment in full or in part during any Due Period,
which Principal
Prepayment was applied to such Mortgage Loan prior to such Mortgage
Loan's Due
Date in such Due Period, the amount of interest (net of the related
Servicing
Fee for Principal Prepayments in full only) that would have accrued
on the
amount of such Principal Prepayment during the period commencing on
the date as
of which such Principal Prepayment was applied to such Mortgage
Loan and ending
on the day immediately preceding such Due Date, inclusive.
"Primary Insurance Policy": A policy of primary mortgage
guaranty
insurance issued by an insurer acceptable under the Underwriting
Guidelines and
qualified to do business in the jurisdiction where the Mortgaged
Property is
located, in effect with respect to a Mortgage Loan and as so
indicated on the
Mortgage Loan Schedule, or any replacement policy therefor obtained
by the
Servicer pursuant to Section 5.08.
"Principal Prepayment": Any payment or other recovery of
principal
on a Mortgage Loan (including a Payoff), other than a Monthly
Payment or a
Prepaid Monthly Payment which is received in advance of its
scheduled Due Date,
including any prepayment penalty or premium thereon, which is not
accompanied by
an amount of interest representing scheduled interest due on any
date or dates
in any month or months subsequent to the month of prepayment and
which is
intended to reduce the principal balance of the Mortgage Loan.
"Principal Prepayment Period": The Due Period preceding the
related
Remittance Date occurs.
"Proprietary Lease": The lease on a Cooperative Unit evidencing
the
possessory interest of the owner of the Cooperative Shares in such
Cooperative
Unit.
"PUD": Shall have the meaning set forth in Section 3.03.
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"Purchase Price": As to each Mortgage Loan to be sold hereunder,
the
price set forth in the Mortgage Loan Schedule and the related
Purchase Price and
Terms Letter.
"Purchase Price and Terms Letter": With respect to any pool of
Mortgage Loans purchased and sold on any Funding Date, the letter
agreement or
the electronic loan confirmation between the Purchaser and Seller
(including any
exhibits, schedules and attachments thereto), setting forth the
terms and
conditions of such transaction and describing the Mortgage Loans to
be purchased
by the Purchaser on such Funding Date. A Purchase Price and Terms
Letter may
relate to more than one pool of Mortgage Loans to be purchased on
one or more
Funding Dates hereunder.
"Purchase Price Percentage": Shall have the meaning set forth in
the
related Purchase Price and Terms Letter.
"Purchaser": Morgan Stanley Mortgage Capital Inc., or its
successor
in interest or any successor under this Agreement appointed as
herein provided.
"Purchaser's Account": The account of the Purchaser at a bank
or
other entity most recently designated in a written notice by the
Purchaser to
the Sellers as the "Purchaser's Account."
"Qualified Appraiser": An appraiser, duly appointed by the
Seller,
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
FIRREA and the regulations promulgated thereunder, all as in effect
on the date
the Mortgage Loan was originated.
"Qualified Correspondent": Any Person from which the Seller
purchased Mortgage Loans, provided that the following conditions
are satisfied:
(i) such Mortgage Loans were originated pursuant to an agreement
between the
Seller and such Person that contemplated that such Person would
underwrite
mortgage loans from time to time, for sale to the Seller, in
accordance with
underwriting guidelines designated by the Seller ("Designated
Guidelines") or
guidelines that do not vary materially from such Designated
Guidelines; (ii)
such Mortgage Loans were in fact underwritten as described in
clause (i) above
and were acquired by the Seller within 180 days after origination;
(iii) either
(x) the Designated Guidelines were, at the time such Mortgage Loans
were
originated, used by the Seller in origination of mortgage loans of
the same type
as the Mortgage Loans for the Seller's own account or (y) the
Designated
Guidelines were, at the time such Mortgage Loans were underwritten,
designated
by the Seller on a consistent basis for use by lenders in
originating mortgage
loans to be purchased by the Seller; and (iv) the Seller employed,
at the time
such Mortgage Loans were acquired by the Seller, pre-purchase or
post-purchase
quality assurance procedures (which may involve, among other
things, review of a
sample of mortgage loans purchased during a particular time period
or through
particular channels) designed to ensure that Persons from which it
purchased
mortgage loans properly applied the underwriting criteria
designated by the
Seller.
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"Qualified Mortgage Insurer": American Guaranty Corporation,
Commonwealth Mortgage Assurance Company, General Electric Mortgage
Insurance
Companies, Mortgage Guaranty Insurance Corporation, PMI Mortgage
Insurance
Company, Republic Mortgage Insurance Company or United Guaranty
Residential
Insurance Corporation.
"Qualified Substitute Mortgage Loan": A Mortgage Loan substituted
by
a Seller for a Deleted Mortgage Loan which must, on the date of
such
substitution, (i) have an outstanding principal balance, after
deduction of all
scheduled payments due and received in the month of substitution
(or in the case
of a substitution of more than one Mortgage Loan for a Deleted
Mortgage Loan, an
aggregate principal balance), not in excess of the Unpaid Principal
Balance of
the Deleted Mortgage Loan and not less than ninety percent (90%) of
the Unpaid
Principal Balance of the Deleted Mortgage Loan (the amount of any
shortfall to
be distributed by the applicable Seller to the Purchaser in the
month of
substitution), (ii) have a remaining term to maturity not greater
than (and not
more than one year less than) that of the Deleted Mortgage Loan,
(iii) have a
Note Rate not less than (and not more than one percentage point
greater than)
the Note Rate of the Deleted Mortgage Loan, (iv) with respect to
each ARM Loan,
have a Minimum Rate not less than that of the Deleted Mortgage
Loan, (v) with
respect to each ARM Loan, have a Maximum Rate not less than that of
the Deleted
Mortgage Loan and not more than two (2) percentage points above
that of the
Deleted Mortgage Loan, (vi) with respect to each ARM Loan, have a
Gross Margin
not less than that of the Deleted Mortgage Loan, (vii) with respect
to each ARM
Loan, have a Periodic Rate Cap equal to that of the Deleted
Mortgage Loan,
(viii) have a Loan-to-Value Ratio at the time of substitution equal
to or less
than the Loan-to-Value Ratio of the Deleted Mortgage Loan at the
time of
substitution, (ix) with respect to each ARM Loan, have the same
Rate Adjustment
Date as that of the Deleted Mortgage Loan, (x) with respect to each
ARM Loan,
have an Index as provided herein for all ARM Loans subject to this
Agreement,
(xi) comply as of the date of substitution with each representation
and warranty
set forth in Sections 3.01, 3.02 and 3.03, (xii) be in the same
credit grade
category as the Deleted Mortgage Loan, (xiii) have the same
prepayment penalty
term, (xiv) be current in the payment of principal and interest;
(xv) be secured
by a Mortgaged Property of the same type and occupancy status as
secured the
Deleted Mortgage Loan; and (xvi) have payment terms that do not
vary in any
material respect from those of the Deleted Mortgage Loan.
"Rate Adjustment Date": With respect to each ARM Loan, the date
on
which the Note Rate adjusts.
"Rating Agency": Standard & Poor's Ratings Services, a division
of
The McGraw-Hill Companies, Moody's Investors Service, Inc., and
Fitch, Inc.
"Recognition Agreement": An agreement among a Cooperative
Corporation, a lender and a Mortgagor with respect to a Cooperative
Loan whereby
such parties (i) acknowledge that such lender may make, or intends
to make, such
Cooperative Loan, and (ii) make certain agreements with respect to
such
Cooperative Loan.
"Reconstitution": Any Securitization Transaction or Whole Loan
Transfer.
"Reconstitution Agreements": The agreement or agreements
entered
into by the Purchaser, the Servicer, and/or certain third parties
on any
Reconstitution Date with respect to
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any or all of the Mortgage Loans in connection with a
Securitization
Transaction, Whole-Loan Transfer or an Agency Transfer, including,
but not
limited to, (i) an Assignment, Assumption and Recognition Agreement
in
substantially the form of Exhibit 2.05 hereof, (ii) a Fannie Mae
Mortgage
Selling and Servicing Contract, a Pool Purchase Contract, and any
and all
servicing agreements and tri-party agreements reasonably required
by Fannie Mae
with respect to a Fannie Mae Transfer, (iii) a Purchase Contract
and all
purchase documents associated therewith as set forth in the Freddie
Mac Sellers'
& Servicers' Guide, and any and all servicing agreements and
tri-party
agreements reasonably required by Freddie Mac with respect to a
Freddie Mac
Transfer, and (iv) a Pooling and Servicing Agreement, trust
agreement,
assignment and assumption agreements, and/or a subservicing/master
servicing
agreement and any related custodial agreement, officers'
certificates, and
correspondence and related documents related to a Securitization
Transaction.
"Reconstitution Date": The date or dates on which any or all of
the
Mortgage Loans serviced under this Agreement shall be subject to an
Agency
Transfer, a Whole Loan Transfer or a Securitization
Transaction.
"Record Date": The close of business of the first Business Day
of
the month of the related Remittance Date.
"Refinanced Mortgage Loan": A Mortgage Loan that was made to a
Mortgagor who owned the Mortgaged Property prior to the origination
of such
Mortgage Loan and the proceeds of which were used in whole or part
to satisfy an
existing mortgage.
"Regulation AB": Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be
amended from
time to time, and subject to such clarification and interpretation
as have been
provided by the Commission in the adopting release (Asset-Backed
Securities,
Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan.
7, 2005)) or
by the staff of the Commission, or as may be provided by the
Commission or its
staff from time to time.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Internal Revenue Code or any similar
tax vehicle
providing for the pooling of assets (such as a Financial Asset
Security
Investment Trust).
"Remittance Date": The 18th day of each calendar month,
commencing
on the 18th day of the month following the Funding Date, or, if
such 18th day is
not a Business Day, then the next Business Day immediately
preceding such 18th
day.
"Remittance Rate": With respect to each Mortgage Loan, the
related
Note Rate minus the Servicing Fee Rate.
"REO Disposition": The final sale by the Servicer of any REO
Property.
"REO Disposition Proceeds": All amounts received with respect to
any
REO Disposition.
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"REO Property": A Mortgaged Property acquired by the Servicer
on
behalf of the Purchaser as described in Section 5.13.
"Repurchase Price": With respect to any Defective Mortgage Loan,
the
price for such repurchase shall be calculated as follows: (a)
during the first
year immediately following the Closing Date, an amount equal to the
sum of (i)
the product of (x) the Purchase Price Percentage (as adjusted
pursuant the
Purchase Price and Terms Letter) and (y) the then outstanding
principal balance
of such Defective Mortgage Loan as of the date of such repurchase,
plus (ii)
accrued interest on such Defective Mortgage Loan at the applicable
mortgage
interest rate from the date to which interest had last been paid
through the
date of such repurchase, plus (iii) the amount of any outstanding
advances owed
to the Servicer, and (b) thereafter, an amount equal to the sum of
(i) then
outstanding principal balance of such Defective Mortgage Loan as of
the date of
such repurchase plus (ii) accrued interest thereon at the mortgage
interest rate
from the date to which interest had last been paid through the date
of such
repurchase, plus (iii) the amount of any outstanding advances owed
to the
Servicer. In the event the Purchaser has securitized or sold the
Mortgage Loans,
the price for such repurchase shall be as set forth in clause (b)
hereof.
"Required Surety Payment": With respect to any defaulted
Pledged
Asset Mortgage Loan for which a claim is payable under the related
Surety Bond
under the procedures referred to herein, the lesser of (i) the
principal portion
of the realized loss with respect to such Mortgage Loan and (ii)
the excess, if
any, of (a) the amount of Pledged Assets required at origination
with respect to
such Mortgage Loan (but not more than 30% of the original principal
balance of
such Mortgage Loan) over (b) the net proceeds realized by the
related Pledged
Asset Servicer from the related Pledged Assets.
"Sale":
Shall have the meaning set forth in Section 3.05.
"Scheduled Principal Balance": With respect to any Mortgage
Loan,
(i) the outstanding principal balance as of the Funding Date after
application
of principal payments due on or before such date whether or not
received, minus
(ii) all amounts previously remitted to the Purchaser with respect
to such
Mortgage Loan representing (a) payments or other recoveries of
principal, or (b)
advances of principal made pursuant to Section 6.03.
"Securities Account": With respect to any Pledged Asset
Mortgage
Loans, the account, together with the financial assets held
therein, that is the
subject of the related Pledged Asset Agreement.
"Securities Act": The federal Securities Act of 1933, as
amended.
"Securitization Transaction": Any transaction involving either (1)
a
sale or other transfer of some or all of the Mortgage Loans
directly or
indirectly 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.
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"Security Agreement": The agreement creating a security interest
in
the stock allocated to a dwelling unit in the residential
cooperative housing
corporation that was pledged to secure such Cooperative Loan and
the related
Cooperative Lease.
"Sellers": PHH Mortgage Corporation (formerly known as Cendant
Mortgage Corporation), a New Jersey corporation and Bishop's Gate
Residential
Mortgage Trust (formerly known as Cendant Residential Mortgage
Trust), a
Delaware statutory trust, or their successors in interest or any
successor under
this Agreement appointed as herein provided.
"Seller Information": As defined in Section 13.07(a).
"Servicer": PHH Mortgage Corporation, a New Jersey corporation,
or
with respect to Subsection 13.03(c), as defined therein.
"Servicing Advances": All "out of pocket" costs and expenses
that
are customary, reasonable and necessary which are incurred by the
Servicer in
the performance of its servicing obligations hereunder, including
(without
duplication) (i) reasonable attorneys' fees and (ii) the cost of
(a) the
preservation, restoration and protection of the Mortgaged Property,
(b) any
enforcement or judicial proceedings, including foreclosures, (c)
the servicing,
management and liquidation of any Specially Serviced Mortgaged
Loans and/or any
REO Property, and (d) compliance with the Servicer's obligations
under Section
5.08.
"Servicing Criteria": The "servicing criteria" set forth in
Item
1122(d) of Regulation AB, as such may be amended from time to
time.
"Servicing Event": Any of the following events with respect to
any
Mortgage Loan: (i) any Monthly Payment being more than 60 days
delinquent; (ii)
any filing of an Insolvency Proceeding by or on behalf of the
related Mortgagor,
any consent by or on behalf of the related Mortgagor to the filing
of an
Insolvency Proceeding against such Mortgagor, or any admission by
or on behalf
of such Mortgagor of its inability to pay such Person's debts
generally as the
same become due; (iii) any filing of an Insolvency Proceeding
against the
related Mortgagor that remains undismissed or unstayed for a period
of 60 days
after the filing thereof; (iv) any issuance of any attachment or
execution
against, or any appointment of a conservator, receiver or
liquidator with
respect to, all or substantially all of the assets of the related
Mortgagor or
with respect to any Mortgaged Property; (v) any receipt by the
Servicer of
notice of the foreclosure or proposed foreclosure of any other lien
on the
related Mortgaged Property; (vi) any proposal of a material
modification (as
reasonably determined by the Seller) to such Mortgage Loan due to a
default or
imminent default under such Mortgage Loan; or (vii) in the
reasonable judgment
of the Servicer, the occurrence, or likely occurrence within 60
days, of a
payment default with respect to such Mortgage Loan that is likely
to remain
uncured by the related Mortgagor within 60 days thereafter.
"Servicing Fee": The annual fee, payable monthly to the Servicer
out
of the interest portion of the Monthly Payment actually received on
each
Mortgage Loan. The Servicing Fee with respect to each Mortgage Loan
for any
calendar month (or a portion thereof) shall be 1/12 of the product
of (i) the
Unpaid Principal Balance of the Mortgage Loan and (ii) the
Servicing Fee Rate
applicable to such Mortgage Loan.
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"Servicing Fee Rate": Unless otherwise specified on the
Mortgage
Loan Schedule, (i) with respect to any ARM Loan, 0.375% per annum;
provided
that, prior to the first Rate Adjustment Date with respect to any
such Mortgage
Loan, such rate may be, at the Servicer's option, not less than
0.25% per annum;
and (ii) with respect to any Mortgage Loan other than an ARM Loan,
0.25% per
annum.
"Servicing Officer": Any officer of the Servicer involved in,
or
responsible for, the administration and servicing of the Mortgage
Loans whose
name appears on a written list of servicing officers furnished by
the Servicer
to the Purchaser upon request therefor by the Purchaser, as such
list may from
time to time be amended.
"Specially Serviced Mortgage Loan": A Mortgage Loan as to which
a
Servicing Event has occurred and is continuing.
"Sponsor": The sponsor, as such term is defined in Regulation
AB,
with respect to any Securitization Transaction.
"Standard & Poor's": Standard & Poor's Ratings Services, a
division
of The McGraw Hill Companies Inc., and any successor thereto.
"Standard & Poor's Glossary": The Standard & Poor's
LEVELS(R)
Glossary, as may be in effect from time to time.
"Static Pool Information": Static pool information as described
in
Item 1105(a)(1)-(3) and 1105(c) of Regulation AB.
"Subcontractor": Any vendor, subcontractor or other Person that
is
not responsible for the overall servicing (as "servicing" is
commonly understood
by participants in the mortgage-backed securities market) of
Mortgage Loans but
performs one or more discrete functions identified in Item 1122(d)
of Regulation
AB with respect to Mortgage Loans under the direction or authority
of the
Servicer or a Subservicer.
"Subservicer": Any Person that services Mortgage Loans on behalf
of
the Servicer or any Subservicer and 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
Seller under
this Agreement or any Reconstitution Agreement that are identified
in Item
1122(d) of Regulation AB.
"Stock Certificate": With respect to a Cooperative Loan, the
certificates evidencing ownership of the Cooperative Shares issued
by the
Cooperative Corporation.
"Stock Power": With respect to a Cooperative Loan, an assignment
of
the Stock Certificate or an assignment of the Cooperative Shares
issued by the
Cooperative Corporation.
"Surety Bond": With respect to each Pledged Asset Mortgage Loan,
the
surety bond issued by the related Surety Bond Issuer covering such
Pledged Asset
Mortgage Loan.
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"Surety Bond Issuer": With respect to each Pledged Asset
Mortgage
Loan, the surety bond issuer for the related Surety Bond covering
such Pledged
Asset Mortgage Loan.
"Third-Party Originator": Each Person, other than a Qualified
Correspondent, that originated Mortgage Loans acquired by the
Seller.
"Transaction Servicer": As defined in Section 13.03(c).
"Transfer Date": In the event the Servicer is terminated as
servicer
of a Mortgage Loan, the date on which the Purchaser, or its
designee, shall
receive the transfer of servicing responsibilities with respect to
such Mortgage
Loan and begin to perform the servicing of such Mortgage Loans and
the Servicer
shall cease all servicing responsibilities.
"Trust Financials": Shall have the meaning set forth in Section
3.01
"Underwriting Guidelines": The underwriting guidelines of the
Seller, a copy of which shall be attached as an exhibit to the
related
Assignment and Conveyance.
"Uniform Commercial Code": The Uniform Commercial Code as in
effect
on the date hereof in the State of New York; provided that if by
reason of
mandatory provisions of law, the perfection or the effect of
perfection or non
perfection of the security interest in any collateral is governed
by the Uniform
Commercial Code as in effect in a jurisdiction other than New York,
"Uniform
Commercial Code" shall mean the Uniform Commercial Code as in
effect in such
other jurisdiction for purposes of the provisions hereof relating
to such
perfection or effect of perfection or non perfection.
"Unpaid Principal Balance": With respect to any Mortgage Loan,
at
any time, the actual outstanding principal balance then payable by
the Mortgagor
under the terms of the related Mortgage Note including any
cumulative Negative
Amortization.
"Warranty Bill of Sale": A warranty bill of sale with respect to
the
Mortgage Loans purchased on a Funding Date in the form annexed
hereto as Exhibit
10.
"Whole Loan Transfer": Any sale or transfer of some or all of
the
Mortgage Loans, other than a Securitization Transaction.
ARTICLE II
SALE AND CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE
FILES; BOOKS AND RECORDS; DELIVERY OF MORTGAGE LOAN DOCUMENTS
Section 2.01 Sale and Conveyance of Mortgage Loans. Seller agrees
to
sell and Purchaser agrees to purchase, from time to time, those
certain Mortgage
Loans identified in a Mortgage Loan Schedule, at the price and on
the terms set
forth herein and in the related Purchase Price and Terms Letter.
Purchaser, on
any Funding Date, shall be obligated to purchase only such Mortgage
Loans set
forth in the applicable Mortgage Loan Schedule, subject to the
terms and
conditions of this Agreement and the related Purchase Price and
Terms Letter.
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Purchaser will purchase Mortgage Loans from Seller, up to four
(4)
times per month on such Funding Dates as may be agreed upon by
Purchaser and
Seller. The closing shall, at Purchaser's option be either: by
telephone,
confirmed by letter or wire as the parties shall agree, or
conducted in person
at such place as the parties shall agree. On the Funding Date and
subject to the
terms and conditions of this Agreement, each Seller will sell,
transfer, assign,
set over and convey to the Purchaser, without recourse except as
set forth in
this Agreement, and the Purchaser will purchase, all of the right,
title and
interest of the applicable Seller in and to the Mortgage Loans
being conveyed by
it hereunder, as identified on the Mortgage Loan Schedule.
Examination of the Mortgage Files may be made by Purchaser or
its
designee as follows. No later than 5 Business Days prior to the
Funding Date,
Seller will deliver to Purchaser or its custodian, Legal Documents
required
pursuant to Schedule B-1. Upon Purchaser's request, Seller shall
make the Credit
Documents available in either original paper form or electronic
imaged format to
Purchaser for review, at Seller's place of business and during
reasonable
business hours. If Purchaser makes such examination prior to the
Funding Date
and identifies any Mortgage Loans that do not conform to the PHH
Guide, such
Mortgage Loans will be deleted from the Mortgage Loan Schedule at
Purchaser's
discretion. Purchaser may, at its option and without notice to
Seller, purchase
all or part of the Mortgage Loans without conducting any partial or
complete
examination. The fact that Purchaser has conducted or has failed to
conduct any
partial or complete examination of the Mortgage Files shall not
affect
Purchaser's rights to demand repurchase, substitution or other
relief as
provided herein.
On the Funding Date and in accordance with the terms herein,
Purchaser will pay to Seller by 2:00 p.m. Eastern Standard Time, by
wire
transfer of immediately available funds, the Purchase Price for the
Mortgage
Loans, which shall be calculated in accordance with the terms of
the related
Purchase Price and Terms Letter and paid by the Purchaser to the
Sellers in
accordance with the instructions to be provided, respectively, by
PHH Mortgage
and the Trust. Seller, simultaneously with the payment of the
Purchase Price,
shall execute and deliver to Purchaser a Warranty Bill of Sale with
respect to
the Mortgage Loans in the form annexed hereto as Exhibit 10.
Purchaser shall be entitled to all scheduled principal due on
and
after the Cut-off Date, all other recoveries of principal collected
after the
Cut-off Date and all payments of interest on the Mortgage Loans
(minus that
portion of any such payment which is allocable to the period prior
to the
Cut-off Date). Notwithstanding the foregoing, on the first
Remittance Date after
the Funding Date the Purchaser shall be entitled to receive the
interest accrued
from and including the Cut-off Date through and including the day
immediately
preceding the Funding Date. The principal balance of each Mortgage
Loan as of
the Cut-off Date is determined after application of payments of
principal due on
or before the Cut-off Date whether or not collected. Therefore,
payments of
scheduled principal and interest prepaid for a due date beyond the
Cut-off Date
shall not be applied to the principal balance as of the Cut-off
Date. Such
prepaid amounts shall be the property of Purchaser. Seller shall
hold any such
prepaid amounts for the benefit of Purchaser for subsequent
remittance by Seller
to Purchaser. All scheduled payments of principal due on or before
the Cut-off
Date and collected by Servicer after the Cut-off Date shall belong
to Seller.
Section 2.02 Possession of Mortgage Files. Upon the sale of any
Mortgage Loan, the ownership of such Mortgage Loan, including the
Mortgage Note,
the Mortgage, the
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contents of the related Mortgage File and all rights, benefits,
payments,
proceeds and obligations arising therefrom or in connection
therewith, shall
then be vested in the Purchaser, and the ownership of all records
and documents
with respect to such Mortgage Loan prepared by or which come into
the possession
of the Seller shall immediately vest in the Purchaser and, to the
extent
retained by the Seller, shall be retained and maintained, in trust,
by the
Seller at the will of the Purchaser in a custodial capacity only.
The contents
of such Mortgage File not delivered to the Purchaser are and shall
be held in
trust by the Seller for the benefit of the Purchaser as the owner
thereof and
the Sellers' possession of the contents of each Mortgage File so
retained is at
the will of the Purchaser for the sole purpose of servicing the
related Mortgage
Loan, and such retention and possession by the Seller shall be in a
custodial
capacity only. Mortgage Files shall be maintained by the Seller and
shall be
marked to clearly reflect the sale of the related Mortgage Loan to
the
Purchaser. Each Seller shall release from its custody of the
contents of any
Mortgage File only in accordance with written instructions from the
Purchaser,
except where such release is required as incidental to the
Servicer's servicing
of the Mortgage Loans or is in connection with a repurchase or
substitution of
any such Mortgage Loan pursuant to Section 3.04.
Any documents released to a Seller or the Servicer in
connection
with the foreclosure or servicing of any Mortgage Loan shall be
held by such
Person in trust for the benefit of the Purchaser in accordance with
this Section
2.02. Such Person shall return to the Purchaser such documents when
such
Person's need therefor in connection with such foreclosure or
servicing no
longer exists (unless sooner requested by the Purchaser); provided
that, if such
Mortgage Loan is liquidated, then, upon the delivery by a Seller or
the Servicer
to the Purchaser of a request for the release of such documents and
a
certificate certifying as to such liquidation, the Purchaser shall
promptly
release and, to the extent necessary, deliver to such Person such
documents.
Section 2.03 Books and Records. The sale of each of its
Mortgage
Loans shall be reflected on the applicable Seller's balance sheet
and other
financial statements as a sale of assets by the applicable Seller.
Each Seller
shall be responsible for maintaining, and shall maintain, a
complete set of
books and records for the Mortgage Loans it conveyed to the
Purchaser which
shall be clearly marked to reflect the sale of each Mortgage Loan
to the
Purchaser and the ownership of each Mortgage Loan by the
Purchaser.
Section 2.04 Defective Documents; Delivery of Mortgage Loan
Documents. If, subsequent to the related Funding Date, the
Purchaser or either
Seller finds any document or documents constituting a part of a
Mortgage File to
be defective or missing in any material respect (in this Section
2.04, a
"Defect"), the party discovering such Defect shall promptly so
notify the other
parties. If the Defect pertains to the Mortgage Note or the
Mortgage, then the
applicable Seller shall have a period of 60 days within which to
correct or cure
any such defect after the earlier of such Seller's discovery of
same or such
Seller being notified of same. If such Defect can ultimately be
cured but is not
reasonably expected to be cured within such 60-day period, such
Seller shall
have such additional time as is reasonably determined by the
Purchaser to cure
or correct such Defect, provided that such Seller has commenced
curing or
correcting such Defect and is diligently pursuing same; and
provided, however,
that in no event shall the cure period be extended beyond 90 days
after notice
or discovery of such Defect. If the Defect pertains to any other
document
constituting a part of a Mortgage File, then such Seller shall
have
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a period of 60 days within which to correct or cure any such Defect
after the
earlier of such Seller's discovery of same or such Seller being
notified of
same. If such Defect can ultimately be cured but is not reasonably
expected to
be cured within the 60-day period, then such Seller shall have such
additional
time as is reasonably determined by the Purchaser to cure or
correct such Defect
provided such Seller has commenced curing or correcting such Defect
and is
diligently pursuing same; and provided, however, that in no event
shall the cure
period be extended beyond 90 days after notice or discovery of such
Defect. PHH
Mortgage hereby covenants and agrees that, if any material Defect
cannot be
corrected or cured, the related Mortgage Loan shall automatically
constitute,
upon the expiration of the applicable cure period described above
and without
any further action by any other party, a Defective Mortgage Loan,
whereupon PHH
Mortgage shall repurchase such Mortgage Loan by paying to the
Purchaser the
Repurchase Price therefor in accordance with Section 3.04.
The applicable Seller will, with respect to each Mortgage Loan to
be
purchased by the Purchaser, deliver and release to the Purchaser on
the related
Funding Date (or on such earlier date as may be specified in the
related
Purchase Price and Terms Letter), the Legal Documents as set forth
in Section
2.01. If the applicable Seller cannot deliver an original Mortgage
with evidence
of recording thereon, original assumption, modification and
substitution
agreements with evidence of recording thereon or an original
intervening
assignment with evidence of recording thereon within the time
periods specified
in the preceding sentence, then such Seller shall promptly deliver
to the
Purchaser such original Mortgages and original intervening
assignments with
evidence of recording indicated thereon upon receipt thereof from
the public
recording official, except in cases where the original Mortgage or
original
intervening assignments are retained permanently by the recording
office, in
which case, such Seller shall deliver a copy of such Mortgage or
intervening
assignment, as the case may be, certified to be a true and complete
copy of the
recorded original thereof. If the applicable Seller cannot deliver
the original
security instrument or if an original intervening assignment has
been lost, then
the applicable Seller will deliver a copy of such security
instrument or
intervening assignment, certified by the local public recording
official. If the
original title policy has been lost, the applicable Seller will
deliver a
duplicate original title policy.
If the original Mortgage was not delivered pursuant to the
preceding
paragraph, then the applicable Seller shall use its best efforts to
promptly
secure the delivery of such originals and shall cause such
originals to be
delivered to the Purchaser promptly upon receipt thereof.
Notwithstanding the
foregoing, if the original Mortgage, original assumption,
modification, and
substitution agreements, the original of any intervening assignment
or the
original policy of title insurance is not so delivered to the
Purchaser within
180 days following the Funding Date, then, upon written notice by
the Purchaser
to PHH Mortgage, the Purchaser may, in its sole discretion, then
elect (by
providing written notice to PHH Mortgage) to treat such Mortgage
Loan as a
Defective Mortgage Loan, whereupon PHH Mortgage shall repurchase
such Mortgage
Loan by paying to the Purchaser the Repurchase Price therefor in
accordance with
Section 3.04. It is understood that from time to time certain local
recorder
offices become backlogged with document volume. It is agreed that
the Seller
will provide an Officers' Certificate to document that the Seller
has performed
all necessary tasks to ensure delivery of the required
documentation within 180
days and the delay beyond 180 is caused by the backlog. If the
delay exceeds 240
days, regardless of the backlog the Purchaser may elect to collect
the documents
with its own resources with the reasonable cost and expense to be
borne by the
Seller.
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The fact that the Purchaser has conducted or failed to conduct any
partial or
complete examination of the Mortgage Files shall not affect its
right to demand
repurchase or any other remedies provided in this Agreement.
At the Purchaser's request, the Assignments shall be promptly
recorded in the name of the Purchaser or in the name of a Person
designated by
the Purchaser in all appropriate public offices for real property
records. If
any such Assignment is lost or returned unrecorded because of a
defect therein,
then the applicable Seller shall promptly prepare a substitute
Assignment to
cure such defect and thereafter cause each such Assignment to be
duly recorded.
All recording fees related to such a one-time recordation of the
Assignments to
or by a Seller shall be paid by the applicable Seller.
Section 2.05 Transfer of Mortgage Loans. Subject to the
provisions
of this Section 2.05, the Purchaser shall have the right, without
the consent of
the Sellers, at any time and from time to time, to assign any of
the Mortgage
Loans and all or any part of its interest in this Agreement and
designate any
person to exercise any rights of the Purchaser hereunder, and the
assignees or
designees shall accede to the rights and obligations hereunder of
the Purchaser
with respect to such Mortgage Loans. The Sellers recognize that the
Mortgage
Loans may be divided into "packages" for resale.
All of the provisions of this Agreement shall inure to the
benefit
of the Purchaser and any of its assignees or designees. All
references to the
Purchaser shall be deemed to include its assignees or designees.
Utilizing
resources reasonably available to the Seller without incurring any
cost except
the Seller's overhead and employees' salaries, the applicable
Seller shall
cooperate in any such assignment of the Mortgage Loans and this
Agreement;
provided that the Purchaser shall bear all costs associated with
any such
assignment of the Mortgage Loans and this Agreement other than such
Seller's
overhead or employees' salaries.
The Servicer and Purchaser agree that the Servicer shall continue
to
remit funds and make available via Servicer's website remittance
reports to no
more than four (4) Persons (not including the Servicer or any
Affiliate or
transferee thereof) at any given time with respect to any Mortgage
Loans sold on
a particular Funding Date.
The Servicer and the Purchaser acknowledge that the Servicer
shall
continue to remit payments to the Purchaser on the Remittance Date
after the
transfer of the Mortgage Loans, unless the Servicer was notified in
writing of
the new record owner of the Mortgage Loans prior to the immediately
preceding
Record Date, in which case, the Servicer shall remit to the new
record owner (or
trustee or master servicer, as the case may be) of the Mortgage
Loans.
Any prospective
assignees of the Purchaser who have entered into a
commitment to purchase any of the Mortgage Loans may review and
underwrite the
Servicer's servicing and origination operations, upon reasonable
prior notice to
the Servicer, and the Servicer shall cooperate with such review and
underwriting
to the extent such prospective assignees request information or
documents that
are reasonably available and can be produced without unreasonable
expense or
effort. The Servicer shall make the Mortgage Files related to the
Mortgage Loans
held by the Servicer available at the Servicer's principal
operations center for
review by any such prospective assignees during normal business
hours upon
reasonable prior
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notice to the Servicer (in no event less than 10 Business Days
prior notice).
The Servicer may, in its sole discretion, require that such
prospective
assignees sign a confidentiality agreement with respect to such
information
disclosed to the prospective assignee which is not available to the
public at
large and a release agreement with respect to its activities on the
Servicer's
premises.
The Servicer shall keep at its servicing office books and records
in
which, subject to such reasonable regulations as it may prescribe,
the Servicer
shall note transfers of Mortgage Loans. The Purchaser may, subject
to the terms
of this Agreement, sell and transfer, in whole or in part, any or
all of the
Mortgage Loans; provided that no such sale and transfer shall be
binding upon
the Servicer unless such transferee shall agree in writing to an
Assignment,
Assumption and Recognition Agreement, in substantially the form of
Exhibit 2.05
attached hereto, and an executed copy of such Assignment,
Assumption and
Recognition Agreement shall have been delivered to the Servicer.
The Servicer
shall evidence its acknowledgment of any transfers of the Mortgage
Loans to any
assignees of the Purchaser by executing such Assignment, Assumption
and
Recognition Agreement. The Servicer shall mark its books and
records to reflect
the ownership of the Mortgage Loans by any such assignees, and the
previous
Purchaser shall be released from its obligations hereunder accruing
after the
date of transfer to the extent such obligations relate to Mortgage
Loans sold by
the Purchaser. This Agreement shall be binding upon and inure to
the benefit of
the Purchaser and the Servicer and their permitted successors,
assignees and
designees.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER;
REPURCHASE AND SUBSTITUTION; REVIEW OF MORTGAGE LOANS
Section 3.01 Representations and Warranties of each Seller.
Each
Seller, as to itself, represents, warrants and covenants to the
Purchaser that
as of each Funding Date or as of such date specifically provided
herein:
(1) Due Organization and Authority. The Seller is a New Jersey
corporation, validly existing, and in good standing under the laws
of its
jurisdiction of incorporation or formation and has all licenses
necessary to
carry on its business as now being conducted and is licensed,
qualified and in
good standing in the states where the Mortgaged Property is located
if the laws
of such state require licensing or qualification in order to
conduct business of
the type conducted by the Seller. The Seller has corporate power
and authority
to execute and deliver this Agreement and to perform its
obligations hereunder;
the execution, delivery and performance of this Agreement
(including all
instruments of transfer to be delivered pursuant to this Agreement)
by the
Seller and the consummation of the transactions contemplated hereby
have been
duly and validly authorized; this Agreement has been duly executed
and delivered
and constitutes the valid, legal, binding and enforceable
obligation of the
Seller, except as enforceability may be limited by (i) bankruptcy,
insolvency,
liquidation, receivership, moratorium, reorganization or other
similar laws
affecting the enforcement of the rights of creditors and (ii)
general principles
of equity, whether enforcement is sought in a proceeding in equity
or at law.
All requisite corporate action has been taken by the Seller to make
this
Agreement valid and binding upon the Seller in accordance with its
terms;
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(2) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition or origination of the Mortgage Loans by
the Seller,
the sale of the Mortgage Loans to the Purchaser, the consummation
of 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 terms, conditions or provisions of the Seller's
charter or by-laws
or any legal restriction or any agreement or instrument to which
the Seller is
now a party or by which it is bound, or constitute a default or
result in an
acceleration under any of the foregoing, or result in the violation
of any law,
rule, regulation, order, judgment or decree to which the Seller or
its property
is subject, or result in the creation or imposition of any lien,
charge or
encumbrance that would have an adverse effect upon any of its
properties
pursuant to the terms of any mortgage, contract, deed of trust or
other
instrument, or impair the ability of the Purchaser to realize on
the Mortgage
Loans, impair the value of the Mortgage Loans, or impair the
ability of the
Purchaser to realize the full amount of any insurance benefits
accruing pursuant
to this Agreement;
(3) Ability to Perform; Solvency. The Seller does not believe,
nor
does it have any reason or cause to believe, that it cannot perform
each and
every covenant contained in this Agreement. The Seller is solvent
and the sale
of the Mortgage Loans will not cause the Seller to become
insolvent. The sale of
the Mortgage Loans is not undertaken with the intent to hinder,
delay or defraud
any of Seller's creditors;
(4) No Material Default. Neither the Seller nor any of its
Affiliates is in material default under any agreement, contract,
instrument or
indenture of any nature whatsoever to which the Seller or any of
its Affiliates
is a party or by which it (or any of its assets) is bound, which
default would
have a material adverse effect on the ability of the Seller to
perform under
this Agreement, nor, to the best of the Seller's knowledge, has any
event
occurred which, with notice, lapse of time or both, would
constitute a default
under any such agreement, contract, instrument or indenture and
have a material
adverse effect on the ability of the Seller to perform its
obligations under
this Agreement;
(5) Financial Statements. The Seller has delivered to the
Purchaser
financial statements as to its last three complete fiscal years and
any later
quarter ended more than 60 days prior to the execution of this
Agreement. All
such financial statements fairly present the pertinent results of
operations and
changes in financial position for each of such periods and the
financial
position at the end of each such period of the Seller and its
subsidiaries and
have been prepared in accordance with generally accepted accounting
principles
consistently applied throughout the periods involved, except as set
forth in the
notes thereto. In addition, the Seller has delivered information as
to its loan
gain and loss experience in respect of foreclosures and its loan
delinquency
experience for the immediately preceding three year period, in each
case with
respect to mortgage loans owned by it and such mortgage loans
serviced for
others during such period, and all such information so delivered
shall be true
and correct in all material respects. There has been no change in
the business,
operations, financial condition, properties or assets of the Seller
since the
date of the Seller's financial statements that would have a
material adverse
effect on its ability to perform its obligations under this
Agreement. The
Seller has completed any forms requested by the Purchaser in a
timely manner and
in accordance with the provided instructions;
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(6) No Change in Business. There has been no change in the
business,
operations, financial condition, properties or assets of the
applicable Seller
since (i) in the case of PHH Mortgage, the date of its financial
statements and
(ii) in the case of the Trust, the date of delivery of the Trust
Financials,
that would have a material adverse effect on the ability of the
applicable
Seller to perform its obligations under this Agreement;
(7) No Litigation Pending. There is no action, suit, proceeding
or
investigation pending or threatened against the Seller, before any
court,
administrative agency or other tribunal asserting the invalidity of
this
Agreement, seeking to prevent the consummation of any of the
transactions
contemplated by this Agreement or 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
Seller, or in any
material impairment of the right or ability of the Seller to carry
on its
business substantially as now conducted, or in any material
liability on the
part of the Seller, or which would draw into question the validity
of this
Agreement or the Mortgage Loans or of any action taken or to be
taken in
connection with the obligations of the Seller contemplated herein,
or which
would be likely to impair materially the ability of the Seller to
perform under
the terms of this Agreement;
(8) No Consent Required. No consent, approval, authorization or
order is required for the transactions contemplated by this
Agreement from any
court, governmental agency or body, or federal or state regulatory
authority
having jurisdiction over the Seller is required or, if required,
such consent,
approval, authorization or order has been or will, prior to the
related Closing
Date, be obtained;
(9) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary
course of
business of the Seller, and the transfer, assignment and conveyance
of the
Mortgage Notes and the Mortgages by the Seller pursuant to this
Agreement are
not subject to the bulk transfer or any similar statutory
provisions in effect
in any applicable jurisdiction;
(10) No Brokers. The Seller has not dealt with any broker,
investment banker, agent or other person that may be entitled to
any commission
or compensation in connection with the sale of the Mortgage
Loans;
(11) No Untrue Information. Neither this Agreement nor any
information, statement, tape, diskette, report, form, or other
document
furnished or to be furnished pursuant to this Agreement or any
Reconstitution
Agreement or in connection with the transactions contemplated
hereby (including
any Securitization Transaction or Whole Loan Transfer) contains or
will contain
any untrue statement of fact or omits or will omit to state a fact
necessary to
make the statements contained herein or therein not misleading;
(12) Non-solicitation. The Seller agrees that it shall not
solicit
any Mortgagors (in writing or otherwise) to refinance any of the
Mortgage Loans;
provided that mass advertising or mailings (such as placing
advertisements on
television, on radio, in magazines or in newspapers or including
messages in
billing statements) that are not exclusively directed towards the
Mortgagors
shall not constitute solicitation and shall not violate this
covenant;
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<PAGE>
(13) Privacy. The Seller agrees and acknowledges that as to all
nonpublic personal information received or obtained by it with
respect to any
Mortgagor: (a) such information is and shall be held by Seller in
accordance
with all applicable law, including but not limited to the privacy
provisions of
the Gramm-Leach Bliley Act, as may be amended from time to time;
(b) such
information is in connection with a proposed or actual secondary
market sale
related to a transaction of the Mortgagor for purposes of 16
C.F.R.
ss.313.14(a)(3); and (c) Seller is hereby prohibited from
disclosing or using
any such information other than to carry out the express provisions
of this
Agreement, or as otherwise permitted by applicable law;
(14) Seller's Origination. The Seller's decision to originate
any
mortgage loan or to deny any mortgage loan application is an
independent
decision based upon the Underwriting Guidelines, and is in no way
made as a
result of Purchaser's decision to purchase, or not to purchase, or
the price
Purchaser may offer to pay for, any such mortgage loan, if
originated; and
(15) Fair Consideration. The consideration received by the
Seller
upon the sale of the Mortgage Loans under this Agreement
constitutes fair
consideration and reasonably equivalent value for the Mortgage
Loans.
Section 3.02 Representations and Warranties of the Servicer.
The
Servicer represents, warrants and covenants to the Purchaser that
as of the
Funding Date or as of such date specifically provided herein:
(1) Ability to Service. Servicer has the facilities, procedures,
and
experienced personnel necessary for the sound servicing of mortgage
loans of the
same type as the Mortgage Loans. The Servicer is duly qualified,
licensed,
registered and otherwise authorized under all applicable federal,
state and
local laws, and regulations, if applicable, meets the minimum
capital
requirements set forth by HUD, the OTS, the OCC or the FDIC, if
applicable, and
is in good standing to enforce, originate, sell mortgage loans to,
and service
mortgage loans in the jurisdiction wherein the Mortgaged Properties
are located;
(2)
No Litigation Pending. There is no action, suit, proceeding or
investigation pending or threatened against the Servicer, before
any court,
administrative agency or other tribunal asserting the invalidity of
this
Agreement, seeking to prevent the consummation of any of the
transactions
contemplated by this Agreement or 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
Servicer, or in any
material impairment of the right or ability of the Servicer to
carry on its
business substantially as now conducted, or in any material
liability on the
part of the Servicer, or which would draw into question the
validity of this
Agreement or the Mortgage Loans or of any action taken or to be
taken in
connection with the obligations of the Servicer contemplated
herein, or which
would be likely to impair materially the ability of the Servicer to
perform
under the terms of this Agreement;
(3)
Collection Practices. The collection practices used by the
Servicer with respect to each Mortgage Note and Mortgage have been
in all
respects legal, proper and prudent in the mortgage servicing
business;
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<PAGE>
(4) MERS. The Servicer is a member of MERS in good standing,
and
will comply in all material respects with the rules and procedures
of MERS in
connection with the servicing of the MERS Mortgage Loans for as
long as such
Mortgage Loans are registered with MERS;
(5) Non-solicitation. The Servicer agrees that it shall not
solicit
any Mortgagors (in writing or otherwise) to refinance any of the
Mortgage Loans;
provided that mass advertising or mailings (such as placing
advertisements on
television, on radio, in magazines or in newspapers or including
messages in
billing statements) that are not exclusively directed towards the
Mortgagors
shall not constitute solicitation and shall not violate this
covenant;
(6) Privacy. The Servicer agrees and acknowledges that as to
all
nonpublic personal information received or obtained by it with
respect to any
Mortgagor: (a) such information is and shall be held by Servicer in
accordance
with all applicable law, including but not limited to the privacy
provisions of
the Gramm-Leach Bliley Act, as may be amended from time to time;
(b) such
information is in connection with a proposed or actual secondary
market sale
related to a transaction of the Mortgagor for purposes of 16
C.F.R.ss.
313.14(a)(3); and (c) Servicer is hereby prohibited from disclosing
or using any
such information other than to carry out the express provisions of
this
Agreement, or as otherwise permitted by applicable law; and
(7) Reasonable Servicing Fee. The Servicer acknowledges and
agrees
that the Servicing Fee represents reasonable compensation for
performing such
services and that the entire Servicing Fee shall be treated by the
Servicer, for
accounting and tax purposes, as compensation for the servicing
and
administration of the Mortgage Loans pursuant to this
Agreement.
Section 3.03 Representations and Warranties as to Individual
Mortgage Loans. With respect to each Mortgage Loan, the applicable
Seller hereby
makes the following representations and warranties to the Purchaser
on which the
Purchaser specifically relies in purchasing such Mortgage Loan.
Such
representations and warranties speak as of the Funding Date unless
otherwise
indicated, but shall survive any subsequent transfer, assignment or
conveyance
of such Mortgage Loans:
(1) Mortgage Loans as Described. Such Mortgage Loan complies
with
the terms and conditions set forth herein, and all of the
information set forth
in the related Mortgage Loan Schedule is complete, true and
correct;
(2) Delivery to the Custodian. The Mortgage Note, the Mortgage,
the
Assignment and any other documents required to be delivered with
respect to each
Mortgage Loan pursuant to the Custodial Agreement, shall be
delivered to the
Custodian all in compliance with the specific requirements of the
Custodial
Agreement. With respect to each Mortgage Loan, the Seller will be
in possession
of a complete Mortgage File in compliance with Exhibit 2 hereto,
except for such
documents as will be delivered to the Custodian;
(3) Owner of Record. The Seller is the owner of record of each
Mortgage and the indebtedness evidenced by each Mortgage Note,
except for the
Assignments of Mortgage
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which have been sent for recording, and upon recordation the Seller
will be the
owner of record of each Mortgage and the indebtedness evidenced by
each Mortgage
Note, and upon the sale of the Mortgage Loans to the Purchaser, the
Seller will
retain the Mortgage Files with respect thereto in trust only for
the purpose of
servicing and supervising the servicing of each Mortgage Loan;
(4) Payments Current. All payments required to be made up to
the
related Closing Date for the Mortgage Loan under the terms of the
Mortgage Note
have been made and credited. No payment required under the Mortgage
Loan is 30
days or more delinquent nor has any payment under the Mortgage Loan
been 30 days
or more delinquent at any time since the origination of the
Mortgage Loan;
(5) No Outstanding Charges. There are no defaults in complying
with
the terms of the Mortgage, and all taxes, governmental assessments,
insurance
premiums, water, sewer and municipal charges, leasehold payments or
ground rents
which previously became due and owing have been paid, or an escrow
of funds has
been established in an amount sufficient to pay for every such item
which
remains unpaid and which has been assessed but is not yet due and
payable. The
Seller has not advanced funds, or induced, solicited or knowingly
received any
advance of funds by a party other than the Mortgagor, directly or
indirectly,
for the payment of any amount required under the Mortgage Loan,
except for
interest accruing from the date of the Mortgage Note or date of
disbursement of
the Mortgage Loan proceeds, whichever is earlier, to the day which
precedes by
one month the related Due Date of the first installment of
principal and
interest;
(6) Original Terms Unmodified. The terms of the Mortgage Note
and
Mortgage have not been impaired, waived, altered or modified in any
respect,
from the date of origination except by a written instrument which
has been
recorded, if necessary to protect the interests of the Purchaser,
and which has
been delivered to the Custodian or to such other Person as the
Purchaser shall
designate in writing, and the terms of which are reflected in the
related
Mortgage Loan Schedule. The substance of any such waiver,
alteration or
modification has been approved by the issuer of any related Primary
Insurance
Policy and the title insurer, if any, to the extent required by the
policy, and
its terms are reflected on the related Mortgage Loan Schedule, if
applicable. No
Mortgagor has been released, in whole or in part, except in
connection with an
assumption agreement, approved by the issuer of any related Primary
Insurance
Policy and the title insurer, to the extent required by the policy,
and which
assumption agreement is part of the Mortgage File delivered to the
Custodian or
to such other Person as the Purchaser shall designate in writing
and the terms
of which are reflected in the related Mortgage Loan Schedule;
(7) No Defenses. The Mortgage Loan is not subject to any right
of
rescission, set-off, counterclaim or defense, including without
limitation the
defense of usury, nor will the operation of any of the terms of the
Mortgage
Note or the Mortgage, or the exercise of any right thereunder,
render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part,
or subject to
any right of rescission, set-off, counterclaim or defense,
including without
limitation the defense of usury, and no such right of rescission,
set-off,
counterclaim or defense has been asserted with respect thereto;
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<PAGE>
(8) Hazard Insurance. Pursuant to the terms of the Mortgage,
all
buildings or other improvements upon the Mortgaged Property are
insured by a
generally acceptable insurer against loss by fire, hazards of
extended coverage
and such other hazards as are provided for in the Underwriting
Guidelines. If
required by the National Flood Insurance Act of 1968, as amended,
each Mortgage
Loan is covered by a flood insurance policy meeting the
requirements of the
current guidelines of the Federal Insurance Administration as in
effect which
policy conforms with the Underwriting Guidelines. All individual
insurance
policies contain a standard mortgagee clause naming the Seller and
its
successors and assigns as mortgagee, and all premiums thereon have
been paid.
The Mortgage obligates the Mortgagor thereunder to maintain the
hazard insurance
policy at the Mortgagor's cost and expense, and on the Mortgagor's
failure to do
so, authorizes the holder of the Mortgage to obtain and maintain
such insurance
at such Mortgagor's cost and expense, and to seek reimbursement
therefor from
the Mortgagor. Where required by state law or regulation, the
Mortgagor has been
given an opportunity to choose the carrier of the required hazard
insurance,
provided the policy is not a "master" or "blanket" hazard insurance
policy
covering a condominium, or any hazard insurance policy covering the
common
facilities of a planned unit development. The hazard insurance
policy is the
valid and binding obligation of the insurer, is in full force and
effect, and
will be in full force and effect and inure to the benefit of the
Purchaser upon
the consummation of the transactions contemplated by this
Agreement. The Seller
has not engaged in, and has no knowledge of the Mortgagor's having
engaged in,
any act or omission which would impair the coverage of any such
policy, the
benefits of the endorsement provided for herein, or the validity
and binding
effect of either including, without limitation, no unlawful fee,
commission,
kickback or other unlawful compensation or value of any kind has
been or will be
received, retained or realized by any attorney, firm or other
person or entity,
and no such unlawful items have been received, retained or realized
by the
Seller;
(9) Compliance with Applicable Laws. Any and all requirements of
any
federal, state or local law including, without limitation,
usury,
truth-in-lending, real estate settlement procedures, consumer
credit protection,
predatory and abusive lending, equal credit opportunity and
disclosure laws
applicable to the Mortgage Loan, including, without limitation, any
provisions
relating to a Prepayment Penalty, have been complied with, the
consummation of
the transactions contemplated hereby will not involve the violation
of any such
laws or regulations, and the Seller shall maintain in its
possession, available
for the Purchaser's inspection, and shall deliver to the Purchaser
upon demand,
evidence of compliance with all such requirements. This
representation and
warranty is a Deemed Material and Adverse Representation;
(10) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, subordinated or rescinded, 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
release, cancellation, subordination or rescission. The Seller has
not waived
the performance by the Mortgagor of any action, if the Mortgagor's
failure to
perform such action would cause the Mortgage Loan to be in default,
nor has the
Seller waived any default resulting from any action or inaction by
the
Mortgagor;
(11) Valid First Lien. The Mortgage is a valid, subsisting,
enforceable and perfected, first lien on the Mortgaged Property,
including all
buildings and improvements on the
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Mortgaged Property and all installations and mechanical,
electrical, plumbing,
heating and air conditioning systems located in or annexed to such
buildings,
and all additions, alterations and replacements made at any time
with respect to
the foregoing. The lien of the Mortgage is subject only to:
(a) the lien of current real property taxes and assessments not
yet
due and
payable;
(b) covenants, conditions and restrictions, rights of way,
easements
and other
matters of the public record as of the date of recording
acceptable
to prudent mortgage lending institutions generally and
specifically referred to in the lender's title insurance policy
delivered
to the
originator of the Mortgage Loan and (a) specifically referred to
or
otherwise
considered in the appraisal made for the originator of the
Mortgage
Loan or (b) which do not adversely affect the Appraised Value
of
the
Mortgaged Property set forth in such appraisal; and
(c) other matters to which like properties are commonly subject
which do
not materially interfere with the benefits of the security
intended
to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property.
Any security agreement, chattel mortgage or equivalent document
related to and delivered in connection with the Mortgage Loan
establishes and
creates a valid, subsisting, enforceable and perfected first lien
and first
priority security interest on the property described therein and
the Seller has
full right to sell and assign the same to the Purchaser.
With respect to any Cooperative Loan, the related Mortgage is a
valid, subsisting and enforceable first priority security interest
on the
related cooperative shares securing the Mortgage Note, subject only
to (a) liens
of the related residential cooperative housing corporation for
unpaid
assessments representing the Mortgagor's pro rata share of the
related
residential cooperative housing corporation's payments for its
blanket mortgage,
current and future real property taxes, insurance premiums,
maintenance fees and
other assessments to which like collateral is commonly subject and
(b) other
matters to which like collateral is commonly subject which do not
materially
interfere with the benefits of the security interest intended to be
provided by
the related Security Agreement;
(12) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a
Mortgagor in
connection with a Mortgage Loan are genuine, and each is the legal,
valid and
binding obligation of the maker thereof enforceable in accordance
with its
terms. All parties to the Mortgage Note, the Mortgage and any other
such related
agreement had legal capacity to enter into the Mortgage Loan and to
execute and
deliver the Mortgage Note, the Mortgage and any such agreement, and
the Mortgage
Note, the Mortgage and any other such related agreement have been
duly and
properly executed by other such related parties. No fraud, error,
omission,
misrepresentation, negligence or similar occurrence with respect to
a Mortgage
Loan has taken place on the part of the Seller in connection with
the
origination of the Mortgage Loan or in the application of any
insurance in
relation to such Mortgage Loan. The documents, instruments and
agreements
submitted for loan
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<PAGE>
underwriting were not falsified and contain no untrue statement of
material fact
or omit to state a material fact required to be stated therein or
necessary to
make the information and statements therein not misleading. No
fraud, error,
omission, misrepresentation, negligence or similar occurrence with
respect to a
Mortgage Loan has taken place on the part of any Person, including
without
limitation, the Mortgagor, any appraiser, any builder or developer,
or any other
party involved in the origination of the Mortgage Loan or in the
application for
any insurance in relation to such Mortgage Loan. The Seller has
reviewed all of
the documents constituting the Servicing File and has made such
inquiries as it
deems necessary to make and confirm the accuracy of the
representations set
forth herein;
(13) Valid Execution of Documents. All parties to the Mortgage
Note
and the Mortgage related to such Mortgage Loan had legal capacity
to enter into
such Mortgage Loan and to execute and deliver the related Mortgage
Note and the
related Mortgage and the related Mortgage Note and the related
Mortgage have
been duly and properly executed by such parties; with respect to
each
Cooperative Loan, all parties to the Mortgage Note and the Mortgage
Loan had
legal capacity to execute and deliver the Mortgage Note, the
Acceptance of
Assignment and Assumption of Lease Agreement, the Proprietary
Lease, the Stock
Power, the Recognition Agreement, the Financing Statement and the
Assignment of
Proprietary Lease and such documents have been duly and properly
executed by
such parties; each Stock Power (i) has all signatures guaranteed or
(ii) if all
signatures are not guaranteed, then such Cooperative Shares will be
transferred
by the stock transfer agent of the Cooperative Corporation if the
Seller
undertakes to convert the ownership of the collateral securing the
related
Cooperative Loan;
(14) Full Disbursement of Proceeds. The Mortgage Loan has been
closed and the proceeds of the Mortgage Loan have been fully
disbursed and there
is no requirement for future advances thereunder, and any and all
requirements
as to completion of any on-site or off-site improvement and as to
disbursements
of any escrow funds therefor 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 the Mortgagor is not entitled to any
refund of any
amounts paid or due under the Mortgage Note or Mortgage;
(15) Ownership. The Seller is the sole owner of record and holder
of
the Mortgage Loan and the indebtedness evidenced by each Mortgage
Note and upon
the sale of the Mortgage Loans to the Purchaser, the Seller will
retain the
Mortgage Files or any part thereof with respect thereto not
delivered to the
Custodian, the Purchaser or the Purchaser's designee, in trust only
for the
purpose of servicing and supervising the servicing of each Mortgage
Loan. The
Mortgage Loan is not assigned or pledged, and the Seller has good,
indefeasible
and marketable title thereto, and has full right to transfer and
sell the
Mortgage Loan to the Purchaser free and clear of any encumbrance,
equity,
participation interest, lien, pledge, charge, claim or security
interest, and
has full right and authority subject to no interest or
participation of, or
agreement with, any other party, to sell and assign each Mortgage
Loan pursuant
to this Agreement and following the sale of each Mortgage Loan, the
Purchaser
will own such Mortgage Loan free and clear of any encumbrance,
equity,
participation interest, lien, pledge, charge, claim or security
interest. The
Seller intends to relinquish all rights to possess, control and
monitor the
Mortgage Loan. After the related Closing Date, the Seller will have
no right to
modify or alter the terms of the sale of the Mortgage Loan and the
Seller will
have no obligation or right to repurchase the Mortgage Loan or
substitute
another Mortgage Loan, except as provided in this Agreement;
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(16) Doing Business. 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) (1) in
compliance with any and all applicable licensing requirements of
the laws of the
state wherein the Mortgaged Property is located, and (2) either (i)
organized
under the laws of such state, or (ii) qualified to do business in
such state, or
(iii) a federal savings and loan association, a savings bank or a
national bank
having a principal office in such state, or (3) not doing business
in such
state;
(17) Title Insurance. With respect to a Mortgage Loan which is not
a
Cooperative Loan, the Mortgage Loan is covered by an ALTA lender's
title
insurance policy or other generally acceptable form of policy or
insurance
acceptable under the Underwriting Guidelines and each such title
insurance
policy is issued by a title insurer acceptable under the
Underwriting Guidelines
and qualified to do business in the jurisdiction where the
Mortgaged Property is
located, insuring the Seller, its successors and assigns, as to the
first
priority lien of the Mortgage in the original principal amount of
the Mortgage
Loan (or to the extent a Mortgage Note provides for negative
amortization, the
maximum amount of negative amortization in accordance with the
Mortgage),
subject only to the exceptions contained in clauses (a) and (b) of
paragraph
(11) of this Subsection 3.03, and in the case of Adjustable Rate
Mortgage Loans,
against any loss by reason of the invalidity or unenforceability of
the lien
resulting from the provisions of the Mortgage providing for
adjustment to the
Note Rate and Monthly Payment. Where required by state law or
regulation, the
Mortgagor has been given the opportunity to choose the carrier of
the required
mortgage title insurance. Additionally, such lender's title
insurance policy
affirmatively insures ingress and egress, and against encroachments
by or upon
the Mortgaged Property or any interest therein. The Seller, its
successor and
assigns, are the sole insureds of such lender's title insurance
policy, and such
lender's title insurance policy is valid and remains in full force
and effect
and will be in force and effect upon the consummation of the
transactions
contemplated by this Agreement. No claims have been made under such
lender's
title insurance policy, and no prior holder of the related
Mortgage, including
the Seller, has done, by act or omission, anything which would
impair the
coverage of such lender's title insurance policy, including without
limitation,
no unlawful fee, commission, kickback or other unlawful
compensation or value of
any kind has been or will be received, retained or realized by any
attorney,
firm or other person or entity, and no such unlawful items have
been received,
retained or realized by the Seller;
(18) No Defaults. Other than payments due but not yet 30 days
or
more delinquent, there is no default, breach, violation or event
which would
permit 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
which would permit acceleration, and neither the Seller nor any of
its
affiliates nor any of their respective predecessors, have waived
any default,
breach, violation or event which would permit acceleration;
(19) No Mechanics' Liens. There are no mechanics' or similar
liens
or claims which have been filed for work, labor or material (and no
rights are
outstanding that under law could give rise to such liens) affecting
the related
Mortgaged Property which are or may be liens prior to, or equal or
coordinate
with, the lien of the related Mortgage;
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<PAGE>
(20) Location of Improvements; No Encroachments. All
improvements
which were considered in determining the Appraised Value of the
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. No improvement located on or being part of
the Mortgaged
Property is in violation of any applicable zoning law or
regulation;
(21) Origination; Payment Terms. The Mortgage Loan was originated
by
a mortgagee approved by the Secretary of Housing and Urban
Development pursuant
to Sections 203 and 211 of the National Housing Act, a savings and
loan
association, a savings bank, a commercial bank, credit union,
insurance company
or other similar institution which is supervised and examined by a
federal or
state authority. Principal payments on the Mortgage Loan commenced
no more than
seventy days after funds were disbursed in connection with the
Mortgage Loan.
The Note Rate as well as, in the case of an Adjustable Rate
Mortgage Loan, the
Lifetime Rate Cap and the Periodic Rate Cap and the Periodic Rate
Floor are as
set forth on the related Mortgage Loan Schedule. The Note Rate is
adjusted, with
respect to Adjustable Rate Mortgage Loans, on each Rate Adjustment
Date to equal
the Index plus the Gross Margin (rounded up or down to the nearest
0.125%),
subject to the Periodic Rate Cap. The Mortgage Note is payable in
equal monthly
installments of principal and interest, which installments of
interest, with
respect to Adjustable Rate Mortgage Loans, are subject to change
due to the
adjustments to the Note Rate on each Rate Adjustment Date, with
interest
calculated and payable in arrears, sufficient to amortize the
Mortgage Loan
fully by the stated maturity date, over an original term of not
more than
fifteen years from commencement of amortization. Unless otherwise
specified on
the related Mortgage Loan Schedule, the Mortgage Loan is payable on
the first
day of each month. The Mortgage Loan by its original terms or any
modification
thereof, does not provide for amortization beyond its scheduled
maturity date;
(22) Due-On-Sale. With respect to each Fixed Rate Mortgage Loan,
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;
(23) Prepayment Penalty. No Mortgage Loan is subject to any
prepayment penalty. This representation and warranty is a Deemed
Material and
Adverse Representation;
(24) Mortgaged Property Undamaged; No Condemnation Proceedings.
There is no proceeding pending or threatened for the total or
partial
condemnation of the Mortgaged Property. The Mortgaged Property is
undamaged by
waste, fire, earthquake or earth movement, windstorm, flood,
tornado or other
casualty so as to affect adversely the value of the Mortgaged
Property as
security for the Mortgage Loan or the use for which the premises
were intended
and each Mortgaged Property is in good repair. There have not been
any
condemnation proceedings with respect to the Mortgaged Property and
the Seller
has no knowledge of any such proceedings in the future;
(25) Customary Provisions. The Mortgage contains customary and
enforceable provisions such as to render the rights and remedies of
the holder
thereof adequate for the realization against the Mortgaged Property
of the
benefits of the security provided thereby,
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including, (i) in the case of a Mortgage designated as a deed of
trust, by
trustee's sale, and (ii) otherwise by judicial foreclosure. Upon
default by a
Mortgagor on a Mortgage Loan and foreclosure on, or trustee's sale
of, the
Mortgaged Property pursuant to the proper procedures, the holder of
the Mortgage
Loan will be able to deliver good and merchantable title to the
Mortgaged
Property. There is no homestead or other exemption 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, subject to
applicable
federal and state laws and judicial precedent with respect to
bankruptcy and
right of redemption or similar law;
(26) Conformance with Agency and Underwriting Guidelines. The
Mortgage Loan was underwritten in accordance with the Underwriting
Guidelines (a
copy of which is attached to the related Assignment and Conveyance
as Exhibit
C). The Mortgage Note and Mortgage are on forms acceptable to
Freddie Mac or
Fannie Mae and no representations have been made to a Mortgagor
that are
inconsistent with the mortgage instruments used;
(27) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property signed prior to the approval of the
Mortgage Loan
application by a Qualified Appraiser, duly appointed by the Seller,
who had no
interest, direct or indirect in the Mortgaged Property or in any
loan made on
the security thereof, and whose compensation is not affected by the
approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser
both satisfy
the requirements of Fannie Mae or Freddie Mac and Title XI of the
Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 and the
regulations
promulgated thereunder, all as in effect on the date the Mortgage
Loan was
originated;
(28) Deeds of Trust. In the event the Mortgage constitutes a deed
of
trust, a trustee, authorized and 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;
(29) LTV, Primary Insurance Policy. No Mortgage Loan has an LTV
greater than 100%. Any Mortgage Loan that had at the time of
origination an LTV
in excess of 80% is insured as to payment defaults by a Primary
Insurance
Policy. Any Primary Insurance Policy in effect covers the related
Mortgage Loan
for the life of such Mortgage Loan. All provisions of such Primary
Insurance
Policy have been and are being complied with, such policy is in
full force and
effect, and all premiums due thereunder have been paid. No action,
inaction, or
event has occurred and no state of facts exists that has, or will
result in the
exclusion from, denial of, or defense to coverage. Any Mortgage
Loan subject to
a Primary Insurance Policy obligates the Mortgagor thereunder to
maintain the
Primary Insurance Policy and to pay all premiums and charges in
connection
therewith. The Note Rate for the Mortgage Loan as set forth on the
related
Mortgage Loan Schedule is net of any such insurance premium;
(30) Occupancy of the Mortgaged Property. As of the related
Closing
Date the Mortgaged Property is lawfully occupied under applicable
law. 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 and fire underwriting certificates, have been made or
obtained from
the
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appropriate authorities. Unless otherwise specified on the related
Mortgage Loan
Schedule, the Mortgagor represented at the time of origination of
the Mortgage
Loan that the Mortgagor would occupy the Mortgaged Property as the
Mortgagor's
primary residence;
(31) Supervision and Examination by a Federal or State
Authority.
Each Mortgage Loan either was (a) closed in the name of the PHH
Mortgage, or (b)
closed in the name of another entity that is either a savings and
loan
association, a savings bank, a commercial bank, credit union,
insurance company
or an institution which is supervised and examined by a federal or
state
authority, or a mortgagee approved by the Secretary of Housing and
Urban
Development pursuant to Sections 203 and 211 of the National
Housing Act (a "HUD
Approved Mortgagee"), and was so at the time such Mortgage Loan was
originated
(PHH Mortgage or such other entity, the "Originator") or (c) closed
in the name
of a loan broker under the circumstances described in the following
sentence. If
such Mortgage Loan was originated through a loan broker, such
Mortgage Loan met
the Originator's underwriting criteria at the time of origination
and was
originated in accordance with the Originator's policies and
procedures and the
Originator acquired such Mortgage Loan from the loan broker
contemporaneously
with the origination thereof. The Mortgage Loans that the Trust is
selling to
Purchaser were originated by or on behalf of PHH Mortgage and
subsequently
assigned to the Trust;
(32) Adjustments. All of the terms of the related Mortgage Note
pertaining to interest rate adjustments, payment adjustments and
adjustments of
the outstanding principal balance, if any, are enforceable and such
adjustments
will not affect the priority of the lien of the related Mortgage;
all such
adjustments on such Mortgage Loan have been made properly and in
accordance with
the provisions of such Mortgage Loan;
(33) Insolvency Proceedings; Servicemembers Civil Relief Act. To
the
best of the Seller's knowledge, the related Mortgagor is not the
subject of any
Insolvency Proceeding;
(34) Servicemembers Civil Relief Act. The Mortgagor has not
notified
the Seller, and the Seller has no knowledge of any relief requested
or allowed
to the Mortgagor under the Servicemembers Civil Relief Act or other
similar
state statute;
(35) Fannie Mae/Freddie Mac Documents. Such Mortgage Loan was
closed
on standard Fannie Mae or Freddie Mac documents or on such
documents otherwise
acceptable to them;
(36) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions pursuant
to which
Monthly Payments are paid or partially paid with funds deposited in
any separate
account established by the Seller, the Mortgagor, or anyone on
behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does
it contain
any other similar provisions which may constitute a "buydown"
provision. The
Mortgage Loan is not a graduated payment mortgage loan and the
Mortgage Loan
does not have a shared appreciation or other contingent interest
feature;
(37) Recordation. Each original Mortgage was recorded and all
subsequent assignments of the original Mortgage (other than the
assignment to
the Purchaser) have been
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recorded in the appropriate jurisdictions wherein such recordation
is necessary
to perfect the lien thereof as against creditors of the Seller, or
is in the
process of being recorded;
(38) Consolidation of Future Advances. Any future advances made
to
the Mortgagor prior to the applicable Cut-off Date have been
consolidated with
the outstanding principal amount secured by the Mortgage, and the
secured
principal amount, as consolidated, bears a single interest rate and
single
repayment term. The lien of the Mortgage securing the consolidated
principal
amount is expressly insured as having first lien priority by a
title insurance
policy, an endorsement to the policy insuring the mortgagee's
consolidated
interest or by other title evidence acceptable to Fannie Mae and
Freddie Mac.
The consolidated principal amount does not exceed the original
principal amount
of the Mortgage Loan;
(39) Balloon Loans. Unless otherwise disclosed in the Offering
Materials or the Mortgage Loan Schedule, no Mortgage Loan has a
balloon payment
feature. With respect to any Mortgage Loan with a balloon payment
feature, the
Mortgage Note is payable in Monthly Payments based on a thirty year
amortization
schedule and has a final Monthly Payment substantially greater than
the
proceeding Monthly Payment which is sufficient to amortize the
remaining
principal balance of the Mortgage Loan;
(40) Condominium Units/PUDs. If the residential dwelling on the
Mortgaged Property is a condominium unit or a unit in a planned
unit development
(other than a de minimis planned unit development) such condominium
or planned
unit development project meets the eligibility requirements of the
PHH Guide;
(41) Predatory Lending Regulations. No Mortgage Loan is a High
Cost
Loan. No Mortgage Loan is covered by the Home Ownership and Equity
Protection
Act of 1994 and no Mortgage Loan is in violation of any comparable
state or
local law. The Mortgaged Property is not located in a jurisdiction
where a
breach of this representation with respect to the related Mortgage
Loan may
result in additional assignee liability to the Purchaser, as
determined by
Purchaser in its reasonable discretion. This representation and
warranty is a
Deemed Material and Adverse Representation;
(42) No Rehabilitation Loan. Unless otherwise disclosed in the
Offering Materials or the Mortgage Loan Schedule, no Mortgage Loan
was made in
connection with (a) the construction or rehabilitation of a
Mortgaged Property
or (b) facilitating the trade-in or exchange of a Mortgaged
Property;
(43) No Adverse Conditions. The Seller has no knowledge of any
circumstances or condition with respect to the Mortgage, the
Mortgage Property
(or with respect to a Cooperative Loan, the Acceptance of
Assignment and
Assumption of Lease Agreement, the Cooperative Unit or the
Cooperative Project),
the Mortgagor or the Mortgagor's credit standing that can
reasonably be expected
to cause the Mortgage Loan to be an unacceptable investment, cause
the Mortgage
Loan to become delinquent, or adversely affect the value of the
Mortgage Loan;
(44) Scheduled Interest. Interest on each Mortgage Loan is
calculated on the basis of a 360-day year consisting of twelve
30-day months;
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<PAGE>
(45) No Violation of Environmental Laws. To the best of the
Seller's
knowledge, there is no pending action or proceeding directly
involving the
Mortgaged Property in which compliance with any environmental law,
rule or
regulation is an issue; there is no violation of any environmental
law, rule or
regulation with respect to the Mortgage Property; and nothing
further remains to
be done to satisfy in full all requirements of each such law, rule
or regulation
constituting a prerequisite to use and enjoyment of said
property;
(46) Negative Amortization. Unless otherwise disclosed in the
Offering Materials or the Mortgage Loan Schedule, no Mortgage Loan
is subject to
negative amortization;
(47) Cooperative Lien Search. With respect to each Cooperative
Loan,
a Cooperative Lien Search has been made by a company competent to
make the same
which company is acceptable to Fannie Mae and qualified to do
business in the
jurisdiction where the Cooperative Unit is located;
(48) Cooperative Loan - Proprietary Lease. With respect to each
Cooperative Loan, (i) the terms of the related Proprietary Lease is
longer than
the terms of the Cooperative Loan, (ii) there is no provision in
any Proprietary
Lease which requires the Mortgagor to offer for sale the
Cooperative Shares
owned by such Mortgagor first to the Cooperative Corporation, (iii)
there is no
prohibition in any Proprietary Lease against pledging the
Cooperative Shares or
assigning the Proprietary Lease and (iv) the Recognition Agreement
is on a form
of agreement published by the Aztech Document Systems, Inc. or
includes
provisions which are no less favorable to the lender than those
contained in
such agreement;
(49) Cooperative Loan - UCC Financing Statement. With respect
to
each Cooperative Loan, each original UCC financing statement,
continuation
statement or other governmental filing or recordation necessary to
create or
preserve the perfection and priority of the first priority lien and
security
interest in the Cooperative Shares and Proprietary Lease has been
timely and
properly made. Any security agreement, chattel mortgage or
equivalent document
related to the Cooperative Loan and delivered to the Mortgagor or
its designee
establishes in the Mortgagor a valid and subsisting perfected first
lien on and
security interest in the Mortgaged Property described therein, and
the Mortgagor
has full right to sell and assign the same;
(50) Cooperative Loan- Acceptance of Assignment and Assumption
of
Lease Agreement. With respect to each Cooperative Loan, each
Acceptance of
Assignment and Assumption of Lease Agreement contains enforceable
provisions
such as to render the rights and remedies of the holder thereof
adequate for the
realization of the benefits of the security provided thereby. The
Acceptance of
Assignment and Assumption of Lease Agreement contains an
enforceable provision
for the acceleration of the payment of the Unpaid Principal Balance
of the
Mortgage Note in the event the Cooperative Unit is transferred or
sold without
the consent of the holder thereof;
(51) Imaging. Each imaged document represents a true, complete,
and
correct copy of the original document in all respects, including,
but not
limited to, all signatures conforming with signatures contained in
the original
document, no information having been added or deleted, and no
imaged document
having been manipulated or altered in any manner.
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<PAGE>
Each imaged document is clear and legible, including, but not
limited to,
accurate reproductions of photographs. No original documents have
been or will
be altered in any manner;
(52) Qualified Mortgage. The Mortgage Loan is a qualified
mortgage
under Section 860G(a)(3) of the Code;
(53) No Adverse Selection. The Seller used no adverse selection
procedures in selecting the Mortgage Loans among the outstanding
first lien
residential mortgagee loans owned by it which were available for
inclusion in
the Mortgage Loans;
(54) Leaseholds. If the Mortgage Loan is secured by a long-term
residential lease, (1) the lessor under the lease holds a fee
simple interest in
the land; (2) the terms of such lease expressly permit the
mortgaging of the
leasehold estate, the assignment of the lease without the lessor's
consent and
the acquisition by the holder of the Mortgage of the rights of the
lessee upon
foreclosure or assignment in lieu of foreclosure or provide the
holder of the
Mortgage with substantially similar protections; (3) the terms of
such lease do
not (a) allow the termination thereof upon the lessee's default
without the
holder of the Mortgage being entitled to receive written notice of,
and
opportunity to cure, such default, (b) allow the termination of the
lease in the
event of damage or destruction as long as the Mortgage is in
existence, (c)
prohibit the holder of the Mortgage from being insured (or
receiving proceeds of
insurance) under the hazard insurance policy or policies relating
to the
Mortgaged Property or (d) permit any increase in rent other than
pre-established
increases set forth in the lease; (4) the original term of such
lease is not
less than 15 years; (5) the term of such lease does not terminate
earlier than
five years after the maturity date of the Mortgage Note; and (6)
the Mortgaged
Property is located in a jurisdiction in which the use of leasehold
estates in
transferring ownership in residential properties is a widely
accepted practice;
(55) Assumability. With respect to each Adjustable Rate
Mortgage
Loan, the Mortgage Loan Documents provide that after the related
first Rate
Adjustment Date, a related Mortgage Loan may only be assumed if the
party
assuming such Mortgage Loan meets certain credit requirements
stated in the
Mortgage Loan Documents;
(56) Disclosure Materials. The Mortgagor has executed a statement
to
the effect that the Mortgagor has received all disclosure materials
required by,
and the Seller has complied with, all applicable law with respect
to the making
of the Mortgage Loans. The Seller shall maintain such statement in
the Mortgage
File;
(57) No
Defense to Insurance Coverage. No action has been taken or
failed to be taken, no event has occurred and no state of facts
exists or has
existed on or prior to the related Funding Date (whether or not
known to the
Seller on or prior to such date) which has resulted or will result
in an
exclusion from, denial of, or defense to coverage under any primary
mortgage
insurance (including, without limitation, any exclusions, denials
or defenses
which would limit or reduce the availability of the timely payment
of the full
amount of the loss otherwise due thereunder to the insured),
provided this shall
not include the failure of such insurer to pay by reason of such
insurer's
breach of such insurance policy or such insurer's financial
inability to pay;
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<PAGE>
(58) Prior Servicing. Each Mortgage Loan has been serviced in
compliance with Accepted Servicing Practices;
(59) Credit Information. As to each consumer report (as defined
in
the Fair Credit Reporting Act, Public Law 91-508) or other credit
information
furnished by the Seller to the Purchaser, that Seller has full
right and
authority and is not precluded by law or contract from furnishing
such
information to the Purchaser and the Purchaser is not precluded
from furnishing
the same to any subsequent or prospective purchaser of such
Mortgage. The Seller
has and shall in its capacity as servicer, for each Mortgage Loan,
fully
furnished, in accordance with the Fair Credit Reporting Act and its
implementing
regulations, accurate and complete information (e.g., favorable and
unfavorable)
on its borrower credit files to Equifax, Experian and Trans Union
Credit
Information Company (three of the credit repositories), on a
monthly basis. This
representation and warranty is a Deemed Material and Adverse
Representation;
(60) Convertible Loans. With respect to ARM Loans, unless
otherwise
set forth in the Mortgage Loan Schedule, the Mortgage Loan is not a
Convertible
Mortgage Loan;
(61) Type of Mortgaged Property. With respect to a Mortgage
Loan
that is not a Cooperative Loan and is not secured by an interest in
a leasehold
estate, the Mortgaged Property is a fee simple estate that consists
of a single
parcel of real property with a detached single family residence
erected thereon,
or a two- to four-family dwelling, or an individual residential
condominium unit
in a condominium project, or an individual unit in a planned unit
development,
or an individual unit in a residential cooperative housing
corporation;
provided, however, that any condominium unit, planned unit
development or
residential cooperative housing corporation shall conform with the
Underwriting
Guidelines. No portion of the Mortgaged Property (or underlying
Mortgaged
Property, in the case of a Cooperative Loan) is used for commercial
purposes,
and since the date of origination, no portion of the Mortgaged
Property has been
used for commercial purposes; provided, that Mortgaged Properties
which contain
a home office shall not be considered as being used for commercial
purposes as
long as the Mortgaged Property has not been altered for commercial
purposes and
is not storing any chemicals or raw materials other than those
commonly used for
homeowner repair, maintenance and/or household purposes. None of
the Mortgaged
Properties are Manufactured Homes, log homes, mobile homes,
geodesic domes or
other unique property types. This representation and warranty is a
Deemed
Material and Adverse Representation;
(62) No Additional Collateral. The Mortgage Note is not and has
not
been secured by any collateral except the lien of the corresponding
Mortgage and
the security interest of any applicable security agreement or
chattel mortgage
referred to in clause (j) above;
(63) Acceptable Investment. There are no circumstances or
conditions
with respect to the Mortgage, the Mortgaged Property, the
Mortgagor, the
Mortgage File or the Mortgagor's credit standing that can
reasonably be expected
to cause private institutional investors who invest in prime
mortgage loans
similar to the Mortgage Loan to regard the Mortgage Loan as an
unacceptable
investment, cause the Mortgage Loan to become delinquent, or
adversely affect
the value or marketability of the Mortgage Loan, or cause the
Mortgage Loan to
prepay during any period materially faster or slower than the
mortgage loans
originated by the Seller generally. No Mortgaged Property is
located in a state,
city, county or other local
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<PAGE>
jurisdiction which the Buyer has determined in its sole good faith
discretion
would cause the related Mortgage Loan to be ineligible for whole
loan sale or
securitization in a transaction consistent with the prevailing sale
and
securitization industry (including, without limitation, the
practice of the
rating agencies) with respect to substantially similar mortgage
loans;
(64) Transfer of Mortgage Loans. The Assignment (except with
respect
to any Mortgage that has been recorded in the name of MERS or its
designee) with
respect to each Mortgage Loan is in recordable form and is
acceptable for
recording under the laws of the jurisdiction in which the Mortgaged
Property is
located;
(65) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. The origination, servicing and collection practices
used by the
Seller with respect to the Mortgage Loan have been in all respects
in compliance
with Accepted Servicing Practices, applicable laws and regulations,
and have
been in all respects legal and proper. With respect to escrow
deposits and
Escrow Payments, all such payments are in the possession of, or
under the
control of, the Seller and there exist no deficiencies in
connection therewith
for which customary arrangements for repayment thereof have not
been made. All
Escrow Payments have been collected in full compliance with state
and federal
law and the provisions of the related Mortgage Note and Mortgage.
An escrow of
funds is not prohibited by applicable law and has been established
in an amount
sufficient to pay for every item that remains unpaid and has been
assessed but
is not yet due and payable. No escrow deposits or Escrow Payments
or other
charges or payments due the Seller have been capitalized under the
Mortgage or
the Mortgage Note. All Note Rate adjustments have been made in
strict compliance
with state and federal law and the terms of the related Mortgage
and Mortgage
Note on the related Rate Adjustment Date. If, pursuant to the terms
of the
Mortgage Note, another index was selected for determining the Note
Rate, the
same index was used with respect to each Mortgage Note which
required a new
index to be selected, and such selection did not conflict with the
terms of the
related Mortgage Note. The Seller executed and delivered any and
all notices
required under applicable law and the terms of the related Mortgage
Note and
Mortgage regarding the Note Rate and the Monthly Payment
adjustments. Any
interest required to be paid pursuant to state, federal and local
law has been
properly paid and credited;
(66) Conversion to Fixed Interest Rate. The Mortgage Loan does
not
contain a provision whereby the Mortgagor is permitted to convert
the Note Rate
from an adjustable rate to a fixed rate;
(67) Other
Insurance Policies; No Defense to Coverage. No action,
inaction or event has occurred and no state of facts exists or has
existed on or
prior to the Closing Date that has resulted or will result in the
exclusion
from, denial of, or defense to coverage under any applicable hazard
insurance
policy, Primary Insurance Policy or bankruptcy bond (including,
without
limitation, any exclusions, denials or defenses which would limit
or reduce the
availability of the timely payment of the full amount of the loss
otherwise due
thereunder to the insured), irrespective of the cause of such
failure of
coverage. The Seller has caused or will cause to be performed any
and all acts
required to preserve the rights and remedies of the Purchaser in
any insurance
policies applicable to the Mortgage Loans including, without
limitation, any
necessary notifications of insurers, assignments of policies or
interests
therein, and establishments of coinsured, joint loss payee and
mortgagee rights
in favor of the Purchaser.
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In connection with the placement of any such insurance, no
commission, fee, or
other compensation has been or will be received by the Seller or by
any officer,
director, or employee of the Seller or any designee of the Seller
or any
corporation in which the Seller or any officer, director, or
employee had a
financial interest at the time of placement of such insurance;
(68) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction (other
than a
"construct-to-perm" loan) or rehabilitation of a Mortgaged Property
or
facilitating the trade-in or exchange of a Mortgaged Property;
(69) Escrow Analysis. If applicable, with respect to each
Mortgage,
the Seller has within the last twelve months (unless such Mortgage
was
originated within such twelve month period) analyzed the required
Escrow
Payments for each Mortgage and adjusted the amount of such payments
so that,
assuming all required payments are timely made, any deficiency will
be
eliminated on or before the first anniversary of such analysis, or
any overage
will be refunded to the Mortgagor, in accordance with RESPA and any
other
applicable law;
(70) Leaseholds. If the Mortgage Loan is secured by a leasehold
estate, (1) the ground lease is assignable or transferable; (2) the
ground lease
will not terminate earlier than five years after the maturity date
of the
Mortgage Loan; (3) the ground lease does not provide for
termination of the
lease in the event of lessee's default without the mortgagee being
entitled to
receive written notice of, and a reasonable opportunity to cure the
default; (4)
the ground lease permits the mortgaging of the related Mortgaged
Property; (5)
the ground lease protects the mortgagee's interests in the event of
a property
condemnation; (6) all ground lease rents, other payments, or
assessments that
have become due have been paid; and (7) the use of leasehold
estates for
residential properties is a widely accepted practice in the
jurisdiction in
which the Mortgaged Property is located;
(71) Single-premium credit life insurance policy. No Mortgagor
was
required to purchase any single premium credit insurance policy
(e.g., life,
mortgage, disability, property, accident, unemployment or health
insurance
product) or debt cancellation agreement as a condition of obtaining
the
extension of credit. No Mortgagor obtained a prepaid single premium
credit
insurance policy (e.g., life, mortgage, disability, property,
accident,
unemployment, mortgage or health insurance) in connection with the
origination
of the Mortgage Loan. No proceeds from any Mortgage Loan were used
to purchase
single premium credit insurance policies or debt cancellation
agreements as part
of the origination of, or as a condition to closing, such Mortgage
Loan. This
representation and warranty is a Deemed Material and Adverse
Representation;
(72) Tax Service Contract. Each Mortgage Loan is covered by a
paid
in full, life of loan, tax service contract issued by First
American Real Estate
Tax Service, and such contract is transferable;
(73) Origination. No predatory or deceptive lending practices,
including, without limitation, the extension of credit without
regard to the
ability of the Mortgagor to repay and the extension of credit which
has no
apparent benefit to the Mortgagor, were employed in the origination
of the
Mortgage Loan;
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(74) Cooperative Loans. With respect to a Mortgage Loan that is
a
Cooperative Loan, the stock that is pledged as security for the
Mortgage Loan is
held by a person as a tenant-stockholder (as defined in Section 216
of the Code)
in a cooperative housing corporation (as defined in Section 216 of
the Code);
(75) Mortgagor Bankruptcy. On or prior to the date 60 days after
the
related Closing Date, the Mortgagor has not filed and will not file
a bankruptcy
petition or has not become the subject and will not become the
subject of
involuntary bankruptcy proceedings or has not consented to or will
not consent
to the filing of a bankruptcy proceeding against it or to a
receiver being
appointed in respect of the related Mortgaged Property;
(76) No Prior Offer. The Mortgage Loan has not previously been
offered for sale;
(77) Georgia Fair Lending Act. There is no Mortgage Loan that
was
originated (or modified) on or after October 1, 2002 and before
March 7, 2003
which is secured by property located in the State of Georgia. There
is no
Mortgage Loan that was originated on or after March 7, 2003 that is
a "high cost
home loan" as defined under the Georgia Fair Lending Act. This
representation
and warranty is a Deemed Material and Adverse Representation;
(78) No Arbitration. No Mortgagor with respect to any Mortgage
Loan
originated on or after August 1, 2004 agreed to submit to
arbitration to resolve
any dispute arising out of or relating in any way to the mortgage
loan
transaction. This representation and warranty is a Deemed Material
and Adverse
Representation;
(79) Flood Service Contract. Each Mortgage Loan is covered by a
paid
in full, life of loan, flood service contract issued by First
American Real
Estate Tax Service or Fidelity, and such contract is
transferable;
(80) Origination Practices/No Steering. No Mortgagor was
encouraged
or required to select a mortgage loan product offered by the
Mortgage Loan's
originator which is a higher cost product designed for less
creditworthy
borrowers, unless at the time of the Mortgage Loan's origination,
such Mortgagor
did not qualify taking into account credit history and
debt-to-income ratios for
a lower-cost credit product then offered by the Mortgage Loan's
originator or
any affiliate of the Mortgage Loan's originator. If, at the time of
loan
application, the Mortgagor may have qualified for a lower-cost
credit product
then offered by any mortgage lending affiliate of the Mortgage
Loan's
originator, the Mortgage Loan's originator referred the Mortgagor's
application
to such affiliate for underwriting consideration. This
representation and
warranty is a Deemed Material and Adverse Representation;
(81) Underwriting Methodology. The methodology used in
underwriting
the extension of credit for each Mortgage Loan employs, in part,
objective
mathematical principles which relate the Mortgagor's income, assets
and
liabilities to the proposed payment and such underwriting
methodology does not
rely on the extent of the Mortgagor's equity in the collateral as
the principal
determining factor in approving such credit extension. Such
underwriting
methodology confirmed that at the time of origination
(application/approval) the
Mortgagor had
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a reasonable ability to make timely payments on the Mortgage Loan.
This
representation and warranty is a Deemed Material and Adverse
Representation;
(82) Points and Fees. No Mortgagor was charged "points and
fees"
(whether or not financed) in an amount greater than (i) $1,000, or
(ii) 5% of
the principal amount of such Mortgage Loan, whichever is greater.
For purposes
of this representation, such 5% limitation is calculated in
accordance with
Fannie Mae's anti-predatory lending requirements as set forth in
the Fannie Mae
Guides and "points and fees" (x) include origination, underwriting,
broker and
finder fees and charges that the mortgagee imposed as a condition
of making the
Mortgage Loan, whether they are paid to the mortgagee or a third
party; and (y)
exclude bona fide discount points, fees paid for actual services
rendered in
connection with the origination of the Mortgage Loan (such as
attorneys' fees,
notaries fees and fees paid for property appraisals, credit
reports, surveys,
title examinations and extracts, flood and tax certifications, and
home
inspections), the cost of mortgage insurance or credit-risk price
adjustments,
the costs of title, hazard, and flood insurance policies, state and
local
transfer taxes or fees, escrow deposits for the future payment of
taxes and
insurance premiums, and other miscellaneous fees and charges that,
in total, do
not exceed 0.25% of the principal amount of such Mortgage Loan.
This
representation and warranty is a Deemed Material and Adverse
Representation; and
(83) Fees Charges. All points, fees and charges (including
finance
charges) and whether or not financed, assessed, collected or to be
collected in
connection with the origination and servicing of each Mortgage Loan
have been
disclosed in writing to the Mortgagor in accordance with applicable
state and
federal law and regulation. This representation and warranty is a
Deemed
Material and Adverse Representation.
Section 3.04 Repurchase and Substitution. It is understood and
agreed that the representations and warranties set forth in
Sections 3.01, 3.02
and 3.03 shall survive the sale of the Mortgage Loans to the
Purchaser and shall
inure to the benefit of the Purchaser, notwithstanding any
restrictive or
qualified endorsement on any Mortgage Note or Assignment or the
examination of
any Mortgage File.
Upon discovery by either of the Sellers or the Purchaser of a
breach
of any of the representations and warranties contained in Sections
3.01, 3.02 or
3.03 that materially and adversely affects the interest of the
Purchaser (or
that materially and adversely affects the interests of the
Purchaser in the
related Mortgage Loan, in the case of a representation or warranty
relating to a
particular Mortgage Loan), the party discovering such breach shall
give prompt
written notice to the other.
Unless permitted a greater period of time to cure as set forth
in
Section 2.04, the applicable Seller shall have a period of 60 days
from the
earlier of either discovery by or receipt of written notice from
the Purchaser
to the Seller of any breach of any of the representations and
warranties
contained in Sections 3.01, 3.02 or 3.03 that materially and
adversely affects
the interest of the Purchaser (or that materially and adversely
affects the
interests of the Purchaser in the related Mortgage Loan, in the
case of a
representation or warranty relating to a particular Mortgage Loan)
(a "Defective
Mortgage Loan"; provided that "Defective Mortgage Loan" shall also
include (a)
any Mortgage Loan treated or designated as such in accordance with
Section 2.04
and (b) any Mortgage Loan regarding which the Mortgagor fails to
make the first
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regularly scheduled payment of principal and interest within 30
days of its Due
Date) within which to correct or cure such breach. If such breach
can ultimately
be cured but is not reasonably expected to be cured within the
60-day period,
then the applicable Seller shall have such additional time, if any,
as is
reasonably determined by the Purchaser to cure such breach,
provided that the
Seller has commenced curing or correcting such breach and is
diligently pursuing
same. Notwithstanding anything to the contrary contained herein,
(i) within
sixty (60) days after the earlier of either discovery by, or notice
to, the
Seller of any breach of the representation and warranty set forth
in clause (52)
of Subsection 3.03, the Seller shall repurchase such Mortgage Loan
at the
Repurchase Price and (ii) any breach of a Deemed Material and
Adverse
Representation shall automatically be deemed to materially and
adversely affect
the value of the Mortgage Loans or the interest of the Purchaser
therein. Each
Seller hereby covenants and agrees with respect to each Mortgage
Loan conveyed
by it that, if any breach relating thereto cannot be corrected or
cured within
the applicable cure period or such additional time, if any, as is
reasonably
determined by the Purchaser, then such Seller shall, at the
direction of the
Purchaser, repurchase the Defective Mortgage Loan at the applicable
Repurchase
Price. Notwithstanding anything to the contrary contained herein,
if the first
regularly scheduled payment of principal and interest due under any
Mortgage
Loan has been delinquent more than 30 days, the Purchaser may, by
written notice
to the applicable Seller, require that the Seller repurchase the
related
Mortgage Loan. However, if the Seller provides evidence that the
delinquency was
due to a servicing setup error, no repurchase shall be required.
Within 10
Business Days following the delivery of any such written notice
from the
Purchaser, the applicable Seller shall repurchase the specified
Mortgage Loan by
paying the Repurchase Price therefor by wire transfer of
immediately available
funds directly to the Purchaser's Account.
Except with respect to any breach of the representation and
warranty
set forth in clause (52) of Subsection 3.03, the applicable Seller
may, at its
option and assuming that such Seller has a Qualified Substitute
Mortgage Loan or
Qualified Substitute Mortgage Loans, rather than repurchase the
Mortgage Loan as
provided above, remove such Mortgage Loan ("Deleted Mortgage Loan")
and
substitute in its place a Qualified Substitute Mortgage Loan or
Qualified
Substitute Mortgage Loans, provided that no such substitution shall
be effected
after the Mortgage Loan has been conveyed as part of a Sale
transaction as
described in Section 3.05 hereof and no such substitution shall be
effected more
than 180 days after the related Funding Date. If the applicable
Seller has no
Qualified Substitute Mortgage Loan, it shall repurchase the
Defective Mortgage
Loan.
As to any Deleted Mortgage Loan for which the applicable Seller
substitutes a Qualified Substitute Mortgage Loan or Qualified
Substitute
Mortgage Loans, the applicable Seller shall effect such
substitution by
delivering to the Purchaser or its designee for such Qualified
Substitute
Mortgage Loan or Qualified Substitute Mortgage Loans the Legal
Documents as are
required by Section 2. In the event of a repurchase or
substitution, the Seller
shall, simultaneously with such reassignment, give written notice
(by
telecopier, electronically or otherwise) 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 the Qualified Substitute
Mortgage Loan or
Qualified Substitute Mortgage Loans and amend the related Mortgage
Loan Schedule
to reflect the addition of such Qualified Substitute Mortgage Loan
or Qualified
Substitute Mortgage
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Loans to this Agreement. Upon such substitution, such Qualified
Substitute
Mortgage Loan or Qualified Substitute Mortgage Loans shall be
subject to the
terms of this Agreement in all respects, and the applicable Seller
shall be
deemed to have made with respect to such Qualified Substitute
Mortgage Loan or
Qualified Substitute Mortgage Loans, as of the date of
substitution, the
covenants, representations and warranties set forth in Sections
3.01, 3.02 and
3.03. The Seller 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.
For any month in which the applicable Seller substitutes one or
more
Qualified Substitute Mortgage Loans for one or more Deleted
Mortgage Loans, the
applicable Seller will determine the amount (if any) by which the
aggregate
principal balance of all such Qualified Substitute Mortgage Loans
as of the date
of substitution (after application of scheduled principal payments
due in the
month of substitution which have been received or as to which an
advance has
been made) is less than the aggregate outstanding principal balance
of all such
Deleted Mortgage Loans. The amount of such shortfall shall be paid
by the
applicable Seller on the date of such substitution) by wire
transfer of
immediately available funds directly to the Purchaser's
Account.
Any repurchase of a Defective Mortgage Loan required hereunder
shall
be accomplished by payment of the applicable Repurchase Price
within 3 Business
Days of expiration of the applicable time period referred to above
in paragraph
3.04 by wire transfer of immediately available funds directly to
the Purchaser's
Account. It is understood and agreed that the obligations of a
Seller (a) set
forth in this Section 3.04 to cure any breach of such Seller's
representations
and warranties contained in Sections 3.01, 3.02 and 3.03 or to
repurchase the
Defective Mortgage Loan or Defective Mortgage Loans and (b) set
forth in Section
9.01 to indemnify the Indemnified Parties in connection with any
breach of a
Seller's representations and warranties contained in Sections 3.01,
3.02 and
3.03 shall constitute the sole remedies of the Purchaser respecting
a breach of
such representations and warranties.
The parties further agree that, in recognition of the Trust's
rights
against PHH Mortgage with respect to the Mortgage Loans acquired by
it from PHH
Mortgage and conveyed to the Purchaser hereunder, the Purchaser
shall have the
right to cause PHH Mortgage to repurchase directly any Defective
Mortgage Loan
(other than as a result of a breach by the Trust of Section 3.03(3)
or 3.03(16)
hereof, in which case the Purchaser shall have the right to cause
the Trust to
repurchase directly the Defective Mortgage Loan) acquired hereunder
by the
Purchaser from the Trust.
Section 3.05 Removal of Mortgage Loans from Inclusion Under
this
Agreement Upon an Agency Transfer, Whole-Loan Transfer or a
Securitization
Transaction on One or More Reconstitution Dates. Without incurring
undue effort
or any cost except the Seller's overhead or employees' salaries,
each Seller
shall take reasonable steps to assist the Purchaser, if the
Purchaser so
requests by 15 days' advanc
