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Exhibit 99.11(b)
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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
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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<PAGE>
Schedules
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A. Mortgage Loan Schedule
B. Contents of Mortgage File
B-1 Collateral File
B-2 Credit Documents
C. PHH Guide
Exhibits
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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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<PAGE>
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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<PAGE>
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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<PAGE>
(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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<PAGE>
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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<PAGE>
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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<PAGE>
(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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<PAGE>
(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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<PAGE>
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) here
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