AGREEMENT FOR PURCHASE AND SALE OF SERVICING

EXHIBIT 10.1

AGREEMENT FOR PURCHASE AND SALE
OF SERVICING

         THIS AGREEMENT FOR PURCHASE AND SALE OF SERVICING (this “Agreement”) is dated as of the 29th day of March, 2005, between EVERBANK , a federal savings bank (“Purchaser”), whose address is 8100 Nations Way, Jacksonville, Florida 32256, and FIRST INDIANABANK, N.A. , a national banking association (“Seller”), whose mailing address is 135 North Pennsylvania Street, Indianapolis, Indiana 46204. All defined terms utilized herein shall have the meaning assigned thereto in the Definitions below.

R E C I T A L S :

         WHEREAS , Seller is the owner of the Servicing for the Mortgage Loans; and

         WHEREAS , Seller desires to sell, transfer and assign to Purchaser all of its right, title and interest in and to the Servicing for the Mortgage Loans and Purchaser desires to acquire and assume all right, title and interest in and to the Servicing from Seller; and

         WHEREAS , Purchaser was the successful bidder for the purchase of the Servicing in the offering conducted by Broker.

         NOW, THEREFORE , in consideration of the mutual promises, covenants and conditions, and upon the terms and subject to the conditions set forth herein, the parties hereto agree as follows:

1. DEFINITIONS .

        For purposes of this Agreement, the following terms shall have the following meanings when used herein. The terms defined herein include the plural as well as the singular and the singular as well as the plural.

        “ Accounts Receivable ”. Amounts due Seller by virtue of documented advances made prior to the Transfer Date in connection with the Servicing of the Mortgage Loans and which are deemed recoverable by Purchaser in accordance with Investor Guidelines.

        “ Agreement ”. This Agreement and all attachments hereto, as the same may from time to time be amended or supplemented by one or more instruments executed by Seller and Purchaser.

        “ Ancillary Income ”. Late Mortgagor payment charges, charges for dishonored checks (NSF Fees), pay-off fees, assumption fees, commissions and administrative fees on insurance and similar fees and charges collected from or assessed against the Mortgagor.

        “ Applicable Requirements ” means and includes, as of the time of reference, with respect to the Mortgage Loans and the Servicing, all of the following: (i) all contractual obligations of Seller and any prior originator or servicers, including without limitation those contractual obligations contained herein or in the Mortgage Loan documents for which Seller or the servicer is responsible or at any time was responsible; (ii) all applicable federal, state and local legal and regulatory requirements (including statutes, rules, regulations and ordinances) binding upon Seller and/or the servicer or any prior servicer; (iii) all other applicable requirements and guidelines of each governmental agency, board, commission, instrumentality and other governmental body or office having jurisdiction over the Mortgage Loans; (iv) all other applicable judicial and administrative

 

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judgments, orders, stipulations, awards, writs and injunctions; and (v) the reasonable and customary mortgage servicing practices of prudent mortgage lending institutions which service mortgage loans of the same type as the Mortgage Loans in the jurisdiction in which the related mortgaged properties are located.

        “ Bankruptcy ”. The Mortgagor under a Mortgage Loan has sought protection under or is subject to proceedings under the bankruptcy or insolvency laws of the United States or any other similar laws of general application for the relief of debtors.

        “ Bid Letter ”. The letter from Purchaser to Broker dated March 16, 2005, wherein Purchaser offered to purchase the Servicing from Seller.

        “ Broker ”. Hanover Trade, Inc.

        “ Business Day ”. Any day other than (i) a Saturday or Sunday, or (ii) a day on which national banking institutions are authorized or obligated by law or executive order to be closed.

        “ Buy-Down Funds ”. The remaining amount of funds collected at the closing of a Mortgage Loan to cover a portion of the mortgage payment for a stated term and which are held by or on behalf of Seller.

        “ Closing Documents ”. This Agreement, the Assignment of the Servicing of the Mortgage Loans attached hereto as Appendix II, the Transfer of Servicing attached hereto as Appendix III and the Interim Servicing Agreement attached hereto as Appendix VI.

        “ Foreclosure ”. A Mortgage Loan where payment has been accelerated and the Mortgage Loan has been referred to an attorney for collection and enforcement proceedings or is in the process of liquidation after the foreclosure sale.

        “ Holdback ”. Ten percent (10%) of the Purchase Price, less any sums deducted therefrom pursuant to this Agreement.

        “ Insurer ”. Any insurer under any applicable hazard insurance policy, any federal flood insurance policy, or any title insurance policy.

        “ Interim Servicing Agreement ”. That certain Interim Servicing Agreement between Seller and Purchaser, as set forth at Appendix VI to this Agreement.

        “ Investor(s) ”. The beneficial owner(s) of the Mortgage Loans.

        “ Investor Approval ”. The written acknowledgment provided by an Investor and delivered to Purchaser unconditionally approving the purchase and sale of the Servicing.

        “ Investor Guidelines ”. Rules and regulations set forth by each Investor, as outlined in their respective Selling and Servicing Guides or other published or written rules and regulations, and as amended from time to time, including project guidelines, setting forth the manner in which Mortgage Loans shall be originated, underwritten, sold or serviced, excluding any special commitments.

        “ Litigation ”. A legal action in foreclosure of a Mortgage Loan, or for a deficiency thereunder, in which the sale of the mortgaged property in foreclosure (whether by action, power of sale, or otherwise) has been delayed by reason of the defense of such action by the Mortgagor, or any other action commenced or

 

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pending which involves the Mortgage Loan (excluding class actions), and which action materially and adversely, in Purchaser’s reasonable opinion, affects the Mortgagor’s obligation to make payments under the Mortgage Loan or the enforceability or priority of the Mortgage or results in a material increase in the cost to service the Mortgage Loan.

        “ Mortgage ”. A security instrument, including without limitation a mortgage or deed of trust, creating a first or second lien on real property securing the payment of a Mortgage Note.

        “ Mortgage File ”. The file containing the photostatic copies of mortgage loan documents with respect to a Mortgage Loan, as well as the credit and closing packages, disclosures, custodial documents, and all other files, books, records and documents, all as called for pursuant to the Transfer Instructions at Appendix IV to this Agreement.

        “ Mortgage Loan(s) ”. Any loan, evidenced by a Mortgage Note and secured by a Mortgage, described in the Mortgage Loan Schedule and thereby subject to this Agreement.

        “ Mortgage Loan Schedule ”. The schedule of Mortgage Loans attached hereto as Appendix I, which has been prepared as of the close of business on March 31, 2005.

        “ Mortgage Note ”. The evidence of indebtedness from a Mortgagor to a lender which is secured by a Mortgage.

        “ Mortgagor(s) ”. The obligor on a Mortgage Note.

        “ Offering Information ”. The data, tapes and written statements and information provided to Purchaser by Seller or Broker in the preparation of Purchaser’s Bid Letter with respect to the Servicing.

        “ Offering Memorandum ”. The offering memorandum prepared by Broker, acting as broker for Seller.

        “ Prepaid Mortgage Loans ”. Mortgage Loans which are prepaid in full on or before three (3) months after the Sale Date. The date on which the Mortgage Loan is considered prepaid with respect to Prepaid Mortgage Loans shall be (a) the date of receipt by Seller or Purchaser the payoff check from the settlement agent or (b) the date the payoff is received via wire transfer of federal funds.

        “ Purchase Price ”. The amount paid by Purchaser to Seller for the Servicing of the Mortgage Loans, as provided in Paragraph 3 hereof, and as subsequently adjusted pursuant to this Agreement.

        “ Purchaser’s Indemnified Matters ”. As defined in subparagraph 12.3 of this Agreement.

        “ Recorded Assignments ”. All assignments of the Mortgage Loans required to legally vest record title to the Mortgage Loans in MERS, which assignments shall be properly recorded, individually or as blanket assignments, where permitted by the applicable recorder’s office.

        “ Recourse Obligation ”. Any obligation with respect to any Mortgage Loan in any master commitment or pool purchase contract, whether described as a limited or full repurchase requirement, limited or full recourse, credit support reimbursement or other obligation, indemnification, loss sharing arrangement or otherwise which would subject the servicer of such Mortgage Loan to losses on the liquidation of such Mortgage Loan or which would entitle the Investor to require the servicer of such Mortgage Loan to repurchase such Mortgage Loan for any reason. The fact that any of the Mortgage Loans may have been classified by an

 

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Investor as “non-recourse” because of the existence of any pool insurance policy shall not, for purposes of this Agreement, remove any such Mortgage Loan from the definition of Recourse Obligation.

        “ Related Escrow Accounts ”. Segregated trust accounts maintained by Seller for the account of the Mortgagors or Investors, as applicable, in accordance with Investor Guidelines and established to hold funds for principal and interest, taxes and insurance in escrow pursuant to the terms of the Mortgage Loans.

        “ Sale Date ”. The date on which the ownership of the Servicing and other assets specified herein are transferred to Purchaser, which shall be the close of business on March 31, 2005, unless extended in writing by Seller and Purchaser.

        “ Seller’s Indemnified Matters ”. As defined in subparagraph 12.1.

        “ Servicing ”. With respect to the Mortgage Loans (a) the management of operational functions related to servicing each Mortgage Loan including without limitation (i) the collection and disbursement of funds being held in escrow to pay taxes, insurance and other items as they become due, (ii) the collection and remittance of principal and interest payments in accordance with Investor Guidelines, and (iii) the resolution of defaulted loans in accordance with Investor Guidelines, (b) the right to all service fees, Ancillary Income, any economic benefit of holding the Related Escrow Accounts, any right to solicit the Mortgagors for other services and all other customary rights related to servicing the Mortgage Loans, and (c) the right to all Mortgage Files and other related records.

        “ Servicing Agreements ”. Those written agreements, including the Investor Guidelines, which govern the Servicing.

        “ Sixty (60) Days Delinquent ”. With respect to a Mortgage Loan, when two (2) regularly scheduled monthly Mortgage Loan payments are due and unpaid. By way of example: A Mortgage Loan due and unpaid for the February 1, 2005 payment as of the Sale Date.

        “ Tax Identification Number ”. The number used by the Internal Revenue Service to identify a taxpayer for income tax reporting purposes.

        “ Third Party Originated Loans ”. Mortgage Loans originated by a lender other than Seller.

        “ Thirty (30) Days Delinquent ”. With respect to a Mortgage Loan, when one (1) regularly scheduled monthly Mortgage Loan payment is due and unpaid. By way of example: A Mortgage Loan due and unpaid for the March 1, 2005 payment as of the Sale Date.

        “ Transfer Date ”. The date on which Purchaser assumes the obligations for Servicing the Mortgage Loans in accordance with Investor Approvals, but in any event, not later than May 31, 2005, for Investors with cutoff dates from the 20th through the 31st of the month and June 15, 2005, for the Investors with cutoff dates from the 10th through the 15th of the month, unless extended in writing by Purchaser and Seller.

        “ Transferred Assets ”. Collectively, the Servicing, Accounts Receivable, Mortgage Files and Buy-Down Funds.

 

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2. SALE AND TRANSFER OF SERVICING .

2.1 Sale .

        Subject to, and upon the terms and conditions of this Agreement, Seller shall, on the Sale Date, sell, convey, transfer, assign and deliver to Purchaser and Purchaser shall purchase, assume and accept all right, title and interest of Seller, as of the Sale Date, in and to the Transferred Assets.

        As of the Sale Date, Purchaser will assume only those contractual duties, obligations and liabilities of Seller which prospectively and directly relate to Purchaser’s acquisition, ownership and performance of the Transferred Assets, including Seller’s prospective obligations under the Servicing Agreements. Purchaser will not assume or otherwise be responsible for, in any way whatsoever, any other duties, obligations and liabilities of, or claims against, Seller or its shareholders (or any of their respective, agents, officers, directors, trustee, or affiliates), with respect to the Servicing or otherwise.

2.2 Investor Approval .

                (a) The purchase and sale of the Servicing are subject to Investor Approval. If Seller fails, for whatever reason, to obtain written approval from Investors with respect to the Servicing of Mortgage Loans with a principal balance of at least $240,000,000.00 by no later than the Business Day prior to the Transfer Date, Purchaser shall have the option to terminate this Agreement. If Purchaser terminates this Agreement as provided above, Seller shall immediately refund to Purchaser the portion of the Purchase Price received by Seller and Purchaser shall re-convey the Mortgages and other Transferred Assets to Seller. Thereafter, subject to the continuing obligations of the parties pursuant to Paragraph 12, the parties shall have no further obligation to one another.

                (b) If the unconditional consent of an Investor is not timely received or within such later date as Purchaser may approve in writing, or if such consent is given only upon terms which are not reasonably acceptable to Purchaser, then Purchaser or Seller may elect to exclude such Mortgage Loans for which Investor Approval was not obtained with a commensurate adjustment in the Purchase Price in accordance with subparagraph 3.4 herein.

2.3 Transfer Documents . On the Sale Date, Seller shall execute and deliver to Purchaser (a) the Assignment of Servicing of the Mortgage Loans attached hereto and made a part hereof as Appendix II and (b) the Transfer of Servicing attached hereto and made a part hereof as Appendix III. Prior to the Transfer Date, Purchaser and Seller shall execute and deliver any documents reasonably required by the Investors in connection with the transfer of the Transferred Assets hereunder, in form and substance reasonably satisfactory to Purchaser and Seller, and shall execute and deliver such other instruments or documents as Purchaser and Seller shall reasonably determine are necessary to consummate the transactions contemplated hereby.

2.4 Interim Servicing . Notwithstanding the sale of Servicing as provided in subparagraph 2.1, Seller shall sub-service the Mortgage Loans until the Transfer Date pursuant to the Interim Servicing Agreement which shall be executed by Purchaser and Seller on the Sale Date. The Interim Servicing Agreement is attached hereto as Appendix VI.

 

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3. CONSIDERATION .

3.1 Purchase Price . In full consideration for the sale of the Servicing of the Mortgage Loans and upon the terms and conditions of this Agreement, Purchaser shall pay to Seller (in accordance with subparagraph 3.3), an amount equal to the following:

        As to Mortgage Loans which are current or less than Sixty (60) Days Delinquent and Mortgage Loans which are not (i) in Bankruptcy and Thirty (30) Days Delinquent or greater, (ii) in Litigation or (iii) in Foreclosure, the aggregate outstanding principal balance of such Mortgage Loans, as of the close of business on the Sale Date, multiplied by 0.99% (0.0099). All of the above determinations shall be made based upon the status of each Mortgage Loan on the Sale Date.

        The Purchase Price due and payable under this Agreement shall be reduced by an amount equal to $10.00 for each first lien Mortgage Loan without an existing tax service contract as of the Sale Date.

3.2 Accounts Receivable . Within five (5) Business Days after Purchaser receives documentation which is reasonably satisfactory to it as to Accounts Receivable on the Mortgage Loans transferred to Purchaser, Purchaser shall pay such documented amount to Seller. Accounts Receivable which are not considered by Purchaser to be recoverable in accordance with Investor Guidelines, will be reimbursed only if and when recovered by Purchaser.

3.3 Payment of the Purchase Price; Holdback .

        Subject to the conditions precedent set forth in Paragraph 9 of this Agreement, the Purchase Price shall be due and payable as follows:

                (a) On the Sale Date, Purchaser shall pay to Seller a sum equal to twenty percent (20%) of the Purchase Price.

                (b) Within three (3) Business Days after the Transfer Date, Purchaser shall pay to Seller a sum equal to ninety percent (90%) of the Purchase Price, less the payment made in accordance with subparagraph (a) above.

                (c) The balance of the Purchase Price, which is represented by the Holdback, shall be paid as herein provided, (i) fifty percent (50%) of the Holdback shall be paid to Seller upon Seller’s completion in all material respects of the delivery requirements set forth in the Transfer Instructions and Purchaser’s receipt of seventy-five percent (75%) of the Recorded Assignments, (ii) an additional twenty-five percent (25%) of the Holdback will be paid to Seller upon Purchaser’s receipt of ninety-five percent (95%) of the Recorded Assignments, and (iii) the balance of the Holdback will be paid to Seller upon Seller’s completion of all delivery requirements set forth in this Agreement. Notwithstanding the foregoing, Purchaser may elect to withhold such portion of the Holdback as Purchaser reasonably determines, in good faith, is equivalent to the out-of-pocket damages and expenses it expects to sustain if any of Seller’s representations and warranties are found to be untrue in any material respect or if Seller has otherwise materially defaulted under this Agreement and Seller has received written notice of such default from Purchaser, and as of the date such payment of the Holdback is due, such default or defaults have not been cured to the reasonable satisfaction of Purchaser. Provided, however, Purchaser shall fund the Holdback or such portion thereof as is due to Seller at such time as the misrepresentations or defaults have been cured.

 

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                (d) Any amounts owed to Purchaser by Seller due to Buy-Down Funds or Related Escrow Accounts shall be transferred to Purchaser by Seller by wire transfer of federal funds within two (2) Business Days after the Transfer Date, based upon the certification of Seller to Purchaser as provided in subparagraph 11.1.

                (e) If, subsequent to the payment of the Purchase Price or the payment of any amounts due hereunder to either party, the outstanding principal balance of any of the Mortgage Loans is found to be in error, or if for any reason the Purchase Price or such other amounts is found to be in error, the party benefiting from the error shall pay an amount sufficient to correct and reconcile the Purchase Price or such other amounts and shall provide a reconciliation statement and other such documentation to reasonably satisfy the other party concerning the accuracy of such reconciliation. Such amounts shall be paid by the proper party within ten (10) Business Days from receipt of satisfactory written verification of amounts due.

3.4 Adjustments to Purchase Price .

                (a) In the event an Investor does not approve the transfer of its Mortgage Loans as contemplated in subparagraph 2.2 of this Agreement, then Seller shall repurchase the Servicing of the applicable Mortgage Loans in accordance with subparagraph 12.2. If the net average service fee of the remaining Mortgage Loans is less than 0.495%, the Purchase Price will be reduced by multiplying 2.0 times the true net servicing fee (e.g. net service fee of 0.49% times 2.0 equals a purchase price of 0.98%, a 1 basis point reduction). If the net average service fee of the remaining Mortgage Loans is greater than 0.495%, the Purchase Price will be increased by multiplying 2.0 times the true net servicing fee (e.g. net service fee of 0.50% times 2.0 equals a purchase price of 1.00%, a 1 basis point increase).

                (b) In the event of the termination of the Servicing by an Investor as to any of the Mortgage Loans, through no fault of Purchaser, within fifteen (15) months from the Transfer Date (the date of the notice from the Investor shall be considered the termination date for the purpose of this subparagraph) and for which a termination fee is not paid or is less than the Purchase Price paid for such Mortgage Loans, then Seller agrees to reimburse Purchaser for the Purchase Price paid for the Servicing of such Mortgage Loans based on the unpaid principal balance at the time of termination, less any termination fees paid to Purchaser, in relation to such Servicing as follows:

4. COVENANTS OF PURCHASER . Purchaser shall, subject to the terms and conditions of this Agreement, pay, perform and discharge or cause to be paid, performed, and discharged all of the obligations relating to the Transferred Assets assigned to Purchaser from and after the Sale Date. Purchaser further agrees to accept and assume such obligations relating to the Servicing, Servicing Agreements and the Mortgage Loans as shall be required by the Investors and as provided in the agreements and documents executed by the parties pursuant to subparagraph 2.3 of this Agreement.

5. COVENANTS OF SELLER . Seller covenants and agrees with Purchaser as follows:

                (a) Remaining Obligations . Seller shall pay, perform or discharge all of its liabilities and obligations accruing before the Sale Date relating to the Servicing, the Related Escrow Accounts and the Mortgage Loans, to the extent the same are unpaid or unfulfilled on the Sale Date and except as expressly assumed by Purchaser pursuant to the terms hereof.

 

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        For the benefit of Purchaser and as its agent, Seller shall continue to pay, perform and discharge all of Seller’s liabilities and obligations related to the Servicing, the Related Escrow Accounts and the Mortgage Loans from the Sale Date to the Transfer Date, in accordance with the terms and provisions of the Investor Guidelines and the Interim Servicing Agreement.

                (b) Servicing Income . Except as otherwise provided in the Interim Servicing Agreement, all monies received by Seller after the Sale Date relating to the Mortgage Loans and the Accounts Receivable shall be promptly turned over to Purchaser and all servicing fees and Ancillary Income accruing after the Sale Date with respect to the Servicing shall inure to the benefit of Purchaser.

                (c) Correction of Material Errors . Seller shall, at the request of Purchaser, make a good faith effort and diligently pursue the correction of any material errors or deficiencies in any of the Mortgage Loans or related loan documentation. For purposes of this provision, material shall refer to errors or deficiencies which are required to be corrected by the Investors in accordance with the contractual obligations between Seller and the Investors.

                (d) Assignment and Transfer . Unless previously recorded in the Investor’s name, as evidenced of record in the Mortgage Loan file, Seller shall, at its expense, cause to be prepared, executed, and, where applicable, recorded all documents necessary to legally transfer and assign all right, title and interest in and to the Servicing of the Mortgage Loans from Seller to Purchaser including, without limitation, the Mortgage Note endorsements and the Recorded Assignments in to the name of MERS. Seller shall be responsible for obtaining and shall pay the cost of securing the approval of the Investors, including payment of any investor fees, sub-servicer fees or transfer fees due. In addition, Seller shall pay any costs related to (i) obtaining the release of the Mortgage File and related Mortgage Loan documents from the custodian of the Mortgage Loans, (ii) the cost of shipping the Mortgage File and related Mortgage Loan documentation to Purchaser or a custodian designated by Purchaser, and (iii) obtaining and delivering complete master file tape information and any other electronically stored information.

                (e) Tax Payments . Provided the tax bill has been released by the taxing authority prior to the Transfer Date, Seller shall pay to Purchaser any penalty charges or the amount of any discounts lost as a result of a failure to pay tax bills which are due and payable on or before the Transfer Date or thirty (30) days subsequent thereto, which are subsequently incurred by Purchaser.

                (f) Defects . If any Mortgage Loan, including the Related Escrow Account for such Mortgage Loan, is found defective or deficient in accordance with Investor Guidelines or such defect or deficiency limits in any material respect the Purchaser’s ability to properly service the Mortgage Loan (which defect existed as of the Transfer Date), other than a servicing error by Purchaser after the Sale Date, Seller shall upon written notification by Purchaser (i) correct or cure the defect to the reasonable satisfaction of Purchaser and/or Investor within thirty (30) days or such time period allowed by the Investors, or if such defect cannot be cured within such time period, (ii) repurchase the Servicing of the Mortgage Loan and/or the Mortgage Loan from Purchaser as provided in subparagraph 12.2 of this Agreement, and (iii) hold harmless and indemnify Purchaser from any and all claims, demands, liabilities or losses incidental thereto including reasonable attorney’s fees and costs.

                (g) Casualty Loss . Seller shall be liable for any loss incurred by Purchaser as the result of a casualty loss to any property subject to a Mortgage Loan where the loss occurs either prior to or on the Transfer Date for such Mortgage Loan, if such loss is the direct result of the expiration of any such insurance policies prior to the Transfer Date or is due to the insufficiency (in accordance with Investor Guidelines) of any such insurance coverage. In the event there is no evidence of insurance coverage on any Mortgage Loan as of

 

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the Transfer Date for such Mortgage Loan, Seller shall provide such evidence within five (5) days of written request by Purchaser or shall be responsible for the cost of Purchaser’s obtaining the necessary insurance coverage to the extent such costs are not otherwise due, collectible, and payable by the Mortgagor under the Mortgage Loan.

                (h) No Solicitation or Refinancing . After the Sale Date, neither Seller nor any affiliate, parent, subsidiary, sub-servicer, or agent of Seller (the “Related Parties”) shall, during the remaining term of any of the Mortgage Loans, (a) use information derived from the origination, sale, or servicing of the Mortgage Loans to refinance any Mortgage Loan, or (b) solicit in any manner any of the Mortgagors of the Mortgage Loans for the purpose of refinancing or the sale of any other products. For purposes of this subparagraph, advertising directed to (i) the general public, (ii) generic statement stuffers to all Seller’s bank customers, (iii) general mailings to Seller’s bank customers, excluding mailings for refinance products to any of the Mortgage Loans and (iv) mailings to parties whose names were obtained through commercially available mailing lists shall not be deemed to be a prohibited solicitation. Seller shall not direct any promotion or creation of a mass mailing list nor shall Seller use a mass mailing list prepared where such mailing list is structured to target Mortgagors of the Mortgage Loans.

        In the event Seller or the Related Parties violate the above covenant, Seller shall, upon demand by Purchaser, pay to Purchaser a sum equal to the Purchase Price paid by Purchaser for each Mortgage Loan which Seller or Related Parties has refinanced for a period of time three (3) months before the violation and three (3) months after the violation. Provided that such violation is within three (3) months of the Sale and Transfer Date, Purchaser shall receive a full six (6) months protection from the Seller as to any violation.

                (i) Prepaid Mortgage Loans . Seller shall reimburse Purchaser upon demand for the Purchase Price paid for any Prepaid Mortgage Loans. In the event the Transfer Date is extended by the Seller, the number of days during which Purchaser will be entitled to prepayment protection from Seller, as contemplated herein, shall be extended for a like number of days.

                (j) Compliance with Obligations . From and after the Sale Date through the Transfer Date, Seller shall comply in all material respects with all of its obligations under all contracts to which it is a party and with all applicable laws, regulations and other guidelines of the Investors which might affect any of the Servicing of the Mortgage Loans being purchased by Purchaser hereunder and Seller will do no act or thing which may cause the cancellation of or otherwise materially and adversely affect any of the Servicing.

                (k) Investor Reports/Remittances . Seller has filed or timely will file all reports and remittances required by Investor Guidelines. As of the Transfer Date, Seller will be in compliance in all material respects with all applicable federal, state and municipal laws, regulations and ordinances affecting the Servicing of the Mortgage Loans. Seller shall report the interest payments of the Mortgagors under the Mortgage Loans and other related payments and disbursements made during the period prior to the Transfer Date, during which period Seller serviced or sub-serviced the Mortgage Loans. Seller shall be responsible for providing Purchaser with accurate Tax Identification Numbers on all of the Mortgagors of the Mortgage Loans and shall reimburse Purchaser or successfully contest the Internal Revenue Service for any Internal Revenue Service penalties incurred by Purchaser for any tax years prior to the Transfer Date as to Tax Identification Number errors in the Mortgage Loan data base.

                (l) Investor Approval . The sale and assignment of Servicing under this Agreement is subject to the consent and approval of the Investors, subject to subparagraph 2.2 herein. Seller agrees to (i) pay all costs and fees relating to obtaining such approval, and (ii) use due diligence to obtain such approval.

 

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Purchaser will assist Seller and complete any documentation and supply any information reasonably required in order to obtain the approval of the Investors.

                (m) Optional Insurance Premiums . If, at any time after the Sale Date, Purchaser determines that Seller received unearned optional insurance premiums from any Mortgagor(s), Seller shall, upon demand from Purchaser reimburse Purchaser therefor within ten (10) days of Purchaser’s written request for such reimbursement.

                (n) Tax Reporting Service . Seller shall, at its sole expense, transfer to Purchaser all existing tax servicing contracts with First American Real Estate Tax Service.

                (o) Master Commitments . Seller shall make available to Purchaser, upon request, copies of all commitments under which the Mortgage Loans were sold to the Investors.

                (p) Custodial Account Adjustments . On or before the Transfer Date, Seller shall correct and fund all cash and collateral deficiencies with respect to the custodial accounts as required by Investor Guidelines.

                (q) Mortgage Loans in Litigation . On or before ten (10) Business Days prior to the Transfer Date, Seller shall disclose to Purchaser, in writing, all Litigation relating to any Mortgage Loan. Purchaser shall have the right to exclude the Servicing of any such Mortgage Loan in Litigation from this Agreement.

6. POST CLOSING REQUIREMENTS . Seller agrees to complete the following subsequent to the Sale Date:

                (a) Assignments . As provided for in subparagraph 5(d), Seller shall be responsible for preparing and delivering all documents necessary to legally transfer and assign all right, title and interest in and to the Servicing of the Mortgage Loans, including the Recorded Assignments. Seller shall send the Recorded Assignments for recording on the Transfer Date. Seller shall diligently pursue obtaining the Recorded Assignments and shall deliver same to Purchaser immediately upon receipt.

                (b) Seller shall diligently pursue obtaining all documentation required for the due transfer of the Servicing to Purchaser and for delivering such documentation to Purchaser within the prescribed time limits set forth in the Investor Guidelines.

                (c) Seller shall deliver, or cause to be delivered to Purchaser on the Transfer Date, all Mortgage Files.

7. REPRESENTATIONS AND WARRANTIES OF SELLER .

        The representations and warranties of Seller contained in this Agreement shall continue and survive the purchase of the Servicing and the delivery and assignment to Purchaser of such Servicing and shall inure to the benefit of Purchaser, its successors and assigns. In addition to representations and warranties made elsewhere in this Agreement, Seller represents and warrants to Purchaser, as of the Sale Date and through the Transfer Date, as follows:

7.1 Due Incorporation and Good Standing . Seller is a national banking association, duly organized, validly existing, and in good standing under the laws of the United States. Seller has in full force and effect

 

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(without notice of possible suspension, revocation or impairment) all required qualifications, permits, approvals, licenses, and registrations (or is exempt from same) to conduct all activities in all states in which its activities with respect to the Mortgage Loans or the Servicing require it to be qualified or licensed.

7.2 Authority and Capacity . Seller has all requisite power, authority and capacity to execute and deliver this Agreement and the Interim Servicing Agreement and to perform all of its obligations hereunder and thereunder. Seller does not believe, nor does it have any cause or reason to believe, that it cannot perform each and every covenant contained in this Agreement and the Interim Servicing Agreement.

7.3 Effective Agreement . The execution, delivery and performance of this Agreement and the Interim Servicing Agreement by Seller and consummation of the transactions contemplated hereby and thereby have been or will be duly and validly authorized by all necessary association, shareholder or other action. This Agreement and the Interim Servicing Agreement have been duly and validly executed and delivered by Seller, and this Agreement and the Interim Servicing Agreement are valid and legally binding agreements of Seller enforceable against Seller in accordance with their respective terms, subject to applicable insolvency, bankruptcy, reorganization, moratorium, or similar laws and principles of equity. Any requisite consents or approvals of third parties to the execution and delivery of this Agreement and the Interim Servicing Agreement or the performance of the transactions contemplated hereby and thereby by Seller have been or will be obtained prior to the Transfer Date or such other earlier date as expressly provided herein (except for Investor Approvals which Seller will use commercially reasonable efforts to obtain subject to subparagraph 2.2 herein).

7.4 No Conflict . Neither the execution and delivery of this Agreement and the Interim Servicing Agreement nor the consummation of the transactions contemplated hereby and thereby, nor compliance with their respective terms and conditions, shall (a) violate, conflict with, result in a material breach of, constitute a default under any of the terms, conditions or provisions of the Articles of Incorporation or Bylaws or any similar corporate or organizational documents of Seller, or other agreement or instrument to which Seller is now a party or by which Seller is bound, or of any law, ordinance, rule or regulation of any governmental authority applicable to Seller, or of any order, judgment or decree of any court or governmental authority applicable to Seller, or (b) result in the creation or imposition of any lien, charge or encumbrance of any nature upon, the Servicing or any of the Mortgage Loans or the properties or assets of Seller.

7.5 Approvals and Compliance . Seller is approved and in good standing with the Investors. Seller is not in default with respect to Seller’s obligations under Investor Guidelines, and Seller is in compliance in all material respects with all applicable laws, regulations, rules and requirements (including, without limitation, the rules, regulations and requirements of the Investors, to the extent applicable) relating to the Servicing.

7.6 Filing of Reports . Seller has filed all reports required by the Investors with respect to the Mortgage Loans and the Servicing, and Seller has complied in all material respects with federal, state and municipal laws, regulations and ordinances affecting the Mortgage Loans and the Servicing. Seller has filed all IRS Forms, as appropriate, which are required to be filed with respect to the Servicing.

7.7 Related Escrow Accounts . All Related Escrow Accounts required to be maintained by Seller have been established and continuously maintained in accordance with Applicable Requirements. Except as to payments which are past due under the Mortgage Loans, all Related Escrow Account balances required by the Mortgage Loans and paid to Seller for the account of the Mortgagors under the Mortgage Loans are on deposit in the appropriate Related Escrow Accounts. Within the last twelve (12) months, Seller has analyzed the payments required to be deposited into the Related Escrow Account and adjusted the payment thereto in order to eliminate any deficiency it may have discovered.

 

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7.8 Accounts Receivable . The Accounts Receivable are valid and subsisting accounts owing to Seller, are carried on the books of Seller at values determined in accordance with generally accepted accounting principles and are not subject to any set-offs or claims of the account debtor arising from acts or omissions of, or otherwise known to, Seller.

7.9 The Mortgage Loans .

                (a) Investor Requirements . Each Mortgage Loan conforms in all material respects to the requirements and specifications of the Investors.

                (b) Enforceability of Mortgage Loan . The Mortgage Note and the related 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 and the Mortgage Loan had legal capacity to execute the Mortgage Note and the Mortgage Loan and each Mortgage Note and Mortgage Loan have been duly and properly executed by such parties. None of the Mortgage Loans are subject to any right of rescission, set-off, counterclaim or defense, including the defense of usury, nor will the operation of any of the terms of the Mortgage Note or the Mortgage Loan, or the exercise of any right thereunder, render either the Mortgage Note or the Mortgage Loan unenforceable, in whole or in part, or subject to any right of rescission, set-off, counterclaim or defense, including the defense of usury, and no such right of rescission, set-off, counterclaim or defense has been asserted with respect thereto.

                (c) Disbursement . The full original principal amount of each Mortgage Loan (net of any discounts) has been fully advanced or disbursed to the Mortgagor named therein, there is no requirement for future advances and any and all requirements as to completion of any on-site or off-site improvements and as to disbursements of any escrow funds therefor have been satisfied. All costs, fees and expenses incurred in making, closing or recording the Mortgage Loan were paid. There is no obligation on the part of Seller, or of any other party, to make supplemental payments in addition to those made by the Mortgagor.

                (d) Priority of Lien . Each Mortgage Loan has been duly acknowledged and recorded and is a valid and subsisting first lien, excepted as disclosed on Appendix VII attached hereto, and the mortgaged property is free and clear of all encumbrances and liens having priority over the lien of the Mortgage Loan, except for (i) liens for real estate taxes and special assessments not yet due and payable, (ii) covenants, conditions and restrictions, rights of way, easements and other matters of the public record as of the date of recording, acceptable to mortgage lending institutions generally and (iii) 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 Loan or the use, enjoyment, value or marketability of the related mortgaged property. 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 lien) affecting the mortgaged property which are or may be liens prior to, or equal or coordinate with, the lien of the Mortgage Loan. A valid mortgagee’s title policy or attorney’s opinion letter, if applicable, which meets Investor Guidelines has been issued and is and shall remain in full force and effect for each such Mortgage Loan in an amount not less than the original principal amount of such Mortgage Loan, which title policy insures that the related Mortgage Loan is a valid first lien on the mortgaged property therein described and that the mortgaged property is free and clear of all encumbrances and liens having priority over the lien of the Mortgage Loan, subject to the exceptions set forth in this subparagraph, and otherwise in compliance with the requirements of the Investors and the applicable insurer. All tax identifications and property descriptions are legally sufficient; tax segregation, where required, has been completed. The failure of Seller or any servicer to have recorded intervening assignments of the Mortgage Loan will not cause a delay in the subsequent release of any Mortgage Loan or otherwise subject Purchaser to any liabilities or costs.

 

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                (e) No Default/No Waiver . There is no default, breach, violation or event of acceleration (except as disclosed by Seller to Purchaser prior to the Sale Date) existing under any Mortgage Loan, and no event has occurred which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration; and Seller has not waived any default, breach, violation or event of acceleration. The terms of the Mortgage Loan have in no way been waived, impaired, changed or modified, except by written instrument which has been recorded, if necessary, and approved by the Investors. Seller has not advanced its funds to cure a default or delinquency with respect to any such Mortgage Loans, except for escrowed items.

                (f) Application of Funds . All payments received by Seller or any prior servicer with respect to any Mortgage Loans have been remitted and properly accounted for as required by Applicable Requirements. All funds received by Seller or any prior servicer in connection with the satisfaction of Mortgage Loans, including but not limited to foreclosure proceeds and insurance proceeds from hazard losses,