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Exhibit 99.12(b)
EXECUTION COPY
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MORTGAGE LOAN PURCHASE AND WARRANTIES AGREEMENT
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MORGAN STANLEY MORTGAGE CAPITAL INC.,
Purchaser
SOVEREIGN BANK,
Seller
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Dated as of June 1, 2006
Conventional,
Fixed and Adjustable Rate
Residential Mortgage Loans
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TABLE OF CONTENTS
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SECTION 1.
DEFINITIONS..................................................................................1
SECTION 2. AGREEMENT TO
PURCHASE.......................................................................15
SECTION 3. MORTGAGE
SCHEDULES..........................................................................15
SECTION 4. PURCHASE
PRICE..............................................................................15
SECTION 5. EXAMINATION OF MORTGAGE
FILES...............................................................16
SECTION 6. CONVEYANCE FROM SELLER TO
PURCHASER.........................................................17
SECTION 7. SERVICING OF THE MORTGAGE
LOANS.............................................................19
SECTION 8.
[RESERVED]..................................................................................20
SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER;
REMEDIES FOR BREACH................20
SECTION 10.
CLOSING.....................................................................................40
SECTION 11. CLOSING
DOCUMENTS...........................................................................41
SECTION 12.
COSTS.......................................................................................42
SECTION 13. COOPERATION OF SELLER WITH A
RECONSTITUTION.................................................42
SECTION 14. THE
SELLER..................................................................................44
SECTION 15. FINANCIAL
STATEMENTS........................................................................45
SECTION 16. MANDATORY DELIVERY; GRANT OF SECURITY
INTEREST..............................................46
SECTION 17.
NOTICES.....................................................................................46
SECTION 18. SEVERABILITY
CLAUSE.........................................................................47
SECTION 19.
COUNTERPARTS................................................................................47
SECTION 20. INTENTION OF THE
PARTIES....................................................................47
SECTION 21. SUCCESSORS AND ASSIGNS; ASSIGNMENT OF PURCHASE
AGREEMENT....................................48
SECTION 22.
WAIVERS.....................................................................................48
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SECTION 23.
EXHIBITS....................................................................................48
SECTION 24. GENERAL INTERPRETIVE
PRINCIPLES.............................................................48
SECTION 25. REPRODUCTION OF
DOCUMENTS...................................................................49
SECTION 26. FURTHER
AGREEMENTS..........................................................................49
SECTION 27. RECORDATION OF ASSIGNMENTS OF
MORTGAGE......................................................49
SECTION 28. NO
SOLICITATION.............................................................................49
SECTION 29. WAIVER OF TRIAL BY
JURY.....................................................................50
SECTION 30. GOVERNING LAW JURISDICTION; CONSENT TO SERVICE OF
PROCESS...................................50
SECTION 31.
AMENDMENT...................................................................................51
SECTION 32.
CONFIDENTIALITY.............................................................................51
SECTION 33. ENTIRE
AGREEMENT............................................................................51
SECTION 34. COMPLIANCE WITH REGULATION
AB...............................................................51
EXHIBITS
EXHIBIT A-1 MORTGAGE LOAN DOCUMENTS
EXHIBIT A-2 CONTENTS OF EACH MORTGAGE FILE
EXHIBIT B FORM OF INDEMNIFICATION AND CONTRIBUTION AGREEMENT
EXHIBIT C FORM OF SELLER'S OFFICER'S CERTIFICATE
EXHIBIT D FORM OF OPINION OF COUNSEL TO THE SELLER
EXHIBIT E FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT F FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT G [RESERVED]
EXHIBIT H FORM OF ASSIGNMENT AND CONVEYANCE AGREEMENT
EXHIBIT J FORM OF ASSIGNMENT, ASSUMPTION AND RECOGNITION
AGREEMENT
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MORTGAGE LOAN PURCHASE AND WARRANTIES AGREEMENT
This MORTGAGE LOAN PURCHASE AND WARRANTIES AGREEMENT
("Agreement"),
dated as of June 1, 2006, by and between Morgan Stanley Mortgage
Capital Inc.,
a New York corporation (the "Purchaser"), and Sovereign Bank, a
federal
savings bank (the "Seller").
W I T N E S S E T H:
WHEREAS, the Seller desires to sell, from time to time, to the
Purchaser, and the Purchaser desires to purchase, from time to
time, from the
Seller, certain conventional fixed and adjustable rate residential
first-lien
and second-lien mortgage loans (the "Mortgage Loans") on a
servicing released
basis as described herein, and which shall be delivered in pools of
whole
loans (each, a "Mortgage Loan Package") on various dates as
provided herein
(each, a "Closing Date");
WHEREAS, each Mortgage Loan is secured by a mortgage, deed of
trust
or other security instrument creating a first lien or second-lien
on a
residential dwelling located in the jurisdiction indicated on the
Mortgage
Loan Schedule for the related Mortgage Loan Package;
WHEREAS, the Purchaser and the Seller wish to prescribe the manner
of
the conveyance, servicing by the Interim Servicer and control of
the Mortgage
Loans; and
WHEREAS, following its purchase of the Mortgage Loans from the
Seller, the Purchaser desires to sell some or all of the Mortgage
Loans to one
or more purchasers as a whole loan transfer or a public or private,
rated or
unrated mortgage Securitization Transaction.
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 Seller agree as follows:
SECTION 1. Definitions.
For purposes of this Agreement the following capitalized terms
shall
have the respective meanings set forth below.
Accepted Servicing Practices: With respect to any Mortgage
Loan,
those mortgage servicing practices which are in accordance with
accepted
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.
Act: The National Housing Act, as amended from time to time.
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Adjustable Rate Mortgage Loan: A Mortgage Loan purchased pursuant
to
this Agreement, the Mortgage Interest Rate of which is adjusted
from time to
time in accordance with the terms of the related Mortgage Note.
Affiliate: With respect to any specified Person, any other
Person
controlling or controlled by or under common control with such
specified
Person. For the purposes of this definition, "control" when used
with respect
to any specified Person means the power to direct the management
and policies
of such Person, directly or indirectly, whether through the
ownership of
voting securities, by contract or otherwise and the terms
"controlling" and
"controlled" have meanings correlative to the foregoing.
Agreement: This Mortgage Loan Purchase and Warranties Agreement
including all exhibits, schedules, amendments and supplements
hereto.
ALTA: The American Land Title Association or any successor
thereto.
Appraised Value: With respect to any Mortgaged Property, the
lesser
of (i) the value thereof as determined by an appraisal made for the
originator
of the Mortgage Loan at the time of origination of the Mortgage
Loan by a
Qualified Appraiser and (ii) the purchase price paid for the
related Mortgaged
Property by the Mortgagor with the proceeds of the Mortgage Loan;
provided,
however, that in the case of a Refinanced Mortgage Loan, such value
of the
Mortgaged Property is 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 a Qualified
Appraiser.
Assignment and Conveyance Agreement: As defined in Subsection
6.01.
Assignment and Assumption Agreement: That certain Assignment,
Assumption and Recognition Agreement, to be dated as of June 1,
2006, among
the Seller, the Purchaser and the Interim Servicer.
Assignment of Mortgage: An individual assignment of the
Mortgage,
notice of transfer or equivalent instrument in recordable form and
in blank,
sufficient under the laws of the jurisdiction in which the related
Mortgaged
Property is located to give record notice of the sale of the
Mortgage to the
Purchaser.
Balloon Mortgage Loan: Any Mortgage Loan (a) that requires only
payments of interest until the stated maturity date of the Mortgage
Loan or
(b) for which Monthly Payments of principal (not including the
payment due on
its stated maturity date) are based on an amortization schedule
that would be
insufficient to fully amortize the principal thereof by the stated
maturity
date of the Mortgage Loan.
Business Day: Any day other than (i) a Saturday or Sunday, (ii) a
day
on which banking and savings and loan institutions, in the State of
New York
or the state in which the Interim Servicer's servicing operations
are located
or (iii) the state in which the Custodian's operations are located,
are
authorized or obligated by law or executive order to be closed.
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Cash-Out Refinance: A Refinanced Mortgage Loan in which the
proceeds
received were in excess of the amount of funds required to repay
the principal
balance of any existing first mortgage on the related Mortgaged
Property, pay
related closing costs and satisfy any outstanding subordinate
mortgages on the
related Mortgaged Property and which provided incidental cash to
the related
Mortgagor of more than 1% of the original principal balance of such
Mortgage
Loan.
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 with respect to
the related
Mortgage Loan Package.
Closing Documents: The documents required to be delivered on
each
Closing Date pursuant to Section 11.
CLTV: As of any date and as to any Second Lien Loan, the ratio,
expressed as a percentage, of (a) the sum of (i) the outstanding
principal
balance of the Second Lien Loan and (ii) the outstanding principal
balance as
of such date of any mortgage loan or mortgage loans that are senior
or equal
in priority to the Second Lien Loan and which are secured by the
same
Mortgaged Property to (b) the Appraised Value as determined
pursuant to the
Underwriting Guidelines of the related Mortgaged Property as of
the
origination of the Second Lien Loan.
Code: The Internal Revenue Code of 1986, as amended, or any
successor
statute thereto.
Collection Account: The separate trust account created and
maintained
pursuant to Article 3 of the Interim Servicing Agreement (with
respect to each
Mortgage Loan, as specified therein).
Commission: The United States Securities and Exchange
Commission.
Condemnation Proceeds: All awards, compensation and settlements
in
respect of a taking of all or part of a Mortgaged Property, whether
permanent
or temporary, partial or entire, by exercise of the power of
condemnation or
the right of eminent domain, to the extent not required to be
released to a
Mortgagor in accordance with the terms of the related Mortgage Loan
Documents.
Co-op: A private, cooperative housing corporation, having only
one
class of stock outstanding, which owns or leases land and all or
part of a
building or buildings, including apartments, spaces used for
commercial
purposes and common areas therein and whose board of directors
authorizes the
sale of stock and the issuance of a Co-op Lease.
Co-op Lease: With respect to a Co-op Loan, the lease with respect
to
a dwelling unit occupied by the Mortgagor and relating to the stock
allocated
to the related dwelling unit.
Co-op Loan: A Mortgage Loan secured by the pledge of stock
allocated
to a dwelling unit in a residential cooperative housing corporation
and a
collateral assignment of the related Co-op Lease.
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Covered Loan: A Mortgage Loan categorized as Covered pursuant
to
Appendix E of Standard & Poor's Glossary.
Custodial Agreement: The agreement(s) between the Purchaser and
the
Custodian governing the retention of the originals of each Mortgage
Note,
Mortgage, Assignment of Mortgage and other Mortgage Loan Documents,
together
with that certain letter, dated as of June 1, 2006, by and among
the Seller,
the Purchaser and the Custodian. If more than one Custodial
Agreement is in
effect at any given time, all of the individual Custodial
Agreements shall
collectively be referred to as the "Custodial Agreement."
Custodian: Deutsche Bank Trust Company Americas, a national
banking
association (or such other Person identified as the Custodian by
the Purchaser
to the Seller).
Cut-off Date: The date or dates designated as such on the
related
Mortgage Loan Schedule with respect to the related Mortgage Loan
Package.
Deleted Mortgage Loan: A Mortgage Loan that is repurchased or to
be
repurchased or replaced or to be replaced with a Qualified
Substitute Mortgage
Loan by the Seller in accordance with the terms of this
Agreement.
Deemed Material and Adverse Representation: Each representation
and
warranty identified as such in Section 9.02 of this Agreement.
Depositor: The depositor, as such term is defined in Regulation
AB,
with respect to any Securitization Transaction.
Due Date: The day of the month on which the Monthly Payment is due
on
a Mortgage Loan, exclusive of any days of grace.
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer
rents,
municipal charges, mortgage insurance premiums, fire and hazard
insurance
premiums, condominium charges, and any other payments required to
be escrowed
by the Mortgagor with the Mortgagee pursuant to the Mortgage or any
other
document.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Fannie Mae: The Federal National Mortgage Association, or any
successor thereto.
Fannie Mae Guides: The Fannie Mae Sellers' Guide and the Fannie
Mae
Servicers' Guide, as amended or restated from time to time.
FHA: The Federal Housing Administration, an agency within the
United
States Department of Housing and Urban Development, or any
successor thereto
and including the Federal Housing Commissioner and the Secretary of
Housing
and Urban Development where appropriate under the FHA
Regulations.
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FIRREA: The Financial Institutions Reform, Recovery, and
Enforcement
Act of 1989, as amended and in effect from time to time.
First Lien Loan: A Mortgage Loan secured by a first lien Mortgage
on
the related Mortgaged Property.
Fixed Rate Mortgage Loan: A fixed rate mortgage loan purchased
pursuant to this Agreement.
Freddie Mac: The Federal Home Loan Mortgage Corporation, or any
successor thereto.
Gross Margin: With respect to each Adjustable Rate Mortgage Loan,
the
fixed percentage amount set forth in the related Mortgage Note
which amount is
added to the Index in accordance with the terms of the related
Mortgage Note
to determine on each Interest Rate Adjustment Date the Mortgage
Interest Rate
for such Mortgage Loan.
High Cost Loan: A Mortgage Loan (a) covered by the Home Ownership
and
Equity Protection Act of 1994 ("HOEPA"), (b) with an "annual
percentage rate"
or total "points and fees" payable by the related Mortgagor (as
each such term
is calculated under HOEPA) that exceed the thresholds set forth by
HOEPA and
its implementing regulations, including 12 C.F.R. Section
226.32(a)(1)(i) and
(ii), (c) classified as a "high cost home," "threshold," "covered,"
"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 (d) 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.
Home Loan: A Mortgage Loan categorized as a Home Loan pursuant
to
Appendix E of Standard & Poor's Glossary.
HUD: The Department of Housing and Urban Development, or any
federal
agency or official thereof which may from time to time succeed to
the
functions thereof with regard to Mortgage Insurance issued by the
FHA. The
term "HUD," for purposes of this Agreement, is also deemed to
include
subdivisions thereof such as the FHA and Government National
Mortgage
Association.
Index: The index indicated in the related Mortgage Note for
each
Adjustable Rate Mortgage Loan.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds
of
insurance policies insuring the Mortgage Loan or the related
Mortgaged
Property.
Interest Rate Adjustment Date: With respect to each Adjustable
Rate
Mortgage Loan, the date, specified in the related Mortgage Note and
the
related Mortgage Loan Schedule, on which the Mortgage Interest Rate
is
adjusted.
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Interim Funder: With respect to each MERS Designated Mortgage
Loan,
the Person named on the MERS System as the interim funder pursuant
to the MERS
Procedures Manual.
Interim Servicer: The servicer under the Interim Servicing
Agreement,
or its successor in interest, or any successor to the Interim
Servicer under
the Interim Servicing Agreement, as therein provided.
Interim Servicing Agreement: That certain Servicing Agreement,
dated
as of June 1, 2005, by and between Seller, as mortgagee, and
Interim Servicer,
as servicer.
Investor: With respect to each MERS Designated Mortgage Loan,
the
Person named on the MERS System as the investor pursuant to the
MERS
Procedures Manual.
Lifetime Rate Cap: The provision of each Mortgage Note related to
an
Adjustable Rate Mortgage Loan which provides for an absolute
maximum Mortgage
Interest Rate thereunder. The Mortgage Interest Rate during the
term of each
Adjustable Rate Mortgage Loan shall not at any time exceed the
Mortgage
Interest 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: The proceeds received in connection with
the
liquidation of a defaulted Mortgage Loan, whether through the sale
or
assignment of such Mortgage Loan, trustee's sale, foreclosure sale
or
otherwise or the sale of the related Mortgaged Property if the
Mortgaged
Property is acquired in satisfaction of the Mortgage Loan, other
than amounts
received following the acquisition of REO Property, Insurance
Proceeds and
Condemnation Proceeds.
Loan-to-Value Ratio: With respect to any Mortgage Loan, as of
any
date of determination, the ratio (expressed as a percentage) the
numerator of
which is the outstanding principal balance of the Mortgage Loan as
of the
related Cut-off Date (unless otherwise indicated), and the
denominator of
which is the lesser of (a) the Appraised Value of the Mortgaged
Property at
origination and (b) if the Mortgage Loan was made to finance the
acquisition
of the related Mortgaged Property, the purchase price of the
Mortgaged
Property.
LTV: Loan-to-Value Ratio.
Manufactured Home: A single family residential unit that is
constructed in a factory in sections in accordance with the
Federal
Manufactured Home Construction and Safety Standards adopted on June
15, 1976,
by the Department of Housing and Urban Development ("HUD Code"), as
amended in
2000, which preempts state and local building codes. Each unit is
identified
by the presence of a HUD Plate/Compliance Certificate label. The
sections are
then transported to the site and joined together and affixed to a
pre-built
permanent foundation (which satisfies the manufacturer's
requirements and all
state, county, and local building codes and regulations). The
manufactured
home is built on a non-removable, permanent frame chassis that
supports the
complete unit of walls, floors, and roof. The underneath part of
the home may
have running gear (wheels, axles, and brakes) that enable it to be
transported
to the permanent site. The wheels and hitch are removed prior to
anchoring the
unit to the permanent foundation. The
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manufactured home must be classified as real estate and taxed
accordingly. The
permanent foundation may be on land owned by the mortgager or may
be on leased
land.
MERS: Mortgage Electronic Registration Systems, Inc., a
Delaware
corporation, and its successors in interest.
MERS Designated Mortgage Loan: Mortgage Loans for which (a) the
Seller has designated or will designate MERS as, and has taken or
will take
such action as is necessary to cause MERS to be, the mortgagee of
record, as
nominee for the Seller, in accordance with MERS Procedures Manual
and (b) the
Seller has designated or will designate the Purchaser as the
Investor on the
MERS System.
MERS Procedures Manual: The MERS Procedures Manual, as it may
be
amended, supplemented or otherwise modified from time to time.
MERS Report: The report from the MERS System listing MERS
Designated
Mortgage Loans and other information.
MERS System: MERS mortgage electronic registry system, as more
particularly described in the MERS Procedures Manual.
Monthly Payment: With respect to any Mortgage Loan, the
scheduled
payment of principal and interest payable by a Mortgagor under the
related
Mortgage Note on each Due Date.
Mortgage: With respect to a Mortgage Loan that is not a Co-op
Loan,
the mortgage, deed of trust or other instrument securing a Mortgage
Note,
which creates a first lien, in the case of a First Lien Loan, or a
second
lien, in the case of a Second Lien Loan, on the related Mortgaged
Property.
With respect to a Co-op Loan, the Security Agreement.
Mortgage File: With respect to any Mortgage Loan, the Mortgage
Loan
Documents and the items listed in Exhibit A-2 hereto and any
additional
documents required to be added to the Mortgage File pursuant to
this
Agreement.
Mortgage Interest Rate: With respect to each Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan from
time to time
in accordance with the provisions of the related Mortgage Note.
Mortgage Interest Rate Cap: With respect to an Adjustable Rate
Mortgage Loan, the limit on each Mortgage Interest Rate adjustment
as set
forth in the related Mortgage Note.
Mortgage Loan: Each mortgage loan sold, assigned and
transferred
pursuant to this Agreement and identified on the applicable
Mortgage Loan
Schedule, which Mortgage Loan includes, without limitation, the
Mortgage File,
the Monthly Payments, Principal Prepayments, Liquidation
Proceeds,
Condemnation Proceeds, Insurance Proceeds, Servicing Rights and all
other
rights, benefits, proceeds and obligations arising from or in
connection with
such Mortgage Loan, excluding replaced or repurchased mortgage
loans.
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Mortgage Loan Documents: With respect to any Mortgage Loan, the
documents required to be delivered to the Custodian pursuant to
Subsection
6.03.
Mortgage Loan Package: Each pool of Mortgage Loans, which shall
be
purchased by the Purchaser from the Seller from time to time on
each Closing
Date.
Mortgage Loan Schedule: The schedule of Mortgage Loans setting
forth
the following information with respect to each Mortgage Loan in the
related
Mortgage Loan Package: (1) the Seller's Mortgage Loan identifying
number; (2)
the Mortgagor's name; (3) the social security number of the
Mortgagor; (4)
[Reserved]; (5) the street address of the Mortgaged Property
including the
city, state and zip code; (6) [Reserved]; (7) a code indicating
whether the
Mortgaged Property is owner-occupied, investment property or a
second home;
(8) a code indicating the number and type of residential units
constituting
the Mortgaged Property (e.g. single family residence, two-family
residence,
three-family residence, four-family residence, multifamily
residence,
condominium, manufactured housing, mixed-use property, raw land and
other
non-residential properties, planned unit development or cooperative
stock in a
cooperative housing corporation); (9) the original months to
maturity or the
remaining months to maturity from the related Cut-off Date, in any
case based
on the original amortization schedule and, if different, the
maturity
expressed in the same manner but based on the actual amortization
schedule;
(10) the LTV or CLTV, as applicable, at origination; (11) the
Mortgage
Interest Rate as of the related Cut-off Date; (12) the date on
which the first
Monthly Payment was due on the Mortgage Loan and, if such date is
not
consistent with the Due Date currently in effect, the Due Date;
(13) the
stated maturity date; (14) the amount of the Monthly Payment as of
the related
Cut-off Date; (15) whether the Mortgage Loan has Monthly Payments
that are
interest-only for a period of time, and the interest-only period,
if
applicable (and with respect to each Second Lien Loan, whether the
related
first lien mortgage loan has monthly payments that are
interest-only for a
period of time, and the interest-only period, if applicable); (16)
the last
paid through date for each Mortgage Loan for which a payment was
applied to
the outstanding principal balance; (17) the schedule of the
payment
delinquencies in the prior 12 months; (18) the original principal
amount of
the Mortgage Loan; (19) the principal balance of the Mortgage Loan
as of the
close of business on the related Cut-off Date, after deduction of
payments of
principal due and collected on or before the related Cut-off Date;
(20)
[Reserved]; (21) with respect to Adjustable Rate Mortgage Loans,
the Interest
Rate Adjustment Date; (22) with respect to Adjustable Rate Mortgage
Loans, the
Gross Margin; (23) with respect to Adjustable Rate Mortgage Loans,
the
Lifetime Rate Cap under the terms of the Mortgage Note; (24) with
respect to
Adjustable Rate Mortgage Loans, a code indicating the type of
Index, including
the methodology for rounding (e.g. rounded upward, if necessary, to
the
nearest ten thousandth (.0001) and the applicable time frame for
determining
the Index; (25) the product type of Mortgage Loan (i.e., Fixed
Rate,
Adjustable Rate, First Lien Loan or Second Lien Loan), and with
respect to
each Second Lien Loan, the product type of the related first lien
loan]; (26)
a code indicating the purpose of the loan (i.e., purchase,
Rate/Term Refinance
or Cash-Out Refinance); (27) a code indicating the documentation
style (i.e.
no documents, full, alternative, reduced, no income/no asset,
stated income,
no ration, reduced or NIV); (28) [Reserved]; (29) whether such
Mortgage Loan
provides for a Prepayment Penalty; (30) the Prepayment Penalty
period of such
Mortgage Loan, if applicable; (31) a description of the Prepayment
Penalty, if
applicable; (32) the Mortgage Interest Rate as of origination; (33)
the credit
risk score (FICO score); (34) the date of origination; (35) with
respect to
Adjustable Rate Mortgage Loans, the Mortgage Interest Rate
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adjustment period; (36) with respect to Adjustable Rate Mortgage
Loans, the
Mortgage Interest Rate adjustment percentage; (37) with respect to
Adjustable
Rate Mortgage Loans, the Mortgage Interest Rate floor; (38) the
Mortgage
Interest Rate calculation method (i.e. 30/360, simple interest,
other); (39)
with respect to Adjustable Rate Mortgage Loans, the Periodic Rate
Cap as of
the first Interest Rate Adjustment Date; (40) with respect to each
Adjustable
Rate Mortgage Loan, a code indicating whether the Mortgage Loan
provides for
negative amortization; (41) a code indicating whether the Mortgage
Loan is a
Balloon Mortgage Loan; (42) [Reserved]; (43) the original Monthly
Payment due;
(44) the Appraised Value; (45) [Reserved]; (46) a code indicating
whether the
Mortgage Loan is covered by a PMI Policy and, if so, identifying
the PMI
Policy provider; (47) the certificate number of the PMI Policy, if
applicable;
(48) the amount of coverage of the PMI Policy, if applicable; (49)
in
connection with a condominium unit, a code indicating whether the
condominium
project where such unit is located is low-rise or high-rise; (50)
[Reserved];
(51) with respect to the related Mortgagor, the debt-to-income
ratio; (52)
sales price; and (53) a code indicating whether the Mortgage Loan
is a MERS
Designated Mortgage Loan and the MERS Identification Number, if
applicable.
With respect to the Mortgage Loans in the aggregate, the related
Mortgage Loan
Schedule shall set forth the following information, as of the
related Cut-off
Date: (1) the number of Mortgage Loans; (2) the current aggregate
outstanding
principal balance of the Mortgage Loans; (3) the weighted average
Mortgage
Interest Rate of the Mortgage Loans; (4) the weighted average
maturity of the
Mortgage Loans; (5) the average principal balance of the Mortgage
Loans; (6)
the applicable Cut-off Date; and (7) the applicable Closing
Date.
Mortgage Note: The original executed note or other evidence of
the
Mortgage Loan indebtedness of a Mortgagor, including any riders or
addenda
thereto.
Mortgaged Property: With respect to a Mortgage Loan that is not
a
Co-op Loan, the Mortgagor's real property securing repayment of a
related
Mortgage Note, consisting of an unsubordinated estate in fee simple
or, with
respect to real property located in jurisdictions in which the use
of
leasehold estates for residential properties is a widely-accepted
practice, a
leasehold estate, in a single parcel or multiple parcels of real
property
improved by a Residential Dwelling. With respect to a Co-op Loan,
the stock
allocated to a dwelling unit in the residential cooperative
housing
corporation that was pledged to secure such Co-op Loan and the
related Co-op
Lease.
Mortgagee: The mortgagee or beneficiary named in the Mortgage and
the
successors and assigns of such mortgagee or beneficiary.
Mortgagor: The obligor on a Mortgage Note, who is an owner of
the
Mortgaged Property and the grantor or mortgagor named in the
Mortgage and such
grantor's or mortgagor's successors in title to the Mortgaged
Property.
Nonrecoverable Advance: Any advance previously made or proposed to
be
made in respect of a Mortgage Loan which, in the good faith
judgment of the
Interim Servicer, will not or, in the case of a proposed advance,
would not,
be ultimately recoverable from related Insurance Proceeds,
Liquidation
Proceeds or otherwise. The determination by the Interim Servicer
that it has
made a Nonrecoverable Advance or that any proposed advance of
principal
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and interest, if made, would constitute a Nonrecoverable Advance,
shall be
evidenced by an Officers' Certificate delivered to the
Purchaser.
Officer's Certificate: A certificate signed by the Chairman of
the
Board or the Vice Chairman of the Board or a President or a Vice
President and
by the Treasurer or the Secretary or one of the Assistant
Treasurers or
Assistant Secretaries of the Seller, and delivered to the Purchaser
as
required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be
counsel
for the Seller, reasonably acceptable to the Purchaser
substantially in the
form of Exhibit D hereto.
Periodic Rate Cap: 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
increase or
decrease on an Interest Rate Adjustment Date above or below the
Mortgage
Interest Rate previously in effect. The Periodic Rate Cap for each
Adjustable
Rate Mortgage Loan is the rate set forth as such on the related
Mortgage Loan
Schedule.
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
Interest Rate Adjustment Date below the Mortgage Interest Rate
previously in
effect.
Person: Any individual, corporation, partnership, limited
liability
company, joint venture, association, joint-stock company,
trust,
unincorporated organization, government or any agency or political
subdivision
thereof.
PMI Policy: A policy of primary mortgage guaranty insurance issued
by
an insurer acceptable under the Underwriting Guidelines and
qualified to do
business in the jurisdiction where the Mortgaged Property is
located.
Preliminary Mortgage Schedule: As defined in Section 3.
Prepayment Penalty: With respect to each Mortgage Loan, the amount
of
any premium or penalty required to be paid by the Mortgagor if the
Mortgagor
prepays such Mortgage Loan as provided in the related Mortgage Note
or
Mortgage.
Principal Prepayment: Any payment or other recovery of principal on
a
Mortgage Loan which is received in advance of its scheduled Due
Date,
including any Prepayment Penalty thereon, and which is not
accompanied by an
amount of interest representing scheduled interest due on any date
or dates in
any month or months subsequent to the month of prepayment.
Purchase Price: The price paid on the related Closing Date by
the
Purchaser to the Seller in exchange for the Mortgage Loans
purchased on such
Closing Date as calculated in Section 4 of this Agreement.
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Purchase Price and Terms Agreement: Each agreement setting forth
the
general terms and conditions of the purchase and sale of the
Mortgage Loans to
be purchased from time to time under this Agreement.
Purchase Price Percentage: The percentage of par (expressed as
a
decimal) set forth in the related Purchase Price and Terms
Agreement.
Purchaser: Morgan Stanley Mortgage Capital Inc., a New York
corporation, and its successors in interest and assigns, or any
successor to
the Purchaser under this Agreement as herein provided.
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.
Qualified Substitute Mortgage Loan: A mortgage loan eligible to
be
substituted by the Seller for a Deleted Mortgage Loan which must,
on the date
of such substitution, be approved by the Purchaser and (i) have an
unpaid
principal balance, after deduction of all scheduled payments due in
the month
of substitution (or in the case of a substitution of more than one
mortgage
loan for a Deleted Mortgage Loan, an aggregate principal balance),
not in
excess of the unpaid principal balance of the Deleted Mortgage Loan
(the
amount of any shortfall will be deposited in the Collection Account
by the
Seller in the month of substitution); (ii) have a Mortgage Interest
Rate not
less than and not more than one percent (1%) greater than the
Mortgage
Interest Rate of the Deleted Mortgage Loan; (iii) have a remaining
term to
maturity not greater than and not more than one (1) year less than
that of the
Deleted Mortgage Loan; (iv) be of the same type as the Deleted
Mortgage Loan
(i.e., fixed rate or adjustable rate with
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same Mortgage Interest Rate Cap and Index); (v) comply as of the
date of
substitution with each representation and warranty set forth in
Section 9 of
this Agreement; (vi) be current in the payment of principal and
interest;
(vii) be secured by a Mortgaged Property of the same type and
occupancy status
as secured the Deleted Mortgage Loan; and (viii) have payment terms
that do
not vary in any material respect from those of the Deleted Mortgage
Loan.
Rate/Term Refinance: A Refinanced Mortgage Loan, in which the
proceeds received were not in excess of the amount of funds
required to repay
the principal balance of any existing first mortgage loan on the
related
Mortgaged Property, pay related closing costs and satisfy any
outstanding
subordinate mortgages on the related Mortgaged Property and did not
provide
incidental cash to the related Mortgagor of more than one percent
(1%) of the
original principal balance of such Mortgage Loan.
Reconstitution: Any Securitization Transaction or a Whole Loan
Transfer.
Reconstitution Agreements: The agreement or agreements entered
into
by the Seller and the Purchaser and/or certain third parties on
the
Reconstitution Date or Dates with respect to any or all of the
Mortgage Loans
sold hereunder, in connection with a Whole Loan Transfer or a
Securitization
Transaction pursuant to Section 13.
Reconstitution Date: As defined in Section 13.
Refinanced Mortgage Loan: A Mortgage Loan the proceeds of which
were
not used to purchase the related Mortgaged Property.
Regulation AB: Subpart 229.1100 - Asset Backed Securities
(Regulation
AB), 17 C.F.R. Sections 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
(January 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 Code.
REMIC Provisions: Provisions of the federal income tax law
relating
to a REMIC, which appear at Section 860A through 860G of Subchapter
M of
Chapter 1, Subtitle A of the Code, and related provisions and
regulations,
rulings or pronouncements promulgated thereunder, as the foregoing
may be in
effect from time to time.
REO Property: A Mortgaged Property acquired by the Interim
Servicer
through foreclosure or deed in lieu of foreclosure.
Reporting Date: As defined in the Interim Servicing Agreement.
Repurchase Price: With respect to any Mortgage Loan a price equal
to
the sum of: (i) the product of (a) (I) with respect to each
Mortgage Loan with
an applicable Purchase Price Percentage less than par and which is
not
included in a Securitization Transaction, such
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applicable Purchase Price Percentage, or (II) in any other
instance, par (or,
with respect to any Mortgage Loan required to be repurchased on or
prior to
the first anniversary of the related Closing Date, the greater of
(x) par and
(y) the excess of the applicable Purchase Price Percentage over par
multiplied
by a fraction equal to (1) 360 minus the number of days from but
excluding the
related Closing Date, up through and including the date of such
repurchase,
divided by (2) 360) and (b) the outstanding principal balance of
such Mortgage
Loan, (ii) accrued interest thereon at the applicable Mortgage
Interest Rate
from the last "interest paid to" date through the date of such
repurchase,
(iii) the amount of any outstanding advances owed to any servicer,
and (iv)
all costs and expenses incurred by the Purchaser or any servicer
arising out
of or based upon such breach, including without limitation costs
and expenses
incurred in the enforcement of the Seller's repurchase obligation
hereunder.
Residential Dwelling: Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling,
(iii) a
one-family dwelling unit in a condominium project or (iv) a
one-family
dwelling in a planned unit development, none of which is a
co-operative,
mobile or Manufactured Home.
RESPA: The Real Estate Settlement Procedures Act, as amended
from
time to time.
Second Lien Loan: A Mortgage Loan secured by a second lien
Mortgage
on the related Mortgaged Property.
Securities Act: The 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.
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 Co-op Loan and the
related Co-op
Lease.
Seller: As defined in the initial paragraph of the Agreement,
together with its successors in interest.
Seller Information: As defined in Subsection 34.04(a).
Servicing Fee: As to each Mortgage Loan Package, the amount owed
by
the Purchaser to the Seller for causing the Interim Servicer to the
service
and administer the Mortgage Loans in accordance with the terms of
this
Agreement, the Interim Servicing Agreement and the Assignment and
Assumption
Agreement, which shall, with respect to each Mortgage Loan, be
equal to $7.00
per calendar month. The Purchaser shall pay the Servicing
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Fee directly to the Interim Servicer and the Servicing Fee shall be
pro-rated
when servicing of the Mortgage Loans is for less than a full
calendar month.
Servicing File: With respect to each Mortgage Loan, the file
consisting of all documents on Exhibit A-2 hereto, to be retained
by the
Interim Servicer to service the Mortgage Loans as set forth in this
Agreement,
and copies of any additional documents required to be added to the
Mortgage
File pursuant to this Agreement.
Servicing Rights: Any and all of the following: (a) any and all
rights to service the Mortgage Loans; (b) any payments to or monies
received
by the Seller for servicing the Mortgage Loans; (c) any late fees,
penalties
or similar payments with respect to the Mortgage Loans; (d) all
agreements or
documents creating, defining or evidencing any such servicing
rights to the
extent they relate to such servicing rights and all rights of the
Seller
thereunder; (e) Escrow Payments or other similar payments with
respect to the
Mortgage Loans and any amounts actually collected by the Seller
with respect
thereto; (f) all accounts and other rights to payment related to
any of the
property described in this paragraph; and (g) any and all
documents, files,
records, servicing files, servicing documents, servicing records,
data tapes,
computer records, or other information pertaining to the Mortgage
Loans or
pertaining to the past, present or prospective servicing of the
Mortgage
Loans.
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.
Stated Principal Balance: As to each Mortgage Loan on any date
of
determination, (i) the principal balance of such Mortgage Loan at
the related
Cut-off Date after giving effect to payments of principal due on or
before
such date, to the extent actually received, minus (ii) all amounts
previously
distributed to the Purchaser with respect to the related Mortgage
Loan
representing payments or recoveries of principal on such Mortgage
Loan.
Static Pool Information: Static pool information as described in
Item
1105(a)(1)-(3) and 1105(c) of Regulation AB.
Successor Servicer: Any servicer of one or more Mortgage Loans
designated by the Purchaser as being entitled to the benefits of
the
indemnifications set forth in Subsections 9.03 and 14.01.
Third-Party Originator: Each Person, other than a Qualified
Correspondent, that originated Mortgage Loans acquired by the
Seller.
Transfer Date: In the event the Interim Servicer is terminated
as
servicer of a Mortgage Loan pursuant to the Interim Servicing
Agreement and
the Assignment and Assumption Agreement, the date on which the
Purchaser, or
its designee, shall receive the
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the transfer of servicing responsibilities and begin to perform the
servicing
of such Mortgage Loans, and the Interim Servicer shall cease all
servicing
responsibilities.
Underwriting Guidelines: With respect to any Mortgage Loan, the
underwriting guidelines of the applicable Third-Party Originator
(or, if the
Seller originated such Mortgage Loan, the underwriting guidelines
of the
Seller), in each case, a then-current copy of which is attached as
an exhibit
to the related Assignment and Conveyance.
Whole Loan Transfer: Any sale or transfer of some or all of the
Mortgage Loans, other than a Securitization Transaction.
SECTION 2. Agreement to Purchase.
The Seller agrees to sell from time to time, and the Purchaser
agrees
to purchase from time to time, Mortgage Loans having an aggregate
actual unpaid
principal balance on the related Cut-off Date in an amount as set
forth in the
related Purchase Price and Terms Agreement, or in such other amount
as agreed by
the Purchaser and the Seller as evidenced by the actual aggregate
unpaid
principal balance of the Mortgage Loans accepted by the Purchaser
on each
Closing Date, together with the related Mortgage Files and all
rights and
obligations arising under the documents contained therein.
SECTION 3. Mortgage Schedules.
The Seller from time to time shall provide the Purchaser with
certain
information constituting a preliminary listing of the Mortgage
Loans to be
purchased on each Closing Date in accordance with the related
Purchase Price
and Terms Agreement and this Agreement (each, a "Preliminary
Mortgage
Schedule").
The Seller shall deliver the related Preliminary Mortgage
Schedule
for the Mortgage Loans to be purchased on a particular Closing Date
to the
Purchaser at least five (5) Business Days prior to the related
Closing Date.
The related Mortgage Loan Schedule shall be the related Preliminary
Mortgage
Schedule with those Mortgage Loans which have not been funded prior
to the
related Closing Date deleted.
SECTION 4. Purchase Price.
The Purchase Price for each Mortgage Loan and the related
Servicing
Rights shall be the percentage of par as stated in the related
Purchase Price
and Terms Agreement (subject to adjustment as provided therein),
multiplied by
the aggregate actual unpaid principal balance, as of the related
Cut-off Date,
of the Mortgage Loans listed on the related Mortgage Loan Schedule,
after
application of scheduled payments of principal due on or before the
related
Cut-off Date, but only to the extent such payments were actually
received. The
initial principal amount of the related Mortgage Loans shall be the
aggregate
actual unpaid principal balance of the Mortgage Loans, so computed
as of the
related Cut-off Date. If so provided in the related Purchase Price
and Terms
Agreement, portions of the Mortgage Loans and/or the Servicing
Rights shall be
priced and paid for separately.
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In addition to the Purchase Price as described above, the
Purchaser
shall pay to the Seller, at closing, accrued interest from the last
"interest
paid to" date through the day immediately preceding the related
Closing Date,
inclusive, on the aggregate actual unpaid principal amount of the
related
Mortgage Loans as of the related Cut-off Date at the weighted
average Mortgage
Interest Rate of those Mortgage Loans. The Purchase Price plus
accrued
interest as set forth in the preceding paragraph shall be paid to
the Seller
by wire transfer of immediately available funds to an account
designated by
the Seller in writing.
The Purchaser shall be entitled to (1) all scheduled principal
due
after the related Cut-off Date, (2) all other recoveries of
principal
collected on or after the related Cut-off Date, (3) all payments of
interest
on the Mortgage Loans net of applicable Servicing Fees (minus that
portion of
any such payment which is allocable to the period prior to the
related Cut-off
Date) and (4) any Prepayment Penalties incurred by the related
Mortgagors. The
outstanding principal balance of each Mortgage Loan as of the
related Cut-off
Date is determined after application of payments of principal due
on or before
the related Cut-off Date, to the extent actually collected,
together with any
unscheduled principal prepayments collected prior to such Cut-off
Date;
provided, however, that payments of scheduled principal and
interest paid
prior to such Cut-off date, but to be applied on a Due Date beyond
the related
Cut-off Date shall not be applied to the principal balance as of
the related
Cut-off Date. Such prepaid amounts and any related Prepayment
Penalties shall
be the property of the Purchaser. The Seller shall deposit any such
prepaid
amounts and Prepayment Penalties into the Collection Account, which
account is
established for the benefit of the Purchaser for subsequent
remittance by the
Seller to the Purchaser.
SECTION 5. Examination of Mortgage Files.
At least ten (10) Business Days prior to the related Closing
Date,
the Seller shall either (a) deliver to the Purchaser or its
designee in
escrow, for examination with respect to each Mortgage Loan to be
purchased,
the related Mortgage File, including a copy of the Assignment of
Mortgage,
pertaining to each Mortgage Loan, or (b) make the related Mortgage
File
available to the Purchaser for examination at such other location
as shall
otherwise be acceptable to the Purchaser. Such examination of the
Mortgage
Files may be made by the Purchaser or its designee at any
reasonable time
before or after the related Closing Date. If the Purchaser
reasonably
determines, prior to the related Closing Date, that any Mortgage
Loans do not
conform to any of the requirements set forth in this Agreement or
the related
Purchase Price and Terms Agreement, or as an Exhibit annexed hereto
or
thereto, the Purchaser may delete such Mortgage Loans from the
related
Mortgage Loan Schedule, and such Deleted Mortgage Loan (or Loans)
may be
replaced by a Qualified Substitute Mortgage Loan (or Loans)
acceptable to the
Purchaser. The fact that the Purchaser or its designee has
conducted or has
failed to conduct any partial or complete examination of the
Mortgage Files
shall not impair in any way the Purchaser's (or any of its
successor's) rights
to demand repurchase, substitution or other relief as provided in
this
Agreement. In the event that the Seller fails to deliver the
Mortgage File
with respect to any Mortgage Loan, the Seller shall, upon the
request of the
Purchaser, repurchase such Mortgage Loan as the price and in the
manner
specified in Subsection 9.03.
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SECTION 6. Conveyance from Seller to Purchaser.
Subsection 6.01. Conveyance of Mortgage Loans.
The Seller, simultaneously with the delivery of the Mortgage
Loan
Schedule with respect to the related Mortgage Loan Package to be
purchased on
each Closing Date, shall execute and deliver, an Assignment and
Conveyance
Agreement in the form attached hereto as Exhibit H (the "Assignment
and
Conveyance Agreement"). The Seller shall ensure that the contents
of each
Servicing File, which are required to be retained by or delivered
to the
Interim Servicer to service the Mortgage Loans pursuant to the
Interim
Servicing Agreement and thus not delivered to the Purchaser, or its
designee,
are and shall be held in trust by the Interim Servicer for the
benefit of the
Purchaser as the owner thereof. The Seller agrees that the Interim
Servicer's
possession of any portion of each such Mortgage File is at the will
of the
Purchaser for the sole purpose of facilitating servicing of the
Mortgage Loans
pursuant to this Agreement, and such retention and possession by
the Interim
Servicer shall be in a custodial capacity only. The ownership of
each Mortgage
Note, each Mortgage and the contents of each Mortgage File is
vested in the
Purchaser and the ownership of all records and documents with
respect to the
related Mortgage Loan prepared by or which come into the possession
of the
Interim Servicer shall immediately vest in the Purchaser and shall
be retained
and maintained, in trust, by the Interim Servicer at the will of
the Purchaser
in such custodial capacity only. The Seller shall cause the
Servicing File
retained by the Interim Servicer pursuant to this Agreement to
be
appropriately identified in the Seller's computer system and/or
books and
records, as appropriate, to clearly reflect the sale of the related
Mortgage
Loan to the Purchaser. The Seller shall cause the Interim Servicer
to release
from its custody the contents of any Servicing File retained by it
only in
accordance with this Agreement or the Interim Servicing Agreement,
except when
such release is required in connection with a repurchase of any
such Mortgage
Loan pursuant to Subsection 9.03 or if required under applicable
law or court
order.
Subsection 6.02. Books and Records.
Subject to Section 6.02, record title to each Mortgage and the
related Mortgage Note as of the related Closing Date shall be in
blank or in
the name of the Seller, an Affiliate of the Seller, the Purchaser
or one or
more designees of the Purchaser (or an Assignment of Mortgage
conveying record
title of such Mortgage to such Person has been submitted for
recordation but
has not yet been returned by the public recording office) as the
Purchaser
shall select; provided, however, that if a Mortgage has been
recorded in the
name of MERS or its designee, the Seller is shown as the owner of
the related
Mortgage Loan on the records of MERS for purposes of the system of
recording
transfers of beneficial ownership of mortgages maintained by
MERS.
Notwithstanding the foregoing, ownership of each Mortgage and
related Mortgage
Note shall be vested solely in the Purchaser or the appropriate
designee of
the Purchaser, as the case may be. All rights arising out of the
Mortgage
Loans including, but not limited to, all funds received by the
Seller or the
Interim Servicer after the related Cut-off Date on or in connection
with a
Mortgage Loan shall be vested in the Purchaser or one or more
designees of the
Purchaser, and all funds received on or in connection with a
Mortgage Loan
during the period from the related Cut-off Date to the related
Transfer Date
shall be received and held by the Seller or the Interim Servicer in
trust for
the benefit of the Purchaser or the
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appropriate designee of the Purchaser, as the case may be, as the
owner of the
Mortgage Loans pursuant to the terms of this Agreement.
The Seller shall be or shall cause the Interim Servicer to be
responsible for maintaining, and shall maintain, a complete set of
books and
records for each Mortgage Loan which shall be marked clearly to
reflect the
ownership of each Mortgage Loan by the Purchaser. In particular,
the Seller
shall or shall cause the Interim Servicer to maintain in its
possession,
available for inspection by the Purchaser, and shall deliver to the
Purchaser
upon demand, evidence of compliance with all federal, state and
local laws,
rules and regulations, and requirements of Fannie Mae or Freddie
Mac,
including but not limited to documentation as to the method used
in
determining the applicability of the provisions of the National
Flood
Insurance Act of 1968, as amended, to the Mortgaged Property,
documentation
evidencing insurance coverage and periodic inspection reports, as
required by
the Fannie Mae Guides. To the extent that original documents are
not required
for purposes of realization of Liquidation Proceeds or Insurance
Proceeds,
documents maintained by the Seller or the Interim Servicer may be
in the form
of microfilm or microfiche so long as the Seller or the Interim
Servicer
complies with the requirements of the Fannie Mae Guides.
It is the express intention of the parties that the
transactions
contemplated by this Agreement be, and be construed as, a sale of
the related
Mortgage Loans by the Seller and not a pledge of such Mortgage
Loans by the
Seller to the Purchaser to secure a debt or other obligation of the
Seller.
Consequently, the sale of each Mortgage Loan shall be reflected as
a purchase
on the Purchaser's business records, tax returns and financial
statements, and
as a sale of assets on the Seller's business records, tax returns
and
financial statements.
Subsection 6.03. Delivery of Mortgage Loan Documents.
The Seller shall deliver to the Custodian no later than two (2)
Business Days prior to the related Closing Date those Mortgage Loan
Documents
set forth on Exhibit A-1 hereto with respect to each Mortgage Loan
set forth
on the related Mortgage Loan Schedule. The Purchaser shall pay all
fees and
expenses of the Custodian.
The Seller shall or shall cause the Interim Servicer to forward
to
the Custodian, or to such other Person as the Purchaser shall
designate in
writing, original documents evidencing an assumption,
modification,
consolidation or extension of any Mortgage Loan entered into in
accordance
with this Agreement within two weeks of their execution, provided,
however,
that the Seller shall provide the Custodian, or to such other
Person as the
Purchaser shall designate in writing, with a certified true copy of
any such
document submitted for recordation within two weeks of its
execution, and
shall promptly provide the original of any document submitted for
recordation
or a copy of such document certified by the appropriate public
recording
office to be a true and complete copy of the original within two
(2) weeks
following receipt of the original document by the Interim Servicer;
provided,
however, that such original recorded document or certified copy
thereof shall
be delivered to the Purchaser no later than 180 days following the
related
date of execution, unless there has been a delay at the applicable
recording
office.
If the original or copy of any document submitted for recordation
to
the appropriate public recording office is not delivered to the
Purchaser or
its designee within
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180 days following the related Closing Date (or the related
execution date, in
the case of the items referred to in the immediately preceding
paragraph), the
related Mortgage Loan shall, upon the request of the Purchaser, be
repurchased
by the Seller at the price and in the manner specified in
Subsection 9.03. The
foregoing repurchase obligation shall not apply if the Seller
cannot cause the
Interim Servicer to deliver such original or copy of any document
submitted
for recordation to the appropriate public recording office within
the
specified period due to a delay caused by the recording office in
the
applicable jurisdiction; provided that (i) the Seller shall instead
deliver a
recording receipt of such recording office or, if such recording
receipt is
not available, an officer's certificate of a servicing officer of
the Seller,
confirming that such document has been accepted for recording, and
(ii) such
document is delivered within twelve (12) months of the related
Closing Date
(or the related execution date, in the case of the items referred
to in the
immediately preceding paragraph).
The Seller shall pay all initial recording fees, if any, for
the
Assignments of Mortgage and any other fees or costs in transferring
or
releasing all original documents to the Custodian or, upon written
request of
the Purchaser, to the Purchaser or the Purchaser's designee. The
Purchaser or
the Purchaser's designee shall be responsible for recording the
Assignments of
Mortgage and shall be reimbursed by the Seller for the costs
associated
therewith pursuant to the preceding sentence.
Subsection 6.04. Quality Control Procedures.
The Seller shall, or shall cause the Interim Servicer to, have
an
internal quality control program that verifies, on a regular basis,
the
existence and accuracy of the legal documents, credit documents,
property
appraisals, and underwriting decisions. The program shall include
evaluating
and monitoring the overall quality of the Seller's loan production
and the
servicing activities of the Interim Servicer. The program is to
ensure that
the Mortgage Loans are originated in accordance with the
Underwriting
Guidelines of the Seller; guard against dishonest, fraudulent, or
negligent
acts; and guard against errors and omissions by officers,
employees, or other
authorized persons. The provisions of this subsection 6.04 shall
apply only to
Mortgage Loans originated by the Seller or its affiliates.
Subsection 6.05. MERS Designated Loans.
With respect to each MERS Designated Mortgage Loan, the Seller
shall,
on or prior to the related Closing Date, designate the Purchaser as
the
Investor and the Custodian as custodian, and no Person shall be
listed as
Interim Funder on the MERS System. In addition, on or prior to the
related
Closing Date, Seller shall provide the Custodian and the Purchaser
with a MERS
Report listing the Purchaser as the Investor, the Custodian as
custodian and
no Person as Interim Funder with respect to each MERS Designated
Mortgage
Loan.
SECTION 7. Servicing of the Mortgage Loans.
The Mortgage Loans have been sold by the Seller to the Purchaser on
a
servicing released basis. Subject to and upon the terms and
conditions of this
Agreement, the Interim Servicing Agreement (with respect to each
Mortgage
Loan, for an interim period, as specified therein) and the
Assignment and
Assumption Agreement, the Servicing Rights shall be
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transferred from the Seller to the Purchaser as of the close of
business on
each Transfer Date. In between each Closing Date and the related
Transfer
Date, the Seller shall cause the Interim Servicer to service the
Mortgage
Loans on behalf of the Purchaser for the Servicing Fee, which fee
shall be
paid by the Purchaser directly to the Interim Servicer. The
Servicing Fee
shall be pro-rated when servicing of the Mortgage Loans is for less
than a
full calendar month.
On each Transfer Date, the Seller shall (1) cause the Interim
Servicer to transfer in accordance with the terms of the Interim
Servicing
Agreement the servicing files and records to the Purchaser together
with all
escrow proceeds and other funds relating to the Mortgage Loans held
by the
Interim Servicer, and (2) cause Fidelity National Title Insurance
Company to
transfer the tax service contracts and flood insurance
certificates, if
applicable, covering the Mortgage Loans to Transamerica/First
American. The
Purchaser will pay all fees charged by Transamerica/First American
in
connection with such transfer.
SECTION 8. [RESERVED].
SECTION 9. Representations, Warranties and Covenants of the
Seller;
Remedies for Breach.
Subsection 9.01 Representations and Warranties Regarding the
Seller.
The Seller represents, warrants and covenants to the Purchaser
that
as of the date hereof and as of each Closing Date:
(a) Due Organization and Authority. The Seller is a federal
savings
bank, validly existing, and in good standing under the laws of the
United
States and has all licenses necessary to carry on its business as
now being
conducted 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;
(b) 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;
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(c) 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;
(d) 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;
(e) 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;
(f) 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;
(g) Seller's Origination. Solely with respect to Mortgage Loans
originated by the Seller or its affiliates, the Seller's decision
to originate
any mortgage loan or to deny any mortgage loan application is an
independent
decision based upon the applicable Underwriting Guidelines of the
Seller or
such affiliate, 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;
(h) Anti-Money Laundering Laws. The Seller has complied with
all
applicable anti-money laundering laws, executive orders and
regulations,
including without
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limitation the USA Patriot Act of 2001 (collectively, the
"Anti-Money
Laundering Laws"); the Seller has established an anti-money
laundering
compliance program as required by the Anti-Money Laundering Laws,
has
conducted the requisite due diligence in connection with the
origination of
each Mortgage Loan for purposes of the Anti-Money Laundering Laws,
including
with respect to the legitimacy of the applicable Mortgagor and the
origin of
the assets used by the said Mortgagor to purchase the property in
question,
and maintains, and will maintain, sufficient information to
identify the
applicable Mortgagor for purposes of the Anti-Money Laundering
Laws;
(i) Financial Statements. All reports and financial statements
of
the Seller filed by the Seller pursuant to the Exchange Act fairly
present the
pertinent results of operations and changes in financial position
for each
reporting period specified therein 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.
There has been no change in the business, operations, financial
condition,
properties or assets of the Seller since the date of such filings
that would
have a material adverse effect on its ability to perform its
obligations under
this Agreement;
(j) Selection Process. To the best of Seller's knowledge, the
Mortgage Loans included in the related Mortgage Loan Package were
not selected
in a manner so as to affect adversely the interests of the
Purchaser;
(k) Delivery to the Custodian. The Mortgage Note, the Mortgage,
the
Assignment of Mortgage and any other documents required to be
delivered with
respect to each Mortgage Loan pursuant to this Agreement shall be
delivered to
the Custodian all in compliance with the specific requirements of
this
Agreement. With respect to each Mortgage Loan, the Seller will be
in
possession of a complete Mortgage File in compliance with Exhibit
A-2 hereto,
except for such documents as have been delivered to the
Custodian;
(l) Mortgage Loan Characteristics. The characteristics of the
related Mortgage Loan Package are as set forth on the description
of the pool
characteristics for the applicable Mortgage Loan Package delivered
pursuant to
Section 11 on the related Closing Date in the form attached as
Exhibit B to
each related Assignment and Conveyance Agreement;
(m) 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 (excluding (i) any untrue statement of fact or omission
to state a
fact necessary to make the statements herein or therein not
misleading and
which the Purchaser has actual knowledge thereof and expressly
waives, or (ii)
which the Seller, prior to the time the Purchaser provides such
information to
a third-party which relies upon such information, provides
corrected
information to the Purchaser which is true, correct and
complete);
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<PAGE>
(n) No Brokers. Either (i) 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,
or (ii) the Seller has paid such banker, agent or other person all
commission
or compensation to which they are entitled to in connection with
the sale of
the Mortgage Loans;
(o) Sale Treatment. The Seller intends to treat the transfer of
the
Mortgage Loans as a sale on the books and records of the Seller and
the Seller
has determined that the disposition of the Mortgage Loans pursuant
to this
Agreement will be afforded sale treatment for tax and accounting
purposes;
(p) [Reserved]
(q) Insured Depository Institution Representations. Seller is
an
"insured depository institution" as that term is defined in Section
1813(c)(2)
of Title 12 of the United States Code, as amended, and accordingly,
Seller
makes the following additional representations and warranties:
(i) This Agreement between Purchaser and Seller conforms to all
applicable statutory and regulatory requirements; and
(ii) This Agreement is (1) executed contemporaneously with the
agreement reached by Purchaser and Seller, (2) approved by a
corporate or banking association resolution by the Seller's
board of directors, which approval shall be reflected in the
minutes of said board, and (3) an official record of the
Seller. A copy of such resolution, certified by a vice
president, assistant secretary or higher officer of Seller has
been provided to Purchaser.
Subsection 9.02 Representations and Warranties Regarding
Individual
Mortgage Loans.
The Seller hereby represents and warrants to the Purchaser that,
as
to each Mortgage Loan, as of the related Closing Date for such
Mortgage Loan:
(a) Mortgage Loans as Described. The information set forth in
the
related Mortgage Loan Schedule and in the payment histories
provided by the
Seller with respect to Mortgage Loans originated more than 12
months prior to
the related Closing Date is complete, true and correct;
(b) 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 more recent of
the
origination date of the Mortgage Loan or the date which is 12
months prior to
the related Closing Date;
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(c) 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;
(d) 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 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 PMI
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 PMI
Policy and the
title insurer, to the extent required by the policy, and which
assumption
agreement is part of the Mortgage Loan File delivered to the
Custodian or such
other Person as the Purchaser shall designate in writing and the
terms of
which are reflected in the related Mortgage Loan Schedule;
(e) 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;
(f) 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
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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;
(g) 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, abusive and fair 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;
(h) 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;
(i) Type of Mortgaged Property. With respect to a Mortgage Loan
that
is not a Co-op 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, with respect to each Co-op Loan, 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 Co-op
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
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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;
(j) Valid First or Second Lien. The Mortgage is a valid,
subsisting,
enforceable and perfected, first lien (with respect to a First Lien
Loan) or
second lien (with respect to a Second Lien Loan) on the Mortgaged
Property,
including all buildings and improvements on the 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:
(i) with respect to a Second Lien Loan only, the lien of the
first
mortgage on the Mortgaged Property;
(ii) the lien of current real property taxes and assessments not
yet
due and payable;
(iii) 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
(iv) 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
(with
respect to a First Lien Loan) or second lien (with respect to a
Second Lien
Loan) and first priority (with respect to a First Lien Loan) or
second
priority (with respect to a Second Lien Loan) 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 Co-op 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;
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(k) 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 (including, without limitation, any provisions therein
relating to
Prepayment Penalties). 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 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;
(l) 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;
(m) 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
released or
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;
-27-
<PAGE>
(n) 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;
(o) CLTV, LTV and PMI Policy. No Mortgage Loan that is a Second
Lien
Loan has a CLTV greater than 100%. 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 PMI Policy. Any PMI
Policy in
effect covers the related Mortgage Loan for the life of such
Mortgage Loan.
All provisions of such PMI 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 PMI Policy obligates the
Mortgagor
thereunder to maintain the PMI Policy and to pay all premiums and
charges in
connection therewith. The Mortgage Interest Rate for the Mortgage
Loan as set
forth on the related Mortgage Loan Schedule is net of any such
insurance
premium if the related PMI Policy is lender-paid;
(p) Title Insurance. With respect to a Mortgage Loan which is not
a
Co-op 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
(with respect to a First Lien Loan) or second (with respect to a
Second Lien
Loan) 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
(i), (ii),
(iii) and (iv) of paragraph (j) of this Subsect
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