Exhibit 99.16(c)
EXECUTION COPY
MORGAN STANLEY MORTGAGE CAPITAL INC.
Purchaser,
WACHOVIA MORTGAGE CORPORATION
Seller
SELLER'S PURCHASE, WARRANTIES AND SERVICING AGREEMENT
Dated as of September 1, 2004
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS........................................................................2
Section
1.01. Defined
Terms..............................................................2
ARTICLE II SERVICING OF MORTGAGE LOANS; RECORD TITLE AND
POSSESSION
OF MORTGAGE FILES; BOOKS AND RECORDS; CUSTODIAL AGREEMENT;
DELIVERY OF MORTGAGE LOAN
DOCUMENTS.......................................16
Section
2.01. Agreement to
Purchase.....................................................16
Section
2.02. Purchase
Price............................................................17
Section
2.03. Servicing of Mortgage
Loans...............................................17
Section
2.04. Record Title and Possession of Mortgage Files;
Maintenance
of Servicing
Files........................................................18
Section
2.05. Books and
Records.........................................................18
Section
2.06. Transfer of Mortgage
Loans................................................19
Section
2.07. Delivery of Mortgage Loan
Documents.......................................19
Section
2.08. Quality Control
Procedures................................................20
Section
2.09.
Closing...................................................................20
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER;
REPURCHASE; REVIEW OF MORTGAGE
LOANS......................................21
Section
3.01. Representations and Warranties of the
Seller..............................21
Section
3.02. Representations and Warranties as to Individual Mortgage
Loans............23
Section
3.03. Repurchase;
Substitution..................................................36
Section
3.04. Repurchase of Mortgage Loans With First Payment
Defaults..................38
Section
3.05. Purchase Price
Protection.................................................38
ARTICLE IV ADMINISTRATION AND SERVICING OF THE MORTGAGE
LOANS...............................39
Section
4.01. The Seller to Act as
Servicer.............................................39
Section
4.02. Collection of Mortgage Loan
Payments......................................40
Section
4.03. Realization Upon Defaulted Mortgage
Loans.................................41
Section
4.04. Establishment of Custodial Accounts; Deposits in Custodial
Accounts.......42
Section
4.05. Permitted Withdrawals From the Custodial
Account..........................43
Section
4.06. Establishment of Escrow Accounts; Deposits in
Accounts....................44
Section
4.07. Permitted Withdrawals From the Escrow
Account.............................45
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Section
4.08. Payment of Taxes, Insurance and Charges; Maintenance of
Primary Mortgage Insurance; Collections
Thereunder........................46
Section
4.09. Transfer of
Accounts......................................................47
Section
4.10. Maintenance of Hazard
Insurance...........................................47
Section
4.11. Maintenance of Mortgage Impairment Insurance
Policy.......................48
Section
4.12. Maintenance of Fidelity Bond and Errors and Omissions
Insurance...........49
Section
4.13. Title, Management and Disposition of REO
Property.........................49
Section
4.14. Notification of Maturity
Date.............................................50
ARTICLE V PAYMENTS TO THE
PURCHASER.........................................................50
Section
5.01.
Distributions.............................................................50
Section
5.02. Statements to the
Purchaser...............................................51
Section
5.03. Monthly Advances by the
Seller............................................52
Section
5.04. Liquidation
Reports.......................................................52
ARTICLE VI GENERAL SERVICING
PROCEDURES.....................................................53
Section
6.01. Assumption
Agreements.....................................................53
Section
6.02. Satisfaction of Mortgages and Release of Mortgage
Files...................54
Section
6.03. Servicing
Compensation....................................................55
Section
6.04. Annual Statement as to
Compliance.........................................55
Section
6.05. Annual Independent Certified Public Accountants' Servicing
Report.........55
Section
6.06. Purchaser's Right to Examine Seller
Records...............................56
Section
6.07. Seller Shall Provide Information as Reasonably
Required...................56
ARTICLE VII THE
SELLER......................................................................57
Section
7.01. Indemnification; Third Party
Claims.......................................57
Section
7.02. Merger or Consolidation of the
Seller.....................................57
Section
7.03. Limitation on Liability of the Seller and
Others..........................58
Section
7.04. Seller Not to
Resign......................................................58
Section
7.05. No Transfer of
Servicing..................................................58
ARTICLE VIII
DEFAULT........................................................................59
Section
8.01. Events of
Default.........................................................59
Section
8.02. Waiver of
Defaults........................................................61
ARTICLE IX
TERMINATION......................................................................61
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Section
9.01.
Termination...............................................................61
ARTICLE X RECONSTITUTION OF MORTGAGE
LOANS..................................................61
Section
10.01.Reconstitution of Mortgage
Loans..........................................61
ARTICLE XI MISCELLANEOUS
PROVISIONS.........................................................64
Section
11.01.Successor to the
Seller...................................................64
Section
11.02.Amendment.................................................................64
Section
11.03.Recordation of
Agreement..................................................65
Section
11.04.Governing
Law.............................................................65
Section
11.05.Notices...................................................................65
Section
11.06.Severability of
Provisions................................................66
Section
11.07.Exhibits..................................................................67
Section
11.08.General Interpretive
Principles...........................................67
Section
11.09.Reproduction of
Documents.................................................67
Section
11.10.Confidentiality of
Information............................................68
Section
11.11.Recordation of Assignments of
Mortgage....................................68
Section
11.12.Assignment by
Purchaser...................................................68
Section
11.13.No
Partnership............................................................69
Section
11.14.Execution; Successors and
Assigns.........................................69
Section
11.15.Entire
Agreement..........................................................69
Section
11.16.No
Solicitation...........................................................69
Section
11.17.Costs.....................................................................70
Section
11.18.Protection of Mortgagor Personal
Information..............................70
</TABLE>
EXHIBITS
A-1
Contents of
Mortgage File
A-2
Contents of
Servicing File
B
Form
of Custodial Account Letter Agreement
C
Form
of Escrow Account Letter Agreement
D
Form
of Assignment, Assumption and Recognition Agreement
E
Form
of Assignment and Conveyance
F
Request for Release of Documents and Receipt
G
Form
of S-50Y Report
H
Form
of P-4DL Report
I
Form
of Indemnification and Contribution Agreement
J
Form
of Annual Certification
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This is a Seller's Purchase, Warranties and Servicing
Agreement,
dated as of September 1, 2004 and is executed by and between Morgan
Stanley
Mortgage Capital Inc., as purchaser (the "Purchaser"), and Wachovia
Mortgage
Corporation, as seller and servicer (in such capacity, the
"Seller").
WITNESSETH:
-----------
WHEREAS, the Purchaser has heretofore agreed to purchase from
the
Seller and the Seller has heretofore agreed to sell to the
Purchaser certain
Mortgage Loans, servicing rights retained, from time to time,
pursuant to the
terms of a letter agreement by and between the Seller and the
Purchaser (the
"Purchase Price and Terms Letter");
WHEREAS, each of the Mortgage Loans is secured by a mortgage,
deed
of trust or other security instrument creating a first or second
lien on a
residential dwelling located in the jurisdiction indicated on the
related
Mortgage Loan Schedule, which is annexed to the related Assignment
and
Conveyance. The Mortgage Loans as described herein shall be
delivered in
groups of whole loans (each, a "Mortgage Loan Package") on various
dates as
provided herein (each, a "Closing Date"); and
WHEREAS, the Purchaser and the Seller wish to prescribe the
representations and warranties of the Seller with respect to
itself, the
Mortgage Loans and the management, servicing and control of the
Mortgage Loans
by the Seller.
NOW, THEREFORE, in consideration of the mutual agreements
hereinafter set forth, and for other good and valuable
consideration, the
receipt and adequacy of which is hereby acknowledged, the Purchaser
and the
Seller agree as follows:
ARTICLE I
DEFINITIONS
-----------
Section 1.01. Defined
Terms.
Whenever used in this Agreement, the following words and
phrases,
unless the context otherwise requires, shall have the following
meaning
specified in this Article:
Accepted Servicing Practices: With respect to any Mortgage
Loan,
those mortgage servicing practices (including collection
procedures) of
prudent mortgage banking institutions which service mortgage loans
of the same
type as such Mortgage Loan in the jurisdiction where the related
Mortgaged
Property is located, and which are in accordance with Fannie Mae
servicing
practices and procedures, for MBS pool mortgages, as defined in the
Fannie Mae
Guides, including future updates.
Adjustable Rate Mortgage Loan: A Mortgage Loan as to which the
related Mortgage Note provides that the Mortgage Interest Rate may
be adjusted
periodically.
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Adjustment Date: With respect to each Adjustable Rate Mortgage
Loan, the date set forth in the related Mortgage Note on which the
Mortgage
Interest Rate on the Mortgage Loan is adjusted in accordance with
the terms of
the 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.
Agency Transfer: A
Fannie Mae Transfer or a Freddie Mac Transfer.
Agreement: This
Seller's Purchase, Warranties and Servicing
Agreement including
all exhibits hereto,
amendments
hereof and
supplements
hereto.
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, 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: As defined in Section 2.03.
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 wherein the related
Mortgaged
Property is located to give record notice of the transfer of the
Mortgage.
Balloon Mortgage Loan: Any Mortgage Loan which by its original
terms or any modifications thereof provides for amortization beyond
its
scheduled maturity date.
Business Day: Any day other than (i) a Saturday or a Sunday, or
(ii) a legal holiday in the States of New York or North Carolina,
or (iii) a
day on which banks in the States of New York or North Carolina are
authorized
or obligated by law or executive order to be closed.
Closing Date: The date or dates set forth in the related
Purchase
Price and Terms Letter on which the Purchaser from time to time
shall purchase
and the Seller from time to time shall sell to the Purchaser, the
Mortgage
Loans listed on the related Mortgage Loan Schedule with respect to
the related
Mortgage Loan Package.
Code: The Internal Revenue Code of 1986, as the same may be
amended from time to time (or any successor statute thereto).
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Combined Loan-to-Value Ratio or CLTV: As to any Second Lien
Loan,
the ratio, expressed as a percentage, of the (a) sum of (i) the
original
outstanding principal balance of the Second Lien Loan and (ii) the
outstanding
principal balance 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 as of the origination date at such Second Lien
Loan to (b)
the Appraised Value of the related Mortgaged Property as of the
origination of
the Second Lien Loan.
Compensating Interest: For any Remittance Date, the lesser of
(i)
the aggregate Servicing Fee payable to the Seller for such
Remittance Date and
(ii) the aggregate Prepayment Interest Shortfall for such
Remittance Date.
Condemnation Proceeds: All awards, compensation and settlements
in
respect of a Mortgaged Property, whether permanent or temporary,
partial or
entire, by exercise of the power of eminent domain or condemnation,
to the
extent not required to be released to a Mortgagor in accordance
with the terms
of the related Mortgage Loan Documents.
Convertible Mortgage Loan: Any Adjustable Rate Mortgage Loan
purchased pursuant to this Agreement as to which the related
Mortgage Note
permits the Mortgagor to convert the Mortgage Interest Rate on such
Mortgage
Loan to a fixed Mortgage Interest Rate.
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.
Co-op Stock: With respect to a Co-op Loan, the single
outstanding
class of stock, partnership interest or other ownership instrument
in the
related residential cooperative housing corporation.
Covered Loan: A Mortgage Loan categorized as Covered pursuant
to
Appendix E of the Standard & Poor's Glossary.
Credit Score: The credit score for each Mortgage Loan shall be
the
minimum of two credit bureau scores obtained at origination or such
other time
by the Seller. If two credit bureau scores are obtained, the Credit
Score will
be the lower score. If three credit bureau scores are obtained, the
Credit
Score will be the middle of the three. When there is more than one
applicant,
the lowest of the applicants' Credit Scores will be used. There is
only one
(1) score for any loan regardless of the number of borrowers
and/or
applicants.
Custodial Account: Each separate demand account or accounts
created and maintained pursuant to Section 4.04 which shall be
entitled
"Wachovia Mortgage Corporation, in trust for the Purchaser, as
owner of
various whole loan series" and shall be established as an Eligible
Account, in
the name of the Person that is the "Purchaser" with respect to the
related
Mortgage Loans.
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Cut-off Date: With respect to each Mortgage Loan Package, the
first Business Day of the month of the related Closing Date, or as
otherwise
set forth in the related Purchase Price and Terms Letter.
Determination Date: With respect to each Remittance Date, the
15th
day (or if such 15th day is not a Business Day, the Business Day
immediately
preceding such 15th day) of the month in which such Remittance Date
occurs.
Due Date: With respect to any Mortgage Loan, the first day of
each
month, exclusive of any days of grace.
Due Period: With respect to each Remittance Date, the period
commencing on the second day of the month preceding the month of
such
Remittance Date and ending on the first day of the month of the
Remittance
Date, in both cases, inclusive.
Eligible Account: An account established and maintained: (a)
within FDIC insured accounts (or other accounts with comparable
insurance
coverage acceptable to the Rating Agencies) created, maintained and
monitored
by the Seller so that all funds deposited therein are fully
insured, (b) with
the corporate trust department of a financial institution assigned
a long-term
debt rating of not less than "A-1" by Standard & Poor's or
"Prime-1" by
Moody's Investors Services, Inc. and, if ownership of the Mortgage
Loans is
evidenced by mortgaged backed securities, the equivalent ratings of
the rating
agencies, and held such that the rights of the Purchaser and the
owner of the
Mortgage Loans shall be fully protected against the claims of any
creditors of
the Seller and of any creditors or depositors of the institution in
which such
account is maintained or (c) in a separate non-trust account
without FDIC or
other insurance in an Eligible Institution. In the event that a
Custodial
Account is established pursuant to clause (b) or (c) of the
preceding
sentence, the Seller shall provide the Purchaser with written
notice on the
Business Day following the date on which the applicable institution
fails to
meet the applicable ratings requirements.
Eligible Institution: An institution having (i) the highest
short-term debt rating, and one of the two highest long-term debt
ratings of
the Rating Agency; or (ii) with respect to any Custodial Account,
an unsecured
long-term debt rating of at least one of the two highest unsecured
long-term
debt ratings of the Rating Agencies.
Eligible
Investments: Any
one or more of the following
obligations or securities:
(a) direct obligations of, and obligations fully guaranteed by
the
United States of America or any agency or instrumentality of the
United States
of America the obligations of which are backed by the full faith
and credit of
the United States of America;
(b) (i) demand or time deposits, federal funds or bankers'
acceptances issued by any depository institution or trust company
incorporated
under the laws of the United States of America or any state thereof
and
subject to supervision and examination by federal and/or state
banking
authorities, provided that the commercial paper and/or the
short-term deposit
rating and/or the long-term unsecured debt obligations or deposits
of such
depository institution or trust company at the time of such
investment or
contractual commitment providing for such
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investment are rated in one of the two highest rating categories by
each
Rating Agency and (ii) any other demand or time deposit or
certificate of
deposit that is fully insured by the FDIC;
(c) repurchase obligations with a term not to exceed thirty
(30)
days and with respect to (i) any security described in clause (a)
above and
entered into with a depository institution or trust company (acting
as
principal) described in clause (b)(ii) above;
(d) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States of
America or
any state thereof that are rated in one of the two highest rating
categories
by each Rating Agency at the time of such investment or contractual
commitment
providing for such investment; provided, however, that securities
issued by
any particular corporation will not be Eligible Investments to the
extent that
investments therein will cause the then outstanding principal
amount of
securities issued by such corporation and held as Eligible
Investments to
exceed 10% of the aggregate outstanding principal balances of all
of the
Mortgage Loans and Eligible Investments;
(e) commercial paper (including both non-interest-bearing
discount
obligations and interest-bearing obligations payable on demand or
on a
specified date not more than one year after the date of issuance
thereof)
which are rated in one of the two highest rating categories by each
Rating
Agency at the time of such investment;
(f) any other demand, money market or time deposit, obligation,
security or investment as may be acceptable to each Rating Agency
as evidenced
in writing by each Rating Agency; and
(g) any money market funds the collateral of which consists of
obligations fully guaranteed by the United States of America or any
agency or
instrumentality of the United States of America the obligations of
which are
backed by the full faith and credit of the United States of America
(which may
include repurchase obligations secured by collateral described in
clause (a))
and other securities and which money market funds are rated in one
of the two
highest rating categories by each Rating Agency.
provided, however, that no instrument or security shall be an
Eligible
Investment if such instrument or security evidences a right to
receive only
interest payments with respect to the obligations underlying such
instrument
or if such security provides for payment of both principal and
interest with a
yield to maturity in excess of 120% of the yield to maturity at par
or if such
investment or security is purchased at a price greater than
par.
Escrow Account: Each separate trust account or accounts created
and maintained pursuant to Section 4.06 which shall be entitled
"Wachovia
Mortgage Corporation, in trust for the Purchaser, as owner of
various whole
loan series and various Mortgagors" and shall be established as an
Eligible
Account, in the name of the Person that is the "Purchaser" with
respect to the
related Mortgage Loans.
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
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required to be escrowed by the Mortgagor with the mortgagee
pursuant to the
Mortgage, applicable law or any other related document.
Event of Default: Any one of the conditions or circumstances
enumerated in Section 8.01.
Fannie Mae: The entity formerly known as the Federal National
Mortgage Association, or any successor thereto.
Fannie Mae Guides: The Fannie Mae Sellers' Guide and the Fannie
Mae Servicers' Guide and all amendments or additions thereto,
including, but
not limited to, future updates thereof.
Fannie Mae Transfer:
As defined in Section 10.01.
FDIC: The Federal Deposit Insurance Corporation, or any
successor thereto.
Fidelity Bond:
A fidelity
bond to be
maintained
by the Seller
pursuant to Section 4.12.
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.
First Remittance Date: The eighteenth (18th) day of the month
following each respective Closing Date, or if such day is not a
Business Day,
the first Business Day immediately thereafter.
Fixed Rate Mortgage Loan: A Mortgage Loan purchased pursuant to
this Agreement which bears a fixed Mortgage Interest Rate during
the life of
the loan.
Freddie Mac: The entity formerly known as the Federal Home Loan
Mortgage Corporation, or any successor thereto.
Freddie Mac Guides: The Freddie Mac Sellers' Guide and the
Freddie
Mac Servicers' Guide and all amendments or additions thereto,
including, but
not limited to, any future updates thereof.
Freddie Mac Transfer:
As defined in Section 10.01.
GAAP: Generally
accepted accounting principles, consistently
applied.
Gross Margin: With respect to any Adjustable Rate Mortgage
Loan,
the fixed percentage amount set forth in the related Mortgage Note
and the
related Mortgage Loan Schedule that is added to the Index on each
Adjustment
Date in accordance with the terms of the related Mortgage Note to
determine
the new Mortgage Interest Rate for such Mortgage Loan.
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High Cost Loan: A Mortgage Loan (a) covered by the Home
Ownership
and Equity Protection Act of 1994, (b) classified as a "high cost
home,"
"threshold," "covered," "high risk home," "predatory" or similar
loan under
any other applicable state, federal or local law (or a similarly
classified
loan using different terminology under a law imposing heightened
regulatory
scrutiny or additional legal liability for residential mortgage
loans having
high interest rates, points and/or fees) or (c) 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 the Standard & Poor's Glossary.
HUD: The
United States Department of Housing and Urban
Development or any successor thereto.
Index: With respect to any Adjustable Rate Mortgage Loan, the
index identified on the Mortgage Loan Schedule and set forth in the
related
Mortgage Note for the purpose of calculating the Mortgage Interest
Rate
thereon.
Insurance Proceeds: With respect to each Mortgage Loan,
proceeds
of insurance policies insuring the Mortgage Loan or the related
Mortgaged
Property.
Interest Only Mortgage Loan: A Mortgage Loan that only requires
payments of interest for a period of time specified in the related
Mortgage
Note.
Liquidation Proceeds: Amounts received in connection with the
partial or complete liquidation of a defaulted Mortgage Loan,
whether through
the sale or assignment of such Mortgage Loan, trustee's sale,
foreclosure sale
or otherwise, or in connection with the sale of the Mortgaged
Property if the
Mortgaged Property is acquired in satisfaction of the Mortgage.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan,
the
ratio (expressed as a percentage) of the original outstanding
principal amount
of the Mortgage Loan to the Appraised Value of the Mortgaged
Property at
origination.
Manufactured Home Mortgage Loan: A single family residential
unit
that is constructed in a factory in sections in accordance with the
Federal
Manufactured Home Construction and Safety Standards adopted on July
15, 1976,
by the Department of Housing and Urban Development ("HUD Code"), as
amended in
2000, which preempts state and local building codes. Each unit is
identified
by the presence of a HUD Plate/Compliance Certificate label. The
sections are
then transported to the site and joined together and affixed to a
pre-built
permanent foundation (which satisfies the manufacturer's
requirements and all
state, county, and local building codes and regulations). The
manufactured
home is built on a non-removable, permanent frame chassis that
supports the
complete unit of walls, floors, and roof. The underneath part of
the home may
have running gear (wheels, axles, and brakes) that enable it to be
transported
to the permanent site. The wheels and hitch are removed prior to
anchoring the
unit to the permanent foundation. The manufactured home must be
classified as
real estate and
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taxed accordingly. The permanent foundation may be on land owned by
the
mortgager or may be on leased land.
Maximum Mortgage Interest Rate: With respect to each Adjustable
Rate Mortgage Loan, a rate that is set forth on the related
Mortgage Loan
Schedule and in the related Mortgage Note and is the maximum
interest rate to
which the Mortgage Interest Rate on such Mortgage Loan may be
increased on any
Adjustment Date.
MERS: Mortgage
Electronic
Registration
Systems,
Inc.,
a
corporation organized
and existing
under the laws of the
State of Delaware,
or any successor thereto.
MERS Mortgage
Loan: Any Mortgage Loan registered with MERS on
the MERS System.
MERS System: The system of recording transfers of mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number for any MERS Mortgage
Loan.
Minimum Mortgage Interest Rate: With respect to each Adjustable
Rate Mortgage Loan, a rate that is set forth on the related
Mortgage Loan
Schedule and in the related Mortgage Note and is the minimum
interest rate to
which the Mortgage Interest Rate on such Mortgage Loan may be
decreased on any
Adjustment Date.
MOM Loan: Any Mortgage Loan as to which MERS is acting as
mortgagee, solely as nominee for the originator of such Mortgage
Loan and its
successors and assigns.
Monthly Advance: The payment required to be made by the Seller
with respect to any Remittance Date pursuant to Section 5.03.
Monthly Payment: The scheduled monthly payment on a Mortgage
Loan
due on any Due Date allocable to principal and/or interest on such
Mortgage
Loan pursuant to the terms of the related Mortgage Note.
Mortgage: With respect to any 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 or second lien on an unsubordinated estate in
fee simple
in real property securing the Mortgage Note; except that with
respect to real
property located in jurisdictions in which the use of leasehold
estates for
residential properties is a widely-accepted practice, the mortgage,
deed of
trust or other instrument securing the Mortgage Note may secure and
create a
first or second lien upon a leasehold estate of the Mortgagor. With
respect to
a Co-op Loan, the related Security Agreement.
Mortgage File: With respect to each Mortgage Loan, the
documents
pertaining thereto specified in Exhibit A-1 and any additional
documents
required to be added to the Mortgage File pursuant to this
Agreement.
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Mortgage Interest Rate: As to each Mortgage Loan, the annual
rate
at which interest accrues on such Mortgage Loan 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: An individual Mortgage Loan which is the subject
of
this Agreement, each Mortgage Loan originally sold and subject to
this
Agreement being identified on the related Mortgage Loan Schedule,
which
Mortgage Loan includes without limitation the Mortgage File, the
Monthly
Payments, Principal Prepayments, Liquidation Proceeds, Condemnation
Proceeds,
Insurance Proceeds, REO Disposition Proceeds, any escrow accounts
related to
the Mortgage Loan, and all other rights, benefits, proceeds and
obligations
arising from or in connection with such Mortgage Loan, excluding
replaced or
repurchased mortgage loans.
Mortgage Loan Documents: The documents contained in a Mortgage
File.
Mortgage Loan Package: As defined in the Recitals to this
Agreement.
Mortgage Loan Remittance Rate: With respect to each Mortgage
Loan,
the Mortgage Interest Rate less the related Servicing Fee Rate.
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 street address of the
Mortgaged
Property including the city, state and zip code; (4) a code
indicating whether
the Mortgagor is self-employed; (5) a code indicating whether the
Mortgaged
Property is owner-occupied; (6) the number of units and type of
residential
property constituting the Mortgaged Property; (7) 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; (8) with respect to each First Lien Loan, the LTV at
origination,
and with respect to each Second Lien Loan, the CLTV at origination;
(9) the
Mortgage Interest Rate as of the related Cut-off Date; (10) the
date on which
the Monthly Payment was due on the Mortgage Loan and, if such date
is not
consistent with the Due Date currently in effect, such Due Date;
(11) the
stated maturity date; (12) the first payment date; (13) the amount
of the
Monthly Payment as of the related Cut-off Date; (14) the last
payment date on
which a payment was actually applied to the outstanding principal
balance;
(15) the original principal amount of the Mortgage Loan; (16) 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; (17) with respect to each
Adjustable Rate
Mortgage Loan, the Adjustment Date; (18) with respect to each
Adjustable Rate
Mortgage Loan, the Gross Margin; (19) with respect to each
Adjustable Rate
Mortgage Loan, the Mortgage Interest Rate Cap under the terms of
the Mortgage
Note; (20) with respect to each Mortgage Loan, a code indicating
the type of
Index; (21) the type of Mortgage Loan (i.e., Fixed or Adjustable
Rate Mortgage
Loan, First or Second Lien Loan); (20) a code indicating the
purpose of the
loan (i.e., purchase, rate and term refinance, equity take-out
refinance);
(21) a code indicating the documentation style (i.e., full,
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alternative or reduced); (22) asset verification (Y/N); (23) the
loan credit
classification (as described in the Underwriting Standards); (24)
whether such
Mortgage Loan provides for a Prepayment Penalty and, if applicable,
the
Prepayment Penalty term; (25) the Mortgage Interest Rate as of
origination;
(26) the credit risk score (FICO score); (27) the date of
origination; (28)
with respect to Adjustable Rate Mortgage Loans, the Mortgage
Interest Rate
adjustment period; (29) with respect to each Adjustable Rate
Mortgage Loan,
the Mortgage Interest Rate adjustment percentage; (30) with respect
to each
Adjustable Rate Mortgage Loan, the Mortgage Interest Rate Cap as of
the first
Adjustment Date; (31) with respect to each Adjustable Rate Mortgage
Loan, the
Periodic Rate Cap subsequent to the first Adjustment Date; (32) the
Due Date
for the first Monthly Payment; (33) the original Monthly Payment
due; (34) a
code indicating the Primary Mortgage Insurance Policy provider and
percentage
of coverage, if applicable; (35) Appraised Value; (36) appraisal
type; (37)
appraisal date; (40) a code indicating whether the Mortgage Loans
is a
"buydown" loan; and (38) with respect to the related Mortgagor,
the
debt-to-income ratio. With respect to the Mortgage Loans in the
aggregate, the
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 applicable
Cut-off
Date; and (6) the applicable Closing Date.
Mortgage Note: The note or other evidence of the indebtedness of
a
Mortgagor secured by a Mortgage.
Mortgaged Property: With respect to any Mortgage Loan that is
not
a Co-op Loan, the underlying real property securing repayment of
the related
Mortgage Note, consisting of a fee simple parcel of real estate or
a leasehold
estate, the term of which is equal to or longer than the term of
such Mortgage
Note. 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.
Mortgagor: The obligor
on a Mortgage Note.
Mortgagor Personal
Information: Any
information,
including, but
not limited to, all personal information about a Mortgagor that is
disclosed
to the Seller or the Purchaser by or on behalf of the
Mortgagor.
OCC: Office of the
Comptroller
of the Currency,
its successors
and assigns.
Officers' Certificate: A certificate signed by the Chairman of
the
Board, the Vice Chairman of the Board, the President, a Senior Vice
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 an
employee of the party on behalf of whom the opinion is being given,
reasonably
acceptable to the Purchaser, provided that any Opinion of Counsel
relating to
(a) qualification of the Mortgage Loans in a REMIC or (b)
compliance with the
REMIC Provisions, must be (unless otherwise stated in such
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<PAGE>
Opinion of Counsel) an opinion of counsel who (i) is in fact
independent of
the Seller and any servicer of the Mortgage Loans, (ii) does not
have any
material direct or indirect financial interest in the Seller or any
servicer
or in an Affiliate of either and (iii) is not connected with the
Seller or any
servicer as an officer, employee, director or person performing
similar
functions.
OTS: Office of Thrift
Supervision or any successor thereto.
Periodic Rate Cap: With respect to each Adjustable Rate
Mortgage
Loan and any Adjustment Date therefor, a number of percentage
points per annum
that is set forth in the related Mortgage Loan Schedule and in the
related
Mortgage Note, which is the maximum amount by which the Mortgage
Interest Rate
for such Mortgage Loan may increase (without regard to the Maximum
Mortgage
Interest Rate) or decrease (without regard to the Minimum Mortgage
Interest
Rate) on such Adjustment Date from the Mortgage Interest Rate in
effect
immediately prior to such Adjustment Date, which may be a different
amount
with respect to the first Adjustment Date.
Person: Any individual, corporation, partnership, joint
venture,
association, limited liability company, joint-stock company,
trust,
unincorporated organization or government or any agency or
political
subdivision thereof.
Premium Percentage: With respect to any Mortgage Loan, a
percentage equal to the excess of the Purchase Price Percentage
over 100%.
Prepayment Interest Shortfall: As to any Remittance Date and
Principal Prepayment in full, the difference between (i) one full
month's
interest at the applicable Mortgage Interest Rate (after giving
effect to any
applicable relief act reduction, debt service reduction and
deficient
valuation), as reduced by the Servicing Fee Rate, on the
outstanding principal
balance of the related Mortgage Loan immediately prior to such
Principal
Prepayment and (ii) the amount of interest actually received with
respect to
such Mortgage Loan in connection with such Principal
Prepayment.
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.
Primary Mortgage Insurance Policy: Each policy of primary
mortgage
insurance represented to be in effect pursuant to Section 3.02(bb),
or any
replacement policy therefor obtained by the Seller pursuant to
Section 4.08.
Prime Rate: The prime rate announced to be in effect from time
to
time as published as the average rate in The Wall Street Journal
(Northeast
Edition).
Principal Prepayment: Any full or partial 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.
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<PAGE>
Purchase Price: As defined in Section 2.02.
Purchase Price and
Terms Letter:
As defined in the
Recitals to
this Agreement which may also be a form of trade execution
notice.
Purchaser: Morgan
Stanley Mortgage
Capital Inc., its
successors
in interest and assigns.
Qualified Appraiser: With respect to each Mortgage Loan, 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 is not affected by the approval or
disapproval
of the Mortgage Loan, and such appraiser and the appraisal made by
such
appraiser both satisfy the requirements of Fannie Mae and Title XI
of FIRREA
and the regulations promulgated thereunder, all as in effect on the
date the
Mortgage Loan was originated.
Qualified Insurer: An insurance company duly qualified as such
under the laws of the states in which the Mortgaged Properties are
located,
duly authorized and licensed in such states to transact the
applicable
insurance business and to write the insurance provided by the
insurance policy
issued by it, approved as an insurer by Fannie Mae or Freddie
Mac.
Rating Agencies: Standard & Poor's Ratings Services, a division
of
The McGraw- Hill Companies, Inc., Moody's Investors Service, Inc.
or, in the
event that some or all ownership of the Mortgage Loans is evidenced
by
mortgage-backed securities, the nationally recognized rating
agencies issuing
ratings with respect to such securities, if any.
Reconstitution: As
defined in Section 10.01.
Reconstitution Agreement: As defined in Section 10.01.
Reconstitution Date:
As defined in Section 10.01.
Refinanced Mortgage Loan: A Mortgage Loan which was made to a
Mortgagor who owned the Mortgaged Property prior to the origination
of such
Mortgage Loan and the proceeds of which were used in whole or part
to satisfy
an existing mortgage.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
Remittance Date: The 18th day of each month, beginning with the
First Remittance Date, or if such day is not a Business Day, the
first
Business Day thereafter.
REO Disposition: The final sale by the Seller of any REO
Property.
REO Disposition
Proceeds: Amounts received by the Seller in
connection with an REO Disposition.
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<PAGE>
REO Property: A Mortgaged Property acquired by or on behalf of
the
Purchaser in full or partial satisfaction of the related Mortgage
as described
in Section 4.13.
Repurchase Price: With respect to any Mortgage Loan for which a
breach of a representation or warranty set forth in this Agreement
is found, a
price equal to (i) the then outstanding principal balance of the
Mortgage Loan
to be repurchased, plus (ii) accrued interest thereon at the
Mortgage Interest
Rate from the date to which interest had last been paid through the
date of
such repurchase, plus (iii) the amount of any outstanding advances
owed to any
servicer, plus (iv) all costs and expenses incurred by the
Purchaser or any
servicer arising out of or based upon such breach, including
without
limitation reasonable costs and expenses incurred in the
enforcement of the
Seller's repurchase obligation hereunder, less (v) in the event the
Seller is
servicing such Mortgage Loan as of the date of repurchase, amounts
received or
advanced in respect of such repurchased Mortgage Loan which are
being held in
the Custodial Account for distribution in connection with such
Mortgage Loan,
plus (vi) in the event a Mortgage Loan is repurchased during the
period
following the related Closing Date and prior to a related
Reconstitution Date
(but in no event shall such period extend for more than the first
twelve
months following the related Closing Date), an amount equal to the
Premium
Percentage multiplied by the outstanding principal balance of such
Mortgage
Loan as of the date of such repurchase.
RESPA: Real Estate Settlement Procedures Act, as amended from
time
to time.
SAIF: The Savings
Association
Insurance Fund, or any successor
thereto.
Second Lien
Loan: A Mortgage Loan secured by a second lien
Mortgage on the related Mortgaged Property.
Securitization Transfer: The sale or transfer of some or all of
the Mortgage Loans to a trust or other entity as part of a
publicly-offered or
privately-placed, rated or unrated mortgage pass-through or
other
mortgage-backed securities transaction.
Security Agreement: With respect to a Co-op Loan, the agreement
or
mortgage creating a security interest in favor of the originator of
the Co-op
Loan in the related Co-op Stock.
Scheduled Principal Balance: As to each Mortgage Loan and any
date
of determination, (i) the principal balance of such Mortgage Loan
as of the
related Cut-off Date after giving effect to payments of principal
due on or
before such date, whether or not received, minus (ii) all amounts
previously
distributed to the Purchaser with respect to the Mortgage Loan
representing
payments or recoveries of principal (or advances in lieu
thereof).
Servicing Advances: All customary, reasonable and necessary
"out
of pocket" costs and expenses (including reasonable attorneys' fees
and
disbursements) incurred in the performance by the Seller of its
servicing
obligations, including, but not limited to, the cost of (a) the
preservation,
restoration and protection of a Mortgaged Property, (b) any
enforcement,
administrative or judicial proceedings, or any legal work or
advice
specifically related to servicing the Mortgage Loans, including but
not
limited to, foreclosures, bankruptcies,
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<PAGE>
condemnations, drug seizures, elections, foreclosures by
subordinate or
superior lienholders, and other legal actions incidental to the
servicing of
the Mortgage Loans (provided that such expenses are reasonable and
that the
Seller specifies the Mortgage Loan(s) to which such expenses
relate, and
provided further that any such enforcement, administrative or
judicial
proceeding does not arise out of a breach of any representation,
warranty or
covenant of the Seller hereunder), (c) the management and
liquidation of any
REO Property, (d) taxes, assessments, water rates, sewer rates and
other
charges which are or may become a lien upon the Mortgaged Property,
and
Primary Mortgage Insurance Policy premiums and fire and hazard
insurance
coverage, (e) any expenses reasonably sustained by the Seller with
respect to
the liquidation of the Mortgaged Property in accordance with the
terms of this
Agreement and (f) compliance with the obligations under Section
4.08.
Servicing Fee: With respect to each Mortgage Loan, the amount
of
the annual fee the Purchaser shall pay to the Seller, which shall,
for each
month, be equal to one-twelfth of the product of (i) the Servicing
Fee Rate
and (ii) the Scheduled Principal Balance of such Mortgage Loan.
Such fee shall
be payable monthly, computed on the basis of the same principal
amount and
period respecting which any related interest payment on a Mortgage
Loan is
computed, and for any month in which servicing of such Mortgage
Loan is
transferred from the Seller, shall be pro rated (based upon the
number of days
of the related month the Seller so acted as servicer relative to
the number of
days in that month) for each part thereof. The obligation of the
Purchaser to
pay the Servicing Fee is limited to, and payable solely from, the
interest
portion (including recoveries with respect to interest from
Liquidation
Proceeds and other proceeds, to the extent permitted by Section
4.05) of
related Monthly Payments collected by the Seller, or as otherwise
provided
under Section 4.05.
Servicing Fee Rate: The per annum rate at which the Servicing
Fee
accrues, which rate with respect to each Mortgage Loan shall be as
set forth
in the related Purchase Price and Terms Letter.
Servicing File: With respect to each Mortgage Loan, the
documents
pertaining thereto specified in Exhibit A-2 and copies of all
documents for
such Mortgage Loan specified in Exhibit A-1.
Servicing Officer: Any officer of the Seller involved in, or
responsible for, the administration and servicing of the Mortgage
Loans whose
name appears on a list of servicing officers furnished by the
Seller to the
Purchaser upon request, as such list may from time to time be
amended.
Standard &
Poor's: Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies Inc., and its successors in
interest.
Standard &
Poor's Glossary: The Standard & Poor's LEVELS(R)
Glossary, as may be in effect from time to time.
Underwriting
Standards: As to each
Mortgage Loan,
the Seller's
underwriting
guidelines in
effect as of the date of origination of such
Mortgage Loan.
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<PAGE>
Whole Loan Transfer:
As defined in Section 11.01(a)(i).
ARTICLE II
SERVICING OF MORTGAGE LOANS; RECORD TITLE AND POSSESSION
--------------------------------------------------------
OF MORTGAGE FILES; BOOKS AND RECORDS; CUSTODIAL AGREEMENT;
----------------------------------------------------------
DELIVERY OF MORTGAGE LOAN DOCUMENTS
-----------------------------------
Section 2.01. Agreement to Purchase.
The Seller agrees to sell and the Purchaser agrees to purchase
on
each Closing Date, pursuant to this Agreement and the related
Purchase Price
and Terms Letter, the Mortgage Loans being sold by the Seller and
listed on
the related Mortgage Loan Schedule, servicing rights retained,
having an
aggregate Scheduled Principal Balance in an amount as set forth in
the related
Purchase Price and Terms Letter, or in such other amount as agreed
by the
Purchaser and the Seller as evidenced by the actual aggregate
principal
balance of the Mortgage Loans accepted by the Purchaser on such
Closing Date.
The Seller shall deliver in an electronic format the Mortgage Loan
Schedule
for the Mortgage Loans to be purchased on such Closing Date to the
Purchaser
at least two (2) Business Days prior to such Closing Date.
Section 2.02. Purchase Price.
The Purchase Price for the Mortgage Loans in a Mortgage Loan
Package shall be equal to the sum of (a) the percentage of par as
stated in
the related Purchase Price and Terms Letter (subject to adjustment
as provided
therein), multiplied by the aggregate Scheduled Principal Balance
of Mortgage
Loans as of the related Cut-off Date listed on the related Mortgage
Loan
Schedule plus (b) accrued interest on the aggregate Scheduled
Principal
Balance of the related Mortgage Loans as of the related Cut-off
Date at the
weighted average Mortgage Loan Remittance Rate of such Mortgage
Loans from and
including the related Cut-off Date to but not including such
Closing Date (the
"Purchase Price"). If so provided in the related Purchase Price and
Terms
Letter, portions of each Mortgage Loan Package shall be priced
separately.
The Purchase Price as set forth in the preceding paragraph for
the
Mortgage Loans in a Mortgage Loan Package shall be paid on the
related Closing
Date by wire transfer of immediately available funds.
With respect to each Mortgage Loan, the Purchaser shall be
entitled to (1) the principal portion of all Monthly Payments due
after the
related Cut-off Date, (2) all other recoveries of principal
collected on or
after the related Cut-off Date (provided, however, that the
principal portion
of all Monthly Payments due on or before the related Cut-off Date
and
collected by the Seller or any successor servicer after the related
Cut-off
Date shall belong to the Seller), and (3) all payments of interest
on the
Mortgage Loans at the related Mortgage Loan Remittance Rate (minus
that
portion of any such payment which is allocable to the period prior
to the
related Cut-off Date). The Scheduled Principal Balance of each
Mortgage Loan
as of the related Cut-off Date is determined after application of
payments of
principal due on or before the related Cut-off Date whether or not
collected,
together with any unscheduled Principal Prepayments collected prior
to the
related Cut-off Date; provided, however, that Monthly
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<PAGE>
Payments for 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
Monthly Payments
shall be the property of the Purchaser. The Seller shall deposit
any such
Monthly Payments into the Custodial Account.
Section 2.03. Servicing of Mortgage Loans.
On each Closing Date, the Mortgage Loans in the related
Mortgage
Loan Package will be sold by the Seller to the Purchaser on a
servicing
retained basis upon the execution and delivery of an Assignment and
Conveyance
in the form attached hereto as Exhibit E (the "Assignment and
Conveyance").
Simultaneously with the execution and delivery of the related
Assignment and Conveyance, for each Mortgage Loan Package, the
Seller hereby
agrees to service the Mortgage Loans listed on the Mortgage Loan
Schedule in
accordance with Accepted Servicing Practices and this Agreement.
The rights of
the Purchaser to receive payments with respect to the related
Mortgage Loans
shall be as set forth in this Agreement.
Section 2.04. Record Title and Possession of Mortgage Files;
Maintenance of Servicing Files.
As of each Closing Date, the Seller will have sold,
transferred,
assigned, set over and conveyed to the Purchaser, without recourse,
and the
Seller hereby acknowledges that the Purchaser will have, all the
right, title
and interest of the Seller in and to the Mortgage Loans. In
accordance with
Section 2.07, the Seller shall deliver at its own expense, the
Mortgage Files
for the related Mortgage Loans to Purchaser or its designee. The
possession of
each Servicing File by the Seller is for the sole purpose of
servicing the
related Mortgage Loan. From each Closing Date, the ownership of
each related
Mortgage Loan, including the Mortgage Note, the Mortgage, the
contents of the
related Mortgage File and all rights, benefits, proceeds and
obligations
arising therefrom or in connection therewith, has been vested in
the
Purchaser. All rights arising out of the Mortgage Loans including,
but not
limited to, all funds received on or in connection with the
Mortgage Loans and
all records or documents with respect to the Mortgage Loans
prepared by or
which come into the possession of the Seller shall be received and
held by the
Seller in trust for the benefit of the Purchaser as the owner of
the Mortgage
Loans. Any portion of the Mortgage Files retained by the Seller
shall be
appropriately identified in the Seller's computer system to clearly
reflect
the ownership of the Mortgage Loans by the Purchaser.
In addition, in connection with the assignment of any MERS
Mortgage Loan, the Seller agrees that it will cause, at its own
expense, the
MERS(R) System to indicate that such Mortgage Loans have been
assigned by the
Seller to the Purchaser in accordance with this Agreement by
including (or
deleting, in the case of Mortgage Loans which are repurchased in
accordance
with this Agreement) in such computer files the information
required by the
MERS(R) System to identify the Purchaser of such Mortgage Loans.
The Seller
further agrees that it will not alter the information referenced in
this
paragraph with respect to any Mortgage Loan during the term of this
Agreement
unless and until such Mortgage Loan is repurchased in accordance
with the
terms of this Agreement.
Section 2.05. Books
and Records.
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<PAGE>
The
sale of each Mortgage Loan will be reflected on the Seller's
balance sheet and other financial statements as a sale of assets by
the Seller
and will be reflected on the Purchaser's balance sheet and other
financial
statements as a purchase by the Purchaser. The Seller shall
maintain, a
complete set of books and records for the Mortgage Loans sold by it
which
shall be appropriately identified in the Seller's computer system
to clearly
reflect the ownership of the Mortgage Loans by the Purchaser. In
particular,
the Seller shall maintain in its possession, available for
inspection by the
Purchaser, or its designee 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, as
applicable,
including but not limited to documentation as to the method used
in
determining the applicability of the provisions of the Flood
Disaster
Protection Act of 1973, as amended, to the Mortgaged Property,
documentation
evidencing insurance coverage and eligibility of any condominium
project for
approval by Seller and periodic inspection reports as required by
Section
4.13. To the extent that original documents are not required for
purposes of
realization of Liquidation Proceeds or Insurance Proceeds,
documents
maintained by the Seller may be in the form of microfilm or
microfiche or such
other reliable means of recreating original documents, including
but not
limited to, optical imagery techniques so long as the Seller
complies with the
requirements of the Fannie Mae Guides.
Section 2.06. Transfer
of Mortgage Loans.
The Seller shall keep at its office books and records in which,
subject to such reasonable regulations as it may prescribe, the
Seller shall
note transfers of Mortgage Loans. No transfer of a Mortgage Loan
may be made
unless such transfer is in compliance with the terms of Section
11.12. For the
purposes of this Agreement, the Seller shall be under no obligation
to deal
with any person with respect to this Agreement or any Mortgage Loan
unless a
properly executed Assignment, Assumption and Recognition Agreement
in the form
of Exhibit D with respect to such Mortgage Loan has been delivered
to the
Seller; provided, that, unless otherwise provided in the related
Purchase
Price and Terms Letter, in no event shall there be more than four
(4)
"Purchasers" with respect to any Mortgage Loan Package. Upon
receipt of notice
of the transfer, the Seller shall mark its books and records to
reflect the
ownership of the Mortgage Loans by such assignee, and, except as
otherwise
provided herein, the previous Purchaser shall be released from its
obligations
hereunder with respect to the Mortgage Loans sold or
transferred.
Section 2.07. Delivery
of Mortgage Loan Documents.
The Seller shall, at least two (2) Business Days prior to the
related Closing Date (or such later date as the Purchaser may
reasonably
request), deliver and release to the Purchaser, or its designee,
the Mortgage
Loan Documents with respect to each Mortgage Loan pursuant to a
bailee letter
agreement. If the Seller cannot deliver the original recorded
Mortgage Loan
Documents on the related Closing Date, the Seller shall, promptly
upon receipt
thereof and in any case not later than 180 days from the related
Closing Date,
deliver such original recorded documents to the Purchaser or its
designee
(unless the Seller is delayed in making such delivery by reason of
the fact
that such documents shall not have been returned by the appropriate
recording
office). If delivery is not completed within 180 days of the
related Closing
Date solely
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<PAGE>
because such documents shall not have been returned by the
appropriate
recording office, the Seller shall 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 shall use its best
efforts to
deliver such document within twelve (12) months of the related
Closing Date.
To the extent received by it, the Seller shall forward to the
Purchaser, or its designee, original documents evidencing an
assumption,
modification, consolidation or extension of any Mortgage Loan
entered into in
accordance with this Agreement within two (2) weeks after their
execution;
provided, however, that the Seller shall provide the Purchaser, or
its
designee, with a copy, certified by the Seller as a true copy, of
any such
document submitted for recordation within two (2) weeks after 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 of its return from the appropriate public recording
office.
The Seller shall pay all initial recording fees, if any, for
the
Assignments of Mortgage and any other fees or costs in transferring
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.
Section 2.08. Quality
Control Procedures.
The Seller shall have an internal quality control program that
verifies, on a regular basis, the existence and accuracy of the
legal
documents, credit documents, property appraisals, and underwriting
decisions.
The program must be capable of evaluating and monitoring the
overall quality
of its loan production and servicing activities. The program is to
ensure that
the Mortgage Loans are originated and serviced in accordance with
prudent
mortgage banking practices and accounting principles; guard against
dishonest,
fraudulent, or negligent acts; and guard against errors and
omissions by
officers, employees, or other authorized persons.
Section 2.09.
Closing.
The closing for the purchase and sale of the Mortgage Loans
shall
take place on the related Closing Date. The closing shall be
either: by
telephone, confirmed by letter or wire as the parties shall agree,
or
conducted in person, at such place as the parties shall agree.
The closing for the Mortgage Loans to be purchased on the
related
Closing Date shall be subject to each of the following
conditions:
(a)
at least two (2)
Business Days prior to the related Closing
Date, the Seller shall deliver to the Purchaser a magnetic
diskette, or transmit by modem or e-mail, a listing on a
loan-level basis of the information contained in the
Mortgage Loan Schedule;
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(b) all of the
representations and warranties of the Seller
under this Agreement shall be true and correct as of the
related Closing Date or, with respect to representations and
warranties made as of a date other than the related Closing
Date, as of such date, and no event shall have occurred
which, with notice or the passage of time, would constitute
a default under this Agreement;
(c) the
Purchaser shall have received, or the Purchaser's
attorneys shall have received in escrow, all closing
documents, in such forms as are agreed upon and acceptable
to the Purchaser, duly executed by all signatories other
than the Purchaser as required pursuant to the terms hereof;
(d) the Seller shall have
received, or the Seller's attorneys
shall have received in escrow, all closing documents, in
such forms as are agreed upon and acceptable to the Seller,
duly executed by all signatories other than the Seller as
required pursuant to the terms hereof;
(e) the Seller
shall have delivered and released to the
Purchaser (or its designee) on or prior to the related
Closing Date all
documents required to be delivered and
released pursuant to the terms of this Agreement; and
(f) all other
terms and conditions of this Agreement, the
related Purchase Price and Terms Letter and the related
Assignment and Conveyance shall have been materially
complied with.
Subject to the foregoing conditions, the Purchaser shall pay to
the Seller on the related Closing Date the Purchase Price pursuant
to Section
2.02 of this Agreement, by wire transfer of immediately available
funds to the
account designated by the Seller.
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES OF THE SELLER;
---------------------------------------------
REPURCHASE; REVIEW OF MORTGAGE LOANS
------------------------------------
Section 3.01. Representations and Warranties of the Seller.
The Seller represents, warrants and covenants to the Purchaser
that as of each Closing Date or as of such date specifically
provided herein:
(a) The Seller is a corporation duly organized, validly
existing
and in good standing under the laws of the jurisdiction of its
incorporation
and has all licenses necessary to carry out its business as now
being
conducted, and is licensed and qualified to transact business in
and is in
good standing under the laws of each state in which any Mortgaged
Property is
located or is otherwise exempt under applicable law from such
licensing or
qualification or is otherwise not required under applicable law to
effect such
licensing or qualification and no demand for such licensing or
qualification
has been made upon the Seller by any such state, and in any event
the Seller
is in compliance with the laws of any such state to the extent
necessary to
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ensure the enforceability of each Mortgage Loan and the servicing
of the
Mortgage Loans in accordance with the terms of this Agreement;
(b) The Seller has the full power and authority and legal right
to
hold, transfer and convey each Mortgage Loan, to sell each Mortgage
Loan and
to execute, deliver and perform, and to enter into and consummate
all
transactions contemplated by this Agreement, the related Purchase
Price and
Terms Letter and the related Assignment and Conveyance and to
conduct its
business as presently conducted; the Seller has duly authorized the
execution,
delivery and performance of this Agreement and any agreements
contemplated
hereby, has duly executed and delivered this Agreement, the related
Purchase
Price and Terms Letter and the related Assignment and Conveyance,
and any
agreements contemplated hereby, and this Agreement, the related
Purchase Price
and Terms Letter, the related Assignment and Conveyance and each
Assignment of
Mortgage to the Purchaser and any agreements contemplated hereby,
constitute
the legal, valid and binding obligations of the Seller, enforceable
against it
in accordance with their respective terms, except as such
enforceability may
be limited by bankruptcy, insolvency, moratorium, reorganization
and similar
laws, and by equitable principles affecting the enforceability of
the rights
of creditors; and all requisite corporate action has been taken by
the Seller
to make this Agreement, the related Purchase Price and Terms
Letter, the
related Assignment and Conveyance and all agreements contemplated
hereby valid
and binding upon the Seller in accordance with their respective
terms;
(c) None of the execution and delivery of this Agreement, the
related Purchase Price and Terms Letter, the related Assignment
and
Conveyance, the sale of the Mortgage Loans to the Purchaser, the
consummation
of the transactions contemplated hereby, or the fulfillment of or
compliance
with the terms and conditions of this Agreement, the related
Purchase Price
and Terms Letter or the related Assignment and Conveyance will
conflict with
any of the terms, conditions or provisions of the Seller's charter
or by-laws
or materially conflict with or result in a material breach of any
of the
terms, conditions or provisions of any legal restriction or any
material
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 material violation of any law, rule,
regulation,
order, judgment or decree to which the Seller or its property is
subject;
(d) There is no litigation, suit, proceeding or investigation
pending or, to the Seller's knowledge, threatened, or any order or
decree
outstanding, which is reasonably likely to have a material adverse
effect on
the sale of the Mortgage Loans, the execution, delivery,
performance or
enforceability of this Agreement, the related Purchase Price and
Terms Letter
or the related Assignment and Conveyance, or which is reasonably
likely to
have a material adverse effect on the financial condition of the
Seller;
(e) No consent, approval, authorization or order of any court
or
governmental agency or body is required for the execution, delivery
and
performance by the Seller of or compliance by the Seller with this
Agreement,
the related Purchase Price and Terms Letter and the related
Assignment and
Conveyance, except for consents, approvals, authorizations and
orders which
have been obtained;
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(f) The consummation of the transactions contemplated by this
Agreement, the related Purchase Price and Terms Letter and the
related
Assignment and Conveyance 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, the related
Purchase
Price and Terms Letter and the related Assignment and Conveyance
are not
subject to bulk transfer or any similar statutory provisions in
effect in any
applicable jurisdiction;
(g) The Seller has not used selection procedures that
identified
the Mortgage Loans as being less desirable or valuable than other
comparable
mortgage loans in the Seller's portfolio at the Cut-off Date;
(h) The Seller will treat the sale of the Mortgage Loans to the
Purchaser as a sale for reporting and accounting purposes and, to
the extent
appropriate, for federal income tax purposes;
(i) The Seller is an approved seller/servicer of residential
mortgage loans for Fannie Mae or Freddie Mac and HUD, with such
facilities,
procedures and personnel necessary for the sound servicing of such
mortgage
loans. The Seller is duly qualified, licensed, registered and
otherwise
authorized under all applicable federal, state and local laws and
regulations,
meets the minimum capital requirements, if applicable, set forth by
the OCC,
and is in good standing to sell mortgage loans to and service
mortgage loans
for Fannie Mae or Freddie Mac and no event has occurred which would
make the
Seller unable to comply with eligibility requirements or which
would require
notification to either Fannie Mae or Freddie Mac;
(j) The Seller does not believe, nor does it have any cause or
reason to believe, that it cannot perform each and every covenant
contained in
this Agreement and the related Purchase Price and Terms Letter. 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 the Seller's creditors;
(k) Neither this Agreement nor any information, statement,
tape,
diskette, form, report, 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
Transfer 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;
(l) The Seller acknowledges and agrees that the Servicing Fee
represents reasonable compensation for performing such services and
that the
entire Servicing Fee shall be treated by the Seller, for accounting
and tax
purposes, as compensation for the servicing and administration of
the Mortgage
Loans pursuant to this Agreement;
(m) The Seller has delivered to the Purchaser financial
statements
as to its last two complete fiscal years for which financial
statements are
available. All such financial statements fairly present the
pertinent results
of operations and changes in financial position for each of such
periods and
the financial position at the end of each such period of the Seller
and its
subsidiaries and have been prepared in accordance with GAAP
consistently
applied throughout
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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 the Seller's financial
statements that
would have a material adverse effect on its ability to perform its
obligations
under this Agreement, the related Purchase Price and Terms Letter
or the
related Assignment and Conveyance;
(n) 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; and
(o) The Seller is a member of MERS in good standing, and will
comply in all material respects with the rules and procedures of
MERS in
connection with the servicing of the MERS Mortgage Loans for as
long as such
Mortgage Loans are registered with MERS.
Section 3.02. Representations and Warranties as to Individual
Mortgage Loans.
The Seller hereby represents and warrants to the Purchaser, as
to
each Mortgage Loan, as of the related Closing Date as follows:
(a) The information set forth in the Mortgage Loan Schedule,
including any diskette or other related data tapes delivered to the
Purchaser,
is complete, true and correct in all material respects as of the
related
Cut-off Date;
(b) With respect to a first lien Mortgage Loan that is not a
Co-op
Loan, the Mortgage creates a first lien or a first priority
ownership interest
in an estate in fee simple in real property securing the related
Mortgage
Note. With respect to a first lien Mortgage Loan that is a Co-op
Loan, the
Mortgage creates a first lien or a first priority ownership
interest in the
stock ownership and leasehold rights associated with the
cooperative unit
securing the related Mortgage Note;
(c) With respect to a Second Lien Mortgage Loan that is not a
Co-op Loan, the Mortgage creates a second lien or a second priority
ownership
interest in an estate in fee simple in real property securing the
related
Mortgage Note. With respect to a Second Lien Mortgage Loan that is
a Co-op
Loan, the Mortgage creates a second lien or a second priority
ownership
interest in the stock ownership and leasehold rights associated
with the
cooperative unit securing the related Mortgage Note;
(d) All payments due on or prior to the related Cut-off Date
for
such Mortgage Loan have been made as of the related Closing Date,
the Mortgage
Loan is not delinquent thirty (30) days or more in payment and has
not been
dishonored; there are no material defaults under the terms of the
Mortgage
Loan; the Seller has not advanced funds, or induced, solicited or
knowingly
received any advance of funds from a party other than the owner of
the
Mortgaged Property subject to the Mortgage, directly or indirectly,
for the
payment of any amount required by the Mortgage Loan; as to each
Mortgage Loan,
there has been no more than one thirty (30) day delinquency during
the
immediately preceding twelve-month period;
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<PAGE>
(e) 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 escrow funds
have been
established in an amount sufficient to pay for every such escrowed
item which
remains unpaid and which has been assessed but is not yet due and
payable;
(f) The terms of the Mortgage Note and the Mortgage have not
been
impaired, waived, altered or modified in any respect, except by
written
instruments which have been recorded to the extent any such
recordation is
required by law, or, necessary to protect the interest of the
Purchaser. No
instrument of waiver, alteration or modification has been executed
in
connection with such Mortgage Loan, and no Mortgagor has been
released, in
whole or in part, from the terms thereof except in connection with
an
assumption agreement and which assumption agreement is part of the
Mortgage
File and the terms of which are reflected in the Mortgage Loan
Schedule; the
substance of any such waiver, alteration or modification has been
approved by
the issuer of any related Primary Mortgage Insurance Policy and
title
insurance policy, to the extent required by the related
policies;
(g) The Mortgage Note and the Mortgage are 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 the Mortgage Note or Mortgage unenforceable, in whole or in
part, or
subject to any right of rescission, set-off, counterclaim or
defense,
including the defense of usury, and no such right of rescission,
set-off,
counterclaim or defense has been asserted with respect thereto;
(h) All buildings or other customarily insured improvements
upon
the Mortgaged Property are insured by an insurer acceptable under
the Fannie
Mae Guides, against loss by fire, hazards of extended coverage and
such other
hazards as are provided for in the Fannie Mae Guides or by Freddie
Mac, as
well as all additional requirements set forth in Section 4.10 of
this
Agreement. All such standard hazard policies are in full force and
effect and
on the date of origination contained a standard mortgagee clause
naming the
Seller and its successors in interest and assigns as loss payee and
such
clause is still in effect and all premiums due thereon have been
paid. If
required by the Flood Disaster Protection Act of 1973, as amended,
the
Mortgage Loan is covered by a flood insurance policy meeting the
requirements
of the current guidelines of the Federal Insurance Administration
which policy
conforms to Fannie Mae and Freddie Mac requirements, as well as all
additional
requirements set forth in Section 4.10 of this Agreement. Such
policy was
issued by an insurer acceptable under Fannie Mae or Freddie Mac
guidelines.
The Mortgage obligates the Mortgagor thereunder to maintain all
such insurance
at the Mortgagor's cost and expense, and upon the Mortgagor's
failure to do
so, authorizes the holder of the Mortgage to maintain such
insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor
from the
Mortgagor. Where required by state law or regulation, the Mortgagor
has been
given an opportunity to choose the carrier of the required hazard
insurance,
provided the policy is not a "master" or "blanket" hazard insurance
policy
covering a condominium, or any hazard insurance policy covering the
common
facilities of a planned unit development. The hazard insurance
policy is the
valid and binding obligation of the insurer, is in full force and
effect, and
will be in full force and effect and inure to the benefit of the
Purchaser
26
<PAGE>
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;
(i) 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, equal credit opportunity or
disclosure
laws applicable to the Mortgage Loan 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;
(j) The Mortgage has not been satisfied, canceled or
subordinated,
in whole or in part, or rescinded, 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;
(k) With respect to any first lien Mortgage Loan, the related
Mortgage is a valid, subsisting, enforceable and perfected first
lien on the
Mortgaged Property and, with respect to any Second Lien Mortgage
Loan, the
related Mortgage is a valid, subsisting, enforceable and perfected
second lien
on the Mortgaged Property, including for Mortgage Loans that are
not Co-op
Loans, all buildings on the Mortgaged Property and all
installations and
mechanical, electrical, plumbing, heating and air conditioning
systems affixed
to such buildings, and all additions, alterations and replacements
made at any
time with respect to the foregoing securing the Mortgage Note's
original
principal balance. The Mortgage and the Mortgage Note do not
contain any
evidence of any security interest or other interest or right
thereto. Such
lien is free and clear of all adverse claims, liens and
encumbrances having
priority over the first or second lien, as applicable, of the
Mortgage subject
only to (1) with respect to any Second Lien Mortgage Loan, the
related First
Lien, (2) the lien of non-delinquent current real property taxes
and
assessments not yet due and payable, (3) covenants, conditions
and
restrictions, rights of way, easements and other matters of the
public record
as of the date of recording which are acceptable to mortgage
lending
institutions generally and either (A) which are 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 as set forth in such appraisal, and (4) 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 (1)
with respect to any first lien Mortgage Loan, a
27
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valid, subsisting, enforceable and perfected first lien and first
priority
security interest and (2) with respect to any Second Lien Mortgage
Loan, a
valid, subsisting, enforceable and perfected second lien and second
priority
security interest, in each case, on the property described therein,
and the
Seller has the full right to sell and assign the same to the
Purchaser;
(l) The Mortgage Note and the related Mortgage are original and
genuine and each is the legal, valid and binding obligation of the
maker
thereof, enforceable in all respects in accordance with its terms,
except as
such enforcement may be limited by bankruptcy, insolvency,
moratorium,
reorganization and other laws of general application affecting the
rights of
creditors generally and the equitable remedy of specific
performance and by
general equitable principles. All parties to the Mortgage Note and
the related
Mortgage had the legal capacity to enter into the Mortgage Loan and
to execute
and deliver the Mortgage Note and the related Mortgage. The
Mortgage Note and
the related Mortgage have been duly and properly executed by such
parties. No
fraud, error, omission, misrepresentation, negligence or similar
occurrence
with respect to a Mortgage Loan has taken place on the part of
Seller, the
Mortgagor or any other party involved in the origination of the
Mortgage Loan.
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 improvements 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 related
Mortgage;
(m) The Seller or its Affiliate (or with respect to MERS
Mortgage
Loans, MERS on behalf of the Seller or its Affiliate) is the sole
owner of
record and holder of the Mortgage Loan and the indebtedness
evidenced by the
Mortgage Note, and upon recordation the Purchaser or its designee
will be the
owner of record of the Mortgage and the indebtedness evidenced by
the Mortgage
Note, and upon the sale of the Mortgage Loan to the Purchaser, the
Seller will
retain the Servicing File in trust for the Purchaser only for the
purpose of
servicing and supervising the servicing of the Mortgage Loan.
Immediately
prior to the transfer and assignment to the Purchaser on the
related Closing
Date, the Mortgage Loan, including the Mortgage Note and the
Mortgage, were
not subject to an assignment or pledge, and the Seller had good and
marketable
title to and was the sole owner thereof and had full right to
transfer and
sell the Mortgage Loan to the Purchaser free and clear of any
encumbrance,
equity, lien, pledge, charge, claim or security interest and has
the full
right and authority subject to no interest or participation of, or
agreement
with, any other party, to sell and assign the Mortgage Loan
pursuant to this
Agreement and following the sale of the 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,
except for the purposes of servicing the Mortgage Loan as set forth
in this
Agreement. After the related Closing Date, the Seller will have no
right to
modify or alter the terms of the sale of the Mortgage Loan and the
Seller will
have no obligation or right to repurchase the Mortgage Loan or
substitute
another Mortgage Loan, except as provided in this Agreement;
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(n) Each Mortgage Loan that is not a Co-op Loan is covered by
an
ALTA lender's title insurance policy or other generally acceptable
form of
policy or insurance acceptable to Fannie Mae or Freddie Mac, issued
by a title
insurer acceptable to Fannie Mae or Freddie Mac and qualified to do
business
in the jurisdiction where the Mortgaged Property is located,
insuring (subject
to the exceptions contained in (k)(1), (2), (3) and (4) above) the
Seller, its
successors and assigns, as to the first or second priority lien,
as
applicable, of the Mortgage in the original principal amount of the
Mortgage
Loan. Where required by applicable state law or regulation, the
Mortgagor has
been given the opportunity to choose the carrier of the required
mortgage
title insurance. The Seller, its successors and assigns, are the
sole insureds
of such lender's title insurance policy, such title insurance
policy has been
duly and validly endorsed to the Purchaser or the assignment to the
Purchaser
of the Seller's interest therein does not require the consent of
or
notification to the insurer and such lender's title insurance
policy is in
full force and effect and will be in full force and effect upon
the
consummation of the transactions contemplated by this Agreement and
the
related Purchase Price and Terms Letter. No claims have been made
under such
lender's title insurance policy, and no prior holder of the related
Mortgage,
including the Seller, has done, by act or omission, anything which
would
impair the coverage of such lender's title insurance policy,
including without
limitation, no unlawful fee, commission, kickback or other
unlawful
compensation or value of any kind has been or will be received,
retained or
realized by any attorney, firm or other person or entity, and no
such unlawful
items have been received, retained or realized by the Seller;
(o) There is no default, breach, violation or event of
acceleration existing under the Mortgage or the related Mortgage
Note and no
event which, with the passage of time or with notice and the
expiration of any
grace or cure period, would constitute a default, breach, violation
or event
permitting acceleration; and neither the Seller nor, to the
Seller's
knowledge, any prior mortgagee has waived any default, breach,
violation or
event permitting acceleration. With respect to each Second Lien
Mortgage Loan,
(i) the First Lien is in full force and effect, (ii) there is no
default,
breach, violation or event of acceleration existing under such
prior mortgage
or the related mortgage note, (iii) no event which, with the
passage of time
or with notice and the expiration of any grace or cure period,
would
constitute a default, breach, violation or event of acceleration
thereunder,
and either (A) the prior mortgage contains a provision which allows
or (B)
applicable law requires, the mortgagee under the Second Lien
Mortgage Loan to
receive notice of, and affords such mortgagee an opportunity to
cure any
default by payment in full or otherwise under the prior
mortgage;
(p) There are no mechanics' or similar liens or claims which
have
been filed for work, labor or material (and no rights are
outstanding that
under law could give rise to such liens) affecting the related
Mortgaged
Property which are or may be liens prior to or equal to the lien of
the
related Mortgage, which are not insured against by the title
insurance policy
referenced in paragraph (n) above;
(q) All improvements subject to the Mortgage which were
considered
in determining the Appraised Value of the Mortgaged Property lie
wholly within
the boundaries and building restriction lines of the Mortgaged
Property (and
wholly within the project with respect to a condominium unit) and
no
improvements on adjoining properties encroach upon the Mortgaged
Property
except those which are insured against by the title insurance
policy referred
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<PAGE>
to in clause (n) above and all improvements on the property comply
with all
applicable zoning and subdivision laws and ordinances;
(r) The Mortgage Loan was originated by or for the Seller. The
Mortgage Loan complies with the terms, conditions and requirements
of the
Underwriting Standards in all material respects. The Mortgage Notes
and
Mortgages (exclusive of any riders) are on forms generally
acceptable to
Fannie Mae or Freddie Mac. The Mortgage Loan bears interest at the
Mortgage
Interest Rate set forth in the related Mortgage Loan Schedule, and
Monthly
Payments under the Mortgage Note are due and payable on the first
day of each
month. The Mortgage contains the usual and enforceable provisions
of the
originator at the time of origination for the acceleration of the
payment of
the unpaid principal amount of the Mortgage Loan if the related
Mortgaged
Property is sold or transferred without the prior written consent
of the
mortgagee thereunder;
(s) The Mortgaged Property at origination of the related
Mortgage
Loan was and, to the Seller's knowledge, currently is free of
material damage
and waste. At origination of the Mortgage Loan there was, and there
currently
is, no proceeding pending for the total or partial condemnation of
the
Mortgaged Property;
(t) The related Mortgage contains customary and enforceable
provisions such as to render the rights and remedies of the holder
thereof
adequate for the realization against the Mortgaged Property of the
benefits of
the security provided thereby. Upon default by a Mortgagor on a
Mortgage Loan
and foreclosure on, or trustee's sale of, the Mortgaged Property
pursuant to
the proper procedures, the holder of the Mortgage Loan will be able
to deliver
good and merchantable title to the Mortgaged Property. There is no
homestead
or other exemption available to the Mortgagor which would interfere
with the
right to sell the Mortgaged Property at a trustee's sale or the
right to
foreclose the Mortgage subject to applicable federal and state laws
and
judicial precedent with respect to bankruptcy and right of
redemption;
(u) If the Mortgage constitutes a deed of trust, a trustee,
authorized and duly qualified if required under applicable law to
act as such,
has been properly designated and currently so serves and is named
in the
Mortgage, and no fees or expenses, except as may be required by
local law, are
or will become payable by the Purchaser to the trustee under the
deed of
trust, except in connection with a trustee's sale or attempted sale
after
default by the Mortgagor;
(v) The Mortgage File contains an appraisal (or other valuation
method as indicated on the related Mortgage Loan Schedule and
otherwise
acceptable to Fannie Mae or Freddie Mac for mortgage loans that
have "DU"
underwriter or loan prospector approval, respectively) of the
related
Mortgaged Property signed prior to the final approval of the
mortgage loan
application by a Qualified Appraiser. The appraisal is in a form
acceptable to
Fannie Mae or Freddie Mac;
(w) All parties which have had any interest in the Mortgage,
whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the
period in which they held and disposed of such interest, were) (A)
in
compliance with any and all applicable licensing requirements of
the laws of
the state wherein the Mortgaged Property is located, and (B)
(1)
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organized under the laws of such state, or (2) qualified to do
business in
such state, or (3) federal savings and loan associations or
national banks or
a Federal Home Loan Bank or savings bank having principal offices
in such
state, or (4) not doing business in such state;
(x)
The related Mortgage Note is not and has not been secured by
any collateral except the lien of the corresponding Mortgage and
the security
interest of any applicable security agreement or chattel mortgage
referred to
in clause (k) above and such collateral does not serve as security
for any
other obligation;
(y) The Mortgage Loan does not contain provisions pursuant to
which Monthly Payments are paid or partially paid with funds
deposited in any
separate account established by the Seller or anyone on behalf of
the
Mortgagor, or paid by any source other than the Mortgagor nor does
it contain
any other similar provisions which may constitute a "buydown"
provision. The
Mortgage Loan is not a graduated payment mortgage loan and the
Mortgage Loan
does not have a shared appreciation or other contingent interest
feature;
(z) The Mortgagor was not in bankruptcy or insolvent as of the
date of origination of the Mortgage Loan and, to the Seller's
knowledge, is
not in bankruptcy or insolvent as of the related Closing Date;
(aa) Each Fixed Rate Mortgage Loan has an original term to
maturity of not more than thirty (30) years, with interest
calculated and
payable in arrears on the first day of each month in equal
monthly
installments of principal and interest. Except with respect to
Interest Only
Mortgage Loans, each Mortgage Note requires a monthly payment which
is
sufficient to fully amortize the original principal balance of the
Mortgage
Loan fully by the stated maturity date, over an original term of
not more than
thirty (30) years and to pay interest at the related Mortgage
Interest Rate;
provided, however, in the case of an Interest Only Mortgage Loan,
after the
interest-only period, payments will be sufficient to amortize with
respect to
the life of the Mortgage Loan. No Mortgage Loan contains terms or
provisions
which would result in negative amortization. No Mortgage Loan is a
Balloon
Mortgage Loan;
(bb) If a Mortgage Loan has an LTV greater than 80%, the
portion
of the principal balance of such Mortgage Loan in excess of the
portion of the
Appraisal Value of the Mortgaged Property required by Fannie Mae,
is and will
be insured as to payment defaults by a Primary Mortgage Insurance
Policy
issued by a Qualified Insurer. All provisions of such Primary
Mortgage
Insurance Policy have been and are being complied with, such policy
is in full
force and effect, and all premiums due thereunder have been paid.
No action,
inaction, or event has occurred and no state of facts exists that
has, or will
result in the exclusion from, denial of, or defense to coverage.
Any Mortgage
Loan subject to a Primary Mortgage Insurance Policy obligates the
Mortgagor
thereunder to maintain the Primary Mortgage Insurance 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;
(cc) The Assignment of Mortgage is in recordable form and is
acceptable for recording under the laws of the jurisdiction in
which the
Mortgaged Property is located;
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(dd) As to Mortgage Loans that are not Co-op Loans and that are
not secured by an interest in a leasehold estate, the Mortgaged
Property is
located in the state identified in the related Mortgage Loan
Schedule and
consists of a single parcel of real property with a detached single
family
residence erected thereon, or a townhouse, or a two-to four-family
dwelling,
or an individual condominium unit in a condominium project, or an
individual
unit in a planned unit development or a de minimis planned unit
development,
provided, however, that no residence or dwelling is a mobile home,
log home,
geodesic dome or other unique property type. As of the date of
origination, no
portion of the Mortgaged Property was used for commercial purposes,
and, since
the date of origination no portion of the Mortgaged Property has
been used for
commercial purposes, except as permitted under the Underwriting
Standards. In
the case of any Mortgaged Properties that are manufactured homes
(a
"Manufactured Home Mortgage Loan"), (i) such Manufactured Home
Mortgage Loan
conforms with the applicable Fannie Mae or Freddie Mac requirements
regarding
mortgage loans related to manufactured dwellings, (ii) the
related
manufactured dwelling is permanently affixed to the land, (iii) the
related
manufactured dwelling and the related land are subject to a
Mortgage properly
filed in the appropriate public recording office and naming Seller
as
mortgagee, (iv) the applicable laws of the jurisdiction in which
the related
Mortgaged Property is located will deem the manufactured dwelling
located on
such Mortgaged Property to be a part of the real property on which
such
dwelling is located, and (v) such Manufactured Home Mortgage Loan
is (x) a
qualified mortgage under Section 860G(a)(3) of the Internal Revenue
Code of
1986, as amended and (y) secured by manufactured housing treated as
a single
family residence under Section 25(e)(10) of the Code. As of the
date of
origination, no portion of the Mortgaged Property was used for
commercial
purposes, and since the date of origination, no portion of the
Mortgaged
Property has been used for commercial purposes; provided, that
Mortgaged
Properties which contain a home office shall not be considered as
being used
for commercial purposes as long as the Mortgaged Property has not
been altered
for commercial purposes and is not storing any chemicals or raw
materials
other than those commonly used for homeowner repair, maintenance
and/or
household purposes;
(ee) Except with respect to Interest Only Mortgage Loans,
principal payments on the Mortgage Loan commenced no more than
sixty (60) days
after the funds were disbursed in connection with such Mortgage
Loan;
(ff) No Mortgage Loan imposes a Prepayment Penalty;
(gg) As of the date of origination of the Mortgage Loan, the
Mortgaged Property was lawfully occupied under applicable law, and
all
inspections, licenses and certificates required to be made or
issued with
respect to all occupied portions of the Mortgaged Property and,
with respect
to the use and occupancy of the same, including but not limited
to
certificates of occupancy and fire underwriting certificates, have
been made
or obtained from the appropriate authorities;
(hh) If the Mortgaged Property is a condominium unit or a
planned
unit development (other than a de minimis planned unit
development), or stock
in a cooperative housing corporation, such condominium, cooperative
or planned
unit development project meets the Seller's eligibility
requirements as set
forth in Underwriting Standards;
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(ii)
There is no pending action or proceeding directly involving
the Mortgaged Property in which compliance with any environmental
law, rule or
regulation is an issue; there is no violation of any environmental
law, rule
or regulation with respect to the Mortgage Property; and, to the
best of the
Seller's knowledge, nothing further remains to be done to satisfy
in full all
requirements of each such law, rule or regulation constituting a
prerequisite
to use and enjoyment of said property;
(jj) The related Mortgagor has not notified the Seller, and the
Seller has no knowledge of any relief requested or allowed to the
Mortgagor
under the Servicemembers Civil Relief Act or other similar state
statute;
(kk) No action has been taken or failed to be taken by the
Seller
on or prior to the related Closing Date which has resulted or will
result in
an exclusion from, denial of, or defense to coverage under any
Primary
Mortgage Insurance Policy (including, without limitation, any
exclusions,
denials or defenses which would limit or reduce the availability of
the timely
payment of the full amount of the loss otherwise due thereunder to
the
insured) whether arising out of actions, representations, errors,
omissions,
negligence, or fraud of the Seller, or for any other reason under
such
coverage;
(ll) Each Mortgage Loan has been serviced in all material
respects
in compliance with Accepted Servicing Practices;
(mm) With respect to each Co-op Loan, the related Mortgage is a
valid, enforceable and subsisting first security interest on the
related
cooperative shares securing the related cooperative note, subject
only to (a)
liens of the cooperative for unpaid assessments representing the
Mortgagor's
pro rata share of the cooperative'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 intended to be provided by the
Security
Agreement. There are no liens against or security interest in the
cooperative
shares relating to each Co-op Loan (except for unpaid maintenance,
assessments
and other amounts owed to the related cooperative which
individually or in the
aggregate will not have a material adverse effect on such Co-op
Loan), which
have priority over the Seller's security interest in such
cooperative shares;
(nn) With
respect to each Co-op Loan, a search for filings of
financing statements has been made by a company competent to make
the same,
which company is acceptable to Fannie Mae and qualified to do
business in the
jurisdiction where the cooperative unit is located, and such search
has not
found anything which would materially and adversely affect the
Co-op Loan;
(oo) With respect to each Co-op Loan, the related cooperative
corporation that owns title to the related cooperative apartment
building is a
"cooperative housing corporation" within the meaning of Section 216
of the
Code, is held by a person as a tenant-stockholder (as defined in
Section 216
of the Code) and is in material compliance with applicable federal,
state and
local laws which, if not complied with, could have a material
adverse effect
on the Mortgaged Property;
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<PAGE>
(pp) With respect to each Co-op Loan, there is no prohibition
against pledging the shares of the cooperative corporation or
assigning the
Co-op Lease;
(qq) The Mortgage Loan was originated by a mortgagee approved
by
the Secretary of Housing and Urban Development pursuant to sections
203 and
211 of the National Housing Act, a savings and loan association, a
savings
bank, a commercial bank, credit union, insurance company or
similar
institution which is supervised and examined by a federal or state
authority;
(rr) With respect to any ground lease to which a Mortgaged
Property may be subject: (i) a true, correct and complete copy of
the ground
lease and all amendments, modifications and supplements thereto is
included in
the Servicing File, and the Mortgagor is the owner of a valid and
subsisting
leasehold interest under such ground lease; (ii) such ground lease
is in full
force and effect, unmodified and not supplemented by any writing or
otherwise
except as contained in the Mortgage File; (iii) all rent,
additional rent and
other charges reserved therein have been fully paid to the extent
payable as
of the related Closing Date; (iv) the Mortgagor enjoys the quiet
and peaceful
possession of the leasehold estate, subject to any sublease; (v)
the Mortgagor
is not in default under any of the terms of such ground lease, and
there are
no circumstances which, with the passage of time or the giving of
notice, or
both, would result in a default under such ground lease; (vi) the
lessor under
such ground lease is not in default under any of the terms or
provisions of
such ground lease on the part of the lessor to be observed or
performed; (vii)
the lessor under such ground lease has satisfied any repair or
construction
obligations due as of the related Closing Date pursuant to the
terms of such
ground lease; (viii) the execution, delivery and performance of the
Mortgage
do not require the consent (other than those consents which have
been obtained
and are in full force and effect) under, and will not contravene
any provision
of or cause a default under, such ground lease; (ix) the ground
lease term
extends beyond the maturity date of the related Mortgage Loan; and
(x) the
Purchaser has the right to cure defaults on the ground lease;
(ss) With respect to any broker fees collected and paid on any
of
the Mortgage Loans, all broker fees have been properly assessed to
the
borrower and no claims will arise as to broker fees that are double
charged
and for which the borrower would be entitled to reimbursement;
(tt) Each Mortgage Loan constitutes a "qualified mortgage"
under
Section 860G(a)(3)(A) of the Code and Treasury Regulations
Section
1.860G-2(a)(1);
(uu) Except as provided in Section 2.07, the Mortgage Note, the
Mortgage, the Assignment of Mortgage and the other documents set
forth in
Exhibit A-1 and required to be delivered on the related Closing
Date have been
delivered to the Purchaser or its designee;
(vv) To the Seller's knowledge, all information supplied by, on
behalf of, or concerning the Mortgagor is true, accurate and
complete and does
not contain any statement that is or will be inaccurate or
misleading in any
material respect;
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<PAGE>
(ww) The Mortgagor has executed a statement to the effect that
the
Mortgagor has received all disclosure materials required by
applicable law
with respect to the making of adjustable rate mortgage loans. The
Seller shall
maintain such statement in the Servicing File;
(xx) No Mortgage Loan had a Loan-to-Value Ratio at the time of
origination of more than 100%. No Second Lien Mortgage Loan has an
CLTV in
excess of 100%;
(yy) Either (a) no consent for the Second Lien Mortgage Loan is
required by the holder of the related First Lien or (b) such
consent has been
obtained and is contained in the Mortgage File;
(zz) With respect to any Second Lien Mortgage Loan, the Seller
has
not received notice of: (1) any proceeding for the total or
partial
condemnation of any Mortgaged Property, (2) any subsequent,
intervening
mortgage, lien, attachment, lis pendens or other encumbrance
affecting any
Mortgaged Property or (3) any default under any mortgage, lien or
other
encumbrance senior to each Mortgage;
(aaa) No Second Lien Mortgage Loan is a "home equity line of
credit";
(bbb) As of the Closing Date, the Seller has not received a
notice
of default of a First Lien which has not been cured;
(ccc) No First Lien provides for negative amortization;
(ddd) No Mortgage Loan is a High Cost Loan or Covered Loan, as
applicable, and no Mortgage Loan originated on or after October 1,
2002
through March 6, 2003 is governed by the Georgia Fair Lending
Act;
(eee) None of the proceeds of the Mortgage Loan were used to
finance single-premium credit insurance policies;
(fff) The origination and servicing practices with respect to
each
Mortgage Note and Mortgage have been legal and in accordance with
applicable
laws and regulations, and in all material respects proper and
prudent in the
mortgage origination and servicing business. With respect to escrow
deposits
and payments that the Seller is entitled to collect, all such
payments are in
the possession of, or under the control of, the Seller, and there
exist no
deficiencies in connection therewith for which customary
arrangements for
repayment thereof have not been made. All escrow payments have been
collected
and are being maintained in full compliance with applicable state
and federal
law and the provisions of the related Mortgage Note and Mortgage.
As to any
Mortgage Loan that is the subject of an escrow, escrow of funds is
not
prohibited by applicable law and has been established in an amount
sufficient
to pay for every escrowed item that remains unpaid and has been
assessed but
is not yet due and payable. No escrow deposits or other charges or
payments
due under the Mortgage Note have been capitalized under any
Mortgage or the
related Mortgage Note. All Mortgage Interest Rate adjustments have
been made
in strict compliance with state and federal law and the terms of
the related
Mortgage Note. Any interest required to be paid pursuant to state
and local
law has been properly paid and credited;
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<PAGE>
(ggg) No Mortgage Loan is a Convertible Mortgage Loan;
(hhh) With respect to each Adjustable Rate Mortgage Loan, the
Mortgage Loan Documents provide that after the related first
Interest Rate
Adjustment Date, a related Mortgage Loan may only be assumed if the
party
assuming such Mortgage Loan meets certain credit requirements
stated in the
Mortgage Loan Documents;
(iii) Any future advances made to the Mortgagor prior to the
applicable Cut-off Date have been consolidated with the outstanding
principal
amount secured by the Mortgage, and the secured principal amount,
as
consolidated, bears a single interest rate and single repayment
term. The lien
of the Mortgage securing the consolidated principal amount is
expressly
insured as having first lien priority by a title insurance policy,
an
endorsement to the policy insuring the Mortgagee's consolidated
interest or by
other title evidence acceptable to Fannie Mae and Freddie Mac.
The
consolidated principal amount does not exceed the original
principal amount of
the Mortgage Loan;
(jjj) There is no proceeding pending or threatened for the
total
or partial condemnation of the Mortgaged Property. The Mortgaged
Property is
undamaged by waste, fire, earthquake or earth movement, windstorm,
flood,
tornado or other casualty so as to affect adversely the value of
the Mortgaged
Property as security for the Mortgage Loan or the use for which the
premises
were intended and each Mortgaged Property is in good repair. There
have not
been any condemnation proceedings with respect to the Mortgaged
Property and
the Seller has no knowledge of any such proceedings in the
future;
(kkk) No Mortgage Loan was made in connection with the
construction (other than a "construct-to-perm" loan) or
rehabilitation of a
Mortgaged Property or facilitating the trade-in or exchange of a
Mortgaged
Property (other than a tax deferred exchange under Section 1031 of
the Code);
(lll) If applicable, with respect to each Mortgage, the Seller
has
within the last twelve months (unless such Mortgage was originated
within such
twelve month period) analyzed the required Escrow Payments for each
Mortgage
and adjusted the amount of such payments so that, assuming all
required
payments are timely made, any deficiency will be eliminated on or
before the
first anniversary of such analysis, or any overage will be refunded
to the
Mortgagor, in accordance with
