Exhibit 99.4
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MASTER MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE CAPITAL INC.
Purchaser
OPTION ONE MORTGAGE CORPORATION
Seller and Servicer
OPTION ONE OWNER TRUST 2001-1A
Seller
OPTION ONE OWNER TRUST 2001-1B
Seller
OPTION ONE OWNER TRUST 2001-2
Seller
OPTION ONE OWNER TRUST 2002-3
Seller
Dated as of August 1, 2002
Conventional Fixed and Adjustable Rate Mortgage Loans
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TABLE OF CONTENTS
Page
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SECTION 1. Definitions ............................................................ 1
SECTION 2. Agreement to Purchase .................................................. 16
SECTION 3. Mortgage Loan Schedules ................................................ 16
SECTION 4. Purchase Price ......................................................... 16
SECTION 5. Examination of Mortgage Files .......................................... 17
SECTION 6. Conveyance from Sellers to Initial Purchaser ........................... 17
SECTION 7. Representations, Warranties and Covenants of the Sellers:
Remedies for Breach ................................................................... 19
SECTION 8. Closing ................................................................ 32
SECTION 9. Closing Documents ...................................................... 33
SECTION 10. Costs .................................................................. 34
SECTION 11. Option One's Servicing Obligations ..................................... 34
SECTION 12. Removal of Mortgage Loans from Inclusion under This Agreement
Upon a Whole Loan Transfer or a Pass-Through Transfer on One or More Reconstitution
Dates ................................................................................. 34
SECTION 13. The Sellers ............................................................ 37
SECTION 14. Default ................................................................ 39
SECTION 15. Termination ............................................................ 40
SECTION 16. Successor to the Seller ................................................ 41
SECTION 17. Financial Statements ................................................... 42
SECTION 18. Mandatory Delivery ..................................................... 42
SECTION 19. Notices ................................................................ 42
SECTION 20. Severability Clause .................................................... 44
SECTION 21. Counterparts ........................................................... 44
SECTION 22. Governing Law .......................................................... 44
SECTION 23. Intention of the Parties ............................................... 44
SECTION 24. Successors and Assigns ................................................. 44
SECTION 25. Waivers ................................................................ 45
SECTION 26. Exhibits ............................................................... 45
SECTION 27. Nonsolicitation ........................................................ 45
SECTION 28. General Interpretive Principles ........................................ 45
SECTION 29. Reproduction of Documents .............................................. 46
SECTION 30. Further Agreements ..................................................... 46
SECTION 31. Protection of Confidential Information ................................. 46
SECTION 32. Survival ............................................................... 47
SECTION 33. No Recourse to Trustee ................................................. 47
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EXHIBITS
EXHIBIT 1-A OPTION ONE'S OFFICERS CERTIFICATE
EXHIBIT 1-B FORM OF SELLER TRUSTS' OFFICERS CERTIFICATE
EXHIBIT 2 FORM OF OPINION OF COUNSEL TO THE SELLER
EXHIBIT 3 SECURITY RELEASE CERTIFICATION
EXHIBIT 4 FORM OF WARRANTY ▇▇▇▇ OF SALE
EXHIBIT 5 CONTENTS OF EACH MORTGAGE FILE
EXHIBIT 6 FORM OF CUSTODIAL ACCOUNT CERTIFICATION
EXHIBIT 7 FORM OF ESCROW ACCOUNT CERTIFICATION
EXHIBIT 8 SERVICING ADDENDUM
EXHIBIT 9 FORM OF PURCHASE PRICE AND TERMS LETTER
SCHEDULE I FINAL MORTGAGE LOAN SCHEDULE
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MASTER MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT
This is a MASTER MORTGAGE LOAN PURCHASE AND SERVICING
AGREEMENT (the "Agreement"), dated as of August 1, 2002, by and between ▇▇▇▇▇▇▇
▇▇▇▇▇ Mortgage Capital Inc., having an office at World Financial Center, ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Initial Purchaser", and the Initial
Purchaser or the Person, if any, to which the Initial Purchaser has assigned its
rights and obligations hereunder as Purchaser with respect to a Mortgage Loan,
and each of their respective successors and assigns, the "Purchaser") and Option
One Mortgage Corporation ("Option One"), Option One Owner Trust 2001-1A ("Trust
A"), Option One Owner Trust 2001-1B ("Trust B"), Option One Owner Trust 2001-2
("Trust 2") and Option One Owner Trust 2002-3 ("Trust 3"; each of Trust A, Trust
B, Trust 2 and Trust 3 a "Seller Trust", collectively the "Seller Trusts") (each
of Option One and the Seller Trusts, a "Seller", collectively the "Sellers"),
having an office at 3 ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H :
WHEREAS, the Sellers desire to sell, from time to time, to the
Purchaser, and the Purchaser desires to purchase, from time to time, from the
Sellers, certain conventional fixed and adjustable rate residential first and
second lien mortgage loans, (the "Mortgage Loans") as described herein on a
servicing-retained basis, and which shall be delivered in groups of whole loans
on various dates as provided herein (each, a "Closing Date");
WHEREAS, each Mortgage Loan is secured by a mortgage, deed of
trust or other security instrument creating a first or second lien on a
residential dwelling located in the jurisdiction indicated on the Final Mortgage
Loan Schedule for the related Mortgage Loan Package, which is to be annexed
hereto on each Closing Date as Schedule I;
WHEREAS, the Purchaser and Option One Mortgage Corporation
wish to prescribe the manner of the conveyance, servicing and control of the
Mortgage Loans; and
WHEREAS, following its purchase of the Mortgage Loans from the
Sellers, the Purchaser desires to sell some or all of the Mortgage Loans to one
or more purchasers as a whole loan transfer in a whole loan or participation
format or a public or private mortgage-backed securities transaction;
NOW, THEREFORE, in consideration of the premises and mutual
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Purchaser and the
Sellers agree as follows:
SECTION 1. Definitions. For purposes of this Agreement
the following capitalized terms shall have the respective meanings set forth
below.
Adjustable Rate Mortgage Loan: A Mortgage Loan which provides
for the adjustment of the Mortgage Interest Rate payable in respect thereto.
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 such Adjustable Rate Mortgage Loan is adjusted in accordance
with the terms of the related Mortgage Note.
Agreement: This Master Mortgage Loan Purchase and Servicing
Agreement including all exhibits, schedules, amendments and supplements hereto.
Appraised Value: With respect to any Mortgaged Property, the
lesser of (i)(a) 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 an appraiser who met the minimum requirements of ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac
and (b) the value thereof as determined by a review appraisal conducted by
Option One in the event any such review appraisal determines an appraised value
more than ten percent lower than the value thereof as determined by the
appraisal referred to in clause (i)(a) above, in the case of a Mortgage Loan
with an LTV less than or equal to 80%, or more than five percent lower than the
value thereof as determined by the appraisal referred to in clause (i)(a) above;
in the case of a Mortgage Loan with an LTV greater than 80%, as determined by
the appraisal referred to in clause (i)(a), and (ii) the purchase price paid for
the related Mortgaged Property by the Mortgagor with the proceeds of the
Mortgage Loan, provided, however, (A) in the case of a Refinanced Mortgage Loan,
such value of the Mortgaged Property is based solely upon the lesser of (1) the
value determined by an appraisal made for the originator of such Refinanced
Mortgage Loan at the time of origination of such Refinanced Mortgage Loan by an
appraiser who met the minimum requirements of ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac and (2)
the value thereof as determined by a review appraisal conducted by Option One in
the event any such review appraisal determines an appraised value of more than
ten percent lower than the value thereof as determined by the appraisal referred
to in clause (ii)(A)(1) above; in the case of a Mortgage Loan with an LTV less
than or equal to 80%, or more than five percent lower than the value thereof as
determined by the appraisal referred to in clause (ii)(a)(1) above, in the case
of a Mortgage Loan with an LTV greater than 80%, as determined by the appraisal
referred to in clause (ii)(a)(1) and (B) in the case of a Mortgage Loan
originated in connection with a "lease-option purchase", such value of the
Mortgaged Property is based on the lower of the value determined by an appraisal
made for the Company of such Mortgage Loan at the time of origination or the
sale price of such Mortgaged Property if the "lease option purchase price" was
set less than 12 months prior to origination, and is based on the value
determined by an appraisal made for the originator of such Mortgage Loan at the
time of origination if the "lease option purchase price" was set 12 months or
more prior to origination.
Assignment of Mortgage: An individual assignment of the
Mortgage, notice of transfer or equivalent instrument in recordable form,
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to give record notice of the sale of the Mortgage to the
Purchaser.
Balloon Loan: A Mortgage Loan identified on the Final Mortgage
Loan Schedule as a balloon mortgage loan.
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Business Day: Any day other than a Saturday, a Sunday or a day
on which banking or savings institutions in the Commonwealth of Pennsylvania,
the State of Delaware, the State of New York or the State of California are
authorized or obligated by law or executive order to be closed.
Buydown Mortgage Loan: A Mortgage Loan in which buydown funds
are used to pay a portion of the interest payable on the Mortgage Loan for a
specified period of time.
Cash-Out Refinancing: A Refinanced Mortgage Loan the proceeds
of which were in excess of the greater of 1.00% or $1,000.00 principal balance
of any existing first mortgage on the related Mortgaged Property and related
closing costs, and were used to pay any such existing first mortgage, related
closing costs and subordinate mortgages on the related Mortgaged Property.
Closing Date: The date or dates on which the Purchaser from
time to time shall purchase and the Sellers from time to time shall sell to the
Purchaser, the Mortgage Loans listed on the related Final Mortgage Loan Schedule
with respect to the related Mortgage Loan Package.
Closing Documents: With respect to any Closing Date, the
documents required pursuant to Section 9.
Code: The Internal Revenue Code of 1986, or any successor
statute thereto.
Condemnation Proceeds: All awards, compensation and
settlements in respect of a taking of all or part of a Mortgaged Property by
exercise of the power of condemnation or the right of eminent domain.
Convertible Mortgage Loan: A Mortgage Loan that by its terms
and subject to certain conditions contained in the related Mortgage or Mortgage
Note allows the Mortgagor to convert the adjustable Mortgage Interest Rate on
such Mortgage Loan to a fixed Mortgage Interest Rate.
Custodial Account: One or more accounts created and maintained
pursuant to Exhibit 8, which accounts shall be held as a special deposit by the
depository institution maintaining such accounts in a fiduciary capacity,
separate and apart from its funds or general assets and shall not be held in any
capacity that would create a debtor-creditor relationship between the depository
institution maintaining the accounts and the Seller or Purchaser.
Custodial Agreement: The agreement between the Initial
Purchaser and the Custodian, governing the retention of the originals of the
Mortgage Loan Documents.
Custodian: The custodian designated by the Initial
Purchaser under the Custodial Agreement, or its successor in interest or
assigns, or any successor to the Custodian under the Custodial Agreement.
Cut-off Date: The first day of the month in which the related
Closing Date occurs.
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Deleted Mortgage Loan: A Mortgage Loan replaced or to be
replaced by a Qualified Substitute Mortgage Loan.
Determination Date: With respect to each Remittance Date, the
fifteenth (15th) day of the calendar month in which such Remittance Date occurs
or, if such fifteenth (15th) day is not a Business Day, the Business Day
immediately preceding such fifteenth (15th) day.
Due Date: With respect to each Remittance Date, the first day
of the calendar month in which such Remittance Date occurs, which is the day on
which the Monthly Payment is due on a Mortgage Loan, 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 the Remittance
Date and ending on the first day of the month of the Remittance Date.
Eligible Account: A Custodial Account maintained with a
depository institution whose deposits are insured by the Bank Insurance Fund or
the Savings Association Insurance Fund of the FDIC, the unsecured and
uncollateralized debt obligations of which shall be rated "AA" or better by S&P
and "Aa2"or better by Moody's and in the highest short-term rating category by
S&P and the highest short term rating category by Moody's, and which is either
(i) a federal savings and loan association duly organized, validly existing and
in good standing under the federal banking laws, (ii) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state; or (iii) a national banking association duly organized,
validly existing and in good standing under the federal banking laws.
Eligible Investment: Any one or more of the obligations and
securities listed below which investment provides for a date of maturity not
later than the Remittance Date in each month:
(1) direct obligations of or obligations fully guaranteed by,
(i) the United States of America, or (ii) 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;
(2) federal funds, demand, money market, or time deposits in,
certificates of deposits of, or banker's acceptances issued by
any depository institution or trust company incorporated or
organized under the laws of the United States of America or
any state thereof, subject to supervision and examination by
federal and/or state banking authorities, and, at the time of
such investment or contractual commitment providing for such
investment, whose commercial paper or other short-term debt
obligations (or, in the case of a depository institution or
trust company that is a subsidiary of a holding company, the
commercial paper or other short-term debt obligations of such
holding company) is rated "P-1" by Moody's and "A-1" by S&P
and whose long-term debt obligations (or, in the case of a
depository institution that is a subsidiary of a holding
company, the long-term
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debt obligations of such holding company) are rated at least
"Aa2" by ▇▇▇▇▇'▇ and "AA" by S&P (collectively, with all other
rating categories set out in this paragraph, the "Investment
Ratings").
Notwithstanding the foregoing, Eligible Investments shall
not include (i) "stripped securities," (ii) any investments which contractually
may return less than the unpaid principal balance therefor, or (iii) a direct
purchase of commercial paper from the issuer.
Escrow Account: One or more accounts created and maintained
pursuant to Exhibit 8.
Escrow Payments: The amounts constituting ground rents, taxes,
assessments, water charges, sewer rents, Primary Insurance Policy premiums, fire
and hazard insurance premiums and other payments required to be escrowed by the
Mortgagor with the Mortgagee pursuant to the terms of any Mortgage Note or
Mortgage.
Event of Default: Any one of the events enumerated in
Subsection 14.01.
▇▇▇▇▇▇ ▇▇▇: ▇▇▇▇▇▇ ▇▇▇ or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any
successor thereto.
Final Mortgage Loan Schedule: With respect to each Mortgage
Loan Package, the schedule of Mortgage Loans to be annexed hereto as Schedule I
(or a supplement thereto) on each Closing Date for the Mortgage Loan Package
delivered on such Closing Date in both hard copy and floppy disk, such schedule
setting forth the following information with respect to each Mortgage Loan in
the Mortgage Loan Package:
(1) the Seller's Mortgage Loan identifying number;
(2) the Mortgagor's first and last name;
(3) the street address of the Mortgaged Property
including the state and zip code;
(4) a code indicating whether the Mortgaged Property is
owner-occupied;
(5) the type of Residential Dwelling constituting the
Mortgaged Property;
(6) the original months to maturity;
(7) the original date of the Mortgage Loan and the
remaining months to maturity from the Cut-off
Date, based on the original amortization schedule;
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(8) the Loan-to-Value Ratio at origination;
(9) the Mortgage Interest Rate in effect immediately
following the Cut-off Date;
(10) the date on which the first Monthly Payment was or is
due on the Mortgage Loan;
(11) the stated maturity date;
(12) the amount of the Monthly Payment at origination;
(13) the amount of the Monthly Payment as of the Cut-off
Date;
(14) the last Due Date on which a Monthly Payment was
actually applied to the unpaid Stated Principal
Balance;
(15) the original principal amount of the Mortgage Loan;
(16) the Stated Principal Balance of the Mortgage Loan as
of the close of business on the Cut-off Date;
(17) with respect to each Adjustable Rate Mortgage Loan,
the first Mortgage Interest Rate Adjustment Date;
(18) with respect to each Adjustable Rate Mortgage Loan,
the Gross Margin;
(19) with respect to each Adjustable Rate Mortgage Loan,
the Periodic Rate Cap;
(20) a code indicating the purpose of the loan (i.e.,
purchase financing, Rate/Term Refinancing, Cash-Out
Refinancing);
(21) with respect to each Adjustable Rate Mortgage Loan,
the Maximum Mortgage Interest Rate under the terms of
the Mortgage Note;
(22) with respect to each Adjustable Rate Mortgage Loan,
the Minimum Mortgage Interest Rate under the terms of
the Mortgage Note;
(23) the Mortgage Interest Rate at origination;
(24) with respect to each Adjustable Rate Mortgage Loan,
the first Adjustment Date immediately following the
Cut-off Date;
(25) with respect to each Adjustable Rate Mortgage Loan,
the Index;
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(26) the date on which the first Monthly Payment was or is
due on the Mortgage Loan and, if such date is not
consistent with the Due Date currently in effect,
such Due Date;
(27) a code indicating whether the Mortgage Loan is an
Adjustable Rate Mortgage Loan or a Fixed Rate
Mortgage Loan;
(28) a code indicating the documentation style (i.e.,
full, alternative or reduced);
(29) a code indicating if the Mortgage Loan is subject to
a Primary Insurance Policy;
(30) a code indicating whether the Mortgage Loan is a
Buydown Mortgage Loan;
(31) a code indicating whether the Mortgage Loan is
subject to a first or second lien;
(32) a code indicating whether the Mortgage Loan is
subject to a Prepayment Charge, the term of such
Prepayment Charge and the amount of such Prepayment
Charge;
(33) the Appraised Value of the Mortgaged Property; and
(34) the sale price of the Mortgaged Property, if
applicable.
With respect to the Mortgage Loan Package in the aggregate, the Final 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 principal balance of the Mortgage Loans;
(3) the weighted average Mortgage Interest Rate of the
Mortgage Loans; and
(4) the weighted average maturity of the Mortgage Loans.
Schedule I hereto shall be supplemented as of each Closing Date to reflect the
addition of the Final Mortgage Loan Schedule with respect to the related
Mortgage Loan Package.
Final Recovery Determination: With respect to any defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property
purchased by Option One pursuant to this Agreement), a determination made by
Option One that all Insurance Proceeds, Condemnation Proceeds, Liquidation
Proceeds and other payments or recoveries which Option One, in its reasonable
good faith judgment, expects to be finally recoverable in respect thereof have
been so recovered. Option One shall maintain records, prepared by a servicing
officer of Option One, of each Final Recovery Determination.
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Fixed Rate Mortgage Loan: A Mortgage Loan with respect to
which the Mortgage Interest Rate set forth in the Mortgage Note is fixed for the
term of such Mortgage Loan.
▇▇▇▇▇▇▇ Mac: The Federal Home Loan Mortgage Corporation or any
successor thereto.
Gross Margin: With respect to any Adjustable Rate Mortgage
Loan, the fixed percentage amount set forth in the related Mortgage Note and the
related Final 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.
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 Final Mortgage Loan Schedule and set forth in the
related Mortgage Note for the purpose of calculating the interest rate thereon.
Initial Closing Date: The Closing Date on which the Initial
Purchaser purchases and the Sellers sell the first Mortgage Loan Package
hereunder.
Initial Purchaser: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Capital Inc., or any
successor thereto.
Insurance Proceeds: With respect to each Mortgage Loan,
proceeds of insurance policies insuring the Mortgage Loan or the related
Mortgaged Property.
Liquidation Proceeds: Amounts, other than Insurance Proceeds
and Condemnation Proceeds, received in connection with the liquidation of a
defaulted Mortgage Loan through trustee's sale, foreclosure sale or otherwise,
other than amounts received following the acquisition of REO Property.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan
as of any date of determination, the ratio on such date of the outstanding
principal amount of the Mortgage Loan, to the Appraised Value of the Mortgaged
Property.
Maximum Mortgage Interest Rate: With respect to each
Adjustable Rate Mortgage Loan, a rate that is set forth on the related Final
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.
Minimum Mortgage Interest Rate: With respect to each
Adjustable Rate Mortgage Loan, a rate that is set forth on the related Final
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.
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Monthly Advance: Following a Pass-Through Transfer, the
aggregate of the advances made by the Seller on any Remittance Date pursuant to
Section 11.22.
Monthly Payment: With respect to any Mortgage Loan, the
scheduled combined payment of principal and interest payable by a Mortgagor
under the related Mortgage Note on each Due Date.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. or its successor in
interest.
Mortgage: The mortgage, deed of trust or other instrument
creating a first or second lien on Mortgaged Property securing the Mortgage
Note.
Mortgagee: The mortgagee or beneficiary named in the Mortgage
and the successors and assigns of such mortgagee or beneficiary.
Mortgage File: The items pertaining to a particular Mortgage
Loan referred to in Exhibit 5 annexed hereto, and any additional documents
required to be added to the Mortgage File pursuant to this Agreement or the
related Purchase Price and Terms Letter.
Mortgage Interest Rate: With respect to each Fixed Rate
Mortgage Loan, the fixed annual rate of interest provided for in the related
Mortgage Note and, with respect to each Adjustable Rate Mortgage Loan, the
annual rate that interest accrues on such Adjustable Rate Mortgage Loan from
time to time in accordance with the provisions of the related Mortgage Note.
Mortgage Loan: Each first or second lien, residential mortgage
loan, sold, assigned and transferred to the Purchaser pursuant to this Agreement
and the related Purchase Price and Terms Letter and identified on the Final
Mortgage Loan Schedule annexed to this Agreement on such Closing Date, which
Mortgage Loan includes without limitation the Mortgage File, the Monthly
Payments, Principal Prepayments, Liquidation Proceeds, Condemnation Proceeds,
Insurance Proceeds, REO Disposition proceeds, and all other rights, benefits,
proceeds and obligations arising from or in connection with such Mortgage Loan.
Mortgage Loan Documents: The following documents:
(1) The original Mortgage Note endorsed, "Pay to the
order of ______________, without recourse" and signed in the name of
the Seller by an authorized officer of the Seller. If the Mortgage
Loan was acquired by the Seller in a merger or other type of
acquisition, the endorsement must be by "[Seller], successor [by
merger to or in interest to, as applicable] [name of predecessor]";
and if the Mortgage Loan was acquired or originated by Option One
Mortgage Corporation while doing business under another name, the
endorsement must be by "Option One Mortgage Corporation, successor in
interest to [previous name]." The Mortgage Note shall include all
intervening endorsements showing a complete chain of title from the
originator to the Seller;
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(2) The original recorded Mortgage, with evidence of
recording thereon, or, if the original Mortgage has not yet been
returned from the recording office, a copy of the original Mortgage
certified by the previous owner to be a true copy of the original of
the Mortgage that has been delivered for recording in the appropriate
recording office of the jurisdiction in which the Mortgaged Property
is located;
(3) The original Assignment of each Mortgage, executed in
blank. If the Mortgage Loan was acquired by the Seller in a merger or
other type of acquisition, the assignment must be by "[Seller],
successor [by merger to or in interest to, as applicable] [name of
predecessor]"; and in the event that the Mortgage Loan was acquired or
originated by Option One while doing business under another name, the
assignment must be by "Option One Mortgage Corporation, successor in
interest to [previous name]";
(4) The original policy of title insurance (or a
preliminary title report if the original title insurance policy has
not been received from the title insurance company);
(5) Originals of any intervening assignments of the
Mortgage, with evidence of recording thereon or, if the original
intervening assignment has not yet been returned from the recording
office, a copy of such assignment certified to be a true copy of the
original of the assignment which has been sent for recording in the
appropriate jurisdiction in which the Mortgaged Property is located;
(6) With respect to a Mortgage Loan that, according to
the Final Mortgage Loan Schedule is covered by a primary mortgage
insurance policy, the original or a copy of the policy of primary
mortgage insurance; and
(7) Originals of all assumption and modification
agreements, if any.
Mortgage Loan Package: The Mortgage Loans listed on a Final
Mortgage Loan Schedule, delivered to the Custodian or the Purchaser at least
five (5) Business Days prior to the related Closing Date and attached to this
Agreement as Schedule I on the related Closing Date.
Mortgage Note: The original executed note or other evidence
of the Mortgage Loan indebtedness of a Mortgagor.
Mortgaged Property: The Mortgagor's real property securing
repayment of a related Mortgage Note, consisting of a fee simple interest in a
single parcel of real property improved by a Residential Dwelling.
Mortgagor: The obligor on a Mortgage Note, the owner of the
Mortgaged Property and the grantor or mortgagor named in the related Mortgage
and such grantor's or mortgagor's successor's in title to the Mortgaged
Property.
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Net Mortgage Interest Rate: With respect to any Mortgage Loan
(or the related REO Property), as of any date of determination, a per annum rate
of interest equal to the then applicable Mortgage Interest Rate for such
Mortgage Loan minus the Servicing Fee Rate.
Nonrecoverable Monthly Advance: Any Monthly Advance previously
made or proposed to be made in respect of a Mortgage Loan or REO Property that,
in the good faith business judgment of the Seller, will not, or, in the case of
a proposed Monthly Advance, would not be, ultimately recoverable from related
late payments, Insurance Proceeds, Condemnation Proceeds or Liquidation Proceeds
on such Mortgage Loan or REO Property as provided herein.
Officers' Certificate: A certificate signed by the Chairman of
the Board or the Vice Chairman of the Board or a Vice President or a Senior Vice
President and by the Treasurer or the Secretary or one of the Assistant
Treasurers or Assistant Secretaries or Servicing Officer of the Person on behalf
of whom such certificate is being delivered.
Opinion of Counsel: A written opinion of counsel, who may be
salaried counsel for the Person on behalf of whom the opinion is being given,
reasonably acceptable to each Person to whom such opinion is addressed.
Pass-Through Transfer: The sale or transfer of some or all of
the Mortgage Loans by the Purchaser to a trust to be formed as part of a
publicly issued or privately placed mortgage-backed securities transaction.
Payment Clearing Account: An Eligible Account created and
maintained pursuant to Exhibit 8 and that is designated "Option One Mortgage
Corporation Payment Clearing Account in trust for the account of others".
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 Final Mortgage Loan Schedule and in
the related Mortgage Note, which is the maximum amount by which the Mortgage
Interest Rate for such Adjustable Rate 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.
Person: An individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Preliminary Mortgage Loan Schedule:
(1) the Seller's Mortgage Loan identifying number;
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(2) the Mortgagor's first and last name;
(3) the Mortgage Interest Rate at origination;
(4) the Mortgage Interest Rate in effect immediately
following the Cut-off Date;
(5) the original months to maturity;
(6) the original date of the Mortgage Loan and the
remaining months to maturity from the Cut-off Date,
based on the original amortization schedule;
(7) the stated maturity date;
(8) the amount of the Monthly Payment at origination;
(9) the amount of the Monthly Payment as of the Cut-off
Date;
(10) the Stated Principal Balance of the Mortgage Loan as
of the close of business on the Cut-off Date;
(11) a code indicating whether the Mortgaged Property is
owner-occupied; and
(12) a code indicating the documentation style.
Preliminary Servicing Period: With respect to any Mortgage
Loans, the period commencing on the related Closing Date and ending on the date
Option One enters into Reconstitution Agreements which amend or restate the
servicing provisions of this Agreement.
Prepayment Charge: With respect to any Mortgage Loan, any
prepayment penalty or premium thereon payable in connection with a principal
prepayment on such Mortgage Loan pursuant to the terms of the related Mortgage
Note.
Primary Insurance Policy: A policy of primary mortgage
guaranty insurance issued by a Qualified Insurer.
Principal Prepayment: Any payment or other recovery of
principal on a Mortgage Loan which is received in advance of its scheduled Due
Date, including any Prepayment Charge or premium thereon, which is not
accompanied by an amount of interest representing scheduled interest due on any
date or dates in any month or months subsequent to the month of prepayment.
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Purchase Price: The price paid on the related Closing Date by
the Purchaser to the Seller pursuant to the related Purchase Price and Terms
Letter in exchange for the Mortgage Loans purchased on such Closing Date as
calculated as provided in Section 4.
Purchase Price and Terms Letter: With respect to any Mortgage
Loan Package purchased and sold on any Closing Date, the letter agreement
between the Purchaser and the Seller, in the form annexed hereto as Exhibit 9
(including any exhibits, schedules and attachments thereto), setting forth the
terms and conditions of such transaction and describing the Mortgage Loans to be
purchased by the Purchaser on such Closing Date. A Purchase Price and Terms
Letter may relate to more than one Mortgage Loan Package to be purchased on one
or more Closing Dates hereunder.
Qualified Depository: Any institution offering an Eligible
Account.
Qualified Insurer: Any insurer which meets the requirements of
▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac.
Qualified Substitute Mortgage Loan: A mortgage loan
substituted for a Deleted Mortgage Loan pursuant to the terms of this Agreement
which must, on the date of such substitution, (i) have an outstanding principal
balance, after application of all scheduled payments of principal and interest
due during or prior to the month of substitution, not in excess of the Stated
Principal Balance of the Deleted Mortgage Loan as of the Due Date in the
calendar month during which the substitution occurs, (ii) have a Mortgage
Interest Rate not less than (and not more than one percentage point in excess
of) the Mortgage Interest Rate of the Deleted Mortgage Loan, (iii) have a Net
Mortgage Rate equal to the Net Mortgage Rate of the Deleted Mortgage Loan, (iv)
have a remaining terms to maturity not greater than (and not more than one year
less than) that of the Deleted Mortgage Loan, (v) have the same Due Date as the
Due Date on the Deleted Mortgage Loan, (vi) have a Loan-to-Value Ratio as of the
date of substitution equal to or lower than the Loan-to-Value Ratio of the
Deleted Mortgage Loan as of such date, (vii) be covered under a Primary
Insurance Policy if such Qualified Substitute Mortgage Loan has a Loan-to-Value
Ratio in excess of 80%, (viii) conform to each representation and warranty set
forth in Subsection 7.02 of this Agreement and (ix) be the same type of mortgage
loan (i.e. fixed or adjustable rate with the same Gross Margin and Index as the
Deleted Mortgage Loan). In the event that one or more mortgage loans are
substituted for one or more Deleted Mortgage Loans, the amounts described in
clause (i) hereof shall be determined on the basis of aggregate principal
balances, the Mortgage Interest Rates described in clause (ii) hereof shall be
determined on the basis of weighted average Mortgage Interest Rates, the Net
Mortgage Rates described in clause (iii) hereof shall be satisfied as to each
such mortgage loan, the terms described in clause (iv) shall be determined on
the basis of weighted average remaining terms to maturity, the Loan-to-Value
Ratios described in clause (vi) hereof shall be satisfied as to each such
mortgage loan and, except to the extent otherwise provided in this sentence, the
representations and warranties described in clause (viii) hereof must be
satisfied as to each Qualified Substitute Mortgage Loan or in the aggregate, as
the case may be.
Rate/Term Refinancing: A Refinanced Mortgage Loan, the
proceeds of which are not in excess of the lesser of: (i) 1% of the existing
first mortgage loan on the related Mortgaged Property and
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related closing costs, or (ii) $1,000, and were used exclusively to satisfy the
then existing first mortgage loan of the Mortgagor on the related Mortgaged
Property and to pay related closing costs.
Reconstitution Agreements: The agreement or agreements entered
into by Option One and the Purchaser and/or certain third parties on the
Reconstitution Date or Dates with respect to any or all of the Mortgage Loans
serviced hereunder, in connection with a Whole Loan Transfer or a Pass-Through
Transfer as provided in Section 12.
Reconstitution Date: The date or dates on which any or all of
the Mortgage Loans serviced under this Agreement shall be removed from this
Agreement and reconstituted as part of a Whole Loan Transfer or Pass-Through
Transfer pursuant to Section 12 hereof.
Record Date: With respect to each Remittance Date, the last
Business Day of the month immediately preceding the month in which such
Remittance Date occurs.
Refinanced Mortgage Loan: A Mortgage Loan the proceeds of
which were not used to purchase the related Mortgaged Property.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law
relating to REMICs, which appear in Sections 860A through 860G of the Code, and
related provisions, and proposed, temporary and final regulations and published
rulings, notices and announcements promulgated thereunder, as the foregoing may
be in effect from time to time.
Remittance Date: The eighteenth (18th) day of each month,
commencing on the eighteenth day of the month next following the month in which
the related Cut-off Date occurs, or if such eighteenth (18th) day is not a
Business Day, the first Business Day immediately following such eighteenth
(18th) day.
REO Account: The separate trust account or accounts created
and maintained pursuant to this Agreement which shall be entitled "Option One
Mortgage Corporation, in trust for the Purchaser, as of [date of acquisition of
title], Fixed and Adjustable Rate Mortgage Loans".
REO Disposition: The final sale by Option One of any REO
Property.
REO Property: A Mortgaged Property acquired as a result of the
liquidation of a Mortgage Loan.
Repurchase Price: With respect to any Mortgage Loan, a price
equal to (A) during the first year following the related Closing Date, (i) the
product of (a) the Stated Principal Balance of such Mortgage Loan times (b) the
percentage of par used to calculate the Purchase Price as calculated pursuant
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to Section 5 of the related Purchase Price and Terms Letter, plus (ii) interest
on such Stated Principal Balance at the Net Mortgage Interest Rate from and
including the last Due Date through which interest is paid by or on behalf of
the Mortgagor to the first day of the month following the date of repurchase,
(B) during the second and third years following the related Closing Date, (i)
the product of (a) the Stated Principal Balance of such Mortgage Loan times (b)
the product of (x) the percentage of par used to calculate the Purchase Price as
calculated pursuant to Section 5 of the related Purchase Price and Terms Letter
and (y) 0.75, plus (ii) interest on such Stated Principal Balance at the Net
Mortgage Interest Rate from and including the last Due Date through which
interest is paid by or on behalf of the Mortgagor to the first day of the month
following the date of repurchase, (C) during the fourth year following the
related Closing Date, (i) the product of (a) the Stated Principal Balance of
such Mortgage Loan times (b) the product of (x) the percentage of par used to
calculate the Purchase Price as calculated pursuant to Section 5 of the related
Purchase Price and Terms Letter and (y) 0.50, plus (ii) interest on such Stated
Principal Balance at the Net Mortgage Interest Rate from and including the last
Due Date through which interest is paid by or on behalf of the Mortgagor to the
first day of the month following the date of repurchase, and (D) thereafter, (i)
the Stated Principal Balance of such Mortgage Loan, plus (ii) interest on such
Stated Principal Balance at the Net Mortgage Interest Rate from and including
the last Due Date through which interest is paid by or on behalf of the
Mortgagor to the first day of the month following the date of repurchase, and in
the case of (A), (B), (C) and (D), less amounts received in respect of such
repurchased Mortgage Loan which are being held in the Custodial Account for
distribution in connection with such Mortgage Loan.
Residential Dwelling: Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
one-family dwelling unit in a ▇▇▇▇▇▇ ▇▇▇ eligible condominium project, (iv) a
manufactured home which constitutes real property or (v) a detached one-family
dwelling in a planned unit development, none of which is a cooperative or mobile
home.
Servicing Addendum: The terms and conditions attached hereto
as Exhibit 8 which will govern the servicing of the Mortgage Loans by Option One
during the Preliminary Servicing Period.
Servicing Advances: All customary, reasonable and necessary
"out-of-pocket" costs and expenses incurred by Option One, including attorney's
fees and disbursements, in the performance of its servicing obligations,
including, but not limited to, the cost of (i) preservation, inspection,
restoration and repair of a Mortgaged Property, (ii) any enforcement or judicial
proceedings with respect to a Mortgage Loan, including foreclosure actions,
(iii) the management and liquidation of REO Property, and (iv) compliance with
the applicable sections of this Agreement.
Servicing Fee: With respect to each Mortgage Loan, the amount
of the annual servicing fee the Purchaser shall pay to Option One, which shall,
for each month, be equal to one-twelfth of the product of (a) the Servicing Fee
Rate and (b) the unpaid principal balance of the Mortgage Loan. Such fee shall
be payable monthly, computed on the basis of the same principal amount and
period respectively which any related interest payment on a Mortgage Loan is
computed. The obligation of the Purchaser to pay the Servicing Fee is limited
to, and payable solely from, the interest portion (including recoveries with
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respect to interest from Liquidation Proceeds and other proceeds, to the extent
permitted by Section 11.5) of related Monthly Payment collected by Option One,
or as otherwise proved under Section 11.5. If the Preliminary Servicing Period
includes any partial month, the Servicing Fee for such month shall be pro rated
at a per diem rate based upon a 30-day month.
Servicing Fee Rate: The per annum rate set forth in the
related Purchase Price and Terms Letter at which the Servicing Fee accrues.
Servicing File: With respect to each Mortgage Loan, the file
retained by Option One consisting of originals of all documents in the Mortgage
File which are not delivered to the Purchaser or the Custodian and copies of the
Mortgage Loan Documents.
S&P: Standard & Poor's Ratings Services, a Division of the
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. or its successor in interest.
Stated Principal Balance: As to each Mortgage Loan as of any
date of determination, (i) the principal balance of the Mortgage Loan as of the
Cut-off Date after giving effect to payments of principal received on or before
such date, minus (ii) all amounts previously distributed to the Purchaser with
respect to the related Mortgage Loan representing payments or recoveries of
principal.
Tax Service Contract: A transferable contract maintained for
the Mortgaged Property with a tax service provider for the purpose of obtaining
current information from local taxing authorities relating to such Mortgaged
Property.
Warranty ▇▇▇▇ of Sale: A Warranty ▇▇▇▇ of Sale with respect to
the Mortgage Loans purchased on a Closing Date in the form annexed hereto as
Exhibit 4.
Whole Loan Transfer: Any sale or transfer of some or all of
the Mortgage Loans by the Purchaser to a third party, which sale or transfer is
not a Pass-Through Transfer.
SECTION 2. Agreement to Purchase. The Sellers agree to
sell, and the Purchaser agrees to purchase, from time-to-time, Mortgage Loans
having an aggregate principal balance on the related Cut-off Date 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 Sellers as evidenced by the actual
aggregate principal balance of the Mortgage Loans accepted by the Purchaser on
the related Closing Date. The obligation of the Purchaser to purchase any
Mortgage Loan from the Seller on any particular Closing Date shall be subject to
the satisfaction of the conditions precedent to the Purchaser's obligation to
purchase set forth in Section 8.
SECTION 3. Mortgage Loan Schedules. Prior to the date
on which the Sellers and the Purchaser execute a Purchase Price and Terms
Letter, the Seller shall provide the Purchaser with the Preliminary Mortgage
Loan Schedule. Option One shall deliver the Final Mortgage Loan Schedule for a
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Mortgage Loan Package to be purchased on a particular Closing Date to the
Purchaser at least three (3) Business Days, or such other period agreed upon by
the Sellers and Purchaser, prior to the related Closing Date.
SECTION 4. Purchase Price. The Purchase Price for each
Mortgage Loan listed on the related Final Mortgage Loan Schedule shall be the
percentage of par as stated in the related Purchase Price and Terms Letter
(subject to adjustment as provided therein), multiplied by its Stated Principal
Balance as of the related Cut-off Date. If so provided in the related Purchase
Price and Terms Letter, portions of the Mortgage Loans shall be priced
separately.
In addition to the Purchase Price as described above, the
Initial Purchaser shall pay to the Seller, at closing, accrued interest on the
Stated Principal Balance of each Mortgage Loan as of the related Cut-off Date at
the Net Mortgage Interest Rate from the related Cut-off Date through the day
prior to the related Closing Date, both inclusive.
The Purchaser shall own and be entitled to receive with
respect to each Mortgage Loan purchased, (1) all principal due after the related
Cut-off Date, (2) all other recoveries of principal collected after the related
Cut-off Date (provided, however, that all scheduled payments of principal due on
or before the related Cut-off Date and collected by Option One after the related
Cut-off Date shall belong to the Sellers), and (3) all payments of interest on
the Mortgage Loans net of the Servicing Fee (minus that portion of any such
interest payment that is allocable to the period prior to the related Cut-off
Date). The Stated Principal Balance of each Mortgage Loan as of the related
Cut-off Date is determined after application to the reduction of principal of
payments of principal due on or before the related Cut-off Date. Therefore, for
the purposes of this Agreement, payments of scheduled principal and interest
prepaid 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 prepaid amounts
(minus the applicable Servicing Fee) shall be the property of the Purchaser.
Option One shall deposit any such prepaid amounts into the Custodial Account,
which account is established for the benefit of the Purchaser, for remittance by
Option One to the Purchaser on the first related Remittance Date. All payments
of principal and interest, less the applicable Servicing Fee, due on a Due Date
following the related Cut-off Date shall belong to the Purchaser.
SECTION 5. Examination of Mortgage Files. In addition to
the rights granted to the Initial Purchaser under the related Purchase Price and
Terms Letter to underwrite the Mortgage Loans and review the Mortgage Files
prior to the Closing Date, prior to the related Closing Date, Option One shall
(a) deliver to the Custodian in escrow, for examination with respect to each
Mortgage Loan to be purchased on such Closing Date, the related Mortgage
Documents, including the Assignment of Mortgage, pertaining to each Mortgage
Loan, or (b) make the related Mortgage File available to the Initial Purchaser
for examination at Option One's offices or such other location as shall
otherwise be agreed upon by the Initial Purchaser and Option One. Such
examination may be made by the Initial Purchaser or its designee at any
reasonable time before or after the related Closing Date. If the Initial
Purchaser makes such examination prior to the related Closing Date and
identifies any Mortgage Loans that do not conform to the terms of the related
Purchase Price and Terms Letter or Option One's underwriting standards, such
Mortgage Loans may, at the Initial Purchaser's option, be rejected for purchase
by the Initial Purchaser.
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If not purchased by the Initial Purchaser, such Mortgage Loans shall be deleted
from the related Final Mortgage Loan Schedule and may be replaced by a Qualified
Substitute Mortgage Loan pursuant to Section 7. The Initial Purchaser may, at
its option and without notice to any Seller, purchase all or part of any
Mortgage Loan Package without conducting any partial or complete examination.
The fact that the Initial Purchaser has conducted or has determined not to
conduct any partial or complete examination of the Mortgage Files shall not
affect the Initial Purchaser's (or any of its successors') rights to demand
repurchase or other relief or remedy provided for in this Agreement.
SECTION 6. Conveyance from Sellers to Initial Purchaser.
Subsection 6.01. Conveyance of Mortgage Loans; Possession of
Servicing Files.
The Sellers, simultaneously with the payment of the Purchase
Price, shall execute and deliver to the Initial Purchaser a Warranty ▇▇▇▇ of
Sale with respect to the related Mortgage Loan Package in the form attached
hereto as Exhibit 4. The Servicing File retained by Option One with respect to
each Mortgage Loan pursuant to this Agreement shall be appropriately identified
in Option One's computer system to reflect clearly the sale of such related
Mortgage Loan to the Purchaser. Option One shall release from its custody the
contents of any Servicing File retained by it only in accordance with this
Agreement, except when such release is required in connection with a repurchase
of any such Mortgage Loan pursuant to Subsection 7.03 or 7.04.
Subsection 6.02. Books and Records.
Record title to each Mortgage and the related Mortgage Note as
of the related Closing Date shall be in the name of a Seller, the Purchaser, the
Custodian or one or more designees of the Purchaser, as the Purchaser shall
designate. Notwithstanding the foregoing, beneficial ownership of each Mortgage
and the related Mortgage Note shall be vested solely in the Purchaser or the
appropriate designee of the Purchaser, as the case may be. All rights arising
out of the Mortgage Loans including, but not limited to, all funds received by
any Seller after the related Cut-off Date on or in connection with a Mortgage
Loan as provided in Section 4 shall be vested in the Purchaser or one or more
designees of the Purchaser; provided, however, that all such funds received on
or in connection with a Mortgage Loan as provided in Section 4 shall be received
and held by Option One in trust for the benefit of the Purchaser or the assignee
of the Purchaser, as the case may be, as the owner of the Mortgage Loans
pursuant to the terms of this Agreement.
It is the express intention of the parties that the
transactions contemplated by this Agreement be, and be construed as, a sale of
the Mortgage Loans by each Seller and not a pledge of the Mortgage Loans by any
Seller to the Purchaser to secure a debt or other obligation of such Seller.
Consequently, the sale of each Mortgage Loan shall be reflected as a sale on
each Seller's business records, tax returns and financial statements.
Subsection 6.03. Delivery of Mortgage Loan Documents.
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The Sellers shall from time to time in connection with each
Closing Date, at least three (3) Business Days prior to such Closing Date, or
such other period agreed upon by the Sellers and the Purchaser, deliver and
release to the Custodian the Mortgage Loan Documents with respect to each
Mortgage Loan to be purchased and sold on the related Closing Date and set forth
on the related Final Mortgage Loan Schedule delivered with such Mortgage Loan
Documents.
The Custodian shall certify its receipt of all such Mortgage
Loan Documents for the related Closing Date, pursuant to an initial custody
receipt and initial certification of the Custodian.
Option One shall forward to the Custodian original documents
evidencing an assumption, modification, consolidation or extension of any
Mortgage Loan entered into in accordance with this Agreement within two weeks of
their execution, provided, however, that Option One shall provide the Custodian
with a certified true copy of any such document submitted for recordation within
two weeks of its execution, and shall 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 270 days of its submission for recordation.
SECTION 7. Representations, Warranties and Covenants of
the Sellers: Remedies for Breach.
Subsection 7.01. Representations and Warranties Respecting
Option One.
(a) Option One represents, warrants and covenants to the
Purchaser as of the date hereof, as of the date of each respective Purchase
Price and Terms Letter, and as of each respective Closing Date or as of such
date specifically provided herein or in the applicable Warranty ▇▇▇▇ of Sale:
(i) Option One is duly organized, validly existing and in
good standing under the laws of the state of California and is and will remain
in compliance with the laws of each state in which any Mortgaged Property is
located to the extent necessary to ensure the enforceability of each Mortgage
Loan and the servicing of the Mortgage Loan in accordance with the terms of this
Agreement;
(ii) Option One has the full power and authority to hold
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. Option One has duly authorized the execution, delivery and
performance of this Agreement, has duly executed and delivered this Agreement,
and this Agreement, assuming due authorization, execution and delivery by the
Purchaser and the Seller Trusts, constitutes a legal, valid and binding
obligation of Option One, enforceable against it in accordance with its terms
except as the enforceability thereof may be limited by bankruptcy, insolvency or
reorganization;
(iii) The execution and delivery of this Agreement by
Option One and the performance of and compliance with the terms of this
Agreement will not violate Option One's articles of incorporation or by-laws or
constitute a default under or result in a breach or acceleration of, any
material contract,
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agreement or other instrument to which Option One is a party or which may be
applicable to Option One or its assets;
(iv) Option One is not in violation of, and the execution
and delivery of this Agreement by Option One and its performance and compliance
with the terms of this Agreement will not constitute a violation with respect
to, any order or decree of any court or any order or regulation of any federal,
state, municipal or governmental agency having jurisdiction over Option One or
its assets, which violation might have consequences that would materially and
adversely affect the condition (financial or otherwise) or the operation of
Option One or its assets or might have consequences that would materially and
adversely affect the performance of its obligations and duties hereunder;
(v) Option One is an approved seller/servicer for ▇▇▇▇▇▇
▇▇▇ and ▇▇▇▇▇▇▇ Mac in good standing and is a HUD approved mortgagee pursuant to
Section 203 of the National Housing Act. No event has occurred, including but
not limited to a change in insurance coverage, which would make Option One
unable to comply with ▇▇▇▇▇▇ Mae, ▇▇▇▇▇▇▇ Mac or HUD eligibility requirements or
which would require notification to ▇▇▇▇▇▇ Mae, ▇▇▇▇▇▇▇ Mac or HUD;
(vi) Option One does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
(vii) The Mortgage Loan Documents have been delivered to
the Custodian. With respect to each Mortgage Loan, Option One is in possession
of a complete Mortgage File in compliance with Exhibit 5, except for such
documents as have been delivered to the Custodian;
(viii) Immediately prior to the payment of the Purchase
Price for each Mortgage Loan, the related Seller was the owner of record of the
related Mortgage and the indebtedness evidenced by the related Mortgage Note and
upon the payment of the Purchase Price by the Purchaser, in the event that
Option One retains record title, Option One shall retain such record title to
each Mortgage, each related Mortgage Note and the related Mortgage Files with
respect thereto in trust for the Purchaser as the owner thereof and only for the
purpose of servicing and supervising the servicing of each Mortgage Loan;
(ix) There are no actions or proceedings against, or
investigations of, Option One before any court, administrative agency or other
tribunal (A) that might prohibit its entering into this Agreement, (B) seeking
to prevent the sale of the Mortgage Loans or the consummation of the
transactions contemplated by this Agreement or (C) that might prohibit or
materially and adversely affect the performance by the Seller of its obligations
under, or the validity or enforceability of, this Agreement;
(x) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution, delivery and
performance by Option One of, or compliance by Option One with, this Agreement
or the consummation of the transactions contemplated by this Agreement, except
for such consents, approvals, authorizations or orders, if any, that have been
obtained prior to the Closing Date;
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(xi) The consummation of the transactions contemplated by
this Agreement are in the ordinary course of business of each Seller, and the
transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by
each Seller pursuant to this Agreement are not subject to the bulk transfer or
any similar statutory provisions;
(xii) The information delivered by Option One to the
Purchaser with respect to Option One's loan loss, foreclosure and delinquency
experience for the twelve (12) months immediately preceding the Initial Closing
Date on mortgage loans underwritten to the same standards as the Mortgage Loans
and covering mortgaged properties similar to the Mortgaged Properties, is true
and correct in all material respects; and
(xiii) Neither this Agreement, the related Purchase Price
and Terms Letter, nor any information, certificate of an officer, statement
furnished in writing or report delivered to the Purchaser by Option One in
connection with the transactions contemplated hereby contains any untrue
statement of a material fact.
(b) Each Seller Trust represents, warrants and covenants to
the Purchaser, that with respect to such Seller Trust, as of the Initial Closing
Date and each subsequent Closing Date or as of such date specifically provided
herein or in the applicable Warranty ▇▇▇▇ of Sale:
(i) The Seller Trust is duly formed, validly existing and
in good standing under the laws of the state of Delaware and is and will remain
in compliance with the laws of each state in which any Mortgaged Property is
located to the extent necessary to ensure the enforceability of each Mortgage
Loan in accordance with the terms of this Agreement. No licenses or approvals
obtained by a Seller Trust has been suspended or revoked by any court,
administrative agency, arbitrator or governmental body and no proceedings are
pending which might result in such suspension or revocation;
(ii) The Seller Trust has the full power and authority to
hold 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 Seller Trust has duly authorized the execution, delivery and
performance of this Agreement, has duly executed and delivered this Agreement,
and this Agreement, assuming due authorization, execution and delivery by the
Purchaser and Option One, constitutes a legal, valid and binding obligation of
the Seller Trust, enforceable against it in accordance with its terms except as
the enforceability thereof may be limited by bankruptcy, insolvency or
reorganization;
(iii) The execution and delivery of this Agreement by the
Seller Trust and the performance of and compliance with the terms of this
Agreement will not violate the Seller Trust's trust agreement or trust
certificate or constitute a default under or result in a breach or acceleration
of, any material contract, agreement or other instrument to which the Seller
Trust is a party or which may be applicable to the Seller Trust or its assets;
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(iv) The Seller Trust is not in violation of, and the
execution and delivery of this Agreement by the Seller Trust and its performance
and compliance with the terms of this Agreement will not constitute a violation
with respect to, any order or decree of any court or any order or regulation of
any federal, state, municipal or governmental agency having jurisdiction over
the Seller Trust or its assets, which violation might have consequences that
would materially and adversely affect the condition (financial or otherwise) or
the operation of the Seller Trust or its assets or might have consequences that
would materially and adversely affect the performance of its obligations and
duties hereunder;
(v) The Seller Trust does not believe, nor does it have
any reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
(vi) The Mortgage Loan Documents and any other documents
required to be delivered with respect to each Mortgage Loan have been delivered
to the Custodian;
(vii) Immediately prior to the payment of the Purchase
Price for each Mortgage Loan, a Seller was the owner of record of the related
Mortgage and the indebtedness evidenced by the related Mortgage Note;
(viii) There are no actions or proceedings against, or
investigations of, the Seller Trust before any court, administrative agency or
other tribunal (A) that might prohibit its entering into this Agreement, (B)
seeking to prevent the sale of the Mortgage Loans or the consummation of the
transactions contemplated by this Agreement or (C) that might prohibit or
materially and adversely affect the performance by the Seller Trust of its
obligations under, or the validity or enforceability of, this Agreement;
(ix) 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 Trust of, or compliance by the Seller Trust with, this
Agreement or the consummation of the transactions contemplated by this
Agreement, except for such consents, approvals, authorizations or orders, if
any, that have been obtained prior to the related Closing Date; and
(x) The consummation of the transactions contemplated by
this Agreement are in the ordinary course of business of the Seller Trust, and
the transfer, assignment and conveyance of the Mortgage Notes and the Mortgages
by the Seller Trust pursuant to this Agreement are not subject to the bulk
transfer or any similar statutory provisions.
Subsection 7.02. Representations and Warranties Regarding
Individual Mortgage Loans.
Option One hereby represents and warrants to the Purchaser
that, as to each Mortgage Loan, as of the related Closing Date for such Mortgage
Loan:
(i) The information set forth in the related Final
Mortgage Loan Schedule is complete, true and correct;
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(ii) The Mortgage Loan is in compliance with all
requirements set forth in the related Purchase Price and Terms Letter, and the
characteristics of the related Mortgage Loan Package as set forth in the related
Purchase Price and Terms Letter are true and correct;
(iii) All payments required to be made up to the close of
business on the Closing Date for such Mortgage Loan under the terms of the
Mortgage Note have been made; 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 related Mortgaged Property, directly or indirectly, for the payment
of any amount required by the Mortgage Note or Mortgage; and there has been no
delinquency, exclusive of any period of grace, in any payment by the Mortgagor
thereunder during the last twelve months;
(iv) At the time of origination and to the best of Option
One's knowledge, as of the related Closing Date, there are no delinquent taxes,
ground rents, water charges, sewer rents, assessments, insurance premiums,
leasehold payments, including assessments payable in future installments or
other outstanding charges affecting the related Mortgaged Property;
(v) The terms of the Mortgage Note and the Mortgage have
not been impaired, waived, altered or modified in any respect, except by written
instruments, recorded in the applicable public recording office if necessary to
maintain the lien priority of the Mortgage, and which have been delivered to the
Custodian; the substance of any such waiver, alteration or modification has been
approved by the insurer under the Primary Insurance Policy, if any, and the
title insurer, to the extent required by the related policy, and is reflected on
the related Final Mortgage Loan Schedule. No instrument of waiver, alteration or
modification has been executed, and no Mortgagor has been released, in whole or
in part, except in connection with an assumption agreement approved by the
insurer under the Primary Insurance Policy, if any, the title insurer, to the
extent required by the policy, and which assumption agreement has been delivered
to the Custodian and the terms of which are reflected in the related Final
Mortgage Loan Schedule;
(vi) The Mortgage Note and the Mortgage are not subject to
any right of rescission, set-off, counterclaim or defense, including the defense
of usury, nor will the operation of any of the terms of the Mortgage Note and
the Mortgage, or the exercise of any right thereunder, render the 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;
(vii) All buildings upon the Mortgaged Property are insured
by an insurer acceptable to ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac against loss by fire,
hazards of extended coverage and such other hazards as are customary in the area
where the Mortgaged Property is located, pursuant to insurance policies
conforming to the requirements of the Servicing Addendum. All such insurance
policies contain a standard mortgagee clause naming Option One, its successors
and assigns as mortgagee and all premiums thereon have been paid. If the
Mortgaged Property is in an area identified on a Flood Hazard Map or Flood
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Insurance Rate Map issued by the Federal Emergency Management Agency as having
special flood hazards (and such flood insurance has been made available) a flood
insurance policy meeting the requirements of the current guidelines of the
Federal Insurance Administration is in effect which policy conforms to the
requirements of ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac. The Mortgage obligates the Mortgagor
thereunder to maintain all such insurance at the Mortgagor's cost and expense,
and on the Mortgagor's failure to do so, authorizes the holder of the Mortgage
to maintain such insurance at Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor;
(viii) 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, anti-predatory lending, equal
credit opportunity, fair housing or disclosure laws applicable to the
origination and servicing of mortgage loans of a type similar to the Mortgage
Loans have been complied with;
(ix) The Mortgage has not been satisfied, cancelled,
subordinated or rescinded, in whole or in part, and the Mortgaged Property has
not been released from the lien of the Mortgage, in whole or in part, nor has
any instrument been executed that would effect any such satisfaction,
cancellation, subordination, rescission or release;
(x) The related Mortgage is properly recorded and is a
valid, existing and enforceable (A) first lien and first priority security
interest with respect to each Mortgage Loan which is indicated by Option One to
be a first lien (as reflected on the Final Mortgage Loan Schedule), or (B)
second lien and second priority security interest with respect to each Mortgage
Loan which is indicated by Option One to be a second lien (as reflected on the
Final Mortgage Loan Schedule), in either case, on the Mortgaged Property,
including all improvements on the Mortgaged Property subject only to (a) the
lien of current real property taxes and assessments not yet due and payable, (b)
covenants, conditions and restrictions, rights of way, easements and other
matters of the public record as of the date of recording being acceptable to
mortgage lending institutions generally and specifically referred to in the
lender's title insurance policy delivered to the originator of the Mortgage Loan
and which do not adversely affect the Appraised Value of the Mortgaged Property,
(c) other matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be provided
by the Mortgage or the use, enjoyment, value or marketability of the related
Mortgaged Property and (d) with respect to each Mortgage Loan which is indicated
by Option One to be a second lien Mortgage Loan (as reflected on the Final
Mortgage Loan Schedule) a first lien on the Mortgaged Property. Any security
agreement, chattel mortgage or equivalent document related to and delivered in
connection with the Mortgage Loan establishes and creates a valid, existing and
enforceable (A) first lien and first priority security interest with respect to
each Mortgage Loan which is indicated by Option One to be a first lien (as
reflected on the Final Mortgage Loan Schedule) or (B) second lien and second
priority interest with respect to each Mortgage Loan which is indicated by
Option One to be a second lien Mortgage Loan (as reflected on the Final Mortgage
Loan Schedule), in either case, on the property described therein and the
related Seller has full right to sell and assign the same to the Purchaser. The
Mortgaged Property was not, as of the date of origination of the Mortgage Loan,
subject to a mortgage, deed of trust, deed to secure debt or other security
instrument creating a lien subordinate to the lien of the Mortgage;
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(xi) The Mortgage Note and the related Mortgage are
genuine and each is the legal, valid and binding obligation of the maker
thereof, enforceable in accordance with its terms;
(xii) All parties to the Mortgage Note and the Mortgage had
legal capacity to enter into the Mortgage Loan and to execute and deliver the
Mortgage Note and the Mortgage, and the Mortgage Note and the Mortgage have been
duly and properly executed by such parties. The Mortgagor is a natural person;
(xiii) The proceeds of the Mortgage Loan have been fully
disbursed to or for the account of the Mortgagor and there is no obligation for
the Mortgagee to advance additional funds thereunder and any and all
requirements as to completion of any on-site or off-site improvement and as to
disbursements of any escrow funds therefor have been complied with. All costs,
fees and expenses incurred in making or closing the Mortgage Loan and the
recording of the Mortgage have been paid, and the Mortgagor is not entitled to
any refund of any amounts paid or due to the Mortgagee pursuant to the Mortgage
Note or Mortgage;
(xiv) The related Seller is the sole legal, beneficial and
equitable owner of the Mortgage Note and the Mortgage and has 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;
(xv) All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) in
compliance with any and all applicable "doing business" and licensing
requirements of the laws of the state wherein the Mortgaged Property is located;
(xvi) The Mortgage Loan is covered by an ALTA lender's
title insurance policy, or with respect to any Mortgage Loan for which the
related Mortgaged Property is located in California a CLTA lender's title
insurance policy, or other generally acceptable form of policy or insurance and
each such title insurance policy is issued by a title insurer qualified to do
business in the jurisdiction where the Mortgaged Property is located, insuring
the applicable Sellers (or Option One), its successors and assigns, as to the
first priority lien (with respect to First Lien Loans) or second priority lien
(with respect to Second Lien Loans) of the Mortgage in the original principal
amount of the Mortgage Loan, subject only to the exceptions contained in clauses
(1) and (2) of paragraph (j) of this Subsection 7.02, and in the case of
adjustable rate Mortgage Loans, against any loss by reason of the invalidity or
unenforceability of the lien resulting from the provisions of the Mortgage
providing for adjustment to the Mortgage Interest Rate and Monthly Payment.
Where required by state law or regulation, the Mortgagor has been given the
opportunity to choose the carrier of the required mortgage title insurance.
Additionally, such lender's title insurance policy affirmatively insures ingress
and egress, and against encroachments by or upon the Mortgaged Property or any
interest therein. The Sellers, or Option One, their respective successors and
assigns, are the sole insureds of such lender's title insurance policy, and such
lender's title insurance policy is valid and remains in full force and effect
and will be in force and effect upon the consummation of the transactions
contemplated by this Agreement. No claims have been made under such lender's
title insurance policy, and no prior holder of the related Mortgage, including
the Sellers, have done, by act or
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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
Sellers;
(xvii) There is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note and no event
which, with the passage of time or with notice and the expiration of any grace
or cure period, would constitute a default, breach, violation or event of
acceleration, and no Seller has waived any default, breach, violation or event
of acceleration. With respect to each Mortgage Loan which is indicated by Option
One to be a second lien Mortgage Loan (as reflected on the Final Mortgage Loan
Schedule) (i) the first lien is in full force and effect, (ii) there is no
default, breach, violation or event of acceleration existing under such first
lien 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 first lien 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 first lien mortgage;
(xviii) There are no mechanics' or similar liens or claims
which have been filed for work, labor or material (and no rights are outstanding
that under law could give rise to such lien) affecting the related Mortgaged
Property which are or may be liens prior to, or equal or coordinate with, the
lien of the related Mortgage;
(xix) All improvements which were considered in determining
the Appraised Value of the related Mortgaged Property lay wholly within the
boundaries and building restriction lines of the Mortgaged Property, and no
improvements on adjoining properties encroach upon the Mortgaged Property;
(xx) The Mortgage Loan was originated by Option One or by
a savings and loan association, a savings bank, a commercial bank or similar
banking institution which is supervised and examined by a federal or state
authority, or by a mortgagee approved as such by the Secretary of HUD;
(xxi) Principal payments on the Mortgage Loan commenced no
more than two (2) months after the proceeds of the Mortgage Loan were disbursed.
The Mortgage Loan bears interest at the Mortgage Interest Rate. With respect to
each Mortgage Loan, the Mortgage Note is payable on the first day of each month
in Monthly Payments, except as identified on the Final Mortgage Loan Schedule,
which, (A) in the case of a Fixed Rate Mortgage Loan, are sufficient to fully
amortize the original principal balance over the original term thereof and to
pay interest at the related Mortgage Interest Rate, (B) in the case of an
Adjustable Rate Mortgage Loan, are changed on each Adjustment Date, and in any
case, are sufficient to fully amortize the original principal balance over the
original term thereof and to pay interest at the related Mortgage Interest Rate
and (C) in the case of a Balloon Loan, are based on a thirty (30) year
amortization schedule, as applicable, as set forth in the related Mortgage Note,
and a final monthly payment
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substantially greater than the preceding monthly payment which is sufficient to
amortize the remaining principal balance of the Balloon Loan and to pay interest
at the related Mortgage Interest Rate. The Index for each Adjustable Rate
Mortgage Loan is as defined in the related Purchase Price and Terms Letter. The
Mortgage Note does not permit negative amortization. No Mortgage Loan is a
Convertible Mortgage Loan;
(xxii) The origination and collection practices used by
Option One with respect to each Mortgage Note and Mortgage have been in all
respects legal, proper, prudent and customary in the mortgage origination and
servicing industry. The Mortgage Loan has been serviced by Option One and any
predecessor servicer in accordance with the terms of the Mortgage Note. With
respect to escrow deposits and Escrow Payments (other than with respect to each
Mortgage Loan which is indicated by Option One to be a second lien Mortgage Loan
and for which the mortgagee under the first lien is collecting Escrow Payments
(as reflected on the Final Mortgage Loan Schedule)), if any, all such payments
are in the possession of, or under the control of, Option One and there exist no
deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. No escrow deposits or Escrow Payments or
other charges or payments due the Seller have been capitalized under any
Mortgage or the related Mortgage Note and no such escrow deposits or Escrow
Payments are being held by a Seller for any work on a Mortgaged Property which
has not been completed;
(xxiii) The Mortgaged Property is free of material damage and
waste and there is no proceeding pending for the total or partial condemnation
thereof;
(xxiv) The Mortgage and related Mortgage Note contain
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, including, (a) in the
case of a Mortgage designated as a deed of trust, by trustee's sale, and (b)
otherwise by judicial foreclosure. The Mortgaged Property has not been subject
to any bankruptcy proceeding or foreclosure proceeding and the Mortgagor has not
filed for protection under applicable bankruptcy laws. 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. The Mortgagor has not notified any Seller and no Seller has knowledge
of any relief requested or allowed to the Mortgagor under the Soldiers and
Sailors Civil Relief Act of 1940;
(xxv) The Mortgage Loan was underwritten in accordance with
the underwriting standards of Option One in effect at the time the Mortgage Loan
was originated;
(xxvi) The Mortgage Note is not and has not been secured by
any collateral except the lien of the corresponding Mortgage on the Mortgaged
Property and the security interest of any applicable security agreement or
chattel mortgage referred to in (x) above;
(xxvii) The Mortgage File contains an appraisal of the
related Mortgaged Property signed prior to the approval of the Mortgage Loan
application by a Qualified Appraiser, duly appointed by Option One who had no
interest, direct or indirect in the Mortgaged Property or in any loan made on
the security
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thereof, and whose compensation is not affected by the approval or disapproval
of the Mortgage Loan, and the appraisal and appraiser both satisfy the
requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and Title XI of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 and the regulations
promulgated thereunder, all as in effect on the date the Mortgage Loan was
originated;
(xxviii) In the event the Mortgage constitutes a deed of
trust, a trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in the Mortgage, and no
fees or expenses are or will become payable by the Purchaser to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the Mortgagor;
(xxix) No Mortgage Loan contains provisions pursuant to
which Monthly Payments are (a) paid or partially paid with funds deposited in
any separate account established by Option One, the related Seller Trust, the
Mortgagor, or anyone on behalf of the Mortgagor, (b) paid by any source other
than the Mortgagor or (c) contains 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;
(xxx) 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 fixed rate mortgage loans in the case of Fixed
Rate Mortgage Loans, and adjustable rate mortgage loans in the case of
Adjustable Rate Mortgage Loans and rescission materials with respect to
Refinanced Mortgage Loans, and such statement is and will remain in the Mortgage
File;
(xxxi) No Mortgage Loan was made in connection with (a) the
construction or rehabilitation of a Mortgaged Property or (b) facilitating the
trade-in or exchange of a Mortgaged Property;
(xxxii) Option One has no knowledge of any circumstances or
condition with respect to the Mortgage, the Mortgaged Property, the Mortgagor or
the Mortgagor's credit standing that can reasonably be expected to cause the
Mortgage Loan to be an unacceptable investment, cause the Mortgage Loan to
become delinquent, or adversely affect the value of the Mortgage Loan;
(xxxiii) If indicated on the Final Mortgage Loan Schedule,
each Mortgage Loan with an LTV at origination in excess of 80% is and will be
subject to a Primary Mortgage Insurance Policy, issued by a Qualified Insurer,
which insures that portion of the Mortgage Loan in excess of the portion of the
Appraised Value of the Mortgaged Property required by ▇▇▇▇▇▇ Mae. All provisions
of such Primary Insurance Policy have been and are being complied with, such
policy is in full force and effect, and all premiums due thereunder have been
paid. Any Mortgage subject to any such Primary Insurance Policy obligates the
Mortgagor thereunder to maintain such insurance and to pay all premiums and
charges in connection therewith. The Mortgage Interest Rate for the Mortgage
Loan does not include any such insurance premium;
(xxxiv) The Mortgaged Property is lawfully occupied under
applicable law; all inspections, licenses and certificates required to be made
or issued with respect to all occupied portions of the
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Mortgaged Property and, with respect to the use and occupancy of the same,
including but not limited to certificates of occupancy, have been made or
obtained from the appropriate authorities;
(xxxv) No error, omission, misrepresentation, negligence,
fraud or similar occurrence with respect to a Mortgage Loan has taken place on
the part of the Company, or to the best of the Company's knowledge, the
Mortgagor, the appraiser, any builder, or any developer, or any other party
involved in the origination of the Mortgage Loan or in the application of any
insurance in relation to such Mortgage Loan;
(xxxvi) The Assignment of Mortgage is in recordable form
(except that the assignment is in blank) and is acceptable for recording (upon
insertion of the name of the assignee) under the laws of the jurisdiction in
which the Mortgaged Property is located;
(xxxvii) Any principal advances made to the Mortgagor prior to
the 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 (A)
first lien priority with respect to each Mortgage Loan which is indicated by
Option One to be a first lien (as reflected on the Final Mortgage Loan
Schedule), or (B) second lien priority with respect to each Mortgage Loan which
is indicated by Option One to be a second lien Mortgage Loan (as reflected on
the Final Mortgage Loan Schedule), in either case, by a title insurance policy,
an endorsement to the policy insuring the mortgagee's consolidated interest or
by other title evidence acceptable to ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac. The
consolidated principal amount does not exceed the original principal amount of
the Mortgage Loan;
(xxxviii)Except as set forth on the Final Mortgage Loan
Schedule, no Mortgage Loan has a balloon payment feature;
(xxxix) If the Residential Dwelling on the Mortgaged Property
is a condominium unit or a unit in a planned unit development (other than a de
minimis planned unit development) such condominium or planned unit development
project meets the eligibility requirements of ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac;
(xl) The source of the down payment with respect to each
Mortgage Loan has been fully verified by Option One to the extent required by
Option One's underwriting guidelines;
(xli) Interest on each Mortgage Loan is calculated on the
basis of a 360-day year consisting of twelve 30-day months;
(xlii) To the best of Option One's knowledge, the Mortgaged
Property is in material compliance with all applicable environmental laws
pertaining to environmental hazards including, without limitation, asbestos, and
neither Option One nor, to Option One's knowledge, the related Mortgagor, has
received any notice of any violation or potential violation of such law;
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(xliii) No Mortgage Loan is subject to the Homeownership and
Equity Protection Act of 1994 or is considered a "high cost loan" under any
other Federal, state or local laws;
(xliv) Each Mortgage Loan originated in the state of Texas
pursuant to Article XVI, Section 50(a)(6) of the Texas Constitution (a "Texas
Refinance Loan") has been originated in compliance with the provisions of
Article XVI, Section 50(a)(6) of the Texas Constitution, Texas Civil Statutes
and the Texas Finance Code. With respect to each Texas Refinance Loan that is a
Cash-Out Refinancing, the related Mortgage Loan Documents state that the
Mortgagor may prepay such Texas Refinance Loan in whole or in part without
incurring a Prepayment Charge. Option One does not collect any such Prepayment
Charges in connection with any such Texas Refinance Loan;
(xlv) As of the origination of the Mortgage Loan, the
Mortgage Loan Documents with respect to each Mortgage Loan subject to Prepayment
Charges specifically authorizes such Prepayment Charges to be collected and such
Prepayment Charges are permissible and enforceable in accordance with the terms
of the related Mortgage Loan Documents and applicable law (except to the extent
that the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors' rights
generally or the collectability thereof may be limited due to acceleration in
connection with a foreclosure); and
(xlvi) Option One shall, at its own expense, cause each
Mortgage Loan to be covered by a "life of loan" Tax Service Contract; provided
however, that if Option One fails to purchase such Tax Service Contract, Option
One shall be required to reimburse the Purchaser for all costs and expenses
incurred by the Purchaser in connection with the purchase of any such Tax
Service Contract.
Subsection 7.03. Remedies for Breach of Representations and
Warranties.
It is understood and agreed that the representations and
warranties set forth in Subsections 7.01 and 7.02 shall survive the sale of the
Mortgage Loans to the Purchaser and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note or
Assignment of Mortgage or the examination or lack of examination of any Mortgage
File. Upon discovery by either a Seller or the Purchaser of a breach of any of
the foregoing representations and warranties which materially and adversely
affects the value of the Mortgage Loans or the interest of the Purchaser (or
which materially and adversely affects the interests of the Purchaser in the
related Mortgage Loan in the case of a representation and warranty relating to a
particular Mortgage Loan), the party discovering such breach shall give prompt
written notice to the other.
Within sixty (60) days of the earlier of either discovery by
or notice to the Sellers of any breach of a representation or warranty which
materially and adversely affects the value of a Mortgage Loan or the Mortgage
Loans, Option One (and the related Seller Trust, if applicable) shall use its
best efforts promptly to cure such breach in all material respects and, if such
breach cannot be cured, Option One shall, at the Purchaser's option, repurchase
such Mortgage Loan at the Repurchase Price. In the event that a breach shall
involve any representation or warranty set forth in Subsection 7.01 and such
breach cannot be cured within sixty (60) days of the earlier of either discovery
by or notice to Option One (and the related
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Seller Trust, if applicable) of such breach, all of the Mortgage Loans shall, at
the Purchaser's option, be repurchased by Option One at the Repurchase Price.
Option One shall, at the request of the Purchaser and assuming that Option One
has a Qualified Substitute Mortgage Loan, rather than repurchase the Mortgage
Loan as provided above, remove such Mortgage Loan and substitute in its place a
Qualified Substitute Mortgage Loan or Loans; provided that such substitution
shall be effected not later than one hundred twenty (120) days after the related
Closing Date. If Option One has no Qualified Substitute Mortgage Loan, Option
One shall repurchase the deficient Mortgage Loan. Any repurchase of a Mortgage
Loan(s) pursuant to the foregoing provisions of this Subsection 7.03 shall occur
on a date designated by the Purchaser and shall be accomplished by deposit in
the Custodial Account of the amount of the Repurchase Price for distribution to
the Purchaser on the next scheduled Remittance Date.
At the time of repurchase of any deficient Mortgage Loan, the
Purchaser and Option One (and the related Seller Trust, if applicable) shall
arrange for the reassignment of the repurchased Mortgage Loan to the Seller and
the delivery to the related Seller of any documents held by the Custodian
relating to the repurchased Mortgage Loan. In the event the Repurchase Price is
deposited in the Custodial Account, Option One shall, simultaneously with such
deposit, give written notice to the Purchaser that such deposit has taken place.
Upon such repurchase the related Final Mortgage Loan Schedule shall be amended
to reflect the withdrawal of the repurchased Mortgage Loan from this Agreement.
As to any Deleted Mortgage Loan for which Option One
substitutes a Qualified Substitute Mortgage Loan or Loans, Option One shall
effect such substitution by delivering to the Purchaser for such Qualified
Substitute Mortgage Loan or Loans the Mortgage Loan Documents with the Mortgage
Note endorsed as required herein. Option One shall deposit in the Custodial
Account the Monthly Payment less the Servicing Fee due on such Qualified
Substitute Mortgage Loan or Loans in the month following the date of such
substitution. Monthly Payments due with respect to Qualified Substitute Mortgage
Loans in the month of substitution will be retained by Option One. For the month
of substitution, distributions to the Purchaser will include the Monthly Payment
due on such Deleted Mortgage Loan in the month of substitution, and Option One
shall thereafter be entitled to retain all amounts subsequently received by
Option One in respect of such Deleted Mortgage Loan. Option One shall give
written notice to the Purchaser that such substitution has taken place and shall
amend the Final Mortgage Loan Schedule to reflect the removal of such Deleted
Mortgage Loan from the terms of this Agreement and the substitution of the
Qualified Substitute Mortgage Loan. Upon such substitution, such Qualified
Substitute Mortgage Loan or Loans shall be subject to the terms of this
Agreement in all respects, and Option One shall be deemed to have made with
respect to such Qualified Substitute Mortgage Loan or Loans, as of the date of
substitution, the covenants, representations and warranties set forth in
Subsections 7.01 and 7.02.
For any month in which Option One substitutes one or more
Qualified Substitute Mortgage Loans for one or more Deleted Mortgage Loans,
Option One will determine the amount (if any) by which the aggregate principal
balance of all such Qualified Substitute Mortgage Loans as of the date of
substitution is less than the aggregate Stated Principal Balance of all such
Deleted Mortgage Loans (after application of scheduled principal payments due in
the month of substitution). An amount equal to the product of the amount of such
shortfall multiplied by the Repurchase Price shall be distributed by Option One
in the month
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of substitution pursuant to the Servicing Addendum. Accordingly, on the date of
such substitution, Option One, will deposit from its own funds into the
Custodial Account an amount equal to such amount.
In addition to such cure, repurchase and substitution
obligation, Option One shall indemnify the Purchaser and hold it harmless
against any losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments, and other costs and expenses
resulting from any claim, demand, defense or assertion based on or grounded
upon, or resulting from, a breach of the Sellers' representations and warranties
contained in this Section 7. It is understood and agreed that the obligations of
each Seller set forth in this Subsection 7.03 to cure or repurchase a defective
Mortgage Loan and to indemnify the Purchaser as provided in this Subsection 7.03
constitute the sole remedies of the Purchaser respecting a breach of the
foregoing representations and warranties.
Any cause of action against the Sellers relating to or arising
out of the breach of any representations and warranties made in Subsections 7.01
or 7.02 shall accrue as to any Mortgage Loan upon (i) discovery of such breach
by the Purchaser or notice thereof by the Seller to the Purchaser, (ii) failure
by Option One or the related Seller Trust to cure such breach or repurchase such
Mortgage Loan as specified above, and (iii) demand upon a Seller by the
Purchaser for compliance with the relevant provisions of this Agreement.
Subsection 7.04. Repurchase of Certain Mortgage Loans.
In the event that (i) the first Due Date for a Mortgage Loan
is subsequent to the Cut-off Date and the initial Monthly Payment is not made
within forty-five (45) days of such Due Date, Option One shall repurchase the
affected Mortgage Loans at the Repurchase Price, which shall be paid as provided
for in Subsection 7.03; or as otherwise set forth on the Purchase Price and
Terms Letter, or (ii) the principal balance due on a Mortgage Loan is paid in
full within three (3) months following the earlier of either: (a) the related
Closing Date, or (b) the issuance if a NIM security comprised of the Mortgage
Loans purchased pursuant to a Purchase Price and Terms Letter, then, in each
such case, Option One shall remit to the Purchaser an amount equal to the
Premium, as defined in the Purchase Price and Terms Letter, reduced by the
amount of any prepayment penalty or fee remitted to the Purchaser with respect
to such prepaid Mortgage Loan.
SECTION 8. Closing. The closing for each Mortgage Loan
Package shall take place on the related Closing Date. At the Purchaser's option,
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 each
Closing Date shall be subject to each of the following conditions:
(a) all of the representations and warranties of the
Sellers under this Agreement shall be true and
correct as of the related Closing Date and no event
shall have occurred which, with notice or the passage
of time, would constitute a default
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under this Agreement, the related Purchase Price and
Terms Letter or the related Warranty ▇▇▇▇ of Sale;
(b) the Initial Purchaser shall have received, or the
Initial Purchaser's attorneys shall have received in
escrow, all Closing Documents as specified in Section
9, 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;
(c) the related Seller shall have delivered and released
the Mortgage Loan Documents to the Custodian; and
(d) all other terms and conditions of this Agreement
shall have been complied with.
Subject to the foregoing conditions, the Initial Purchaser
shall pay to the related Seller on the related Closing Date the Purchase Price,
plus accrued interest pursuant to Section 4, by wire transfer of immediately
available funds to the account designated by the related Seller.
SECTION 9. Closing Documents.
(a) On or before the Initial Closing Date, Option One
shall submit to the Initial Purchaser fully executed originals of the following
documents:
1. this Agreement, in four counterparts;
2. a Custodial Account Certification in the form
attached as Exhibit 6 hereto;
3. as Escrow Account Certification in the form attached
as Exhibit 7 hereto;
4. evidence of the establishment or existence of the
Payment Clearing Account;
5. an Officer's Certificate as to each Seller, in the
form of Exhibit 1 hereto, including all attachments
thereto;
6. an Opinion of Counsel to each Seller, in the form of
Exhibit 2 hereto; and
7. Option One's underwriting guidelines for each of the
Sellers origination programs.
(b) The Closing Documents for the Mortgage Loans to be
purchased on each Closing Date shall consist of fully executed originals of the
following documents:
1. the related Purchase Price and Terms Letter;
2. the related Final Mortgage Loan Schedule;
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3. an Officer's Certificate as to each Seller, in the
form of Exhibit 1 hereto, including all attachments
thereto;
4. if requested by the Initial Purchaser, an Opinion of
Counsel to each Seller, in the form of Exhibit 2
hereto;
5. a Security Release Certification, in the form of
Exhibit 3 hereto executed by any Person, as requested
by the Initial Purchaser, if any of the Mortgage
Loans has at any time been subject to any security
interest, pledge or hypothecation for the benefit of
such Person;
6. a certificate or other evidence of merger or change
of name, signed or stamped by the applicable
regulatory authority, if any of the Mortgage Loans
were acquired by the related Seller by merger or
acquired or originated by the related Seller while
conducting business under a name other than its
present name, if applicable; and
7. a Warranty ▇▇▇▇ of Sale in the form of Exhibit 4
hereto.
SECTION 10. Costs. The Purchaser shall pay any
commissions due its salesmen and the legal fees and expenses of its attorneys.
All other costs and expenses incurred in connection with the transfer and
delivery of the Mortgage Loans, including without limitation recording fees,
fees for title policy endorsements and continuations, fees for recording
Assignments of Mortgage and the Sellers' attorney's fees, shall be paid by the
Sellers.
SECTION 11. Option One's Servicing Obligations. Option
One, as independent contract servicer, shall service and administer the Mortgage
Loans during the Preliminary Servicing Period in accordance with the terms and
provisions set forth in the Servicing Addendum attached as Exhibit 8, which
Servicing Addendum is incorporated herein by reference.
SECTION 12. Removal of Mortgage Loans from Inclusion
under This Agreement Upon a Whole Loan Transfer or a Pass-Through Transfer on
One or More Reconstitution Dates.
The Sellers and the Initial Purchaser agree that with respect
to some or all of the Mortgage Loans, the Initial Purchaser may effect either:
(1) one or more Whole Loan Transfers; and/or
(2) one or more Pass-Through Transfers.
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With respect to each Whole Loan Transfer or Pass-Through
Transfer, as the case may be, entered into by the Initial Purchaser, Option One
agrees:
(1) to cooperate fully with the Purchaser and any
prospective purchaser with respect to all reasonable
requests and due diligence procedures including
participating in meetings with rating agencies, bond
insurers and such other parties as the Purchaser
shall designate and participating in meetings with
prospective purchasers of the Mortgage Loans or
interests therein and providing information
reasonably requested by such purchasers;
(2) to execute all Reconstitution Agreements provided
that each of Option One and the Purchaser is given an
opportunity to review and reasonably negotiate in
good faith the content of such documents not
specifically referenced or provided for herein;
(3) with respect to any Whole Loan Transfer or
Pass-Through Transfer, Option One shall make the
representations and warranties regarding Option One
and, if such Whole Loan Transfer or Pass-Through
Transfer occurs within 12 months of the Closing Date
or such later period as specified in the related
Purchase Price and Terms Letter, the Mortgage Loans
as of the date of the Whole Loan Transfer or
Pass-Through Transfer, modified to the extent
necessary to accurately reflect the pool statistics
of the Mortgage Loans as of the date of such Whole
Loan Transfer or Pass-Through Transfer and any events
or circumstances existing subsequent to the related
Closing Date(s);
(4) to deliver to the Purchaser for inclusion in any
prospectus or other offering material such publicly
available information regarding Option One, its
financial condition and its mortgage loan
delinquency, foreclosure and loss experience and any
additional information requested by the Purchaser,
and to deliver to the Purchaser any similar non
public, unaudited financial information, in which
case the Purchaser shall bear the cost of having such
information audited by certified public accountants
if the Purchaser desires such an audit, or as is
otherwise reasonably requested by the Purchaser and
which Option One is capable of providing without
unreasonable effort or expense, and to indemnify the
Purchaser and its affiliates for material
misstatements or omissions contained in such
information;
(5) to deliver to the Purchaser and to any Person
designated by the Purchaser, at the Purchaser's
expense, such statements and audit letters of
reputable, certified public accountants pertaining to
information provided by Option One pursuant to clause
4 above as shall be reasonably requested by the
Purchaser;
(6) to deliver to the Purchaser, and to any Person
designated by the Purchaser, such legal documents and
in-house Opinions of Counsel as are customarily
delivered
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by originators or servicers, as the case may be, and
reasonably determined by the Purchaser to be
necessary in connection with Whole Loan Transfers or
Pass-Through Transfers, as the case may be, such
in-house Opinions of Counsel for a Pass-Through
Transfer to be in the form reasonably acceptable to
the Purchaser, it being understood that the cost of
any opinions of outside special counsel that may be
required for a Whole Loan Transfer or Pass-Through
Transfer, as the case may be, shall be the
responsibility of the Purchaser;
(7) to review, negotiate and execute one or more
subservicing agreements between Option One and any
master servicer which is generally considered to be a
prudent master servicer in the secondary mortgage
market, designated by the Purchaser in its sole
discretion after consultation with Option One and/or
one or more custodial and servicing agreements among
the Purchaser, Option One and a third party
custodian/trustee which is generally considered to be
a prudent custodian/trustee in the secondary mortgage
market designated by the Purchaser in its sole
discretion after consultation with Option One, in
either case for the purpose of pooling the Mortgage
Loans with other Mortgage Loans for resale or
securitization;
(8) in connection with any securitization of any Mortgage
Loans, to review, negotiate and execute a pooling and
servicing agreement, which pooling and servicing
agreement may, at the Purchaser's direction, contain
contractual provisions including, but not limited to,
a 24-day certificate payment delay (54-day total
payment delay), servicer advances of delinquent
scheduled payments of principal and interest through
liquidation (unless deemed non-recoverable) and
prepayment interest shortfalls (to the extent of the
monthly servicing fee payable thereto), servicing and
mortgage loan representations and warranties which in
form and substance conform to the representations and
warranties in this Agreement and to secondary market
standards for securities backed by mortgage loans
similar to the Mortgage Loans and such provisions
with regard to servicing responsibilities, investor
reporting, segregation and deposit of principal and
interest payments, custody of the Mortgage Loans, and
other covenants as are required by the Purchaser and
one or more nationally recognized rating agencies for
"AAA" rated mortgage pass-through transactions which
are "mortgage related securities" for the purposes of
the Secondary Mortgage Market Enhancement Act of
1984, unless otherwise mutually agreed. At the option
of the Purchaser, the facilities of the Depository
Trust Company ("DTC") may be used in connection with
any class of security issued pursuant to any pooling
agreement, subject only to the consent of the DTC. If
the Purchaser deems it advisable at any time to pool
the Mortgage Loans with other mortgage loans for the
purpose of resale or securitization, Option One
agrees to execute one or more subservicing agreements
between itself (as servicer) and a master servicer
designated by the Purchaser at its sole discretion,
and/or one or more servicing agreements among Option
One (as servicer), the
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Purchaser and a trustee designated by the Purchaser
at its sole discretion, such agreements in each case
incorporating terms and provisions substantially
identical to those described in the immediately
preceding paragraph and providing for a servicing fee
no less than the Servicing Fee provided in this
Agreement; and
(9) to transfer the servicing rights to the Purchaser or
its designee as described in Section 15 upon the
direction of the Purchaser.
All Mortgage Loans not sold or transferred pursuant to a Whole
Loan Transfer or Pass-Through Transfer shall be subject to this Agreement and
shall continue to be serviced for the remainder of the Preliminary Servicing
Period in accordance with the terms of this Agreement and with respect thereto
this Agreement shall remain in full force and effect.
SECTION 13. The Sellers.
Subsection 13.01. Additional Indemnification by the Sellers.
In addition to the indemnification provided in Subsection
7.03, Option One shall indemnify the Purchaser and hold the Purchaser harmless
against any and all claims, losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments, and any other
costs, fees and expenses that the Purchaser may sustain in any way related to
the failure of any Seller to perform its obligations under this Agreement
including but not limited to Option One's obligation to service and administer
the Mortgage Loans in strict compliance with the terms of this Agreement or any
Reconstitution Agreement entered into pursuant to Section 12.
Subsection 13.02. Merger or Consolidation of Option One.
Option One shall keep in full force and effect its existence,
rights and franchises as a corporation under the laws of the state of its
incorporation except as permitted herein, and shall obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans, and to enable
Option One to perform its duties under this Agreement.
Any Person into which Option One may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which Option One shall be a party, or any Person succeeding to
the business of Option One, shall be the successor of Option One hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided, however, that the successor or surviving Person shall be an
institution whose deposits are insured by the FDIC or a company whose business
is the origination and servicing of mortgage loans, shall be a ▇▇▇▇▇▇ Mae or
▇▇▇▇▇▇▇ Mac approved seller/servicer and shall satisfy any requirements of
Section 16 with respect to the qualifications of a successor to Option One.
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Subsection 13.03. Limitation on Liability of the Sellers and
Others.
Neither Option One nor any other Seller or any of the
officers, employees or agents of Option One or any other Seller shall be under
any liability to the Purchaser for any action taken or for refraining from the
taking of any action in good faith in connection with the servicing of the
Mortgage Loans pursuant to this Agreement, or for errors in judgment; provided,
however, that this provision shall not protect Option One or any such person
against any breach of warranties or representations made herein, or failure to
perform its obligations in strict compliance with any standard of care set forth
in this Agreement, or any liability which would otherwise be imposed by reason
of any breach of the terms and conditions of this Agreement. The Sellers and any
officer, employee or agent of the Sellers may rely in good faith on any document
of any kind prima facie properly executed and submitted by any Person respecting
any matters arising hereunder. The Sellers shall not be under any obligation to
appear in, prosecute or defend any legal action which is not incidental to their
obligation to sell or duty to service, as applicable, the Mortgage Loans in
accordance with this Agreement and which in such Seller's opinion may result in
its incurring any expenses or liability; provided, however, that a Seller may,
with the consent of the Purchaser, undertake any such action which they may deem
necessary or desirable in respect to this Agreement and the rights and duties of
the parties hereto. In such event, the legal expenses and costs of such action
and any liability resulting therefrom shall be expenses, costs and liabilities
for which the Purchaser shall be liable, and the related Seller shall be
entitled to reimbursement therefor from the Purchaser upon written demand except
when such expenses, costs and liabilities are subject to the Sellers'
indemnification under Subsections 7.03 or 13.01.
Subsection 13.04. Sellers Not to Resign.
The Sellers shall not assign this Agreement or resign from the
obligations and duties hereby imposed on it except by mutual consent of Option
One and the Purchaser or upon the determination that its servicing duties
hereunder are no longer permissible under applicable law and such incapacity
cannot be cured by Option One in which event Option One may resign as servicer.
Any such determination permitting the resignation of Option One as servicer
shall be evidenced by an Opinion of Counsel to such effect delivered to the
Purchaser which Opinion of Counsel shall be in form and substance acceptable to
the Purchaser and which shall be provided at the cost of Option One. No such
resignation shall become effective until a successor shall have assumed Option
One's responsibilities and obligations hereunder in the manner provided in
Section 16.
Subsection 13.05. No Transfer of Servicing.
Each Seller acknowledges that the Purchaser has acted in
reliance upon Option One's independent status, the adequacy of its servicing
facilities, plan, personnel, records and procedures, its integrity, reputation
and financial standing and the continuance thereof. Without in any way limiting
the generality of this Section, no Seller shall assign this Agreement and Option
One shall not assign the servicing hereunder or delegate its rights or duties
hereunder or any portion thereof, or sell or otherwise dispose of
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all or substantially all of its property or assets, without the prior written
approval of the Purchaser, which consent will not be unreasonably withheld.
SECTION 14. Default.
Subsection 14.01. Events of Default.
In case one or more of the following Events of Default by
Option One shall occur and be continuing, that is to say:
(i) any failure by Option One to remit to the Purchaser
any payment required to be made under the terms of this Agreement which
continues unremedied for a period of one (1) Business Day after the date upon
which written notice of such failure, requiring the same to be remedied, shall
have been given to Option One (and the related Seller Trust, if applicable) by
the Purchaser; or
(ii) failure on the part of Option One duly to observe or
perform in any material respect any other of the covenants or agreements on the
part of such Seller set forth in this Agreement which continues unremedied for a
period of thirty (30) days (except that such number of days shall be fifteen
(15) in the case of a failure to pay any premium for any insurance policy
required to be maintained under this Agreement) after the date on which written
notice of such failure, requiring the same to be remedied, shall have been given
to Option One (and such Seller Trust, if applicable) by the Purchaser; or
(iii) decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or receiver
or liquidator in any insolvency, bankruptcy, readjustment of debt, marshalling
of assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against Option One and such
decree or order shall have remained in force undischarged or unstayed for a
period of sixty (60) days; or
(iv) Option One shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, bankruptcy,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to Option One or of or relating to all or
substantially all of its property; or
(v) Option One shall admit in writing its inability to
pay its debts generally as they become due, file a petition to take advantage of
any applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
(vi) failure by Option One to be in compliance with
the "doing business" or licensing laws of any jurisdiction where a Mortgaged
Property is located; or
(vii) Option One ceases to meet the qualifications of
either a ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac seller/servicer; or
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(viii) Option One attempts to assign its right to servicing
compensation hereunder or the Seller attempts, without the consent of the
Purchaser, to sell or otherwise dispose of all or substantially all of its
property or assets or to assign this Agreement or the servicing responsibilities
hereunder or to delegate its duties hereunder or any portion thereof;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, the Purchaser, by notice in writing to Option One may, in
addition to whatever rights the Purchaser may have at law or equity to damages,
including injunctive relief and specific performance, terminate all the rights
and obligations of Option One as servicer under this Agreement. On or after the
receipt by Option One of such written notice, all authority and power of Option
One to service the Mortgage Loans under this Agreement shall on the date set
forth in such notice pass to and be vested in the successor appointed pursuant
to Section 16.
Subsection 14.02. Waiver of Defaults.
The Purchaser may waive any default by a Seller in the
performance of its obligations hereunder and its consequences. Upon any such
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
SECTION 15. Termination.
(a) The obligations and responsibilities of Option One, as
servicer, shall terminate upon the distribution to the Purchaser of the final
payment or liquidation with respect to the last Mortgage Loan (or advances of
same by Option One) or the disposition of all property acquired upon foreclosure
or deed in lieu of foreclosure with respect to the last Mortgage Loan and the
remittance of all funds due hereunder unless terminated with respect to all or a
portion of the Mortgage Loans on an earlier date at the option of the Purchaser
pursuant to Section 14.
(b) The Purchaser, at its sole option, may terminate Option
One as servicer of any Mortgage Loan under this Agreement, without cause,
pursuant to this Section 15. Any such notice of termination shall be in writing
and delivered to Option One by registered mail as provided in Section 19. The
termination fee for the termination of servicing without cause pursuant to this
Section 15 for each Mortgage Loan for which servicing is being terminated shall
be equal to (i) the product of 1.00% and the Stated Principal Balance of the
Mortgage Loans as to which Option One is terminated during the thirty-six month
period following the related Closing Date for such Mortgage Loans, (ii) the
product of 0.75% and the Stated Principal Balance of the Mortgage Loans as to
which Option One is terminated during the following thirty-six month period, and
(iii) the product of 0.25% and the Stated Principal Balance of the Mortgage
Loans terminated more than seventy-two months following the related Closing
Date.
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(c) Upon written request from the Purchaser in connection with
any such termination, Option One shall prepare, execute and deliver, any and all
documents and other instruments, place in the Purchaser's possession all
Mortgage Files, and do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise, at the Option One's sole expense. The Seller
agrees to cooperate with the Purchaser and such successor in effecting the
termination of Option One's responsibilities and rights hereunder as servicer,
including, without limitation, the transfer to such successor for administration
by it of all cash amounts which shall at the time be credited by Option One to
the Custodial Account, REO Account or Escrow Account or thereafter received with
respect to the Mortgage Loans.
SECTION 16. Successor to the Seller. Prior to termination
of Option One's responsibilities and duties under this Agreement pursuant to
Section 12, 13, 14 or 15, the Purchaser shall (i) succeed to and assume all of
Option One's responsibilities, rights, duties and obligations under this
Agreement, or (ii) appoint a successor which shall succeed to all rights and
assume all of the responsibilities, duties and liabilities of Option One as
servicer under this Agreement. In connection with such appointment and
assumption, the Purchaser may make such arrangements for the compensation of
such successor out of payments on Mortgage Loans as it and such successor shall
agree. In the event that Option One's duties, responsibilities and liabilities
as servicer under this Agreement should be terminated pursuant to the
aforementioned Sections, Option One shall discharge such duties and
responsibilities during the period from the date it acquires knowledge of such
termination until the effective date thereof with the same degree of diligence
and prudence which it is obligated to exercise under this Agreement, and shall
take no action whatsoever that might impair or prejudice the rights or financial
condition of the Purchaser or such successor. The termination of Option One as
servicer pursuant to the aforementioned Sections shall not become effective
until a successor shall be appointed pursuant to this Section 16 and shall in no
event relieve the Sellers of the representations and warranties made pursuant to
Subsections 7.01 and 7.02 and the remedies available to the Purchaser under
Subsection 7.03 or 7.04, it being understood and agreed that the provisions of
such Subsections 7.01, 7.02, 7.03 and 7.04 shall be applicable to the Sellers
notwithstanding any such resignation or termination of Option One, or the
termination of this Agreement.
Any successor appointed as provided herein shall execute,
acknowledge and deliver to Option One and to the Purchaser an instrument
accepting such appointment, whereupon such successor shall become fully vested
with all the rights, powers, duties, responsibilities, obligations and
liabilities of Option One, with like effect as if originally named as a party to
this Agreement provided, however, that such successor shall not assume, and
Option One shall indemnify such successor for, any and all liabilities arising
out of the Option One's acts as servicer. Any termination of Option One as
servicer pursuant to Section 12, 14 or 15 shall not affect any claims that the
Purchaser may have against any Seller arising prior to any such termination or
resignation or remedies with respect to such claims.
Option One shall timely deliver to the successor the funds in
the Custodial Account, REO Account and the Escrow Account and the Mortgage Files
and related documents and statements held by it hereunder and Option One shall
account for all funds. Option One shall execute and deliver such
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instruments and do such other things all as may reasonably be required to more
fully and definitely vest and confirm in the successor all such rights, powers,
duties, responsibilities, obligations and liabilities of Option One as servicer.
The successor shall make arrangements as it may deem appropriate to reimburse
Option One for amounts Option One actually expended as servicer pursuant to this
Agreement which the successor is entitled to retain hereunder and which would
otherwise have been recovered by Option One pursuant to this Agreement but for
the appointment of the successor servicer.
SECTION 17. Financial Statements. Option One understands
that in connection with the Purchaser's marketing of the Mortgage Loans, the
Purchaser shall make available to prospective purchasers financial statements of
Option One and Option's parent company, if applicable, for the most recently
completed three fiscal years respecting which such statements are available.
Option One also shall make available any comparable interim statements to the
extent any such statements have been prepared by Option One (and are available
upon request to members or stockholders of Option One or the public at large).
Option One, if it has not already done so, agrees to furnish promptly to the
Purchaser copies of the statements specified above. Option One also shall make
available information on its servicing performance with respect to mortgage
loans serviced for others, including delinquency ratios.
Option One also agrees to allow access to knowledgeable
financial, accounting, origination and servicing officers of Option One for the
purpose of answering questions asked by any prospective purchaser regarding
recent developments affecting Option One, its loan origination or servicing
practices or the financial statements of Option One.
SECTION 18. Mandatory Delivery. Grant of Security
Interest. The sale and delivery of each Mortgage Loan on or before the related
Closing Date is mandatory from and after the date of the execution of the
related Purchase Price and Terms Letter, it being specifically understood and
agreed that each Mortgage Loan is unique and identifiable on the date hereof and
that an award of money damages would be insufficient to compensate the Initial
Purchaser for the losses and damages incurred by the Initial Purchaser
(including damages to prospective purchasers of the Mortgage Loans) in the event
of the Sellers failure to deliver (i) each of the related Mortgage Loans, (ii)
one or more Qualified Substitute Mortgage Loans delivered pursuant to Section 7,
or (iii) one or more Mortgage Loans otherwise acceptable to the Initial
Purchaser on or before the related Closing Date. Each Seller hereby grants to
the Initial Purchaser a lien on and a continuing security interest in each
Mortgage Loan and each document and instrument evidencing each such Mortgage
Loan to secure the performance by the Seller of its obligation hereunder, and
each Seller agrees that it holds such Mortgage Loans in custody for the Initial
Purchaser subject to the Initial Purchaser's (i) right to reject any Mortgage
Loan under the terms of this Agreement and the related Purchase Price and Terms
Letter, and (ii) obligation to pay the related Purchase Price for the Mortgage
Loans. All rights and remedies of the Purchaser under this Agreement are
distinct from, and cumulative with, any other rights or remedies under this
Agreement or afforded by law or equity and all such rights and remedies may be
exercised concurrently, independently or successively.
SECTION 19. Notices. All demands, notices and
communications hereunder shall be in writing and shall be deemed to have been
duly given if mailed, by registered or certified mail, return receipt requested,
or, if by other means, when received by the other party at the address as
follows:
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(i) if to the Purchaser:
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Capital Inc.
World Financial Center
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
(ii) if to Option One:
Option One Mortgage Corporation
3 Ada
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
if to Seller Trusts:
Option One Seller Trust 2001-1A
Option One Seller Trust 2001-1B
Option One Seller Trust 2001-2
Option One Seller Trust 2002-3
c/o Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust
Administration
with a copy to:
Option One Mortgage Corporation
3 Ada
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
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SECTION 20. Severability Clause. Any part, provision,
representation or warranty of this Agreement which is prohibited or which is
held to be void or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof. Any part, provision, representation or warranty of this Agreement which
is prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall be ineffective, as to such jurisdiction, to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof. If the invalidity of any
part, provision, representation or warranty of this Agreement shall deprive any
party of the economic benefit intended to be conferred by this Agreement, the
parties shall negotiate, in good-faith, to develop a structure the economic
effect of which is nearly as possible the same as the economic effect of this
Agreement without regard to such invalidity.
SECTION 21. Counterparts. This Agreement may be executed
simultaneously in any number of counterparts. Each counterpart shall be deemed
to be an original, and all such counterparts shall constitute one and the same
instrument.
SECTION 22. Governing Law. The Agreement shall be
construed in accordance with the laws of the State of New York without regard to
any conflicts of law provisions and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with the laws of the State
of New York, except to the extent preempted by Federal law.
SECTION 23. Intention of the Parties. It is the intention
of the parties that the Initial Purchaser is purchasing, and the Seller is
selling, the Mortgage Loans and not a debt instrument of the Seller or another
security. Accordingly, the parties hereto each intend to treat the transaction
for Federal income tax purposes as a sale by the Seller, and a purchase by the
Purchaser, of the Mortgage Loans. The Initial Purchaser shall have the right to
review the Mortgage Loans and the related Mortgage File to determine the
characteristics of the Mortgage Loans which shall affect the Federal income tax
consequences of owning the Mortgage Loans and the Seller shall cooperate with
all reasonable requests made by the Initial Purchaser in the course of such
review.
SECTION 24. Successors and Assigns. This Agreement shall
bind and inure to the benefit of and be enforceable by the Seller and the
Purchaser and the respective successors and assigns of the Seller and the
Purchaser. The Purchaser may assign this Agreement to any Person to whom any
Mortgage Loan is transferred whether pursuant to a sale or financing and to any
Person to whom the servicing or master servicing of any Mortgage Loan is sold or
transferred. Upon any such assignment, the Person to whom such assignment is
made shall succeed to all rights and obligations of the Purchaser under this
Agreement to the extent of the related Mortgage Loan or Mortgage Loans and this
Agreement, to the extent of the related Mortgage Loan or Loans, shall be deemed
to be a separate and distinct Agreement between the Seller and such Purchaser,
and a separate and distinct Agreement between the Seller and each other
Purchaser to the extent of the other related Mortgage Loan or Loans. In the
event that this Agreement is assigned to any Person to whom the servicing or
master servicing of any Mortgage Loan is sold or
-44-
transferred, the rights and benefits under this agreement which inure to the
Purchaser shall inure to the benefit of both the Person to whom such Mortgage
Loan is transferred and the Person to whom the servicing or master servicing of
the Mortgage Loan has been transferred; provided that, the right to require a
Mortgage Loan to be repurchased by the Seller pursuant to Subsection 7.03 or
7.04 shall be retained solely by the Purchaser. This Agreement shall not be
assigned, pledged or hypothecated by the Seller to a third party without the
consent of the Purchaser.
SECTION 25. Waivers. No term or provision of this
Agreement may be waived or modified unless such waiver or modification is in
writing and signed by the party against whom such waiver or modification is
sought to be enforced.
SECTION 26. Exhibits. The exhibits to this Agreement are
hereby incorporated and made a part hereof and are an integral part of this
Agreement.
SECTION 27. Nonsolicitation. From and after the Closing
Date, Option One agrees that it will not take any action or permit or cause any
action to be taken by any of its agents or Affiliates, or by any independent
contractors or independent mortgage brokerage companies on Option One's behalf,
to personally, by telephone, mail or electronic mail, solicit any Mortgagor
under any Mortgage Loan for the purpose of refinancing such Mortgage Loan;
provided, that Option One may solicit any Mortgagor for whom Option One has
received a request for demand for payoff or a borrower or obligor initiated
written communication indicating a desire to prepay the related Mortgage Loan;
provided, further, it is understood and agreed that (i) promotions undertaken by
Option One or any of its Affiliates which are directed to the general public at
large, including, without limitation, mass mailings based on commercially
acquired mailing lists, newspaper, radio and television advertisements shall not
constitute solicitation under this Section and (ii) all rights and benefits
relating to the solicitation of any Mortgagors to refinance any Mortgage Loans
and the attendant rights, title and interest in and to the list of such
Mortgagors and data relating to their mortgages (including insurance renewal
dates) shall be transferred to the Purchaser on the Closing Date and Option One
shall take no action to undermine these rights and benefits.
SECTION 28. General Interpretive Principles. For purposes
of this Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Agreement have the meanings
assigned to them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to include the other
gender;
(b) accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally accepted accounting
principles;
(c) references herein to "Articles," "Sections,"
"Subsections," "Paragraphs," and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, Paragraphs and other
subdivisions of this Agreement;
-45-
(d) reference to a Subsection without further reference
to a Section is a reference to such Subsection as contained in the same Section
in which the reference appears, and this rule shall also apply to Paragraphs and
other subdivisions;
(e) the words "herein," "hereof," "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
SECTION 29. Reproduction of Documents. This Agreement and
all documents relating thereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by any party at the closing, and (c) financial statements, certificates
and other information previously or hereafter furnished, may be reproduced by
any photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding, whether or not the original is in existence and whether or not such
reproduction was made by a party in the regular course of business, and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
SECTION 30. Further Agreements. The Seller and the
Purchaser each agree to execute and deliver to the other such reasonable and
appropriate additional documents, instruments or agreements as may be necessary
or appropriate to effectuate the purposes of this Agreement.
SECTION 31. Protection of Confidential Information. The
Seller agrees that the Purchaser has or will introduce subsequent Purchasers to
the Seller, that purchasers of the Mortgage Loans are customers of the Purchaser
and that the relationships of the Purchaser to purchasers of the Mortgage Loans
are confidential. The Seller agrees that, for a period of two (2) years
following the Closing Date with respect to a subsequent Purchaser, the Seller
will not, for the purpose of purchasing and selling other Mortgage Loans,
communicate with or sell such other mortgage loans to such purchaser of the
Mortgage Loans unless such subsequent Purchaser is independently introduced to
the Seller; provided, however, that the foregoing shall not apply to a purchaser
of the Mortgage Loans that is ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac. The Seller will keep
confidential and will not, without the Purchaser's written consent, divulge to
any party the Purchase Price of the Mortgage Loans, except to the extent that it
is appropriate to do so in working with legal counsel, auditors, taxing
authorities or other governmental agencies.
Option One agrees and acknowledges that as to all nonpublic personal
information received or obtained by it with respect to any Mortgagor: (a) such
information is and shall be held by Option One in accordance with all applicable
law, including but not limited to the privacy provisions of the ▇▇▇▇▇-▇▇▇▇▇-
Bliley Act of 1999; (b) such information is in connection with a proposed or
actual secondary market sale related to a transaction of the Mortgagor for the
purposes of 16 C.F.R., Section 313.14(a)(3); and (c)
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Option One is hereby prohibited from disclosing or using any such information
internally other than to carry out the express provisions of this Agreement.
SECTION 32. Survival. The Seller agrees that the
representations, warranties and agreements made by the Seller herein and in any
certificate or other instrument delivered pursuant hereto shall be deemed to be
relied upon by the Purchaser, notwithstanding any investigation heretofore or
hereafter made by the Purchaser or on the Purchaser's behalf, and that the
representations, warranties and agreements made by the Seller herein or in any
such certificate or other instrument shall survive the delivery and payment for
the Mortgage Loans for each Transaction.
SECTION 33. No Recourse to Trustee. It is expressly
understood and agreed by the parties to this Agreement that (a) this Agreement
is executed and delivered by Wilmington Trust Company, not individually or
personally but solely as trustee of the Seller Trusts, in the exercise of the
powers and authority conferred and vested in it as trustee, (b) each of the
representations, undertakings and agreements herein made on the part of each
Seller Trust is made and intended not as personal representations, undertakings
and agreements by Wilmington Trust Company but is made and intended for the
purpose of binding only the Seller Trusts, (c) nothing herein contained shall be
construed as creating any liability on Wilmington Trust Company, individually or
personally, to perform any covenant either expressed or implied contained
herein, all such liability, if any, being expressly waived by the parties to
this Agreement and by any person claiming by, through or under the parties to
this Agreement and (d) under no circumstances shall Wilmington Trust Company be
personally liable for the payment of any indebtedness or expenses of the Seller
Trusts or be liable for the breach or failure of any obligation, representation,
warranty or covenant made or undertaken by the Seller Trusts under this
Agreement or any other document.
-47-
IN WITNESS WHEREOF, the Sellers and the Purchaser have caused
their names to be signed hereto by their respective officers thereunto duly
authorized as of the date first above written.
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE CAPITAL INC.
(Initial Purchaser)
By:________________________________
Name:______________________________
Title:_____________________________
OPTION ONE MORTGAGE
CORPORATION
(Seller)
By: __________________
Name:
Title:
OPTION ONE OWNER TRUST 2001-1A
(Seller)
By: Wilmington Trust Company,
not in its individual capacity,
but solely as trustee
By:___________________
Name:
Title:
OPTION ONE OWNER TRUST 2001-1B
(Seller)
By: Wilmington Trust Company,
not in its individual capacity,
but solely as trustee
By:___________________
Name:
Title:
OPTION ONE OWNER TRUST 2001-2
(Seller)
By: Wilmington Trust Company,
not in its individual capacity,
but solely as trustee
By:___________________
Name:
Title:
OPTION ONE OWNER TRUST 2002-3
(Seller)
By: Wilmington Trust Company,
not in its individual capacity,
but solely as trustee
By:___________________
Name:
Title:
EXHIBIT 1-A
OPTION ONE'S OFFICER'S CERTIFICATE
I, ________________________, hereby certify that I am the
duly elected ______________ of Option One Mortgage Corporation, a California
corporation (the "Seller"), and further certify, on behalf of the Seller as
follows:
1. Attached hereto as Attachment I are a true and
correct copy of the Certificate of Incorporation and by-laws of the
Seller as are in full force and effect on the date hereof.
2. No proceedings looking toward merger, liquidation,
dissolution or bankruptcy of the Seller are pending or contemplated.
3. Each person who, as an officer or attorney-in-fact of
the Seller, signed (a) the Master Mortgage Loan Purchase and Servicing
Agreement (the "Purchase Agreement"), dated as of August 1, 2002, by
and among Option One, Option One Owner Trust 2001-1A, Option One Owner
Trust 2001-1B, Option One Owner Trust 2001-2 and Option One Owner Trust
2002-3 (collectively, the "Sellers") and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Capital
Inc. (the "Purchaser"); (b) the Purchase Price and Terms Letter, dated
_____________ 200_, between the Sellers and the Purchaser (the
"Purchase Price and Terms Letter"); and (c) any other document
delivered prior hereto or on the date hereof in connection with the
sale and servicing of the Mortgage Loans in accordance with the
Purchase Agreement and the Purchase Price and Terms Letter was, at the
respective times of such signing and delivery, and is as of the date
hereof, duly elected or appointed, qualified and acting as such officer
or attorney-in-fact, and the signatures of such persons appearing on
such documents are their genuine signatures.
4. Attached hereto as Attachment II is a true and
correct copy of the resolutions duly adopted by the board of directors
of the Seller on ________________, 200_ (the "Resolutions") with
respect to the authorization and approval of the sale and servicing of
the Mortgage Loans; said Resolutions have not been amended, modified,
annulled or revoked and are in full force and effect on the date
hereof.
5. Attached hereto as Attachment III is a Certificate of
Good Standing of the Seller dated ______________, 200_. No event has
occurred since ___________________, 200_ which has affected the good
standing of the Seller under the laws of the State of ___________.
6. All of the representations and warranties of the
Seller contained in Subsections 7.01 and 7.02 of the Purchase Agreement
were true and correct in all material respects as of the date of the
Purchase Agreement and are true and correct in all material respects as
of the date hereof.
7. The Seller has performed all of its duties and has
satisfied all the material conditions on its part to be performed or
satisfied prior to the related Closing Date pursuant to the Purchase
Agreement and the related Purchase Price and Terms Letter.
All capitalized terms used herein and not otherwise defined
shall have the meaning assigned to them in the Purchase Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed
the seal of the Seller.
Dated:____________________
[Seal]
OPTION ONE MORTGAGE CORPORATION
(Seller)
By:____________________________
Name:__________________________
Title: [ ]
I, _______________________, Secretary of the Seller, hereby
certify that _________________________ is the duly elected, qualified and acting
Vice President of the Seller and that the signature appearing above is genuine.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:____________________
[Seal]
OPTION ONE MORTGAGE CORPORATION
(Seller)
By:____________________________
Name:__________________________
Title: [Assistant] Secretary
E-1-2
EXHIBIT 1-B
FORM OF SELLER TRUSTS' OFFICERS' CERTIFICATE
The undersigned Seller Trust (the "Seller") does hereby certify:
1. Attached hereto as Attachment I are a true and
correct copy of the trust certificate and trust agreement of the Seller
as are in full force and effect on the date hereof.
2. No proceedings looking toward merger, liquidation,
dissolution or bankruptcy of the Seller are pending or contemplated.
3. Each person who, as an officer or attorney-in-fact of
the Seller, signed (a) the Master Mortgage Loan Purchase and Servicing
Agreement (the "Purchase Agreement"), dated as of August 1, 2002 by and
among Option One, Option One Owner Trust 2001-1A, Option One Owner
Trust 2001-1B, Option One Owner Trust 2001-2, Option One Owner Trust
2002-3 (collectively, the "Sellers") and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Capital
Inc. (the "Purchaser"); (b) the Purchase Price and Terms Letter, dated
__________ ___, 200__, among Option One, Option One Owner Trust
2001-1A, Option One Owner Trust 2001-1B, Option One Owner Trust 2001-
2, Option One Owner Trust 2002-3 and the Purchaser (the "Purchase Price
and Terms Letter"); and (c) any other document delivered prior hereto
or on the date hereof in connection with the sale and servicing of the
Mortgage Loans in accordance with the Purchase Agreement and the
Purchase Price and Terms Letter was, at the respective times of such
signing and delivery, and is as of the date hereof, duly elected or
appointed, qualified and acting as such officer or attorney-in-fact,
and the signatures of such persons appearing on such documents are
their genuine signatures.
4. Attached hereto as Attachment III is a Certificate of
Good Standing of the Seller dated ____________, 200_. No event has
occurred since ____________, 200_ which has affected the good standing
of the Seller under the laws of the State of ___________.
5. Attached hereto as Attachment IV is a copy of each
license of the Seller to sell the Mortgage Loans, as required. No such
licenses have been suspended or revoked by any court, administrative
agency, arbitrator or governmental body and no proceedings are pending
which might result in such suspension or revocation.
6. All of the representations and warranties of the
Seller contained in [Subsections 7.01 and 7.02 ]of the Agreement were
true and correct in all material respects as of the date of the
Agreement and are true and correct in all material respects as of the
date hereof.
7. The Seller has performed all of its duties and has
satisfied all the material conditions on its part to be performed or
satisfied prior to the related Closing Date pursuant to the Agreement
and the related Purchase Price and Terms Letter.
E-1-3
8. It is expressly understood that (a) this officers'
certificate is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as trustee of the Seller, in the
exercise of the powers and authority conferred and vested in it as
trustee, (b) each of the representations, undertakings and agreements
herein made on the part of the Seller is made and intended not as
personal representations, undertakings and agreements by Wilmington
Trust Company but is made and intended for the purpose of binding only
the Seller, (c) nothing herein contained shall be construed as creating
any liability on Wilmington Trust Company, individually or personally,
to perform any covenant either expressed or implied contained herein,
all such liability, if any, being expressly waived by the parties to
the Agreement and by any person claiming by, through or under the
parties to the Agreement and (d) under no circumstances shall
Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Seller or be liable for the breach or
failure of any obligation, representation, warranty or covenant made or
undertaken by the Seller under this officers' certificate, the
Agreement or any other document.
All capitalized terms used herein and not otherwise defined
shall have the meaning assigned to them in the Agreement.
O P T I O N O N E O W N E R T R U S T
200[1][2]-[1A][1B][2][3]
By: Wilmington Trust Company, not in
its individual capacity, but solely as
trustee
By:___________________________
Name:
Title:
I, _______________________, [Assistant] Secretary of
Wilmington Trust Company, hereby certify that _________________________ is the
duly elected, qualified and acting _______________ of Wilmington Trust Company
and that the signature appearing above is genuine.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:
WILMINGTON TRUST COMPANY
By:____________________
Name:
Title: [Assistant] Secretary
E-1-4
EXHIBIT 2
[FORM OF OPINION OF COUNSEL TO THE SELLERS]
______________________________
(Date)
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Capital Inc.
World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Master Mortgage Loan Purchase and Servicing
Agreement, dated as of August 1, 2002
Gentlemen:
I have acted as counsel to Option One Mortgage Corporation, a
California Corporation ("Option One"), Option One Owner Trust 2001-1A, Option
One Owner Trust 2001-1B, Option One Owner Trust 2001-2, Option One Owner Trust
2002-3, each a Delaware Business Trust (the "Seller Trusts") (Option One and the
Seller Trusts, collectively, the "Sellers"), in connection with the sale of
certain mortgage loans by the Seller to ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Capital Inc. (the
"Purchaser") pursuant to the Master Mortgage Loan Purchase and Servicing
Agreement, dated as of August 1, 2002, between the Sellers and the Purchaser
(the "Agreement") [and the Purchase Price and Terms Letter, dated __________,
200_, by and among the Sellers and the Purchaser (the "Purchase Price and Terms
Letter")]. Capitalized terms not otherwise defined herein have the meanings set
forth in the Agreement.
In connection with rendering this opinion letter, I, or
attorneys working under my direction, have examined, among other things,
originals, certified copies or copies otherwise identified to my satisfaction as
being true copies of the following:
A. The Agreement;
B. [The Purchase Price and Terms Letter;]
C. Option One's [Certificate of Incorporation and by-laws]
[certificate of limited partnership and limited
partnership agreement], as amended to date; and
D. Resolutions adopted by the Board of Directors of the
Sellers with specific reference to actions relating
to the transactions covered by this opinion (the
"Board Resolutions").
For the purpose of rendering this opinion, I have made such
documentary, factual and legal examinations as I deemed necessary under the
circumstances. As to factual matters, I have relied upon statements,
certificates and other assurances of public officials and of officers and other
representatives of the Sellers, and upon such other certificates as I deemed
appropriate, which factual matters have not been independently established or
verified by me. I have also assumed, among other things, the genuineness of all
signatures, the legal capacity of all natural persons, the authenticity of all
documents submitted to me as originals, and the conformity to original documents
of all documents submitted to me as copies and the authenticity of the originals
of such copied documents.
On the basis of and subject to the foregoing examination, and
in reliance thereon, and subject to the assumptions, qualifications, exceptions
and limitations expressed herein, I am of the opinion that:
1. Option One has been duly incorporated and the Seller
Trusts have been duly formed and each is validly existing and in good standing
under the laws of the State of California, with corporate power and authority to
own its properties and conduct its business as presently conducted by it. Option
One has the corporate power and authority to service the Mortgage Loans, and
each Seller has the power and authority to execute, deliver, and perform its
obligations under the Agreement [and the Purchase Price and Terms Letter]
(sometimes collectively, the "Agreements").
2. The Agreement [and the Purchase Price and Terms
Letter] have been duly and validly authorized, executed and delivered by the
Sellers.
3. The Agreement [and the Purchase Price and Terms
Letter] constitute valid, legal and binding obligations of the Sellers,
enforceable against the Sellers in accordance with their respective terms.
4. No consent, approval, authorization or order of any
state or federal court or government agency or body is required for the
execution, delivery and performance by any Seller of the Agreement [and the
Purchase Price and Terms Letter], or the consummation of the transactions
contemplated by the Agreement [and the Purchase Price and Terms Letter], except
for those consents, approvals, authorizations or orders which previously have
been obtained.
5. Neither the servicing of the Mortgage Loans by Option
One as provided in the Agreement [and the Purchase Price and Terms Letter,] nor
the fulfillment of the terms of or the consummation of any other transactions
contemplated in the Agreement [and the Purchase Price and Terms Letter] will
result in a breach of any term or provision of the certificate of incorporation
or by-laws of Option One or the trust agreement or trust certificate of the
Seller Trusts, or, to the best of my knowledge, will conflict with, result in a
breach or violation of, or constitute a default under, (i) the terms of any
E-2-2
indenture or other agreement or instrument known to me to which a Seller is a
party or by which it is bound, (ii) any State of ____________ or federal statute
or regulation applicable to any Seller, or (iii) any order of any State of
____________ or federal court, regulatory body, administrative agency or
governmental body having jurisdiction over any Seller, except in any such case
where the default, breach or violation would not have a material adverse effect
on such Seller or its ability to perform its obligations under the Agreement.
6. There is no action, suit, proceeding or investigation
pending or, to the best of my knowledge, threatened against any Seller which, in
my judgment, either in any one instance or in the aggregate, would draw into
question the validity of the Agreement or which would be likely to impair
materially the ability of the Seller to perform under the terms of the
Agreement.
7. The sale of each Mortgage Note and Mortgage as and in
the manner contemplated by the Agreement is sufficient fully to transfer to the
Purchaser all right, title and interest of each Seller thereto as noteholder and
mortgagee.
8. The Assignments of Mortgage are in recordable form
and upon completion will be acceptable for recording under the laws of the State
of ___________. When endorsed, as provided in the Agreement, the Mortgage Notes
will be duly endorsed under ______________ law.
The opinions above are subject to the following additional
assumptions, exceptions, qualifications and limitations:
A. I have assumed that all parties to the Agreements
other than the Sellers have all requisite power and authority to execute,
deliver and perform their respective obligations under each of the Agreements,
and that the Agreements have been duly authorized by all necessary corporate
action on the part of such parties, have been executed and delivered by such
parties and constitute the legal, valid and binding obligations of such parties.
B. My opinion expressed in paragraphs 3 and 7 above is
subject to the qualifications that (i) the enforceability of the Agreements may
be limited by the effect of laws relating to (1) bankruptcy, reorganization,
insolvency, moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally, including, without limitation, the effect of
statutory or other laws regarding fraudulent conveyances or preferential
transfers, and (2) general principles of equity upon the specific enforceability
of any of the remedies, covenants or other provisions of the Agreements and upon
the availability of injunctive relief or other equitable remedies and the
application of principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law) as such principles relate to,
limit or affect the enforcement of creditors' rights generally and the
discretion of the court before which any proceeding for such enforcement may be
brought; and (ii) I express no opinion herein with respect to the validity,
legality, binding effect or enforceability of (a) provisions for indemnification
in the Agreements to the extent such provisions may be held to be unenforceable
as contrary to public policy or (b) Section 18 of the Agreement.
E-2-3
C. I have assumed, without independent check or
certification, that there are no agreements or understandings among the Sellers,
the Purchaser and any other party which would expand, modify or otherwise affect
the terms of the documents described herein or the respective rights or
obligations of the parties thereunder.
I am admitted to practice in the State of ___________, and I
render no opinion herein as to matters involving the laws of any jurisdiction
other than the State of _________ and the Federal laws of the United States of
America.
Very truly yours,
E-2-4
EXHIBIT 3
SECURITY RELEASE CERTIFICATION
I. Release of Security Interest
___________________________, hereby relinquishes any and all
right, title and interest it may have in and to the Mortgage Loans described in
Exhibit A attached hereto upon purchase thereof by ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage
Capital Inc. from the Seller named below pursuant to that certain Master
Mortgage Loan Purchase and Servicing Agreement, dated as of August 1, 2002, as
of the date and time of receipt by ______________________________ of $__________
for such Mortgage Loans (the "Date and Time of Sale"), and certifies that all
notes, mortgages, assignments and other documents in its possession relating to
such Mortgage Loans have been delivered and released to the Seller named below
or its designees as of the Date and Time of Sale.
Name and Address of Financial Institution
_________________________________________
(Name)
_________________________________________
(Address)
By:______________________________________
II. Certification of Release
The Seller named below hereby certifies to ▇▇▇▇▇▇▇ ▇▇▇▇▇
Mortgage Capital Inc. that, as of the Date and Time of Sale of the above
mentioned Mortgage Loans to ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Capital Inc., the security
interests in the Mortgage Loans released by the above named corporation comprise
all security interests relating to or affecting any and all such Mortgage Loans.
The Seller warrants that, as of such time, there are and will be no other
security interests affecting any or all of such Mortgage Loans.
[O P T I O N O N E M O R T G A G E
CORPORATION][OPTION ONE OWNER TRUST
2001-1A][OPTION ONE OWNER TRUST 2001-1B]
[OPTION ONE OWNER TRUST 2001-2][OPTION
ONE OWNER TRUST 2002-3]
Seller
By:_____________________________________
Name:___________________________________
Title:__________________________________
EXHIBIT 4
WARRANTY ▇▇▇▇ OF SALE
On this _______ day of ________, 200_, each of [OPTION ONE
MORTGAGE CORPORATION][OPTION ONE OWNER TRUST 2001-1A][OPTION ONE OWNER TRUST
2001-1B][OPTION ONE OWNER TRUST 2001-2][OPTION ONE OWNER TRUST 2002-3](each a
"Seller" collectively, the "Sellers") as the Seller under that certain Master
Mortgage Loan Purchase and Servicing Agreement, dated as of August 1, 2002 (the
"Agreement") does hereby sell, transfer, assign, set over and convey to ▇▇▇▇▇▇▇
▇▇▇▇▇ Mortgage Capital Inc. as Purchaser under the Agreement, without recourse,
but subject to the terms of the Agreement, all rights, title and interest of the
Sellers in and to the Mortgage Loans listed on the Final Mortgage Loan Schedule
attached hereto, together with the related Mortgage Files and all rights and
obligations arising under the documents contained therein. Pursuant to
Subsection 6.03 of the Agreement, each Seller has delivered to the Custodian the
documents for each Mortgage Loan to be purchased as set forth in the Agreement.
The contents of each related Servicing File required to be retained by Option
One Mortgage Corporation to service the Mortgage Loans pursuant to the Agreement
and thus not delivered to the Purchaser are and shall be held in trust by the
Seller for the benefit of the Purchaser as the owner thereof. Option One
Mortgage Corporation's possession of any portion of each such Servicing File is
at the will of the Purchaser for the sole purpose of facilitating servicing of
the related Mortgage Loan pursuant to the Agreement, and such retention and
possession by Option One Mortgage Corporation shall be in a custodial capacity
only. The ownership of each Mortgage Note, Mortgage, and the contents of the
Mortgage File and Servicing File is vested in the Purchaser and the ownership of
all records and documents with respect to the related Mortgage Loan prepared by
or which come into the possession of the Sellers shall immediately vest in the
Purchaser and shall be retained and maintained, in trust, by such Seller at the
will of the Purchaser in such custodial capacity only.
Each Seller confirms to the Purchaser that the representations
and warranties set forth in Subsections 7.01 and 7.02 of the Agreement are true
and correct as of the date hereof, and that all statements made in each Seller's
Officer's Certificate and all Attachments thereto remain complete, true and
correct in all respects as of the date hereof, and makes the following
additional representations and warranties to the Purchaser, which additional
representations and warranties are hereby incorporated into Subsection 7.02 of
the Agreement:
(1) When measured by aggregate Stated Principal Balance
as of the Cut-off Date, no more than ____________
percent (__%) of the Mortgage Loans are Rate/Term
Refinancings and no more than _____________ percent
(__%) of the Mortgage Loans are Cash-Out
Refinancings.
(2) When measured by aggregate Stated Principal Balance
as of the Cut-off Date, (i) no less than
______________ percent (__%) of the Mortgage Loans
are secured by detached one-family dwellings or
detached one-family dwellings in planned unit
developments, (ii) no more than ____________ percent
(__%) of the Mortgage Loans are secured by attached
one-family dwellings in a planned unit
development, (iii) no more than ______ percent (__%)
of the Mortgage Loans are secured by individual
condominium units, and (iv) no more than _____
percent (__%) of the Mortgage Loans are secured by
detached two-to-four family dwellings;
(3) When measured by aggregate Stated Principal Balance
as of the Cut-off Date, no more than ______ percent
(__%) of the Mortgage Loans had Loan-to-Value Ratio
at origination in excess of 80%, and the weighted
average Loan-to-Value Ratio for all Mortgage Loans at
origination did not exceed __%;
(4) With respect to all of the Mortgage Loans, at the
time that the Mortgage Loan was made, the Mortgagor
represented that the Mortgagor would occupy the
Mortgaged Property as the Mortgagor's primary
residence;
(5) No Mortgage Loan had a principal balance at
origination in excess of $______ and the average
principal balance of the Mortgage Loans on the
Cut-off Date was not in excess of $______. When
measured by the aggregate Stated Principal Balance as
of the Cut-off Date, no more than _____ percent __%
of the Mortgage Loans had a principal balance at
origination in excess of $_________;
(6) Each Mortgage Loan has a Mortgage Interest Rate of at
least _____ percent ____%. The Mortgage Loans have a
weighted average Mortgage Interest Rate of ______% as
of the Cut-off Date;
(7) All of the Mortgage Loans had an original term to
maturity of 30 years; and
(8) When measured by aggregate Closing Date Principal
Balance as of the Cut-off Date, no more than five
percent (5%) of the Mortgage Loans are secured by
Mortgaged Properties located in the same United
States postal zip code.
Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Agreement.
[OPTION ONE MORTGAGE CORPORATION
(Seller)
By:_____________________________
Name:___________________________
Title:__________________________]
[OPTION ONE OWNER TRUST 2001-1A
(Seller)
By:_____________________________
Name:___________________________
Title:__________________________]
[OPTION ONE OWNER TRUST 2001-1B
(Seller)
By:_____________________________
Name:___________________________
Title:__________________________]
[OPTION ONE OWNER TRUST 2001-2
(Seller)
By:_____________________________
Name:___________________________
Title:__________________________
[OPTION ONE OWNER TRUST 2002-3
(Seller)
By:_____________________________
Name:___________________________
Title:__________________________
EXHIBIT 5
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, which shall be available for inspection by the
Purchaser and which shall be retained by Option One Mortgage Corporation, as
servicer, or delivered to the Custodian:
(1) Mortgage Loan Documents.
(2) Residential loan application.
(3) Mortgage Loan closing statement.
(4) Verification of employment and income.
(5) Verification of acceptable evidence of source and amount of
downpayment.
(6) Credit report on Mortgagor.
(7) Residential appraisal report.
(8) Photograph of the Mortgaged Property.
(9) Survey of the Mortgaged Property.
(10) Copy of each instrument necessary to complete identification
of any exception set forth in the exception schedule in the
title policy, i.e., map or plat, restrictions, easements,
sewer agreements, home association declarations, etc.
(11) All required disclosure statements and statement of Mortgagor
confirming receipt thereof.
(12) If available, termite report, structural engineer's report,
water potability and septic certification.
(13) Sales Contract, if applicable.
(14) Hazard insurance policy.
(15) Tax receipts, insurance premium receipts, ledger sheets,
payment history from date of origination, insurance claim
files, correspondence, current and historical computerized
data files, and all other processing, underwriting and closing
papers
and records which are customarily contained in a mortgage loan
file and which are required to document the Mortgage Loan or
to service the Mortgage Loan.
(16) Amortization schedule, if available.
(17) Payment history for Mortgage Loans that have been closed for
more than ninety (90) days.
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EXHIBIT 6
CUSTODIAL ACCOUNT CERTIFICATION
_________ __, 200_
To: _____________________
_____________________
_____________________
(the "Depository")
As Seller under the Master Mortgage Loan Purchase and Servicing
Agreement, (the "Agreement") dated as of August 1, 2002, we hereby authorize
and request you to establish an account, as a Custodial Account, to be
designated as "Option One Mortgage Corporation, as Servicer, in trust for
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Capital, Inc." All deposits in the account shall be
subject to withdrawal therefrom by order signed by the Seller in accordance with
the Agreement. You may refuse any deposit which would result in violation of the
requirement that the account be fully insured as described below. This letter is
submitted to you in duplicate. Please execute and return one original to us.
OPTION ONE MORTGAGE CORPORATION
(Seller)
By:_________________________________
Name:_______________________________
Title:______________________________
Date:_______________________________
The undersigned, as Depository, hereby certifies that the
above-described account has been established as a Custodial Account pursuant to
the Agreement under Account Number ___________ at the office of the Depository
indicated above, and agrees to honor withdrawals on such account as provided
above. The full amount deposited at any time in the account will be insured by
the Federal Deposit Insurance Corporation through the Bank Insurance Fund
("BIF") or the Savings Association Insurance Fund ("SAIF").
____________________________________
Depository
By:_________________________________
Name:_______________________________
Title:______________________________
Date:_______________________________
EXHIBIT 7
ESCROW ACCOUNT CERTIFICATION
__________ __, 200_
To: _____________________
_____________________
_____________________
(the "Depository")
As Seller under the Master Mortgage Loan Purchase and Servicing
Agreement, (the "Agreement") dated as of August 1, 2002, we hereby authorize and
request you to establish an account, as an Escrow Account, to be designated as
"Option One Mortgage Corporation, as servicer, in trust for the Purchaser and
various Mortgagors, Fixed and Adjustable Rate Mortgage Loans". All deposits in
the account shall be subject to withdrawal therefrom by order signed by the
Seller in accordance with the Agreement. You may refuse any deposit which would
result in violation of the requirement that the account be fully insured as
described below. This letter is submitted to you in duplicate. Please execute
and return one original to us.
OPTION ONE MORTGAGE CORPORATION
(Seller)
By:__________________________________
Name:________________________________
Title:_______________________________
Date:________________________________
The undersigned, as Depository, hereby certifies that the
above-described account has been established as an Escrow Account pursuant to
the Agreement under Account Number ___________ at the office of the Depository
indicated above, and agrees to honor withdrawals on such account as provided
above. The full amount deposited at any time in the account will be insured by
the Federal Deposit Insurance Corporation through the Bank Insurance Fund
("BIF") or the Savings Association Insurance Fund ("SAIF").
____________________________________
Depository
By:_________________________________
Name:_______________________________
Title:______________________________
Date:_______________________________
EXHIBIT 8
SERVICING ADDENDUM
Section 11.01. Option One to Act as Servicer.
Option One, as an independent contract servicer, shall service
and administer the Mortgage Loans in accordance with this Agreement and shall
have full power and authority, acting alone, to do or cause to be done any and
all things in connection with such servicing and administration which Option One
may deem necessary or desirable and consistent with the terms of this Agreement.
Consistent with the terms of this Agreement, Option One may
waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in Option One's reasonable and prudent
determination such waiver, modification, postponement or indulgence is not
materially adverse to the Purchaser; provided, however, that Option One shall
not, without the prior written consent of the Purchaser, permit any modification
with respect to any Mortgage Loan that would change the Mortgage Interest Rate,
except for interest rate changes related to the Soldier's and Sailor's Civil
Relief Act of 1940, defer or forgive the payment thereof or of any principal or
interest payments, reduce the outstanding principal amount (except for actual
payments of principal), make additional advances of additional principal or
extend the final maturity date on such Mortgage Loan. Without limiting the
generality of the foregoing, Option One shall continue, and is hereby authorized
and empowered, to execute and deliver on behalf of itself, and the Purchaser,
all instruments of satisfaction or cancellation, or of partial or full release,
discharge and all other comparable instruments, with respect to the Mortgage
Loans and with respect to the Mortgaged Property. If reasonably required by
Option One, the Purchaser shall furnish Option One, within five (5) Business
Days of receipt of Option One's request, with any powers of attorney and other
documents necessary or appropriate to enable the Seller to carry out its
servicing and administrative duties under this Agreement.
Notwithstanding anything in this Agreement to the contrary, in
the event of a Principal Prepayment in full or in part of a Mortgage Loan,
Option One may not waive any Prepayment Charge or portion thereof required by
the terms of the related Mortgage Note unless (i) Option One determines that
such waiver would maximize recovery of Liquidation Proceeds for such Mortgage
Loan, taking into account the value of such Prepayment Charge, or (ii) (A) the
enforceability thereof is limited (1) by bankruptcy, insolvency, moratorium,
receivership, or other similar law relating to creditors' rights generally or
(2) due to acceleration in connection with a foreclosure or other involuntary
payment, or (B) the enforceability is otherwise limited or prohibited by
applicable law. If Option One waives or does not collect all or a portion of a
Prepayment Charge relating to a Principal Prepayment in full, or is past due to
any action or omission of Option One, other than as provided above, Option One
shall deposit the amount of such Prepayment Charge (or such portion thereof as
had been waived for deposit) into the Custodial Account for distribution in
accordance with the terms of this Agreement.
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In servicing and administering the Mortgage Loans, Option One
shall employ procedures including collection procedures and exercise the same
care that it customarily employs and exercises in servicing and administering
mortgage loans for its own account giving due consideration to accepted mortgage
servicing practices of prudent lending institutions and the Purchaser's reliance
on Option One.
Section 11.02. Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and
interest on all Mortgage Loans serviced by Option One are paid in full, if the
Mortgage Loans remain subject to this Agreement, or until a Whole Loan Transfer
or Pass-Through Transfer has occurred, Option One shall proceed diligently to
collect all payments due under each Mortgage Loan serviced by Seller when the
same shall become due and payable and shall, to the extent such procedures shall
be consistent with this Agreement and the terms and provisions of any related
Primary Insurance Policy, follow such collection procedures as it follows with
respect to mortgage loans comparable to the Mortgage Loans and held for its own
account. Further, with respect to Mortgage Loans subject to Escrow Payments,
Option One shall take special care in ascertaining and estimating annual ground
rents, taxes, assessments, water rates, fire and hazard insurance premiums,
mortgage insurance premiums, and all other charges that, as provided in the
Mortgage, will become due and payable to the end that the installments payable
by the Mortgagors will be sufficient to pay such charges as and when they become
due and payable.
Section 11.03. Realization Upon Defaulted Mortgage Loans.
(a) Option One shall use its best efforts, in as
practicable period as possible, and consistent with the procedures that Option
One would use in servicing loans for its own account, to foreclose upon or
otherwise comparably convert the ownership of such Mortgaged Properties as come
into and continue in default and as to which no satisfactory arrangements can be
made for collection of delinquent payments pursuant to Section 11.01. Option One
shall use its best efforts to realize upon defaulted Mortgage Loans in such a
manner as will maximize the receipt of principal and interest by the Purchaser,
taking into account, among other things, the timing of foreclosure proceedings.
The foregoing is subject to the provisions that, in any case in which Mortgaged
Property shall have suffered damage, Option One shall not be required to expend
its own funds toward the restoration of such property unless it shall determine
in its discretion (i) that such restoration will increase the proceeds of
liquidation of the related Mortgage Loan to Purchaser after reimbursement to
itself for such expenses, and (ii) that such expenses will be recoverable by
Option One through Insurance Proceeds or Liquidation Proceeds from the related
Mortgaged Property, as contemplated in Section 11.05. In the event that any
payment due under any Mortgage Loan is not paid when the same becomes due and
payable, or in the event the Mortgagor fails to perform any other covenant or
obligation under the Mortgage Loan and such failure continues beyond any
applicable grace period, Option One shall take such action as it shall deem to
be in the best interest of the Purchaser. In the event that any payment due
under any Mortgage Loan remains delinquent for a period of ninety (90) days or
more, Option One shall commence foreclosure proceedings. Option One shall notify
the Purchaser in writing of the commencement of foreclosure proceedings pursuant
to Section 11.19. In such connection, Option One shall be responsible for all
costs and expenses incurred
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by it in any such proceedings; provided, however, that it shall be entitled to
reimbursement thereof from the related Mortgaged Property, as contemplated in
Section 11.05.
(b) Notwithstanding the foregoing provisions of this
Section 11.03, with respect to any Mortgage Loan as to which Option One has
received actual notice of, or has actual knowledge of, the presence of any toxic
or hazardous substance on the related Mortgaged Property Option One shall not
either (i) obtain title to such Mortgaged Property as a result of or in lieu of
foreclosure or otherwise, or (ii) otherwise acquire possession of, or take any
other action, with respect to, such Mortgaged Property if, as a result of any
such action, the Purchaser would be considered to hold title to, to be a
mortgagee-in- possession of, or to be an owner or operator of such Mortgaged
Property within the meaning of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time, or any
comparable law, unless Option One has also previously determined, based on its
reasonable judgment and a prudent report prepared by a Person who regularly
conducts environmental audits using customary industry standards, that:
(1) such Mortgaged Property is in compliance
with applicable environmental laws or, if not, that it would
be in the best economic interest of the Purchaser to take such
actions as are necessary to bring the Mortgaged Property into
compliance therewith; and
(2) there are no circumstances present at such
Mortgaged Property relating to the use, management or disposal
of any hazardous substances, hazardous materials, hazardous
wastes, or petroleum-based materials for which investigation,
testing, monitoring, containment, clean-up or remediation
could be required under any federal, state or local law or
regulation, or that if any such materials are present for
which such action could be required, that it would be in the
best economic interest of the Purchaser to take such actions
with respect to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by
this Section 11.03 shall be advanced by Option One, subject to Option One's
right to be reimbursed therefor from the Custodial Account as provided in
Section 11.06.
If Option One determines, as described above, that it is in
the best economic interest of the Purchaser to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes, or petroleum-based materials affecting any such Mortgaged Property, then
Option One shall take such action as it deems to be in the best economic
interest of the Purchaser. The cost of any such compliance, containment, cleanup
or remediation shall be advanced by Option One, subject to Option One's right to
be reimbursed therefor from the Custodial Account as provided in Section 11.06.
(c) Proceeds received in connection with any Final
Recovery Determination, as well as any recovery resulting from a partial
collection of Insurance Proceeds or Liquidation Proceeds in respect of any
Mortgage Loan, will be applied in the following order of priority: first, to
reimburse Option One for
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any related unreimbursed Servicing Advances, pursuant to Section 11.06; second,
to accrued and unpaid interest on the Mortgage Loan, to the date of the Final
Recovery Determination, or to the Due Date prior to the Remittance Date on which
such amounts are to be distributed if not in connection with a Final Recovery
Determination; and third, as a recovery of principal of the Mortgage Loan. If
the amount of the recovery so allocated to interest is less than the full amount
of accrued and unpaid interest due on such Mortgage Loan, the amount of such
recovery will be allocated by Option One as follows: first, to unpaid Servicing
Fees; and second, to the balance of the interest then due and owing.
Section 11.04. Establishment of Payment Clearing Accounts
(a) Option One shall establish one or more Payment
Clearing Accounts for the deposit of all funds collected in connection with the
Mortgage Loans. Option One shall deposit in the Payment Clearing Account prior
to the opening of business on the Business Day following the day on which such
amounts are received by Option One, all payments and collections received in
connection with the Mortgage Loans subsequent to the Cut-off Date or prior to
the Cut-off Date but allocable to a period subsequent to such date. The funds
deposited and held in the Payment Clearing Account may not be commingled with
any other funds, including the proceeds of any other mortgage loans or with
funds serviced for other investors or for Option One's own portfolio. Option One
shall transfer funds deposited into the Payment Clearing Account to the
Custodial Accounts and Escrow Accounts, as provided in Sections 11.05 and 11.07,
within twenty-four (24) hours.
Option One shall segregate and hold all funds collected and
received in connection with the Mortgage Loans separate and apart from any of
its own funds and general assets and from any other funds or amounts collected
or held by Option One on behalf of third parties. Option One's account agreement
for each Payment Clearing Account shall provide that such account is a special
deposit, required to be segregated and held by the depository institution
maintaining such account in a fiduciary capacity, separate and apart from the
institution's own funds and general assets and that the account shall not be
held in any capacity that would create a debtor-creditor relationship between
the institution and Option One or the Purchaser. At all times, Purchaser shall
be the sole beneficial owner of the funds in the Payment Clearing Accounts
received in connection with the Mortgage Loans and Option One's possession or
control of any such funds shall be solely in Option One's capacity as collecting
agent for Purchaser.
Section 11.05 Establishment of Custodial Accounts; Deposits
in Custodial Accounts
(a) Option One shall establish and maintain one or more
Custodial Accounts for the deposit of funds specified in Section 11.05(b)
collected in connection with the Mortgage Loans.
(b) Option One shall transfer the following funds into
the applicable Custodial Account within 24 hours of deposit in the Payment
Clearing Account:
(i) all payments on account of principal on the
Mortgage Loans, including all principal prepayments;
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(ii) all payments on account of interest, minus
the Servicing Fee, on the Mortgage Loans, including
all Prepayment Charges;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts
required to be deposited pursuant to Sections 11.11
and 11.12, other than proceeds to be held in the
Escrow Account and applied to the restoration or
repair of the Mortgaged Property or released to the
Mortgagor in accordance with Option One's normal
servicing procedures, the loan documents or
applicable law;
(v) all Condemnation Proceeds affecting any
Mortgaged Property which are not released to the
Mortgagor in accordance with Option One's normal
servicing procedures, the loan documents or
applicable law;
(vi) following a Pass-Through Transfer, all
Monthly Advances;
(vii) all proceeds of any Mortgage Loan
repurchased in accordance with Subsections 7.03 and
7.04 and all amounts required to be deposited by
Option One in connection with shortfalls in principal
amount of Qualified Substitute Mortgage Loans
pursuant to Subsection 7.03;
(viii) any amounts required to be deposited by
Option One pursuant to Section 11.12 in connection
with the deductible clause in any blanket hazard
insurance policy. Such deposit shall be made from
Option One's own funds, without reimbursement
therefor;
(ix) any amounts required to be deposited by
Option One in connection with any REO Property
pursuant to Section 11.14;
(x) any amounts required to be deposited in the
Custodial Account pursuant to Sections 11.20 or
11.21; and
(xi) following a Pass-Through Transfer, with
respect to each Principal Prepayment in full, an
amount (to be paid by Option One out of its own funds
without reimbursement therefor) which, when added to
all amounts allocable to interest received in
connection with such Principal Prepayment, equals one
month's interest on the amount of principal so
prepaid at the Mortgage Interest Rate, provided,
however, that in no event shall the aggregate of
deposits made by Option One pursuant to this clause
(xi) exceed the aggregate amount of Option One's
servicing compensation in the calendar month in which
such deposits are required.
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The foregoing requirements for deposit in the Custodial
Account shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of late payment
charges, assumption fees, insufficient fund charges, modification fees and
similar fees and charges, to the extent permitted by Section 11.01, need not be
deposited by Option One in the Custodial Account. Each Custodial Account shall
be an Eligible Account. Option One shall give notice to the Purchaser of the
location of the Custodial Account when established and prior to any change
thereof.
Any amounts held in the Custodial Account may be, but are not
required to be, invested by Option One. Any such investment by Option One must
be in Eligible Investments. Any interest or other income on Eligible Investments
shall accrue to the benefit of Option One and Option One shall be entitled to
retain and withdraw such funds from the Custodial Account pursuant to Section
11.06. Other than such interest or other income received on Eligible
Investments, no other amounts may be commingled in the Custodial Account. Option
One shall promptly deposit in the Custodial Account from its own funds, without
any right of reimbursement, the full amount of any losses on its investment of
funds in the Custodial Account.
(c) Without limiting the foregoing, the funds in the
Custodial Accounts shall at all times be segregated and held separate and apart
from Option One's own funds and general assets and from any other funds or
assets collected or held by Option One on behalf of third parties. Option One's
account agreement for each Custodial Account shall provide that such account is
a special deposit, required to be segregated and held by the depository
institution maintaining such account in a fiduciary capacity, separate and apart
from the institution's own funds and general assets and that the account shall
not be held in any capacity that would create a debtor-creditor relationship
between the institution and Option One or the Purchaser. Each Custodial Account
shall be evidenced by a Custodial Account Certification in the form of Exhibit 6
and shall be entitled "Option One Mortgage Corporation, as servicer, in trust
for the Purchaser". At all times, the Purchaser shall be the sole beneficial
owner of all funds in the Custodial Accounts. Option One's possession or control
of any such funds shall be solely in Option One's capacity as collecting agent
for the Purchaser.
Section 11.06 Withdrawals From Custodial Accounts.
Option One may, from time to time, withdraw from the Custodial
Account for the following purposes:
(i) to make distributions to the Purchaser in the amounts
and in the manner provided for in Section 11.15;
(ii) following a Pass-Through Transfer, to reimburse
itself for Monthly Advances, the Option One's right to reimburse itself pursuant
to this subclause (ii) being limited to amounts received on the related Mortgage
Loan which represent late collections (net of the related Servicing Fees)
respecting which any such advance was made it being understood that, in the case
of such reimbursement, the Option One's right thereto shall be prior to the
rights of Purchaser, except that, where Option One is required to repurchase a
Mortgage Loan, pursuant to Subsection 7.03, Option One's right to such
reimbursement shall
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be subsequent to the payment to the Purchaser of the Repurchase Price pursuant
to Subsection 7.03, and all other amounts required to be paid to the Purchaser
with respect to such Mortgage Loans;
(iii) to reimburse itself for unreimbursed Servicing
Advances, Option One's right to reimburse itself pursuant to this subclause
(iii) with respect to any Mortgage Loan being limited to related Liquidation
Proceeds, Condemnation Proceeds, Insurance Proceeds and such other amounts as
may be collected by Option One from the Mortgagor or otherwise relating to the
Mortgage Loan, it being understood that, in the case of such reimbursement,
Option One's right thereto shall be prior to the rights of the Purchaser, except
that, where Option One is required to repurchase a Mortgage Loan, pursuant to
Subsection 7.03, Option One's right to such reimbursement shall be subsequent to
the payment to the Purchaser of the Repurchase Price pursuant to Subsection 7.03
and all other amounts required to be paid to the Purchaser with respect to such
Mortgage Loans;
(iv) to pay to itself pursuant to Section 11.23 as
servicing compensation (a) any interest earned on funds in the Custodial Account
(all such interest to be withdrawn monthly not later than each Remittance Date),
and (b) the Servicing Fee from that portion of any payment or recovery
attributable to interest on a particular Mortgage Loan;
(v) to pay to itself with respect to each Mortgage Loan
that has been repurchased pursuant to Subsection 7.03, all amounts received
thereon and not distributed as of the date on which the related Repurchase Price
is determined;
(vi) following a Pass-Through Transfer, to reimburse
Option One for any Monthly Advance previously made which Option One has
determined to be a Nonrecoverable Monthly Advance;
(vii) to pay, or to reimburse itself for advances in
respect of, expenses incurred in connection with any Mortgage Loan pursuant to
Section 11.03(b) or 11.14, but only to the extent of amounts received in respect
of the Mortgage Loans to which such expense is attributable;
(viii) to clear and terminate the Custodial Account on the
termination of this Agreement;
(ix) to withdraw funds deposited in error; or
(x) to transfer funds to another Eligible Account or
Eligible Investment in accordance with Section 11.10.
Option One shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Custodial Account pursuant to such subclauses (ii) - (vii)
above.
Section 11.07. Establishment of Escrow Accounts; Deposits in
Escrow Accounts.
(a) Option One shall establish one or more Escrow
Accounts for the deposit of Escrow Payments. Option One shall segregate and hold
all funds collected and received in connection with
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the Mortgage Loans which constitute Escrow Payments separate and apart from any
of its own funds and general assets and from any other funds or amounts
collected or held by Option One on behalf of third parties.
(b) Option One shall transfer into the applicable Escrow
Account within 24 hours of deposit in the Payment Clearing Account, and retain
therein the following payments and collections:
(i) Mortgagors' Escrow Payments collected in
connection with the Mortgage Loans, for the purpose
of effecting timely payment of any such items as
required under the terms of this Agreement; and
(ii) all Insurance Proceeds and/or Condemnation
Proceeds which are to be applied to the restoration
or repair of any Mortgaged Property.
Option One shall make withdrawals therefrom only to effect
such payments as are required under this Agreement, and for such other purposes
as shall be as set forth or in accordance with Section 11.08.
(c) Each Escrow Account will be maintained at the expense
of Option One at a Qualified Depository. Such accounts may be interest-bearing
accounts provided that such accounts comply with all federal state or local
laws, any other requirements of any government or any agency or instrumentality
thereof applicable to the origination and servicing of the Mortgage Loans, the
management of the Mortgage Property, and the provision of services hereunder by
Option One as well as all local, state and federal laws and regulations
governing interest-bearing accounts and borrower escrow accounts. Each Escrow
Account shall be evidenced by an Escrow Account Certification, in the form of
Exhibit 7 and shall be entitled "Option One Mortgage Corporation, as servicer,
in trust for the Purchaser and various Mortgagors, Fixed and Adjustable Rate
Mortgage Loans." Option One shall ensure that all interest credited to any
account that is not due the respective Mortgagor is removed and retained by
Option One, pursuant to applicable law, within thirty (30) days of receipt of
such interest.
Section 11.08. Withdrawals From Escrow Accounts
Option One shall make withdrawals from the applicable Escrow
Account for the following:
(i) to effect timely payments of Mortgagors' Escrow
Payments;
(ii) to reimburse Option One for any Servicing Advance
made by Option One with respect to a related Mortgage Loan but
only from amounts received on the related Mortgage Loan that
represent late payments or collections of Escrow Payments
thereunder;
(iii) to refund to the Mortgagor any funds determined to be
overages, under the terms of the Mortgage Loan or applicable
law;
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(iv) for transfer to the Custodial Account in accordance
with the terms of this Agreement and as permitted by
applicable law;
(v) for application to restoration, inspection or repair
of the Mortgaged Property;
(vi) to pay to Option One, or to the Mortgagor, to the
extent required by law, any interest paid on the funds
deposited in the Escrow Account;
(vii) to clear and terminate the Escrow Account on the
termination of this Agreement; or
(viii) to withdraw funds deposited in error.
Option One shall be entitled to retain any interest paid on
funds deposited in the Escrow Account by the depository institution other than
interest on escrowed funds required by law to be paid to the Mortgagor and, to
the extent required by law, Option One shall pay interest on escrowed funds to
the Mortgagor notwithstanding that the Escrow Account is non-interest bearing or
that interest paid thereon is insufficient for such purposes. If Seller elects
or is required by law to deposit a Mortgagor's Escrow funds into an
interest-bearing account, Option One shall remain obligated to pay the
Mortgagor's taxes and insurance premiums when due, even if the Mortgagor's
Escrow funds are not withdrawable on demand.
Section 11.09. Payment of Taxes, Insurance and Other
Charges; Maintenance of Primary Insurance Policies; Collections Thereunder.
With respect to each escrowed Mortgage Loan, Option One shall
maintain accurate records reflecting the status of ground rents, taxes,
assessments, water rates and other charges which are or may become a lien upon
the Mortgaged Property and the status of Primary Insurance Policy premiums, if
any, and fire and hazard insurance coverage and shall obtain, from time to time,
all bills for the payment of such charges, including insurance renewal premiums
and shall effect payment thereof prior to the applicable penalty or termination
date and at a time appropriate for securing maximum discounts allowable,
employing for such purpose deposits of the Mortgagor in the Escrow Account which
shall have been estimated and accumulated by Option One in amounts sufficient
for such purposes, as allowed under the terms of the Mortgage and applicable
law. To the extent that the Mortgage does not provide for Escrow Payments,
Option One shall use its best efforts to determine that any such payments are
made by the Mortgagor at the time they first become due. Option One shall make
advances from its own funds to effect such payments, which advances shall
constitute Servicing Advances. Option One shall make all such payments in a
manner and at a time that avoids the lapse of insurance coverage on the
Mortgaged Property and the loss of the Mortgaged Property due to a tax sale or
the foreclosure as a result of a tax lien.
If applicable, Option One shall maintain in full force and
effect, a Primary Insurance Policy, issued by a Qualified Insurer, with respect
to each Mortgage Loan for which such coverage is required.
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Option One will not cancel or refuse to renew any Primary Insurance Policy in
effect on the Closing Date that is required to be kept in force under this
Agreement unless a replacement Primary Insurance Policy for such cancelled or
non-renewed policy is obtained from and maintained with a Qualified Insurer.
Option One shall not take any action which would result in non-coverage under
any applicable Primary Insurance Policy of any loss which, but for the actions
of Option One, would have been covered thereunder. In connection with any
assumption or substitution agreement entered into or to be entered into pursuant
to Section 11.20, Option One shall promptly notify the insurer under the related
Primary Insurance Policy, if any, of such assumption or substitution of
liability in accordance with the terms of such policy and shall take all actions
which may be required by such insurer as a condition to the continuation of
coverage under the Primary Insurance Policy. If such Primary Insurance Policy is
terminated as a result of such assumption or substitution of liability, Option
One shall obtain a replacement Primary Insurance Policy as provided above.
In connection with its activities as servicer, Option One
agrees to prepare and present, on behalf of itself, and the Purchaser, claims to
the insurer under any Primary Insurance Policy, if applicable, in a timely
fashion in accordance with the terms of such policies and, in this regard, to
take such action as shall be necessary to permit recovery under any Primary
Insurance Policy respecting a defaulted Mortgage Loan. Pursuant to Section
11.04, any amounts collected by Option One under any Primary Insurance Policy
shall be deposited in the Custodial Account, subject to withdrawal pursuant to
Section 11.06.
Section 11.10 Transfer of Accounts.
Option One may transfer the Payment Clearing Account,
Custodial Account or the Escrow Account and all funds and investments therein to
a different Qualified Depository from time to time. Such transfer shall be made
only upon prior written notification to the Purchaser. In any case, the Payment
Clearing Account, Custodial Account and Escrow Account shall be Eligible
Accounts.
If any one of the Investment Ratings of a Qualified Depository holding
funds or Eligible Investments in the Payment Clearing Account, Custodial Account
or Escrow Account as an Eligible Account is downgraded by the issuing rating
agency, or if the Purchaser has a reasonable, good faith belief that a downgrade
will occur by the issuing rating agency, Option One shall, within three (3)
Business Days of receipt of notice of the downgrading, transfer all such
accounts, funds and Eligible Investments to a different Qualified Depository in
accordance with this Agreement.
Section 11.11 Maintenance of Hazard Insurance.
Option One shall cause to be maintained for each Mortgage Loan
fire and hazard insurance with extended coverage as is customary in the area
where the Mortgaged Property is located in an amount which is at least equal to
the lesser of (i) the amount necessary to fully compensate for any damage or
loss to the improvements which are a part of such property on a replacement cost
basis or (ii) the outstanding principal balance of the Mortgage Loan, in each
case in an amount not less than such amount as is necessary to prevent the
Mortgagor and/or the Mortgagee from becoming a co-insurer. If the Mortgaged
Property is in an area identified on a Flood Hazard Boundary Map or Flood.
Insurance Rate Map issued
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by the Flood Emergency Management Agency as having special flood hazards and
such flood insurance has been made available, Option One will cause to be
maintained a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration with a generally acceptable
insurance carrier, in an amount representing coverage not less than the lesser
of (i) the outstanding principal balance of the Mortgage Loan or (ii) the
maximum amount of insurance which is available under the National Flood
Insurance Act of 1968 or the Flood Disaster Protection Act of 1973, as amended.
Option One also shall maintain on any REO Property, fire and hazard insurance
with extended coverage in an amount which is at least equal to the lesser of (i)
the maximum insurable value of the improvements which are a part of such
property and (ii) the outstanding principal balance of the related Mortgage Loan
at the time it became an REO Property plus accrued interest at the Mortgage
Interest Rate and related Servicing Advances, liability insurance and, to the
extent required and available under the National Flood Insurance Act of 1968 or
the Flood Disaster Protection Act of 1973, as amended, flood insurance in an
amount as provided above. Pursuant to Section 11.04, any amounts collected by
Option One under any such policies other than amounts to be deposited in the
Escrow Account and applied to the restoration or repair of the Mortgaged
Property or REO Property, or released to the Mortgagor in accordance with Option
One's normal servicing procedures, shall be deposited in the Custodial Account,
subject to withdrawal pursuant to Section 11.06. Any cost incurred by Option One
in maintaining any such insurance shall not, for the purpose of calculating
distributions to the Purchaser, be added to the unpaid principal balance of the
related Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so
permit. It is understood and agreed that no earthquake or other additional
insurance need be required by Option One of the Mortgagor or maintained on
property acquired in respect of the Mortgage Loan, other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. All such policies shall be endorsed with
standard mortgagee clauses with loss payable to Option One, or upon request to
the Purchaser, and shall provide for at least thirty (30) days' prior written
notice of any cancellation, reduction in the amount of, or material change in,
coverage to Option One. Option One shall not interfere with the Mortgagor's
freedom of choice in selecting either his insurance carrier or agent, provided,
however, that Option One shall not accept any such insurance policies from
insurance companies unless such companies currently reflect a General Policy
Rating of B:III or better in Best's Key Rating Guide and are licensed to do
business in the state wherein the property subject to the policy is located.
Section 11.12 Maintenance of Mortgage Impairment Insurance
Policy.
In the event that Option One shall obtain and maintain a
mortgage impairment or blanket policy issued by an issuer that has a Best rating
of B:III insuring against hazard losses on all of Mortgaged Properties securing
the Mortgage Loans, then, to the extent such policy provides coverage in an
amount equal to the amount required pursuant to Section 11.11 and otherwise
complies with all other requirements of Section 11.11, Option One shall
conclusively be deemed to have satisfied its obligations as set forth in Section
11.11, it being understood and agreed that such policy may contain a deductible
clause, in which case Option One shall, in the event that there shall not have
been maintained on the related Mortgaged Property or REO Property a policy
complying with Section 11.11, and there shall have been one or more losses which
would have been covered by such policy, deposit in the Custodial Account the
amount not otherwise payable under the blanket policy because of such deductible
clause. In connection with its activities as servicer of the Mortgage Loans,
Option One agrees to prepare and present, on behalf of the
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Purchaser, claims under any such blanket policy in a timely fashion in
accordance with the terms of such policy. Upon request of the Purchaser, Option
One shall cause to be delivered to the Purchaser a certified true copy of such
policy and a statement from the insurer thereunder that such policy shall in no
event be terminated or materially modified without thirty (30) days' prior
written notice to the Purchaser.
Section 11.13 Fidelity Bond, Errors and Omissions
Insurance.
Option One shall maintain, at its own expense, a blanket
fidelity bond and an errors and omissions insurance policy, with broad coverage
with responsible companies that would meet the requirements of ▇▇▇▇▇▇ ▇▇▇ or
▇▇▇▇▇▇▇ Mac on all officers, employees or other persons acting in any capacity
with regard to the Mortgage Loans to handle funds, money, documents and papers
relating to the Mortgage Loans. The fidelity bond and errors and omissions
insurance shall be in the form of the Mortgage Banker's Blanket Bond and shall
protect and insure Option One against losses, including forgery, theft,
embezzlement, fraud, errors and omissions and negligent acts of such persons.
Such fidelity bond shall also protect and insure Option One against losses in
connection with the failure to maintain any insurance policies required pursuant
to this Agreement and the release or satisfaction of a Mortgage Loan without
having obtained payment in full of the indebtedness secured thereby. No
provision of this Section 11.13 requiring the fidelity bond and errors and
omissions insurance shall diminish or relieve Option One from its duties and
obligations as set forth in this Agreement. The minimum coverage under any such
bond and insurance policy shall be at least equal to the corresponding amounts
required by ▇▇▇▇▇▇ Mae in the ▇▇▇▇▇▇ ▇▇▇ Servicing Guide or by ▇▇▇▇▇▇▇ Mac in
the ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇' and Servicers' Guide. Upon request of the Purchaser,
Option One shall cause to be delivered to the Purchaser a certified true copy of
the fidelity bond and insurance policy and a statement from the surety and the
insurer that such fidelity bond or insurance policy shall in no event be
terminated or materially modified without thirty (30) days' prior written notice
to the Purchaser.
Section 11.14 Title, Management and Disposition of REO
Property.
In the event that title to the Mortgaged Property is acquired
in foreclosure or by deed in lieu of foreclosure, the deed or certificate of
sale shall be taken in the name of the Person designated by the Purchaser, which
shall be an affiliate or subsidiary of the Purchaser, or in the event such
person is not authorized or permitted to hold title to real property in the
state where the REO Property is located, or would be adversely affected under
the "doing business" or tax laws of such state by so holding title, the deed or
certificate of sale shall be taken in the name of such Person or Persons as
shall be consistent with an opinion of counsel obtained by Option One from an
attorney duly licensed to practice law in the state where the REO Property is
located. Any Person or Persons holding such title other than the Purchaser shall
acknowledge in writing that such title is being held as nominee for the benefit
of the Purchaser.
Option One shall either itself or through an agent selected by
Option One, manage, conserve, protect and operate each REO Property (and may
temporarily rent the same) in the same manner that it manages, conserves,
protects and operates other foreclosed property for its own account, and in the
same manner that similar property in the same locality as the REO Property is
managed. If a REMIC election is or is to be made with respect to the arrangement
under which the Mortgage Loans and any REO
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Property are held, Option One shall manage, conserve, protect and operate each
REO Property in a manner which does not cause such REO Property to fail to
qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code or result in the receipt by such REMIC of any "income from non-
permitted assets" within the meaning of Section 860F(a)(2)(B) of the Code or any
"net income from foreclosure property" within the meaning of Section 860G(c)(2)
of the Code. Option One shall cause each REO Property to be inspected promptly
upon the acquisition of title thereto and shall cause each REO Property to be
inspected at least annually thereafter. Option One shall make or cause to be
made an electronic report of each such inspection. Such reports shall be
retained in the Mortgage File and copies thereof shall be forwarded by Option
One to the Purchaser. Option One shall use its best efforts to dispose of the
REO Property as soon as possible and shall sell such REO Property in any event
within three years after title has been taken to such REO Property, unless
Option One determines, and gives appropriate notice to the Purchaser, that a
longer period is necessary for the orderly liquidation of such REO Property. If
a period longer than three years is necessary to sell any REO property, (i)
Option One shall report monthly to the Purchaser as to the progress being made
in selling such REO Property and (ii) if, with the written consent of the
Purchaser, a purchase money mortgage is taken in connection with such sale, such
purchase money mortgage shall name Option One as mortgagee, and a separate
servicing agreement between Option One and the Purchaser shall be entered into
with respect to such purchase money mortgage. Notwithstanding the foregoing, if
a REMIC election is made with respect to the arrangement under which the
Mortgage Loans and the REO Property are held, such REO Property shall be
disposed of within three (3) years or such other period as may be permitted
under Section 860G(a)(8) of the Code.
Option One shall deposit or cause to be deposited, on a daily
basis in each Custodial Account all revenues received with respect to the
related REO Property and shall withdraw therefrom funds necessary for the proper
operation, management and maintenance of the REO Property, including the cost of
maintaining any hazard insurance pursuant to Section 11.11 hereof and the fees
of any managing agent acting on behalf of Option One. Option One shall maintain
separate records with respect to each REO Property identifying all deposits and
withdrawals from the Custodial Account for each REO Property.
Option One shall furnish to the Purchaser on each Remittance
Date, an operating statement for each REO Property covering the operation of
each REO Property for the previous month. Such operating statement shall be
accompanied by such other information as the Purchaser shall reasonably request.
Each REO Disposition shall be carried out by Option One at
such price and upon such terms and conditions as Option One deems to be in the
best interest of the Purchaser. If as of the date title to any REO Property was
acquired by Option One there were outstanding unreimbursed Servicing Advances
and unpaid servicing fees with respect to the REO Property, Option One, upon an
REO Disposition of such REO Property, shall be entitled to reimbursement for any
related unreimbursed Servicing Advances and unpaid servicing fees from proceeds
received in connection with such REO Disposition. The proceeds from the REO
Disposition, net of any payment to Option One as provided above, shall be
deposited in the Custodial Account and shall be transferred to the Custodial
Account on the Determination Date in the month following receipt thereof for
distribution on the succeeding Remittance Date in accordance with Section 11.15.
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Section 11.15 Distributions.
On each Remittance Date, Option One shall distribute to the
Purchaser all amounts credited to the Custodial Account as of the close of
business on the preceding Determination Date, net of charges against or
withdrawals from the Custodial Account pursuant to Section 11.06;. plus (ii)
following a Pass- Through Transfer, all Monthly Advances, if any, which the
Seller is obligated to distribute pursuant to Section 11.22, minus (iii) any
amounts attributable to Principal Prepayments received after the last day of the
calendar month immediately preceding the related Remittance Date and (iv) any
amounts attributable to Monthly Prepayments collected but due on a Due Date or
Dates subsequent to the preceding Determination Date.
All distributions made to the Purchaser on each Remittance
Date will be made to the Purchaser of record on the preceding Record Date, and
shall be based on the Mortgage Loans owned and held by the Purchaser, and shall
be made by wire transfer of immediately available funds to the account of the
Purchaser at a bank or other entity having appropriate facilities therefor, if
the Purchaser shall have so notified Option One or by check mailed to the
address of the Purchaser.
With respect to any remittance received by the Purchaser on or
after the second Business Day following the Business Day on which such payment
was due, Option One shall pay to the Purchaser interest on any such late payment
at an annual rate equal to the rate of interest as is publicly announced from
time to time at its principal office by The Chase Manhattan Bank, New York, New
York, as its prime lending rate, adjusted as of the date of each change, plus
three percentage points, but in no event greater than the maximum amount
permitted by applicable law. Such interest shall be paid by Option One to the
Purchaser on the date such late payment is made and shall cover the period
commencing with the day following such second Business Day and ending with the
Business Day on which such payment is made, both inclusive. Such interest shall
be remitted along with such late payment. The payment by Option One of any such
interest shall not be deemed an extension of time for payment or a waiver of any
Event of Default by Option One.
Section 11.16 Remittance Reports.
On each Remittance Date, Option One shall furnish, via
electronic mail, to the Purchaser or its designee the monthly data in a form
acceptable to both parties. On the Business Day following each Determination
Date, Option One shall deliver to the Purchaser or its designee by telecopy (or
by such other means as Option One and the Purchaser may agree from time to time)
a computer tape containing, and a hard copy of, the determination data with
respect to the related Remittance Date, together with such other information
with respect to the Mortgage Loans as the Purchaser may reasonably require to
allocate distributions made pursuant to this Agreement and provide appropriate
statements with respect to such distributions. On the same date, Option One
shall forward to the Purchaser by overnight mail a computer readable magnetic
tape containing the information reasonably requested by the Purchaser with
respect to the related Remittance Date, or provide such information by
electronic mail.
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Section 11.17 Statements to the Purchaser.
With respect to the Mortgage Loans, Option One shall provide
the Purchaser on the Remittance Date, a report that shall set forth for the
prior month for each Mortgage Loan: (i) the status of the Custodial Account as
of the close of business on such Remittance Date and showing, for the period
covered by such statement, the aggregate amount of deposits into and withdrawals
from the Custodial Account of each category of deposit specified in Section
11.05 and each category of withdrawal specified in Section 11.06; (ii) the
Mortgage Interest Rate; (iii) the amount of any shortfall in the Servicing Fee
due to delinquencies; (iv) the amount of any delinquency in the scheduled
payment of principal and interest delineated at 30 days, 60 days and greater
than 90 days past due; and (v) such other information as may be reasonably
requested by the Purchaser.
In addition, not more than sixty (60) days after the end of
each calendar year, Option One shall furnish to each Person who was the
Purchaser at any time during such calendar year, (i) as to the aggregate of
remittances for the applicable portion of such year, an annual statement in
accordance with the requirements of applicable federal income tax law, and (ii)
listing of the principal balances of the Mortgage Loans outstanding at the end
of such calendar year.
Option One shall prepare and deliver any and all tax
information statements or other information required to be delivered to any
governmental taxing authority or to any Purchaser pursuant to any applicable law
with respect to the Mortgage Loans and the transactions contemplated hereby. In
addition, Option One shall provide the Purchaser with such information
concerning the Mortgage Loans as is necessary for the Purchaser to prepare its
federal income tax return as any Purchaser may reasonably request from time to
time.
Option One shall also provide the Purchaser a monthly report
setting forth the investments that the funds in the Payment Clearing Account,
Custodial Account and Escrow Account are held in, and the name and location of
each Qualified Depository holding any such funds or investments.
Section 11.18 Real Estate Owned Reports.
Together with the statement furnished pursuant to Section
11.14, with respect to any REO Property, Option One shall furnish to the
Purchaser a statement covering Option One's efforts in connection with the sale
of such REO Property and any rental of such REO Property incidental to the sale
thereof for the previous month, together with the operating statement for those
REO Properties that are subject to rental agreements. Such statement shall be
accompanied by such other information as the Purchaser shall reasonably request.
Section 11.19 Foreclosure Reports.
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Upon the foreclosure sale of any Mortgaged Property or the
acquisition thereof by the Purchaser pursuant to a deed-in-lieu of foreclosure,
Option One shall submit to the Purchaser a foreclosure report with respect to
such Mortgaged Property.
Section 11.20 Assumption Agreements.
Option One shall, to the extent it has knowledge of any
conveyance or prospective conveyance by any Mortgagor of the Mortgaged Property
(whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note and/or the
Mortgage), exercise its rights to accelerate the maturity of such Mortgage Loan
under any "due-on- sale" clause applicable thereto; provided, however, that
Option One shall not exercise any such rights if prohibited by law from doing so
or if the exercise of such rights would impair or threaten to impair any
recovery under the related Primary Insurance Policy, if any. If Option One
reasonably believes it is unable under applicable law to enforce such
"due-on-sale" clause, Option One shall enter into an assumption agreement with
the person to whom the Mortgaged Property has been conveyed or is proposed to be
conveyed, pursuant to which such person becomes liable under the Mortgage Note
and, to the extent permitted by applicable state law, the Mortgagor remains
liable thereon. Where an assumption is allowed pursuant to this Section 11.20,
Option One, with the prior written consent of the insurer under the Primary
Insurance Policy, if any, is authorized to enter into a substitution of
liability agreement with the person to whom the Mortgaged Property has been
conveyed or is proposed to be conveyed pursuant to which the original Mortgagor
is released from liability and such Person is substituted as Mortgagor and
becomes liable under the related Mortgage Note. Any such substitution of
liability agreement shall be in lieu of an assumption agreement.
In connection with any such assumption or substitution of
liability, Option One shall follow its own underwriting practices and procedures
in the state in which the related Mortgaged Property is located. With respect to
an assumption or substitution of liability, the Mortgage Interest Rate, the
amount of the Monthly Payment, and the final maturity date of such Mortgage Note
may not be changed. Option One shall notify the Purchaser that any such
substitution of liability or assumption agreement has been completed by
forwarding to the Purchaser the original of any such substitution of liability
or assumption agreement, which document shall be added to the related Mortgage
File and shall, for all purposes, be considered a part of such Mortgage File to
the same extent as all other documents and instruments constituting a part
thereof.
Notwithstanding the foregoing paragraphs of this Section or
any other provision of this Agreement, Option One shall not be deemed to be in
default, breach or any other violation of its obligations hereunder by reason of
any assumption of a Mortgage Loan by operation of law or any assumption which
Option One may be restricted by law from preventing, for any reason whatsoever.
For purposes of this Section 11.20, the term "assumption" is deemed to also
include a sale of the Mortgaged Property subject to the Mortgage that is not
accompanied by an assumption or substitution of liability agreement.
Section 11.21 Satisfaction of Mortgages and Release of
Mortgage Files.
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Upon the payment in full of any Mortgage Loan, or the receipt
by Option One of a notification that payment in full will be escrowed in a
manner customary for such purposes, Option One will immediately notify the
Purchaser, or its custodian or designee, by a certification of a servicing
officer of Option One (a "Servicing Officer"), which certification shall include
a statement to the effect that all amounts received or to be received in
connection with such payment which are required to be deposited in the Custodial
Account pursuant to Section 11.05 have been or will be so deposited, and shall
request execution of any document necessary to satisfy the Mortgage Loan and
delivery to it the portion of the Mortgage File held by the Purchaser or the
Purchaser's designee. Upon receipt of such certification and request, the
Purchaser, or its custodian or designee, shall promptly release, or cause to be
released, the related mortgage documents to Option One and Option One shall
prepare and process any satisfaction or release. No expense incurred in
connection with any instrument of satisfaction or deed of reconveyance shall be
chargeable to the Custodial Account or the Purchaser.
In the event Option One satisfies or releases a Mortgage
without having obtained payment in full of the indebtedness secured by the
Mortgage or should it otherwise prejudice any right the Purchaser may have under
the mortgage instruments, Option One, upon written demand, shall remit to the
Purchaser the then outstanding principal balance of the related Mortgage Loan by
deposit thereof in the Custodial Account. Option One shall maintain the fidelity
bond insuring Option One against any loss they may sustain with respect to any
Mortgage Loan not satisfied in accordance with the procedures set forth herein.
From time to time and as appropriate for the servicing or
foreclosure of the Mortgage Loan, including for this purpose collection under
any Primary Insurance Policy, if any, the Purchaser, or its custodian, shall,
upon request of Option One and delivery to the Purchaser, or its custodian, of a
servicing receipt signed by a Servicing Officer, release the requested portion,
or all of the Mortgage File held by the Purchaser, or its custodian, to Option
One. Such servicing receipt shall obligate Option One to return the related
Mortgage Files to the Purchaser when the need therefor by Option One no longer
exists, unless the Mortgage Loan has been liquidated and the Liquidation
Proceeds relating to the Mortgage Loan have been deposited in the Custodial
Account or the Mortgage File or such document has been delivered to an attorney,
or to a public trustee or other public official as required by law, for purposes
of initiating or pursuing legal action or other proceedings for the foreclosure
of the Mortgaged Property either judicially or non-judicially, and Option One
has delivered to the Purchaser a certificate of a Servicing Officer certifying
as to the name and address of the Person to which such Mortgage File or such
document was delivered and the purpose or purposes of such delivery. Upon
receipt of a certificate of a Servicing Officer stating that such Mortgage Loan
was liquidated, the servicing receipt shall be released by the Purchaser to
Option One.
Section 11.22 Monthly Advances by Option One.
Following a Pass-Through Transfer:
(a) Not later than the close of business on the Business
Day preceding each Remittance Date, Option One shall deposit in the Custodial
Account an amount equal to all payments not previously advanced by Option One,
whether or not deferred pursuant to Section 11.01, of principal (due after the
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Cut-off Date) and interest not allocable to the period prior to the Cut-off
Date, at the Mortgage Interest Rate net of the Servicing Fee, which were due on
a Mortgage Loan and delinquent at the close of business on the related
Determination Date.
(b) The obligation of Option One to make such Monthly
Advances is mandatory, notwithstanding any other provision of this Agreement,
and, with respect to any Mortgage Loan or REO Property, shall continue until a
Final Recovery Determination in connection therewith; provided that,
notwithstanding anything herein to the contrary, no Monthly Advance shall be
required to be made hereunder by Option One if such Monthly Advance would, if
made, constitute a Nonrecoverable Monthly Advance. The determination by Option
One that it has made a Nonrecoverable Monthly Advance or that any proposed
Monthly Advance, if made, would constitute a Nonrecoverable Monthly Advance,
shall be evidenced by an Officers' Certificate delivered to the Purchaser.
Section 11.23 Servicing Compensation.
As compensation for its services hereunder, Option One shall,
subject to Section 11.05(xi), be entitled to withdraw from the Custodial Account
or to retain from interest payments on the Mortgage Loans the amounts provided
for as Option One's Servicing Fee. Additional servicing compensation in the form
of assumption fees, as provided in Section 11.20, interest earned from the
investment in Eligible Investments of amounts held in Custodial Accounts
pursuant to Section 11.05 and late payment charges and similar fees and charges
shall be retained by Option One to the extent not required to be deposited in
the Custodial Account. Option One shall be required to pay all expenses incurred
by it in connection with its servicing activities hereunder and shall not be
entitled to reimbursement therefor except as specifically provided for.
Section 11.24 Notification of Adjustments.
On each Adjustment Date, Option One shall make interest rate
adjustments for each Adjustable Rate Mortgage Loan in compliance with the
requirements of the related Mortgage and Mortgage Note, or applicable law.
Option One shall execute and deliver the notices required by each Mortgage and
Mortgage Note regarding interest rate adjustments. Option One also shall provide
timely notification to the Purchaser of all applicable data and information
regarding such interest rate adjustments and Option One's methods of
implementing such interest rate adjustments. Upon the discovery by Option One or
the Purchaser that Option One has failed to adjust a Mortgage Interest Rate or a
Monthly Payment pursuant to the terms of the related Mortgage Note and Mortgage,
Option One shall immediately deposit in the Custodial Account from its own funds
the amount of any interest loss caused thereby without reimbursement therefor.
Section 11.25 Statement as to Compliance.
Option One will deliver to the Purchaser not later than ninety
(90) days following the end of each fiscal year of Option One, which as of the
Closing Date ends on the last day in April in each calendar year, a statement of
compliance stating, as to each signatory thereof, that (i) a review of the
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activities of Option One during the preceding year and of performance under this
Agreement has been made under such signatories' supervision and (ii) to the best
of such signatories' knowledge, based on such review, Option One has fulfilled
all of its obligations under this Agreement throughout such year, or, if there
has been a default in the fulfillment of any such obligation, specifying each
such default known to such signatory and the nature and status thereof. Copies
of such statement shall be provided by the Purchaser to any Person identified as
a prospective purchaser of the Mortgage Loans.
Section 11.26 Independent Public Accountants' Servicing
Report.
Not later than ninety (90) days following the end of each
fiscal year of Option One, Option One at its expense shall cause a firm of
independent public accountants (which may also render other services to Option
One) which is a member of the American Institute of Certified Public Accountants
to furnish a report to the Purchaser or its designee to the effect that (i) it
has obtained a letter of representation regarding certain matters from the
management of Option One which includes an assertion that Option One has
complied with certain residential mortgage loan servicing standards, identified
in the Uniform Single Attestation Program for Mortgage Bankers established by
the Mortgage Bankers Association of America, with respect to the servicing of
residential mortgage loans during the most recently completed fiscal year and
(ii) on the basis of an examination conducted by such firm in accordance with
standards established by the American Institute of Certified Public Accountants,
such representation is fairly stated in all material respects, subject to such
exceptions and other qualifications that may be appropriate. In rendering its
report such firm may rely, as to matters relating to the direct servicing of
residential mortgage loans by sub- servicers, upon comparable reports of firms
of independent certified public accountants rendered on the basis of
examinations conducted in accordance with the same standards (rendered within
one year of such report) with respect to those sub-servicers. Immediately upon
receipt of such report, Option One shall furnish a copy of such report to the
Purchaser upon request at Option One's expense.
Section 11.27 Access to Certain Documentation.
Option One shall provide to the Office of Thrift Supervision,
the FDIC and any other federal or state banking or insurance regulatory
authority that may exercise authority over the Purchaser access to the
documentation regarding the Mortgage Loans serviced by Option One required by
applicable laws and regulations. Such access shall be afforded without charge,
but only with reasonable request and during normal business hours at the offices
of Option One and upon reasonable advance notice to Option One. In addition,
access to the documentation will be provided to the Purchaser and any Person
identified to Option One by the Purchaser without charge, upon reasonable
request during normal business hours at the offices of Option One.
Section 11.28 Reports and Returns to be Filed by Option
One.
Option One shall file information reports with respect to the
receipt of mortgage interest received in a trade or business, reports of
foreclosures and abandonments of any Mortgaged Property and information returns
relating to cancellation of indebtedness income with respect to any Mortgaged
Property as required by Sections 6050H, 6050J and 6050P of the Code. Such
reports shall be in form and
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substance sufficient to meet the reporting requirements imposed by such Sections
6050H, 6050J and 6050P of the Code.
Section 11.29 Compliance with REMIC Provisions.
If a REMIC election has been made with respect to the
arrangement under which the Mortgage Loans and REO Property are held, Option One
shall not take any action, cause the REMIC to take any action or fail to take
(or fail to cause to be taken) any action that, under the REMIC Provisions, if
taken or not taken, as the case may be, could (i) endanger the status of the
REMIC as a REMIC or (ii) result in the imposition of a tax upon the REMIC
(including but not limited to the tax on "prohibited transactions" as defined in
Section 860F(a)(2) of the Code and the tax on "contributions" to a REMIC set
forth in Section 860G(d) of the Code) unless Option One has received an Opinion
of Counsel (at the expense of the party seeking to take such action) to the
effect that the contemplated action will not endanger such REMIC status or
result in the imposition of any such tax.
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SCHEDULE ONE
FINAL MORTGAGE LOAN SCHEDULE
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