EXECUTION COPY
MASTER MORTGAGE LOAN PURCHASE
AND SERVICING AGREEMENT
HSBC MORTGAGE CORPORATION (USA)
Seller And Servicer
XXXXXX BROTHERS BANK, FSB
Initial Purchaser
Dated As Of November 1, 2005
Fixed and Adjustable Rate Mortgage Loans
First and Second Liens
TABLE OF CONTENTS
Page
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SECTION 1. Definitions.................................................................................1
SECTION 2. Agreement to Purchase......................................................................13
SECTION 3. Mortgage Loan Schedules....................................................................13
SECTION 4. Purchase Price.............................................................................13
SECTION 5. Examination of Mortgage Files..............................................................13
SECTION 6. Conveyance from Seller to Initial Purchaser................................................14
SECTION 7. Representations, Warranties and Covenants of the Seller:
Remedies for Breach........................................................................16
SECTION 8. Closing....................................................................................32
SECTION 9. Closing Documents..........................................................................33
SECTION 10. Costs......................................................................................34
SECTION 11. Seller'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...............................................................35
SECTION 13. The Seller.................................................................................37
SECTION 14. DEFAULT....................................................................................39
SECTION 15. Termination................................................................................41
SECTION 16. Successor to the Seller....................................................................41
SECTION 17. Financial Statements.......................................................................43
SECTION 18. Mandatory Delivery: Grant of Security Interest.............................................43
SECTION 19. Notices....................................................................................43
SECTION 20. Severability Clause........................................................................45
SECTION 21. Counterparts...............................................................................45
SECTION 22. Governing Law..............................................................................45
SECTION 23. Intention of the Parties...................................................................45
SECTION 24. Successors and Assigns.....................................................................46
SECTION 25. Waivers....................................................................................46
SECTION 26. Exhibits...................................................................................46
SECTION 27. Nonsolicitation............................................................................46
SECTION 28. General Interpretive Principles............................................................46
SECTION 29. Reproduction of Documents..................................................................47
SECTION 30. Further Agreements.........................................................................47
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EXHIBITS
EXHIBIT 1 FORM OF SELLER'S OFFICER'S CERTIFICATE
EXHIBIT 2 FORM OF OPINION OF COUNSEL TO THE SELLER
EXHIBIT 3 FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT 4 FORM OF ASSIGNMENT AND CONVEYANCE
EXHIBIT 5 CONTENTS OF EACH MORTGAGE FILE
EXHIBIT 6 FORM OF CUSTODIAL ACCOUNT LETTER AGREEMENT
EXHIBIT 7 FORM OF ESCROW ACCOUNT LETTER AGREEMENT
EXHIBIT 8 SERVICING ADDENDUM
EXHIBIT 9 FORM OF COMMITMENT LETTER
EXHIBIT 10 MORTGAGE LOAN DOCUMENTS
EXHIBIT 11 FORM OF MONTHLY SERVICER'S REPORT
SCHEDULE 1 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 November 1, 2005, by and between Xxxxxx
Brothers Bank, FSB, having an office at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000
(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 HSBC Mortgage Corp (USA), having an
office at 0000 Xxxxxx Xxxxxx, Xxxxx, XX 00000 (the "Seller").
W I T N E S S E T H :
- - - - - - - - - - -
WHEREAS, the Seller desires to sell, from time to time, to the
Purchaser, and the Purchaser desires to purchase, from time to time, from the
Seller, certain 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 or
participation interests therein, as applicable, on various dates as provided in
the related Commitment Letter (each, a "Closing Date");
WHEREAS, each Mortgage Loan is secured by a mortgage, deed of
trust or other security instrument creating a first on a residential dwelling
located in the jurisdiction indicated on the 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 the Seller 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
Seller, the Purchaser desires to sell some or all of the Mortgage Loans to not
more than three purchasers as a whole loan transfer in a whole loan or
participation format or a public or private mortgage-backed securities
transaction; and
WHEREAS, certain Mortgage Loans have been, or will be,
registered on the MERS(R) System (defined below) such that the mortgagee of
record under each such Mortgage Loan shall be identified as MERS.
NOW, THEREFORE, in consideration of the premises and mutual
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Purchaser and the
Seller agree as follows:
SECTION 1. Definitions. For purposes of this Agreement the
following capitalized terms shall have the respective meanings set forth below.
Accepted Servicing Practices: With respect to any Loan, those
mortgage servicing practices (including collection procedures of prudent
mortgage lending institutions which service loans of the same type as such Loan
in the jurisdiction where the related Mortgage Property is located and in
accordance with applicable law, the terms of the Mortgage and Note and the
servicing guidelines established by Xxxxxx Xxx for MBS pool mortgages, as
defined in the Xxxxxx Mae Guides (including future updates).
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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) 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 FNMA and FHLMC, and (ii) the
purchase price paid for the related Mortgaged Property by the Mortgagor with the
proceeds of the Mortgage Loan, provided, however, in the case of a Refinanced
Mortgage Loan, such value of the Mortgaged Property is based solely upon the
value determined by an appraisal made for the originator of such Refinanced
Mortgage Loan at the time of origination of such Refinanced Mortgage Loan by an
appraiser who met the minimum requirements of FNMA and FHLMC. However in the
case of a mortgage made on property in New York State value will always be
determined by the appraisal for determining any requirement for primary mortgage
insurance only.
Assignment and Conveyance: An assignment and conveyance of the
Mortgage Loans purchased on a Closing Date in the form annexed hereto as
Exhibit 4.
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 Mortgage Loan
Schedule as a balloon mortgage loan.
Borrower: The obligor on a Note, the owner of the Mortgaged
Property and the grantor or borrower named in the related Mortgage and such
grantor's or borrower's successors in title to the Mortgage Property.
Business Day: Any day other than a Saturday or Sunday, or a
day on which banking and savings and loan institutions in the of State of New
York are authorized or obligated by law or executive order to be closed.
Cash-Out Refinancing: A Refinanced Loan, the proceeds of which
were in excess of the principal balance, as defined per HSBC underwriting manual
in affect at the time of origination.
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Closing Date: The date or dates on which the Purchaser from
time to time shall purchase and the Seller from time to time shall sell to the
Purchaser, the Mortgage Loans listed on the related 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.
Combined Loan-to-Value Ratio or CLTV: With respect to any
Mortgage Loan, the fraction, expressed as a percentage, the numerator of which
is the sum of (a) the original principal balance of the Mortgage Loan, plus (b)
the unpaid principal balance of any related subordinate mortgage loan or loans
secured by the Mortgaged Property, and the denominator of which is the Appraised
Value of the related Mortgaged Property.
Commitment 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 Commitment Letter may relate to more
than one Mortgage Loan Package to be purchased on one or more Closing Dates
hereunder.
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.
Credit Score: The credit score of the Mortgagor provided by
Fair, Xxxxx & Company, Inc. or such other organization providing credit scores
as per HSBC underwriting/program guidelines in affect at the time of the
origination of a Mortgage Loan. .
Custodial Account: The separate account or accounts, each of
which shall be an Eligible Account, created and maintained pursuant to this
Agreement, which shall be entitled HSBC Mortgage Corporation (USA), as servicer,
in trust for Purchaser, and established at a financial institution acceptable
to the Purchaser.
Custodial Agreement: The agreement governing the retention of
the originals of each Mortgage Note, Mortgage, Assignment of Mortgage and other
Mortgage Loan Documents.
Custodian: The custodian under the Custodial Agreement, or its
successor in interest or assigns, or any successor to the Custodian under the
Custodial Agreement, as therein provided.
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Cut-off Date: The first day of the month in which the related
Closing Date occurs or as otherwise set forth in the related Commitment Letter.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be
replaced by a Qualified Substitute Mortgage Loan.
Determination Date: With respect to each Distribution Date,
the sixteenth (16th) day of the calendar month in which such Distribution Date
occurs or, if such sixteenth (16th) day is not a Business Day, the Business Day
immediately preceding such sixteenth (16th) day.
Distribution Date: The eighteenth (18th) day of each month, or
if such eighteenth (18th) day is not a Business Day, the first Business Day
immediately following such eighteenth (18th) day.
Due Date: With respect to each Distribution Date, the first
day of the calendar month in which such Distribution 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 Distribution Date, the period
commencing on the second day of the month preceding the month of the
Distribution Date and ending on the first day of the month of the Distribution
Date.
Eligible Account: Either (i) an account or accounts maintained
with a federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the short-term unsecured debt obligations of such holding company of
which) are rated A-2 or higher by S&P or Prime-2 or higher by Moody's (or a
comparable rating if another rating agency is specified by the Initial Purchaser
by written notice to the Seller of which) at the time any amounts are held on
deposit therein and the long-term debt obligations of such depository
institution or trust company (or, in the case of a depository institution or
trust company which is the principal subsidiary of a holding company, the
long-term debt obligations of such holding company( are rated at least "Aa" by
Xxxxx'x Investor Services, Inc., (ii) an account or accounts the deposits in
which are fully insured by the FDIC or (iii) a trust account or accounts
maintained with a federal or state chartered depository institution or trust
company acting in its fiduciary capacity. Eligible Accounts may bear interest.
Escrow Account: The separate trust accounts created and
maintained pursuant to this Agreement which shall be entitled "HSBC Mortgage
Corporation (USA), as servicer, in trust for Purchaser and various Mortgagors,
Fixed and Adjustable Rate Mortgage Loans", and established at a financial
institution acceptable to the Purchaser.
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.
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FDIC: The Federal Deposit Insurance Corporation, or any
successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation or any
successor thereto.
Final Recovery Determination: With respect to any defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property
purchased by the Seller pursuant to this Agreement), a determination made by the
Seller that all Insurance Proceeds, Liquidation Proceeds and other payments or
recoveries which the Seller, in its reasonable good faith judgment, expects to
be finally recoverable in respect thereof have been so recovered. The Seller
shall maintain records, prepared by a servicing officer of the Seller, of each
Final Recovery Determination.
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.
Flood Zone Service Contract: A contract transferable to a
nationally recognized flood service provider, maintained for the Mortgaged
Property for the purpose of obtaining the current flood zone status relating to
such Mortgaged Property.
FNMA: Xxxxxx Xxx, F/K/A Federal National Mortgage Association,
or any successor thereto.
FNMA Guides: The Xxxxxx Mae Seller's Guide and the Xxxxxx Xxx
Services Guide and all amendments or additions 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 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 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 Seller sells the first Mortgage Loan Package
hereunder.
Initial Purchaser: Xxxxxx Brothers Bank, FSB, or any
successor.
Insurance Proceeds: With respect to each Mortgage Loan,
proceeds of insurance policies insuring the Mortgage Loan or the related
Mortgaged Property.
Initial Rate Cap: With respect to each adjustable Rate Loan
and the initial adjustment Date therefore, a number of percentage points per
annum that is set forth in the related Loan Schedule and in the related Note,
which is the maximum amount by which the Loan Interest rate for such Adjustable
Rate Loan may increase or decrease on such Adjustment Date from the Loan
Interest Rate in effect immediately prior to such Adjustment Date.
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Interest Only Mortgage Loan: A Mortgage Loan that requires
payment of interest for a period of time specified on the related Mortgage Note.
The interest-only period followed by full amortization of the remaining balance
for the remaining duration of the loan.
Lender Paid Mortgage Insurance Policy or LPMI Policy: A policy
of mortgage guaranty insurance issued by a Qualified Insurer in which the owner
or servicer of the Mortgage Loan is responsible for the premiums associated with
such mortgage insurance policy.
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 lower of the Appraised Value or
the sale's price of the Mortgaged Property. However, in the case of a mortgage
made on property in New York State, value will always be determined by the
appraisal for determining any requirement for primary mortgage insurance only.
Maximum Mortgage Interest Rate: With respect to each
Adjustable Rate Mortgage Loan, a rate that is set forth on the related Mortgage
Loan Schedule and in the related Mortgage Note and is the maximum interest rate
to which the Mortgage Interest Rate on such Mortgage Loan may be increased on
any Adjustment Date.
MERS: Mortgage Electronic Registration System, Inc., a
subsidiary of MERSCORP, Inc.
MERS(R) System: The electronic mortgage registration system
maintained by MERS.
Minimum Mortgage Interest Rate: With respect to each
Adjustable Rate Mortgage Loan, a rate that is set forth on the related Mortgage
Loan Schedule and in the related Mortgage Note and is the minimum interest rate
to which the Mortgage Interest Rate on such Mortgage Loan may be decreased on
any Adjustment Date.
MOM Mortgage: A Mortgage Loan naming MERS as the original
mortgagee on the mortgage security instrument.
Monthly Advance: The aggregate of the advances made by the
Seller on any Distribution Date pursuant to Subsection 11.30 of the Servicing
Addendum.
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Monthly Payment: With respect to any Mortgage Loan, the
scheduled combined payment of principal ( if applicable) and interest payable by
a Mortgagor under the related Mortgage Note on each Due Date.
Moody's: Xxxxx'x 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 Commitment 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 residential mortgage loan, sold, assigned
and transferred to the Purchaser pursuant to this Agreement and the related
Commitment Letter and identified on the Mortgage Loan Schedule annexed to this
Agreement on the related 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 documents listed in Exhibit 10
hereto pertaining to any Mortgage Loan.
Mortgage Loan Package: The Mortgage Loans listed on a Mortgage
Loan Schedule, delivered to the Custodian and the Purchaser at least three (3)
Business Days prior to the related Closing Date and attached to this Agreement
as Schedule I on the related Closing Date.
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 electronic form, 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; (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
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Payment was 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 Adjustment
Date; (18) with respect to each Adjustable Rate Mortgage Loan, the Gross Margin;
(19) a code indicating the purpose of the loan (i.e., purchase financing,
Rate/Term Refinancing, Cash-Out Refinancing); (20) with respect to each
Adjustable Rate Mortgage Loan, the Maximum Mortgage Interest Rate under the
terms of the Mortgage Note; (21) with respect to each Adjustable Rate Mortgage
Loan, the Minimum Mortgage Interest Rate under the terms of the Mortgage Note;
(22) the Mortgage Interest Rate at origination; (23) with respect to each
Adjustable Rate Mortgage Loan, the Periodic Rate Cap; (24) with respect to each
Adjustable Rate Mortgage Loan, the first Adjustment Date immediately following
the related Cut-off Date; (25) with respect to each Adjustable Rate Mortgage
Loan, the Index; (26) the date on which the first Monthly Payment was due on the
Mortgage Loan and, if such date is not consistent with the Due Date currently in
effect, 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 or
LPMI Policy; (30) the Appraised Value of the Mortgaged Property; (31) the sale
price of the Mortgaged Property, if applicable; (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 product type (e.g.,
2/28, 15 year fixed, 30 year fixed, 15/30 balloon, etc.); (34) the Mortgagor's
debt to income ratio; (35) a code indicating whether the Mortgaged Property is
subject to a First Lien or a Second Lien, (36) with respect to Adjustable Rate
Mortgage Loan, a code indicating initial and subsequent caps, (37) with respect
to Adjustable Rate Mortgage Loan, a code indicating rate adjustment frequency,
(38) a code indicating whether the Mortgage Loan is an Interest Only Mortgage
Loan; and (39) and with respect to each Interest Only Mortgage Loan, the
duration of the related interest only period expressed in months.
With respect to the Mortgage Loan Package in the aggregate,
the Mortgage Loan Schedule shall set forth the following information, as of the
related Cut-off Date: (1 the number of Mortgage Loans; (2) the current 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 1 hereto shall be supplemented as of each Closing
Date to reflect the addition of the Mortgage Loan Schedule with respect to the
related Mortgage Loan Package.
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 or
leasehold in a single parcel of real property improved by a Residential
Dwelling.
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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 successors in title to the Mortgaged Property.
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 or Liquidation Proceeds on such Mortgage Loan
or REO Property as provided herein.
Officer's Certificate: A certificate signed by the Chairman of
the Board or the Vice Chairman of the Board or a President or a Vice President
and by the Treasurer or the Secretary or one of the Assistant Treasurers or
Assistant Secretaries of the 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.
Periodic Rate Cap: With respect to each Adjustable Rate
Mortgage Loan and any Adjustment Date therefor, a number of percentage points
per annum that is set forth in the related Mortgage Loan Schedule and in the
related Mortgage Note, which is the maximum amount by which the Mortgage
Interest Rate for such 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 Servicing Period: With respect to any Mortgage
Loans, the period commencing on the related Closing Date and ending on the date
the Seller 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.
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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, excluding any Prepayment Charge, which is not accompanied by an amount of
interest representing scheduled interest due on any date or dates in any month
or months subsequent to the month of prepayment.
Purchase Price: The price paid on the related Closing Date by
the Purchaser to the Seller pursuant to the related Commitment Letter in
exchange for the Mortgage Loans purchased on such Closing Date as provided in
Section 4.
Qualified Insurer: Any insurer which meets the requirements of
FNMA and FHLMC.
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 Interest Rate not less than (and not more than one percentage point in
excess of) the Net Mortgage Interest Rate of the Deleted Mortgage Loan, (iv)
have a remaining term to maturity not greater than (and not more than 1 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% and the Deleted Mortgage Loan was covered under a Primary
Insurance Policy, (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 and 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. In addition, the substitution of
more than one Mortgage Loan pursuant to the previous sentence shall be subject
to the Purchaser's approval in its sole discretion.
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Rate/Term Refinancing: A Refinanced Mortgage Loan, the
proceeds of which are not in excess of the existing first mortgage, as outlined
in the HSBC Underwriting Guidelines in effect at the time of origination.
Reconstitution Agreements: The agreement or agreements entered
into by the Seller and the Purchaser and/or certain third parties on the
Reconstitution Date or Dates with respect to any or all of the Mortgage Loans
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 Distribution Date, the last
Business Day of the month immediately preceding the month in which such
Distribution 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.
REO Account: The separate trust account or accounts created
and maintained pursuant to this Agreement which shall be entitled "[Seller], in
trust for the Purchaser, as of [date of acquisition of title], Fixed and
Adjustable Rate Mortgage Loans".
REO Disposition: The final sale by the Seller 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, (1) a
price equal to (A) during the first three months following the related Closing
Date (i) the Purchase Price percentage used to calculate the Purchase Price, as
stated in the related Commitment Letter, times the Stated Principal Balance of
the Mortgage Loan so repurchased plus (ii) accrued interest thereon to the last
day of the month that such repurchase occurs, and (B) thereafter (i) the Stated
Principal Balance of the Mortgage Loan so repurchased, plus (ii) accrued
interest thereon to the last day of the month such repurchase occurs.
Residential Dwelling: Any one of the following: (i) a
one-family dwelling in an eligible cooperative project, (ii) a two- to four
family dwelling, or (iii) a one-family dwelling unit in an eligible condominium
project, as defined in the HSBC guidelines in effect at the time of origination.
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Servicing Addendum: The terms and conditions attached hereto
as Exhibit 8 which will govern the servicing of the Mortgage Loans by the Seller
during the Preliminary Servicing Period.
Servicing Advances: All customary, reasonable and necessary
"out-of-pocket" costs and expenses incurred by the Seller in the performance of
its servicing obligations, including, but not limited to, the cost of (i)
preservation, restoration and repair of a Mortgaged Property, (ii) any
enforcement or judicial proceedings with respect to a Mortgage Loan, including
foreclosure actions and (iii) the management and liquidation of REO Property.
Servicing Fee: With respect to each Mortgage Loan, the amount
of the annual servicing fee the Purchaser shall pay to the Seller, 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
respect to interest from Liquidation Proceeds and other proceeds, to the extent
permitted by Section 11.05) of related Monthly Payment collected by the Seller,
or as otherwise provided under Section 11.05.
Servicing Fee Rate: The per annum rate set forth in the
related Commitment Letter at which the Servicing Fee accrues.
Servicing File: With respect to each Mortgage Loan, the file
retained by the Seller consisting of photo copies of all documents in the
Mortgage File which are not delivered to the Purchaser or the Custodian and
copies of the Mortgage Loan Documents set forth in Section 2 of the Custodial
Agreement.
S&P: Standard & Poor's, a division of the XxXxxx-Xxxx
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 due on or before such
date, whether or not collected from the Mortgagor 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 contract, transferable to a nationally
recognized tax service provider, maintained for the Mortgaged Property for the
purpose of obtaining current information from local taxing authorities relating
to such Mortgaged Property.
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.
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SECTION 2. Agreement to Purchase. The Seller agrees 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 Commitment Letter, or in such other amount as agreed to by
the Purchaser and the Seller as evidenced by the actual aggregate principal
balance of the Mortgage Loans accepted by the Purchaser on the related Closing
Date.
SECTION 3. Mortgage Loan Schedules. The Seller shall deliver
the Mortgage Loan Schedule for a Mortgage Loan Package to be purchased on a
particular Closing Date to the Purchaser at least two (2) Business Days prior to
the related Closing Date or as otherwise set forth in the related Commitment
Letter.
SECTION 4. Purchase Price. The Purchase Price for each
Mortgage Loan listed on the related Mortgage Loan Schedule shall be the
percentage of par as stated in the related Commitment Letter (subject to
adjustment as provided therein), multiplied by its Stated Principal Balance as
of the related Closing Date. If so provided in the related Commitment Letter,
portions of the Mortgage Loans shall be priced separately.
The Purchaser shall own and be entitled to receive with
respect to each Mortgage Loan purchased, (1) all scheduled 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 the Seller
after the related Cut-off Date shall belong to the Seller), 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
whether or not collected. 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. The Seller shall deposit any such
prepaid amounts into the Custodial Account, which account is established for the
benefit of the Purchaser, for remittance by the Seller to the Purchaser on the
first related Distribution 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 Commitment Letter to
underwrite the Mortgage Loans and review the Mortgage Files prior to the related
Closing Date, the Seller 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 File, including the Assignment of Mortgage,
pertaining to each Mortgage Loan unless such Mortgage Loan is a MOM Mortgage or
has been previously assigned to MERS, in which case no such Assignment of
Mortgage is required, or (b) make the related Mortgage File available to the
Initial Purchaser for examination at the Seller's offices or such other location
as shall otherwise be agreed upon by the Initial Purchaser and the Seller. Such
examination may be made by the Initial Purchaser or its designee at any
reasonable time before or after the related Closing Date. Such examination shall
be during regular business hours and Purchaser shall give Seller ten days prior
written notice. If the Initial Purchaser makes such examination prior to the
related Closing Date and identifies any Mortgage Loans that do not conform to
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the terms of the related Commitment Letter or the Seller's underwriting
standards, such Mortgage Loans may, at the Initial Purchaser's option, be
rejected for purchase by the Initial Purchaser. If not purchased by the Initial
Purchaser, such Mortgage Loans shall be deleted from the related Mortgage Loan
Schedule. The Initial Purchaser may, at its option and without notice to the
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 Seller to Initial Purchaser.
Subsection 6.01. Conveyance of Mortgage Loans; Possession of
Servicing Files.
The Seller, simultaneously with the payment of the Purchase
Price, shall execute and deliver to the Initial Purchaser an Assignment and
Conveyance with respect to the related Mortgage Loan Package in the form
attached hereto as Exhibit 4. No assignment of Mortgage is required if the
Mortgage Loan is a MOM Mortgage, or has been previously assigned to MERS, and
will remain registered on the MERS(R) System. The Servicing File retained by the
Seller with respect to each Mortgage Loan pursuant to this Agreement shall be
appropriately identified in the Seller's computer system to reflect clearly the
sale of such related Mortgage Loan to the Purchaser. The Seller 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 the Seller, MERS, 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 the 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 the Seller 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.
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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 the Seller and not a pledge of the Mortgage Loans by the
Seller to the Purchaser to secure a debt or other obligation of the Seller.
Consequently, the sale of each Mortgage Loan shall be reflected as a sale on the
Seller's business records, tax returns and financial statements. In the event,
for any reason, any transaction contemplated herein is construed by any court or
regulatory authority as a borrowing rather than as a sale, the Seller and the
Purchaser intend that the Purchaser or its assignee, as the case may be, shall
have a perfected first priority security interest in the Mortgage Loans which
may be held by MERS as the nominee for the Purchaser, the Custodial Account and
the proceeds of any and all of the foregoing (collectively, the "Collateral"),
free and clear of adverse claims. In such case, the Seller shall be deemed to
have hereby granted to the Purchaser or its assignee, as the case may be, a
first priority security interest in and lien upon the Collateral, free and clear
of adverse claims. In such event, the related Commitment Letter and this
Agreement shall constitute a security agreement, the Custodian shall be deemed
to be an independent custodian for purposes of perfection of the security
interest granted to the Purchaser or its assignee, as the case may be, and the
Purchaser or its assignee, as the case may be, shall have all of the rights of a
secured party under applicable law.
Subsection 6.03. Delivery of Mortgage Loan Documents.
Pursuant to the Custodial Agreement between the Custodian and
the Initial Purchaser, the Seller shall from time to time in connection with
each Closing Date, at least five (5) Business Days prior to such Closing Date,
deliver and release to the Custodian those Mortgage Loan Documents as required
by the Custodial Agreement with respect to each Mortgage Loan to be purchased
and sold on the related Closing Date and set forth on the related Mortgage Loan
Schedule delivered with such Mortgage Loan Documents.
The Custodian shall certify its receipt of all such Mortgage
Loan Documents required to be delivered pursuant to the Custodial Agreement for
the related Closing Date, as evidenced by the Trust Receipt and Initial
Certification of the Custodian in the form annexed to the Custodial Agreement.
The Seller 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 the Seller 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 two hundred forty days for all states except New York, which
will be within three hundred and sixty days of its submission for recordation.
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SECTION 7. Representations, Warranties and Covenants of the
Seller: Remedies for Breach.
Subsection 7.01. Representations and Warranties Respecting the
Seller.
The Seller represents, warrants and covenants to the Purchaser
as of the Initial Closing Date and each subsequent Closing Date or as of such
date specifically provided herein or in the applicable Assignment and
Conveyance;
i) The Seller is duly organized, 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 and the servicing of the
Mortgage Loan in accordance with the terms of this Agreement. No
licenses or approvals obtained by the Seller 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;
ii) The Seller 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 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, constitutes a legal, valid and binding obligation of
the Seller, 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 and the
performance of and compliance with the terms of this Agreement
will not violate the Seller's articles of incorporation or by-laws
or constitute a default under or result in a breach or
acceleration of, any material contract, agreement or other
instrument to which the Seller is a party or which may be
applicable to the Seller or its assets;
iv) The Seller is not in violation of, and the execution and delivery
of this Agreement by the Seller 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 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 or its assets or might have consequences that would
materially and adversely affect the performance of its obligations
and duties hereunder;
v) The Seller is an approved seller/servicer for FNMA and FHLMC 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 the Seller unable to comply with FNMA, FHLMC or HUD
eligibility requirements or which would require notification to
FNMA, FHLMC or HUD;
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vi) The Seller does not believe, nor does it have any reason or cause
to believe, that it cannot perform each and every covenant
contained in this Agreement;
vii) The Mortgage Loan Documents and any other documents required to
be delivered with respect to each Mortgage Loan pursuant to this
Agreement have been delivered to the Custodian all in compliance
with the specific requirements of this Agreement;
viii) Immediately prior to the payment of the Purchase Price for each
Mortgage Loan, the Seller was the owner of record or had
appointed MERS as the Seller's nominee 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 the Seller or MERS as nominee for the Seller retains
record title, the Seller or MERS as nominee for the Seller 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, the Seller 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 the Seller of, or compliance by the
Seller 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;
xi) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Seller,
and the transfer, assignment and conveyance of the Mortgage Notes
and the Mortgages by the Seller pursuant to this Agreement are
not subject to the bulk transfer or any similar statutory
provisions;
xii) Neither this Agreement nor any written statement, report or other
document prepared and furnished or to be prepared and furnished
by the Seller pursuant to this Agreement or in connection with
the transactions contemplated hereby contains any untrue
statement of material fact or omits to state a material fact
necessary to make the statements contained herein or therein not
misleading;
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xiii) The consideration received by the Seller upon the sale of the
Mortgage Loans constitutes fair consideration and reasonably
equivalent value for such Mortgage Loans; and
xiv) The Seller is solvent and will not be rendered insolvent by the
consummation of the transactions contemplated hereby. The Seller
is not transferring any Mortgage Loan with any intent to hinder,
delay or defraud any of its creditors.
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Subsection 7.02. Representations and Warranties Regarding
Individual Mortgage Loans.
The Seller hereby represents and warrants to the Purchaser
that, as to each Mortgage Loan, as of the related Closing Date for such Mortgage
Loan:
i) The information set forth in the related Mortgage Loan Schedule
and the Mortgage Loan data delivered to the Purchaser and the
Custodian is complete, true and correct;
ii) The Mortgage Loan is in compliance with all requirements set
forth in the related Commitment Letter, and the characteristics
of the related Mortgage Loan Package as set forth in the related
Commitment Letter are true and correct;
iii) All payments required to be made up to the close of business on
the related 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. No payment under the
Mortgage Loan has been delinquent for more than twenty-nine days
(29) during the last twelve months;
iv) 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 or
LPMI Policy, if any, and the title insurer, to the extent
required by the related policy, and is reflected on the related
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 or LPMI 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 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;
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vii) All buildings upon the Mortgaged Property are insured by an
insurer acceptable to FNMA and FHLMC 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 the Seller, 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 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 FNMA and FHLMC. 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, 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 The Seller has
implemented and will maintain security measures designed to meet
the objectives of the Interagency Guidelines Establishing
Standards for Safeguarding Customer Information published in
final form on February 1, 2001, 66 Fed. Reg. 8616, and the rules
promulgated thereunder, as amended from time to time. The Seller
shall promptly provide the Purchaser information regarding such
security measures upon the reasonable request of the Purchaser or
its designee which information shall include, audit reports,
summaries of test results or equivalent measures taken by the
Seller with respect to its security measures.
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 the Seller as reflected on the Mortgage Loan
Schedule, 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
20
benefits of the security intended to be provided by the Mortgage
or the use, enjoyment, value or marketability of the related
Mortgaged Property Any security agreement, chattel mortgage or
equivalent document related to and delivered in connection with
the Mortgage Loan establishes and creates a valid, existing and
enforceable (A) and first priority security interest with respect
to each Mortgage Loan which is indicated by the Seller to be a
First Lien (as reflected on the Mortgage Loan Schedule) on the
property described therein and the 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;
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, a qualified Living
Trust (Revocable Trust) or a qualified Land Trust as listed in
the HSBC Underwriting Guidelines.
xiii) The proceeds of the Mortgage Loan have been fully disbursed
except where there is an established completion escrow or for the
account of the Mortgagor then 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 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;
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xvi) The Mortgage Loan is covered by an American Land Title
Association ("ALTA") ALTA lender's title insurance policy
(which, in the case of an Adjustable Rate Mortgage Loan has an
adjustable rate mortgage endorsement in the form of ALTA 6.0 or
6.1) acceptable to FNMA and FHLMC, issued by a title insurer
acceptable to FNMA and FHLMC and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring
(subject to the exceptions contained above in (x)(a) (b)) the
Seller and/or MERS as nominee for the Seller, its successors and
assigns as to the first priority lien of the Mortgage in the
original principal amount of the Mortgage Loan and, with respect
to any Adjustable Rate Mortgage Loan, against any loss by reason
of the invalidity or unenforceability of the lien resulting from
the provisions of the Mortgage providing for adjustment in the
Mortgage Interest Rate and Monthly Payment. Additionally, such
lender's title insurance policy affirmatively insures ingress
and egress to and from the Mortgaged Property, and against
encroachments by or upon the Mortgaged Property or any interest
therein. The Seller and/or MERS as nominee for the Seller, its
successors and assigns, is the sole insured of such lender's
title insurance policy, and such lender's title insurance policy
is in full force and effect and will be in full force and effect
upon the consummation of the transactions contemplated by this
Agreement. No claims have been made under such lender's title
insurance policy, and no prior holder of the related Mortgage,
including the Seller, has done, by act or omission, anything
which would impair the coverage of such lender's title insurance
policy;
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 the
Seller has not waived any default, breach, violation or event of
acceleration.
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 the Seller 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, Xxxxxx Xxx or Xxxxxxx Mac or by a
mortgage banker or broker licensed or authorized to originate
mortgage loans and do business in the jurisdiction in which the
related Mortgaged Property is located, applying substantially
the same underwriting standards used by the Seller and in a
manner that in all respects meets the requirements of the
Secondary Mortgage Market Enhancement Act of 1984, as amended;
22
xxi) Principal payments on the Mortgage Loan, other than the Interest
Only Mortgage Loan, shall commence (with respect to any newly
originated Mortgage Loans) or commenced no more than sixty days
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, 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, other
than the Interest Only 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
fifteen (15) or thirty (30) year amortization schedule, as set
forth in the related Mortgage Note, and a final monthly payment
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 Commitment Letter and the Mortgage
Loan Schedule. The Mortgage Note does not permit negative
amortization, unless otherwise noted on the Mortgage Loan
Schedule. No Mortgage Loan is a Convertible Mortgage Loan; (D)
in the case of an Interest Only Mortgage Loan, the monthly
payments on each interest Only Mortgage Loan during the related
interest only period is equal to the product of the related
Mortgage Interest Rate and the principal balance of such
Mortgage Loan on the first day of each month and after such
interest only period, except with respect to Interest Only
Mortgage Loan that are Adjustable Rate Mortgage Loans, such
Mortgage Loan is payable in equal monthly installments of
principal and interest.
xxii) The origination and collection practices used by the Seller 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 the Seller and any predecessor servicer in
accordance with the terms of the Mortgage Note. With respect to
escrow deposits and Escrow), if any, all such payments are in
the possession of, or under the control of, the Seller and there
exist no deficiencies in connection therewith for which
customary arrangements for repayment thereof have not been made.
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;
xxiii) The Mortgaged Property is free of 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 within the 12 months preceding the origination
of the existing Mortgage Loan. 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 the Seller and the Seller has no knowledge of any
relief requested or allowed to the Mortgagor under the Soldiers
and Sailors Civil Relief Act of 1940;
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xxv) The Mortgage Loan was underwritten in accordance with the
underwriting standards of the Seller in effect at the time the
Mortgage Loan was originated; and the Mortgage Note and Mortgage
are on forms acceptable to FNMA and FHLMC;
xxvi) The methodology used in underwriting the extension of credit for
each Mortgage Loan does not rely solely on the equity in the
collateral for determining approval of credit extension, but
relies on additional factors such as the Mortgagor's income,
assets liabilities and/or credit history. Such underwriting
methodology confirmed that at the time of origination
(application/approval) the Mortgagor had a reasonable ability to
make timely payments on the Mortgage Loan.
xxvii) 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;
xxviii) The Mortgage File contains an appraisal of the related
Mortgaged Property which satisfied the standards of FNMA and
FHLMC and was made and signed, prior to the approval of the
Mortgage Loan application, by a qualified appraiser, who had no
interest, direct or indirect in the Mortgaged Property or in
any loan made on the security thereof, whose compensation is
not affected by the approval or disapproval of the Mortgage
Loan and who met the minimum qualifications of FNMA and FHLMC.
Each appraisal of the Mortgage Loan was made in accordance with
the relevant provisions of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989;
xxix) 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;
xxx) 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 the Seller, 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;
xxxi) No Mortgage Loan was made in connection with (a) rehabilitation
of a Mortgaged Property or (b) facilitating the trade-in or
exchange of a Mortgaged Property;
xxxii) The Seller 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;
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xxxiii) With respect to any Mortgage Loan with an original
Loan-to-Value Ratio greater than 80%, the Mortgage Loan will be
insured by a Primary 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 FNMA. 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. For
loans in New York State, the appraisal will be used to
determine the original Loan-to-Value. With respect to each
Mortgage Loan for which the related Mortgage Loan Schedule
indicates there is a PMI Policy, the LTV of the Mortgage Loan
either is not more than 80% or the excess over 75% of the
Appraised Value is and will be insured as to payment defaults
by a PMI Policy until the LTV of such Mortgage Loan is reduced
to 80%. No action, inaction, or event has occurred and no state
of facts exists that has, or will result in the exclusion from,
denial of, or defense to coverage. Any Mortgage Loan subject to
a PMI Policy obligates the Mortgagor thereunder to maintain the
PMI Policy and to pay all premiums and charges in connection
therewith;
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
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 any person including without limitation
the Mortgagor, any appraiser, any builder or developer, or any
other party involved in the origination of the Mortgage Loan
or, in the application of any insurance in relation to such
Mortgage Loan; no predatory or deceptive lending practices,
including, without limitation, the extension of credit without
regard to the ability of the borrower to repay and the
extension of credit which has no apparent benefit to the
borrower, were employed in the origination of the Mortgage
Loan.
xxxvi) The Assignment of Mortgage, if required, is in recordable form
and is acceptable for recording 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 first lien priority with respect to each Mortgage Loan
which is indicated by the Seller to be a First Lien (as
reflected on the Mortgage Loan Schedule), by a title
insurance policy, an endorsement to the policy insuring the
mortgagee's consolidated interest or by other title evidence
acceptable to FNMA and FHLMC;
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xxxviii) If the Residential Dwelling on the Mortgaged Property is a
condominium unit, a unit in a planned unit development (other
than a de minimis planned unit development), or a unit in a
cooperative, such condominium, planned unit development, or
cooperative project meets the eligibility requirements of HSBC
xxxix) Interest on each Mortgage Loan is calculated on the basis of a
360-day year consisting of twelve 30-day months;
xl) The Mortgaged Property is in material compliance with all
applicable environmental laws pertaining to environmental
hazards including, without limitation, asbestos, and neither
the Seller nor, to the Seller's knowledge, the related
Mortgagor, has received any notice of any violation or
potential violation of such law;
xli) The Seller shall, at its own expense, cause each Mortgage Loan
to be covered by a "life of loan" Tax Service Contract which
is assignable to the Purchaser or its designee at no cost to
the Purchaser or its designee; provided however, that if the
Seller fails to purchase such Tax Service Contract, the Seller
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;
xlii) Each Mortgage Loan is covered by a "life of loan" Flood Zone
Service Contract which is assignable to the Purchaser or its
designee at no cost to the Purchaser or its designee or, for
each Mortgage Loan not covered by such Flood Zone Service
Contract, the Seller agrees to purchase such Flood Zone
Service Contract;
xliii) None of the Adjustable Rate Mortgage Loans include an option
to convert to a Fixed Rate Mortgage Loan;
xliv) No selection procedures were used by the Seller that
identified the Mortgage Loans as being less desirable or
valuable than other comparable mortgage loans in the Seller's
portfolio;
xlv) The Loan-to-Value Ratio of any Mortgage Loan at origination
was not more than 95% and the CLTV of any Mortgage Loan at
origination was not more than 100%;
xlvi) Each Mortgage Loan constitutes a "qualified mortgage" under
Section 860G(a)(3)(A) of the Code and Treasury Regulation
Section 1.860G-2(a)(1);
xlvii) No Mortgage Loan is subject to the provisions of the
Homeownership and Equity Protection Act of 1994 or is
considered a "high cost loan" under any other state, county or
municipal laws or ordinances; None of the Mortgage Loans are
classified as either: high cost, threshold, covered or
predatory loans under any applicable federal, state, or local
laws, or as defined by the applicable predatory and abusive
lending laws. Each loan at the time it was made complied in
all material respects with applicable local, state, and
federal laws, including, but not limited to, all applicable
predatory and abusive lending laws.
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xlviii) No Mortgage Loan had an original term to maturity of more than
thirty (30) year
xlix) No Mortgagor was required to purchase single premium credit
life insurance, disability insurance or similar insurance in
connection with the origination of the Mortgage Loan; and No
Mortgage Loans is a "High Cost Home Loan" within the meaning
of the Georgia Fair Lending Act (the "Georgia Act"). With
respect to any Mortgage Loan that is a "Covered Loan" within
the meaning of the Georgia Act such Mortgage Loan complies
with all material provisions of the Georgia Act. No mortgagor
obtained a prepaid single premium credit insurance policy
(e.g., life, disability, accident, unemployment, mortgage, or
health insurance) in connection with the origination of the
Mortgage Loan. No proceeds from any Mortgage Loan were used to
purchase single premium credit insurance policies or debt
cancellation agreements as part of the origination of, or as a
condition to closing, such Mortgage Loan.
l) The Seller has complied with all applicable anti-money
laundering laws and regulations, including without limitation
the USA Patriot Act of 2003, and the laws and regulations
administered by the U.S. Department of Treasury's Office of
Foreign Assets Control ("OFAC"), which prohibit dealings with
certain countries, territories, entities and individuals named
in OFAC's Sanction Programs and on the Specially Designated
Nationals and Blocked Persons List (collectively, the
"Anti-Money Laundering Laws"). The Seller has established an
anti-money laundering compliance program to the extent
required by the Anti-Money Laundering Laws, has conducted the
requisite due diligence in connection with the origination of
each Mortgage Loan for purposes of the Anti-Money Laundering
Laws, including with respect to the legitimacy of the
applicable Mortgagor and the origin of the assets used by the
said Mortgagor to purchase the property in question, and
maintains, and will maintain, sufficient information to
identify the applicable Mortgagor for purposes of the
Anti-Money Laundering Laws.
li) With respect to any Mortgage Loan which is a Texas Home Equity
Loan, any and all requirements of Section 50, Article XVI of
the Texas Constitution applicable to Texas Home Equity Loans
which were in effect at the time of the origination of the
Mortgage Loan have been complied with. Specifically, without
limiting the generality of the foregoing, any fees paid in
connection with such Mortgage Loan in order for the Mortgagor
to receive a reduced interest rate are not required to be
included in the calculation of the aggregate fees pursuant to
Section 50(a)(6)(E) of the Texas Constitution;
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lii) No Mortgagor with respect to any Mortgage Loan originated on
or after August 1, 2004 agreed to submit to arbitration to
resolve any dispute arising out of or relating in any way to
the mortgage loan transaction;
liii) The Prepayment Penalty Mortgage Loans. The penalty will be
enforced as per HSBC guidelines and as per the Mortgage Note
and will be payable to the Seller or the Purchaser as per the
Commitment Letter.
Section 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 the 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 60 days of the earlier of either discovery by or notice
to the Seller of any breach of a representation or warranty which materially and
adversely affects the value of a Mortgage Loan or the Mortgage Loans, the Seller
shall use its best efforts promptly to cure such breach in all material respects
and, if such breach cannot be cured, the Seller 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 60 days of the earlier of either
discovery by or notice to the Seller of such breach, all of the Mortgage Loans
shall, at the Purchaser's option, be repurchased by the Seller at the Repurchase
Price. The Seller shall, at the request of the Purchaser and assuming that the
Seller 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 120 days after the Closing Date.
If the Seller has no Qualified Substitute Mortgage Loan, the Seller 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 (i) by wire transfer
of immediately available funds on the repurchase date to an account designated
by the Initial Purchaser or (ii) as otherwise set forth in the related
Commitment Letter.
At the time of repurchase of any deficient Mortgage Loan, the
Purchaser and the Seller shall arrange for the reassignment of the repurchased
Mortgage Loan to the Seller and the delivery to the 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, the Seller shall,
simultaneously with such deposit, give written notice to the Purchaser that such
deposit has taken place. Upon such repurchase the related Mortgage Loan Schedule
shall be amended to reflect the withdrawal of the repurchased Mortgage Loan from
this Agreement.
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As to any Deleted Mortgage Loan for which the Seller
substitutes a Qualified Substitute Mortgage Loan or Loans, the Seller shall
effect such substitution by delivering to the Purchaser for such Qualified
Substitute Mortgage Loan or Loans the Mortgage Note, the Mortgage, the
Assignment of Mortgage, unless such Mortgage Loan is a MOM Mortgage or has
previously been assigned to MERS, and such other documents and agreements as are
required by the Custodial Agreement, with the Mortgage Note endorsed as required
therein. The Seller 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 the Seller. 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 the Seller shall thereafter be entitled to retain
all amounts subsequently received by the Seller in respect of such Deleted
Mortgage Loan. The Seller shall give written notice to the Purchaser that such
substitution has taken place and shall amend the 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 the Seller 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 the Seller substitutes one or more
Qualified Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the
Seller will determine the amount (if any) by which the aggregate principal
balance of all such Qualified Substitute Mortgage Loans as of the date of
substitution 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 the Seller
in the month of substitution pursuant to the Servicing Addendum. Accordingly, on
the date of such substitution, the Seller, as applicable, 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, the Seller 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 Seller's representations and warranties
contained in this Section 7. It is understood and agreed that the obligations of
the Seller set forth in this Subsection 7.03 to cure, substitute for 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.
29
Any cause of action against the Seller 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 the
Seller to cure such breach or repurchase such Mortgage Loan as specified above,
and (iii) demand upon the Seller by the Purchaser for compliance with the
relevant provisions of this Agreement.
Subsection 7.04 Repurchase of Certain Mortgage Loans; Premium
Recapture.
In the event that any Mortgage Loans prepay-in-full within 60
days following the related loan closing date, the Seller shall remit to the
Purchaser (i) an amount equal to the product of (A) the excess of the related
Purchase Price percentage over 100% and (B) the Stated Principal Balance of such
prepaid Mortgage Loan as of the related Closing Date. In the event that any
Mortgagor fails to make the first scheduled Monthly Payment due on such Mortgage
Loan or due to Purchaser within the calendar month such payment is due, Seller
shall repurchase such Mortgage Loan at the Repurchase Price.
Subsection 7.05. Representations of the Purchaser.
The Initial Purchaser hereby represents and warrants to the
Seller, as of the date hereof and as of each Closing Date, that:
(i) The Initial Purchaser is Xxxxxx Brothers Bank, FSB_ with
full corporate power and authority to conduct its business as presently
conducted by it to the extent material to the consummation of the transactions
contemplated herein. This Agreement has been duly authorized, executed and
delivered by the Initial Purchaser acting through the New York branch. The
Initial Purchaser had the full corporate power and authority to own the Mortgage
loans and has the full corporate power authority to execute and deliver, engage
in the transactions contemplated by, and perform and observe the terms and
conditions of the Agreement.
(ii) The Initial Purchaser has duly authorized the execution,
delivery and performance of the Agreement, has duly executed and delivered this
Agreement, and this Agreement, assuming due authorization, execution and
delivery by the Seller, constitutes a legal, valid and binding obligation of the
Seller, enforceable against it in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency or
reorganization or by general principles of equity;
(iii) The execution, delivery and performance of this
Agreement by the Initial Purchaser (x) does not conflict and will not conflict
with, does not breach and will not result in a breach of and does not constitute
and will not constitute a default (or an event, which with notice or lapse of
time or both, would constitute a default) under (A) any terms or provision on
the organizational documents of the Initial Purchaser, (B) any term or provision
of any material agreement, contract, instrument or indenture, to which the
Initial Purchaser is a party or by which the Initial Purchaser or any of its
property is bound, or (C) any law, rule, regulation, order, judgment, writ,
injunction or decree of any court or governmental authority having jurisdiction
over the Initial Purchaser or any of its property and (y) does not create or
impose and will not result in the creation or imposition of any lien, charge or
encumbrance which would have a material adverse effect upon the Mortgage Loans
or any documents or instruments evidencing or securing the Mortgage Loan;
30
(iv) No consent, approval, authorization or order of,
registration or filing with, or notice on behalf of the Initial Purchaser to any
governmental authority or court is required, under federal or the laws of the
State of New York, for the execution, delivery and performance by the Initial
Purchaser of, or compliance by the Initial Purchaser with, this Agreement or the
consummation by the Initial Purchaser of any other transaction contemplated
hereby;
(v) The Initial Purchaser is not in violation of, and the
execution and delivery of this Agreement by the Initial Purchaser and its
performance and compliance with the terms of this Agreement will not constitute
a violation with respect to, any order or decree of New York court or any order
or regulation of any federal, state, municipal or governmental agency having
jurisdiction over the Initial Purchaser or its assets, which violation might
have consequences that would materially and adversely affect the condition
(financial or otherwise) or the operation of the Initial Purchaser or its assets
or might have consequences that would materially and adversely affect the
performance of its obligation and duties hereunder;
(vi) There are not actions or proceedings against, or
investigations known to it of, the Initial Purchaser before any court,
administrative or other tribunal (A) that might prohibit its entering into the
Agreement, or (B) that might prohibit or materially and adversely affect the
performance by the Initial Purchaser of its obligations under, or validity or
enforceability of, this Agreement; and
(vii) There is no litigation currently pending or, to the best
of the Initial Purchaser's knowledge without independent investigation,
threatened against the Initial Purchaser that would reasonably be expected to
adversely affect the execution, delivery, performance or enforceability of this
Agreement, or that would result in a material adverse change in the financial
condition of the Initial Purchaser.
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:
i) all of the representations and warranties of the Seller under this
Agreement shall be true and correct as of the related Closing Date
and no event shall have occurred which, with reasonable notice to
the Seller or the passage of time, would constitute a default
under this Agreement. The Seller represents to the Purchaser on
the related Closing Date that it has not experienced any Material
Adverse Change from the execution date of this Agreement. For the
purpose of this Section, Material Adverse Change shall mean, (a) a
material adverse change in, or a material adverse effect upon, the
operations, business, properties, condition (financial or
otherwise) or prospects of the Seller; (b) a material impairment
of the ability of Seller to perform under the Agreement, the
Servicing Addendum or any related agreements (the "Operative
Agreements"); or (c) a material adverse effect upon the legality,
validity, binding effect or enforceability of any Operative
Agreements against Seller;
31
ii) 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;
iii) the Seller shall have delivered and released to the Custodian all
documents required pursuant to the Custodial Agreement; and
iv) 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 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 Seller.
SECTION 9. Closing Documents.
(a) On or before the Initial Closing Date, the Seller shall
submit to the Initial Purchaser fully executed originals of the following
documents:
1. this Agreement, in four counterparts;
2. a Custodial Account Letter Agreement in the form attached
as Exhibit 6 hereto;
3. as Escrow Account Letter Agreement in the form attached as
Exhibit 7 hereto;
4. an Officer's Certificate, in the form of Exhibit 1 hereto,
including all attachments thereto;
5. an Opinion of Counsel to the Seller, in the form of
Exhibit 2 hereto;
6. the Seller's underwriting guidelines for each of the
Seller's origination programs; and
7. an Assignment and Assumption by Purchaser to Seller of the
Purchaser's rights as Servicer under the Custodial
Agreement by and between Purchaser and US Bank N.A. (the
"Custodian") dated as of September 1, 1999, with respect
to the Mortgage Loans in this Purchase Transaction;
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(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 Commitment Letter;
2. the related Mortgage Loan Schedule, one copy to be
attached hereto and one copy to be attached to the
Custodian's counterpart of the Custodial Agreement, as the
Mortgage Loan Schedule thereto;
3. a Custodian's trust receipt and initial certification, as
required under the Custodial Agreement, in a form
acceptable to the Initial Purchaser;
4. 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;
5. 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 Seller by merger or acquired or originated by the
Seller while conducting business under a name other than
its present name, if applicable; and
6. an Assignment and Conveyance in the form of Exhibit 4
hereto;
7. an Assignment and Assumption by Purchaser to Seller of the
Purchaser's rights as Servicer under the Custodial
Agreement by and between Purchaser and US Bank N.A. (the
"Custodian") dated as of September 1, 1999, with respect
to the Mortgage Loans in this Purchase Transaction;
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 Seller's attorney's fees, shall be paid by the Seller.
SECTION 11. Seller's Servicing Obligations. The Seller, as
independent contract servicer, shall service and administer the Mortgage Loans
the Seller sold to the Purchaser on the related Closing Date 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.
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SECTION 12. Removal of Mortgage Loans from Inclusion under
this Agreement Upon a Whole Loan Transfer, Pass-Through Transfer or Agency
Transfer on One or More Reconstitution Dates. The Seller 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 not more than three Whole Loan Transfers;
2. and/or one or not more than three Pass-Through Transfers.
3. and/or One or not more than three Agency Transfers.
The Purchaser shall not effect in excess of three (3) Whole
Loan Transfers, Pass-Through Transfers, or Agency Transfers, as the case may be
with respect to any Loan Package. All notices of intent to exercise the option
in Section 12 must be received by the Seller no less than 7 business days prior
to each Whole Loan Transfer, Pass-Through Transfer, or Agency Transfer.
All notices of this nature should be sent via e-mail to:
Xxxx Xxxxxx/HSBC - Investor Accounting
E-mail address: xxxx.xxxxxx@xx.xxxx.xxx
Phone number: 000-000-0000
With respect to each Whole Loan Transfer, Pass-Through
Transfer or Agency Transfer, as the case may be, entered into by the Initial
Purchaser, the Seller agrees:
(1) to cooperate fully with the Purchaser and any prospective
purchaser with respect to all reasonable requests and due
diligence procedures and with respect to the preparation
(including, but not limited to, the endorsement, delivery,
assignment, and execution) of the Mortgage Loan Documents
and other related documents, and with respect to servicing
requirements reasonably requested by the rating agencies
and credit enhancers;
(2) to execute all Reconstitution Agreements, provided that
each of the Seller 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. It is understood that
any such Reconstitution Agreement will not contain any
greater obligations of the part of the Seller than are
contained in this Agreement.
(3) with respect to any Whole Loan Transfer, Pass-Through
Transfer or Agency Transfer, the Seller shall restate the
representations and warranties set forth in this Agreement
regarding the Seller.
(4) to deliver to the Purchaser for inclusion in any
prospectus or other offering material such publicly
available information regarding the Seller, 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 the Seller is capable of providing without
unreasonable effort or expense, and to indemnify the
Purchaser and its affiliates for material misstatements or
omissions contained (i) in such information and (ii) on
the Mortgage Loan Schedule;
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(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
the Seller 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 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 negotiate and execute one or more subservicing
agreements between the Seller 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 the Seller and/or one or more custodial and servicing
agreements among the Purchaser, the Seller 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 the Seller, 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 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
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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. In addition, at the sole option of the
Purchaser, any REMIC residual class issued pursuant to any
pooling agreement may be transferred to the Seller. 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, the Seller 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 the Seller (as servicer), the
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
(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, Pass-Through Transfer or Agency 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 Seller.
Subsection 13.01. Additional Indemnification by the Seller.
In addition to the indemnification provided in Subsection
7.03, the Seller 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 the Seller to perform its obligations under this Agreement
including but not limited to its 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.
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Subsection 13.02. Merger or Consolidation of the Seller.
The Seller 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 entity 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 the
Seller to perform its duties under this Agreement.
Any Person into which the Seller may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Seller shall be a party, or any Person succeeding to
the business of the Seller, shall be the successor of the Seller 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 FDIC or a company whose business is
the origination and servicing of mortgage loans, shall be a FNMA or FHLMC
approved seller/servicer and shall satisfy any requirements of Section 16 with
respect to the qualifications of a successor to the Seller.
Subsection 13.03. Limitation on Liability of the Seller and
Others.
Neither the Seller nor any of the officers, employees or
agents of the 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 the Seller 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 Seller and any officer, employee or agent
of the Seller 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 Seller shall not be under any obligation to appear in, prosecute
or defend any legal action which is not incidental to its obligation to sell or
duty to service the Mortgage Loans in accordance with this Agreement and which
in its opinion may result in its incurring any expenses or liability; provided,
however, that the 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 Seller shall be entitled to reimbursement therefor from the
Purchaser upon written demand except when such expenses, costs and liabilities
are subject to the Seller's indemnification under Subsections 7.03 or 13.01.
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Subsection 13.04. Seller Not to Resign.
The Seller shall not assign this Agreement or resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Seller 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 the Seller in which event the Seller may resign as servicer.
Any such determination permitting the resignation of the Seller 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 the Seller. No such
resignation shall become effective until a successor shall have assumed the
Seller's responsibilities and obligations hereunder in the manner provided in
Section 16.
Subsection 13.05. No Transfer of Servicing.
The Seller acknowledges that the Purchaser has acted in
reliance upon the Seller'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, the Seller shall not either assign this
Agreement or the servicing hereunder or delegate its rights or duties hereunder
or any portion thereof, or sell or otherwise dispose of all or substantially all
of its property or assets, without the prior written approval of the Purchaser,
which consent will not be unreasonably withheld. This provision shall not
prevent Seller from delegating certain servicing functions to affiliates of
Seller.
SECTION 14. DEFAULT.
Subsection 14.01. Events of Default.
In case one or more of the following Events of Default by the
Seller shall occur and be continuing, that is to say:
(i) any failure by the Seller to remit to the Purchaser any
payment required to be made under the terms of this Agreement which continues
unremedied for a period of two Business Days after the date upon which written
notice of such failure, requiring the same to be remedied, shall have been given
to the Seller by the Purchaser; or
(ii) failure on the part of the Seller duly to observe or
perform in any material respect any other of the covenants or agreements on the
part of the Seller set forth in this Agreement which continues unremedied for a
period of thirty days (except that such number of days shall be fifteen 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 the Seller
by the Purchaser; or
(iii) a 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 the Seller and such
decree or order shall have remained in force undischarged or unstayed for a
period of thirty days; or
(iv) the Seller 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 the Seller or of or relating to all or
substantially all of its property; or
38
(v) the Seller 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 the Seller to be in compliance with the "doing
business" or licensing laws of any jurisdiction where a Mortgaged Property is
located; or
(vii) the Seller ceases to meet the qualifications of either a
FNMA or FHLMC seller/servicer; or
(viii) the Seller 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 the Seller, may, in
addition to whatever rights the Purchaser may have at law or in equity to
damages, including injunctive relief and specific performance, terminate all the
rights and obligations of the Seller as servicer under this Agreement. On or
after the receipt by the Seller of such written notice, all authority and power
of the Seller 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 the 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.
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SECTION 15. Termination. The respective obligations and
responsibilities of the Seller, 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 the Seller) 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 this Section 15 or
pursuant to Section 14. In the event that the Seller is terminated pursuant to
this Section 15 without cause, the Purchaser shall pay to the Seller a
termination fee in an amount equal to the product of the "Termination
Percentage" below times the then outstanding aggregate principal balance of the
Mortgage Loans for which servicing is being terminated
For the purposes hereof, "Termination Percentage" with respect
to any Mortgage Loan shall mean the following:
Date of Termination Termination Percentage
Prior to the third anniversary of the related Closing Date 2.0%
On or following the third anniversary of the related 1.5%
Closing Date but prior to the fifth anniversary of the
Related Closing Date.
On or following the fifth anniversary of the related 1.0%
Closing Date.
Upon written request from the Purchaser in connection with any such termination,
the Seller 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 Seller's sole expense. The Seller agrees to cooperate with the
Purchaser and such successor in effecting the termination of the Seller'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 the Seller to the related
Custodial Account or Escrow Account or thereafter received with respect to the
Mortgage Loans.
SECTION 16. Successor to the Seller. Prior to termination of
the Seller's responsibilities and duties under this Agreement pursuant to
Section 12, 14 or 15, the Purchaser shall (i) succeed to and assume all of the
Seller'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 the Seller as servicer under
this Agreement. In connection with such appointment and assumption, the
Purchaser may make such arrangements for the reasonable compensation of such
successor out of payments on Mortgage Loans as it and such successor shall
agree. In the event that the Seller's duties, responsibilities and liabilities
40
as servicer under this Agreement should be terminated pursuant to the
aforementioned Sections, the Seller 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 the Seller 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 Seller 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 Seller
notwithstanding any such resignation or termination of the Seller, or the
termination of this Agreement.
Any successor appointed as provided herein shall execute,
acknowledge and deliver to the Seller 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 the Seller, with like effect as if originally named as a party to
this Agreement provided, however, that such successor shall not assume, and the
Seller shall indemnify such successor for, any and all liabilities arising out
of the Seller's acts as servicer. Any termination of the Seller as servicer
pursuant to Section 12, 14 or 15 shall not affect any claims that the Purchaser
may have against the Seller arising prior to any such termination or resignation
or remedies with respect to such claims.
The Seller shall timely deliver to the successor the funds in
the related Custodial Account, REO Account and the related Escrow Account and
the Mortgage Files and related documents and statements held by it hereunder and
the Seller shall account for all funds. The Seller shall execute and deliver
such 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 the Seller as
servicer. The successor shall make arrangements as it may deem appropriate to
reimburse the Seller for amounts the Seller actually expended as servicer
pursuant to this Agreement which the successor is entitled to retain hereunder
and which would otherwise have been recovered by the Seller pursuant to this
Agreement but for the appointment of the successor servicer.
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SECTION 17. Financial Statements. The Seller understands that
in connection with the Purchaser's marketing of the Mortgage Loans, the
Purchaser shall make available to prospective purchasers the Seller's financial
statements for the most recently completed three fiscal years respecting which
such statements are available. The Seller also shall make available any
comparable interim statements to the extent any such statements have been
prepared by the Seller (and are available upon request to members or
stockholders of the Seller or the public at large). The Seller, if it has not
already done so, agrees to furnish promptly to the Purchaser copies of the
statements specified above. The Seller also shall make available information on
its servicing performance with respect to mortgage loans serviced for others,
including delinquency ratios.
The Seller also agrees to allow access to knowledgeable
financial, accounting, origination and servicing officers of the Seller for the
purpose of answering questions asked by any prospective purchaser regarding
recent developments affecting the Seller, its loan origination or servicing
practices or the financial statements of the Seller.
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
Commitment 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 Seller's
failure to deliver each of the related Mortgage Loans or one or more Mortgage
Loans otherwise acceptable to the Initial Purchaser on or before the related
Closing Date. The 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 the 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 Commitment 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:
(i) if to the Purchaser:
Xxxxxx Brothers Bank, FSB
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxx
42
(ii) if to the Seller:
HSBC Mortgage Corporation (USA)
0000 Xxxxxx Xxxxxx
Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
(iii) if to MERS:
Attn: Secretary
0000 Xxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
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).
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.
43
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 Loan Files 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. In the event, for any reason, any transaction contemplated herein is
construed by any court or regulatory authority as a borrowing rather than as a
sale, the Seller and the Purchaser intend that the Purchaser or its assignee, as
the case may be, shall have a perfected first priority security interest in the
Mortgage Loans which may be held by MERS as the nominee for the Purchaser, the
Custodial Account and the proceeds of any and all of the foregoing
(collectively, the "Collateral"), free and clear of adverse claims. In such
case, the Seller shall be deemed to have hereby granted to the Purchaser or its
assignee, as the case may be, a first priority security interest in and lien
upon the Collateral, free and clear of adverse claims. In such event, the
related Commitment Letter and this Agreement shall constitute a security
agreement, the Custodian shall be deemed to be an independent custodian for
purposes of perfection of the security interest granted to the Purchaser or its
assignee, as the case may be, and the Purchaser or its assignee, as the case may
be, shall have all of the rights of a secured party under applicable law.
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 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, which consent
shall not be unreasonably withheld.
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.
44
SECTION 27. Nonsolicitation. The Seller covenants and agrees
that it shall not take any action to solicit the refinancing of any Mortgage
Loan following the date hereof or provide information to any other entity to
solicit the refinancing of any Mortgage Loan; provided that, the foregoing shall
not preclude the Seller from engaging in solicitations to the general public by
newspaper, radio, television or other media which are not directed toward the
Mortgagors or from refinancing the Mortgage Loan of any Mortgagor who, without
solicitation, contacts the Seller to request the refinancing of the related
Mortgage Loan.
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;
(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.
[Signature pages follow]
45
IN WITNESS WHEREOF, the Seller 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.
HSBC Mortgage Corporation (USA)
(Seller)
By:______________________________
Name: Xxxxxxxx Xxxxxxx
Title: Vice President
Xxxxxx Brothers Bank, FSB
(Initial Purchaser)
By:________________________________
Name: Xxxx X. Xxxxxx
Title: Vice President
46
EXHIBIT 1
FORM OF SELLER'S OFFICER'S CERTIFICATE
I, Xxxxxxxx XxXxxxx, hereby certify that I am the duly elected
First Vice President of HSBC Mortgage Corporation (USA)], a Delaware 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 November 1, 2005 by and between the
Seller and "Purchaser; (b) the Commitment Letter, dated October 11, 2005,
between the Seller and the Purchaser (the "Commitment 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 Commitment 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
October 12, 2005 (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 October 11, 2005. No event has occurred since
October 11, 2005 which has affected the good standing of the Seller under the
laws of the State of Delaware.
6. Attached hereto as Attachment IV is a copy of each license
of the Seller to originate and sell the Mortgage Loans. 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.
7. 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.
8. 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 Commitment 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]
HSBC Mortgage Corporation (USA)
(Seller)
By_______________________________________
Name: Xxxxxxxx XxXxxxx
----------------
Title: First Vice President
I, Xxxxxxxx Xxxxxxx, Secretary of the Seller, hereby certify
that Xxxxxxxx XxXxxxx 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]
HSBC Mortgage Corporation (USA)
(Seller)
By:______________________________________
Name: Xxxxxxxx Xxxxxxx
----------------
Title: [Assistant] Secretary
EXHIBIT 2
FORM OF OPINION OF COUNSEL TO THE SELLER
______________________________
(DATE)
Re: Master Mortgage Loan Purchase and Servicing
Agreement, dated as of ________ __, 200_
Gentlemen:
I have acted as counsel to HSBC Mortgage Corporation (USA), a
__Delaware_________ corporation (the "Seller"), in connection with the sale of
certain mortgage loans by the Seller to (the "Purchaser") pursuant to (i) a
Master Mortgage Loan Purchase and Servicing Agreement, dated as of ________ __,
200_, by and between the Seller and the Purchaser (the "Purchase Agreement"),
[and the Commitment Letter, dated __________ __, 200_, between the Seller and
the Purchaser (the "Commitment Letter")]. Capitalized terms not otherwise
defined herein have the meanings set forth in the Purchase 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 Purchase Agreement;
B. [The Commitment Letter;]
C. The Seller's Certificate of Incorporation and By-Laws,
as amended to date; and
D. Resolutions adopted by the board of directors of the
Seller with specific reference to actions relating to
the transactions covered by this opinion (the
"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 Seller, 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. The Seller has been duly incorporated and is validly
existing and in good standing under the laws of the State of __________ with
corporate power and authority to own its properties and conduct its business as
presently conducted by it. The Seller has the corporate power and authority to
service the Mortgage Loans, and to execute, deliver, and perform its obligations
under the Purchase Agreement [and the Commitment Letter] (sometimes
collectively, the "Agreements").
2. The Purchase Agreement [and the Commitment Letter] have
been duly and validly authorized, executed and delivered by the Seller.
3. The Purchase Agreement [and the Commitment Letter]
constitute valid, legal and binding obligations of the Seller, enforceable
against the Seller 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 the Seller of the Purchase Agreement [and the
Commitment Letter], or the consummation of the transactions contemplated by the
Purchase Agreement [and the Commitment Letter], except for those consents,
approvals, authorizations or orders which previously have been obtained.
5. Neither the servicing of the Mortgage Loans by the Seller
as provided in the Purchase Agreement [and the Commitment Letter,] nor the
fulfillment of the terms of or the consummation of any other transactions
contemplated in the Purchase Agreement [and the Commitment Letter] will result
in a breach of any term or provision of the certificate of incorporation or
by-laws of the Seller, 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 indenture or other agreement or instrument known to me to which the
Seller is a party or by which it is bound, (ii) any State of ____________ or
federal statute or regulation applicable to the Seller, or (iii) any order of
any State of ____________ or federal court, regulatory body, administrative
agency or governmental body having jurisdiction over the Seller, except in any
such case where the default, breach or violation would not have a material
adverse effect on the Seller or its ability to perform its obligations under the
Purchase Agreement.
6. There is no action, suit, proceeding or investigation
pending or, to the best of my knowledge, threatened against the Seller which, in
my judgment, either in any one instance or in the aggregate, would draw into
question the validity of the Purchase Agreement or which would be likely to
impair materially the ability of the Seller to perform under the terms of the
Purchase Agreement.
7. The sale of each Mortgage Note and Mortgage as and in the
manner contemplated by the Purchase Agreement is sufficient fully to transfer to
the Purchaser all right, title and interest of the Seller thereto as noteholder
and mortgagee.
8. The Assignments of Mortgage, if applicable, 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 [related
custodial 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 Seller 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 Purchase Agreement.
C. I have assumed, without independent check or certification,
that there are no agreements or understandings among the Seller, 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,
EXHIBIT 3
FORM OF 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 (PURCHASER) from the Seller
named below pursuant to that certain Master Mortgage Loan Purchase and Servicing
Agreement, dated as of _________ __, 200_, 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 PURCHASER that, as
of the Date and Time of Sale of the above mentioned Mortgage Loans to , 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.
HSBC Mortgage Corporation
Seller
By:______________________________________
Name:____________________________________
Title:___________________________________
EXHIBIT 4
ASSIGNMENT AND CONVEYANCE
On this _______ day of ________, 200_, [SELLER] (the
"Seller"), as Seller under that certain Master Mortgage Loan Purchase and
Servicing Agreement, dated as of _________ __, 200_ (the "Agreement"), does
hereby sell, transfer, assign, set over and convey to as Purchaser under the
Agreement, without recourse, but subject to the terms of the Agreement, all
rights, title and interest of the Seller in and to the Mortgage Loans listed on
the Mortgage Loan Schedule attached hereto as Schedule 1, 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, the
Seller has delivered or shall deliver to the Custodian the Mortgage Loan
Documents for each Mortgage Loan to be purchased and such other documents as set
forth in the Custodial Agreement. The contents of each related Servicing File
required to be retained by the Seller 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. The
Seller'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
the Seller 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 Seller shall immediately vest in the Purchaser and shall be
retained and maintained, in trust, by the Seller at the will of the Purchaser in
such custodial capacity only.
The 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 all attachments thereto remain complete,
true and correct in all respects as of the date hereof, and that the Mortgage
Loan information set forth on Schedule Two attached hereto is true and correct
as of the date hereof.
Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Agreement.
HSBC Mortgage Corporation
(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 the Seller or delivered to the
Custodian:
1. Mortgage Loan Documents.
2. Residential loan application.
3. Mortgage Loan closing statement.
4. Verification of employment and income, if required
pursuant to the related Mortgage Loan's origination
program.
5. Verification of acceptable evidence of source and
amount of downpayment, if required pursuant to the
related Mortgage Loan's origination program.
6. Credit report on Mortgagor.
7. Residential appraisal reporter applicable collateral
assessment form as accepted by Xxxxxx Xxx and/or
Xxxxxxx Mac.
8. Photograph of the Mortgaged Property.
9. Survey of the Mortgaged Property, if applicable
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 portability 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 90 days.
EXHIBIT 6
FORM OF CUSTODIAL ACCOUNT LETTER AGREEMENT
________________________ __, 200__
To: _____________________________
(the "Depository")
As Seller under the Master Mortgage Loan Purchase and
Servicing Agreement, dated as of _______ __, 200_, we hereby authorize and
request you to establish an account, as a Custodial Account, to be designated as
HSBC Mortgage Corporation (USA) in trust for __________."All deposits in the
account shall be subject to withdrawal therefrom by order signed by the Seller.
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.
HSBC Mortgage Corporation (USA)
(Seller)
By:______________________________________
Name:____________________________________
Title:___________________________________
Date:____________________________________
The undersigned, as Depository, hereby certifies that the
above-described account has been established 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
FORM OF ESCROW ACCOUNT LETTER AGREEMENT
___________ __, 200__
To: ________________________
(the "Depository")
As Seller under the Master Mortgage Loan Purchase and
Servicing Agreement, dated as of _______ __, 200_, we hereby authorize and
request you to establish an account, as an Escrow Account, to be designated as
HSBC Mortgage Corporation (USA) in trust for ________________________ 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. 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.
HSBC Mortgage Corporation (USA)
(Seller)
By:______________________________________
Name:____________________________________
Title:___________________________________
Date:____________________________________
The undersigned, as Depository, hereby certifies that the
above-described account has been established 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
Subsection 11.01 Seller to Act as Servicer.
The Seller, as independent contract servicer, shall service and
administer the Mortgage Loans that the Seller sells to the Purchaser hereunder
in accordance with this Agreement during the Preliminary Servicing Period 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 the
Seller may deem necessary or desirable and consistent with the terms of this
Agreement.
Consistent with the terms of this Agreement, the Seller 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 the Seller's reasonable and prudent determination such waiver,
modification, postponement or indulgence is not materially adverse to the
Purchaser; provided, however, that the Seller shall not permit any modification
with respect to any Mortgage Loan that would change the Mortgage Interest Rate,
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, the Seller 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 the Seller, the
Purchaser shall furnish the Seller 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, the
Seller may not waive any Prepayment Charge or portion thereof required by the
terms of the related Mortgage Note unless (i) the Seller 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 the Seller waives or does not collect all or a portion of a
Prepayment Charge relating to a Principal Prepayment in full due to any action
or omission of the Seller, other than as provided above, the Seller 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.
In servicing and administering the Mortgage Loans, the Seller 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 the Seller.
Subsection 11.02 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest on
all Mortgage Loans are paid in full, the Seller shall proceed diligently to
collect all payments due under each Mortgage Loan 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 or LPMI 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, the Seller 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.
Subsection 11.03 Realization Upon Defaulted Mortgage Loans.
(a) The Seller shall use its best efforts, consistent with the
procedures that the Seller 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
Subsection 11.01. The Seller 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, the Seller shall not be required to expend its own funds toward the
restoration of such property in excess of $2,000 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 the
Seller through Insurance Proceeds or Liquidation Proceeds from the related
Mortgaged Property, as contemplated in Subsection 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, the Seller 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 90 days or more, the
Seller shall use Accepted Servicing Practices and refer to foreclosure by the
120th day of delinquency. The Seller will notify the Purchaser of foreclosure
referrals on a monthly basis, after the initiation of foreclosure proceedings.
When foreclosure sale is imminent, Seller shall obtain a property valuation and
issue bidding instructions in accordance with Accepted Servicing Practices and
consistent with methods used for the mortgage loans held for its own portfolio.
In such connection, the Seller shall be responsible for all costs and expenses
incurred by it in any such proceedings; provided, however, that it shall be
entitled to reimbursement thereof from the related Mortgaged Property, as
contemplated in Subsection 11.05.
(b) Notwithstanding the foregoing provisions of this Subsection 11.03,
with respect to any Mortgage Loan as to which the Seller has received actual
notice of, or has actual knowledge of, the presence of any toxic or hazardous
substance on the related Mortgaged Property the Seller 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 the Seller 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
Subsection 11.03 shall be advanced by the Seller, subject to the Seller's right
to be reimbursed therefor from the Custodial Account as provided in Subsection
11.05(v).
If the Seller 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 the Seller
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 the Seller, subject to the Seller's right to be reimbursed
therefor from the Custodial Account as provided in Subsection 11.05(v).
(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 the Seller
for any related unreimbursed Servicing Advances, pursuant to Subsection
11.05(iii); 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
Distribution 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 the Seller as
follows: first, to unpaid Servicing Fees; and second, to the balance of the
interest then due and owing. The portion of the recovery so allocated to unpaid
Servicing Fees shall be reimbursed to the Seller pursuant to Subsection
11.05(iii).
Subsection 11.04 Establishment of Custodial Accounts; Deposits in
Custodial Accounts.
The Seller shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts,
in the form of time deposit or demand accounts. The creation of any Custodial
Account shall be evidenced by a Custodial Account Letter Agreement in the form
of Exhibit 6.
The Seller shall deposit in the related Custodial Account on a daily
basis, and retain therein the following payments and collections received by it
subsequent to the Cut-off Date, or received by it prior to the Cut-off Date but
allocable to a period subsequent thereto, other than in respect of principal and
interest on the Mortgage Loans due on or before the Cut-off Date:
(i) all payments on account of principal on the Mortgage
Loans;
(ii) all payments on account of interest on the Mortgage
Loans, including all Prepayment Charges;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts required to be
deposited pursuant to Subsections 11.10 and 11.11, 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 the Seller'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 the Seller's normal
servicing procedures, the loan documents or applicable law;
(vi) all proceeds of any Mortgage Loan repurchased in
accordance with Subsections 7.03 and 7.04 and all amounts required to be
deposited by the Seller in connection with shortfalls in principal amount of
Qualified Substitute Mortgage Loans pursuant to Subsection 7.03;
(vii) any amounts required to be deposited by the Seller
pursuant to Subsection 11.11 in connection with the deductible clause in any
blanket hazard insurance policy. Such deposit shall be made from the Seller's
own funds, without reimbursement therefor;
(viii) any amounts required to be deposited by the Seller in
connection with any REO Property pursuant to Subsection 11.13;
(ix) any amounts required to be deposited in the Custodial
Account pursuant to Subsections 11.19 or 11.20;
(x) all Monthly Advances; and
(xi) with respect to each Principal Prepayment in full, an
amount (to be paid by the Seller 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 the Seller pursuant to
this clause (xi) exceed the aggregate amount of the Seller's servicing
compensation in the calendar month in which such deposits are required.
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 and assumption
fees, to the extent permitted by Subsection 11.21, need not be deposited by the
Seller in the Custodial Account. Such Custodial Account shall be an Eligible
Account. Any interest or earnings on funds deposited in the Custodial Account by
the depository institution shall accrue to the benefit of the Seller and the
Seller shall be entitled to retain and withdraw such interest from the related
Custodial Account pursuant to Subsection 11.05(iii). The Seller shall give
notice to the Purchaser of the location of the Custodial Account when
established and prior to any change thereof.
Subsection 11.05 Permitted Withdrawals From the Custodial Account.
The Seller may, from time to time, withdraw from the related Custodial
Account for the following purposes:
(i) to make distributions to the Purchaser in the amounts and
in the manner provided for in Subsection 11.14;
(ii) to reimburse itself for unreimbursed Servicing Advances,
the Seller's right to reimburse itself pursuant to this subclause (ii) 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 the Seller from the Mortgagor or otherwise relating to the Mortgage
Loan, it being understood that, in the case of such reimbursement, the Seller's
right thereto shall be prior to the rights of the Purchaser, except that, where
the Seller is required to repurchase a Mortgage Loan, pursuant to Subsection
7.03, the Seller'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;
(iii) to pay to itself pursuant to Subsection 11.21 as
servicing compensation (a) any interest earned on funds in the Custodial Account
(all such interest to be withdrawn monthly not later than each Distribution
Date), and (b) the Servicing Fee from that portion of any payment or recovery as
to interest on a particular Mortgage Loan;
(iv) 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;
(v) to pay, or to reimburse the Seller for advances in respect
of, expenses incurred in connection with any Mortgage Loan pursuant to
Subsection 11.03(b), but only to the extent of amounts received in respect of
the Mortgage Loans to which such expense is attributable;
(vi) to clear and terminate the Custodial Account on the
termination of this Agreement;
(vii) to reimburse itself for Monthly Advances, the Seller's
right to reimburse itself pursuant to this subclause (vii) 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 Seller's right
thereto shall be prior to the rights of Purchaser, except that, where the Seller
is required to repurchase a Mortgage Loan, pursuant to Subsection 7.03, the
Seller'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; and
(viii) to reimburse the Seller for any Monthly Advance
previously made which the Seller has determined to be a Nonrecoverable Monthly
Advance.
(ix) to reimburse the Seller for funds deposited in a
custodial account in error.
The Seller 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) - ( ix)
above. The Seller shall provide written notification in the form of an Officers'
Certificate to the Purchaser, on or prior to the next succeeding Distribution
Date, upon making any withdrawals from the Custodial Account pursuant to
subclause (viii) above.
Subsection 11.06 Establishment of Escrow Accounts; Deposits in Escrow
Accounts.
The Seller shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan which constitute Escrow Payments separate and
apart from any of its own funds and general assets and shall establish and
maintain one or more Escrow Accounts, in the form of time deposit or demand
accounts. The creation of any Escrow Account shall be evidenced by an Escrow
Account Letter Agreement in the form of Exhibit 7.
The Seller shall deposit in the Escrow Account or Accounts on a daily
basis, and retain therein, (i) all Escrow Payments collected on account of 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
which are to be applied to the restoration or repair of any Mortgaged Property.
The Seller 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 Subsection 11.08. The Seller shall be entitled to
retain any interest paid on funds deposited in the related 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, the Seller 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.
Subsection 11.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the related Escrow Account may be made by the Seller
(i) to effect timely payments of ground rents, taxes, assessments, water rates,
hazard insurance premiums, Primary Insurance Policy premiums, if applicable, and
comparable items, (ii) to reimburse the Seller for any Servicing Advance made by
the Seller with respect to a related Mortgage Loan but only from amounts
received on the related Mortgage Loan which represent late payments or
collections of Escrow Payments thereunder, (iii) to refund to the Mortgagor any
funds as may be determined to be overages, (iv) for transfer to the related
Custodial Account in accordance with the terms of this Agreement, (v) for
application to restoration or repair of the Mortgaged Property, (vi) to pay to
the Seller, or to the Mortgagor to the extent required by law, any interest paid
on the funds deposited in the Escrow Account, or (vii) to clear and terminate
the Escrow Account on the termination of this Agreement.
Subsection 11.08 Payment of Taxes, Insurance and Other Charges;
Maintenance of Primary Insurance Policies and LPMI
Policies; Collections Thereunder.
With respect to each Mortgage Loan, the Seller 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 and LPMI Policy premiums 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 related Escrow Account which shall have
been estimated and accumulated by the Seller 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, the Seller shall
determine that any such payments are made by the Mortgagor at the time they
first become due. The Seller assumes full responsibility for the timely payment
of all such bills and shall effect timely payments of all such bills
irrespective of the Mortgagor's faithful performance in the payment of same or
the making of the Escrow Payments and shall make advances from its own funds to
effect such payments.
The Seller 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. Such coverage shall be maintained until the
Loan-to-Value Ratio of the related Mortgage Loan is reduced to that amount for
which FNMA no longer requires such insurance to be maintained. The Seller will
not cancel or refuse to renew any Primary Insurance Policy in effect on the
related Closing Date that is required to be kept in force under this Agreement
unless a replacement Primary Insurance Policy or LPMI Policy for such cancelled
or non- renewed policy is obtained from and maintained with a Qualified Insurer.
The Seller shall not take any action which would result in non-coverage under
any applicable Primary Insurance Policy or LPMI Policy of any loss which, but
for the actions of the Seller, would have been covered thereunder. In connection
with any assumption or substitution agreement entered into or to be entered into
pursuant to Subsection 11.19, the Seller shall promptly notify the insurer under
the related Primary Insurance Policy or LPMI 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 or LPMI Policy.
If such Primary Insurance Policy is terminated as a result of such assumption or
substitution of liability, the Seller shall obtain a replacement Primary
Insurance Policy as provided above.
In connection with its activities as servicer, the Seller agrees to
prepare and present, on behalf of itself, and the Purchaser, claims to the
insurer under any Primary Insurance Policy or LPMI Policy 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 or LPMI Policy respecting a defaulted Mortgage Loan. Pursuant to
Subsection 11.04, any amounts collected by the Seller under any Primary
Insurance Policy or LPMI Policy shall be deposited in the related Custodial
Account, subject to withdrawal pursuant to Subsection 11.05.
Subsection 11.09 Transfer of Accounts.
The Seller may transfer the related Custodial Account or the related
Escrow Account to a different depository institution from time to time. Such
transfer shall be made only upon obtaining the consent of the Purchaser, which
consent shall not be unreasonably withheld. In any case, the Custodial Account
and Escrow Account shall be Eligible Accounts.
Subsection 11.10 Maintenance of Hazard Insurance.
The Seller 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 by the Flood Emergency Management Agency as having special flood hazards
and such flood insurance has been made available, the Seller 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.
The Seller 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 Subsection 11.04, any amounts collected by
the Seller 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 the
Seller's normal servicing procedures, shall be deposited in the related
Custodial Account, subject to withdrawal pursuant to Subsection 11.05. Any cost
incurred by the Seller 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 the Seller 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 the Seller, or
upon request to the Purchaser, and shall provide for at least thirty days prior
written notice of any cancellation, reduction in the amount of, or material
change in, coverage to the Seller. The Seller shall not interfere with the
Mortgagor's freedom of choice in selecting either his insurance carrier or
agent, provided, however, that the Seller shall not accept any such insurance
policies from insurance companies unless such companies currently reflect a
General Policy Rating of A:VI 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.
Subsection 11.11 Maintenance of Mortgage Impairment Insurance Policy.
In the event that the Seller shall obtain and maintain a mortgage
impairment or blanket policy issued by an issuer that has a Best rating of A:VI
insuring against hazard losses on all Mortgaged Properties securing the Mortgage
Loans, then, to the extent such policy provides coverage in an amount equal to
the amount required pursuant to Subsection 11.10 and otherwise complies with all
other requirements of Subsection 11.10, the Seller shall conclusively be deemed
to have satisfied its obligations as set forth in Subsection 11.10, it being
understood and agreed that such policy may contain a deductible clause, in which
case the Seller shall, in the event that there shall not have been maintained on
the related Mortgaged Property or REO Property a policy complying with
Subsection 11.10, and there shall have been one or more losses which would have
been covered by such policy, deposit in the related 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, the
Seller agrees to prepare and present, on behalf of the Purchaser, claims under
any such blanket policy in a timely fashion in accordance with the terms of such
policy. Upon request of the Purchaser, the Seller 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 days prior written notice to the Purchaser.
Subsection 11.12 Fidelity Bond, Errors and Omissions Insurance.
The Seller 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 FNMA or FHLMC 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 the
Seller against losses, including forgery, theft, embezzlement, fraud, errors and
omissions and negligent acts of such persons. Such fidelity bond shall also
protect and insure the Seller 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 Subsection 11.12
requiring the fidelity bond and errors and omissions insurance shall diminish or
relieve the Seller 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 FNMA in the FNMA
Servicing Guide or by FHLMC in the FHLMC Seller's and Servicers' Guide. The
Seller shall deliver 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 days' prior written notice to the Purchaser.
Subsection 11.13 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, 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 the Seller 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.
The Seller shall either itself or through an agent selected by the
Seller, 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 Property are held, the Seller 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. The Seller 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. The
Seller shall make or cause to be made a written report of each such inspection.
Such reports shall be retained in the Mortgage File and copies thereof shall be
forwarded by the Seller to the Purchaser upon request. The Seller 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 two years after title has been taken to
such REO Property, unless the Seller determines, and gives appropriate notice to
the Purchaser, that a longer period is necessary for the orderly liquidation of
such REO Property. 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 years or
such other period as may be permitted under Section 860G(a)(8) of the Code.
With respect to each REO Property, the Seller shall segregate and hold
all funds collected and received in connection with the operation of the REO
Property separate and apart from its own funds or general assets and shall
establish and maintain a separate REO Account for each REO Property in the form
of a non interest bearing demand account, unless an Opinion of Counsel is
obtained by the Seller to the effect that the classification as a grantor trust
or REMIC for federal income tax purposes of the arrangement under which the
Mortgage Loans and the REO Property is held will not be adversely affected by
holding such funds in another manner. Each REO Account shall be established with
the Seller or, with the prior consent of the Purchaser, with a commercial bank,
a mutual savings bank or a savings association. The creation of any REO Account
shall be evidenced by a letter agreement substantially in the form of the
Custodial Account Letter Agreement attached as Exhibit 6 hereto. An original of
such letter agreement shall be furnished to any Purchaser upon request.
The Seller shall deposit or cause to be deposited, on a daily basis in
each REO 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 Subsection 11.10 hereof and the
fees of any managing agent acting on behalf of the Seller. The Seller shall not
be entitled to retain interest paid or other earnings, if any, on funds
deposited in such REO Account. On or before each Determination Date, the Seller
shall withdraw from each REO Account and deposit into the Custodial Account the
net income from the REO Property on deposit in the REO Account.
Each REO Disposition shall be carried out by the Seller at such price
and upon such terms and conditions as the Seller deems to be in the best
interest of the Purchaser. If as of the date title to any REO Property was
acquired by the Seller there were outstanding unreimbursed Servicing Advances
with respect to the REO Property, the Seller, upon an REO Disposition of such
REO Property, shall be entitled to reimbursement for any related unreimbursed
Servicing Advances from proceeds received in connection with such REO
Disposition. The proceeds from the REO Disposition, net of any payment to the
Seller as provided above, shall be deposited in the REO Account and shall be
transferred to the Custodial Account on the Determination Date in the month
following receipt thereof for distribution on the succeeding Distribution Date
in accordance with Subsection 11.14.
Subsection 11.14 Distributions.
On each Distribution Date, the Seller shall distribute to the Purchaser
or its designee (A) (i) all amounts credited to the related Custodial Account as
of the close of business on the preceding Determination Date, net of charges
against or withdrawals from the related Custodial Account pursuant to Subsection
11.05., plus (ii) all Monthly Advances, if any, which the Seller is obligated to
distribute pursuant to Subsection 11.21; minus (B) (x) any amounts attributable
to Principal Prepayments received after the last day of the Calendar month
immediately preceding the related Distribution Date and (y) 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 or its designee on each
Distribution Date will be made to the Purchaser of record, and shall be based
on the Mortgage Loans owned and held by the Purchaser as of the preceding Record
Date. All remittances will 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.
With respect to any remittance received by the Purchaser or its
designee on or after the second Business Day following the Business Day on which
such payment was due, the Seller 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 JPMorgan Chase 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 the Seller 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 the Seller of any such
interest shall not be deemed an extension of time for payment or a waiver of any
Event of Default by the Seller.
Subsection 11.15 Remittance Reports.
No later than the fifth Business Day of each month, the Seller shall
furnish to the Purchaser or its designee the monthly data in an acceptable
electronic format via e-mail or paper, together with such other information with
respect to the Loans as the Purchaser may reasonably require to allocate
distributions made pursuant to this Agreement and provide appropriate statements
with respect to such distribution.
Subsection 11.16 Statements to the Purchaser.
Upon Purchaser's request, the Seller shall forward to the Purchaser or
its designee a statement prepared by the Seller setting forth the status of the
Custodial Account as of the close of business on such Distribution 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 Subsection 11.04 and each category of withdrawal specified
in Subsection 11.05.
The Seller shall prepare and file any and all tax returns, information
statements or other filings 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, the Seller
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.
Subsection 11.17 Real Estate Owned Reports.
The Seller shall furnish to the Purchaser a statement covering the
Seller'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, as the Purchaser shall reasonably
request.
Subsection 11.18 Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Purchaser pursuant to a deed in lieu of foreclosure, the Seller
shall submit to the Purchaser a liquidation report with respect to such
Mortgaged Property.
Subsection 11.19 Assumption Agreements.
The Seller 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 the Seller
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 or LPMI Policy, if any. If the Seller
reasonably believes it is unable under applicable law to enforce such
"due-on-sale" clause, the Seller 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 Subsection
11.19, the Seller, with the prior written consent of the insurer under the
Primary Insurance Policy or LPMI 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,
the Seller shall follow the underwriting practices and procedures of prudent
mortgage lenders 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. The Seller 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. Any fee collected by the Seller for entering into
an assumption or substitution of liability agreement in excess of 1% of the
outstanding principal balance of the Mortgage Loan shall be deposited in the
Custodial Account pursuant to Subsection 11.04.
Notwithstanding the foregoing paragraphs of this Subsection or any
other provision of this Agreement, the Seller 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
the Seller may be restricted by law from preventing, for any reason whatsoever.
For purposes of this Subsection 11.19, 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.
Subsection 11.20 Satisfaction of Mortgages and Release of Mortgage
Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Seller of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Seller will immediately notify the Purchaser by
a certification of a servicing officer of the Seller (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 Subsection 11.04 have been or
will be so deposited, and shall request execution of any document necessary to
satisfy the Mortgage Loan and delivery to it of the portion of the Mortgage File
held by the Purchaser or the Purchaser's designee. Upon receipt of such
certification and request, the Purchaser, shall promptly release the related
mortgage documents to the Seller and the Seller 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 the Seller 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, the Seller, 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. The Seller shall maintain the fidelity bond
insuring the Seller 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 of the Mortgage
Loan, including for this purpose collection under any Primary Insurance Policy
or LPMI Policy, the Purchaser shall, upon request of the Seller and delivery to
the Purchaser of a servicing receipt signed by a Servicing Officer, release the
requested portion of the Mortgage File held by the Purchaser to the Seller. Such
servicing receipt shall obligate the Seller to return the related Mortgage
documents to the Purchaser when the need therefor by the Seller 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 the Seller
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 the
Seller.
Subsection 11.21 Servicing Compensation.
As compensation for its services hereunder, the Seller shall be
entitled to withdraw from the Custodial Account or to retain from interest
payments on the Mortgage Loans the amounts provided for as the Seller's
Servicing Fee. Additional servicing compensation in the form of assumption fees,
as provided in Subsection 11.19, and late payment charges or otherwise shall be
retained by the Seller to the extent not required to be deposited in the
Custodial Account. The Seller 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.
Subsection 11.22 Notification of Adjustments.
On each Adjustment Date, the Seller shall make interest rate
adjustments for each Adjustable Rate Mortgage Loan in compliance with the
requirements of the related Mortgage and Mortgage Note. The Seller shall execute
and deliver the notices required by each Mortgage and Mortgage Note regarding
interest rate adjustments. The Seller also shall provide timely notification to
the Purchaser of all applicable data and information regarding such interest
rate adjustments and the Seller's methods of implementing such interest rate
adjustments. Upon the discovery by the Seller or the Purchaser that the Seller
has failed to adjust a Mortgage Interest Rate or a Monthly Payment pursuant to
the terms of the related Mortgage Note and Mortgage, the Seller shall
immediately deposit in the Custodial Account from its own funds the amount of
any interest loss caused thereby without reimbursement therefor.
Subsection 11.23 Statement as to Compliance.
The Seller will deliver to the Purchaser not later than 90 days
following the end of each fiscal year of the Seller, which as of each Closing
Date ends on the last day in December in each calendar year, an Officers'
Certificate stating, as to each signatory thereof, that (i) a review of the
activities of the Seller during the preceding year and of performance under this
Agreement has been made under such officers' supervision and (ii) to the best of
such officers' knowledge, based on such review, the Seller 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 officer 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.
Subsection 11.24 Independent Public Accountants' Servicing Report.
Not later than 90 days following the end of each fiscal year of the
Seller, the Seller at its expense shall cause a firm of independent public
accountants (which may also render other services to the Seller) which is a
member of the American Institute of Certified Public Accountants to furnish a
statement to the Purchaser or its designee to the effect that such firm has
examined certain documents and records relating to the servicing of the Mortgage
Loans under this Agreement or of mortgage loans under pooling and servicing
agreements (including the Mortgage Loans and this Agreement) substantially
similar one to another (such statement to have attached thereto a schedule
setting forth the pooling and servicing agreements covered thereby) and that, on
the basis of such examination conducted substantially in compliance with the
Uniform Single Attestation Program for Mortgage Bankers, such firm confirms that
such servicing has been conducted in compliance with such pooling and servicing
agreements except for such significant exceptions or errors in records that, in
the opinion of such firm, the Uniform Single Attestation Program for Mortgage
Bankers requires it to report. Copies of such statement shall be provided by the
Purchaser to any Person identified as a prospective purchaser of the Mortgage
Loans.
Subsection 11.25 Access to Certain Documentation.
The Seller 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 the Seller required by applicable laws and
regulations. Such access shall be afforded without charge, but only upon
reasonable request and during normal business hours at the offices of the
Seller. In addition, access to the documentation will be provided to the
Purchaser and any Person identified to the Seller by the Purchaser without
charge, upon reasonable request during normal business hours at the offices of
the Seller.
Subsection 11.26 Reports and Returns to be Filed by the Seller.
The Seller 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 substance sufficient to meet the reporting requirements imposed by
such Sections 6050H, 6050J and 6050P of the Code.
Subsection 11.27 Servicing Transfer.
At the end of the Preliminary Servicing Period, the Initial Purchaser,
or its designee, shall assume all servicing responsibilities related to the
Mortgage Loans and the Seller shall cease all servicing responsibilities related
to the Mortgage Loans. During the Preliminary Servicing Period, the Seller
shall, at its cost and expense, take such steps as may be necessary or
appropriate to effectuate and evidence the transfer of the servicing of the
related Mortgage Loans to the Initial Purchaser, or its designee. The Seller
agrees to execute and deliver such instruments and take such actions as the
Initial Purchaser, or its designee may, from time to time, reasonably request to
carry out the servicing transfer.
Subsection 11.28 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, the Seller 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 the Seller 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.
Subsection 11.29 Monthly Advances by the Seller.
(a) Not later than the close of business on the Business Day
preceding each Distribution Date, the Seller shall deposit in the Custodial
Account an amount equal to all payments not previously advanced by the Seller,
whether or not deferred pursuant to Section 11.01, of principal (due after the
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.
The obligation of the Seller 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 the Seller if such Monthly Advance would, if made, constitute a
Nonrecoverable Monthly Advance. The determination by the Seller 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.
EXHIBIT 9
FORM OF COMMITMENT LETTER
XXXXXX BROTHERS
As of [ ] , 200[ ]
HSBC Mortgage Corporation (USA)
0000 Xxxxxx Xxxxxx
Xxxxx, XX 00000
ATTENTION: [ ]
RE: PURCHASE PRICE AND TERMS LETTER ( 200[ ] - [ ])
-----------------------------------------------
Dear [ ]:
Xxxxxx Brothers Bank, FSB (the "Purchaser") hereby confirms its agreement to
purchase and HSBC Mortgage Corporation (USA) (the "Seller") hereby confirms its
agreement to sell, without recourse and on a mandatory delivery basis, certain
[fixed] [adjustable] rate conventional [first] [second] lien mortgage loans (the
"Mortgage Loans") on the terms and conditions set forth below (such transaction,
the "Purchase Transaction"). The Mortgage Loans are being sold on a servicing
retained basis. All capitalized terms not defined herein shall have the meaning
assigned to them in the Master Mortgage Loan Purchase and Servicing Agreement
(the "Agreement") dated as of November 1, 2005 by and between the Seller and
Purchaser. The Purchaser has the right to assign all of its rights under the
Purchase Price and Terms Letter, the Agreement, and/or any of the Mortgage Loans
purchased under the Agreement to any affiliate of the Purchaser or third party.
The Purchaser and the Seller hereby agree that this Purchase Price and Terms
Letter shall serve as the Commitment Letter for the purposes of the Agreement.
1. TERM OF THIS COMMITMENT:
With respect to the Purchase Transaction, the Mortgage Loans shall be
purchased by the Purchaser and sold by the Seller on [ ], 200[ ], (the
"Closing Date") or such other date as shall be mutually agreed to by
the parties. In the event that the Mortgage Loans are sold to the
Purchaser on a date subsequent to the originally scheduled Closing Date
specified herein (the "Scheduled Closing Date"), then for the time
period commencing on the Scheduled Closing Date until the actual
closing date, the Seller shall pay to the Purchaser an amount equal to
the difference between the Mortgage Loan Remittance Rate (as defined
herein ) on the Mortgage Loans and the Purchaser's internal cost of
funds (such difference, the "Cost of Carry"), which Cost of Carry may
be deducted by the Purchaser from the purchase proceeds paid to the
Seller on the Closing Date.
2. AGGREGATE AMOUNT OF MORTGAGE LOANS:
The Mortgage Loans being sold shall have an aggregate unpaid principal
balance as of [ ], 200[ ] (the "Cut-off Date") of approximately $[ ],
with a delivery variance of minus [ ]%. In the event that the Seller
delivers to the Purchaser an amount of Mortgage Loans which is less
than the delivery amount (taking into account any permitted variance
stated herein), then the Purchaser in its sole discretion, may impose a
penalty/pair-off fee on the Seller. This penalty/pair-off fee will be
in an amount sufficient to compensate the Purchaser for any loss which
it might incur as a result of the Seller's failure to deliver the
amount of Mortgage Loans required under the terms of this Purchase
Transaction.
3. PURCHASE PRICE:
The Purchase Price for the Mortgage Loans shall be equal to [ ]% (the
"Purchase Price Percentage") multiplied by the aggregate outstanding
principal balance of the Mortgage Loans actually purchased, as of the
Cut-off Date, after application of payments of principal and interest
due on the Mortgage Loans whether or not such payments were received on
or before the Cut-off Date, plus the accrued interest at the Mortgage
Loan Remittance Rate (as defined herein) from the last paid installment
date through the day prior to the Closing Date, inclusive. The weighted
average of all mortgage interest rates (the "WAC") on the Mortgage
Loans is [ ]%. On the Closing Date, should the WAC for the Mortgage
Loans actually purchased vary from [ ]% the Purchase Price Percentage
shall be adjusted based upon a Buyup ratio of [ ]:1 and a Buydown ratio
of [ ]:1 (the "Adjusted Purchase Price Percentage"). The Adjusted
Purchase Price for the Mortgage Loans shall be equal the Adjusted
Purchase Price Percentage multiplied by the aggregate outstanding
principal balance of the Mortgage Loans actually purchased, as of the
Cut-off Date, after application of payments of principal and interest
due on the Mortgage Loans whether or not such payments were received on
or before the Cut-off Date, plus the accrued interest at the Mortgage
Loan Remittance Rate (as defined herein) from the last paid installment
date through the day prior to the Closing Date, inclusive.
The Purchase Price or Adjusted Purchase Price shall be paid to the
Seller in immediately available funds by wire transfer on the Closing
Date.
4. THE MORTGAGE LOANS:
The Mortgage Loans have the approximate characteristics as set forth
below on the closing date:
a. PRODUCT TYPE: The Mortgage Loans being delivered shall be
conventional [one family] residential [adjustable] [fixed] rate,
[first] [second] lien Mortgage Loans with original terms of up
to [ ] years.
b. MAXIMUM ORIGINAL LOAN AMOUNT: The maximum original loan amount
for the Mortgage Loans shall be $[ ].
c. MINIMUM ORIGINAL LOAN AMOUNT: The minimum original loan amount
for the Mortgage Loans shall be $[ ].
d. AVERAGE ORIGINAL LOAN AMOUNT: The average original loan amount
for the Mortgage Loans shall be $[ ].
e. [INDEX: The Mortgage Loans being delivered shall be indexed to
the [ ].]
f. [PERIODIC AND LIFETIME CAPS: The Mortgage Loans being delivered
shall have a weighted average initial periodic gross interest
rate cap of [ ]% and a weighted average lifetime interest rate
cap of [ ]% over the original Mortgage Interest Rate.]
g. MORTGAGE INTEREST RATE: The Mortgage Interest Rate payable by
the Mortgagor is as set forth in the related Mortgage Note. No
Mortgage Loan shall have a Mortgage Interest Rate greater than [
]%, nor less than [ ]%.
h. MORTGAGE LOAN REMITTANCE RATE: The Mortgage Loan Remittance Rate
shall be equal to the Mortgage Interest Rate or the WAC less the
Servicing Fee as defined in Section 5 hereof.
i. TERMS OF PAYMENT: The Mortgage Note is payable on the first day
of each month in equal monthly installments of principal and
interest, with interest calculated and payable in arrears
sufficient to amortize the Mortgage Loan fully by the stated
maturity date over the term from commencement of amortization of
not more than [ ] years. [Notwithstanding the aforementioned,
with respect to the aggregate unpaid principal balance of the
Mortgage Loans, [ ]% are Interest Only Mortgage Loans with
interest only terms of [ ] years.] The Mortgage Loans being
delivered will have a weighted average maturity ("WAM") of
approximately [ ] months.
j. UNDERWRITING STANDARDS: The Mortgage Loans were underwritten in
accordance with the Seller's product guidelines (the "Product
Guidelines").
k. LOCATION: With respect to the aggregate unpaid principal balance
of the Mortgage Loans, (i) [ ]% of the Mortgaged Properties
securing the Mortgage Loans are located in [ ], (ii) [ ]% of the
Mortgaged Properties securing the Mortgage Loans are located in
[ ], and (iii) no other one state contains more than [ ]% of the
Mortgaged Properties securing the Mortgage Loans. Any Mortgage
Loans with Mortgaged Properties located in the counties declared
"Federal Disaster Area" on August 29, 2005 or later as a result
of Hurricane Xxxxxxx, Hurricane Xxxx, or any other disaster
events that occur prior to each of the Closing Dates (the
"Storms") shall not be in damage or disrepair, either directly
or indirectly, as a result of the Storms. The Purchaser reserves
the right to conduct a review of 100% of the Mortgage Loan Files
where the Mortgaged Property is located in states that have
additional risk related to specific state predatory or high cost
laws, rules or regulations.
l. TYPE OF MORTGAGED PROPERTY: Each of the Mortgaged Properties
will be located in the United States and shall consist of a
single parcel of real property of which, with respect to the
unpaid principal balance of the Mortgage Loans, (i) at least [
]% are attached or detached one family residences; (ii)
approximately [ ]% are units in two to four family residences;
(iii) approximately [ ]% are individual condominium units in a
condominium project; and (iv) [ ]% are planned unit developments
("PUDs"). Any unit in a PUD or condominium project shall conform
with the Product Guidelines regarding such dwellings. No
residence or dwelling is a mobile home or manufactured housing
and no Mortgaged Property may be used for commercial purposes.
m. OWNER OCCUPANCY: With respect to the aggregate unpaid principal
balance of the Mortgage Loans at the time of origination, (i) [
]% are owner-occupied primary residences; (ii) no more than [ ]%
are investment properties; and (iii) no more than [ ]% are
second homes.
n. LOAN-TO-VALUE RATIO: No Mortgage Loans had at origination a
loan-to-value ratio in excess of [ ]%. The weighted average
loan-to-value ratio with respect to all of the Mortgage Loans
was not greater than [ ]% at origination. For purchase money
Mortgage Loans, the LTV shall be calculated using the lower of
the appraised value or the purchase price. In addition no
Mortgage Loans have a combined loan-to-value ("CLTV") ratio
greater than [ ]% and all CLTV balance information, to the
extent applicable, will be available prior to the Closing Date.
The weighted average CLTV ratio with respect to all of the
Mortgage Loans was not greater than [ ]% at origination.
o. PURPOSE TYPE: With respect to the aggregate unpaid principal
balance of the Mortgage Loans: (i) [ ]% were purchase money
mortgage loans; (ii) [ ]% were cash out refinance loans; and
(iii) [ ]% were rate term refinance mortgage loans. All cash-out
refinance and debt consolidation loans will be accurately
identified as such on the Mortgage Loan Schedule as set forth in
Section 9.
p. DOCUMENTATION: With respect to the aggregate unpaid principal
balance of the Mortgage Loans, approximately (i) [ ]% will have
full documentation, (iii) not more than [ ]% will be stated
documentation; and (iii) not more than [ ]% will be no
documentation.
q. CREDIT SCORES: With respect to the aggregate unpaid principal
balance of all the Mortgage Loans, the weighted average credit
score of the borrower shall be [ ]. No Mortgage Loan will have a
credit score of less than [ ].
r. DELINQUENCIES: All Mortgage Loans will be paid up to [ ], and no
Mortgage Loan was delinquent 30 days or more historically.
s. TAX/FLOOD INSURANCE CONTRACTS: Each Mortgage Loan shall have a
tax service contract and if applicable a flood insurance
contract which shall have a term of the life of the Mortgage
Loan as further stated in the Agreement.
5. SERVICING:
The Mortgage Loans shall be serviced by the Seller pursuant to the
terms of the Agreement or any Reconstitution Agreement (as defined in
Section 19) as the case may be. The Seller shall be obligated to remit
scheduled payments of principal and interest, whether or not such
payments have been collected, at the Mortgage Loan Remittance Rate on
each Mortgage Loan to the Purchaser on the 18th day of each month, or
if such day is not a business day then the next occurring business day.
Remittance reports should be submitted to the Purchaser or its designee
by no later than the 5th business day of the month of the related
remittance. The Seller shall be responsible for making all customary
servicing advances required on the Mortgage Loans (i.e. insurance and
escrow advances). The Seller shall be obligated to continue to make
principal and interest advances on the Mortgage Loans through
liquidation of any related Mortgage Loan. In connection with any
prepayments in full, the Seller shall contribute from its own funds, to
the extent that such contributions do not exceed the Servicing Fee (as
defined herein), payable to the Seller for such prior month, any
shortfall in the interest component thereof such that one month's
interest shall be deposited to the Custodial Account as defined in the
Agreement.
The Seller shall be entitled to receive a monthly servicing fee (the
"Servicing Fee") from the interest actually collected on the Mortgage
Loans. The Servicing Fee shall be [ ]% per annum for the Mortgage
Loans. The Mortgage Loan Remittance Rate for each Mortgage Loan shall
be equal to Mortgage Interest Rate on each Mortgage Loan less the
Servicing Fee. The Seller will indemnify the Purchaser for any
servicing errors or omissions which occurred on the Mortgage Loans from
the origination date of each Mortgage Loan.
The Purchaser has designated Aurora Loan Services LLC (formerly doing
business as Aurora Loan Services Inc.) ("Aurora") as its master
servicer for the Mortgage Loans being sold by Seller and purchased by
the Purchaser under this Purchase Transaction. In its capacity as the
Purchaser's master servicer, the Purchaser has empowered and given the
authority to Aurora to conduct and administer certain servicing and
pool administration activities of the Seller on the Purchaser's behalf.
The Seller shall provide all monthly report and remittance to Aurora as
stated further in the Agreement. This interaction between Aurora and
the Seller will occur when Aurora deals with the Seller in its capacity
as servicer of the Mortgage Loans in this Purchase Transaction.
The Agreement shall set forth representations and warranties with
respect to the Mortgage Loans and shall require the Seller to
repurchase any Mortgage Loan to which a material breach of a
representation or warranty is discovered and cannot be cured, and which
breach materially and adversely affects the value of such Mortgage
Loan. The price for such repurchase if a breach of a representation or
warranty is discovered shall be equal (A) during the first three months
following the related Closing Date (i) the Purchase Price percentage
used to calculate the Purchase Price, as stated in the related
Commitment Letter, times the Stated Principal Balance of the Mortgage
Loan so repurchased plus (ii) accrued interest at the Mortgage Loan
Remittance Rate thereon to the last day of the month that such
repurchase occurs, and (B) thereafter (i) the Stated Principal Balance
of the Mortgage Loan so repurchased, plus (ii) accrued interest
Mortgage Loan Remittance Rate thereon to the last day of the month such
repurchase occurs ("Repurchase Price").
6. FIRST PAYMENT DEFAULT:
In the event that a Mortgage Loan does not make its monthly payment
within 30 days in which the first payment is due to the Purchaser such
Mortgage Loan will be classified as a first payment default ("First
Payment Default"). Seller agrees to repurchase those First Payment
Default Mortgage Loans at the Repurchase Price within twenty (20) days
of the first payment default.
7. PREPAID MORTGAGE LOANS:
If a Mortgage Loan prepays in full between the Cut-off Date and the
Closing Date, inclusive, the Seller shall either remove such Mortgage
Loan from the Mortgage Loan Schedule or reimburse the Purchaser for the
premium over par and any accrued interest which the Purchaser paid
within 3 days of the Closing Date. For any Mortgage Loan that prepays
in full up to 60 days after the Closing Date, the Seller shall
reimburse the Purchaser for the premium over par which the Purchaser
paid.
8. DELIVERY OF MORTGAGE LOAN DOCUMENTS:
At least five (5) business days prior to the Closing Date, all Mortgage
Loan Documents, as set forth in Exhibit A, will be transferred to the
Purchaser's document Custodian (as defined herein), chosen by the
Purchaser, and held by the Custodian prior to the Closing Date under a
bailee agreement. After the Closing Date, the Mortgage Loans will be
held pursuant to a custodial agreement (the "Custodial Agreement"). The
Purchaser shall be responsible for paying all expenses of the Custodian
in connection with the Custodian's initial certification (the "Initial
Certification") on the Mortgage Loan Documents as well as all on-going
fees of the Custodian. The Purchaser is under no obligation to purchase
any Mortgage Loan for which there is incomplete or missing
documentation material to the enforceability of the Mortgage Loan. The
Note for each Mortgage Loan shall be endorsed in blank, and the
Assignment of Mortgage will be executed in blank, unless designated
otherwise by the Purchaser.
9. MORTGAGE LOAN SCHEDULE:
At least two (2) business days prior to the Closing Date, the Seller
shall forward a final mortgage loan schedule to the Purchaser setting
forth all of the Mortgage Loans to be purchased pursuant to the terms
of this Purchase Price and Terms Letter. The information to be included
in the final Mortgage Loan Schedule is as set forth in Exhibit B
annexed hereto. The Seller will furnish the Purchaser with all the
information and data set forth on the Mortgage Loan Schedule attached
as Exhibit B hereto, which information and data is required by the
Purchaser in its ordinary course of business and by any rating agency
or investor in connection with the Purchaser's reconstitution of the
Mortgage Loans in the secondary market. To the extent that Seller is
either unable or unwilling to provide such data prior to the Closing
Date (the "Missing Data"), then the Purchaser shall deduct from the
Purchase Price proceeds, the estimated costs that the Purchaser will
incur in connection with the Purchaser or its designee obtaining the
Missing Data. Notwithstanding the fact that the Purchaser obtains the
Missing Data, the Seller will be responsible for making the
representation as to the accuracy of such Missing Data as if the Seller
had furnished such Missing Data to the Purchaser directly.
10. REVIEW OF LOAN FILES:
Purchaser reserves the right to conduct a 100% review of the Mortgage
Loan Files to be purchased, with the results of such due diligence
review to be communicated to the Seller prior to the Closing Date. In
addition, the Purchaser is entitled to obtain BPO's on the Mortgaged
Properties. The Purchaser, in its sole discretion, reserves the right
to reject any Mortgage Loan from this Purchase Transaction which does
not conform to either the Seller's underwriting guidelines or prudent
secondary market underwriting standards for similar mortgage loans, or
on which the property valuation obtained by the Purchaser has a value
decline of greater than 15% from the lesser of the original appraised
value of the Mortgaged Property or the purchase price of the Mortgaged
Property at the time of the origination of the related Mortgage Loan.
The Purchaser reserves the right to conduct such due diligence reviews
and property valuations and require a Seller repurchase of any Mortgage
Loans with either due diligence or property value issues for a period
of up to 30 days after the Closing Date. Any review performed by the
Purchaser prior to or after the Closing Date does not limit Purchaser's
rights or Seller's obligations under the Agreement.
The Seller shall make available all credit files in order for the
Purchaser to complete a full data verification review, which includes
but is not limited to capturing all CRA/HMDA required data fields.
11. CLOSING:
The closing for the purchase and sale of the Mortgage Loans shall take
place on the 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 shall be subject to each of the following conditions:
a) the Seller and the Purchaser shall have executed and delivered
all Closing Documents as specified in Section 12 of this
Purchase Price and Terms Letter, duly executed by all
signatories as required pursuant to the respective terms
thereof;
b) the Seller shall have received the Purchase Price or Adjusted
Purchase Price, as the case may be, on the Closing Date plus
accrued interest at the Mortgage Loan Remittance Rate pursuant
to Section 3 of this Purchase Price and Terms Letter, by wire
transfer of immediately available federal funds to the account
designated by the Seller;
c) all other terms and conditions of this Purchase Price and Terms
Letter shall have been complied with (unless mutually waived by
the Seller and the Purchaser).
12. CLOSING DOCUMENTS:
The Closing Documents shall consist of the following documents:
a. this Purchase Price and Terms Letter dated as of [ ], 200[ ];
b. [the executed Agreement between Seller and Purchaser dated as of
the Closing Date, including all Exhibits;]
c. an original Assignment and Conveyance with an attached Mortgage
Loan Schedule dated as of the Closing Date;
d. an Assignment and Assumption by Purchaser to Seller of the
Purchaser's rights as Servicer under the Custodial Agreement by
and between Purchaser and [ ] (the "Custodian") dated as of [ ],
with respect to the Mortgage Loans in this Purchase Transaction;
e. [the Custodial Account Certification or Custodial Account Letter
Agreement, as required under the Agreement;]
f. [the Escrow Account Certification or Escrow Account Letter
Agreement, as required under the Agreement;]
g. [an Officer's Certificate for the Seller, including all
attachments, thereto;]
h. [an Opinion of Counsel of the Seller, in a form acceptable to
the Purchaser;]
i. the Initial Certification of the Custodian regarding the
Mortgage Loans;
j. Security Release Certifications, if applicable, executed by any
other Person, as requested by Purchaser, if any of the Mortgage
Loans have at any time been subject to a security interest,
pledge or hypothecation for the benefit of such person; and
k. such other documents as may be reasonably required under the
terms of this Purchase Transaction.
13. COSTS:
The Purchaser shall pay any commissions due its salesmen and the legal
fees and expenses of its attorneys. The Seller shall pay for the
physical delivery of the Mortgage Loan Documents to a location
designated by the Purchaser, and all the costs and expenses incurred in
connection with the transfer and delivery of the Mortgage Loans,
including fees for title policy endorsements and continuations. All
fees associated with the preparation of the Assignment of Mortgage for
recordation, as well as all costs for recording the Assignment of
Mortgage from the Seller to the Purchaser or Purchaser's designee shall
be paid by the Seller. Purchaser shall pay any and all fees, costs and
expenses of the document Custodian. With respect to each Mortgage Loan
for which MERS is not the last named mortgagee of record on the
Mortgage, the Purchaser shall deduct from the purchase price proceeds
an amount equal to $25 per Mortgage Loan to pay for the recordation of
Assignments of Mortgage on the Closing Date. On any MERS Mortgage
Loans, the Seller will pay any costs associated with the transfer of
the beneficial owner's name to that of the Purchaser.
14. CONFIDENTIAL INFORMATION:
The Seller and Purchaser shall keep confidential and shall not divulge
to any party, without the other parties written consent, the price paid
by the Purchaser for the Mortgage Loans, except to the extent that it
is appropriate for the Seller or Purchaser to do so in working with
legal counsel, auditors, taxing authorities or other governmental
agencies.
15. 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 shown on the first page
hereof, 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).
16. FURTHER AGREEMENTS:
The Seller and the Purchaser each agree to execute and deliver to the
other such additional documents, instruments or agreements as may be
necessary or appropriate to effectuate the purposes of this Purchase
Price and Terms Letter, or the Agreement. The Purchaser shall have the
right to verify the information in this Purchase Price and Terms
Letter, to review the Mortgage Loan legal and credit files (as outlined
in Section 8) and to make site inspections.
17. RECONSTITUTION:
The Purchaser may (i) sell the Mortgage Loans to whole loan purchasers
("Whole Loan Transfers"), (ii) exchange the Mortgage Loans for agency
securities ("Agency Transfers"), or (iii) convey the Mortgage Loans to
securitized trust structures ("Pass-Through Transfers"). The Purchaser
shall not reconstitute more than three (3) Whole Loan Transfers,
Pass-Through Transfers, or Agency Transfers, as the case may be with
respect to the Mortgage Loans purchased in this Purchase Transaction.
In the event that the Purchaser sells certain Mortgage Loans into
Pass-Through Transfers or Agency Transfers, the Seller agrees to
reasonably cooperate with the Purchaser in reviewing and adhering to
the terms of any agreements which might be required as part of Agency
Transfers or Pass-Through Transfers provided that the servicing
provisions of any such agreements are substantially the same as the
servicing provisions outlined in the Agreement.
The Seller shall cooperate with the Purchaser in connection with any
Whole Loan Transfer, Pass-Through Transfer or Agency Transfer pursuant
to this Section. Upon any reconstitution, the Seller agrees to service
the Mortgage Loans on a scheduled/scheduled basis with advancing
through liquidation of the Mortgaged Property on the related Mortgage
Loan and a remittance on the 18th day of the month, or if such day is
not a business day then the next occurring business day. In connection
with any prepayments, the Seller shall contribute from its own funds,
to the extent that such contributions do not exceed the Servicing Fee,
payable to the Seller for such prior month, any shortfall in the
interest component thereof such that one month's interest shall be
deposited in the Custodial Account as defined in the Agreement.
All Mortgage Loans not sold or transferred pursuant to a Whole Loan
Transfer, Pass-Through Transfer or Agency Transfer shall continue to be
serviced in accordance with the terms of the Agreement and with respect
thereto, the Agreement shall remain in full force and effect.
Kindly acknowledge receipt of this confirmation by signing and returning the
enclosed Purchase Price and Terms Letter to Xxxxxx Xxx by no later than [ ],
200[ ]. Your failure to return a countersigned duplicate of this letter to us
within the time indicated shall give us the right, at our sole discretion, to
declare the oral agreement confirmed hereby null and void.
Very truly yours,
XXXXXX BROTHERS BANK, FSB
By: _______________________________
Name: Xxxx X. Xxxxxx
Title: Vice President
Accepted and Agreed:
HSBC MORTGAGE CORPORATION (USA)
By: __________________________
Name: __________________________
Title: __________________________
Date: __________________________
E X H I B I T A
Mortgage Loan Documents
1. the original Mortgage Note bearing all intervening endorsements
necessary to show a complete chain of endorsements from the original payee to
the Seller, endorsed in blank, "Pay to the order of _____________, without
recourse", and, if previously endorsed, signed in the name of the last endorsee
by a duly qualified officer of the last endorsee. If the Mortgage Loan was
acquired by the last endorsee in a merger, the endorsement must be by "[name of
last endorsee], successor by merger to [name of predecessor]". If the Mortgage
Loan was acquired or originated by the last endorsee while doing business under
another name, the endorsement must be by "[name of last endorsee], formerly
known as [previous name]";
If the Seller uses facsimile signatures to endorse Mortgage Notes, the
Seller must provide in an Officer's Certificate that the endorsement
is valid and enforceable in the jurisdiction(s) in which the Mortgaged
Properties are located and must retain in its corporate records the
following specific documentation authorizing the use of facsimile
signatures: (i) a resolution from its board of directors authorizing
specific officers to use facsimile signatures; stating that facsimile
signatures will be a valid and binding act on the Seller's part; and
authorizing the Seller's corporate secretary to certify the validity
of the resolution, the names of the officers authorized to execute
documents by using facsimile signatures, and the authenticity of
specimen forms of facsimile signatures; (ii) the corporate secretary's
certification of the authenticity and validity of the board of
directors' resolution; and (iii) a notarized "certification of
facsimile signature," which includes both the facsimile and the
original signatures of the signing officer(s) and each officer's
certification that the facsimile is a true and correct copy of his or
her original signature.
2. the certified true copy of the Assignment of Mortgage for each
Mortgage Loan, in form and substance acceptable for recording unless the
Mortgage Loan is a MOM Mortgage or has been previously assigned to MERS. The
Mortgage shall be assigned, with assignee's name left blank. If the Mortgage
Loan was acquired by the last assignee in a merger, the Assignment of Mortgage
must be made by "[name of last assignee], successor by merger to [name of
predecessor]". If the Mortgage Loan was acquired or originated by the last
assignee while doing business under another name, the Assignment of Mortgage
must be by "[name of last assignee], formerly known as [previous name]";
3. the certified true copy of any guarantee executed in connection with
the Mortgage Note, if any;
4. the certified true copy of the Mortgage with evidence of recording
thereon or, if the original Mortgage with evidence of recording thereon has not
been returned by the public recording office where such Mortgage has been
delivered for recordation or such Mortgage has been lost or such public
recording office retains the original recorded Mortgage, a photocopy of such
Mortgage, together with (i) in the case of a delay caused by the public
recording office, a Certificate insuring the Mortgage stating that such Mortgage
has been delivered to the appropriate public recording office for recordation
and that the original recorded Mortgage or a copy of such Mortgage certified by
such public recording office to be a true and complete copy of the original
recorded Mortgage will be promptly delivered to the Custodian upon receipt
thereof and (ii) in the case of a Mortgage where a public recording office
retains the original recorded Mortgage or in the case where a Mortgage is lost
after recordation in a public recording office, a copy of such Mortgage with the
recording information thereon certified by such public recording office to be a
true and complete copy of the original recorded Mortgage;
5. the certified true copies of all assumption, modification,
consolidation or extension agreements, with evidence of recording thereon, if
any;
6. the certified true copies of all intervening assignments of mortgage
with evidence of recording thereon evidencing a complete chain of ownership from
the originator of the Mortgage Loan to the last assignee, or if any such
intervening assignment of mortgage has not been returned from the applicable
public recording office or has been lost or if such public recording office
retains the original recorded intervening assignments of mortgage, a photocopy
of such intervening assignment of mortgage, together with (i) in the case of a
delay caused by the public recording office, a Certificate insuring the Mortgage
stating that such intervening assignment of mortgage has been delivered to the
appropriate public recording office for recordation and that such original
recorded intervening assignment of mortgage or a copy of such intervening
assignment of mortgage certified by the appropriate public recording office to
be a true and complete copy of the original recorded intervening assignment of
mortgage will be promptly delivered to the Custodian upon receipt thereof by the
party delivering the Officer's Certificate or by the Seller; or (ii) in the case
of an intervening assignment of mortgage where a public recording office retains
the original recorded intervening assignment of mortgage or in the case where an
intervening assignment of mortgage is lost after recordation in a public
recording office, a copy of such intervening assignment of mortgage with
recording information thereon certified by such public recording office to be a
true and complete copy of the original recorded intervening assignment of
mortgage;
7. if the Mortgage Note, the Mortgage, any Assignment of Mortgage, or
any other related document has been signed by a Person on behalf of the
Mortgagor, a photocopy of the power of attorney or other instrument that
authorized and empowered such Person to sign;
8. the certified true copy of the lender's title insurance policy in
the form of an ALTA mortgage title insurance policy, containing each of the
endorsements required by FNMA and insuring the Purchaser and its successors and
assigns as to the first or second priority lien of the Mortgage in the original
principal amount of the Mortgage Loan or, if the original lender's title
insurance policy has not been issued, the irrevocable commitment to issue the
same; and
9. the certified true copy of any security agreement, chattel mortgage
or equivalent document executed in connection with the Mortgage, if any.
E X H I B I T B
MORTGAGE LOAN SCHEDULE
(1) the Seller's Mortgage Loan identifying number;
(2) the Mortgagor's and Co-Mortgagor's (if applicable) names;
(3) the street address of the Mortgaged Property, including the city,
state, zip code, county, lot number, block number and section
number;
(4) a code indicating whether the Mortgaged Property is a single
family residence, a 2 family dwelling, a 3-4 family dwelling, a
manufactured home, a PUD, a townhouse, a unit in a condominium
project, a co-operative, a mixed-use property, land, or a
non-residential property;
(5) a code indicating the loan is a fixed rate or adjustable rate
Mortgage Loan (to be provided in accordance with Standard and
Poor's loan type requirements-Field 14);
(6) Product Description (to be provided in accordance with Standard
and Poor's description categories-Field 7);
(7) a code indicating the lien status of the Mortgage Loan;
(8) the original months to maturity or the remaining months to
maturity from the Cut-off Date, in any case based on the original
amortization schedule, and if different, the maturity expressed in
the same manner but based on the actual amortization schedule;
(9) the Loan to Value Ratio at origination;
(10) the combined Loan to Value Ratio at origination;
(11) the Mortgage Interest Rate as of the Cut-off Date;
(12) the Payment and Rate Adjustment Frequencies (if applicable);
(13) the Index (if applicable);
(14) the initial Interest Rate Adjustment Date (if applicable);
(15) the initial Payment Adjustment Date (if applicable);
(16) the next Interest Rate Adjustment Date (if applicable);
(17) the next Payment Adjustment Date (if applicable);
(18) the Gross Margin (if applicable);
(19) the minimum Mortgage Interest Rate under the terms of the Mortgage
Note (if applicable);
(20) Mortgage Interest Rate adjustment frequencies (if applicable);
(21) the maximum Mortgage Interest Rate under the terms of the Mortgage
Note (if applicable);
(22) the Mortgage Interest Rate adjustment cap at the initial Interest
Rate Adjustment Date (if applicable);
(23) the Mortgage Interest Rate adjustment cap at all subsequent
Interest Rate Adjustment Dates (if applicable);
(24) the Lifetime Mortgage Interest Rate Cap (if applicable);
(25) the rounding provisions under the terms of the Mortgage Note (if
applicable);
(26) the lookback provisions (#of days) under the terms of the Mortgage
Note (if applicable);
(27) negative amortization indicator and limit;
(28) the date on which the first payment is due;
(29) the original term of the Mortgage Loan;
(30) the stated maturity date;
(31) the amount of the Monthly Payment;
(32) the Annual Payment Cap expressed as a percentage (for Arms only);
(33) the next due date as of the Cut-off Date;
(34) the original principal amount of the Mortgage Loan;
(35) the Senior and Subordinate balances (if applicable);
(36) the closing date of the Mortgage Loan;
(37) the principal balance of the Mortgage Loan as of the close of
business on the Cut-off Date; after deduction of payments of
principal actually received on or before the Cut-off Date;
(38) the loan purpose code;
(39) the occupancy code;
(40) the loan documentation type, (to be provided in conformance with
Standard and Poor's documentation categories- Field 5);
(41) Asset Verification (Purchase Money loans only), (yes or no);
(42) a code indicating the Credit Grade of the Mortgage Loan (if
applicable);
(43) the debt to income ratio;
(44) the Mortgagor's and Co-Mortgagor's (if applicable) social security
numbers;
(45) the Mortgagor's and Co-Mortgagor's (if applicable) original FICO
score and the Next Generation FICO score for new credit scores;
(46) the Mortgagor's mailing address if different from Number (3)
above;
(47) the purchase price of the Mortgaged Property (if a purchase);
(48) the Appraisal value of the Mortgaged Property;
(49) the Mortgagor's and Co-Mortgagor's (if applicable) race;
(50) the Mortgagor's and Co-Mortgagor's (if applicable) ethnicity;
(51) the Mortgagor's and Co-Mortgagor's (if applicable) gender;
(52) the Mortgagor's and Co-Mortgagor's (if applicable) date of birth;
(53) the combined annual or monthly income;
(54) the origination channel (wholesale, retail, or correspondent);
(55) flood insurance contract provider;
(56) tax service contract provider;
(57) number of units;
(58) as of date;
(59) amortization term;
(60) balloon flag;
(61) prepayment penalty flag;
(62) prepayment penalty term and prepayment penalty description (i.e.-
6 months interest, set percentage of UPB);
(63) mortgage insurance provider, or code for LPMI (if applicable);
(64) mortgage insurance coverage percentage;
(65) mortgage insurance cost (if applicable);
(66) number of borrowers;
(67) first time home buyer flag (if available);
(68) the year in which the Mortgaged Property was built;
(69) the monthly tax and insurance payment;
(70) the monthly servicing fee;
(71) The MIN number assigned to each Mortgage Loan, if applicable;
(72) a code indicating the Appraisal Type (Tax Assessment, BPO,
Drive-By Form 704, URAR, Form 2065, Form 2055 (Exterior only),
Form 2055 (Interior Inspection), or AVM;
(73) if the Appraisal Type in #82 is an AVM, then a description of the
AVM type;
(74) a code indicating whether the Borrower(s) is self-employed (yes or
no);
(75) a section 32 flag and the origination points and or fees;
(76) a code indicating if a loan is assumable (yes or no);
(77) a flag indicating if NEXTGEN FICO Score is being supplied as the
FICO score (yes or no) (if available);
(78) a flag indicating HIGH COST LOAN or COVERED LOAN governed by any
anti-predatory lending laws (only required if the loan falls into
one of these categories);
(79) APR information;
(80) HOEPA status; and
(81) number of months' of reserve at the time of closing or the dollar
amount of reserves at closing along with the PITI monthly payment
amount (if available).
EXHIBIT 10
MORTGAGE LOAN DOCUMENTS
With respect to each Mortgage Loan set forth on a related Mortgage Loan
Schedule, the Seller shall deliver and release to the Custodian the following
documents:
1. the original Mortgage Note bearing all intervening endorsements
necessary to show a complete chain of endorsements from the original payee to
the Seller, endorsed in blank, "Pay to the order of _____________, without
recourse", and, if previously endorsed, signed in the name of the last endorsee
by a duly qualified officer of the last endorsee. If the Mortgage Loan was
acquired by the last endorsee in a merger, the endorsement must be by "[name of
last endorsee], successor by merger to [name of predecessor]". If the Mortgage
Loan was acquired or originated by the last endorsee while doing business under
another name, the endorsement must be by "[name of last endorsee], formerly
known as [previous name]";
If the Seller uses facsimile signatures to endorse Mortgage Notes, the
Seller must provide in an Officer's Certificate that the endorsement
is valid and enforceable in the jurisdiction(s) in which the Mortgaged
Properties are located and must retain in its corporate records the
following specific documentation authorizing the use of facsimile
signatures: (i) a resolution from its board of directors authorizing
specific officers to use facsimile signatures; stating that facsimile
signatures will be a valid and binding act on the Seller's part; and
authorizing the Seller's corporate secretary to certify the validity
of the resolution, the names of the officers authorized to execute
documents by using facsimile signatures, and the authenticity of
specimen forms of facsimile signatures; (ii) the corporate secretary's
certification of the authenticity and validity of the board of
directors' resolution; and (iii) a notarized "certification of
facsimile signature," which includes both the facsimile and the
original signatures of the signing officer(s) and each officer's
certification that the facsimile is a true and correct copy of his or
her original signature.
2. the certified true copy of the Assignment of Mortgage for each
Mortgage Loan, in form and substance acceptable for recording unless the
Mortgage Loan is a MOM Mortgage or has been previously assigned to MERS. The
Mortgage shall be assigned, with assignee's name left blank. If the Mortgage
Loan was acquired by the last assignee in a merger, the Assignment of Mortgage
must be made by "[name of last assignee], successor by merger to [name of
predecessor]". If the Mortgage Loan was acquired or originated by the last
assignee while doing business under another name, the Assignment of Mortgage
must be by "[name of last assignee], formerly known as [previous name]";
3. the certified true copy of any guarantee executed in connection with
the Mortgage Note, if any;
4. the certified true copy of the Mortgage with evidence of recording
thereon or, if the original Mortgage with evidence of recording thereon has not
been returned by the public recording office where such Mortgage has been
delivered for recordation or such Mortgage has been lost or such public
recording office retains the original recorded Mortgage, a photocopy of such
Mortgage, together with (i) in the case of a delay caused by the public
recording office, a Certificate insuring the Mortgage stating that such Mortgage
has been delivered to the appropriate public recording office for recordation
and that the original recorded Mortgage or a copy of such Mortgage certified by
such public recording office to be a true and complete copy of the original
recorded Mortgage will be promptly delivered to the Custodian upon receipt
thereof and (ii) in the case of a Mortgage where a public recording office
retains the original recorded Mortgage or in the case where a Mortgage is lost
after recordation in a public recording office, a copy of such Mortgage with the
recording information thereon certified by such public recording office to be a
true and complete copy of the original recorded Mortgage;
5. the certified true copies of all assumption, modification,
consolidation or extension agreements, with evidence of recording thereon, if
any;
6. the certified true copies of all intervening assignments of mortgage
with evidence of recording thereon evidencing a complete chain of ownership from
the originator of the Mortgage Loan to the last assignee, or if any such
intervening assignment of mortgage has not been returned from the applicable
public recording office or has been lost or if such public recording office
retains the original recorded intervening assignments of mortgage, a photocopy
of such intervening assignment of mortgage, together with (i) in the case of a
delay caused by the public recording office, a Certificate insuring the Mortgage
stating that such intervening assignment of mortgage has been delivered to the
appropriate public recording office for recordation and that such original
recorded intervening assignment of mortgage or a copy of such intervening
assignment of mortgage certified by the appropriate public recording office to
be a true and complete copy of the original recorded intervening assignment of
mortgage will be promptly delivered to the Custodian upon receipt thereof by the
party delivering the Officer's Certificate or by the Seller; or (ii) in the case
of an intervening assignment of mortgage where a public recording office retains
the original recorded intervening assignment of mortgage or in the case where an
intervening assignment of mortgage is lost after recordation in a public
recording office, a copy of such intervening assignment of mortgage with
recording information thereon certified by such public recording office to be a
true and complete copy of the original recorded intervening assignment of
mortgage;
7. if the Mortgage Note, the Mortgage, any Assignment of Mortgage, or
any other related document has been signed by a Person on behalf of the
Mortgagor, a photocopy of the power of attorney or other instrument that
authorized and empowered such Person to sign;
8. the certified true copy of the lender's title insurance policy in
the form of an ALTA mortgage title insurance policy, containing each of the
endorsements required by FNMA and insuring the Purchaser and its successors and
assigns as to the first or second priority lien of the Mortgage in the original
principal amount of the Mortgage Loan or, if the original lender's title
insurance policy has not been issued, the irrevocable commitment to issue the
same; and
9. the certified true copy of any security agreement, chattel mortgage
or equivalent document executed in connection with the Mortgage, if any.
EXHIBIT 11
FORM OF MONTHLY SERVICER'S REPORT
FIELD NAME DESCRIPTION FORMAT
---------- ----------- ------
INVNUM INVESTOR LOAN NUMBER Number no decimals
SERVNUM SERVICER LOAN NUMBER, REQUIRED Number no decimals
BEGSCHEDBAL BEGINNING SCHEDULED BALANCE FOR SCHED/SCHED Number two decimals
BEGINNING TRAIL BALANCE FOR ACTUAL/ACTUAL,
REQUIRED
SCHEDPRIN SCHEDULED PRINCIPAL AMOUNT FOR SCHEDULED/SCHEDULED Number two decimals
ACTUAL PRINCIPAL COLLECTED FOR ACTUAL/ACTUAL,
REQUIRED, .00 IF NO COLLECTIONS
CURT1 CURTAILMENT 1 XXXXXX, .00 IF NOT APPLICABLE Number two decimals
CURT1DATE CURTAILMENT 1 DATE, BLANK IF NOT APPLICABLE DD-MMM-YY
CURT1ADJ CURTAILMENT 1 ADJUSTMENT, .00 IF NOT APPLICABLE Number two decimals
CURT2 CURTAILMENT 2 XXXXXX, .00 IF NOT APPLICABLE Number two decimals
CURT2DATE CURTAILMENT 2 DATE, BLANK IF NOT APPLICABLE DD-MMM-YY
CURT2ADJ CURTAILMENT 2 ADJUSTMENT, .00 IF NOT APPLICABLE Number two decimals
LIQPRIN PAYOFF, LIQUIDATION PRINCIPAL, .00 IF NOT APPLICABLE Number two decimals
OTHPRIN OTHER PRINCIPAL, .00 IF NOT APPLICABLE Number two decimals
PRINREMIT TOTAL PRINCIPAL REMITTANCE AMOUNT, .00 IF NOT APPLICABLE Number two decimals
INTREMIT NET INTEREST REMIT, INCLUDE PAYOFF INTEREST, Number two decimals
.00 IF NOT APPLICABLE
TOTREMIT TOTAL REMITTANCE AMOUNT, .00 IF NOT APPLICABLE Number two decimals
ENDSCHEDBAL ENDING SCHEDULED BALANCE FOR SCHEDULED/SCHEDULED Number two decimals
ENDING TRIAL BALANCE FOR ACTUAL/ACTUAL
.00 IF PAIDOFF, LIQUIDATED OR FULL CHARGEOFF
ENDACTBAL ENDING TRIAL BALANCE Numbertwo decimals
.00 IF PAIDOFF, LIQUIDATED OR FULL CHARGEOFF
ENDDUEDATE ENDING ACTUAL DUE DATE, NOT LAST PAID INSTALLMENT DD-MMM-YY
ACTCODE 60 IF PAIDOFF, BLANK IF NOT APPLICABLE Number no decimals
ACTDATE ACTUAL PAYOFF DATE, BLANK IF NOT APPLICABLE DD-MMM-YY
INTRATE INTEREST RATE, REQUIRED Number seven decimals
Example .0700000 for 7.00%
SFRATE SERVICE FEE RATE, REQUIRED Number seven decimals
Example .0025000 for .25%
PTRATE PASS THRU RATE, REQUIRED Number seven decimals
Example .0675000 for 6.75%
PIPMT P&I CONSTANT, REQUIRED Number two decimals
.00 IF PAIDOFF
SCHEDULE 1
MORTGAGE LOAN SCHEDULE
[INTENTIONALLY OMITTED]
