RFC ASSET HOLDINGS, INC.
as Purchaser,
and
RESIDENTIAL FUNDING CORPORATION
as Seller
MORTGAGE LOAN PURCHASE AGREEMENT
Dated as of January 30, 1997
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1. Definitions............................................ 1
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ARTICLE II
SALE OF MORTGAGE LOANS AND RELATED PROVISIONS
Section 2.1. Sale of Mortgage Loans................................. 2
----------------------
Section 2.2. Payment of Purchase Price.............................. 4
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ARTICLE III
REPRESENTATIONS AND WARRANTIES;
REMEDIES FOR BREACH
Section 3.1. Seller Representations and Warranties.................. 4
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ARTICLE IV
SELLER'S COVENANTS
Section 4.1. Covenants of the Seller................................ 12
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ARTICLE V
SERVICING
Section 5.1. Servicing.............................................. 12
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ARTICLE VI
INDEMNIFICATION BY THE SELLER
WITH RESPECT TO THE MORTGAGE
Section 6.1. Indemnification With Respect to the Mortgage Loans..... 12
--------------------------------------------------
Section 6.2. Limitation on Liability of the Seller.................. 12
-------------------------------------
ARTICLE VII
TERMINATION
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Section 7.1. Termination......................................... 13
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ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1. Amendment........................................... 13
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Section 8.2. GOVERNING LAW....................................... 13
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Section 8.3. Notices............................................. 14
-------
Section 8.4. Severability of Provisions.......................... 14
--------------------------
Section 8.5. Relationship of Parties............................. 14
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Section 8.6. Counterparts........................................ 14
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Section 8.7. Further Agreements.................................. 14
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Section 8.8. Intention of the Parties............................ 15
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Section 8.9. Successors and Assigns; Assignment of This Agreement 15
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Section 8.10. Survival............................................ 15
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Page
Exhibits
Exhibit 1 Mortgage Loan Schedule
-iii-
[NY01:245061.5] 16069-00376 01/29/97 9:30pm
This MORTGAGE LOAN PURCHASE AGREEMENT (this "Agreement"),
dated as of January 30, 1997, is made between Residential Funding Corporation
(the "Seller") and RFC Asset Holdings, Inc. (the "Purchaser").
W I T N E S S E T H :
WHEREAS, the Seller owns Mortgage Loans and the Related
Documents for the mortgage loans indicated on the Mortgage Loan Schedule
attached as Exhibit 1 hereto (collectively, the "Mortgage Loans"), including
rights to (a) any property acquired by foreclosure or deed in lieu of
foreclosure or otherwise, and (b) the proceeds of any insurance policies
covering the Mortgage Loans;
WHEREAS, the parties hereto desire that the Seller sell the
Mortgage Loans to the Purchaser pursuant to the terms of this Agreement together
with the Related Documents on the Closing Date;
WHEREAS, pursuant to the terms of the Transfer Agreement, the Purchaser
will sell the Mortgage Loans to the Depositor;
WHEREAS, pursuant to the terms of the Trust Agreement, the
Depositor will sell the Mortgage Loans to the Issuer in exchange for the cash
proceeds of the Securities;
WHEREAS, pursuant to the terms of the Trust Agreement, the
Issuer will issue and transfer to or at the direction of the Depositor, the
Certificates, evidencing the beneficial ownership interest in the Trust;
WHEREAS, pursuant to the terms of the Indenture, the Issuer
will issue and transfer to or at the direction of the Depositor, the Notes
secured by the Mortgage Loans;
WHEREAS, pursuant to the terms of the Servicing Agreement, the
Master Servicer will service the Mortgage Loans directly or through one or more
Subservicers;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. For all purposes of this Mortgage
Loan Purchase Agreement, except as otherwise expressly provided herein or unless
the context otherwise requires, capitalized terms not otherwise defined herein
shall have the meanings assigned to such terms in the Definitions contained in
Appendix A to the Indenture dated January 30, 1997 (the "Indenture"), between
Home Loan Trust 1997-HI1, as issuer, and The Chase Manhattan Bank,
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as indenture trustee, which is incorporated by reference herein. All other
capitalized terms used herein shall have the meanings specified herein.
ARTICLE II
SALE OF MORTGAGE LOANS AND RELATED PROVISIONS
Section 2.1. Sale of Mortgage Loans.
(a) The Seller, by the execution and delivery of this
Agreement, does hereby sell, assign, set over, and otherwise convey to the
Purchaser, without recourse, all of its right, title and interest in, to and
under the following, and wherever located: (i) the Mortgage Loans, all interest
accruing thereon and all collections in respect thereof received on or after the
Cut-off Date; (ii) property which secured a Mortgage Loan and which has been
acquired by foreclosure or deed in lieu of foreclosure; (iii) the interest of
the Seller in any insurance policies in respect of the Mortgage Loans; and (iv)
all proceeds of the foregoing. Such conveyance shall be deemed to be made: with
respect to the Cut-off Date Loan Balances, as of the Closing Date, subject to
the receipt by the Seller of consideration therefor as provided herein under
clause (b) of Section 2.2.
(b) In connection with such conveyance, the Seller further
agrees, at its own expense, on or prior to the Closing Date to indicate in its
books and records that the Mortgage Loans have been sold to the Purchaser
pursuant to this Agreement and to deliver to the Purchaser true and complete
lists of all of the Mortgage Loans specifying for each Mortgage Loan (i) its
account number and (ii) its Cut-off Date Loan Balance. Such lists, which form
part of the Mortgage Loan Schedule, shall be marked as Exhibit 1 to this
Agreement and are hereby incorporated into and made a part of this Agreement.
(c) In connection with such conveyance by the Seller, the
Seller shall on behalf of the Purchaser deliver to, and deposit with the
Custodian, on or before the Closing Date, the following documents or instruments
with respect to each Mortgage Loan:
(i) the original Mortgage Note endorsed without
recourse in blank or, with respect to any Mortgage Loan as to which the
original Mortgage Note has been permanently lost or destroyed and has
not been replaced, a Lost Note Affidavit;
(ii) the original Mortgage with evidence of recording
thereon, or, if the original Mortgage has not yet been returned from
the public recording office, a copy of the original Mortgage certified
by the public recording office in which such original Mortgage has been
recorded;
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(iii) assignments (which may be included in one or more
blanket assignments if permitted by applicable law) of the Mortgage in
recordable form to "The Chase Manhattan Bank as trustee" c/o the Seller
at an address specified by the Seller;
(iv) originals of any intervening assignments of the
Mortgage, with evidence of recording thereon, or, if the original of
any such intervening assignment has not yet been returned from the
public recording office, a copy of such original intervening assignment
certified by the public recording office in which such original
intervening assignment has been recorded; and
(v) a true and correct copy of each assumption,
modification, consolidation or substitution agreement, if any, relating
to the Mortgage Loan.
Within the time period for the review of each Mortgage File
set forth in Section 2.3 of the Custodial Agreement, if a material defect in any
Mortgage File is discovered which may materially and adversely affect the value
of the related Mortgage Loan, or the interests of the Indenture Trustee (as
pledgee of the Mortgage Loans), the Noteholders, the Certificateholders or the
Credit Enhancer in such Mortgage Loan, including the Seller's failure to deliver
any document required to be delivered to the Custodian on behalf of the
Indenture Trustee (provided that a Mortgage File will not be deemed to contain a
defect for an unrecorded assignment under clause (iii) above if the Seller has
submitted such assignment for recording pursuant to the terms of the following
paragraph), the Seller shall cure such defect, repurchase the related Mortgage
Loan at the Repurchase Price or substitute an Eligible Substitute Loan for the
related Mortgage Loan upon the same terms and conditions set forth in Section
3.1 hereof for breaches of representations and warranties as to the Mortgage
Loans.
Within 60 days after the receipt by the Master Servicer of the
recording information, the Seller at its own expense shall complete and submit
for recording in the appropriate public office for real property records each of
the assignments referred to in clause (iii) above. While such assignment to be
recorded is being recorded, the Custodian shall retain a photocopy of such
assignment. If any assignment is lost or returned unrecorded to the Custodian
because of any defect therein, the Seller is required to prepare a substitute
assignment or cure such defect, as the case may be, and the Seller shall cause
such assignment to be recorded in accordance with this paragraph.
In instances where an original Mortgage or any original
intervening assignment of Mortgage was not, in accordance with clause (ii) or
(iv) above, delivered by the Seller to the respective Custodian prior to or
concurrently with the execution and delivery of this Agreement, the Seller will
deliver or cause to be delivered the originals of such documents to such
Custodian promptly upon receipt thereof.
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The Purchaser hereby acknowledges its acceptance of all right,
title and interest to the property, conveyed to it pursuant to this Section 2.1.
(d) The parties hereto intend that the transactions set forth
herein constitute a sale by the Seller to the Purchaser of all the Seller's
right, title and interest in and to the Mortgage Loans and other property as and
to the extent described above. In the event the transactions set forth herein
are deemed not to be a sale, the Seller hereby grants to the Purchaser a
security interest in all of the Seller's right, title and interest in, to and
under the Mortgage Loans and such other property, to secure all of the Seller's
obligations hereunder, and this Agreement shall constitute a security agreement
under applicable law. The Seller agrees to take or cause to be taken such
actions and to execute such documents, including without limitation the filing
of all necessary UCC-1 financing statements filed in the State of Minnesota
(which shall have been submitted for filing as of the Closing Date), any
continuation statements with respect thereto and any amendments thereto required
to reflect a change in the name or corporate structure of the Seller or the
filing of any additional UCC-1 financing statements due to the change in the
principal office of the Seller, as are necessary to perfect and protect the
Purchaser's interests in each Mortgage Loan and the proceeds thereof.
Section 2.2. Payment of Purchase Price.
(a) The "Purchase Price" for the Mortgage Loans shall be (i)
an amount equal to $149,198,941.51 in immediately available funds, together with
(ii) the Certificates, in respect of the Cut-off Date Loan Balances thereof.
(b) In consideration of the sale of the Mortgage Loans from
the Seller to the Purchaser on the Closing Date, the Purchaser shall pay to the
Seller on the Closing Date by wire transfer of immediately available funds to a
bank account designated by the Seller, the amount specified above in clause (a)
and the Purchaser shall transfer, or cause to be transferred, to the Seller on
the Closing Date the Certificates; provided, that such payment may be on a net
funding basis if agreed by the Seller and the Purchaser.
ARTICLE III
REPRESENTATIONS AND WARRANTIES;
REMEDIES FOR BREACH
Section 3.1. Seller Representations and Warranties. The Seller represents
and warrants to the Purchaser, as of the Closing Date (or if otherwise specified
below, as of the date so specified):
(a) As to the Seller:
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(i) The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has the corporate power to own its assets and to transact the
business in which it is currently engaged. The Seller is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in
which the failure to so qualify would have a material adverse effect on
the business, properties, assets or condition (financial or other) of
the Seller;
(ii) The Seller has the power and authority to make,
execute, deliver and perform its obligations under this Agreement and
all of the transactions contemplated under this Agreement, and has
taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement. When executed and
delivered, this Agreement will constitute the legal, valid and binding
obligation of the Seller enforceable in accordance with its terms,
except as enforcement of such terms may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors'
rights generally and by the availability of equitable remedies;
(iii) The Seller is not required to obtain the consent of
any other Person or any consent, license, approval or authorization
from, or registration or declaration with, any governmental authority,
bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement, except for
such consents, license, approvals or authorization, or registration or
declaration, as shall have been obtained or filed, as the case may be;
(iv) The execution and delivery of this Agreement and
the performance of the transactions contemplated hereby by the Seller
will not violate any provision of any existing law or regulation or any
order or decree of any court applicable to the Seller or any provision
of the Certificate of Incorporation or Bylaws of the Seller, or
constitute a material breach of any mortgage, indenture, contract or
other agreement to which the Seller is a party or by which the Seller
may be bound; and
(v) No litigation or administrative proceeding of or
before any court, tribunal or governmental body is currently pending,
or to the knowledge of the Seller threatened, against the Seller or any
of its properties or with respect to this Agreement or the Certificates
which in the opinion of the Seller has a reasonable likelihood of
resulting in a material adverse effect on the transactions contemplated
by this Agreement.
(vi) This Agreement constitutes a legal, valid and
binding obligation of the Seller, enforceable against the Seller in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect affecting the enforcement of
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creditors' rights in general and except as such enforceability may be
limited by general principles of equity (whether considered in a
proceeding at law or in equity);
(vii) This Agreement constitutes a valid transfer and
assignment to the Purchaser of all right, title and interest of the
Seller in and to the Mortgage Loans, all monies due or to become due
with respect thereto, and all proceeds of such Cut-off Date Loan
Balances with respect to the Mortgage Loans and such funds as are from
time to time deposited in the Custodial Account (excluding any
investment earnings thereon) as assets of the Trust and all other
property specified in the definition of "Trust" as being part of the
corpus of the Trust conveyed to the Purchaser by the Seller; and
(viii) The Seller is not in default with respect to any
order or decree of any court or any order, regulation or demand or any
federal, state, municipal or governmental agency, which default might
have consequences that would materially and adversely affect the
condition (financial or other) or operations of the Master Servicer or
its properties or might have consequences that would materially
adversely affect its performance hereunder.
(b) As to the Mortgage Loans:
(i) The information set forth in the Mortgage Loan
Schedule for such Mortgage Loans is true and correct in all material
respects as of the date or dates respecting which such information is
furnished;
(ii) Approximately 9.6% of the Mortgage Pool, by Cut-off
Date Loan Balance, were originated under a program providing for
partial insurance by the FHA pursuant to Title I of the National
Housing Act. Each FHA Title I Loan was originated in accordance with
all FHA requirements as set forth in the Title I Regulations. No event
has occurred which would invalidate or cancel the FHA Insurance for
such FHA Title I Loan.
(iii) The related Mortgage Note and the Mortgage have not
been assigned or pledged, the Seller has good and marketable title
thereto and the Seller is the sole owner and holder of the Mortgage
Loan free and clear of any and all liens, claims, encumbrances,
participation interests, equities, pledges, charges of security
interests of any nature and has full right and authority, under all
governmental and regulatory bodies having jurisdiction over the
ownership of the applicable Mortgage Loans to sell and assign the same
pursuant to this Agreement;
(iv) To the best of Seller's knowledge, there is no valid offset, defense
or counterclaim of any obligor under any Mortgage;
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(v) To the best of Seller's knowledge, there is no delinquent recording or
other tax or fee or assessment lien against any related Mortgaged Property;
(vi) To the best of Seller's knowledge, there is no proceeding pending or
threatened for the total or partial condemnation of the related Mortgaged
Property;
(vii) To the best of Seller's knowledge, there are no
mechanics' or similar liens or claims which have been filed for work,
labor or material affecting the related Mortgaged Property which are,
or may be liens prior or equal to, or subordinate with, the lien of the
related Mortgage, except liens which are fully insured against by the
title insurance policy referred to in clause (xi);
(viii) As of the Cut-off Date, no Mortgage Loan was 30 days or more
delinquent;
(ix) For each Mortgage Loan, the related Mortgage File contains each of the
documents and instruments specified to be included therein;
(x) The related Mortgage Note and the related Mortgage
at the time it was made complied in all material respects with
applicable local, state and federal laws;
(xi) A policy of title insurance in the form and amount
required by the Program Guide was effective as of the closing of each
Mortgage Loan and each such policy is valid and remains in full force
and effect, and a title search or other assurance of title customary in
the relevant jurisdiction was obtained with respect to each Mortgage
Loan as to which no title insurance policy or binder was issued;
(xii) None of the Mortgaged Properties is a mobile home or a manufactured
housing unit that is not permanently attached to its foundation;
(xiii) No more than 73.8% of the Mortgage Loans, by Cut-off Date Loan
Balance, are secured by Mortgaged Properties located in California;
(xiv) As of the Cut-off Date, 84.34% of the Mortgage Loans had a Combined
Loan-to-Value Ratio in excess of 100%;
(xv) [Reserved];
(xvi) The Seller has not transferred the Mortgage Loans to the Purchaser
with any intent to hinder, delay or defraud any of its creditors;
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(xvii) [Reserved];
(xviii) The Seller will submit for filing or cause to be
submitted for filing UCC-1 financing statements in accordance with the
terms of this Agreement;
(xix) Each Mortgage is substantially similar one to the other and is an
enforceable obligation of the related Mortgagor;
(xx) To the best of Seller's knowledge, the physical property subject to
each Mortgage is free of material damage and is in good repair;
(xxi) The Seller has not received a notice of default of
any senior mortgage loan related to a Mortgaged Property which has not
been cured by a party other than the related Subservicer;
(xxii) [Reserved];
(xxiii)
None of the Mortgage Loans are reverse mortgage loans;
(xxiv) No Mortgage Loan has an original term to maturity
of less than 13 months. All of the Mortgage Loans are fixed rate and
are fully amortizing. As of the Cut-off Date, the Mortgage Rates on the
Mortgage Loans range between 9.99% and 17.99% and the weighted average
Mortgage Rate is approximately 14.35% The weighted average remaining
term to scheduled maturity of the Mortgage Loans as of the Cut-off Date
is approximately 236 months;
(xxv) (A) Each Mortgaged Property with respect to the
Mortgage Loans consists of a single parcel of real property with a
single family residence erected thereon, manufactured housing or an
individual condominium unit. (B) With respect to the Mortgage Loans (i)
approximately 4.17% (by Cut-off Date Loan Balance) are secured by real
property improved by individual condominium units, (ii) approximately
0.14% (by Cut-off Date Loan Balance) are secured by real property
improved by manufactured housing and (iii) approximately 95.70% (by
Cut-off Date Loan Balance) are secured by real property with a single
family residence erected thereon;
(xxvi) Approximately 0.13%, 99.09% and 0.78% of the Mortgage Loans, by
Cut-off Date Loan Balance are first, second and third liens, respectively;
(xxvii) Each Subservicer meets all applicable requirements
under the Servicing Agreement, is properly qualified to service the
Mortgage Loans and has been servicing the Mortgage Loans prior to the
Cut-off Date in accordance with the terms of the Program Guide;
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(xxviii) For each Mortgage Loan, flood insurance has been
obtained which meets all applicable requirements of Section 3.04 of the
Servicing Agreement. For each Mortgage Loan (other than an FHA Title I
Loan), hazard insurance has been obtained which meets all applicable
requirements of Section 3.04 of the Servicing Agreement;
(xxix) There is no material default, breach, violation or
event of acceleration existing under the terms of any Mortgage Note or
Mortgage and no event which, with notice and expiration of any grace or
cure period, would constitute a material default, breach, violation or
event of acceleration under the terms of any Mortgage Note or Mortgage,
and no such material default, breach, violation or event of
acceleration has been waived by the Seller or by any other entity
involved in originating or servicing a Mortgage Loan;
(xxx) No instrument of release or waiver has been
executed in connection with the Mortgage Loans, and no Mortgagor has
been released, in whole or in part from its obligations in connection
with a Mortgage Loan;
(xxxi) With respect to each Mortgage Loan that is a second
or third lien, either (i) no consent for the Mortgage Loan was required
by the holder of the related prior lien or liens or (ii) such consent
has been obtained and is contained in the mortgage file;
(xxxii) With respect to each Mortgage Loan, either (i) the
Mortgage Loan is assumable pursuant to the terms of the Mortgage Note,
or (ii) the Mortgage Loan contains a customary provision for the
acceleration of the payment of the unpaid principal balance of the
Mortgage Loan in the event the related Mortgaged Property is sold
without the prior consent of the mortgagee thereunder;
(xxxiii) Each FHA Title I Loan has been submitted to the FHA
for insurance pursuant to the FHA Title I loan program and each FHA
Title I Loan has been or will be assigned a case number by the FHA for
the FHA Title I loan program within 240 days from the date hereof; and
(xxxiv) The portion of the FHA Reserve Amount with respect
to each FHA Title I Loan has been or will be transferred to the Title I
Contract Holder within 240 days from the date hereof.
(c) Upon discovery by Seller or upon notice from the Purchaser, the
Credit Enhancer, the Issuer, the Owner Trustee, the Indenture Trustee or any
Custodian, as applicable, of a breach of any representation or warranty in
clause (a) above which materially and adversely affects the interests of the
Securityholders or the Credit Enhancer, as applicable, in any Mortgage Loan, the
Seller shall, within 45 days of its discovery or its receipt of notice of such
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breach, either (i) cure such breach in all material respects or (ii) to the
extent that such breach is with respect to a Mortgage Loan or a Related
Document, either (A) repurchase such Mortgage Loan from the Issuer at the
Repurchase Price, or (B) substitute one or more Eligible Substitute Loans for
such Mortgage Loan, in each case in the manner and subject to the conditions and
limitations set forth below.
Upon discovery by the Seller or upon notice from the
Purchaser, the Credit Enhancer, the Issuer, the Owner Trustee, the Indenture
Trustee or any Custodian, as applicable, of a breach of any representation or
warranty in clause (b) above with respect to any Mortgage Loan, or upon the
occurrence of a Repurchase Event, which materially and adversely affects the
interests of any Securityholders or the Credit Enhancer, as applicable, or of
the Purchaser in such Mortgage Loan (notice of which shall be given to the
Purchaser by the Seller, if it discovers the same), notwithstanding the Seller's
lack of knowledge with respect to the substance of such representation and
warranty, the Seller shall, within 90 days after the earlier of its discovery or
receipt of notice thereof, either cure such breach or Repurchase Event in all
material respects or either (i) repurchase such Mortgage Loan from the Issuer at
the Repurchase Price, or (ii) substitute one or more Eligible Substitute Loans
for such Mortgage Loan, in each case in the manner and subject to the conditions
set forth below. The Repurchase Price for any such Mortgage Loan repurchased by
the Seller shall be deposited or caused to be deposited by the Master Servicer
in the Custodial Account maintained by it pursuant to Section 3.02 of the
Servicing Agreement.
The Seller may only substitute an Eligible Substitute Loan or
Loans for a Deleted Loan pursuant to this Section 3.1 if the Seller obtains an
Opinion of Counsel generally to the effect that the substitution of an Eligible
Substitute Loan or Loans for a Deleted Loan will not cause an entity level
federal or state income tax to be imposed on the Owner Trust. The Seller shall
also deliver to the Custodian on behalf of the Issuer, with respect to such
Eligible Substitute Loan or Loans, the original Mortgage Note and all other
documents and agreements as are required by Section 2.1(c), with the Mortgage
Note endorsed as required by Section 2.1(c). No substitution will be made in any
calendar month after the Determination Date for such month. Monthly Payments due
with respect to Eligible Substitute Loans in the month of substitution shall not
be part of the Owner Trust and will be retained by the Master Servicer and
remitted by the Master Servicer to the Seller on the next succeeding Payment
Date, provided that a payment at least equal to the applicable Monthly Payment
has been received by the Owner Trust, for such month in respect of the Deleted
Loan. For the month of substitution, distributions to the Distribution Account
pursuant to the Servicing Agreement will include the Monthly Payment due on a
Deleted Loan for such month and thereafter the Seller shall be entitled to
retain all amounts received in respect of such Deleted Loan. The Master Servicer
shall amend or cause to be amended the Mortgage Loan Schedule to reflect the
removal of such Deleted Loan and the substitution of the Eligible Substitute
Loan or Loans and the Master Servicer shall deliver the amended Mortgage Loan
Schedule to the Owner Trustee. Upon such substitution, the Eligible Substitute
Loan or Loans shall be subject to the terms of this
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Agreement and the Servicing Agreement in all respects, the Seller shall be
deemed to have made the representations and warranties with respect to the
Eligible Substitute Loan contained herein set forth in Section 3.1(b) (other
than clauses (viii), (xiii), (xiv), (xxv)(B) and (xxvi) (and other than clauses
(ii), (xxxiii) and (xxxiv) if such Mortgage Loan substituted by the Seller is
not a Title I Loan)) as of the date of substitution, and the Seller shall be
obligated to repurchase or substitute for any Eligible Substitute Loan as to
which a Repurchase Event has occurred as provided herein. In connection with the
substitution of one or more Eligible Substitute Loans for one or more Deleted
Loans, the Master Servicer will determine the amount (such amount, a
"Substitution Adjustment Amount"), if any, by which the aggregate principal
balance of all such Eligible Substitute Loans as of the date of substitution is
less than the aggregate principal balance of all such Deleted Loans (after
application of the principal portion of the Monthly Payments due in the month of
substitution that are to be distributed to the Payment Account in the month of
substitution). The Seller shall deposit the amount of such shortfall into the
Custodial Account on the day of substitution, without any reimbursement
therefor.
Upon receipt by the Indenture Trustee on behalf of the Issuer
and the Custodian of written notification, signed by a Servicing Officer, of the
deposit of such Repurchase Price or of such substitution of an Eligible
Substitute Loan (together with the complete related Mortgage File) and deposit
of any applicable Substitution Adjustment Amount as provided above, the
Custodian, on behalf of the Indenture Trustee shall release to the Seller the
related Mortgage File for the Mortgage Loan being repurchased or substituted for
and the Indenture Trustee on behalf of the Issuer shall execute and deliver such
instruments of transfer or assignment prepared by the Master Servicer, in each
case without recourse, as shall be necessary to vest in the Seller or its
designee such Mortgage Loan released pursuant hereto and thereafter such
Mortgage Loan shall not be an asset of the Issuer.
It is understood and agreed that the obligation of the Seller
to cure any breach, or to repurchase or substitute for, any Mortgage Loan as to
which such a breach has occurred and is continuing shall, except to the extent
provided in Section 6.1 of this Agreement, constitute the sole remedy respecting
such breach available to the Purchaser, the Issuer, the Certificateholders (or
the Owner Trustee on behalf of the Certificateholders) and the Noteholders (or
the Indenture Trustee on behalf of the Noteholders) against the Seller.
It is understood and agreed that the representations and
warranties set forth in this Section 3.1 shall survive delivery of the
respective Mortgage Files to the Issuer, or the Custodian.
ARTICLE IV
SELLER'S COVENANTS
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Section 4.1. Covenants of the Seller. The Seller hereby
covenants that, except for the transfer hereunder, the Seller will not sell,
pledge, assign or transfer to any other Person, or grant, create, incur or
assume any Lien on any Mortgage Loan, or any interest therein, the Seller will
notify the Issuer, as assignee of the Depositor, which in turn is assignee of
the Purchaser, of the existence of any Lien (other than as provided above) on
any Mortgage Loan immediately upon discovery thereof; and the Seller will defend
the right, title and interest of the Issuer, as assignee of the Depositor, which
in turn is assignee of the Purchaser, in, to and under the Mortgage Loans
against all claims of third parties claiming through or under the Seller;
provided, however, that nothing in this Section 4.1 shall be deemed to apply to
any Liens for municipal or other local taxes and other governmental charges if
such taxes or governmental charges shall not at the time be due and payable or
if the Seller shall currently be contesting the validity thereof in good faith
by appropriate proceedings.
ARTICLE V
SERVICING
Section 5.1. Servicing. The Seller will service the Mortgage Loans pursuant
to the terms and conditions of the Servicing Agreement and will service the
Mortgage Loans directly or through one or more subservicers in accordance
therewith.
ARTICLE VI
INDEMNIFICATION BY THE SELLER
WITH RESPECT TO THE MORTGAGE LOANS
Section 6.1. Indemnification With Respect to the Mortgage
Loans. The Seller shall indemnify and hold harmless the Purchaser from and
against any loss, liability or expense arising from the breach by the Seller of
its representations and warranties in Section 3.1 of this Agreement which
materially and adversely affects the Purchaser's interest in any Mortgage Loan
or from the failure by the Seller to perform its obligations under this
Agreement in any material respect, provided that the Seller shall have no
obligation to indemnify the Purchaser in respect of any loss, liability or
expense that arises as a result of the Purchaser's willful malfeasance, bad
faith or negligence or as a result of the breach by the Purchaser of its
obligations hereunder.
Section 6.2. Limitation on Liability of the Seller. None of
the directors, officers, employees or agents of the Seller shall be under any
liability to the Purchaser, it being expressly understood that all such
liability is expressly waived and released as a condition of, and as
consideration for, the execution of this Agreement. Except as and to the extent
expressly provided in the Servicing Agreement, the Seller shall not be under any
liability to the Owner
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Trust, the Owner Trustee, the Indenture Trustee or the Securityholders. The
Seller and any director, 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.
ARTICLE VII
TERMINATION
Section 7.1. Termination. The respective obligations and
responsibilities of the Seller and the Purchaser created hereby shall terminate,
except for the Seller's indemnity obligations as provided herein, upon the
termination of the Owner Trust pursuant to the terms of the Trust Agreement.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1. Amendment. This Agreement may be amended from
time to time by the Seller and the Purchaser by written agreement signed by the
Seller and the Purchaser, with the consent of the Credit Enhancer (which consent
shall not be unreasonably withheld).
Section 8.2. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
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Section 8.3. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by registered mail, postage prepaid, addressed
as follows:
(i) if to the Seller:
Residential Funding Corporation
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Home Loan Trust 1997-HI1
or, such other address as may hereafter be furnished to the Purchaser
in writing by the Seller.
(ii) if to the Purchaser:
RFC Asset Holdings, Inc.
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Home Loan Trust 1997-HI1
or such other address as may hereafter be furnished to the Seller in writing
by the Purchaser.
Section 8.4. Severability of Provisions. If any one or more of
the covenants, agreements, provisions of terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity of
enforceability of the other provisions of this Agreement.
Section 8.5. Relationship of Parties. Nothing herein contained
shall be deemed or construed to create a partnership or joint venture between
the parties hereto, and the services of the Seller shall be rendered as an
independent contractor and not as agent for the Purchaser.
Section 8.6. Counterparts. This Agreement may be executed in
one or more counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed to be an original
and such counterparts, together, shall constitute one and the same agreement.
Section 8.7. Further Agreements. The Purchaser and the Seller 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
Agreement.
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Section 8.8. Intention of the Parties. It is the intention of
the parties that the Purchaser is purchasing, and the Seller is selling, the
Mortgage Loans, rather than a loan by the Purchaser to the Seller secured by the
Mortgage Loans. 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 Purchaser will have the
right to review the Mortgage Loans and the Related Documents to determine the
characteristics of the Mortgage Loans which will affect the federal income tax
consequences of owning the Mortgage Loans and the Seller will cooperate with all
reasonable requests made by the Purchaser in the course of such review.
Section 8.9. Successors and Assigns; Assignment of This
Agreement. This Agreement shall bind and inure to the benefit of and be
enforceable by the Seller, Purchaser and their respective successors and
assigns. The obligations of the Seller under this Agreement cannot be assigned
or delegated to a third party without the consent of the Credit Enhancer and the
Purchaser, which consent shall be at the Credit Enhancer's and the Purchaser's
sole discretion, except that the Purchaser and the Credit Enhancer acknowledge
and agree that the Seller may assign its obligations hereunder to any Affiliate
of the Seller, to any Person succeeding to the business of the Seller, to any
Person into which the Seller is merged and to any Person resulting from any
merger, conversion or consolidation to which the Seller is a party. The parties
hereto acknowledge that the Purchaser is acquiring the Mortgage Loans for the
purpose of transferring them to the Depositor, who will in turn transfer the
Mortgage Loans to the Issuer, which will issue Certificates representing
interests in and Notes secured by such Mortgage Loans. As an inducement to the
Purchaser to purchase the Mortgage Loans, the Seller acknowledges and consents
to (i) (a) the assignment by the Purchaser to the Depositor of all of the
Purchaser's rights against the Seller pursuant to this Agreement insofar as such
rights relate to Mortgage Loans transferred to the Depositor and to the
enforcement or exercise of any right or remedy against the Seller pursuant to
this Agreement by the Depositor and (b) the assignment by the Depositor to the
Issuer of all the Depositor's rights against the Seller pursuant to the Transfer
Agreement, insofar as such rights relate to Mortgage Loans transferred to the
Issuer and to the enforcement or exercise of any right or remedy against the
Seller pursuant to this Agreement by the Issuer, (ii) the enforcement or
exercise of any right or remedy against the Seller pursuant to this Agreement by
or on behalf of the Issuer and (iii) the Issuer's pledge of its interest in this
Agreement to the Indenture Trustee and the enforcement by the Indenture Trustee
of any such right or remedy against the Seller following an Event of Default
under the Indenture. Such enforcement of a right or remedy by the Issuer or the
Indenture Trustee, as applicable, shall have the same force and effect as if the
right or remedy had been enforced or exercised by the Purchaser directly.
Section 8.10. Survival. The representations and warranties made herein by
the Seller and the provisions of Article VI hereof shall survive the purchase of
the Mortgage Loans hereunder.
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IN WITNESS WHEREOF, the Seller and the Purchaser have caused
their names to be signed to this Mortgage Loan Purchase Agreement by their
respective officers thereunto duly authorized as of the day and year first above
written.
RFC ASSET HOLDINGS, INC.
as Purchaser
By:
Name:
Title:
RESIDENTIAL FUNDING CORPORATION
as Seller
By:
Name:
Title: Director
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Exhibit 1
MORTGAGE LOAN SCHEDULE
TO BE PROVIDED UPON REQUEST
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