EXECUTION COPY
RESIDENTIAL FUNDING MORTGAGE SECURITIES II, INC.
as Purchaser,
and
RESIDENTIAL FUNDING CORPORATION
as Seller
HOME EQUITY LOAN PURCHASE AGREEMENT
Dated as of February 24, 2006
Home Equity Loans
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS...............................................................1
Section 1.1 Definitions.......................................................1
ARTICLE II SALE OF HOME EQUITY LOANS AND RELATED PROVISIONS..........................2
Section 2.1 Sale of Home Equity Loans.........................................2
Section 2.2 Payment of Purchase Price.........................................5
Section 2.3 Reserved..........................................................6
Section 2.4 Variable Funding Notes on or after the Closing Date...............6
Section 2.5 Draws After an Amortization Event.................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH.......................7
Section 3.1 Seller Representations and Warranties.............................7
ARTICLE IV SELLER'S COVENANTS.......................................................20
Section 4.1 Covenants of the Seller..........................................20
ARTICLE V SERVICING................................................................20
Section 5.1 Servicing........................................................20
ARTICLE VI INDEMNIFICATION BY THE SELLER WITH RESPECT TO THE HOME EQUITY LOANS......20
Section 6.1 Limitation on Liability of the Seller............................20
ARTICLE VII TERMINATION..............................................................21
Section 7.1 Termination......................................................21
ARTICLE VIII MISCELLANEOUS PROVISIONS.................................................21
Section 8.1 Amendment........................................................21
Section 8.2 GOVERNING LAW....................................................21
Section 8.3 Notices..........................................................21
Section 8.4 Severability of Provisions.......................................22
Section 8.5 Relationship of Parties..........................................22
Section 8.6 Counterparts.....................................................22
Section 8.7 Further Agreements...............................................22
Section 8.8 Intention of the Parties.........................................22
Section 8.9 Successors and Assigns; Assignment of This Agreement.............22
Section 8.10 Survival.........................................................23
Section 8.11 Credit Enhancer as Third-Party Beneficiary.......................23
EXHIBITS
Exhibit 1...... Group I Loan Schedule
Exhibit 2...... Group II Loan Schedule
Exhibit 3...... Standard & Poor's Predatory Lending Categories
This HOME EQUITY LOAN PURCHASE AGREEMENT (this "Agreement"), dated as of February 24, 2006, is
made between Residential Funding Corporation (the "Seller") and Residential Funding Mortgage Securities II,
Inc. (the "Purchaser").
W I T N E S S E T H :
WHEREAS, the Seller owns Cut-off Date Loan Balances and the Related Documents for the
fixed-rate, closed-end home equity mortgage loans (the "Group I Loans") indicated on the Group I Loan
schedule, attached as Exhibit 1 hereto (the "Group I Loan Schedule"), the adjustable rate, revolving credit
loans (the "Group II Loans" and, together with the Group I Loans, the "Home Equity Loans") indicated on the
Group II Loan schedule, attached as Exhibit 2 hereto (the "Group II Loan Schedule"), 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 Home Equity Loans;
WHEREAS, the parties hereto desire that the Seller sell the Cut-off Date Loan Balances of the
Home Equity Loans to the Purchaser pursuant to the terms of this Agreement together with the Related
Documents on the Closing Date, and thereafter all Additional Balances created on or after the Cut-off Date;
WHEREAS, pursuant to the terms of the Servicing Agreement, the Master Servicer will service the
Home Equity Loans directly or through one or more Subservicers;
WHEREAS, pursuant to the terms of the Trust Agreement, the Purchaser will sell the Home Equity
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 Purchaser, the Certificates; and
WHEREAS, pursuant to the terms of the Indenture, the Issuer will issue and transfer to or at
the direction of the Purchaser, the Notes, secured by the Home Equity Loans.
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 Home Equity 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 as of the date hereof (the "Indenture"), between Home Equity Loan Trust 2006-HSA2, as Issuer
and JPMorgan Chase Bank, N.A., 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 HOME EQUITY LOANS AND RELATED PROVISIONS
Section 2.1....Sale of Home Equity 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 Home Equity Loans (including without limitation the Cut-off Date
Loan Balances and all Additional Balances created on and after the Cut-off Date; provided, however, that
following the occurrence of an Amortization Event, any subsequent loan balance represented by each Draw and
interest thereon will not be deemed transferred to the Issuer, and the Seller (in such event) shall retain
ownership of each loan balance represented by each such Draw made thereafter and interest thereon), all
interest accruing thereon and all collections in respect thereof received on or after the Cut-off Date; (ii)
property which secured a Home Equity 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 Home Equity Loans;
and (iv) all proceeds of the foregoing; provided, however, that the Purchaser does not assume the obligation
under each Loan Agreement relating to a Group II Loan to fund Draws to the Mortgagor thereunder, and the
Purchaser shall not be obligated or permitted to fund any such Draws, it being agreed that the Seller will
retain the obligation to fund future Draws. Such conveyance shall be deemed to be made: (1) with respect to
the Cut-off Date Loan Balances, as of the Closing Date; and (2) with respect to the amount of each Additional
Balance created on or after the Cut-off Date, as of the later of the Closing Date and the date that the
corresponding Draw was made pursuant to the related Loan Agreement, 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 with respect to the Loan Balance of the Home Equity Loans to indicate in its books and records
that the Home Equity Loans have been sold to the Purchaser pursuant to this Agreement and to deliver to the
Purchaser the Group I Loan Schedule, and the Group II Loan Schedule. Such Group I Loan Schedule and Group II
Loan Schedule shall be marked as Exhibit 1 and Exhibit 2, respectively, 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 respective Custodian, on or before the Closing Date, the following documents or
instruments with respect to each Home Equity Loan:
(i) the original Mortgage Note, including the related Loan Agreement, endorsed without recourse to the
Indenture Trustee and showing an unbroken chain of endorsement from the originator thereof to the Person
endorsing it or, with respect to any Home Equity Loan as to which the original Mortgage Note has been
permanently lost, misplaced or destroyed and has not been replaced, a Lost Note Affidavit from the Program
Seller or the Seller stating that the original Mortgage Note was lost, misplaced or destroyed, together with
a copy of the related Mortgage Note;
(ii) the original Mortgage, noting the presence of the MIN of the Home Equity Loan and language indicating
that the Home Equity Loan is a MOM Loan if the Home Equity Loan is a MOM Loan, with evidence of recording
thereon, or, if the original Mortgage has not yet been returned from the public recording office, a copy of
such Mortgage with evidence of recording indicated thereon in the event the recording office keeps the
original or if the original is lost, or if the original or a copy of the original Mortgage has not yet been
returned from the public recording office, a copy of the original Mortgage;
(iii) unless the Home Equity Loan is registered on the MERS(R)System, assignments (which may be included in
one or more blanket assignments if permitted by applicable law) of the Mortgage recorded to "JPMorgan Chase
Bank, N.A. as indenture trustee" c/o the Seller (or to MERS, if the Home Equity Loan is registered on the
MERS(R)System and noting the presence of a MIN) at an address specified by the Seller;
(iv) originals of any intervening assignments of the Mortgage, with evidence of recording thereon, or a
copy of such intervening assignment, 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; and
(v) a copy of each assumption, modification, consolidation or substitution agreement, if any, relating to
the Home Equity Loan.
Within the time period for the review of each Mortgage File set forth in Section 2.3 of the
Custodial Agreement, the Custodian shall notify the Master Servicer of any document or documents constituting
a part of a Mortgage File which are missing or defective in respect of the items reviewed as described in
Section 2.3(b) of the Custodial Agreement; provided, that if the defect or missing item with respect to a
Home Equity Loan related to such Mortgage File is listed on Schedule A of Exhibit 1 of the Custodial
Agreement, no notification shall be necessary. As set forth in Section 2.3 of the Custodial Agreement, the
Custodian shall deliver to the Indenture Trustee and the Credit Enhancer a certificate (the "Interim
Certification") to the effect that all documents required to be delivered pursuant to this Subsection 2.1(c)
have been executed and received and that such documents relate to the Home Equity Loans identified on the
Group I Loan Schedule or Group II Loan Schedule, except for any exceptions listed on such Interim
Certification. If such omission or defect materially and adversely affects the interests in the related Home
Equity Loan of the Noteholders or the Credit Enhancer, the Master Servicer shall promptly notify the Seller
(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 or if such assignment is not
required to be recorded pursuant to the terms of the following paragraph), the Seller shall cure such defect,
repurchase the related Home Equity Loan at the Repurchase Price or substitute an Eligible Substitute Loan for
the related Home Equity Loan upon the same terms and conditions set forth in Section 3.1(d) hereof for
breaches of representations and warranties as to the Home Equity Loans. With respect to any missing Mortgage
Notes or Loan Agreements referred to in Subsections 3.1(b)(xxxi) or 3.1(c)(xxxiv), the Seller shall have 60
days from the Closing Date to deliver the documents referred to in this Subsection 2.1(c). If such documents
have not been delivered within 60 days, the Seller shall repurchase the related Home Equity Loan or
substitute an Eligible Substitute Loan for the related Home Equity Loan upon the same terms and conditions
set forth in Section 3.1(d) hereof for breaches of representations and warranties as to the Home Equity Loans.
Within 60 days after the receipt by the Master Servicer of the recording information necessary
to complete the recording of each of the assignments referred to in clause (iii) above, the Seller at its own
expense shall complete, or cause to be completed, in the name of the Indenture Trustee, and shall submit
each such assignment 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. Notwithstanding the foregoing, as to any Home Equity Loan where the Seller is the
assignee of record of the Mortgage, the assignment referred to in clause (iii) above shall not be required to
be completed and submitted for recording (a) if an Opinion of Counsel is provided in form and substance
satisfactory to the Credit Enhancer and to each Rating Agency, to the effect that such recordation of the
assignment referred to in clause (iii) above (completed in the name of the Indenture Trustee) is not required
(i) to effect the sale and conveyance of the Home Equity Loan by the Seller to the Depositor and by the
Depositor to the Issuer, or the granting and perfecting of the security interest in the Home Equity Loan to
the Indenture Trustee as provided in the Indenture or (ii) to defeat any ownership, security interest or
other adverse claim to the Home Equity Loan by any creditor of the Seller or the Depositor by any purported
transferee of such Home Equity Loan in a purported transfer thereof by the Seller or the Depositor subsequent
to such sale and conveyance or (b) if MERS is identified on the Mortgage or on a properly recorded assignment
of the Mortgage as the mortgagee of record solely as nominee for the Seller and its successors and assigns.
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 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.
In connection with the assignment of any Home Equity Loan registered on the MERS(R)System, the
Purchaser further agrees that it will cause, at the Purchaser's own expense, within 30 Business Days after
the Closing Date, the MERS(R)System to indicate that such Home Equity Loan has been assigned by the Purchaser
to the Indenture Trustee in accordance with this Agreement for the benefit of the Noteholders by including
(or deleting, in the case of Home Equity Loans which are repurchased in accordance with this Agreement) in
such computer files (a) the code in the field which identifies the specific Indenture Trustee and (b) the
code in the field "Pool Field" which identifies the series of the Notes issued in connection with such Home
Equity Loans. The Purchaser further agrees that it will not, and will not permit the Master Servicer to, and
the Master Servicer agrees that it will not, alter the codes referenced in this paragraph with respect to any
Home Equity Loan during the term of this Agreement unless and until such Home Equity Loan is repurchased in
accordance with the terms of this Agreement.
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 Home Equity 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 Home Equity Loans and all accounts, chattel papers, general
intangibles, payment intangibles, contract rights, certificates of deposit, deposit accounts, instruments,
documents, letters of credit, money, advices of credit, investment property, goods and other property
consisting of, arising under or related to the Home Equity 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 or
Delaware (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
Home Equity Loan and the proceeds thereof.
Section 2.2....Payment of Purchase Price.
(a) The "Purchase Price" for the Home Equity Loans (including the Additional Balances) shall be (1) an
amount equal to $447,243,215.08 for the Home Equity Loans, in immediately available funds, together with the
Certificates, in respect of the Cut-off Date Loan Balances thereof and (2) in the case of each Additional
Balance transferred hereunder created on or after the Cut-off Date, the principal amount of the related Draw
under the Loan Agreement on the later of the Closing Date and the date of the creation of such Additional
Balance.
(b) In consideration of the sale of the Home Equity 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)(1) for each Home
Equity Loan; provided, that such payment may be on a net funding basis if agreed by the Seller and the
Purchaser. With respect to each Additional Balance transferred hereunder with respect to any Group II Loan,
the Issuer as assignee of the Purchaser shall pay or cause to be paid to the Seller or its designee the
portion of the Purchase Price specified above in clause (a)(2) for such Additional Balance in one of the
following ways, as applicable: (i) for any Collection Period prior to the Collection Period during which the
Revolving Period ends, so long as an Amortization Event has not occurred, (a) a cash payment pursuant to
Section 3.03(b) of the Servicing Agreement and Section 2.2(a)(2) hereof in an amount equal to the related
Draw, if then available from Principal Collections during the related Collection Period on the Home Equity
Loans, and (b) to the extent aggregate Draws exceed Principal Collections for such Collection Period, an
increase in the aggregate principal amount of the Variable Funding Notes or an issuance of new Variable
Funding Notes, as of the Payment Date corresponding to the Collection Period in which such Additional
Balances were created, equal to the amount by which Additional Balances exceeded Principal Collections for
such Collection Period, and (ii) for the Collection Period during which the Revolving Period ends, and any
Collection Period thereafter, so long as an Amortization Event has not occurred, an increase in the aggregate
principal amount of Variable Funding Notes or an issuance of new Variable Funding Notes as of each Payment
Date in an aggregate amount equal to the total of the related Draws for the corresponding Collection Period.
Section 2.3....Reserved.
Section 2.4....Variable Funding Notes on or after the Closing Date.
Subject to Section 4.02 of the Indenture, if at any time, the Seller holds Variable Funding
Notes that have reached the Maximum Variable Funding Balance, as applicable, and to the extent that the same
are exchanged for Capped Funding Notes in accordance with Section 4.01(d) of the Indenture, the Purchaser
agrees that, upon written request made by the Seller at any time, the Purchaser shall use its best reasonable
efforts to cause such Capped Funding Notes held by the Seller to be registered for resale by the Seller
pursuant to an effective registration statement filed by the Purchaser in accordance with, and meeting all
requirements of, the Securities Act. The Purchaser shall use its best reasonable efforts to cause such
registration statement to become effective with respect to such Capped Funding Notes as soon as practicable
within a mutually agreed reasonable time period after the Seller's request. It is contemplated that such
registration statement will be the shelf registration statement pursuant to which the Term Notes issued on
the Closing Date are to be offered, or one substantially similar thereto. In connection with such
registration statement and offering, the Seller shall reimburse the Purchaser for costs related thereto
including registration fees, printing fees, rating fees, legal fees, accountant's fees, blue sky registration
fees and expenses (if any), related expenses of the Credit Enhancer and other out-of-pocket costs, if any.
In connection with such registration statement and related prospectus, the Seller shall provide the Purchaser
with an updated Group I Loan Schedule or Group II Loan Schedule and all other information reasonably
necessary to assure that the statements in the prospectus with respect to the Home Equity Loans and the
Seller (including in its capacity as servicer of the Home Equity Loans) are complete and correct in all
material respects as of the date of sale of such Capped Funding Notes by the Seller. In addition, the Seller
shall provide, or arrange to be provided, to the Purchaser such additional agreements, opinions and
certifications as may be reasonably requested by the Credit Enhancer. The registration statement shall not
include any information with respect to the Credit Enhancer, except for information approved by the Credit
Enhancer for use therein.
Section 2.5....Draws After an Amortization Event.
In the event that an Amortization Event occurs, any Draws made on the Group II Loans thereafter
shall not be deemed to be "Additional Balances" hereunder, and the ownership of the related balances shall be
retained by the Seller. Following an Amortization Event, on any Payment Date, with respect to the related
Collection Period, all Interest Collections and Principal Collections in respect of each individual Group II
Loan shall be allocated on a pro rata basis as between the Issuer and the Seller, based on the relative
proportions of the Loan Balance and the Excluded Amount, respectively, as of the end of the calendar month
immediately prior to such Collection Period. Any losses incurred with respect to any individual Group II
Loan following an Amortization Event shall be allocated on a pro rata basis between the Issuer and the
Seller, based on the Loan Balance and the Excluded Amount thereof as of the date of liquidation of such Group
II Loan. Notwithstanding any other provision hereof or of the Servicing Agreement, the payments and
collections allocable to the Excluded Amount need not be deposited in the Custodial Account and shall not be
deposited in the Certificate Distribution Account or the Payment Account, and shall be distributed by the
Master Servicer to the Seller not less frequently than monthly in accordance with reasonable instructions
provided by the Seller.
ARTICLE III....
REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH
Section 3.1....Seller Representations and Warranties. The Seller represents and warrants to the Purchaser and
to the Credit Enhancer, as of the Closing Date (or if otherwise specified below, as of the date so specified):
(a) As to the Seller:
(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;
(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 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 Cut-off Date Loan Balances with respect to the Home Equity 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 Home Equity 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
upon payment for the Additional Balances, will constitute a valid transfer and assignment to the Purchaser of
all right, title and interest of the Seller in and to the Additional Balances, all monies due or to become
due with respect thereto, and all proceeds of such Additional Balances and all other property specified in
the definition of "Trust" relating to the Additional Balances;
(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; and
(ix) The Seller is a member of MERS in good standing, and will comply in all material respects with the
rules and procedures of MERS in connection with the servicing of the Mortgage Loans that are registered with
MERS.
(b) As to the Group I Loans (unless otherwise specified, all percentages in this Section 3.1(b) are by
Cut-off Date Principal Balance):
(i) As of the Cut-off Date, no Group I Loan is 30 days or more Delinquent in payment of principal and
interest;
(ii) The information set forth in the Group I Loan Schedule with respect to each Group I Loan or the Group
I Loans, as the case may be, is true and correct in all material respects at the date or dates respecting
which such information is furnished;
(iii) There is no right of rescission, valid offset, defense, claim or counterclaim of any obligor under any
Mortgage Note or Mortgage except as may be provided under the Servicemembers Civil Relief Act, as amended;
(iv) There is no delinquent recording or other tax or fee or assessment lien against any related Mortgaged
Property;
(v) There is no proceeding pending or threatened for the total or partial condemnation of the related
Mortgaged Property;
(vi) 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;
(vii) For each Group I Loan, the related Mortgage File contains or will contain each of the documents and
instruments specified to be included therein;
(viii) 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, including, but not limited to, all applicable
anti-predatory lending laws and the Constitution of the State of Texas;
(ix) A policy of title insurance in the form and amount required by the Program Guide was effective as of
the closing of each Group I Loan and each such policy is valid and remains in full force and effect, unless
the Mortgaged Property is located in the State of Iowa and an attorney's certificate has been provided in
accordance with the Program Guide, 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;
(x) With respect to each Group I Loan, the ratio, expressed as a percentage, of (A) the sum of (i) the
Cut-off Date Principal Balance of such Group I Loan and (ii) any outstanding principal balance, as of the
Cut-off Date, of all other mortgage loans, if any, secured by senior or subordinate liens on the related
Mortgaged Property, to (B) the Appraised Value, or, to the extent permitted by the Program Guide, the Stated
Value of such Mortgaged Property, was not in excess of 100%;
(xi) To the best of the Seller's knowledge, the physical property subject to each Mortgage is free of
material damage and is in good repair;
(xii) 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;
(xiii) The Loan Rate on each Group I Loan will be fixed. No Group I Loan is subject to negative amortization;
(xiv) No more than 22.4% and 10.7% of the Group I Loans are secured by Mortgaged Properties located in
California and Texas, respectively;
(xv) Immediately prior to the assignment of the Group I Loans to the Indenture Trustee, the Seller had good
title to, and was the sole owner of, each Group I Loan free and clear of any pledge, lien, encumbrance or
security interest (other than a first lien on such Mortgaged Property and the rights to servicing and related
compensation) and such assignment validly transfers ownership of the Group I Loans to the Indenture Trustee
free and clear of any pledge, lien, encumbrance or security interest (other than a first lien on such
Mortgaged Property and the rights to servicing and related compensation);
(xvi) Approximately 66.4% of the Group I Loans are balloon loans;
(xvii) No Group I Loan will have a remaining term to stated maturity as of the Cut-off Date of less than 57
months. The weighted average remaining term to stated maturity of the Group I Loans as of the Cut-off Date
will be approximately 206 months. The weighted average original term to maturity of the Group I Loans as of
the Cut-off Date will be approximately 208 months. Approximately 0.1% of the Group I Loans are
fully-amortizing and will have original terms to maturity of approximately five years, with a weighted
average remaining term to stated maturity of such Group I Loans of approximately 60 months. Approximately
0.6% of the Group I Loans are fully-amortizing and will have original terms to maturity of approximately ten
years, with a weighted average remaining term to stated maturity of such Group I Loans of approximately 118
months. Approximately 9.0% of the Group I Loans are fully-amortizing and will have original terms to
maturity of approximately fifteen years, with a weighted average remaining term to stated maturity of such
Group I Loans of approximately 178 months. Approximately 5.1% of the Group I Loans are fully-amortizing and
will have original terms to maturity of approximately twenty years, with a weighted average remaining term to
stated maturity of such Group I Loans of approximately 238 months. Approximately 4.9% of the Group I Loans
are fully-amortizing and will have original terms to maturity of approximately twenty-five years, with a
weighted average remaining term to stated maturity of such Group I Loans of approximately 350 months.
Approximately 66.4% of the Group I Loans are balloon loans will have original terms to maturity of
approximately fifteen years based on 30-year amortization schedules, with a weighted average remaining term
to stated maturity of 179 months;
(xviii) [Reserved];
(xix) Other than with respect to a payment default, 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 Group I Loan;
(xx) For each Group I Loan, hazard insurance and flood insurance has been obtained which meets all
applicable requirements of Section 3.04 of the Servicing Agreement, or the Master Servicer will obtain
blanket coverage in respect thereof as contemplated in the Servicing Agreement;
(xxi) Each Mortgage Note and each Mortgage is an enforceable obligation of the related Mortgagor;
(xxii) No instrument of release or waiver has been executed in connection with the Group I Loans, and no
Mortgagor has been released, in whole or in part from its obligations in connection with a Group I Loan;
(xxiii) With respect to each Group I Loan that is a second lien, either (i) no consent for the Group I Loan
was required by the holder of the related prior lien or (ii) such consent has been obtained and is contained
in the Mortgage File;
(xxiv) None of the Mortgaged Properties is a mobile home or a manufactured housing unit that is not
permanently attached to its foundation;
(xxv) Each Group I Loan constitutes a qualified mortgage under Section 860G(a)(3)(A) of the Code and
Treasury Regulations Section 1.860G-2(a)(1), (2), (4), (5) and (6), without reliance on the provisions of
Treasury Regulation Section 1.860G-2(a)(3) or Treasury Regulation Section 1.860G-2(f)(2) or any other
provision that would allow a Group I Loan to be treated as a "qualified mortgage" notwithstanding its failure
to meet the requirements of Section 860G(a)(3)(A) of the Code and Treasury Regulation Section 1.860G-2(a)(1),
(2), (4), (5) and (6);
(xxvi) 91.5% of the Group I Loans are actuarial mortgage loans, on which 30 days of interest is owed each
month irrespective of the day on which the payment is received;
(xxvii) As of the Cut-off Date, the Loan Rates of the Group I Loans range between 5.500% per annum and 16.000%
per annum, with a weighted average Loan Rate of approximately 8.8236% per annum;
(xxviii).......99.45% of the Group I Loans are secured by second liens and the remainder are secured by first
liens;
(xxix) [Reserved];
(xxx) (A) Each Mortgaged Property with respect to the Group I Loans consists of a single parcel of real
property with a single family residence erected thereon, a two-to-four family residence erected thereon, or
improved by an individual condominium unit, planned unit development, townhouse or manufactured home; (B)
with respect to the Group I Loans, (i) approximately 38.49% of the Group I Loans are secured by real property
improved by individual condominium units, planned unit developments (attached and detached),
townhouses/rowhouses or manufactured homes, (ii) approximately 58.24% of the Group I Loans are secured by
real property with a single family residence erected thereon and (iii) approximately 3.26% of the Group I
Loans are secured by real property with a two-to-four family residence;
(xxxi) 14 of the Mortgage Notes of the Group I Loans are missing from the Mortgage File;
(xxxii) None of the Group I Loans are secured by a leasehold interest;
(xxxiii).......None of the proceeds of the Group I Loans were used to finance the purchase of single premium
credit insurance policies and none of the Group I Loans contain prepayment penalties that extend beyond five
years after the date of origination;
(xxxiv) None of the Group I Loans are loans that, under applicable state or local law in effect at the time of
origination of such loan, are referred to as (1) "high cost" or "covered" loans or (2) any other similar
designation if the law imposes greater restrictions or additional legal liability for residential mortgage
loans with high interest rates, points and/or fees;
(xxxv) The Seller has not transferred the Group I Loans to the Purchaser with any intent to hinder, delay or
defraud creditors;
(xxxvi) Each Subservicer meets all applicable requirements under the Servicing Agreement, is properly
qualified to service the Group I Loans and has been servicing the Group I Loans prior to the Cut-off Date in
accordance with the terms of the Subservicing Agreement;
(xxxvii) All of the Group I Loans have been underwritten in substantial compliance with the criteria set
forth in the Program Guide;
(xxxviii) The proceeds of each Group I Loan have been fully disbursed and there is no requirement for
future advances thereunder;
(xxxix) The Mortgage contains a customary provision for the acceleration of the payment of the unpaid
principal balance of the Group I Loan in the event the related Mortgaged Property is sold without the prior
consent of the mortgagee thereunder;
(xl) With respect to Group I Loans originated more than 12 months prior to the Cut-off Date (A) none of the
obligors under such Group I Loans were the subject of a bankruptcy proceeding and (B) no such Group I Loan
has been 30 or more days delinquent more than once within 12 months of the Cut-off Date;
(xli) Except as provided in clause (xliii), no Group I Loan is a High Cost Loan or Covered Loan, as
applicable (as such terms are defined in the then current Standard & Poor's LEVELS(R)Glossary which is now
Version 5.6 Revised, Appendix E (attached hereto as Exhibit 3)); provided that no representation and warranty
is made in this clause 3.1(b)(xli) with respect to 0.38% of the Group I Loans (by outstanding principal
balance as of the Cut-off Date) secured by property located in the State of Kansas, and with respect to 0.12%
of the Group I Loans (by outstanding principal balance as of the Cut-off Date) secured by property located in
the State of West Virginia;
(xlii) No Group I Loan originated on or after October 1, 2002 through March 6, 2003 is governed by the
Georgia Fair Lending Act; and
(xliii)0.2% of the Group I Loans were subject to the Home Ownership and Equity
Protection Act of 1994.
(c) As to the Group II Loans (unless otherwise specified, all percentages in this Section 3.1(c) are by
Cut-off Date Principal Balance):
(i) The information set forth in the Group II Loan Schedule with respect to each Group II Loan or the
Group II Loans, as the case may be, is true and correct in all material respects as of the date or dates
respecting which such information is furnished;
(ii) The Cut-off Date Loan Balances have not been assigned or pledged, the Seller has good and marketable
title thereto and the Seller is the sole owner and holder of such Cut-off Date Loan Balances 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 Group II Loans to sell and assign the same pursuant to this
Agreement;
(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 Group II 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 Group II Loans to sell and assign the same pursuant to this
Agreement;
(iv) There is no right of rescission, valid offset, defense, claim or counterclaim of any obligor under any
Loan Agreement or Mortgage except as may be provided under the Servicemembers Civil Relief Act, as amended;
(v) There is no delinquent tax or assessment lien against any related Mortgaged Property;
(vi) There is no proceeding pending or threatened for the total or partial condemnation of the related
Mortgaged Property;
(vii) 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 Group II Loan was 30 days or more Delinquent in payment of principal and
interest;
(ix) For each Group II Loan, the related Mortgage File contains each of the documents and instruments
specified to be included therein;
(x) The related Loan Agreement and the related Mortgage 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
anti-predatory lending laws and the Constitution of the State of Texas;
(xi) A policy of title insurance in the form and amount required by the Program Guide was effective as of
the closing of each Group II Loan and each such policy is valid and remains in full force and effect, unless
the Mortgaged Property is located in the State of Iowa and an attorney's certificate has been provided in
accordance with the Program Guide, except that with respect to each Group II Loan with a Cut-off Date Loan
Balance of less than $100,000 as to which no title insurance policy or binder or attorney's certificate was
issued there are no intervening liens affecting the Mortgaged Property;
(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 42.2% and 9.4% of the Group II Loans are secured by Mortgaged Properties located in
California and Florida, respectively;
(xiv) As of the Cut-off Date the Combined Loan-to-Value Ratio for each Group II Loan was not in excess of
100%;
(xv) Immediately prior to the assignment of the Group II Loans to the Indenture Trustee, the Seller had
good title to, and was the sole owner of, each Group II Loan free and clear of any pledge, lien, encumbrance
or security interest (other than a first lien on such Mortgaged Property and the rights to servicing and
related compensation) and such assignment validly transfers ownership of the Group II Loans to the Indenture
Trustee free and clear of any pledge, lien, encumbrance or security interest (other than a first lien on such
Mortgaged Property and the rights to servicing and related compensation);
(xvi) The Seller has not transferred the Group II Loans to the Purchaser with any intent to hinder, delay or
defraud any of its creditors;
(xvii) The minimum monthly payment with respect to any Group II Loan is not less than the interest accrued at
the applicable Loan Rate on the average daily Loan Balance during the interest period relating to the date on
which such minimum monthly payment is due;
(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 Loan Agreement and each Mortgage constitutes a legal, valid and binding obligation of the
Mortgagor enforceable in accordance with its terms except as limited by bankruptcy, insolvency or other
similar laws affecting generally the enforcement of creditors' rights;
(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) Each of the Mortgage Notes has a substantially similar definition of Prime as the Index applicable to
the Loan Rate;
(xxiii) None of the Group II Loans are reverse mortgage loans;
(xxiv) (A) No Group II Loan has an original term to maturity in excess of 261 months. On each date that the
Loan Rates have been adjusted prior to the Cut-off Date interest rate adjustments on the Group II Loans were
made in compliance with the related Mortgage and Mortgage Note and applicable law. Over the term of any
Group II Loan, the Loan Rate may not exceed the related maximum Loan Rate, if any. (B) The Group II Loans
have maximum Loan Rates which range between 10.00% and 25.00%. The Gross Margins for the Group II Loans
range between less than 0.000% and 7.125%, and the weighted average Gross Margin for the Group II Loans is
approximately 2.59% as of the Cut-off Date. As of the Cut-off Date, the Loan Rates on the Group II Loans
range between 4.750% and 18.000% and the weighted average Loan Rate is approximately 7.5563%. The weighted
average remaining term to stated maturity of the Group II Loans on a contractual basis as of the Cut-off Date
is approximately 259 months;
(xxv) (A) Each Mortgaged Property with respect to the Group II Loans consists of a single parcel of real
property with a single family residence erected thereon, a two-to-four family residence erected thereon, or
improved by an individual condominium unit, planned unit development, townhouse or manufactured home. (B)
With respect to the Group II Loans (i) approximately 34.33% of the Group II Loans are secured by real
property improved by individual condominium units, planned unit developments (attached and detached),
townhouses/rowhouses or manufactured homes, (ii) approximately 61.96% of the Group II Loans are secured by
real property with a single family residence erected thereon and (iii) approximately 3.72% of the Group II
Loans are secured by real property with a two-to-four family residence;
(xxvi) As of the Cut-off Date, the Credit Limits on the Group II Loans range between approximately $9,195 and
$500,000 with an average of $64,159. As of the Cut-off Date, no Group II Loan had a principal balance in
excess of $500,000 and the weighted average Credit Limit Utilization Rate, based on the Credit Limits of the
Group II Loans is equal to approximately 90.62%;
(xxvii) 99.28% of the Group II Loans are secured by second liens and the remainder are secured by first liens;
(xxviii) Each Subservicer meets all applicable requirements under the Servicing Agreement, is properly
qualified to service the Group II Loans and has been servicing the Group II Loans prior to the Cut-off Date
in accordance with the terms of the respective Subservicing Agreement;
(xxix) For each Group II Loan, hazard insurance and flood insurance has been obtained which meets all
applicable requirements of Section 3.04 of the Servicing Agreement or the Master Servicer will obtain blanket
coverage in respect thereof as contemplated in the Servicing Agreement;
(xxx) Other than with respect to a payment default, 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 Group II Loan;
(xxxi) No instrument of release or waiver has been executed in connection with the Group II Loans, and no
Mortgagor has been released, in whole or in part from its obligations in connection with a Group II Loan;
(xxxii) With respect to each Group II Loan that is a second lien, either (i) no consent for the Group II Loan
was required by the holder of the related prior lien or (ii) such consent has been obtained and is contained
in the Mortgage File;
(xxxiii) The Mortgage contains a customary provision for the acceleration of the payment of the unpaid
principal balance of the Group II Loan in the event the related Mortgaged Property is sold without the prior
consent of the mortgagee thereunder;
(xxxiv) Three of the Loan Agreements of the Group II Loans are missing from the Mortgage File;
(xxxv) With respect to each Group II Loan, the ratio, expressed as a percentage, of (A) the sum of (i) the
Cut-off Date Principal Balance of such Group II Loan and (ii) any outstanding principal balance, as of the
Cut-off Date, of all other mortgage loans, if any, secured by senior or subordinate liens on the related
Mortgaged Property, to (B) the Appraised Value, or, to the extent permitted by the Program Guide, the Stated
Value of such Mortgaged Property, was not in excess of 100% (except due to rounding);
(xxxvi) Approximately 32.9% of the Group II Loans are balloon loans;
(xxxvii) None of the proceeds of the Group II Loans were used to finance the purchase of single premium
credit insurance policies and none of the Group II Loans contain prepayment penalties that extend beyond five
years after the date of origination;
(xxxviii) None of the Group II Loans are secured by a leasehold interest;
(xxxix) None of the Group II Loans are loans that, under applicable state or local law in effect at the time
of origination of such loan, are referred to as (1) "high cost" or "covered" loans or (2) any other similar
designation if the law imposes greater restrictions or additional legal liability for residential mortgage
loans with high interest rates, points and/or fees;
(xl) With respect to Group II Loans originated more than 12 months prior to the Cut-off Date (A) none of
the obligors under such Group II Loans were the subject of a bankruptcy proceeding and (B) no such Group II
Loan has been 30 or more days delinquent more than once within 12 months of the Cut-off Date;
(xli) All of the Group II Loans have been underwritten in substantial compliance with the criteria set forth
in the Program Guide;
(xlii) No Group II Loan is a High Cost Loan or Covered Loan, as applicable (as such terms are defined in the
then current Standard & Poor's LEVELS(R)Glossary which is now Version 5.6 Revised, Appendix E (attached hereto
as Exhibit 3)); provided that no representation and warranty is made in this clause 3.1(c)(xlii) with respect
to 0.08% of the Group II Loans (by outstanding principal balance as of the Cut-off Date) secured by property
located in the State of Kansas, and with respect to 0.03% of the Group II Loans (by outstanding principal
balance as of the Cut-off Date) secured by property located in the State of West Virginia;
(xliii) No Group II Loan originated on or after October 1, 2002 through March 6, 2003 is governed by the
Georgia Fair Lending Act; and
(xliv) None of the Group II Loans were subject to the Home Ownership and Equity Protection Act of 1994.
(d) 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 Home Equity Loan, the Seller shall, within 45
days of its discovery or its receipt of notice of such breach, either (i) cure such breach in all material
respects or (ii) to the extent that such breach is with respect to a Home Equity Loan or a Related Document,
either (A) repurchase such Home Equity Loan from the Issuer at the Repurchase Price, or (B) substitute one or
more Eligible Substitute Loans for such Home Equity Loan, in each case in the manner and subject to the
conditions and limitations set forth below; provided that the Seller shall have the option to substitute an
Eligible Substitute Loan or Loans for a Group I Loan only if such substitution occurs within two years
following the Closing Date.
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) or (c) above with respect to any Home Equity 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 Home Equity 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
of its discovery or its receipt of notice of such breach, or, if such breach would cause a Group I Loan to be
other than a "qualified mortgage" as defined in Section 860G(a)(3) of the Code, within 90 days after the
breach was discovered, either (i) cure such breach in all material respects or (ii) to the extent that such
breach is with respect to a Home Equity Loan or a Related Document, either (A) repurchase such Home Equity
Loan from the Issuer at the Repurchase Price, or (B) substitute one or more Eligible Substitute Loans for
such Home Equity Loan, in each case in the manner and subject to the conditions and limitations set forth
below; provided that the Seller shall have the option to substitute an Eligible Substitute Loan or Loans for
a Group I Loan only if such substitution occurs within two years following the Closing Date. If the breach
of representation and warranty that gave rise to the obligation to repurchase or substitute a Home Equity
Loan pursuant to this Section 3.1 was the representation and warranty set forth in clauses (b)(viii) or
(c)(x) of this Section 3.1, then the Seller shall pay to the Trust, concurrently with and in addition to the
remedies provided in the preceding sentence, an amount equal to any liability, penalty or expense that was
actually incurred and paid out of or on behalf of the Trust, and that directly resulted from such breach, or
if incurred and paid by the Trust thereafter, concurrently with such payment. The Repurchase Price plus any
amount described in the preceding sentence for any such Home Equity 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.
In the event that the Seller elects to substitute an Eligible Substitute Loan or Loans for a
Deleted Loan pursuant to this Section 3.1(d), the Seller shall deliver to the Custodian on behalf of the
Issuer, with respect to such Eligible Substitute Loan or Loans, the original Mortgage Note (or, in the case
of a Home Equity Loan as to which the original Mortgage Note has been permanently lost or destroyed and has
not been replaced, a Lost Note Affidavit, together with a copy of such 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
Trust Estate 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 Minimum Monthly
Payment for such month in respect of the Deleted Loan has been received by the Trust. For the month of
substitution, distributions to the Payment 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 Home Equity 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 Group I Loan Schedule or
Group II Loan Schedule, as the case may be, to the Owner Trustee. Upon such substitution, the Eligible
Substitute Loan or Loans shall be subject to the terms of this 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 (xiv), (xvi),
(xvii), (xxvi), (xxvii), (xxviii), (xxx)(B) and (xxxi) thereof), if such Deleted Loan is a Group I Loan, or
Section 3.1(c) (other than clauses (xiii), (xxiv)(B), (xxv)(B), (xxvi), (xxvii), (xxxiv) and (xxxvi)
thereof), if such Deleted Loan is a Group II 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. The
Seller shall give notice in writing to the Indenture Trustee and the Credit Enhancer of such event, which
notice shall be accompanied by an Officers' Certificate as to the calculation of such shortfall and by an
Opinion of Counsel to the effect that such substitution will not cause (a) any federal tax to be imposed on
the Issuer, including without limitation in the case of a Group I Loan, any federal tax imposed on
"prohibited transactions" under Section 860F(a)(1) of the Code or on "contributions after the startup date"
under Section 860G(d)(1) of the Code or (b) any portion of REMIC I or REMIC II to fail to qualify as a REMIC
at any time that any Term Note is outstanding.
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 Home Equity 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, representation or
warranty as shall be necessary to vest in the Seller or its designee such Home Equity Loan released pursuant
hereto and thereafter such Home Equity 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 Home Equity Loan as to which such a breach has occurred and is continuing,
shall 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.
The Seller hereby represents and warrants to the Purchaser that, with respect to each Group I
Loan, the REMIC's tax basis in each Group I Loan as of the Closing Date is equal to or greater than 100% of
the Loan Balance thereof.
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
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 Home Equity Loan, or any interest therein, except with respect to any Excluded Amount; the
Seller will notify the Issuer, as assignee of the Purchaser, of the existence of any Lien (other than as
provided above) on any Home Equity Loan immediately upon discovery thereof; and the Seller will defend the
right, title and interest of the Issuer, as assignee of the Purchaser, in, to and under the Home Equity 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 Home Equity Loans pursuant to the terms and conditions
of the Servicing Agreement and will service the Home Equity Loans directly or through one or more
sub-servicers in accordance therewith.
ARTICLE VI
INDEMNIFICATION BY THE SELLER WITH RESPECT TO THE HOME EQUITY LOANS
Section 6.1 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 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 upon the termination of the 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 , WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF (OTHER THAN SECTIONS 5-1401
AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
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 Equity Loan Trust 2006-HSA2
or, such other address as may hereafter be furnished to the Purchaser in writing by the Seller.
(ii) if to the Purchaser:
Residential Funding Mortgage Securities II, Inc.
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Home Equity Loan Trust 2006-HSA2
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.
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 Home Equity Loans, rather than a loan by the Purchaser to the Seller secured
by the Home Equity 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 Home Equity Loans. The
Purchaser will have the right to review the Home Equity Loans and the Related Documents to determine the
characteristics of the Home Equity Loans which will affect the Federal income tax consequences of owning the
Home Equity 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 Home Equity Loans for the purpose of contributing them to the Issuer. Pursuant to
the terms of the Trust Agreement, the Issuer will issue and transfer to or at the direction of the Purchaser,
the Certificates and pursuant to the terms of the Indenture, the Issuer will issue and transfer to or at the
direction of the Purchaser, the Notes secured by the Home Equity Loans. As an inducement to the Purchaser to
purchase the Home Equity Loans, the Seller acknowledges and consents to (i) the assignment by the Purchaser
to the Issuer of all of the Purchaser's rights against the Seller pursuant to this Agreement insofar as such
rights relate to Home Equity Loans transferred to 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 Home Equity Loans hereunder.
Section 8.11 Credit Enhancer as Third-Party Beneficiary.
The Credit Enhancer is an express third-party beneficiary under this Agreement.
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their names to be signed to this
Home Equity Loan Purchase Agreement by their respective officers thereunto duly authorized as of the day and
year first above written.
RESIDENTIAL FUNDING MORTGAGE SECURITIES II, INC., as Purchaser
By: /s/ Xxxxxxx Xxxxxxxx
Name: Xxxxxxx Xxxxxxxx
Title: Vice President
RESIDENTIAL FUNDING CORPORATION,
as Seller
By: /s/ Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: Associate
EXHIBIT 1
GROUP I LOAN SCHEDULE
TO BE PROVIDED UPON REQUEST
EXHIBIT 2
GROUP II LOAN SCHEDULE
TO BE PROVIDED UPON REQUEST
EXHIBIT 3
REVISED July 11, 0000
XXXXXXXX X - STANDARD & POOR'S PREDATORY LENDING CATEGORIES
Standard & Poor's has categorized loans governed by anti-predatory lending laws in the Jurisdictions listed
below into three categories based upon a combination of factors that include (a) the risk exposure associated
with the assignee liability and (b) the tests and thresholds set forth in those laws. Note that certain loans
classified by the relevant statute as Covered are included in Standard & Poor's High Cost Loan Category
because they included thresholds and tests that are typical of what is generally considered High Cost by the
industry.
STANDARD & POOR'S HIGH COST LOAN CATEGORIZATION
------------------------------------------------------------------------------------------------
---------------------------------------- --------------------------
State/Jurisdiction Name of Anti-Predatory Lending Category under
Applicable
Anti-Predatory Lending
Law/Effective Date Law
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
Arkansas Arkansas Home Loan Protection Act, High Cost Home Loan
Ark. Code Xxx.ss.ss.00-00-000 et seq.
Effective July 16, 2003
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
Cleveland Heights, OH Ordinance No. 72-2003 (PSH), Mun. Code Covered Loan
ss.ss.757.01 et seq.
Effective June 2, 2003
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
Colorado Consumer Equity Protection, Colo. Covered Loan
Stat. Xxx.ss.ss.5-3.5-101 et seq.
Effective for covered loans offered or
entered into on or after January 1,
2003. Other provisions of the Act took
effect on June 7, 2002
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
Connecticut Connecticut Abusive Home Loan Lending High Cost Home Loan
Practices Act, Conn. Gen. Xxxx.xx.xx.
36a-746 et seq.
Effective October 1, 2001
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
District of Columbia Home Loan Protection Act, D.C. Xxxxxx.xx. Covered Loan
26-1151.01 et seq.
Effective for loans closed on or after
January 28, 2003
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
Florida Fair Lending Act, Fla. Stat. Xxx.xx.xx. High Cost Home Loan
494.0078 et seq.
Effective October 2, 2002
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
Georgia (Oct. 1, 0000 - Xxxxxxx Xxxx Xxxxxxx Xxx, Xx. Code High Cost Home Loan
Mar. 6, 2003) Xxx.ss.ss.7-6A-1 et seq.
Effective October 1, 2002 - March 6,
2003
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
Georgia as amended (Mar. Georgia Fair Lending Act, Ga. Code High Cost Home Loan
7, 2003 - current) Xxx.ss.ss.7-6A-1 et seq.
Effective for loans closed on or after
March 7, 2003
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
HOEPA Section 32 Home Ownership and Equity Protection High Cost Loan
Act of 1994, 15 U.S.C.ss.1639, 12
C.F.R.ss.ss.226.32 and 226.34
Effective October 1, 1995, amendments
October 1, 2002
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
Illinois High Risk Home Loan Act, Ill. Comp. High Risk Home Loan
Stat. tit. 815,ss.ss.137/5 et seq.
Effective January 1, 2004 (prior to
this date, regulations under
Residential Mortgage License Act
effective from May 14, 2001)
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
Kansas Consumer Credit Code, Kan. Stat. Xxx. High Loan to Value
ss.ss.16a-1-101 et seq. Consumer Loan (xx.xx.
16a-3-207) and;
Sections 16a-1-301 and 16a-3-207
became effective April 14, 1999;
Section 16a-3-308a became effective
July 1, 1999
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
High APR Consumer Loan
(id.ss.16a-3-308a)
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
Kentucky 2003 KY H.B. 287 - High Cost Home Loan High Cost Home Loan
Act, Ky. Rev. Stat.ss.ss.360.100 et seq.
Effective June 24, 2003
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
Maine Truth in Lending, Me. Rev. Stat. tit. High Rate High Fee
9-A,ss.ss.8-101 et seq. Mortgage
Effective September 29, 1995 and as
amended from time to time
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
Massachusetts Part 40 and Part 32, 209 X.X.X.xx.xx. High Cost Home Loan
32.00 et seq. and 209 C.M.R.ss.ss.40.01
et seq.
Effective March 22, 2001 and amended
from time to time
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
Nevada Assembly Xxxx No. 284, Nev. Rev. Stat. Home Loan
ss.ss.598D.010 et seq.
Effective October 1, 2003
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
New Jersey New Jersey Home Ownership Security Act High Cost Home Loan
of 2002, N.J. Rev. Stat.ss.ss.46:10B-22
et seq.
Effective for loans closed on or after
November 27, 2003
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
New Mexico Home Loan Protection Act, N.M. Rev. High Cost Home Loan
Stat.ss.ss.58-21A-1 et seq.
Effective as of January 1, 2004;
Revised as of February 26, 2004
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
New York N.Y. Banking Law Article 6-l High Cost Home Loan
Effective for applications made on or
after April 1, 2003
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
North Carolina Restrictions and Limitations on High High Cost Home Loan
Cost Home Loans, N.C. Gen. Xxxx.xx.xx.
24-1.1E et seq.
Effective July 1, 2000; amended
October 1, 2003 (adding open-end lines
of credit)
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
Ohio H.B. 386 (codified in various sections Covered Loan
of the Ohio Code), Ohio Rev. Code Xxx.
ss.ss.1349.25 et seq.
Effective May 24, 2002
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
Oklahoma Consumer Credit Code (codified in Subsection 10 Mortgage
various sections of Title 14A)
Effective July 1, 2000; amended
effective January 1, 2004
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
South Carolina South Carolina High Cost and Consumer High Cost Home Loan
Home Loans Act, S.C. Code Xxx.xx.xx.
37-23-10 et seq.
Effective for loans taken on or after
January 1, 2004
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
West Virginia West Virginia Residential Mortgage West Virginia Mortgage
Lender, Broker and Servicer Act, W. Loan Act Loan
Va. Code Xxx.ss.ss.31-17-1 et seq.
Effective June 5, 2002
---------------------------- ---------------------------------------- --------------------------
STANDARD & POOR'S COVERED LOAN CATEGORIZATION
---------------------------- ---------------------------------------- --------------------------
State/Jurisdiction Name of Anti-Predatory Lending Category under
Applicable
Anti-Predatory Lending
Law/Effective Date Law
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
Georgia (Oct. 1, 2002 - Georgia Fair Lending Act, Ga. Code Covered Loan
Mar. 6, 2003) Xxx.ss.ss.7-6A-1 et seq.
Effective October 1, 2002 - March 6,
2003
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
New Jersey New Jersey Home Ownership Security Act Covered Home Loan
of 2002, N.J. Rev. Stat.ss.ss.46:10B-22
et seq.
Effective November 27, 2003 - July 5,
2004
---------------------------- ---------------------------------------- --------------------------
STANDARD & POOR'S HOME LOAN CATEGORIZATION
------------------------------------------------------------------------------------------------
---------------------------- ---------------------------------------- --------------------------
State/Jurisdiction Name of Anti-Predatory Lending Category under
Applicable
Anti-Predatory Lending
Law/Effective Date Law
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
Georgia (Oct. 1, 2002 - Georgia Fair Lending Act, Ga. Code Home Loan
Mar. 6, 2003) Xxx.ss.ss.7-6A-1 et seq.
Effective October 1, 2002 - March 6,
2003
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
New Jersey New Jersey Home Ownership Security Act Home Loan
of 2002, N.J. Rev. Stat.ss.ss.46:10B-22
et seq.
Effective for loans closed on or after
November 27, 2003
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
New Mexico Home Loan Protection Act, N.M. Rev. Home Loan
Stat.ss.ss.58-21A-1 et seq.
Effective as of January 1, 2004;
Revised as of February 26, 2004
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
North Carolina Restrictions and Limitations on High Consumer Home Loan
Cost Home Loans, N.C. Gen. Xxxx.xx.xx.
24-1.1E et seq.
Effective July 1, 2000; amended
October 1, 2003 (adding open-end lines
of credit)
---------------------------- ---------------------------------------- --------------------------
---------------------------- ---------------------------------------- --------------------------
South Carolina South Carolina High Cost and Consumer Consumer Home Loan
Home Loans Act, S.C. Code Xxx.xx.xx.
37-23-10 et seq.
Effective for loans taken on or after
January 1, 2004
---------------------------- ---------------------------------------- --------------------------