MORTGAGE LOAN PURCHASE AGREEMENT
between
METROPOLITAN MORTGAGE & SECURITIES CO., INC.,
as Seller,
and
METROPOLITAN ASSET FUNDING, INC.,
as Purchaser
Dated as of __________ 1, 1996
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS................................................................. 1
ARTICLE II
AGREEMENT TO PURCHASE; PURCHASE PRICE;
CONVEYANCE OF MORTGAGE LOANS
Section 2.01. Agreement to Purchase; Purchase Price......................... 9
Section 2.02. Underwriting Review........................................... 10
Section 2.03. Obligations of Seller Upon Sale; Characterization............. 10
Section 2.04. Delivery of Mortgage Loan Documents........................... 11
Section 2.05. Survival of Representations and Warranties; Repurchase
Obligations of the Seller..................................... 11
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER..................... 12
ARTICLE IV
SELLER COVENANTS AND CLOSING CONDITIONS
Section 4.01. Covenants of the Seller....................................... 23
Section 4.02. Closing Conditions............................................ 24
ARTICLE V
SERVICING................................................................... 28
ARTICLE VI
INDEMNIFICATION BY THE SELLER WITH RESPECT
TO THE MORTGAGE LOANS
Section 6.01. Indemnification with Respect to the Mortgage Loans............ 28
Section 6.02. Limitation on Liability....................................... 28
i
ARTICLE VII
ISSUANCE OF THE CERTIFICATES
Section 7.01. Information to Be Provided by the Seller in Connection with
the Issuance of the Certificates.............................. 29
ARTICLE VIII
NON-SOLICITATION............................................................ 29
ARTICLE IX
MISCELLANEOUS
Section 9.01. Notices....................................................... 30
Section 9.02. Severability Clause........................................... 30
Section 9.03. GOVERNING LAW................................................. 30
Section 9.04. Further Agreements............................................ 31
Section 9.05. Successors and Assigns; Assignment of Mortgage Loan Purchase
Agreement..................................................... 31
Section 9.06. Waivers; Other Agreements..................................... 31
Section 9.07. Exhibits...................................................... 31
Section 9.08. General Interpretive Principles............................... 31
Section 9.09. Counterparts.................................................. 32
EXHIBIT A--Mortgage Loan Schedule...........................................A-1
Schedule 1--Delinquent Tax Schedule............................................
Schedule 2--Seller Materials...................................................
Schedule 3--High LTV Mortgage Loans............................................
ii
MORTGAGE LOAN PURCHASE AGREEMENT
THIS MORTGAGE LOAN PURCHASE AGREEMENT (the "Agreement"), dated as of
__________ 1, 1996, by and between Metropolitan Asset Funding, Inc., a Delaware
corporation, having its principal office at 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxxx 00000 (the "Purchaser") and Metropolitan Mortgage & Securities Co.,
Inc., a Washington corporation, having its principal office at 000 Xxxx Xxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000 (the "Seller").
WITNESSETH THAT:
In consideration of the mutual agreements herein contained, and of other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
PRELIMINARY STATEMENT
The Seller has agreed to sell, and the Purchaser has agreed to purchase,
the Mortgage Loans identified on the Mortgage Loan Schedule attached hereto as
Exhibit A and having an aggregate Scheduled Principal Balance as of the opening
of business on the Cut-off Date (defined below), of $__________ (the "Seller
Cut-off Date Aggregate Principal Balance").
ARTICLE I
DEFINITIONS
Capitalized and defined terms contained in this Mortgage Loan Purchase
Agreement without definitions shall have the respective meanings assigned
thereto in the Pooling and Servicing Agreement. Otherwise, whenever used in
this Agreement, the following words and phrases shall have the following
meanings:
"AGREEMENT" shall mean this Mortgage Loan Purchase Agreement.
"DELETED LOAN" shall mean a Mortgage Loan replaced or to be replaced by a
Replacement Loan.
"INTERESTED PERSON" shall have the meaning as defined in Section 2.04
hereof.
"MORTGAGE LOAN SCHEDULE" shall mean, with respect to this Agreement, the
list of Mortgage Loans delivered in connection with this Agreement, attached
hereto as Exhibit A. Such list shall set forth the following information with
respect to each such Mortgage Loan:
(a) the loan number;
(b) the Mortgagor's name;
(c) the street address of the Mortgaged Property, including the state
and zip code;
(d) the Mortgage Interest Rate;
(e) the Calculated Maturity Date;
(f) the Original Term;
(g) the original principal balance;
(h) the Remaining Term;
(i) the Cut-off Date Principal Balance of the Mortgage Loan;
(j) the first date on which a Monthly Payment was due under the
Mortgage Note;
(k) the Loan-to-Value Ratio as of the Cut-off Date;
(l) a code indicating the occupancy status;
(m) the property type of the related Mortgaged Property;
(n) the Appraised Value of the Mortgaged Property;
(o) the Monthly Payment;
(p) indication as to whether such Mortgage Loan is a Land Sale
Contract;
(q) indication as to whether such Mortgage Loan is a Balloon Loan;
and
(r) indication as to whether such Mortgage Loan is a Commercial
Mortgage Loan or a Single Family Mortgage Loan.
"OFFICERS' CERTIFICATE" shall mean a certificate signed by the President or
a Vice President and by the Secretary or one of the Assistant Secretaries of the
Seller and delivered to the Purchaser.
"OPINION OF COUNSEL" shall mean a written opinion of counsel, who may be
counsel for the Seller, including in-house counsel, acceptable to the Trustee;
provided, however, that with respect to the interpretation or application of the
REMIC Provisions, such counsel must (a) in
2
fact be independent of the Seller, (b) not have any direct financial interest in
the Seller or in any affiliate of the Seller, and (c) not be connected with the
Seller as an officer, employee, promoter, underwriter, trustee, partner or
director or person performing similar functions.
"POOLING AND SERVICING AGREEMENT" shall mean the pooling and servicing
agreement, dated as of __________ 1, 1996, among the Seller, Old Standard Life
Insurance Company, Summit Securities, Inc. and Western United Life Assurance
Company, as sellers, the Purchaser, the Master Servicer and the Trustee,
pursuant to which the Certificates are issued.
"PURCHASE PRICE" shall mean $_____________________.
"SELLER/SERVICER INFORMATION" shall have the meaning as defined in Section
4.01 hereof.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SELLER CUT-OFF DATE AGGREGATE PRINCIPAL BALANCE" shall mean $__________.
"SELLER MATERIALS" shall mean the information, certificates, statements,
reports and computer tapes, if any, listed on Schedule 2 hereto.
"UNDERWRITING AGREEMENT" shall mean the underwriting agreement, dated
__________, 1996, among the Purchaser and the Underwriters.
ARTICLE II
AGREEMENT TO PURCHASE; PURCHASE PRICE;
CONVEYANCE OF MORTGAGE LOANS
Section 2.01. AGREEMENT TO PURCHASE; PURCHASE PRICE.
(a) The Seller concurrently with the execution and delivery of this
Agreement, does hereby sell, transfer, assign, set over and otherwise
convey to the Purchaser, without recourse, all its right, title and
interest of the Seller in and to the Mortgage Loans, the Mortgage Notes,
including all interest and principal received on or with respect to the
Mortgage Loans after the Cut-off Date and the documents and instruments
contained in the Files.
(b) In consideration of the sale of the Mortgage Loans from the
Seller to the Purchaser, the Purchaser agrees (i) to pay to the Seller on
the Closing Date by transfer of immediately available funds an amount (the
"Purchase Price") equal to the sum of (A) (1) a percentage multiplied by
(2) the Seller Cut-off Date Aggregate Principal Balance of the Mortgage
Loans and (B) all accrued and unpaid interest with respect to such Mortgage
Loans from the Cut-off Date up to and including the day immediately prior
to the applicable Closing Date and (ii) to transfer to the Seller the
portion of
3
the Class B-3, Class B-4 and Class R Certificates relating to the Mortgage
Loans sold hereunder. [The Purchase Price payable to the Seller on the
Closing Date shall be reduced by all expenses incurred by the Purchaser in
connection with the issuance of the Certificates, including, without
limitation, the fees and expenses of Purchaser's own counsel, the
Securities and Exchange Commission registration statement fees, printing
and shipping fees incurred in connection with the Prospectus, blue sky
registration fees and expenses, fees of the Rating Agencies, accountant's
fees and expenses and the fees and expenses of the Trustee and other
out-of-pocket costs.]
Section 2.02. OBLIGATIONS OF SELLER UPON SALE; CHARACTERIZATION. In
connection with the transfer pursuant to Section 2.01 hereof, the Seller further
agrees, at its own expense, on or prior to the Closing Date (a) to indicate in
its books and records that the Mortgage Loans have been sold to the Purchaser
pursuant to this Agreement and (b) to deliver to the Purchaser a computer file
containing the Mortgage Loan Schedule.
The Seller hereby acknowledges and agrees that the Trustee, at the Seller's
expense, shall cause to be recorded in the appropriate public office for real
property records for each Mortgage Loan, either the Assignment of Mortgage, or
the Assignment of Land Sale Contract or Warranty Deed, as applicable, except
that the Trustee need not cause to be recorded any such Assignment of Mortgage
which relates to a Mortgage Loan in a jurisdiction under the laws of which, on
the basis of an Opinion of Counsel delivered by the Seller, at its expense, to
the Trustee which is satisfactory to the Trustee, to the effect that recordation
of such assignment is not necessary to protect the Trustee and the
Certificateholders' interest in the related Mortgage Loan.
The parties hereto intend that the transfer of Mortgage Loans set forth
herein be for all purposes 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 described above. It is, further, not the intent of the parties hereto
that such transfer be deemed a pledge by the Seller of the rights, titles and
interests in and to such Mortgage Loans. However, in the event the transaction
set forth herein is deemed not to be a sale, the Seller hereby grants to the
Purchaser a first priority security interest in all of the Seller's right, title
and interest in, to and under the Mortgage Loans and other property described
above, whether now existing or hereafter created, to secure all of the Seller's
obligations hereunder; and this Agreement shall constitute a security agreement
under applicable law.
Section 2.03. DELIVERY OF MORTGAGE LOAN DOCUMENTS. No later than five (5)
days prior to the Closing Date, the Seller shall, on behalf and at the direction
of the Purchaser, use its best efforts to deliver the documents listed in the
definition of File to the Trustee for each Mortgage Loan. If the Seller cannot
deliver any required original or certified copies of recorded documents
constituting the File on or before five (5) days prior to the Closing Date, the
Seller shall, promptly upon receipt thereof and in any case not later than the
date specified in the Pooling and Servicing Agreement, deliver such original or
certified recorded documents to the Trustee. Notwithstanding anything to the
contrary contained in this Section 2.03, in those instances where the public
recording office retains the original Mortgage, any assignment
4
thereof, Land Sale Contract, Memorandum of Land Sale Contract or any assignment
thereof after it has been recorded, the Seller shall be deemed to have satisfied
its obligations hereunder upon delivery to the Trustee of a copy of the recorded
original of such document, accompanied by an Officer's Certificate stating that
such copy is a true and complete copy of such document.
In the event that the Seller does not deliver the documents constituting
the File as provided in this Section 2.03, the related Mortgage Loan shall be
repurchased at the Repurchase Price for such Mortgage Loan or substituted by the
Seller, in either case at the time and in the manner provided in the Pooling and
Servicing Agreement.
Section 2.04. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; REPURCHASE
OBLIGATIONS OF THE SELLER. With respect to any particular Mortgage Loan, it is
understood and agreed that the representations and warranties set forth in
Article III hereof are continuing representations and warranties and shall inure
to the benefit of the Purchaser, the Trustee and each Certificateholder (each,
an "Interested Person"). The Seller hereby agrees to restate the
representations and warranties set forth in Article III hereof with respect to
the Mortgage Loans in the Pooling and Servicing Agreement to the Trustee, as of
the Closing Date, or if so specified therein, as of the Cut-off Date and to be
bound by the provisions in the Pooling and Servicing Agreement relating to the
breach of any such representation and warranty. Within sixty (60) days of the
Seller's discovery, or its receipt of written notice from any Interested Person
or any other Person specified in Section 2.03 of the Pooling and Servicing
Agreement, of the breach of any such representation and warranty set forth in
Section 3.01 hereof which materially and adversely affects the value of a
Mortgage Loan or Mortgage Loans or the interest of any Interested Person in any
Mortgage Loan or Mortgage Loans, it shall, subject to the provisions of the next
following paragraphs, cure such breach in all material respects or shall either
(a) remove such Deleted Loan and substitute in its place a Replacement Loan or
Loans and pay to the Purchaser or the Trustee (as assignee of the Purchaser) the
amount, if any, by which the unpaid aggregate principal balance of the
Replacement Loan or Loans is less than the unpaid principal balance of the
Deleted Loan or (b) repurchase such Deleted Loan at the Repurchase Price. Any
substitution or repurchase of a Mortgage Loan shall be accomplished in the
manner provided in the Pooling and Servicing Agreement.
No substitution of a Deleted Loan with a Replacement Loan or Loans shall
occur at any time after the second anniversary of the Closing Date. Any
repurchase or substitution shall not be effected prior to the delivery to the
Trustee by the Seller of an Opinion of Counsel to the effect that such purchase
or substitution will not cause (i) any federal tax to be imposed on the Trust
Fund, including without limitation, any Federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the start-up day" under Section 860G(d)(1) of the Code or (ii) any portion of
the Trust Fund to fail to qualify as a REMIC at any time that any Certificate is
outstanding. In the event that such opinion indicates that a repurchase or
substitution will result in the imposition of a prohibited transaction tax, give
rise to net taxable income or be deemed a contribution to the REMIC after the
"start-up day," the Seller shall not be required to repurchase or replace any
such Mortgage Loan unless and until the Purchaser or its designee has determined
there is an actual or imminent default with
5
respect thereto or that such defect or breach adversely affects the
enforceability of such Mortgage Loan.
In the event that a Deleted Loan is replaced by a Replacement Loan or
Loans, the Seller shall amend the applicable Mortgage Loan Schedule in order to
reflect the removal of such Deleted Loan and the substitution of the Replacement
Loan or Loans and the Seller shall deliver such amended Mortgage Loan Schedule
to the Trustee and the Purchaser. Upon such substitution, the Replacement Loan
or Loans shall be subject to the terms of this Agreement in all respects, and
the Seller shall be deemed to have made with respect to such Replacement Loan or
Loans, as of the date of substitution the representations and warranties set
forth in Section 3.01(b) hereof.
It is understood and agreed that the obligation under this Agreement of the
Seller to cure, repurchase or substitute any Mortgage Loan as to which a breach
has occurred and is continuing shall constitute the sole and exclusive remedy of
any Interested Person against the Seller.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER
The Seller, as seller of the Mortgage Loans to the Purchaser, hereby makes
the following representations and warranties, as of the date hereof:
(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
Washington and is duly authorized and qualified to transact any and
all business contemplated by this Agreement in any State in which a
Mortgaged Property is located or is otherwise not required under
applicable law to effect such qualification and, in any event, is in
compliance with the doing business laws of any such State, to the
extent necessary to ensure the enforceability of each Mortgage Loan;
(ii) the Seller has the full corporate power and authority to
execute, deliver and perform, and to enter into and consummate the
transactions contemplated by this Agreement and has duly authorized by
all necessary corporate action on the part of the Seller the
execution, delivery and performance of this Agreement; and this
Agreement, assuming the due authorization, execution and delivery
thereof by the Purchaser, constitutes a legal, valid and binding
obligation of the Seller, enforceable against the Seller in accordance
with its terms, except that (A) the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally and (B) the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and such
6
remedies may be subject to the discretion of the court before which
any proceeding therefor may be brought;
(iii) the execution and delivery of this Agreement by the
Seller, the consummation of any other of the transactions herein
contemplated, and the fulfillment of or compliance with the terms
hereof do not (A) result in a material breach of any term or provision
of the charter or bylaws of the Seller or (B) materially conflict
with, result in a material breach, violation or acceleration of, or
result in a material default under, the terms of any other material
agreement or instrument to which the Seller is a party or by which it
may be bound, or a material violation of any statute, order or
regulation applicable to the Seller of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
the Seller; and the Seller is not a party to, bound by, or in breach
or violation of any material indenture or other material agreement or
instrument, or subject to or in violation of any statute, order or
regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it, which materially and
adversely affects, or, to the Seller's knowledge would in the future
materially and adversely affect, (1) the ability of the Seller to
perform its obligations under this Agreement or (2) the business,
operations, financial condition, properties or assets of the Seller
taken as a whole;
(iv) the Seller is subject to supervision and examination by such
state or federal authority as may be applicable and is in good
standing and qualified to do business where so required by applicable
law;
(v) no litigation is pending or, to the best of the Seller's
knowledge, threatened, against the Seller that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or the performance of any of the Seller's obligations
hereunder in accordance with the terms hereof;
(vi) the Seller Materials delivered by or on behalf of the Seller
to the Purchaser, any affiliate of the Purchaser or the Trustee in
connection with the transactions contemplated by this Agreement and
the Pooling and Servicing Agreement do not contain, as of the date
such information, certificate, statement, report or computer tape is
delivered, any untrue statement of a material fact or omit to state a
material fact necessary to make the information, certificate,
statement, report or computer tape not misleading; and
(vii) no consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by the Seller of, or compliance by the Seller
with, this Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval, authorization
or order is required, the Seller has obtained the same.
7
(b) As to the Mortgage Loans as of the Cut-off Date (unless another
date is specified):
(i) The information set forth on the Mortgage Loan Schedule with
respect to each Mortgage Loan is true and correct in all material
respects as of the Closing Date;
(ii) No more than ___% of the Single Family Mortgage Loans, ___%
of the Commercial Mortgage Loans and ____% of all Mortgage Loans,
based on the Cut-off Date Pool Principal Balance, are located in any
one zip code area;
(iii) No more than ___% of the Single Family Mortgage Loans,
___% of the Commercial Mortgage Loans and ____% of all Mortgaged
Properties, based on the Cut-off Date Pool Principal Balance, are
located in the State of ______________________;
(iv) No Commercial Mortgage Loan and no more than ____% of the
Single Family Mortgage Loans, based on the Cut-off Date Pool Principal
Balance, are secured by or subject to condominium units;
(v) At least ____% of the Single Family Mortgage Loans, based on
the Cut-off Date Pool Principal Balance, are secured by a first lien
on a parcel of real property improved by a one- to four-family
residence; no more than ____% of the Single Family Mortgage Loans,
based on the Cut-off Date Pool Principal Balance, are Land Sale
Contracts; and no Commercial Mortgage Loans are Land Sale Contracts;
(vi) No Single Family Mortgage Loan or Commercial Mortgage Loan
at origination or at the date of each modification had a principal
balance in excess of $__________ and $__________, respectively; the
average Cut-off Date Principal Balance of the Single Family Mortgage
Loans and the Commercial Mortgage Loans was $__________ and
$__________, respectively;
(vii) At least ____% of the Single Family Mortgage Loans, by
Cut-off Date Pool Principal Balance, are secured by or subject to
owner-occupied primary residences; no more than ____% and _____% of
the Single Family Mortgage Loans and the Commercial Mortgage Loans,
respectively, by Cut-off Date Pool Principal Balance, are non-owner
occupied;
(viii) Each Mortgage Loan will have a first payment due date
on or before the Cut-off Date. Approximately ____% and ____% of the
Single Family Mortgage Loans and Commercial Mortgage Loans,
respectively, based on the Cut-off Date Pool Principal Balance, are
Balloon Loans;
8
(ix) The Mortgage Interest Rates borne by the Mortgage Loans as
of the Cut-off Date range from ____% per annum to ____% per annum for
Single Family Mortgage Loans and from ____% per annum to ____% per
annum for Commercial Mortgage Loans, and the weighted average Mortgage
Interest Rate, based on the Cut-off Date Pool Principal Balance, is
____% per annum for Single Family Mortgage Loans and is ____% per
annum for Commercial Mortgage Loans;
(x) No more than ____% and ____% of the Single Family Mortgage
Loans and Commercial Mortgage Loans, respectively, based on the
Cut-off Date Pool Principal Balance, were acquired by the Seller in
bulk purchase from financial institutions, including the Resolution
Trust Corporation; no more than ____% and ____% of the Single Family
Mortgage Loans and Commercial Mortgage Loans, respectively, based on
the Cut-off Date Pool Principal Balance, are loans made by the Seller
to facilitate the sale of real estate owned (reo);
(xi) No Single Family Mortgage Loan or Commercial Mortgage Loan
shall have had an LTV as of the Cut-off Date in excess of ____% and
____%, respectively; the weighted average LTV of the Single Family
Mortgage Loans and the Commercial Mortgage Loans as of the Cut-off
Date, based on the Cut-off Date Pool Principal Balance, is ____% and
____%, respectively;
(xii) No more than ____% and ____% of the Single Family
Mortgage Loans and Commercial Mortgage Loans, respectively, contain
provisions requiring the holder thereof to release a portion of the
Mortgaged Property at the request of the Mortgagor prior to full
payment of amounts due under the related Mortgage Note; no more than
____% and ____% of the Single Family Mortgage Loans and Commercial
Mortgage Loans, respectively, based on the Cut-off Date Pool Principal
Balance, are secured by or subject to leasehold estates;
(xiii) As of the Closing Date, and immediately prior to the
transfer of the Mortgage Loans to the Purchaser, the Seller has good
title to the Mortgage Loans and the Mortgage Notes are subject to no
offsets, defenses or counterclaims;
(xiv) Except as set forth on Schedule 1 hereto, as of the
Closing Date, there are no delinquent tax or assessment liens against
any Mortgaged Property;
(xv) The Mortgage Note relating to each Mortgage Loan (other than
a Land Sale Contract) has been endorsed to the Trustee in a form and
in a manner sufficient to convey to the Trustee all right, title and
interest therein of the Seller in all relevant jurisdictions;
9
(xvi) There are no mechanics' liens or claims for work, labor
or material affecting any Mortgaged Property, except those (A) which
are insured against by a title insurance policy referred to in (xxii)
or (xxiv) below or (B) are subordinate to the Lien of the related
Mortgage, if applicable;
(xvii) Other than normal wear and tear, each Mortgaged
Property has not declined materially in value due to damage or lack of
repair since the Seller's acquisition of the related Mortgage Loan;
(xviii) Each Mortgage is a valid and enforceable first lien on
the related Mortgaged Property subject only to (A) the Lien of
nondelinquent current real property taxes and assessments and
delinquent property taxes and assessments as set forth in Schedule 1
hereto, (B) covenants, conditions and restrictions, rights of way,
easements and other matters of public record as of the date of
recording of such Mortgage, such exceptions appearing of record being
acceptable to mortgage lending institutions generally or specifically
reflected in the Appraisal made in connection with the acquisition by
the Seller of the related Mortgage Loan, and (C) other matters to
which like properties are commonly subject that do not materially
interfere with the benefits of the security intended to be provided by
such Mortgage;
(xix) Each Mortgage Loan at origination and at the date of
each modification complied in all material respects with applicable
state and federal laws, including, without limitation, usury, equal
credit opportunity, real estate settlement procedures,
truth-in-lending and disclosure laws; and consummation of the
transactions contemplated hereby will not involve the violation of any
such laws;
(xx) Neither the Seller nor any prior holder of any Mortgage has
modified the Mortgage in any material respect (except that a Mortgage
Loan may have been modified by a written instrument which is contained
in the File and which has been delivered to the Trustee on or before
the Closing Date); waived, canceled or subordinated such Mortgage in
whole or in part; released the applicable Mortgaged Property in whole
or in part from the lien of such Mortgage (except as set forth in
writing contained in the File); or executed any instrument of release,
cancellation or satisfaction with respect thereto. No more than ____%
of the Mortgage Loans, based on the Cut-off Date Pool Principal
Balance, have been modified by a written instrument which is contained
in the File;
(xxi) With respect to each Land Sale Contract and immediately
prior to the transfer thereof to the Purchaser, the Seller holds the
fee simple interest in the related Mortgaged Property, free and clear
of all liens, claims and encumbrances other than (A) the lien of
nondelinquent current real property taxes and assessments and
delinquent property taxes and assessments as set forth in
10
Schedule 1 hereto, (B) covenants, conditions and restrictions, rights
of way, easements and other matters of public record as of the date of
recording such Land Sale Contract, such exceptions appearing of record
being acceptable to mortgage lending institutions generally or
specifically reflected in the Appraisal made in connection with the
acquisition by the Seller of such Land Sale Contract, (C) the rights
of the buyer of the Mortgaged Property subject to the Land Sale
Contract and (D) other matters to which like properties are commonly
subject that do not materially interfere with the benefits of the
security intended to be provided by such Land Sale Contract;
(xxii) With respect to each Mortgage Loan, other than a Land
Sale Contract, a Title Insurance Policy insuring the first lien
priority of the Mortgage Loan, together with a condominium
endorsement, if applicable, in an amount at least equal to $10,000, or
a commitment binder, commitment to issue the same or preliminary
policy affirmatively insuring ingress and egress and insuring against
encroachments by or upon the Mortgaged Property, was effective on the
date of the Seller's acquisition of such Mortgage Loan, such policy is
valid and remains in full force and effect, and each such policy was
issued by a title insurer qualified to do business in the jurisdiction
where the Mortgaged Property is located, which policy insures either
the Seller or the original holder of the Mortgage and successor owners
of indebtedness secured by the insured Mortgage, as to the first
priority lien of the Mortgage; no claims have been made under such
Title Insurance Policy and no prior holder of the applicable Mortgage,
including the Seller, has done, by act or omission, anything which
would impair the coverage of such mortgage title insurance policy;
(xxiii) Except with respect to any Balloon Loan, each Mortgage
Loan is payable in substantially equal monthly installments of
principal and interest which will be sufficient to fully amortize such
Mortgage Loan within the term thereof, and bears a fixed interest rate
for the term of such Mortgage Loan. Interest accrues on each Mortgage
Loan on an actuarial basis, such that each Monthly Payment contains a
predetermined amount of principal and interest unaffected by whether
such Monthly Payment is made earlier or later than its Due Date;
(xxiv) With respect to each Land Sale Contract, a Title
Insurance Policy insuring the Seller's marketable title to the related
Mortgaged Property, together with a condominium endorsement, if
applicable, in an amount at least equal to the principal balance of
such Land Sale Contract at the time of acquisition by the Seller, or a
commitment binder, commitment to issue the same or preliminary policy
affirmatively insuring ingress and egress and insuring against
encroachments by or upon the Mortgaged Property, was effective on the
date of such acquisition of such Land Sale Contract, such policy is
valid and remains in full force and effect, and each such policy was
issued by a title insurer qualified to do business in the jurisdiction
where the Mortgaged Property is located, which
11
policy insures the Seller and successor owners of the Mortgaged
Property, as to the marketable title of such Mortgaged Property;
no claims have been made under such Title Insurance Policy and no
prior holder of the Mortgaged Property, including the Seller,
has done, by act or omission, anything which would impair the
coverage of such title insurance policy;
(xxv) All of the improvements which were included for the
purpose of determining the Appraised Value of the Mortgaged Property
lie wholly within the boundaries and building restriction lines of
such property, and no improvements on adjoining properties encroach
upon the Mortgaged Property;
(xxvi) To the best of Seller's knowledge, no improvement
located on or being part of the Mortgaged Property is in violation of
any applicable zoning law or regulation. To the best of Seller's
knowledge, all inspections, licenses and certificates required to be
made or issued with respect to all occupied portions of the Mortgaged
Property and, with respect to the use and occupancy of the same,
including, but not limited to, certificates of occupancy and fire
underwriting certificates, have been made or obtained from the
appropriate authorities and the Mortgaged Property is lawfully
occupied under applicable law;
(xxvii) Each Mortgage Note and the related Mortgage, if
applicable, are genuine, and each is the legal, valid and binding
obligation of the maker thereof, enforceable in accordance with its
terms, except as limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to creditors' rights
generally or by equitable principles. All parties to the Mortgage
Note and the related Mortgage, if applicable, had legal capacity to
execute the Mortgage Note and the related Mortgage, if applicable, and
each Mortgage Note and related Mortgage, if applicable, has been duly
and properly executed by such parties;
(xxviii) The proceeds of the Mortgage Loans have been fully
disbursed, there is no requirement for future advances thereunder and
any and all requirements as to disbursement of any escrow funds
therefor have been complied with. The accounts in which escrow
deposits, if any, are made with respect to each Mortgage Loan, contain
all amounts required to be on deposit therein under the terms of the
related Mortgage Loan subject to applicable laws;
(xxix) Each Mortgage contains customary and enforceable
provisions that render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the
benefits of the security, including, but not limited to, (A) in the
case of a Mortgage designated as a deed of trust, by trustee's sale,
and (B) otherwise by judicial foreclosure. There is no homestead or
other exemption available to the Mortgagor which would interfere with
the right to sell the Mortgaged Property at a trustee's sale or the
right to foreclose the Mortgage. Each Land Sale Contract contains
customary and enforceable
12
provisions that render the rights and remedies of the holder thereof
adequate for the forfeiture of the Mortgaged Property by the
Mortgagor;
(xxx) With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is
named in such Mortgage, and no fees or expenses are or will become
payable by the Trustee to the trustee under the deed of trust, except
in connection with a trustee's sale after default by the Mortgagor;
(xxxi) Each Mortgage Loan is secured primarily by an
enforceable first priority mortgage, deed of trust or similar security
instrument or is an installment contract for the sale of real property
and the improvements thereon;
(xxxii) No Mortgage Loan has a shared appreciation feature, or
other contingent interest feature;
(xxxiii) With respect to each Mortgage Loan secured by or
subject to a leasehold estate:
(A) The leasehold created by direct lease of the freehold
estate, the ground lease or memorandum thereof has been recorded,
and by its terms permits the leasehold estate to be mortgaged.
The ground lease grants any leasehold mortgagee standard
protections necessary to protect the security of a leasehold
mortgagee including the right of the leasehold mortgagee to
receive notice of the lessee's default under the ground lease;
the right of the leasehold mortgagee, with adequate time, to cure
such default; and, an the case of incurable defaults of the
lessee, the right of the leasehold mortgagee to assume the ground
lease or enter into a new ground lease with the lessor on terms
financially identical to the existing ground lease;
(B) The ground lease was at the origination of the Mortgage
Loan, and is in full force and effect without any outstanding
defaults, and was and is not subject to liens and encumbrances;
(C) The ground lease extends beyond the date scheduled for
the final payment on the Mortgage Loan secured by such leasehold
interest; and
(D) The fee estate of the lessor under the ground lease is
encumbered by the ground lease, and any lien of any present or
future fee mortgagee is and will be subject to and subordinate to
the ground lease. The foreclosure of the fee mortgage will not
terminate the leasehold estate
13
or the rights of the sub-tenants, and the fee mortgage is subject
to the ground lease;
(xxxiv) The improvements upon each Mortgaged Property are
covered by a valid and existing hazard insurance policy with a
generally acceptable carrier which policy provides for fire extended
coverage and such other hazards as are customary in the area where the
Mortgaged Property is located representing coverage not less than the
outstanding principal balance of the Mortgage Loan as of the Cut-off
Date. Such insurance policies contain a standard mortgagee clause
naming in the case of a Mortgage Loan, the Seller and its successors
in interest, as mortgagee, and the Seller has received no notice that
any premiums due and payable thereon have not been paid; the Mortgage
or Land Sale Contract, as applicable, obligates the related Mortgagor
to maintain all such insurance at the Mortgagor's cost and expense,
and upon the Mortgagor's failure to do so, authorizes the holder of
the Mortgage or Land Sale Contract, as applicable, to obtain and
maintain such insurance at the Mortgagor's cost and expense and to
seek reimbursement therefor from the Mortgagor;
(xxxv) If the Mortgaged Property is in an area identified in
the Federal Register by the Federal Emergency Management Agency as
having special flood hazards and if required by law, a flood insurance
policy in a form meeting the requirements of the current guidelines of
the Flood Insurance Administration is in effect with respect to such
Mortgaged Property with a generally acceptable carrier in an amount
representing coverage not less than the least of (A) the outstanding
principal balance of the Mortgage Loan, (B) the minimum amount
required to compensate for damage or loss on a replacement cost basis
or (C) the maximum amount of insurance that is available under the
Flood Disaster Protection Act of 1973;
(xxxvi) There is no proceeding pending or currently occurring
or, to the best of the Seller's knowledge, threatened for the total or
partial condemnation for any Mortgaged Property;
(xxxvii) Subject to (xli) and except with respect to Mortgage
Loans set forth on Schedules 1 and 2, there is no default, breach,
violation or event of acceleration existing under the Mortgage or the
related Mortgage Note; and the Seller has not waived any default,
breach, violation or event of acceleration except as set forth in
writing contained in the File, and all governmental assessments,
insurance premiums, water, sewer and municipal charges, leasehold
payments or ground rents which previously became due and owing have
been paid;
(xxxviii) Prior to the approval of the purchase of the Mortgage
Loan by the Seller, an Appraisal of the related Mortgaged Property was
obtained by a
14
qualified appraiser, duly appointed or accepted by the Seller, who had
no interest, direct or indirect, in the Mortgaged Property or in any
loan made on the Security thereof, and whose compensation was not
affected by the approval or disapproval of the purchase of such
Mortgage Loan;
(xxxix) None of the Mortgage Loans is a graduated payment loan;
(xl) In selecting the Mortgage Loans for sale pursuant hereto, no
selection procedure was employed by the Seller which was intended to
adversely affect the interest of the Purchaser;
(xli) (A) as of the Cut-off Date, no Mortgage Loan is more
than 59 days delinquent, (B) as of the Cut-off Date, approximately
____% of the Single Family Mortgage Loans were between 30 days and 59
days delinquent, (C) approximately ____% of the Single Family Mortgage
Loans have been 30 days delinquent at least once during the period
commencing January 1, 1995 through __________, 1996, (D) during the
period from January 1, 1995 through __________, 1996, ____%, ____%,
____%, ____% and ____% of the Single Family Mortgage Loans have been
30 days delinquent two times, three times, four times, five times and
more than five times, respectively, (E) during the period from
January 1, 1995 through __________, 1996, approximately ____% of the
Single Family Mortgage Loans have been 60 days delinquent at least
once, (F) during the period from January 1, 1995 through __________,
1996, approximately ____% and ____% of the Single Family Mortgage
Loans have been 60 days delinquent two times and more than two times
and (G) during the period from January 1, 1995 through __________,
1996, approximately ____% of the Single Family Mortgage Loans have
been 90 days delinquent at least once;
(xlii) (A) as of the Cut-off Date, approximately ____% of the
Commercial Mortgage Loans were between 30 days and 59 days delinquent,
(B) approximately ____% of the Commercial Mortgage Loans have been 30
days delinquent at least once during the period commencing January 1,
1995 through __________, 1996, (C) during the period from January 1,
1995 through __________, 1996, ____%, ____%, ____%, ____% and ____% of
the Commercial Mortgage Loans have been 30 days delinquent two times,
three times, four times, five times and more than five times,
respectively, (D) during the period from January 1, 1995 through
__________, 1996, approximately ____% of the Commercial Mortgage Loans
have been 60 days delinquent at least once, (E) during the period from
January 1, 1995 through __________, 1996, approximately ____% and
____% of the Commercial Mortgage Loans have been 60 days delinquent
two times and more than two times and (F) during the period from
January 1, 1995 through __________, 1996, approximately ____% of the
Commercial Mortgage Loans have been 90 days delinquent at least once;
15
(xliii) No material misrepresentation, fraud or similar
occurrence with respect to a Mortgage Loan has taken place on the part
of any person involved in the origination of the Mortgage Loan or in
the application of any insurance in relation to such Mortgage Loan;
(xliv) Upon payment of the purchase price for the Mortgage
Loan by the Purchaser, the Seller has transferred to the Purchaser
good and indefeasible title to, with respect to each Mortgage Loan,
each Mortgage Note and related Mortgage, if applicable, free and clear
of any and all liens, claims, encumbrances, participation interests,
equities, pledges, charges or security interests of any nature and has
full right and authority, subject to no participation of or agreement
with any other person, to sell and assign the same;
(xlv) The Seller has not assigned any interest or
participation in any Mortgage Loan other than pursuant to this
Agreement;
(xlvi) Each Mortgage Loan constitutes a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code;
(xlvii) Each Mortgage Loan was acquired by the Seller in
accordance with the Seller's Acquisition Procedures; and
(xlviii) Substantially all proceeds of each Mortgage Loan listed
on Schedule 3 were used to acquire, improve or protect an interest in
real property which, at the origination date, was the only security
for each such Mortgage Loan.
(c) Upon discovery by any Interested Person of a breach of a
representation or warranty set forth in Section 3.01(a) or 3.01(b) hereof
that materially and adversely affects the value of a Mortgage Loan or
Mortgage Loans or the interests of any Interested Person in any Mortgage
Loan or Mortgage Loans, the party discovering such breach shall give prompt
notice thereof to the other parties. In such event, the Seller shall cure
such breach or repurchase or substitute such Mortgage Loan or Mortgage
Loans in accordance with Section 2.05 hereof.
(d) The Seller hereby agrees to make in the Pooling and Servicing
Agreement such other representations and warranties with respect to the
Mortgage Loans as are customary, usual and requested by any Rating Agency
in connection with the rating of any Class of the Certificates.
16
ARTICLE IV
ISSUANCE OF THE CERTIFICATES
Section 4.01. INFORMATION TO BE PROVIDED BY THE SELLER IN CONNECTION WITH
THE ISSUANCE OF THE CERTIFICATES. The Seller agrees to provide the Purchaser
with any and all information and appropriate verification of information,
whether through letters of its auditors and counsel or otherwise, and will
provide to the Purchaser such additional representations and warranties,
covenants, opinions of counsel, letters from auditors, and certificates of
public officials or officers of the Seller as may be reasonably requested by the
Purchaser in order to effect the issuance of Certificates, which Certificates
shall bear a rating selected by the Purchaser and acceptable to the Seller. Any
such information or verification of information shall be requested by the
Purchaser in a manner which shall provide the Seller with adequate time to
respond to such request. The Purchaser and Seller acknowledge that the issue
and sale of the Certificates will require the disclosure of the Seller and
Master Servicer's underwriting criteria, delinquency, foreclosure and loss
experience of the Master Servicer's loan portfolio, certain financial
information of the Seller and the Master Servicer, the characteristics of the
Mortgage Loans and the collection and other servicing practices of the Master
Servicer as part of the Prospectus (the information furnished in writing to the
Purchaser for use in the Prospectus or any preliminary prospectus or any
amendment or supplement thereto referred to in this sentence being the
"Seller/Servicer Information"). The Seller agrees to cooperate with the
Purchaser and promptly supply any information concerning the Seller, the Master
Servicer and/or the Mortgage Loans which the Purchaser determines is required to
be disclosed in the Prospectus and shall deliver to the Purchaser a comfort
letter from a nationally recognized public accounting firm as to the usual and
customary financial and statistical information concerning the Mortgage Loans
and the Seller that is acceptable to the Purchaser. The Seller shall provide an
initial draft of the Seller/Servicer Information to the Purchaser which the
Purchaser shall be entitled to revise with the consent of the Seller. In
addition, the Seller hereby agrees to execute and deliver the Pooling and
Servicing Agreement in its capacity as Seller.
ARTICLE V
NON-SOLICITATION
Except as provided herein and in the Pooling Agreement, the Seller hereby
agrees that it will not take any action or cause any action to be taken by any
of its agents, employees, affiliates or any Person, broker or correspondent on
behalf of the Seller or directed by the Seller to solicit personally, by
telephone or by mail the prepayment in whole or in part of any Mortgage Loan
without the prior written consent of the Purchaser. The Seller agrees that it
will not prepare or distribute or cause to be prepared or distributed, for
compensation or otherwise, any mailing list consisting only of the Mortgagors or
the Mortgage Loans to parties or Persons other than the Purchaser.
Notwithstanding the foregoing, the Seller, its agents, employees, affiliates or
any Person, broker or correspondent on behalf of the Seller shall be permitted
to solicit any Mortgagor of a Balloon Loan within one year of such Balloon
Loan's maturity date
17
for purposes of offering refinancing of such Balloon Loan; provided, however,
any such refinancing shall not accelerate the Calculated Maturity Date of such
Balloon Loan by more than six months.
ARTICLE VI
MISCELLANEOUS
Section 6.01. NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed by
registered or certified mail, return receipt requested, or, if by other means,
when received by the other party at the address shown below, or such other
address as may hereafter be furnished to the other party by like notice. Any
such demand, notice or communication hereunder shall be deemed to have been
received on the date delivered to or received at the premises of the addressee
(as evidenced, in the case of registered or certified mail, by the date noted on
the return receipt).
If to the Purchaser to: Metropolitan Asset Funding, Inc.
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: __________
If to the Seller to: Metropolitan Mortgage & Securities Co., Inc.
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Section 6.02. SEVERABILITY CLAUSE. Any part, provision, representation or
warranty of this Agreement which is prohibited or which is held to be void or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions thereof. Any
part, provision, representation or warranty of this Agreement which is
prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such provisions thereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof. If the invalidity of any
part, provision, representation or warranty of this Agreement shall deprive any
party of the economic benefit intended to be conferred by this Agreement, the
parties shall negotiate in good faith to develop a structure the economic effect
of which is as nearly as possible the same as the economic effect of this
Agreement without regard to such invalidity.
Section 6.03. GOVERNING LAW. THE AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF WASHINGTON, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
18
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK EXCEPT TO THE
EXTENT PREEMPTED BY FEDERAL LAW.
Section 6.04. 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 and the issuance of the Certificates.
Section 6.05. SUCCESSORS AND ASSIGNS; ASSIGNMENT OF MORTGAGE LOAN PURCHASE
AGREEMENT. This Agreement shall bind and inure to the benefit of and be
enforceable by the Seller, Purchaser and the Trustee. This Agreement cannot be
assigned, pledged or hypothecated by the Seller to a third party without the
consent of the Purchaser. The parties hereto acknowledge that the Purchaser is
acquiring the Mortgage Loans for the purpose of contributing them to the Trust
Fund that will issue Certificates. As an inducement to the Purchaser to
purchase the Mortgage Loans, the Seller acknowledges and consents to the
assignment by the Purchaser to the Trustee of all of the Purchaser's rights
against the Seller pursuant to this Agreement and to the enforcement or exercise
of any right or remedy against the Seller pursuant to this Agreement by the
Trustee, any successor to the duties and obligations of the Trustee under the
Pooling and Servicing Agreement or by any holder of a Certificate to the extent
permitted under the Pooling and Servicing Agreement. Such enforcement of a
right or remedy by the Trustee, such successor or such holder of a Certificate
shall have the same force and effect as if the right or remedy had been enforced
or exercised by the Purchaser directly.
Section 6.06. WAIVERS; OTHER AGREEMENTS. No term or provision of this
Agreement may be waived or modified unless such waiver or modification is in
writing and signed by the party against whom such waiver or modification is
sought to be enforced.
Section 6.07. EXHIBITS. The exhibits and schedules to this Agreement are
hereby incorporated and made a part hereof and are an integral part of this
Agreement.
Section 6.08. GENERAL INTERPRETIVE PRINCIPLES. For purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the singular, and
the use of any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting
principles;
(c) references herein to "Articles," "Sections," "Subsections,"
"Paragraphs," and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other
subdivisions of this Agreement;
19
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section
in which the reference appears, and this rule shall also apply to
Paragraphs and other subdivisions;
(e) the words "herein," "hereof," "hereunder," and other words of
similar import, refer to this Agreement as a whole and not to any
particular provision; and
(f) the term "include" or "including" shall mean without limitation
by reason of enumeration.
Section 6.09. COUNTERPARTS. This Agreement may be executed simultaneously
in any number of counterparts. Each counterpart shall be deemed to be an
original, and all such counterparts shall constitute one and the same
instrument.
20
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their names to
be signed by their respective officers thereunto duly authorized as of the date
first above written.
METROPOLITAN ASSET FUNDING, INC., as Purchaser
By
-----------------------------
Name:
--------------------------
Title:
-------------------------
METROPOLITAN MORTGAGE & SECURITIES CO., INC., as
Seller
By
-----------------------------
Name:
--------------------------
Title:
-------------------------
21
EXHIBIT A
MORTGAGE LOAN SCHEDULE
A-1
SCHEDULE 1
DELINQUENT TAX SCHEDULE
SCHEDULE 2
SELLER MATERIALS
SCHEDULE 3
HIGH LTV MORTGAGE LOANS
