SALES AGREEMENT
EXECUTION
SALES
AGREEMENT, dated February
1, 2007 (this “Agreement”), between Saxon Asset Securities Company, a Virginia
corporation (“SAXON”), and Saxon Funding Management, LLC, a Delaware limited
liability company (“SFM”).
RECITALS
1.
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Schedule
I
attached hereto and made a part hereof list one pool of fully amortizing
and balloon mortgage loans (collectively, the “Mortgage Loans”) currently
owned by SFM that SFM desires to sell to
SAXON.
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2.
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SAXON
desires to purchase the Mortgage Loans and intends immediately thereafter
to transfer the Mortgage Loans to Saxon Asset Securities Trust 2007-1
(the
“Trust”) to be established pursuant to the terms of a pooling and
servicing agreement (the “Pooling and Servicing Agreement”), dated as of
February 1, 2007, among SAXON, Saxon Mortgage Services, Inc., as
servicer
(the “Servicer”), and Deutsche Bank National Trust Company, as trustee
(the “Trustee”).
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3.
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Pursuant
to the terms of the Pooling and Servicing Agreement, the Trust will
issue
securities evidencing 100% of the beneficial ownership interest in
the
Trust to SAXON in consideration of SAXON’s deposit of the Mortgage Loans
to the Trust.
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4.
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Certificates
to be issued by the Trust to SAXON will be designated as the Mortgage
Loan
Asset Backed Certificates, Series 2007-1, Class
X-0, Xxxxx X-0x, Xxxxx X-0x, Class A-2c, Class A-2d, Class M-1, Class
M-2,
Class M-3, Class M-4, Class M-5, Class M-6, Class B-1, Class B-2,
Class
B-3,
Class OC, Class P and Class R Certificates, and shall be collectively
referred to herein as the
“Certificates.”
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5.
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The
Class
X-0, Xxxxx X-0x, Xxxxx X-0x, Class A-2c, Class A-2d, Class M-1, Class
M-2,
Class M-3, Class M-4, Class M-5, Class M-6, Class B-1, Class B-2
and Class
B-3 Certificates
(collectively, the “Underwritten Certificates”) shall be sold pursuant to
an underwriting agreement, dated March 1, 2007 (the “Underwriting
Agreement”), among SAXON, SFM and Xxxxxx
Xxxxxxx & Co. Incorporated,
as
underwriter (the “Underwriter”). The public offering and sale of the
Underwritten Certificates are registered under the Securities Act
of 1933,
as amended, and are being made pursuant to a prospectus supplement,
dated
March 1, 2007 (the “Prospectus Supplement”) and a prospectus, dated April
26, 2006 (collectively, with the Prospectus Supplement, the “Prospectus”).
The balance of the Certificates will be retained by SAXON or one
of its
affiliates.
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6.
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Capitalized
terms used and not defined herein shall have the meanings assigned
to them
in the Pooling and Servicing Agreement.
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AGREEMENT
NOW
THEREFORE, in consideration of the mutual promises herein made and other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereby agree as follows:
SECTION
1. Sale
and Purchase of Mortgage Loans.
(a) Subject
to the terms and conditions of this Agreement, SFM
agrees to sell, and SAXON agrees to purchase, on the date of the issuance of
the
Certificates, which is expected to be on or about March 7, 2007 (the “Closing
Date”), the Mortgage Loans having an aggregate principal balance as of February
1, 2007 (the “Cut-off Date”) (or, in the case of Mortgage Loans originated after
the Cut-off Date but on or prior to the date of this Agreement, the date of
origination), of approximately $622,167,806.96.
(b) SFM
and
SAXON have agreed upon which of the mortgage loans owned by SFM are to be
purchased by SAXON pursuant to this Agreement, and SFM has prepared, or has
provided information to SAXON enabling SAXON to prepare, schedules attached
hereto as Schedules
IA and IB
(together, “Schedule
I”),
setting forth information with respect to the Mortgage Loans to be purchased
by
SAXON as of the Closing Date. SFM shall, with SAXON’s consent, amend or modify,
or provide information to SAXON enabling SAXON to amend or modify Schedule
I
on or
prior to the Closing Date if necessary to reflect the actual Mortgage Loans
transferred by SFM and accepted by SAXON on the Closing Date. Schedule
IA
(which
lists the Group 1 Mortgage Loans) and Schedule
IB
(which
lists the Group 2 Mortgage Loans), as so amended or modified, shall conform
to
the requirements of SAXON as set forth in this Agreement and to the definition
of “Mortgage Loan Schedule” under the Pooling and Servicing Agreement, and shall
be used as the definitive Mortgage Loan Schedule attached as an exhibit to
the
Pooling and Servicing Agreement.
(c) The
sale
of the Mortgage Loans shall be effected pursuant to a Xxxx of Sale substantially
in the form attached hereto as Exhibit
A
(the
“Xxxx of Sale”).
SECTION
2. Purchase
Price of Mortgage Loans.
(a) On
the
Closing Date, as full consideration for SFM’s
sale of the Mortgage Loans to SAXON, SAXON will deliver to SFM (x) cash in
an
amount that shall be set out in the related Xxxx of Sale and shall be equal
in
the aggregate to the amount received by SAXON with respect to the sale of the
Underwritten Certificates, and (y) the balance of the Certificates for further
transfer to an affiliate of SFM.
(b) SAXON
or
any assignee or transferee of SAXON (which may include the Trustee (or its
Custodian) acting on behalf of the Certificateholders) shall be entitled to
all
Scheduled Payments due after the Cut-off Date, and all curtailments or other
principal prepayments received with respect to the Mortgage Loans paid by the
Borrower after the Cut-off Date, except that SAXON or any assignee or transferee
of SAXON will not be entitled to any Curtailments or other prepayments received
on or after the Cut-off Date but reflected in the aggregate Stated Principal
Balance of the Mortgage Loans on the Cut-off Date. All Scheduled Payments due
on
or before the Cut-off Date and collected on or after the Cut-off Date shall
belong to SFM.
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(c) Pursuant
to the Pooling and Servicing Agreement, SAXON will transfer and assign all
its
right, title and interest in and to the Mortgage Loans to the Trustee (or its
Custodian) for the benefit of the Certificateholders in consideration of the
issuance of the Certificates to SAXON.
SECTION
3. Transfer
of the Mortgage Loans.
(a) Mortgage
File.
For
purposes of this Agreement, the “Mortgage File” will be as defined in the
Pooling and Servicing Agreement.
(b) Transfer
of Ownership.
Upon
the sale of any Mortgage Loans, the ownership of each Mortgage Loan Document
with respect thereto shall be vested in SAXON, and the ownership of all other
records and documents with respect thereto prepared by or which come into the
possession of SFM shall immediately vest in SAXON. SFM shall promptly deliver
to
the Custodian (as defined below) or the Trustee, as appropriate, any documents
that come into its possession with respect to such Mortgage Loans following
such
sale. Prior to such delivery, SFM shall hold any such documents for the benefit
of SAXON, its successors and assigns.
(c) Delivery
of Mortgage Loan Files.
Not
later than two Business Days prior to the Closing Date, SFM shall deliver to
Deutsche Bank Trust Company Americas, as custodian (the “Custodian”), each of
the Mortgage Loan Documents required to be included in the Mortgage File. The
Mortgage Note for each such Mortgage Loan shall be endorsed to the Trustee
or
Custodian or in blank, and the Security Instrument for each such Mortgage Loan
shall either name the Custodian as mortgagee or beneficiary, as appropriate,
or
be assigned to the Trustee or Custodian or in blank. Each such endorsement
and
assignment shall be substantially in the form set forth in the Custody
Agreement.
Notwithstanding
the procedures in the preceding paragraph, with respect to each MERS Mortgage
Loan, SFM
shall
take such actions as are necessary to cause the Trustee to be clearly identified
as the owner of each such Mortgage Loan on the records of MERS for purposes
of
the system of recording transfers of beneficial ownership of mortgages
maintained by MERS.
Prior
to
the transfer and sale of any Mortgage Loans, the Mortgage Loan Documents
delivered to the Custodian shall be held by the Custodian for the benefit of
SFM
and the possession by the Custodian of such Mortgage Loan Documents will be
at
the will of SFM and will be in a custodial capacity only. Following the transfer
and sale of any Mortgage Loans from SFM to SAXON in accordance with the terms
and upon satisfaction of the conditions of this Agreement, the Custodian will
hold all Mortgage Loan Documents delivered to it hereunder for the benefit
of
SAXON, as its agent and bailee. The Custodian, who will also act as the Trustee,
will act as a custodian for the receipt and custody of all Mortgage Files,
and,
after the transfer of any Mortgage Loans from SAXON to the Trust, the Custodian
will hold all Mortgage Loan Documents delivered to it hereunder for the benefit
of the Trustee on behalf of the Certificateholders.
3
(d) Examination
of Mortgage Loan Documents: Acceptance of Mortgage Loans.
Prior
to the Closing Date, SFM shall either (i) deliver to SAXON or its designee
in
escrow, for examination, the Mortgage Loan Documents pertaining to each Mortgage
Loan then being sold by it or (ii) make such Mortgage Loan Documents available
to SAXON or its designee for examination at SFM’s offices or at such other place
as SFM shall specify. SAXON, the Custodian, or a designee of either entity
may
review the Mortgage Loan Documents to verify that all documents required to
be
included in each Mortgage File (as such term has been defined in the Pooling
and
Servicing Agreement) are so included.
Prior
to
the Closing Date, the Custodian shall review the documents delivered pursuant
to
Section 3(c) hereof to ascertain that, as to each Mortgage Loan listed on
Schedule
I,
(i) all
documents required to be delivered by SFM pursuant to Section 3(c) have been
received, (ii) such documents appear regular on their face and relate to such
Mortgage Loan and (iii) the information on Schedule
I
accurately reflects the information set forth in the corresponding Mortgage
File, to the extent required by Section 2.1 of the Pooling and Servicing
Agreement. An additional review shall be conducted by the Custodian or its
designee prior to the first anniversary of the Closing Date to determine that
all Mortgage Loan Documents required to be included in the Mortgage File are
included therein. If at any time SAXON or the Trustee (or its Custodian)
discovers or receives notice that any Mortgage Loan Document is missing or
defective in any material respect with respect to any Mortgage Loan, SFM shall
correct or cure any such omission or defect or, if such omission or defect
materially impairs the value of the Mortgage Loan, repurchase the defective
Mortgage Loan or substitute for such defective Mortgage Loan a Substitute
Mortgage Loan in accordance with and if permitted by the terms of Section 7
hereof. At the time of such repurchase or substitution, the Custodian shall
release documents in its possession relating to such Mortgage Loan to SFM.
The
fact that SAXON, the Trustee or a designee of either entity has conducted or
has
failed to conduct any partial or complete examination of the Mortgage Loan
Documents prior to the Closing Date shall not affect the rights of SAXON (or
any
assignee or successor thereof) to demand repurchase or other relief as provided
herein.
(e) Recordation
of Assignments of Security Instrument.
Subject
to the sale of the Mortgage Loans by each Seller to SAXON, SAXON hereby
authorizes and instructs each Seller and each Seller hereby agrees, with respect
to each Mortgage Loan (other than a MERS Mortgage Loan) transferred by such
Seller to SAXON,
to
record all Assignments required to be contained in the Mortgage File pursuant
to
Section 2.1 of the Pooling and Servicing Agreement in the public recording
office for the jurisdiction in which the related Mortgaged Property is located
if not previously recorded, as evidenced in the manner provided in Section
(30)
of Exhibit
B
hereto.
All recording fees relating to the recordation of the Assignments as described
above shall be paid by SFM. If the Trustee does not receive, within the time
specified in the Pooling and Servicing Agreement, evidence satisfactory to
it of
such recording with respect to any Mortgage Loan or, in the alternative, an
Opinion of Counsel acceptable to SAXON and the Rating Agencies, to the effect
that such recording is not required to protect the right, title and interest
of
the Trustee in any such Mortgage Loan, SFM shall, in cooperation with the
Trustee, correct or cure any such omission or repurchase the affected Mortgage
Loan within 90 days of such demand which demand is made within the time
specified in the Pooling and Servicing Agreement (including any such extensions
provided for therein).
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SECTION
4. Representations
and Warranties of SFM. SFM
hereby represents and warrants to SAXON as follows:
(a) SFM
has
been duly organized and is validly existing and in good standing under the
laws
of the State of Delaware and is duly qualified to do business and in good
standing under the laws of each jurisdiction that requires such qualification
wherein it owns or leases any material properties (except where the failure
so
to qualify would not have a material adverse effect on it). SFM has the full
corporate power and authority to own its properties and conduct its business
as
currently conducted.
(b) SFM
has
the full power, authority (corporate and other) and legal right to execute
and
deliver, engage in the transactions contemplated by, and perform and observe
the
terms and conditions of, this Agreement.
(c) This
Agreement has been duly and validly authorized, executed and delivered by SFM
and (assuming the due authorization, execution and delivery hereof by SAXON)
constitutes the valid, legal and binding agreement of SFM, enforceable in
accordance with its terms, subject to bankruptcy, insolvency, receivership,
conservatorship, reorganization, moratorium and other laws affecting creditors’
rights generally and to general principles of equity, regardless of whether
such
enforcement is sought in a proceeding in equity or at law and except that the
provisions of indemnity contained herein may be unenforceable as against public
policy.
(d) No
consent, approval, authorization or order of or registration or filing with,
or
notice to, any governmental authority or court is required, under federal laws
or the laws of the State of Delaware, for the execution, delivery and
performance of or compliance by SFM with this Agreement or the consummation
by
SFM of the transactions contemplated hereby.
(e) Neither
the execution and delivery of this Agreement by SFM, nor the consummation by
SFM
of the transactions herein contemplated, nor compliance with the provisions
hereof by SFM, will (i) conflict with or result in a breach of, or constitute
a
default under, any of the provisions of SFM’s charter or by-laws, or any law,
governmental rule or regulation, or any judgment, decree or order binding on
SFM
or any of its properties, or any of the provisions of any indenture, mortgage,
deed of trust, contract or other instrument to which SFM is a party or by which
it is bound or (ii) result in the creation or imposition of any lien, charge
or
encumbrance upon any of its properties.
(f) There
is
no litigation pending or, to SFM’s knowledge, threatened against SFM that would
reasonably be expected to affect adversely the execution, delivery, performance
or enforceability of this Agreement.
5
(g) Each
of
the representations and warranties set forth in Exhibit B hereto is true
and correct with respect to the Mortgage Loans. Such representations and
warranties, except where specifically noted therein, are made as of the Cut-off
Date, in the case of Mortgage Loans originated on or prior to the Cut-off Date,
and as of the date of origination of the Mortgage Loan, in the case of Mortgage
Loans originated after the Cut-off Date and on or before the date of this
Agreement.
In
addition, SFM
represents and warrants that as of the Closing Date, it has no reason to believe
that any borrower will default under the Mortgage
Loans. This representation and warranty will be deemed to be breached only
if,
as to any Mortgage Loan:
(i) the
Mortgage Loan had an original Loan to Value Ratio as of the Cut-off Date in
excess of 100%;
(ii) the
Mortgage Loan is in default and is liquidated within six months after the
Closing Date;
(iii) a
Realized Loss is incurred on the Mortgage Loan; and
(iv) prior
to
liquidation, Realized Losses had been incurred on the Mortgage Loans in an
amount sufficient to reduce the aggregate Certificate Principal Amount of the
Subordinate Certificates to zero.
(h) The
statistical information in the Prospectus Supplement in Appendix A and under
the
headings “The Mortgage Loan Pool —
General,”
“— Characteristics of the Mortgage Loans,” “— Additional Information” and “—
Underwriting Standards” is true and correct.
(i) SFM
currently operates or actively participates in an on-going and active program
or
business (A) to originate mortgages, and/or (B) to make periodic purchases
of
mortgage loans from originators or other sellers, and/or (C) to issue and/or
purchase securities or bonds supported by the mortgages, with a portion
of
the
proceeds generated by such program or business being used to purchase or
originate mortgages made to borrowers who are:
(x)
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low-income
families (families with incomes of 80% or less of area median income)
living in low-income areas (a census tract or block numbering area
in
which the median income does not exceed 80 percent of the area median
income) and/or
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(y)
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very
low-income families (families with incomes of 60% or less of area
median
income).
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SECTION
5. Representations
and Warranties of SAXON. SAXON
hereby represents and warrants to Seller as follows:
(a) SAXON
is
a corporation duly organized and validly existing in good standing under the
laws of the Commonwealth of Virginia.
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(b) SAXON
has
the full power, authority (corporate and other) and legal right to execute
and
deliver, engage in the transactions contemplated by, and perform and observe
the
terms and conditions of, this Agreement.
(c) This
Agreement has been duly and validly authorized, executed and delivered by SAXON
and (assuming the due authorization, execution and delivery thereof by SFM)
constitutes the valid, legal and binding agreement of SAXON, enforceable in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
receivership, moratorium or other similar laws affecting creditors’ rights
generally, and to general principles of equity, regardless of whether such
enforcement is sought in a proceeding in equity or at law.
(d) No
consent, approval, authorization or order of or registration of filing with,
or
notice to, any governmental authority or court is required, under federal laws
or the laws of the Commonwealth of Virginia, for the execution, delivery and
performance of or compliance by SAXON with this Agreement or the consummation
by
SAXON of any other transaction contemplated hereby, except such as may be
required and have been obtained pursuant to state “blue sky” laws.
(e) Neither
the execution and delivery of this Agreement by SAXON, nor the consummation
by
SAXON of the transactions hereby contemplated, nor compliance with the
provisions hereof by SAXON, will (i) conflict with or result in a breach of,
or
constitute a default under, any of the provisions of SAXON’s articles of
incorporation or by-laws, or any law, governmental rule or regulation, or any
judgment, decree or order binding on SAXON or any of its properties, or any
of
the provisions of any contract or other instrument to which SAXON is a party
or
by which it is bound or (ii) result in the creation or imposition of any lien,
charge or encumbrance on any of its properties.
(f) There
is
no litigation pending or, to SAXON’s knowledge, threatened against SAXON that
would reasonably be expected to affect adversely the execution, delivery,
performance or enforceability of this Agreement.
SECTION
6. Covenants
of SFM. SFM
hereby covenants with SAXON as follows:
(a) On
or
before the Closing Date, SFM
shall
take all steps required of it to effectuate the transfer of the Mortgage Loans
to the Trustee, as transferee of SAXON, free and clear of any lien, charge,
or
encumbrance.
(b) SFM
shall
use its best efforts to make available to counsel for SAXON in executed form
each of the documents listed in Section 8(b) below no later than two Business
Days before the Closing Date, it being understood that such documents are to
be
released and delivered only on the closing of the transaction contemplated
hereby and the sale of the Certificates.
(c) SFM
shall
deliver or cause to be delivered to SAXON (i) an Opinion of Counsel as to
various corporate matters substantially in a form satisfactory to SAXON and
(ii)
such other Opinions of Counsel, if any, as are required by either Rating Agency
for the issuance of the ratings on the Certificates specified in Section 8(d)
below.
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(d) For
federal income tax purposes, SFM will treat the transfer of the Mortgage Loans
as a sale.
(e) Xxxxxxx
Mac for a period of two (2) years following the date of this Agreement may
contact the Seller to confirm that it continues to operate or actively
participate in the mortgage program or business and to obtain other
nonproprietary information about the Seller’s activities that may assist Xxxxxxx
Mac in completing its regulatory reporting requirements. The Seller shall make
reasonable efforts to provide such information to Xxxxxxx Mac.
SECTION
7. Cure,
Repurchase and Substitution Obligations.
(a) Each
of
the representations and warranties of SFM
contained herein shall survive the purchase by SAXON of any of the Mortgage
Loans and shall continue in full force and effect, notwithstanding any
restrictive or qualified endorsement on the Mortgage Notes and notwithstanding
subsequent termination of this Agreement or the Pooling and Servicing Agreement.
The representations and warranties shall not be impaired by any review and
examination of Mortgage Loan Documents or other documents evidencing or relating
to the Mortgage Loans or any failure on the part of SAXON to review or examine
such documents and shall inure to the benefit of the Trustee (as the assignee
of
SAXON) for the benefit of the Certificateholders, the Master Servicer and the
Custodian. With respect to the representations and warranties contained herein,
which are made to the best of SFM’s knowledge or as to which SFM has no
knowledge, if it is discovered by SFM, SAXON, the Custodian or the Trustee
that
the substance of any such representation and warranty is inaccurate and such
inaccuracy materially and adversely affects the value of the related Mortgage
Loan, then notwithstanding SFM’s knowledge or lack of knowledge with respect to
the inaccuracy of such representation and warranty at the time it was made,
SFM
shall take the action described in the following paragraph in respect of such
Mortgage Loan.
(b) Upon
discovery or receipt of notice by SFM, SAXON, the Trustee, the Servicer or
the
Custodian of (i) any missing or materially defective document in any Mortgage
File, or a breach of any of SFM’s representations and warranties set forth in
Section 4 hereof with respect to any Mortgage Loan, or a default in the
performance of any of the covenants or other obligations of SFM under this
Agreement, which in any of the foregoing cases materially and adversely affects
the value of any Mortgage Loan or the interest therein of SAXON, the Trustee,
the Custodian or the Servicer or causes a Qualification Defect (as defined
below), or (ii) a breach of any of SFM’s representations and warranties set
forth in subsection (B) or (C) of Exhibit B hereto, the party discovering or
receiving notice of such missing or materially defective document, breach,
or
default shall give prompt written notice to the others. A “Qualification Defect”
with respect to a Mortgage Loan shall mean (i) a defective document in the
Mortgage File, (ii) the absence of a document in the Mortgage File, or (iii)
the
breach of any representation, warranty or covenant with respect to a Mortgage
Loan made by SFM, the Servicer or SAXON, but only if the affected Mortgage
Loan
would cease to qualify as a “qualified mortgage” for purposes of the REMIC
Provisions. Upon its discovery or its receipt of notice of any such missing
or
materially defective document, breach or default (the “Defect Discovery Date”),
SFM shall either (a), within 90 days of discovery or receipt of such notice,
provide the Custodian with such missing documents or cure such defect, breach
or
default, in all material respects or (b), within 90 days of such discovery
or
receipt of such notice, either repurchase the affected Mortgage Loan at the
Purchase Price therefor or cause the removal of such Mortgage Loan from the
Trust Fund (in which case it shall become a Deleted Mortgage Loan) and
substitute therefor one or more Substitute Mortgage Loans as defined in the
Pooling and Servicing Agreement; provided,
however,
that
any such substitution shall occur within two years of the Closing Date.
Notwithstanding the foregoing, if such defect, breach, or default results in
a
Qualification Defect, or if a Qualification Defect otherwise exists with respect
to a Mortgage Loan, SFM shall cure such defect or repurchase the affected
Mortgage Loan within 90 days of the Defect Discovery Date. The Trustee or its
designee shall amend the Mortgage Loan Schedule to reflect the withdrawal of
any
Mortgage Loan from the terms of this Agreement and the Pooling and Servicing
Agreement and the addition, if any, of a Substitute Mortgage Loan. In order
to
effect a substitution pursuant to this Section, SFM will deliver (i) to the
Custodian each of the Mortgage Loan Documents required to be contained in the
Mortgage File with respect to the Substitute Mortgage Loan(s) and (ii) if the
aggregate Stated Principal Balance on the date of substitution of the Substitute
Mortgage Loan(s) is less than the aggregate Stated Principal Balance of the
Deleted Mortgage Loan(s) (after application of Scheduled Payments due in the
month of substitution), to the Servicer cash in an amount equal to such
Substitution Adjustment Amount. Any repurchase pursuant to this Section shall
be
accomplished by the delivery into the Collection Account, on (or determined
as
of) the last day of the calendar month in which such repurchase is made, of
the
Purchase Price for the Mortgage Loans to be repurchased.
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(c) The
obligations of SFM set forth in this Agreement to cure or to repurchase a
materially defective Mortgage Loan or to substitute a Substitute Mortgage Loan
for such Mortgage Loan and to indemnify SAXON as provided in this Agreement
constitute the sole remedies of SAXON and the Trustee against SFM respecting
a
defective document in any Mortgage File or Servicer Mortgage Loan File or a
breach of representations and warranties of SFM set forth in Section 4
hereof.
SECTION
8. Conditions
to Obligation of SAXON. The
obligation of SAXON hereunder to purchase the Mortgage Loans is subject
to:
(a) The
representations and warranties of SFM
under
this Agreement shall be accurate in all material respects as of the Closing
Date, and no event shall have occurred which, with notice or the passage of
time, would constitute a default under this Agreement;
(b) SAXON
shall have received, or SAXON’s attorneys shall have received, in escrow (to be
released from escrow at the time of closing), the following documents in such
forms as are agreed upon and acceptable to SAXON, duly executed by all
signatories other than SAXON as required pursuant to the respective terms
thereof:
(i) A
Xxxx of
Sale substantially in the form of Exhibit
A
hereto;
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(ii) An
Opinion of Counsel for SFM as to various corporate matters and such other
Opinions of Counsel as are necessary in order to obtain the ratings set forth
in
Section 8(d) below, each of which shall be acceptable to SAXON, its counsel,
the
Underwriters, their counsel and the Rating Agencies referred to
below;
(iii) The
Pooling and Servicing Agreement referred to in the Recitals;
(iv) A
letter
from Deloitte & Touche LLP dated the date hereof containing in substance the
information required by Section 6(c) of the Underwriting Agreement;
and
(v) SFM
shall
have delivered to the Trustee or the Custodian, in escrow, all documents
(including, without limitation, the Security Instrument assigned by SFM in
blank
or to the Trustee or Custodian and the Mortgage Note endorsed in blank or to
the
Trustee or Custodian with respect to each Mortgage Loan) required to be
delivered hereunder and shall have released its interest therein to SAXON or
its
designee;
(c) All
other
terms and conditions of this Agreement shall have been complied
with;
(d) The
receipt of written confirmation from each of Xxxxx’x Investors Service, Inc.
(“Moody’s”)
and
Standard & Poor’s Ratings Services (“S&P”) as to the assignment of the
ratings shown in the following table:
Class
|
Moody's
|
S&P
|
X-0
|
Xxx
|
XXX
|
X-0x
|
Xxx
|
XXX
|
X-0x
|
Aaa
|
AAA
|
A-2c
|
Aaa
|
AAA
|
A-2d
|
Aaa
|
AAA
|
X-0
|
Xx0
|
XXx
|
X-0
|
Xx0
|
XX
|
X-0
|
Xx0
|
XX-
|
X-0
|
A1
|
A+
|
X-0
|
X0
|
X
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X-0
|
X0
|
X-
|
X-0
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Baa1
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BBB+
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B-2
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Baa2
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BBB
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B-3
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Baa3
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BBB-
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SECTION
9. Reserved.
SECTION
10. Servicing.
(a) The
Mortgage Loans will be serviced by the Servicer under the Pooling and Servicing
Agreement. SFM
hereby assigns, sells, transfers and conveys to SAXON all its rights under
the
Pooling and Servicing Agreement with respect to the servicing of the Mortgage
Loans.
10
(b) In
consideration of the services rendered under its Pooling and Servicing
Agreement, the Servicer shall be entitled to a monthly Servicing Fee for each
Mortgage Loan computed based upon the Stated Principal Balance of the Mortgage
Loan as of the opening of business on the first day of the Due Period preceding
the Servicer Remittance Date (without taking into account any payment of
principal due on such Due Date). The Servicing Fee for each Mortgage Loan shall
be payable solely from the interest portion of each Scheduled Payment paid
by
the Borrower or other payment of interest paid with respect to the Mortgage
Loan, whether from the proceeds of foreclosure or any judgment, writ of
attachment or levy against the Borrower or its assets, or from funds paid in
connection with any prepayment in full or from Insurance Proceeds or Liquidation
Proceeds.
The
Servicer shall also be entitled to retain in addition to the Servicing Fee
any
late charges, conversion fees, penalty interest or assumption fees paid by
the
Borrower, which amounts are not required to be deposited to its Collection
Account.
SECTION
11. Mandatory
Delivery; Grant of Security Interest. The
sale
and delivery on the Closing Date of the Mortgage Loans described in the Mortgage
Loan Schedule is mandatory, it being specifically understood and agreed that
each Mortgage Loan is unique and identifiable on the date hereof and that an
award of money damages would be insufficient to compensate SAXON for the losses
and damages incurred by SAXON in the event of SFM’s failure to deliver the
Mortgage Loans on or before the Closing Date. SFM hereby grants to the Trustee
for the benefit of the Certificateholders, a lien on and a continuing first
priority security interest in each Mortgage Loan and each document and
instrument evidencing each such Mortgage Loan to secure the performance by
SFM
of its obligation to deliver such Mortgage Loans hereunder. Subject to Section
7(c) hereof, all rights and remedies of SAXON under this Agreement are distinct
from, and cumulative with, any other rights or remedies under this Agreement
or
afforded by law or equity and all such rights and remedies may be exercised
concurrently, independently or successively.
SECTION
12. Indemnification.
(a) If
SFM
breaches its representations, warranties, covenants or obligations set forth
herein, SFM shall indemnify and hold harmless SAXON, the Servicer, the
Custodian, and the Trustee (each, an “Indemnified Party”) from and against any
actual loss, damages, penalties, fines, forfeiture, legal fees and related
costs, judgments, and other costs and expenses resulting from any claim, demand,
defense or assertion based on or grounded upon, or resulting from, such breach,
except to the extent such breach is the result of the Indemnified Party’s
failure to fulfill its obligations under this Agreement. Promptly after receipt
by the Indemnified Party of notice of the commencement of any such action,
the
Indemnified Party will, if a claim in respect thereof is to be made against
SFM
under this Section, notify SFM in writing of the commencement thereof, but
the
omission so to notify SFM will not relieve SFM from any liability hereunder
unless such omission materially prejudices the rights and positions of SFM.
In
case any such action is brought against the Indemnified Party and it notifies
SFM of the commencement thereof, SFM will be entitled to participate therein,
and to assume the defense thereof, with counsel satisfactory to the Indemnified
Party, and after notice from SFM to the Indemnified Party of its election so
to
assume the defense thereof, SFM will not be liable to the Indemnified Party
under this Section for any legal or other expenses subsequently incurred by
the
Indemnified Party in connection with the defense thereof other than reasonable
costs of such investigation.
11
(b) SFM
shall
indemnify the Trustee, the Servicer and the Custodian and hold the Trustee,
the
Servicer, and the Custodian harmless from and against all claims, liabilities,
costs and expenses (including, without limitation, reasonable attorney’s fees)
arising out of, or assessed against any of them in connection with, any ERISA
violation alleged against the Trustee, the Servicer, and the Custodian relating
to the Certificates.
SECTION
13. Notices.
All
demands, notices and communications hereunder shall be in writing and shall
be
deemed to have been duly given if personally delivered to or mailed by
registered mail, postage prepaid, or transmitted by telecopier, telex or
telegraph and confirmed by a similar mailed writing, as follows:
(a) If
to
SAXON:
Saxon
Asset Securities Company
0000
Xxx
Xxxx
Xxxx
Xxxxx, Xxxxxxxx 00000
Attention:
President
with
a
copy, given in the manner prescribed above, to:
Xxxxx
Xxxxxxxx, Esquire
XxXxx
Xxxxxx LLP
0000
X
Xxxxxx, X.X.
Xxxxx
000
Xxxxxxxxxx,
X.X. 00000
(b) If
to
SFM:
Saxon
Funding Management, LLC
0000
Xxx
Xxxx
Xxxx
Xxxxx, Xxxxxxxx 00000
Attention:
Capital Markets
with
a
copy, given in the manner prescribed above, to:
Saxon
Funding Management, LLC
0000
Xxx
Xxxx
Xxxx
Xxxxx, Xxxxxxxx 00000
Attention:
Legal Department
12
Any
party
may alter the address to which communications or copies are to be sent by giving
notice of such change of address in conformity with the provisions of this
Section for the giving of notice.
SECTION
14. Severability
of Provisions. Any
part,
provision, representation or warranty of this Agreement which is prohibited
or
which is held to be void or unenforceable shall be ineffective to the extent
of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any part, provision, representation or warranty of this
Agreement that 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 prohibition or unenforceability without invalidating
the
remaining provisions hereof, and any such prohibition or unenforceability in
any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.
SECTION
15. GOVERNING
LAW. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE
STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (OTHER
THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
13
SECTION
16. Agreement
of SFM. SFM
agrees to execute and deliver such instruments and take such actions as SAXON
or
the Trustee may, from time to time, reasonably request in order to effectuate
the purpose and to carry out the terms of this Agreement including, without
limitation, the execution and filing of any UCC financing statements to evidence
the interests of SAXON and any of its transferees in the Mortgage Loans and
other assets assigned to the Trust.
SECTION
17. Survival.
SFM
agrees that the representations, warranties and agreements made by it herein
and
in any certificate or other instrument delivered pursuant hereto shall be deemed
to be relied upon by SAXON, notwithstanding any investigation heretofore or
hereafter made by SAXON or on SAXON’s behalf, and that the representations,
warranties and agreements made by SFM herein or in any such certificate or
other
instruments shall survive the delivery of and payment for the Mortgage
Loans.
SECTION
18. Assignment.
SFM
hereby acknowledges that SAXON will assign all its rights hereunder (except
SAXON’s rights set forth in Section 9 and 12) to the Trustee. SFM agrees that,
upon the execution of the Pooling and Servicing Agreement, the Trustee will
have
all such rights and remedies provided to SAXON hereunder (except those rights
of
SAXON set forth in Sections 9 and 12) and this Agreement will inure to the
benefit of the Trustee. The Master Servicer, the Custodian, the Paying Agent
and
the Certificate Registrar for purposes of Section 12, and the Trustee for all
purposes, shall constitute not only an assignee of SAXON’s rights in accordance
with this Section but also intended third party beneficiaries of this Agreement.
SECTION
19. Miscellaneous.
(a) This
Agreement may be executed in two or more counterparts, each of which when so
executed and delivered shall be an original, but all of which together shall
constitute one and the same instrument. This Agreement shall inure to the
benefit of, and be binding upon, the parties hereto and their respective
successors and assigns.
(b) Any
person into which SFM
may
be merged or consolidated or any person resulting from a merger or consolidation
involving SFM or any person succeeding to the business of SFM shall be
considered the successor of SFM hereunder, without the further act or consent
of
either party. Except as provided in Section 18 and the preceding sentence,
this
Agreement may not be assigned, pledged or hypothecated by any party without
the
written consent of each other party to this Agreement.
(c) This
Agreement supersedes all prior agreements and understandings relating to the
subject matter hereof. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument
in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.
14
(d) SAXON
shall immediately effect the redelivery of the Mortgage Loans and all Mortgage
Loan Documents and any security interest created by Section 11 hereof shall
be
deemed to have been released if, on the Closing Date, each of the conditions
set
forth in Section 8 hereof shall not have been satisfied or waived.
(e) It
is the
express intent of the parties hereto that the conveyances of the Mortgage Loans
by SFM to SAXON as contemplated by this Agreement be construed as a sale of
the
Mortgage Loans by SFM to SAXON. It is, further, not the intention of the parties
that such conveyances be deemed a pledge of the Mortgage Loans by SFM to SAXON
or any assignee of SAXON, including, but not limited to, the Trustee, to secure
a debt or other obligation of SFM. Nevertheless, if, notwithstanding the intent
of the parties, the Mortgage Loans are held to be property of SFM then (i)
this
Agreement shall also be deemed to be a security agreement within the meaning
of
Article 9 of the Virginia Uniform Commercial Code and the Uniform Commercial
Code of any other state as necessary; (ii) the conveyances provided for herein
shall be deemed to be a grant by SFM to SAXON of a security interest in all
of
SFM’s right, title and interest in and to the Mortgage Loans and all amounts
payable by the holder of the Mortgage Loans in accordance with the terms thereof
and all proceeds of the conversion, voluntary or involuntary, of the foregoing
into cash, instruments, securities, or other property, including without
limitation, all amounts from time to time held or invested in the Collection
Account, the Collection Account, the Distribution Account or any other account
established under the Pooling and Servicing Agreement, whether in the form
of
cash, instruments, securities or other property; (iii) the conveyances provided
for herein shall be deemed to be a grant by SFM to SAXON of a security interest
in all of SFM’s right, title and interest in and to the Pooling and Servicing
Agreement with respect to the Mortgage Loans and all insurance policies relating
to the Mortgage Loans; (iv) the possession by SAXON or its agents of Mortgage
Notes and such other items of property as constitute instruments, money,
negotiable documents or tangible chattel paper shall be deemed to be “possession
by the secured party” for purposes of perfecting the security interest pursuant
to Section 8.9A-313 of the Virginia Uniform Commercial Code; and (v)
notifications to persons holding such property, and acknowledgments, receipts
or
confirmations from persons holding such property, shall be deemed notifications
to, or acknowledgments, receipts or confirmations from, financial
intermediaries, bailees or agents (as applicable) of SAXON for the purpose
of
perfecting such security interest under applicable law. Any assignment of the
interest of SAXON pursuant to any provision hereof shall also be deemed to
be an
assignment of any security interest created hereby. SFM and SAXON shall, to
the
extent consistent with this Agreement, take such actions as may be necessary
to
ensure that, if this Agreement is deemed to create a security interest in the
Mortgage Loans, such security interest will be a perfected security interest
of
first priority under applicable law and will be maintained as such throughout
the term of this Agreement and the Pooling and Servicing Agreement.
(f) SFM
shall
not file any involuntary petition or otherwise institute any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
proceedings under any federal or state bankruptcy or similar law against SAXON
so long as any debt instrument issued by SAXON is outstanding and for one year
and one day thereafter.
15
SECTION
20. Request
for Opinions. SFM
and
SAXON hereby request and authorize XxXxx Xxxxxx LLP, as their counsel in this
transaction, to issue on behalf of SFM and SAXON such legal opinions to the
Servicer, the Trustee, the Underwriter and the Rating Agencies as may be (i)
required by any and all documents, certificates or agreements executed in
connection with this Sales Agreement or (ii) requested by the Servicer, the
Trustee, the Underwriter or the Rating Agencies, or their respective
counsel.
SECTION
21. Reserved.
16
IN
WITNESS WHEREOF, the parties hereto have caused this Sales Agreement to be
executed and delivered by their respective officers thereunto duly authorized
as
of the date first above written.
SAXON
ASSET SECURITIES COMPANY
By:
/s/
Xxxxxx X. Xxxxxxx
Name:
Xxxxxx X. Xxxxxxx
Title:
Executive
Vice President
SAXON
FUNDING MANAGEMENT, LLC
By:
/s/
Xxxxxx X. Xxxxxxx
Name:
Xxxxxx X. Xxxxxxx
Title:
Senior Vice President and Chief
Financial
Officer
SCHEDULE
IA
GROUP
1 MORTGAGE LOANS
(See
Schedule IA to Pooling and Servicing Agreement)
SCHEDULE
IB
GROUP
2 MORTGAGE LOANS
(See
Schedule IB to Pooling and Servicing Agreement)
SCHEDULE
II
PREPAYMENT
CHARGE SCHEDULE
[On
file at the offices of Saxon
Asset Securities Company and Saxon Funding Management LLC]
EXHIBIT
A TO THE SALES AGREEMENT
XXXX
OF SALE
XXXX
OF
SALE made on March
7,
2007, by Saxon Funding Management, LLC, a Delaware limited liability company
(“SFM”), to Saxon Asset Securities Company, a Virginia corporation
(“SAXON”).
WHEREAS,
SFM and SAXON are parties to a sales agreement, dated February 1, 2007 (the
“Sales Agreement”), with respect to the sale by SFM and purchase by SAXON of
mortgage loans (the “Mortgage Loans”); and
WHEREAS,
SAXON intends to transfer the Mortgage Loans and certain other assets to
Deutsche Bank National Trust Company (the “Trustee”), as trustee for Saxon Asset
Securities Trust 2007-1 (the “Trust”) established pursuant to the Pooling and
Servicing Agreement, dated as of February 1, 2007 (the “Pooling and Servicing
Agreement”), among SAXON, Saxon Mortgage Services, Inc., as Servicer (the
“Servicer”), and the Trustee.
NOW
THEREFORE, SFM, for and in consideration of the purchase price set forth in
the
Sales Agreement, and for other good and valuable consideration, the sufficiency
of which is hereby acknowledged, does hereby bargain, sell, convey, assign
and
transfer to SAXON, without recourse, free and clear of any liens, claims or
other encumbrances, all its right, title and interest in and to each of the
Mortgage Loans identified on Schedules
IA and IB to
the
Sales Agreement, together with the Mortgage Loan Documents and other documents
maintained as part of the related Mortgage Files and Servicer Mortgage Loan
Files and all payments thereon and proceeds of the conversion, voluntary or
involuntary of the foregoing.
SFM
hereby acknowledges receipt from SAXON of cash in the amount of $622,167,806.96,
which
cash constitutes the cash purchase price for the Mortgage Loans as set forth
in
Section 2(a) of the Sales Agreement.
Nothing
in this Xxxx of Sale shall be construed to be a modification of, or limitation
on, any provision of the Sales Agreement, including the representations,
warranties and agreements set forth therein except that SFM, as of the date
hereof, makes the following additional representations and warranties to SAXON
concerning the Mortgage Loans.
(a) All
the
representations and warranties made by SFM in the Sales Agreement are true
and
correct in all material respects as of the date hereof (subject, in the case
of
Schedule I delivered pursuant to the Sales Agreement, to such amendments thereto
as were duly made on or before the date hereof).
(b) Since
the
date of the Sales Agreement, no event has occurred which, with notice or the
passage of time, would constitute a default under the Sales Agreement, and
there
has been no material adverse change or development involving a prospective
material adverse change in the business operations, financial condition,
properties or assets of SFM.
A-1
Unless
otherwise defined herein, capitalized terms used in this Xxxx of Sale shall
have
the meanings assigned to them in the Sales Agreement, or if not assigned in
the
Sales Agreement, the Pooling and Servicing Agreement.
IN
WITNESS WHEREOF, SFM has caused this Xxxx of Sale to be executed and delivered
by its officer thereunto duly authorized as of the date above
written.
SAXON
FUNDING MANAGEMENT, LLC
By:
________________________________________
SAXON
hereby acknowledges receipt from SFM of the Mortgage Loans identified on
Schedules
IA and IB
to the
Sales Agreement, subject to its right of inspection set forth in Section 3
of
the Sales Agreement.
SAXON
ASSET SECURITIES COMPANY
By:
________________________________________
A-2
EXHIBIT
B TO THE SALES AGREEMENT
REPRESENTATIONS
AND WARRANTIES OF SAXON
FUNDING MANAGEMENT, LLC
Unless
otherwise defined herein, capitalized terms used herein shall have the meanings
assigned to them in the Sales Agreement, or if not assigned in the Sales
Agreement, the Pooling and Servicing Agreement.
(A) SFM
represents and warrants with respect to the Mortgage Loans being conveyed by
it
to SAXON (for purposes of this Exhibit, the “Mortgage Loans”) as
follows:
(1) SFM
has
not dealt with any broker, investment banker, agent or other person that may
be
entitled to any commission or compensation in connection with the sale of the
Mortgage Loans to SAXON.
(2) There
is
no litigation pending or, to SFM’s knowledge, threatened against SFM that would
reasonably be expected (i) to affect adversely the transfer of the Mortgage
Loans, the issuance of the Certificates or the execution, delivery, performance
or enforceability of this Agreement or (ii) to have a material adverse effect
on
the financial condition of SFM.
(3) With
respect to each Mortgage Loan, SFM has not acted (i) to modify the Mortgage
Loan
in any material respect, (ii) to satisfy, cancel or subordinate the Mortgage
Loan in whole or in part, (iii) to release the related Mortgaged Property in
whole or in part from the lien of the related Mortgage or (iv) to execute any
instrument of release, cancellation, modification or satisfaction of the
Mortgage Loan, except to the extent reflected in the Loan File.
(4) SFM
has
not assigned any interest or participation in the Mortgage Loans other than
to
SAXON (or, if any such interest or participation has been assigned, it will
be
released upon conveyance to SAXON). On the date of conveyance, SFM will be
the
sole owner of, and will have good and marketable title to, the Mortgage Loans,
subject to no prior lien, mortgage, security interest, pledge, charge or other
encumbrance, except any lien to be released concurrently with the purchase
by
SAXON of the Mortgage Loans.
(5) With
respect to each Mortgage Loan other than a MERS Mortgage Loan, SFM is in
possession of each of the Mortgage Loan Documents required to be included in
the
Mortgage File and the Servicer Mortgage Loan File, except for such documents
as
have been delivered to SAXON (or its designee) or the Servicer.
(6) The
transfer, assignment and conveyance of the Mortgage Notes and the Security
Instruments by SFM pursuant to this Agreement are not subject to the bulk
transfer or any similar statutory provisions in effect in any applicable
jurisdiction.
B-1
(7) Each
of
the Mortgage Loans was underwritten in accordance with the standards described
in the Prospectus Supplement.
(8) The
full
principal amount of the Mortgage Loans has been advanced to the Borrowers or
advanced according to the direction of the Borrowers. The Borrowers have no
option under the Security Instruments to borrow additional funds secured by
the
Security Instruments. The Stated Principal Balances of the Mortgage Loans are
as
represented by SFM to SAXON and are fully secured by the Security
Instruments.
(9) All
Mortgage Loan documentation, Mortgage Loan submission documentation and purchase
documentation that have been submitted are, to the best of SFM’s knowledge,
complete and accurate and have been completed, executed and delivered in the
form and manner as specified in SFM’s underwriting guidelines in effect as of
the date hereof. Each Mortgage Note delivered to SAXON or its custodian is
the
original Mortgage Note and is the only Mortgage Note evidencing the related
Mortgage Loan that has been manually signed by the Borrower except in those
instances where a Lost Note Affidavit has been delivered to SAXON or its
custodian. As of the date hereof, SFM has no knowledge of any default, breach,
violation or event of acceleration existing under any of the Mortgage Loan
Documents transferred to SAXON or any event that with notice and expiration
of
any grace or cure period would result in a default, breach, violation or event
of acceleration. SFM has not waived any event of default or breach, violation
or
event of acceleration.
(10) No
borrower was required to purchase any credit life, disability, accident or
health insurance product as a condition of obtaining the extension of credit
for
such Mortgage Loan. No borrower obtained a prepaid single-premium credit life,
disability, accident or health insurance policy in connection with the
origination of the Mortgage Loan; No proceeds from any Mortgage Loan were used
to purchase single premium credit insurance policies as part of the origination
of, or as a condition to closing, such Mortgage Loan.
(11) All
fees and charges (including finance charges) and whether or not financed,
assessed, collected or to be collected in connection with the origination and
servicing of each Mortgage Loan has been disclosed in writing to the borrower
in
accordance with applicable state and federal law and regulation.
(12) All
improvements located on each Mortgaged Property lie within the boundary lines
of
the related Mortgaged Property. There are no violations of applicable zoning
laws or regulations.
(13) Each
adjustable rate mortgage loan (each an “ARM Loan”) conforms, if applicable, to
its stated Initial Note Rate, Index, Gross Margin, Interest Rate Change Dates,
Index Value Dates, Payment Change Dates, Maximum Lifetime Note Rate, Periodic
Rate Cap, Periodic Payment Cap, first Interest Rate Change Date, Initial
Periodic Rate Cap, Initial Periodic Payment Cap, any pre-payment penalty,
Minimum Gross Margin, and Minimum Lifetime Note Rate. Each ARM Loan has been
serviced pursuant to prudent servicing standards and Xxxxxx Xxx or Xxxxxxx
Mac
standards. Installments of principal and interest are subject to change due
to
adjustments to the Note Rates, with interest calculated and payable in arrears,
and are sufficient to amortize each Mortgage Loan fully by the stated maturity
date, over an original term of thirty years from commencement of amortization.
All provisions for the adjustment of Note Rates comply with state and federal
law and the terms of the Mortgage Note.
B-2
(14) Upon
default by a Borrower on a Mortgage Loan and the subsequent foreclosure on
the
Mortgaged Property pursuant to proper procedures, the holder of the Mortgage
Loan will be able to deliver “Good and Merchantable Title” to the Mortgaged
Property underlying that Mortgage Loan, except to the extent that the
enforceability of remedies against such Borrower may be subject to applicable
bankruptcy, reorganization, insolvency or other similar laws affecting
creditors’ rights generally from time to time in effect, and to general
principles of equity. There is no homestead exemption or other defense available
to the Borrower that would prevent the sale of the Mortgaged Property at a
trustee’s sale or impair the right of foreclosure.
(15) Each
Mortgage Loan is an “obligation principally secured by an interest in real
property” within the meaning of Treas. Reg. §1.860G-2(a).
(16) No
Mortgage Note is secured by any collateral except the lien of the corresponding
Security Instrument.
(17) No
Mortgage Loan is a graduated payment mortgage loan and no Mortgage Loan has
a
shared appreciation or other contingent interest feature.
(18) In
connection with the origination and servicing of each Mortgage Loan, all
applicable federal, state and local laws and regulations including but not
limited to consumer credit, equal credit opportunity, real estate settlement
procedures, truth-in-lending and usury, have been complied with by SFM and
the
entity from whom SFM purchased such Mortgage Loans. All levied assessments
not
part of the general tax xxxx have been paid in full before or at closing of
each
Mortgage Loan.
(19) SFM
has
no knowledge of any relief requested and allowed to any Borrower under the
Servicemembers Civil Relief Act.
(20) All
information regarding the Mortgage Loans that could reasonably be expected
to
adversely affect the value or the marketability of any Mortgaged Property or
Mortgage Loan and of which SFM is aware has been provided by SFM to
SAXON.
(21) All
amounts, with respect to the Mortgage Loans, received after the Cut-off Date
and
to which SFM is not entitled will be deposited into the Collection Account.
(22) SFM
did
not use adverse selection procedures in selecting the Mortgage Loans to be
sold
to SAXON.
B-3
(23) There
is
in effect with respect to each Mortgage Loan so identified on Schedule
I
a policy
of Primary Mortgage Insurance issued by the mortgage insurance company specified
therein; all the information set forth in Schedule
I
is true
and correct.
(24) The
information set forth in Schedule
I
and
Schedule
II
is true
and correct in all material respects as of the Cut-off Date (or, with respect
to
Mortgage Loans originated after the Cut-off Date, the date of origination
thereof).
(25) The
consideration received by SFM upon the sale of the Mortgage Loans constitutes
fair consideration and reasonably equivalent value for the Mortgage Loans.
(26) SFM
is
not, and does not expect with the passage of time to become, insolvent or
bankrupt. The sale of the Mortgage Loans will not cause SFM to become insolvent
and is not undertaken with the intent to hinder, delay or defraud any of SFM’s
creditors.
(27) SFM
intends to relinquish all rights to possess and control the Mortgage Loans.
SFM
will have no right to modify or alter the terms of the Mortgage Loans, and
SFM
will have no right or obligation to repurchase any Mortgage Loan or substitute
another mortgage loan for any Mortgage Loan, except as provided in Sections
3(d), 3(e), 7(b) and 7(d) of the Sales Agreement.
(28) As
of the
date hereof, no Borrower is subject to bankruptcy or insolvency proceedings,
and, to the best of SFM’s knowledge, the filing of a bankruptcy or insolvency
proceeding that would result in such Mortgage Loan becoming subject to
bankruptcy or insolvency proceedings is not imminent. As of the date hereof,
no
property securing a Mortgage Loan is subject to foreclosure proceedings, and,
to
the best of SFM’s knowledge, the commencement of foreclosure proceedings, with
respect to property securing a Mortgage Loan, is not imminent.
(29) Each
Security Instrument securing a Mortgage Loan has been duly executed and
delivered by the Borrower and constitutes a legal, valid and binding obligation
of the Borrower, enforceable against the Borrower in accordance with its terms,
subject, as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency or other laws affecting the enforcement of creditors’
rights generally and to general principles of equity.
(30) Each
Security Instrument securing a Mortgage Loan has been duly recorded in the
appropriate governmental recording office of the jurisdiction where the
Mortgaged Property are located, or SFM has obtained an Opinion of Counsel that
no recording or filing is necessary in order to make effective the lien and
security interest intended to be created thereby.
(31) Except
with respect to any MERS Loan, if the Security Instrument securing a Mortgage
Loan does not name SFM or the Custodian as the holder, then a valid and
recordable Assignment assigning to SFM or the Custodian the Security Instrument
underlying the Mortgage Loan has been duly recorded in the appropriate
governmental recording office for the jurisdiction in which the Mortgaged
Property are located, and SFM has delivered to SAXON the original copy of such
Assignment with appropriate evidence that such Assignment has been duly recorded
or a copy of the original Assignment together with a certificate from an Officer
of SFM or the loan originator from which SFM purchased the Mortgage Loan
certifying that such Assignment has been recorded in the appropriate
governmental recording office, but that such recorded Assignment has not been
returned to SFM; provided,
however, that
such
Assignment shall not be required to have been recorded if Seller shall have
obtained an Opinion of Counsel that no recording is necessary in order to make
effective the assignment intended to be created thereby.
B-4
(32) A
Title
Insurance Policy has been issued on a currently prescribed American Land Title
Association form (or other acceptable form of Title Insurance Policy) with
respect to each Mortgage Loan (other than a Junior Mortgage Loan described
below), is valid and binding and remains in full force and effect and insures
SFM, its successors or assigns as holding a lien for the full principal amount
of such Mortgage Loan.
(33) There
are
no mechanic’s or other liens against the Mortgaged Property that are superior to
or equal to the lien of the Mortgage Loan, except such liens as are expressly
insured against by a Title Insurance Policy.
(34) As
of the
Closing Date, a Hazard Insurance Policy is in full force and effect as required
by SFM’s underwriting guidelines in effect as of the date hereof, and Flood
Insurance coverage is in effect if required by SFM’s underwriting guidelines in
effect as of the date hereof. Such insurance policies contain a mortgagee clause
insuring SFM, its successors and assigns. If Mortgage Insurance is required,
all
conditions necessary for the effectiveness thereof have been satisfied, and
the
Mortgage Insurance is valid and in full force and effect and meets the
requirements of SFM’s underwriting guidelines in effect as of the date hereof.
Such Mortgage Insurance is the valid and binding agreement of the insurer,
and
all premiums thereon have been paid when due and sufficient escrow arrangements
have been established to provide for future premium payments. To the best of
SFM’s knowledge, no events have occurred since the Mortgage Insurance was issued
that would reduce the stated coverage of the Mortgage Insurance.
(35) All
taxes, government assessments or municipal charges due and owing have been
paid,
and sufficient escrow arrangements have been established to make payment thereof
in the future.
(36) As
of the
Closing Date, each Mortgaged Property is free of material damage and is in
good
repair.
(37) With
respect to a deed of trust, the trustee named in the Mortgage Loan Documents
is
authorized to serve as such in the applicable jurisdiction. No fees or expenses
are payable by SFM or SAXON to such trustee pursuant to a deed of trust other
than any applicable trustee’s expenses incurred after a
default.
B-5
(38) With
respect to an appraisal of a Mortgaged Property, each was made by an automatic
valuation model or an appraiser who either (i) met the minimum qualifications
of
Xxxxxx Xxx or Xxxxxxx Mac for appraisers, and each appraisal was completed
on a
form satisfactory to Xxxxxx Mae and Xxxxxxx Mac and includes information
concerning comparable property values or (ii) at the time that the appraisal
was
made, was certified in the state in which the Mortgaged Property are
located.
(39) No
Mortgage Loan is secured by a leasehold estate except such leasehold estates
as
are permitted pursuant to SFM’s underwriting guidelines in effect as of the date
hereof.
(40) Taking
into account the specific characteristics of the various Mortgage Loans: (1)(A)
the Servicing Fee Rate for each Mortgage Loan and (B) all other amounts such
as
late charges, prepayment fees, penalty interest, assumption fees or interest
earnings (the “Additional Amounts”) that the Servicer and any subservicer
retained by the Servicer are entitled to receive, represent a reasonable and
customary servicing fee for servicing and other duties required to be performed
by the Servicer and the subservicers; and (2) the Servicing Fee and the
Additional Amounts will be divided between the Servicer and any subservicers
retained by it in such proportions that the amounts retained by the Servicer
and
each subservicer will represent a reasonable and customary servicing fee for
the
performance of the Mortgage Loan servicing and other duties required to be
performed by each of them. Any amendment to the Servicing Fee Rate following
the
Closing Date shall be deemed to meet the foregoing criteria if each Rating
Agency has provided written confirmation that such amendment will not result
in
the reduction or withdrawal of its then-current rating of any Class of Offered
Certificates.
(41) There
is
no offset, defense or counterclaim to any Mortgage Note or Security Instrument,
including any offset, defense or counterclaim that would excuse or lessen the
obligation of the Borrower to pay the unpaid principal or interest on such
Mortgage Note.
(42) Less
than
1.00% of the Mortgage Loans were more than 30 days delinquent as of February
1,
2007, and no Mortgage
Loan was 60 days or more delinquent as of such date.
(43) None
of
the Mortgage Loans is secured by third liens.
(44) The
Security Instrument with respect to certain of the Mortgage Loans contains
a
provision for the acceleration of the payment of the unpaid principal balance
of
such Mortgage Loans if the related Mortgaged Property is sold or transferred
without the prior written consent of the Mortgagee thereunder, at the option
of
the Mortgagee. This provision provides that the Mortgagee cannot exercise its
option if either (i) the exercise of such option is prohibited by federal law
or
(ii) (A) the Borrower causes to be submitted to the Mortgagee information
required by the Mortgagee to evaluate the intended transferee as if a new loan
were being made to such transferee and (B) the Mortgagee reasonably determines
that the Mortgagee’s security will not be impaired by the assumption of such
Mortgage Loan by the transferee and that the risk of breach of any covenant
or
agreement in the Mortgage Loan Documents is acceptable to the Mortgagee. To
the
best of SFM’s knowledge, such provisions are enforceable.
B-6
(45) [Reserved].
(46) [Reserved].
(47) [Reserved].
(48) None
of
the Mortgage Loans is a retail installment contract for goods or services or
a
home improvement loan for goods or services, which are either “consumer credit
contracts” or “purchase money loans” as such terms are defined in 16 CFR
433.1.
(49) None
of
the Mortgage Loans are (A) subject to 12 CFR Part 226.31, 12 CFR Part 226.32
or
12 CFR Part 226.34 of Regulation Z, the regulation implementing TILA, which
implements the Home Ownership and Equity Protection Act of 1994, as amended,
(B)(i) “High-Cost Home Loans” as defined in the New Jersey Home Ownership Act
effective November 27, 2003, (ii) “High-Cost Home Loans” as defined in the New
Mexico Home Loan Protection Act effective January 1, 2004, (iii) secured by
property located in Illinois and in violation of the Illinois Interest Act
(815
111 Comp. Stat. 205/1 et
seq.
or
“High-Risk Home Loans” as defined in the Illinois High-Risk Home Loan Act (815
111 Comp. Stat 137/1 et
seq.),
(iv)
“High Cost Loans” or “Covered Loans,” as applicable (as such terms are defined
in the then current S&P’s LEVELS® Glossary which is now Version 5.6c
revised, Appendix E), (v) governed by the Georgia Fair Lending Act, if such
Mortgage Loan was originated on or after October 1, 2002 through March 6, 2003,
(vi) “High Cost Home Loans” as defined in the Arkansas Home Loan Protection Act
(Act 1340 of 2003) or (vii) “High Cost Home Loans” as defined in the Kentucky
high-cost home loan statute (Ky, Rev. Stat. Section 360.100) or (C) classified
and/or defined as a “high cost” loan or “predatory,” “high cost,” “threshold” or
“covered” lending under any other state, federal or local law where such law
expressly exposes an assignee to civil or criminal liability or damages, or
to
regulatory action or enforcement proceedings or penalties or materially impairs
the enforceability of the Mortgage Loan. Each Mortgage Loan at the time it
was
made otherwise complied in all material respects with any and all requirements
of any federal, state or local law including, but not limited to, all predatory
lending laws, usury, truth in lending, real estate settlement procedures
(including the Real Estate Settlement Procedures Act of 1974, as amended),
consumer credit protection, equal credit opportunity or disclosure laws
applicable to such Mortgage Loan.
(50) Each
Mortgage Loan at the time it was made complied in all material respects with
applicable local, state, and federal laws, including, but not limited to, all
applicable predatory and abusive lending laws.
B-7
(51) Each
Prepayment Penalty is permissible, originated in compliance with, and
enforceable in accordance with its terms under, applicable federal, state and
local law (except to the extent that the enforceability thereof may be limited
by bankruptcy, insolvency, moratorium, receivership and other similar laws
affecting creditor’s rights generally or the collectibility thereof may be
limited due to acceleration in connection with foreclosure).
(52) The
information set forth in the Prepayment Penalty Schedule attached as Schedule
II
hereto (including the Prepayment Penalty Summary attached thereto) is complete,
true and correct in all material respects on the date or dates when such
information is furnished and each Prepayment Penalty is permissible and
enforceable in accordance with its terms (except to the extent that the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws affecting creditor's rights generally or
the
collectability thereof may be limited due to acceleration in connection with
a
foreclosure) under applicable federal, state and local law
(53) With
respect to each ARM Loan, such Mortgage Loan has a gross margin of not less
than 4.50%.
(B) In
addition to the foregoing representations and warranties made in subparagraphs
(1) through (53)
above, the Seller further represents and warrants upon delivery of the Mortgage
Loans identified on Schedule IA (the “Group 1 Mortgage Loans”), as to each,
that:
(1) each
Group 1 Mortgage Loan, at the time of origination, complied in all material
respects with applicable local, state and federal laws, including, but not
limited to, all applicable predatory and abusive lending laws;
(2) no
Group
1 Mortgage Loan was subject to the Home Ownership and Equity Protection Act
of
1994;
(3) no
Group
1 Mortgage Loan secured by property in the State of Georgia was originated
on or
after October 1, 2002 and before March 7, 2003, and no Group 1 Mortgage Loan
that was originated on or after March 7, 2003 is a “high cost home loan” as
defined under the Georgia Fair Lending Act;
(4) no
Group
1 Mortgage Loan is a “high cost home,” “covered”
(excluding home loans defined as “covered home loans” in the New Jersey Home
Ownership Security Act of 2002 that were originated between November 26, 2003
and July 7, 2004),“high
risk home” or “predatory” loan under any applicable state, federal or local law
(or
a similarly classified loan using different terminology under a law imposing
heightened regulatory scrutiny or additional legal liability for residential
mortgage loans having high interest rates, points and/or fees);
B-8
(5) no
borrower of a Group 1 Mortgage Loan obtained a prepaid single-premium
credit-life, credit disability, credit unemployment or credit property insurance
policy in connection with the origination of the Group 1 Mortgage
Loan;
(6) with
respect to any Group 1 Mortgage Loan that contains a provision permitting
imposition of a penalty upon a prepayment prior to maturity: (a) the Group
1
Mortgage Loan provides some benefit to the borrower (e.g.,
a rate
or fee reduction) in exchange for accepting such prepayment penalty; (b) the
Group 1 Mortgage Loan’s originator had a written policy of offering the
borrower, or requiring third-party brokers to offer the borrower, the option
of
obtaining a mortgage loan that did not require payment of such a penalty; (c)
the prepayment penalty was adequately disclosed to the borrower pursuant to
applicable state and federal law; (d) no Group 1 subprime loan originated on
or
after October 1, 2002 will provide for prepayment penalties for a term in excess
of three years and any Group 1 Mortgage Loan originated prior to such date,
and
any Group 1 non-subprime loans, will not provide for prepayment penalties for
a
term in excess of five years; in each case unless the Group 1 Mortgage Loan
was
modified to reduce the prepayment period to no more than three years from the
date of the note and the borrower was notified in writing of such reduction
in
prepayment period; and (e) such prepayment penalty shall not be imposed in
any
instance where the Group 1 Mortgage Loan is accelerated or paid off in
connection with the workout of a delinquent mortgage or due to the borrower’s
default, notwithstanding that the terms of the Group 1 Mortgage Loan or state
or
federal law might permit the imposition of such penalty;
(7) the
Servicer has fully furnished, in accordance with the Fair Credit Reporting
Act
and its implementing regulations, accurate and complete information (i.e.,
favorable and unfavorable) on its borrower credit files to Equifax, Experian,
and Trans Union Credit Information Company (three of the credit repositories),
on a monthly basis for each Group 1 Mortgage Loan;
(8) the
Servicer will fully furnish, in accordance with the Fair Credit Reporting Act
and its implementing regulations, accurate and complete information (i.e.,
favorable and unfavorable) on its borrower credit files to Equifax, Experian,
and Trans Union Credit Information Company (three of the credit repositories),
on a monthly basis for each Group 1 Mortgage Loan;
(9) with
respect to each Group 1 Mortgage Loan, the borrower was not encouraged or
required to select a mortgage loan product offered by the mortgage loan’s
originator which is a higher cost product designed for less creditworthy
borrowers, taking into account such facts as, without limitation, the mortgage
loan’s requirements and the borrower’s credit history, income, assets and
liabilities. For a borrower who seeks financing through a mortgage loan
originator’s higher-priced subprime lending channel, the borrower should be
directed towards or offered the mortgage loan originator’s standard mortgage
line if the borrower is able to qualify for one of the standard
products;
B-9
(10) the
methodology used in underwriting the extension of credit for each Group 1
Mortgage Loan did not rely on the extent of the borrower’s equity in the
collateral as the principal determining factor in approving such extension
of
credit. The methodology employed objective criteria that related such facts
as,
without limitation, the borrower’s credit history, income, assets or
liabilities, to the proposed mortgage payment and, based on such methodology,
the mortgage loan’s originator made a reasonable determination that at the time
of origination the borrower had the ability to make timely payments on the
mortgage loan;
(11) no
borrower under a Group 1 Mortgage Loan was charged “points and fees” in an
amount greater than (a) $1,000 or (b) 5% of the principal amount of such
mortgage loan, whichever is greater. For purposes of this representation,
“points and fees” (x) include origination, underwriting, broker and finder’s
fees and charges that the lender imposed as a condition of making the mortgage
loan, whether they are paid to the lender or a third party; and (y) exclude
bona
fide discount points, fees paid for actual services rendered in connection
with
the origination of the mortgage (such as attorneys’ fees, notaries fees and fees
paid for property appraisals, credit reports, surveys, title examinations and
extracts, flood and tax certifications, and home inspections); the cost of
mortgage insurance or credit-risk price adjustments; the costs of title, hazard,
and flood insurance policies; state and local transfer taxes or fees; escrow
deposits for the future payment of taxes and insurance premiums; and other
miscellaneous fees and charges that, in total, do not exceed 0.25 percent of
the
loan amount;
(12) with
respect to any Group 1 Mortgage Loan originated on or after August 1, 2004,
neither the related mortgage nor the related mortgage note requires the borrower
to submit to arbitration to resolve any dispute arising out of or relating
in
any way to the mortgage loan transaction; unless such agreement to arbitrate
in
the Mortgage or Mortgage Note provides that, in the event that a Group 1
Mortgage Loan or an interest in a Group 1 Mortgage Loan is sold to Xxxxxxx
Mac,
the arbitration clause immediately becomes null and void and cannot be
reinstated, neither the seller nor any servicer shall require that the borrower
submit to arbitration to resolve any dispute arising out of or relating in
any
way to the Mortgage Loan transaction, the Seller or Servicer will provide the
borrower with written notice of the waiver of the arbitration provision within
60 days of a sale of the Mortgage Loan or an interest in the Mortgage Loan
to
Xxxxxxx Mac, and the Seller or Servicer will maintain a copy of such notice
in
the Mortgage Loan file.
(13) no
Group
1 Mortgage Loan is secured by manufactured housing; and
(14) no
Group
1
Mortgage Loan
has an original principal balance that exceeds the applicable Xxxxxxx Mac loan
limit.
B-10