SALE AND SERVICING AGREEMENT
SALE AND SERVICING AGREEMENT
dated as of December 1, 1999
by and among
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION,
as Depositor,
ABFS MORTGAGE LOAN TRUST 1999-4,
as Issuer,
AMERICAN BUSINESS CREDIT, INC.,
as Servicer,
CHASE BANK OF TEXAS, N.A.,
as Collateral Agent,
and
THE BANK OF NEW YORK,
as Indenture Trustee
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS........................................................1
Section 1.01. Certain Defined Terms........................................1
Section 1.02. Provisions of General Application............................1
Section 1.03. Business Day Certificate.....................................2
ARTICLE II SALE AND CONVEYANCE OF THE MORTGAGE LOANS.........................2
Section 2.01. Purchase and Sale of Initial Mortgage Loans..................2
Section 2.02. Purchase and Sale of Subsequent Mortgage Loans...............3
Section 2.03. Purchase Price...............................................4
Section 2.04. Possession of Mortgage Files; Access to Mortgage Files.......4
Section 2.05. Delivery of Mortgage Loan Documents..........................4
Section 2.06. Acceptance of the Trust Estate; Certain Substitutions;
Certification by the Collateral Agent.....................7
Section 2.07. Grant of Security Interest...................................9
Section 2.08. Further Action Evidencing Assignments.......................10
Section 2.09. Assignment of Agreement.....................................10
ARTICLE III REPRESENTATIONS AND WARRANTIES..................................11
Section 3.01. Representations of the Servicer.............................11
Section 3.02. Representations, Warranties and Covenants of the
Depositor................................................12
Section 3.03. Representations, Warranties and Covenants of the
Collateral Agent.........................................14
Section 3.04. Representations, Warranties and Covenants of the
Indenture Trustee........................................14
ARTICLE IV THE MORTGAGE LOANS...............................................15
Section 4.01. Representations and Warranties Concerning the Mortgage
Loans....................................................15
Section 4.02. Purchase and Substitution...................................15
ARTICLE V ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS................17
Section 5.01. The Servicer................................................17
Section 5.02. Collection of Certain Mortgage Loan Payments;
Collection Account.......................................18
Section 5.03. Permitted Withdrawals from the Collection Account...........19
Section 5.04. Hazard Insurance Policies; Property Protection Expenses.....20
Section 5.05. Assumption and Modification Agreements......................21
Section 5.06. Realization Upon Defaulted Mortgage Loans...................21
Section 5.07. Indenture Trustee to Cooperate..............................22
Section 5.08. Servicing Compensation; Payment of Certain Expenses by
Servicer.................................................23
Section 5.09. Annual Statement as to Compliance...........................23
Section 5.10. Annual Independent Public Accountants' Servicing Report.....23
Section 5.11. Access to Certain Documentation.............................24
Section 5.12. Maintenance of Fidelity Bond................................24
(i)
Section 5.13. The Subservicers............................................24
Section 5.14. Reports to the Indenture Trustee; Collection Account
Statements...............................................25
Section 5.15. Optional Purchase of Defaulted Mortgage Loans...............25
Section 5.16. Reports to be Provided by the Servicer......................26
Section 5.17. Adjustment of Servicing Compensation in Respect of
Prepaid Mortgage Loans...................................27
Section 5.18. Periodic Advances; Special Advance..........................28
Section 5.19. Indemnification; Third Party Claims.........................29
Section 5.20. Maintenance of Corporate Existence and Licenses; Merger
or Consolidation of the Servicer.........................30
Section 5.21. Assignment of Agreement by Servicer; Servicer Not to
Resign...................................................30
Section 5.22. Periodic Filings with the Securities and Exchange
Commission; Additional Information.......................30
ARTICLE VI APPLICATION OF FUNDS.............................................31
Section 6.01. Deposits to the Payment Account.............................31
Section 6.02. Collection of Money.........................................31
Section 6.03. Application of Principal and Interest.......................31
Section 6.04. Information Concerning the Mortgage Loans...................31
Section 6.05. Compensating Interest.......................................32
Section 6.06. Effect of Payments by the Note Insurer; Subrogation.........32
ARTICLE VII SERVICER DEFAULT................................................32
Section 7.01. Servicer Events of Default..................................32
Section 7.02. Indenture Trustee to Act; Appointment of Successor..........35
Section 7.03. Waiver of Defaults..........................................37
Section 7.04. Rights of the Note Insurer to Exercise Rights of the
Noteholders..............................................37
Section 7.05. Indenture Trustee To Act Solely with Consent of the
Note Insurer.............................................38
Section 7.06. Mortgage Loans, Trust Estate and Accounts Held for
Benefit of the Note Insurer..............................38
Section 7.07. Note Insurer Default........................................38
ARTICLE VIII TERMINATION....................................................39
Section 8.01. Termination.................................................39
Section 8.02. Additional Termination Requirements.........................40
Section 8.03. Accounting Upon Termination of Servicer.....................40
Section 8.04. Retention and Termination of the Servicer...................40
ARTICLE IX THE COLLATERAL AGENT.............................................41
Section 9.01. Duties of the Collateral Agent..............................41
Section 9.02. Certain Matters Affecting the Collateral Agent..............42
Section 9.03. Collateral Agent Not Liable for Notes or Mortgage Loans.....44
Section 9.04. Collateral Agent May Own Notes..............................44
Section 9.05. Collateral Agent's Fees and Expenses; Indemnity.............44
Section 9.06. Eligibility Requirements for Collateral Agent...............44
(ii)
Section 9.07. Resignation and Removal of the Collateral Agent.............45
Section 9.08. Successor Collateral Agent..................................45
Section 9.09. Merger or Consolidation of Collateral Agent.................46
ARTICLE X MISCELLANEOUS PROVISIONS..........................................46
Section 10.01. Limitation on Liability....................................46
Section 10.02. Acts of Noteholders........................................47
Section 10.03. Amendment..................................................47
Section 10.04. Recordation of Agreement...................................48
Section 10.05. Duration of Agreement......................................48
Section 10.06. Notices....................................................48
Section 10.07. Severability of Provisions.................................49
Section 10.08. No Partnership.............................................49
Section 10.09. Counterparts...............................................49
Section 10.10. Successors and Assigns.....................................49
Section 10.11. Headings...................................................50
Section 10.12. The Note Insurer Default...................................50
Section 10.13. Third Party Beneficiary....................................50
Section 10.14. Intent of the Parties......................................50
Section 10.15. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL...................................................50
EXHIBITS
EXHIBIT A Contents of the Mortgage File
EXHIBIT B Indenture Trustee's Acknowledgement of Receipt
EXHIBIT C Collateral Agent's Acknowledgement of Receipt
EXHIBIT D Initial Certification of Collateral Agent
EXHIBIT E Final Certification of Collateral Agent
EXHIBIT F Request for Release of Documents
EXHIBIT G Form of Subsequent Contribution Agreement
SCHEDULES
SCHEDULE I Mortgage Loan Schedule
(iii)
SALE AND SERVICING AGREEMENT, dated as of December 1, 1999 (this "Agreement"),
by and among PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION, a Delaware
corporation, as depositor (the "Depositor"), ABFS MORTGAGE LOAN TRUST 1999-4, a
Delaware statutory business trust, as issuer (the "Trust"), AMERICAN BUSINESS
CREDIT, INC., a Pennsylvania corporation, as servicer (the "Servicer"), CHASE
BANK OF TEXAS, N.A., a national banking association, as collateral agent (the
"Collateral Agent"), and THE BANK OF NEW YORK, a New York banking corporation,
as indenture trustee (the "Indenture Trustee").
W I T N E S S E T H
WHEREAS, the Depositor desires to sell to the Trust, and the Trust desires to
purchase from the Depositor, the mortgage loans (the "Mortgage Loans") listed on
Schedule I to this Agreement;
WHEREAS, immediately after such purchase, the Trust will pledge such Mortgage
Loans to the Indenture Trustee pursuant to the terms of an Indenture, dated as
of December 1, 1999 (the "Indenture"), between the Trust and the Indenture
Trustee, and issue the ABFS Mortgage Loan Trust 1999-4, Mortgage Backed Notes
(the "Notes");
WHEREAS, the Servicer has agreed to service the Mortgage Loans, which constitute
the principal assets of the Trust;
WHEREAS, the Collateral Agent will hold, on behalf of the Indenture Trustee, the
Mortgage Loans and certain other assets pledged to the Indenture Trustee
pursuant to the Indenture; and
WHEREAS, Financial Security Assurance Inc. (the "Note Insurer") is intended to
be a third-party beneficiary of this Agreement, and is hereby recognized by the
parties hereto as a third-party beneficiary of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the Trust, the Depositor, the Servicer, the Collateral Agent
and the Indenture Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. Capitalized terms used herein but
not defined herein shall have the meanings ascribed to such terms in Appendix I
attached hereto.
Section 1.02. Provisions of General Application. (a) All accounting
terms not specifically defined herein shall be construed in accordance with
GAAP.
(b) The terms defined herein and in Appendix I to the
Indenture include the plural as well as the singular.
1
(c) The words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole. All references to
Articles and Sections shall be deemed to refer to Articles and Sections of this
Agreement.
(d) Any reference to statutes are to be construed as including
all statutory provisions consolidating, amending or replacing the statute to
which reference is made and all regulations promulgated pursuant to such
statutes.
(e) All calculations of interest with respect to the Class A-1
Notes and the Class A-2 Notes provided for herein shall be made on the basis of
a 360-day year consisting of twelve 30-day months. All calculations of interest
with respect to the Class A-3 Notes provided for herein shall be on the basis of
a 360-day year and the actual number of days elapsed in the related Accrual
Period. All calculations of interest with respect to any Mortgage Loan provided
for herein shall be made in accordance with the terms of the related Mortgage
Note and Mortgage or, if such documents do not specify the basis upon which
interest accrues thereon, on the basis of a 360-day year consisting of twelve
30-day months, to the extent permitted by applicable law.
(f) Any Mortgage Loan payment is deemed to be received on the
date such payment is actually received by the Servicer; provided, however, that,
for purposes of calculating payments on the Notes, prepayments with respect to
any Mortgage Loan are deemed to be received on the date they are applied in
accordance with Accepted Servicing Practices consistent with the terms of the
related Mortgage Note and Mortgage to reduce the outstanding Principal Balance
of such Mortgage Loan on which interest accrues.
Section 1.03. Business Day Certificate. On the Closing Date (with
respect to the calendar years 1999 and 2000) and thereafter, within fifteen (15)
days prior to the end of each calendar year while this Agreement remains in
effect (with respect to the succeeding calendar years), the Servicer shall
provide to the Indenture Trustee and the Collateral Agent a certificate of a
Servicing Officer specifying the days on which banking institutions in the
Commonwealth of Pennsylvania are authorized or obligated by law, executive order
or governmental decree to be closed.
ARTICLE II
SALE AND CONVEYANCE OF THE MORTGAGE LOANS
Section 2.01. Purchase and Sale of Initial Mortgage Loans. The
Depositor does hereby sell, transfer, assign, set over and convey to the Trust,
without recourse, but subject to the terms and provisions of this Agreement, all
of the right, title and interest of the Depositor in and to the Initial Mortgage
Loans, including the outstanding principal of, and interest due on, such Initial
Mortgage Loans listed on Schedule I attached hereto, and all other assets
included or to be included in the Trust Estate. In connection with such transfer
and assignment, and pursuant to Section 2.07 of the Unaffiliated Seller's
Agreement, the Depositor does hereby also irrevocably transfer, assign, set over
and otherwise convey to the Trust all of its rights under the Unaffiliated
Seller's Agreement, including, without limitation, its right to exercise the
remedies created by Sections 2.06 and 3.05 of the Unaffiliated Seller's
Agreement for defective documentation and
2
for breaches of representations and warranties, agreements and covenants of the
Unaffiliated Seller and the Originators contained in Sections 3.01, 3.02 and
3.03 of the Unaffiliated Seller's Agreement.
Section 2.02. Purchase and Sale of Subsequent Mortgage Loans. (a)
Subject to the satisfaction of the conditions set forth in Section 2.14(b) of
the Indenture, in consideration of the Trust's delivery on the related
Subsequent Transfer Dates to or upon the order of the Depositor of all or a
portion of the balance of funds in the related Pre-Funding Account, the
Depositor shall on any Subsequent Transfer Date sell, transfer, assign, set over
and convey to the Trust without recourse, but subject to terms and provisions of
this Agreement, all of the right, title and interest of the Depositor in and to
the Subsequent Mortgage Loans in the related Pool, including the outstanding
principal of, and interest due on, such Subsequent Mortgage Loans, and all other
assets included or to be included in the Trust Estate. In connection with such
transfer and assignment, and pursuant to Section 2.07 of the Unaffiliated
Seller's Agreement, the Depositor will also irrevocably transfer, assign, set
over and otherwise convey to the Trust all of its rights under the Unaffiliated
Seller's Agreement and the related Subsequent Transfer Agreement, including,
without limitation, its right to exercise the remedies created by Sections 2.06
and 3.05 of the Unaffiliated Seller's Agreement for defective documentation and
for breaches of representations and warranties, agreements and covenants of the
Unaffiliated Seller and the Originators contained in Sections 3.01, 3.02 and
3.03 of the Unaffiliated Seller's Agreement.
The amount released from a Pre-Funding Account with respect to a transfer of
Subsequent Mortgage Loans to the related Pool shall be one-hundred percent
(100%) of the Aggregate Principal Balances of the Subsequent Mortgage Loans so
transferred, as of the related Subsequent Cut-Off Date.
(b) In connection with the transfer and assignment of the
Subsequent Mortgage Loans to the Trust, the Depositor shall cause the
Unaffiliated Seller to satisfy the document delivery requirements set forth in
Section 2.05 hereof.
(c) For any Subsequent Mortgage Loan that has a first Due Date
that occurs later than the last day of the Due Period following the Due Period
in which the Subsequent Mortgage Loan was sold to the Trust, on each applicable
Servicer Payment Date, the Servicer will deposit into the Payment Account 30
days' interest at the related Mortgage Interest Rate, net of the Servicing Fee,
for each month after the month in which the Subsequent Transfer occurs until,
but not including, the month in which such first Due Date occurs.
Section 2.03. Purchase Price. On the Closing Date, as full
consideration for the Depositor's sale of the Initial Mortgage Loans to the
Trust, the Underwriter, on behalf of the Trust, will deliver to, or at the
direction of, the Depositor (i) an amount in cash equal to the sum of (A)
99.70%, 98.7625% and 99.70% of the Original Note Principal Balance as of the
Closing Date of the Class A-1 Notes, the Class A-2 Notes and the Class A-3
Notes, respectively, plus (B) accrued interest on the Original Note Principal
Balance of the Class A-1 Notes and the Class A-2 Notes at the rate of 7.675% and
7.200%, respectively, per annum from (and including) December 1, 1999 to (but
not including) the Closing Date, minus (C) the Original Pre-Funded Amount and
the Original Capitalized Interest Amount with respect to each Class of Notes,
payable by wire
3
transfer of same day funds, and (ii) the Trust Certificates to be issued
pursuant to the Trust Agreement.
Section 2.04. Possession of Mortgage Files; Access to Mortgage Files.
(a) Upon the receipt by the Depositor, or its designee, of the purchase price
for the Initial Mortgage Loans set forth in Section 2.03 hereof and the issuance
of the Notes pursuant to the Indenture, the ownership of each Mortgage Note,
each Mortgage and the contents of the Mortgage File related to each Initial
Mortgage Loan will be vested in the Trust, and will be pledged to the Indenture
Trustee, for the benefit of the Noteholders and the Note Insurer.
(b) Pursuant to Section 2.05 hereof and Section 2.05 of the
Unaffiliated Seller's Agreement, the Unaffiliated Seller has delivered or caused
to be delivered the Indenture Trustee's Mortgage File related to each Initial
Mortgage Loan to the Collateral Agent, on behalf of the Indenture Trustee.
(c) The Collateral Agent will be the custodian, on behalf of
the Indenture Trustee, to hold the Indenture Trustee's Mortgage Files in trust
for the benefit of all present and future Noteholders and the Note Insurer. In
the event the Collateral Agent resigns or is removed, the Indenture Trustee
shall either (x) hold the Indenture Trustee's Mortgage Files, or (y) appoint a
successor Collateral Agent to hold the Indenture Trustee's Mortgage Files as set
forth in Section 9.08 hereof.
(d) The Collateral Agent shall afford the Depositor, the
Trust, the Note Insurer and the Servicer reasonable access to all records and
documentation regarding the Mortgage Loans relating to this Agreement, such
access being afforded at customary charges, upon reasonable prior written
request and during normal business hours at the offices of the Collateral Agent.
Section 2.05. Delivery of Mortgage Loan Documents. (a) In connection
with the transfer and assignment of the Mortgage Loans, the Depositor shall on
or before the Closing Date, with respect to the Initial Mortgage Loans, and
shall on or before the Subsequent Transfer Date with respect to Subsequent
Mortgage Loans, deliver, or cause the Unaffiliated Seller to deliver, to the
Collateral Agent, on behalf of the Indenture Trustee (as pledgee of the Trust
pursuant to the Indenture), the following documents or instruments with respect
to each Mortgage Loan so transferred or assigned:
(i) the original Mortgage Note, endorsed without recourse in
blank by the related Originator, including all intervening endorsements
showing a complete chain of endorsement;
(ii) the related original Mortgage with evidence of recording
indicated thereon or a copy thereof certified by the applicable
recording office;
(iii) the recorded mortgage assignment, or copy thereof
certified by the applicable recording office, if any, showing a
complete chain of assignment from the originator of the related
Mortgage Loan to the related Originator (which assignment may, at such
Originator's option, be combined with the assignment referred to in
subpart (iv)
4
hereof, in which case it must be in recordable form, but need not have
been previously recorded);
(iv) a mortgage assignment in recordable form (which, if
acceptable for recording in the relevant jurisdiction, may be included
in a blanket assignment or assignments) of each Mortgage from the
related Originator to the Indenture Trustee;
(v) originals of all assumption, modification and substitution
agreements in those instances where the terms or provisions of a
Mortgage or Mortgage Note have been modified or such Mortgage or
Mortgage Note has been assumed; and
(vi) an original title insurance policy (or (A) a copy of the
title insurance policy, or (B) a binder thereof or copy of such binder
together with a certificate from the related Originator that the
original Mortgage has been delivered to the title insurance company
that issued such binder for recordation).
In instances where the original recorded Mortgage and a completed assignment
thereof in recordable form cannot be delivered by the related Originator to the
Unaffiliated Seller, and by the Unaffiliated Seller to the Collateral Agent, on
behalf of the Indenture Trustee prior to or concurrently with the execution and
delivery of this Agreement (or, with respect to Subsequent Mortgage Loans, prior
to or on the related Subsequent Transfer Date), due to a delay in connection
with recording, the related Originator may:
(x) in lieu of delivering such original recorded Mortgage, deliver to the
Collateral Agent, on behalf of the Indenture Trustee, a copy thereof; provided,
that the related Originator certifies that the original Mortgage has been
delivered to a title insurance company for recordation after receipt of its
policy of title insurance or binder therefor; and
(y) in lieu of delivering the completed assignment in recordable form, deliver
to the Collateral Agent, on behalf of the Indenture Trustee, the assignment in
recordable form, otherwise complete except for recording information.
The Collateral Agent, at the direction and authority of the parties to this
Agreement, on behalf of the Indenture Trustee, shall promptly upon receipt
thereof, with respect to each Mortgage Note described in Section 2.05(a)(i)
hereof and each assignment described in Section 2.05(a)(iv) hereof, endorse such
Mortgage Note and assignment as follows: "The Bank of New York, as Indenture
Trustee under the Indenture dated as of December 1, 1999, ABFS Mortgage Loan
Trust 1999-4."
(b) As promptly as practicable, but in any event within thirty
(30) days from the Closing Date or the Subsequent Transfer Date, as applicable,
the Unaffiliated Seller shall promptly submit, or cause to be submitted by the
related Originator, for recording in the appropriate public office for real
property records, each assignment referred to in Section 2.05(a)(iv). The
Collateral Agent, on behalf of the Indenture Trustee, shall retain a copy of
each assignment submitted for recording. In the event that any such assignment
is lost or returned unrecorded because of a defect therein, the Unaffiliated
Seller or such Originator shall promptly prepare a substitute assignment or cure
such defect, as the case may be, and thereafter the Unaffiliated Seller or such
Originator shall submit each such assignment for recording. The
5
costs relating to the delivery and recordation of the documents in connection
with the Mortgage Loans as specified in this Article II shall be borne by the
Unaffiliated Seller.
(c) The Unaffiliated Seller or the related Originator shall,
within five (5) Business Days after the receipt thereof, deliver, or cause to be
delivered, to the Collateral Agent, on behalf of the Indenture Trustee: (i) the
original recorded Mortgage and related power of attorney, if any, in those
instances where a copy thereof certified by the related Originator was delivered
to the Collateral Agent, on behalf of the Indenture Trustee; (ii) the original
recorded assignment of Mortgage from the related Originator to the Indenture
Trustee, which, together with any intervening assignments of Mortgage, evidences
a complete chain of assignment from the originator of the Mortgage Loan to the
Indenture Trustee, in those instances where copies of such assignments certified
by the related Originator were delivered to the Collateral Agent, on behalf of
the Indenture Trustee, and (iii) the title insurance policy or title opinion
required in Section 2.05(a)(vi). The Collateral Agent shall review the recorded
assignment to confirm the information contained therein. The Collateral Agent
shall notify the Indenture Trustee, the Note Insurer and the Servicer, of any
defect in such assignment based on such review. The Servicer shall have a period
of sixty (60) days following such notice to correct or cure such defect.
Notwithstanding anything to the contrary contained in this Section 2.05, in
those instances where the public recording office retains the original Mortgage,
power of attorney, if any, assignment or assignment of Mortgage after it has
been recorded or such original has been lost, the Unaffiliated Seller or the
related Originator shall be deemed to have satisfied its obligations hereunder
upon delivery to the Collateral Agent, on behalf of the Indenture Trustee, of a
copy of such Mortgage, power of attorney, if any, assignment or assignment of
Mortgage certified by the public recording office to be a true copy of the
recorded original thereof.
From time to time the Unaffiliated Seller or the related Originator may forward,
or cause to be forwarded, to the Collateral Agent, on behalf of the Indenture
Trustee, additional original documents evidencing any assumption or modification
of a Mortgage Loan.
(d) All original documents relating to the Mortgage Loans that
are not delivered to the Collateral Agent, on behalf of the Indenture Trustee,
as permitted by Section 2.05(a) hereof are, and shall be, held by the Servicer,
the Unaffiliated Seller or the related Originator, as the case may be, in trust
for the benefit of the Indenture Trustee, on behalf of the Noteholders and the
Note Insurer. In the event that any such original document is required pursuant
to the terms of this Section 2.05 to be a part of an Indenture Trustee's
Mortgage File, such document shall be delivered promptly to the Collateral
Agent, on behalf of the Indenture Trustee. From and after the sale of the
Mortgage Loans to the Trust pursuant hereto, to the extent that the Unaffiliated
Seller or the related Originator retains legal title of record to any Mortgage
Loans prior to the vesting of legal title in the Trust, such title shall be
retained in trust for the Trust as the owner of the Mortgage Loans, and the
Indenture Trustee, as the pledgee of the Trust under the Indenture. In acting as
custodian of any original document which is part of the Indenture Trustee's
Mortgage Files, the Servicer agrees further that it does not and will not have
or assert any beneficial ownership interest in the related Mortgage Loans or the
Mortgage Files. Promptly upon the Servicer's receipt of any such original
document, the Servicer, on behalf of the Trust, shall mark conspicuously each
such original document, and its master data processing records with a legend
evidencing that the Trust has purchased the related Mortgage
6
Loan and all right and title thereto and interest therein, and pledged such
Mortgage Loan and all right and title thereto and interest therein to the
Indenture Trustee, on behalf of the Noteholders and the Note Insurer.
Section 2.06. Acceptance of the Trust Estate; Certain Substitutions;
Certification by the Collateral Agent. (a) The Indenture Trustee agrees to
execute and deliver to the Depositor, the Note Insurer, the Collateral Agent and
the Servicer on or prior to the Closing Date an acknowledgement of receipt of
the Note Insurance Policy in the form attached as Exhibit B hereto.
(b) The Collateral Agent is authorized and directed, on behalf
of the Indenture Trustee, to do the following:
(i) execute and deliver to the Depositor, the Note
Insurer, the Indenture Trustee, the Servicer and the
Unaffiliated Seller, on or prior to the Closing Date or any
Subsequent Transfer Date, as applicable, with respect to each
Mortgage Loan transferred on such date, an acknowledgement of
receipt of the Mortgage File containing the original Mortgage
Note (with any exceptions noted), in the form attached as
Exhibit C hereto, and declares that it will hold such
documents and any amendments, replacements or supplements
thereto, as well as any other assets included in the
definition of Trust Estate and delivered to the Collateral
Agent, on behalf of the Indenture Trustee, subject to the
conditions set forth herein, for the benefit of the
Noteholders and the Note Insurer.
(ii) to review (or cause to be reviewed) each
Indenture Trustee's Mortgage File within thirty (30) days
after the Closing Date or any Subsequent Transfer Date, as
applicable (or, with respect to any Qualified Substitute
Mortgage Loans, within thirty (30) days after the receipt by
the Collateral Agent, on behalf of the Indenture Trustee,
thereof), and to deliver to the Unaffiliated Seller, the
Servicer, the Depositor, the Indenture Trustee and the Note
Insurer a certification, in the form attached hereto as
Exhibit D, to the effect that, except as otherwise noted, as
to each Mortgage Loan listed in the related Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any
Mortgage Loan specifically identified in such certification as
not covered by such certification), (i) all documents required
to be delivered to it pursuant to Section 2.05 are in its
possession, (ii) each such document has been reviewed by it
and appears, on its face, not to have been mutilated, damaged,
torn or otherwise physically altered (handwritten additions,
changes or corrections shall not constitute physical
alteration if they reasonably appear to have been initialed),
appears regular on its face and relates to such Mortgage Loan,
and (iii) based on its examination and only as to the
foregoing documents, the information set forth on the Mortgage
Loan Schedule as to the information set forth in (i), (ii),
(v) and (vi) of the definition of "Mortgage Loan Schedule"
accurately reflects the information set forth in the Indenture
Trustee's Mortgage File delivered on such date.
(iii) to review (or cause to be reviewed) each
Indenture Trustee's Mortgage File within ninety (90) days
after the Closing Date or any Subsequent Transfer Date, as
applicable (or, with respect to any Qualified Substitute
Mortgage Loans, within ninety (90) days after the receipt by
the Collateral Agent, on behalf of the Indenture Trustee,
7
thereof), and to deliver to the Unaffiliated Seller, the
Servicer, the Depositor, the Indenture Trustee, the Rating
Agencies and the Note Insurer a certification in the form
attached hereto as Exhibit E to the effect that, except as
otherwise noted, as to each Mortgage Loan listed in the
related Mortgage Loan Schedule (other than any Mortgage Loan
paid in full or any Mortgage Loan specifically identified in
such certification as not covered by such certification), (i)
all documents required to be delivered to it pursuant to
Section 2.05 are in its possession, (ii) each such document
has been reviewed by it and has not been mutilated, damaged,
torn or otherwise physically altered (handwritten additions,
changes or corrections shall not constitute physical
alteration if they reasonably appear to be initialed by the
Mortgagor), appears regular on its face and relates to such
Mortgage Loan, and (iii) based on its examination and only as
to the foregoing documents, the information set forth in the
definition of "Mortgage Loan Schedule" accurately reflects the
information set forth in the Indenture Trustee's Mortgage File
delivered on such date.
In performing any such review, the Collateral Agent may conclusively rely on the
Unaffiliated Seller as to the purported genuineness of any such document and any
signature thereon. It is understood that the scope of the Collateral Agent's
review of the Indenture Trustee's Mortgage Files is limited solely to confirming
that the documents listed in Section 2.05 have been executed and received and
relate to the Indenture Trustee's Mortgage Files identified in the related
Mortgage Loan Schedule. The Collateral Agent shall be under no duty or
obligation to inspect, review or examine any such documents, instruments,
certificates or other papers to determine that they are genuine, enforceable, or
appropriate for the represented purpose or that they are other than what they
purport to be on their face.
(c) If the Collateral Agent during the process of reviewing
the Indenture Trustee's Mortgage Files finds any document constituting a part of
a Indenture Trustee's Mortgage File which is not executed, has not been
received, is unrelated to the Mortgage Loan identified in the related Mortgage
Loan Schedule, or does not conform to the requirements of Section 2.05 or the
description thereof as set forth in the related Mortgage Loan Schedule, the
Collateral Agent shall promptly so notify the Servicer, the Unaffiliated Seller,
the Originators, the Note Insurer and the Indenture Trustee. Pursuant to Section
2.06(b) of the Unaffiliated Seller's Agreement, the Unaffiliated Seller and the
Originators have agreed to use reasonable efforts to cause to be remedied a
material defect in a document constituting part of an Indenture Trustee's
Mortgage File of which it is so notified by the Collateral Agent. If, however,
within sixty (60) days after the Collateral Agent's notice to it respecting such
defect the Unaffiliated Seller or the Originators have not caused to be remedied
the defect and the defect materially and adversely affects the interest of the
Noteholders and the Note Insurer in the related Mortgage Loan, the Unaffiliated
Seller and the Originators will be obligated, pursuant to Section 3.05 of the
Unaffiliated Seller's Agreement, to either (i) substitute in lieu of such
Mortgage Loan a Qualified Substitute Mortgage Loan in the manner and subject to
the conditions set forth in Section 3.05 of the Unaffiliated Seller's Agreement
or (ii) purchase such Mortgage Loan at a purchase price equal to the Loan
Repurchase Price. Upon receipt by the Collateral Agent and the Indenture Trustee
of a certification, in the form attached hereto as Exhibit F, of a Servicing
Officer of such substitution or purchase and, in the case of a substitution,
upon receipt by the Collateral Agent, on behalf of the Indenture Trustee, of the
related Indenture Trustee's Mortgage File, and the deposit of the amounts
described above in the Collection Account, the Collateral
8
Agent shall release to the Servicer for release to the Unaffiliated Seller the
related Indenture Trustee's Mortgage File and the Indenture Trustee shall
execute, without recourse, and deliver such instruments of transfer furnished by
the Unaffiliated Seller as may be necessary to transfer such Mortgage Loan to
the Unaffiliated Seller. The Collateral Agent shall report to the Indenture
Trustee, who shall notify the Note Insurer if the Unaffiliated Seller fails to
repurchase or substitute for a Mortgage Loan in accordance with the foregoing.
Section 2.07. Grant of Security Interest. (a) It is intended that the
conveyance of the Mortgage Loans and other property by the Depositor to the
Trust as provided in this Article II be, and be construed as, a sale of the
Mortgage Loans and such other property by the Depositor to the Trust. It is,
further, not intended that such conveyance be deemed a pledge of the Mortgage
Loans or such other property by the Depositor to the Trust to secure a debt or
other obligation of the Depositor. However, in the event that the Mortgage Loans
or any of such other property are held to be property of the Depositor, or if
for any reason this Agreement is held or deemed to create a security interest in
the Mortgage Loans or any of such other property, then it is intended that: (i)
this Agreement shall also be deemed to be a security agreement within the
meaning of the Uniform Commercial Code; (ii) the conveyance provided for in this
Article II shall be deemed to be a grant by the Depositor to the Trust of a
security interest in all of the Depositor's right, title and interest in and to
the Mortgage Loans and such other property and all amounts payable to the
holders 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 Payment Account, whether
in the form of cash, instruments, securities or other property; (iii) the
possession by the Collateral Agent, on behalf of the Indenture Trustee, of the
Mortgage Notes and such other items of property as constitute instruments,
money, negotiable documents or chattel paper shall be deemed to be "possession
by the secured party" for purposes of perfecting the security interest pursuant
to the Uniform Commercial Code; and (iv) 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 the Indenture Trustee for the purpose of perfecting such security interest
under applicable law. The Depositor, the Servicer, on behalf of the Trust, the
Collateral Agent and the Indenture Trustee, shall, to the extent consistent with
this Agreement, take such actions as may be reasonably necessary to ensure that,
if this Agreement were deemed to create a security interest in the Mortgage
Loans or any of such other property, such security interest would be deemed to
be a perfected security interest of first priority under applicable law and will
be maintained as such throughout the term of this Agreement.
(b) The Unaffiliated Seller, the Depositor and the Servicer
shall take no action inconsistent with the Trust's ownership of the Trust Estate
and each shall indicate or shall cause to be indicated in its records and
records held on its behalf that ownership of each Mortgage Loan and the other
assets in the Trust Estate are held by the Collateral Agent, on behalf of the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer. The
Collateral Agent is authorized to act, pursuant to the terms of this Agreement,
as agent and bailee of the Indenture Trustee for the benefit of the Noteholders
and Note Insurer and shall be authorized to act at the direction of such
parties. In addition, the Unaffiliated Seller, the Depositor and the Servicer
shall respond to any inquiries from third parties with respect to ownership of a
Mortgage Loan or any
9
other asset in the Trust Estate by stating that it is not the owner of such
asset and that the Trust is the owner of such Mortgage Loan or other asset in
the Trust Estate, which is held by the Collateral Agent, on behalf of the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer.
Section 2.08. Further Action Evidencing Assignments. (a) The Servicer
agrees that, from time to time, at its expense, it shall cause the Unaffiliated
Seller to (and the Depositor on behalf of itself also agrees that it shall),
promptly execute and deliver all further instruments and documents, and take all
further action, that may be necessary or appropriate, or that the Servicer, the
Indenture Trustee or the Collateral Agent may reasonably request, in order to
perfect, protect or more fully evidence the transfer of ownership of the
Mortgage Loans and other assets in the Trust Estate or to enable the Collateral
Agent, on behalf of the Indenture Trustee, to exercise or enforce any of its
rights hereunder. Without limiting the generality of the foregoing, the Servicer
and the Depositor will, upon the request of the Servicer, the Indenture Trustee
or the Collateral Agent execute and file (or cause to be executed and filed)
such real estate filings, financing or continuation statements, or amendments
thereto or assignments thereof, and such other instruments or notices, as may be
necessary or appropriate.
(b) The Depositor hereby grants to the Servicer, the Indenture
Trustee and the Collateral Agent powers of attorney to execute all documents on
its behalf under this Agreement and the Unaffiliated Seller's Agreement as may
be necessary or desirable to effectuate the foregoing.
Section 2.09. Assignment of Agreement. The Depositor hereby
acknowledges and agrees that the Trust may assign its interest under this
Agreement to the Indenture Trustee, for the benefit of the Noteholders and the
Note Insurer, as may be required to effect the purposes of the Indenture,
without further notice to, or consent of, the Depositor, and the Indenture
Trustee shall succeed to such of the rights and obligations of the Trust
hereunder as shall be so assigned. The Trust shall, pursuant to the Indenture,
assign all of its right, title and interest in and to the Mortgage Loans and its
right to exercise the remedies created by Section 2.06 and 3.05 of the
Unaffiliated Seller's Agreement for breaches of the representations, warranties,
agreements and covenants of the Unaffiliated Seller or the Originators contained
in Sections 2.05, 2.06, 3.02 and 3.03 of the Unaffiliated Seller's Agreement,
assign such right, title and interest to the Indenture Trustee, for the benefit
of the Noteholders and the Note Insurer. The Depositor agrees that, upon such
assignment to the Indenture Trustee, such representations, warranties,
agreements and covenants will run to and be for the benefit of the Indenture
Trustee and the Indenture Trustee may enforce, without joinder of the Depositor
or the Trust, the repurchase obligations of the Unaffiliated Seller and the
Originators set forth herein with respect to breaches of such representations,
warranties, agreements and covenants.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations of the Servicer. The Servicer hereby
represents and warrants to the Indenture Trustee, the Depositor, the Collateral
Agent, the Trust, the Note Insurer and the Noteholders as of the Closing Date
and during the term of this Agreement that:
10
(a) Each of the Servicer and the Subservicers is duly
organized, validly existing and in good standing under the laws of their
respective states of incorporation and has the power to own its assets and to
transact the business in which it is currently engaged. Each of the Servicer and
the Subservicers is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it or the performance of its
obligations hereunder requires such qualification and in which the failure so to
qualify could reasonably be expected to have a material adverse effect on the
business, properties, assets, or condition (financial or other) of the Servicer
or the Subservicers or the performance of their respective obligations
hereunder;
(b) The Servicer has the power and authority to make, execute,
deliver and perform this Agreement and all of the transactions contemplated
under this Agreement, and has taken all necessary corporate action to authorize
the execution, delivery and performance of this Agreement, and assuming the due
authorization, execution and delivery hereof by the other parties hereto
constitutes, or will constitute, the legal, valid and binding obligation of the
Servicer, enforceable in accordance with its terms, except as enforcement of
such terms may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting the rights of creditors
generally, and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law);
(c) The Servicer is not required to obtain the consent of any
other party or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or agency
which consent already has not been obtained in connection with the execution,
delivery, performance, validity or enforceability of this Agreement, except such
as have been obtained prior to the Closing Date;
(d) The execution, delivery and performance of this Agreement
by the Servicer will not violate any provision of any existing law or regulation
or any order or decree of any court or the charter or bylaws of the Servicer, or
constitute a breach of any mortgage, indenture, contract or other Agreement to
which the Servicer is a party or by which it may be bound;
(e) There is no action, suit, proceeding or investigation
pending or threatened against the Servicer or the Subservicers which, either in
any one instance or in the aggregate, is, in the Servicer's judgment, likely to
result in any material adverse change in the business, operations, financial
condition, properties, or assets of the Servicer or the Subservicers, or in any
material impairment of the right or ability of any of them to carry on its
business substantially as now conducted, or in any material liability on the
part of any of them, or which would draw into question the validity of this
Agreement, the Notes, or the Mortgage Loans or of any action taken or to be
taken in connection with the obligations of the Servicer or the Subservicers
contemplated herein or therein, or which would be likely to impair materially
the ability of the Servicer or the Subservicers to perform their respective
obligations hereunder;
(f) Neither this Agreement nor any statement, report, or other
document furnished by the Servicer or the Subservicers pursuant to this
Agreement or in connection with the transactions contemplated hereby, including,
without limitation, the sale or placement of the Notes, contains any untrue
statement of fact provided by or on behalf of the Servicer or omits to
11
state a fact necessary to make the statements provided by or on behalf of the
Servicer contained herein or therein not misleading:
(g) The Servicer does not believe, nor does it have any reason
or cause to believe, that it cannot perform each and every covenant contained in
this Agreement; and
(h) None of the Servicer or the Subservicers is an "investment
company" or a company "controlled by an investment company," within the meaning
of the Investment Company Act of 1940, as amended.
It is understood and agreed that the representations, warranties and covenants
set forth in this Section 3.01 shall survive the delivery of the respective
Indenture Trustee's Mortgage Files to the Collateral Agent, on behalf of the
Indenture Trustee or to another custodian, as the case may be, and inure to the
benefit of the Indenture Trustee.
Section 3.02. Representations, Warranties and Covenants of the
Depositor. The Depositor hereby represents, warrants and covenants to the
Indenture Trustee, the Trust, the Collateral Agent and the Servicer that as of
the date of this Agreement or as of such date specifically provided herein:
(a) The Depositor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(b) The Depositor has the corporate power and authority to
convey the Mortgage Loans and to execute, deliver and perform, and to enter into
and consummate transactions contemplated by this Agreement;
(c) This Agreement has been duly and validly authorized,
executed and delivered by the Depositor, all requisite corporate action having
been taken, and, assuming the due authorization, execution and delivery hereof
by the other parties hereto, constitutes or will constitute the legal, valid and
binding agreement of the Depositor, enforceable against the Depositor in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(d) No consent, approval, authorization or order of or
registration or filing with, or notice to, any governmental authority or court
is required for the execution, delivery and performance of or compliance by the
Depositor with this Agreement or the consummation by the Depositor of any of the
transactions contemplated hereby, except as have been made on or prior to the
Closing Date;
(e) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(i) conflicts or will conflict with or results or will result in a breach of, or
constitutes or will constitute a default or results or will result in an
acceleration under (A) the charter or bylaws of the Depositor, or (B) of any
term, condition or provision of any material indenture, deed of trust, contract
or other agreement or instrument to which the
12
Depositor or any of its subsidiaries is a party or by which it or any of its
subsidiaries is bound; (ii) results or will result in a violation of any law,
rule, regulation, order, judgment or decree applicable to the Depositor of any
court or governmental authority having jurisdiction over the Depositor or its
subsidiaries; or (iii) results in the creation or imposition of any lien, charge
or encumbrance which would have a material adverse effect upon the Mortgage
Loans or any documents or instruments evidencing or securing the Mortgage Loans;
(f) There are no actions, suits or proceedings before or
against or investigations of, the Depositor pending, or to the knowledge of the
Depositor, threatened, before any court, administrative agency or other
tribunal, and no notice of any such action, which, in the Depositor's reasonable
judgment, might materially and adversely affect the performance by the Depositor
of its obligations under this Agreement, or the validity or enforceability of
this Agreement; and
(g) The Depositor is not in default with respect to any order
or decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency that may materially and adversely affect its
performance hereunder.
It is understood and agreed that the representations, warranties and covenants
set forth in this Section 3.02 shall survive delivery of the respective
Indenture Trustee's Mortgage Files to the Collateral Agent, on behalf of the
Indenture Trustee or to another custodian, as the case may be, and shall inure
to the benefit of the Indenture Trustee.
Section 3.03. Representations, Warranties and Covenants of the
Collateral Agent. The Collateral Agent hereby represents, warrants and covenants
to the Indenture Trustee, the Trust, the Servicer and the Depositor that as of
the date of this Agreement or as of such date specifically provided herein:
(a) The Collateral Agent is a national banking association
duly organized, validly existing and in good standing under the laws of the
United States of America;
(b) The Collateral Agent has the corporate power and authority
to execute, deliver and perform, and to enter into and consummate transactions
contemplated by this Agreement; and
(c) This Agreement has been duly and validly authorized,
executed and delivered by the Collateral Agent, all requisite corporate action
having been taken, and, assuming the due authorization, execution and delivery
hereof by the other parties hereto, constitutes or will constitute the legal,
valid and binding agreement of the Collateral Agent, enforceable against the
Collateral Agent in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law).
It is understood and agreed that the representations, warranties and covenants
set forth in this Section 3.03(b) and 3.03(c) shall survive delivery of the
respective Indenture Trustee's Mortgage Files to the Collateral Agent, on behalf
of the Indenture Trustee or to another custodian, as the case may be, and shall
inure to the benefit of the Indenture Trustee.
13
Section 3.04. Representations, Warranties and Covenants of the
Indenture Trustee. The Indenture Trustee hereby represents, warrants and
covenants to the Collateral Agent, the Trust, the Servicer and the Depositor
that as of the date of this Agreement or as of such date specifically provided
herein:
(a) The Indenture Trustee is a banking corporation duly
organized, validly existing and in good standing under the laws of the State of
New York;
(b) The Indenture Trustee has the corporate power and
authority to execute, deliver and perform, and to enter into and consummate
transactions contemplated by this Agreement;
(c) This Agreement has been duly and validly authorized,
executed and delivered by the Indenture Trustee, all requisite corporate action
having been taken, and, assuming the due authorization, execution and delivery
hereof by the other parties hereto, constitutes or will constitute the legal,
valid and binding agreement of the Indenture Trustee, enforceable against the
Indenture Trustee in accordance with its terms, except as such enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights of creditors generally, and by
general equity principles (regardless of whether such enforcement is considered
in a proceeding in equity or at law);
It is understood and agreed that the representations, warranties and covenants
set forth in this Section 3.04 shall survive delivery of the respective
Indenture Trustee's Mortgage Files to the Collateral Agent, on behalf of the
Indenture Trustee or to another custodian, as the case may be.
ARTICLE IV
THE MORTGAGE LOANS
Section 4.01. Representations and Warranties Concerning the Mortgage
Loans. With respect to each Mortgage Loan, the Depositor hereby assigns to the
Trust, pursuant to Section 2.07 of the Unaffiliated Seller's Agreement, the
representations, warranties and covenants of the Unaffiliated Seller and the
Originators set forth in Sections 3.01, 3.02 and 3.03 of the Unaffiliated
Seller's Agreement. Such representations, warranties and covenants are made or
deemed to be made (x) with respect to the Initial Mortgage Loans, as of the
Initial Cut-Off Date and (y) with respect to the Subsequent Mortgage Loans, as
of the related Subsequent Cut-Off Date.
Section 4.02. Purchase and Substitution. (a) It is understood and
agreed that the representations and warranties set forth in Sections 3.01, 3.02
and 3.03 of the Unaffiliated Seller's Agreement shall survive the purchase by
the Depositor of the Mortgage Loans, the subsequent transfer thereof by the
Depositor to the Trust, the subsequent pledge thereof by the Trust to the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer, and
the delivery of the Notes to the Noteholders, and shall continue in full force
and effect, notwithstanding any restrictive or qualified endorsement on the
Mortgage Notes and
14
notwithstanding subsequent termination of this Agreement or the Unaffiliated
Seller's Agreement.
(b) Upon discovery by the Unaffiliated Seller, the Depositor,
the Servicer, any Subservicer, the Indenture Trustee, the Note Insurer or a
Noteholder of a breach of any of the representations and warranties in Sections
3.01, 3.02 or 3.03 of the Unaffiliated Seller's Agreement which materially and
adversely affects the value of the Mortgage Loans or the interest of the
Noteholders or the Note Insurer, or which materially and adversely affects the
interests of the Note Insurer or the Noteholders in the related Mortgage Loan in
the case of a representation and warranty relating to a particular Mortgage Loan
(notwithstanding that such representation and warranty was made to the
Unaffiliated Seller's or the Originator's best knowledge), the party discovering
such breach or failure shall promptly (and in any event within five (5) days of
the discovery) give written notice thereof to the others. Within sixty (60) days
of the earlier of its discovery or its receipt of notice of any breach of a
representation or warranty, the Servicer shall, or shall cause the Unaffiliated
Seller or an Originator to, (a) promptly cure such breach in all material
respects, (b) purchase such Mortgage Loan on the next succeeding Servicer
Payment Date, in the manner and at the price specified in Section 2.06(b) and
this Section 4.02, or (c) remove such Mortgage Loan from the Trust Estate (in
which case it shall become a Deleted Mortgage Loan) and substitute one or more
Qualified Substitute Mortgage Loans in the manner specified in Section 2.06(b)
and this Section 4.02. The Collateral Agent shall give prompt written notice to
the Indenture Trustee, who shall deliver such notice to the Note Insurer and the
Rating Agencies of any repurchase or substitution made pursuant to this Section
4.02 or Section 2.06(b).
(c) As to any Deleted Mortgage Loan for which the Unaffiliated
Seller substitutes a Qualified Substitute Mortgage Loan or Loans, the Servicer
shall cause the Unaffiliated Seller or an Originator, as applicable, to effect
such substitution by delivering to the Indenture Trustee a certification, in the
form attached hereto as Exhibit F, executed by a Servicing Officer, and the
documents described in Sections 2.05(a)(i)-(vi) for such Qualified Substitute
Mortgage Loan or Loans.
(d) The Servicer shall deposit in the Payment Account all
payments received in connection with such Qualified Substitute Mortgage Loan or
Loans after the date of such substitution. Monthly Payments received with
respect to Qualified Substitute Mortgage Loan or Loans on or before the date of
substitution will be retained by the Unaffiliated Seller. The Trust will own all
payments received on the Deleted Mortgage Loan on or before the date of
substitution, and the Unaffiliated Seller shall thereafter be entitled to retain
all amounts subsequently received in respect of such Deleted Mortgage Loan. The
Servicer shall give written notice to the Indenture Trustee, the Collateral
Agent and the Note Insurer that such substitution has taken place and shall
amend the Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage
Loan from the terms of this Agreement and the substitution of the Qualified
Substitute Mortgage Loan or Loans. Upon such substitution, such Qualified
Substitute Mortgage Loan or Loans shall be subject to the terms of this
Agreement in all respects.
(e) With respect to any Mortgage Loan that has been converted
to an REO Mortgage Loan, all references in this Section 4.02 or Section 2.06 to
"Mortgage Loan" shall be deemed to also refer to the REO Mortgage Loan. With
respect to any Mortgage Loan that the
15
Servicer, Originator or Unaffiliated Seller is required to repurchase that is or
becomes a Liquidated Mortgage Loan, in lieu of repurchasing such Mortgage Loan,
the Servicer, Originator or Unaffiliated Seller shall deposit into the related
Payment Account, pursuant to Section 8.01 of the Indenture, an amount equal to
the amount of the Liquidated Loan Loss, if any, incurred in connection with the
liquidation of such Mortgage Loan within the same time period in which the
Servicer, Originator or Unaffiliated Seller would have otherwise been required
to repurchase such Mortgage Loan.
(f) It is understood and agreed th
