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Exhibit 10.1
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PURCHASE AGREEMENT
Between
ADVANTA NATIONAL BANK
and
ADVANTA FINANCE CORP.
as the Originators
and
ADVANTA MORTGAGE CONDUIT SERVICES, INC.
as Purchaser
Dated as of May 1, 1999
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Table of Contents
Page
----
ARTICLE I
Definitions....................................................................................................... 1
ARTICLE II
Procedures for Purchases of Mortgage Loans; Conditions Precedent; Settlements
Section 2.01. Purchase and Sale............................................................................... 5
Section 2.02. Delivery of Documents; Purchase of Mortgage Loans............................................... 5
Section 2.03. Survival of Representations..................................................................... 6
Section 2.04. Proceeds of Mortgage Loans...................................................................... 6
Section 2.05. Repurchased Mortgage Loans...................................................................... 7
ARTICLE III
Protective Security Interest...................................................................................... 7
ARTICLE IV
Representations and Warranties
Section 4.01. Representations and Warranties of Originators................................................... 8
Section 4.02. Representations and Warranties Regarding Mortgage Loans......................................... 10
Section 4.03. Representations and Warranties of Purchaser..................................................... 10
Section 4.04. Remedies for Breach of Representations and Warranties; Repurchase Obligation.................... 11
ARTICLE V
Covenants and Warranties of Originators
Section 5.01. Affirmative Covenants........................................................................... 12
Section 5.02. Negative Covenants.............................................................................. 13
ARTICLE VI
Sale of Mortgage Loans by Purchaser............................................................................... 13
ARTICLE VII
Additional Remedies............................................................................................... 14
ARTICLE VIII
Term.............................................................................................................. 14
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ARTICLE IX
Exclusive Benefit of Parties; Assignment.......................................................................... 15
ARTICLE X
Amendment; Waivers................................................................................................ 15
ARTICLE XI
Execution in Counterparts......................................................................................... 15
ARTICLE XII
Effect of Invalidity of Provisions................................................................................ 15
ARTICLE XIII
Governing Law..................................................................................................... 16
ARTICLE XIV
Notices........................................................................................................... 16
ARTICLE XV
Entire Agreement.................................................................................................. 16
ARTICLE XVI
Indemnities....................................................................................................... 16
ARTICLE XVII
RESPA Obligations................................................................................................. 18
ARTICLE XVIII
Survival.......................................................................................................... 18
ARTICLE XIX
Consent to Service................................................................................................ 18
ARTICLE XX
Submission to Jurisdiction; Waiver of Trial by Jury............................................................... 18
ARTICLE XXI
Construction...................................................................................................... 19
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ARTICLE XXII
Further Assurances................................................................................................ 19
ARTICLE XXIII
Third Party Beneficiary........................................................................................... 19
ARTICLE XXIV
No Petition....................................................................................................... 19
SCHEDULES AND EXHIBITS
Schedule I: Schedule of Mortgage Loans.................................................................. I-1
Exhibit A: Mortgage Loan Representations and Warranties................................................. A-1
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THIS PURCHASE AGREEMENT (this "Agreement") is made as of May
1, 1999 between Advanta National Bank, a national banking association ("ANB"),
and Advanta Finance Corp., a Nevada corporation ("AFC"), on one hand, and
Advanta Mortgage Conduit Services, Inc., a Delaware corporation ("Purchaser"),
on the other hand. ANB and AFC are sometimes individually referred to herein as
an "Originator" and sometimes collectively referred to herein as the
"Originators."
WHEREAS, the Originators desire to sell to Purchaser, and
Purchaser desires to purchase from the Originators, the Mortgage Loans (as
defined below), all in accordance with the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual
promises herein made and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
Capitalized terms not defined herein shall have the meanings
set forth in the Sale and Servicing Agreement or, if not defined therein, the
Indenture. As used in this Agreement, the following terms shall have the
following meanings:
"Additional Balance": With respect to any Mortgage Loan as of
any date of determination, the aggregate amount of all Draws by the related
Mortgagor subsequent to the Cut-Off Date.
"Assignee": With respect to any Person, any immediate or
mediate assignee, pledgee or other transferee of such Person.
"Assignment of Mortgage": With respect to each Mortgage Loan,
any assignment of the Mortgage, notice of transfer or equivalent instrument, in
recordable form, sufficient under the laws of the jurisdiction in which the
related Mortgaged Property is located to reflect the recordation of the pledge
of the Mortgage Loan to the Indenture Trustee for the benefit of the Noteholders
and the Insurer.
"Business Day": Any day that is not a Saturday, Sunday or
other day on which the Trust, the Master Servicer or the Sponsor is closed or
commercial banking institutions in the States of New York or Delaware or in the
city in which the principal corporate trust office of the Indenture Trustee is
located are authorized or obligated by law or executive order to be closed.
"Certificates": The trust certificates evidencing the
beneficial ownership interests in Holding, substantially in the form of Exhibit
A to the Holding Trust Agreement.
"Charged-off Loan": Any Mortgage Loan that (i) has been
Delinquent for a period of 180 consecutive days (irrespective of any grace
periods).
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"Class A Note": Any note executed and authenticated by the
Indenture Trustee substantially in the form set forth in Exhibit A to the
Indenture.
"Class A Noteholder" or "Noteholder": A Person in whose name a
Class A Note is registered in the Note Register.
"Closing Date": May 27, 1999.
"Coupon Rate": As defined in the Sale and Servicing Agreement.
"Credit Line Agreement": With respect to any Mortgage Loan,
the related home equity line of credit agreement, security instrument and
promissory note executed by the related Mortgagor and any amendment or
modification thereof in accordance with the Operative Documents.
"Cut-Off Date": With respect to each Mortgage Loan (including
Mortgage Loans originated after May 1, 1999 but prior to the Closing Date other
than a Qualified Replacement Mortgage Loan), the opening of business on May 1,
1999. With respect to each Qualified Replacement Mortgage Loan, the related
Replacement Cut-Off Date.
"Cut-Off Date Principal Balance": With respect to any Mortgage
Loan, (a) the unpaid principal balance thereof as of the related Cut-Off Date
and (b) for Mortgage Loans originated after the Cut-Off Date but prior to the
Closing Date, the unpaid principal balance of such Mortgage Loans as of its
origination date.
"Draw": With respect to any Mortgage Loan, an additional
borrowing by the Mortgagor subsequent to the Cut-Off Date in accordance with the
related Credit Line Agreement.
"Holding": Advanta Holding Trust 1999-A, a Delaware business
trust.
"Holding Trust Agreement": The trust agreement dated as of May
1, 1999 between the Sponsor and Wilmington Trust Company, as owner trustee,
relating to the formation of Holding.
"Indenture": The Indenture dated as of May 1, 1999 between the
Trust and the Indenture Trustee.
"Indenture Trustee": Bankers Trust Company of California, N.A.
or any successor Indenture Trustee appointed in accordance with the Indenture
that has accepted such appointment in accordance with the Indenture.
"Liquidated Loan": A Mortgage Loan with respect to which (i)
the related Mortgage Property has been acquired, liquidated or foreclosed upon
or (ii) the Master Servicer, in its reasonable good faith business judgment, has
determined that all Liquidation Proceeds that it expects to recover have been so
recovered (exclusive of the possibility of any deficiency judgment). A Mortgage
Loan which is purchased from the
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Trust pursuant to Section 2.2(b), 3.3(c) or 3.4 of the Sale and Servicing
Agreement is not a "Liquidated Loan."
"Losses": Any and all out-of-pocket losses, claims, damages,
liabilities or expenses (including reasonable attorneys' fees and disbursements)
directly incurred by any person specified in this Agreement, resulting from
transactions entered into under this Agreement (other than liability for taxes).
Losses must be accounted for and presented for reimbursement and documented in
reasonable detail and within a reasonable time.
"Master Servicer": Advanta Mortgage Corp. USA, a Delaware
corporation, and its permitted successors and assigns.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first or junior lien in real property securing a Credit Line
Agreement.
"Mortgage File": As defined in the Sale and Servicing
Agreement.
"Mortgage Loans": Each adjustable rate home equity revolving
credit line secured by a first or junior mortgage or deed of trust on Mortgaged
Property and identified in the Schedule of Mortgage Loans attached hereto,
together with any Qualified Replacement Mortgage Loans substituted therefor in
accordance with this Agreement or the Sale and Servicing Agreement. The term
"Mortgage Loan" includes any Mortgage Loan which is Delinquent, which relates to
a foreclosure or which relates to a Mortgaged Property which is REO Property
prior to such Mortgaged Property's disposition by the Trust. Any mortgage loan
which, although intended by the parties hereto to have been, and which
purportedly was, transferred and assigned by an Originator to Purchaser, by
Purchaser to Holding and by Holding to the Trust, in fact was not so transferred
and assigned for any reason whatsoever shall nevertheless be considered a
"Mortgage Loan" for all purposes of this Agreement.
"Mortgaged Property": The underlying property securing a
Mortgage Loan.
"Mortgagor": The obligor on the related Credit Line Agreement.
"Officer's Certificate": A certificate signed by any
Authorized Officer of any Person delivering such certificate and delivered to
the Indenture Trustee.
"Payment Date": Any date on which the Indenture Trustee is
required to make distributions to the Class A Noteholders, which shall be the
25th day of each month, commencing in the month following the Closing Date or,
if such day is not a Business Day, then on the succeeding Business Day.
"Principal Balance": As to any Mortgage Loan, other than a
Charged-off Loan, and as of any date, the related Cut-Off Date Principal
Balance, plus (i) any Additional Balance in respect of such Mortgage Loan, minus
(ii) all collections credited as principal against the Principal Balance of such
Mortgage Loan in accordance with the
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related Credit Line Agreement or prior to such date. For purposes of this
definition, a Charged-off Loan shall be deemed to have a Principal Balance of
zero as of the first day of the Remittance Period following the Remittance
Period in which such Mortgage Loan becomes a Charged-off Loan and at all times
thereafter.
"Qualified Replacement Mortgage Loan": A Mortgage Loan
substituted for another pursuant to Section 2.2(b), 3.3 or 3.4 of the Sale and
Servicing Agreement, which (i) bears a variable rate of interest, (ii) has the
same interest rate index, a margin over such index and a maximum interest rate
at least equal to those applicable to the Mortgage Loan being replaced, (iii) is
of the same or better property type and the same or better occupancy status as
the replaced Mortgage Loan, (iv) is of the same or better credit quality
classification (determined in accordance with the relevant Originator's credit
underwriting guidelines) as the Mortgage Loan being replaced, (v) shall mature
no later than the Payment Date occurring in February 2024, (vi) has a Combined
Loan-to-Value Ratio as of the Replacement Cut-Off Date no higher than the
Combined Loan-to-Value Ratio of the replaced Mortgage Loan at such time, (vii)
has a Principal Balance as of the related Replacement Cut-Off Date equal to or
less than the Principal Balance of the replaced Mortgage Loan as of such
Replacement Cut-Off Date, (viii) is in the same lien position or better, (ix) is
not then Delinquent as of the Transfer Date, and (x) complies with the
representations and warranties set forth in Section 3.3(a) of the Sale and
Servicing Agreement. Except with respect to clause (vi) above, in the event that
one or more mortgage loans are proposed to be substituted for one or more
Mortgage Loans, the Insurer may allow the foregoing tests to be met on a
weighted average basis or other aggregate basis acceptable to the Insurer, as
evidenced by a written approval delivered to the Indenture Trustee by the
Insurer.
"Remittance Period": As to any Payment Date, the calendar
month preceding the month of such Payment Date.
"REO Property": A Mortgaged Property acquired by the Master
Servicer or any Sub-Servicer on behalf of the Trust through foreclosure or
deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan.
"Replacement Cut-Off Date": With respect to any Qualified
Replacement Mortgage, the first day of the calendar month in which such
Qualified Replacement Mortgage Loan is conveyed to the Trust.
"Sale and Servicing Agreement": The Sale and Servicing
Agreement dated as of May 1, 1999 among the Sponsor, Holding, the Trust, the
Master Servicer and the Indenture Trustee.
"Schedule of Mortgage Loans": The schedule of Mortgage Loans
attached hereto as Schedule I, as the same may be revised or amended from time
to time in connection with substitutions of Qualified Replacement Mortgage Loan.
The information contained on the Schedule of Mortgage Loans shall be delivered
to the Indenture Trustee on an electronic media.
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"Sponsor": Advanta Mortgage Conduit Services, Inc., a Delaware
corporation.
"Trust": Advanta Home Equity Loan Trust 1999-A, a Delaware
business trust.
"Trust Agreement": The trust agreement dated as of May 1, 1999
among the Sponsor, Holding and Wilmington Trust Company, as owner trustee,
relating to the formation of the Trust.
ARTICLE II
Procedures for Purchases of Mortgage Loans;
Conditions Precedent; Settlements
Section 2.01. Purchase and Sale. The Originators hereby agree
to sell, assign, transfer, convey and set over to Purchaser, and Purchaser
hereby agrees to purchase and acquire from the Originators, without recourse
(subject to the Originators' obligations herein, including any obligation to
fund Additional Balances with respect to the Mortgage Loans), on the Closing
Date, all of the Originators' respective right, title and interest in and to (a)
each Mortgage Loan, including its Principal Balance as of the Cut-Off Date and
all principal collections and interest accrued in respect of such Mortgage Loan
on or after the Cut-Off Date (excluding any payments of interest collected prior
to the Cut-Off Date); (b) each Mortgaged Property that is acquired by
foreclosure or deed in lieu of foreclosure; (c) all rights under any Mortgage
Insurance Policies covering a Mortgaged Property; (d) all proceeds with respect
to the foregoing; and (e) the Mortgage File and other documents relating to the
foregoing; provided, however, that neither Purchaser nor any of its Assignees
(including the Trust and the Indenture Trustee) shall be deemed to assume any
obligation under any Credit Line Agreement that provides for the funding of
future advances to the Mortgagor thereunder, it being understood that any such
obligation shall remain with the Originators and that neither Purchaser nor any
of its Assignees (including the Trust and the Indenture Trustee) shall be
required or permitted to fund any such future advances. As full consideration
for the Originators' sale, transfer, assignment and conveyance to Purchaser of
all of their respective right, title and interest in and to the Mortgage Loans
and other properties specified above, on the Closing Date, Purchaser shall (x)
pay to or upon the order of the Originators that amount in immediately available
funds equal to the Originators' pro rata share of the proceeds of the sale of
the Notes, net of any underwriting discounts and other transaction costs, and
(y) direct the issuance of the Certificates to or upon the order of the
Originators, all in such relative proportions as the Originators shall jointly
determine on or before the Closing Date.
Section 2.02. Delivery of Documents; Purchase of Mortgage
Loans. Prior to the purchase of the Mortgage Loans:
(a) Each Originator shall have delivered to Purchaser or any
agent appointed by Purchaser the Mortgage File for each of the Mortgage Loans.
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(b) Purchaser shall have received copies of the Mortgage Loan
Schedules.
(c) Purchaser shall have received copies of the resolutions of
the Board of Directors of each Originator, certified by its Secretary, approving
this Agreement.
(d) Purchaser shall have received copies of the articles of
incorporation, articles of association or charter of each Originator.
(e) Purchaser shall have received from each Originator (i) a
certificate of the Secretary or Assistant Secretary of such Originator
certifying the names and signatures of the officers authorized on its behalf to
execute this Agreement and any other documents to be delivered by it hereunder
and (ii) a copy of such Originator's by-laws.
(f) Purchaser shall have received an opinion of counsel to
each Originator as to the due authorization, execution and delivery by such
Originator of this Agreement and as to the validity and enforceability of the
transfers contemplated hereunder and addressing such other matters as Purchaser
may reasonably request.
(g) Each Originator shall have instructed the applicable
debtor, trustee, paying agent, authenticating agent, transfer agent, registrar,
predecessor in interest, owner (if any of the Mortgage Loans are in the form of
a security agreement) or servicer, if any, in respect of the related Mortgage
Loans to reflect on their books and records the transfer of such Mortgage Loans
to Purchaser, as owner or secured party (if any of the Mortgage Loans are in the
form of a security agreement).
(h) [Reserved]
(i) Purchaser shall be permitted to perform its standard loan
review of each Mortgage Loan to be purchased.
(j) UCC-1 financing statements duly executed by each
Originator as debtor shall have been filed naming Purchaser as secured party
and, if Purchaser so requests, the Indenture Trustee on behalf of the Trust as
assignee.
Section 2.03. Survival of Representations. The terms and
conditions of the purchase and sale of each Mortgage Loan shall be as set forth
in this Agreement. Each Originator will be deemed on the Closing Date to have
made to Purchaser the representations and warranties set forth in Article IV
hereof, and such representations and warranties of such Originator shall be true
and correct on and as of the Closing Date. In addition, such Originator will be
deemed to have reaffirmed the representations and warranties contained in
Article IV hereof on the date of disposition of the Mortgage Loans by Purchaser
pursuant to the Sale and Servicing Agreement.
Section 2.04. Proceeds of Mortgage Loans. The sale,
assignment, transfer and conveyance hereby of all of the Originators' respective
right, title and interest in and to each Mortgage Loan shall include all
proceeds, products and profits derived therefrom, including all scheduled
payments of principal of and interest on such Mortgage Loan and other amounts
due or payable or to become due or payable in respect
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thereof and proceeds thereof, including all monies, goods and other tangible or
intangible property received upon the liquidation or sale thereof, except any
payments in respect of interest collected prior to the Cut-Off Date.
Section 2.05. Repurchased Mortgage Loans. If any Mortgage Loan
sold by an Originator hereunder is re-transferred to Purchaser pursuant to
Section 2.2(b) of the Sale and Servicing Agreement, the Originator shall, at
Purchaser's option, either (a) repurchase such Mortgage Loan at the Loan
Purchase Price therefor or (b) substitute in lieu thereof a Qualified
Replacement Mortgage Loan (provided that the Originator has any such loans
available for sale at the time) and deliver to or upon the order of Purchaser
the related Substitution Amount, all in accordance with and subject to the
applicable terms and conditions of the Sale and Servicing Agreement.
ARTICLE III
Protective Security Interest
It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans (including the related Mortgage Files and the
other rights and properties described in Section 2.01 hereof) by the Originators
to Purchaser as contemplated by this Agreement be construed as a sale of the
Mortgage Loans by the Originators to Purchaser. It is, further, not the intent
of the parties that such conveyance be deemed a pledge of the Mortgage Loans by
the Originators to Purchaser or any of its Assignees (including the Trust and
the Indenture Trustee) to secure a debt or other obligation of the Originators.
However, in the event and to the extent that, notwithstanding the intent of the
parties hereto, any or all of the Mortgage Loans (including the related Mortgage
Files and the other rights and properties described in Section 2.01 hereof) are
held to be property of either or both of the Originators, then (i) this
Agreement shall also be deemed to be a security agreement within the meaning of
Article 9 of the New York Uniform Commercial Code; (ii) the conveyance provided
for herein shall be deemed to be a grant by the Originators to Purchaser of a
first priority security interest in all of the Originators' right, title and
interest in and to the Mortgage Loans (including the related Mortgage Files and
the other rights and properties described in Section 2.01 hereof) and all
amounts payable to the holder of the Mortgage Loans and/or such rights or
properties 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 all amounts from time to time held or
invested in the Note Account or the Principal and Interest Account (excluding
any investment earnings thereon), whether in the form of cash, instruments,
securities or other property; (iii) the possession by Purchaser or any of its
Assignees or their respective bailees or agents of items of property that
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 Section 9-305 of the New York Uniform Commercial
Code; (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 Purchaser for the purpose
of perfecting such security interest
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under applicable law; and (v) the obligations secured by the first priority
security interest described in clause (ii) above shall be deemed to include any
and all obligations of Purchaser or any of its Assignees (including the Trust
and the Indenture Trustee) to pay the principal of and interest on the Notes to
the Noteholders and to pay the fees, expenses and other amounts required to be
paid to the Master Servicer, the Indenture Trustee, the Owner Trustee, the
Insurer and the Certificateholders, all in accordance with and otherwise subject
to the Operative Documents (including the Indenture). Any assignment or other
transfer of the interest of Purchaser under any provision hereof shall also be
deemed to be an assignment of any security interest created hereby. Each of the
Originators and Purchaser shall, to the extent consistent with this Agreement,
take such actions as may be necessary to ensure that, if this Agreement were
deemed to create a security interest in the Mortgage Loans, such security
interest would be deemed to be a perfected security interest of first priority
under applicable law and would be maintained as such throughout the terms of
this Agreement, the Sale and Servicing Agreement and the Indenture. Each of the
Originators also covenants not to pledge, assign or grant any security interest
to any third party in any Mortgage Loan conveyed to Purchaser hereunder.
Upon Purchaser's request, each Originator shall perform (or
cause to be performed) such further acts and execute, acknowledge and deliver
(or cause to be executed, acknowledged and delivered) to Purchaser such further
documents as Purchaser shall deem necessary or advisable in order to evidence,
establish, maintain, protect, enforce or defend its rights in and to the
Mortgage Loans and other rights and properties transferred hereunder or
otherwise to carry out the intent and accomplish the purposes of this Agreement
(including UCC-1 financing statements naming such Originator as debtor and
Purchaser as secured party and any continuation statements relating thereto).
ARTICLE IV
Representations and Warranties
Section 4.01. Representations and Warranties of Originators.
Each of the Originators represents, warrants and covenants to Purchaser as of
the Closing Date that:
(a) Such Originator is duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation and is duly
authorized and qualified to transact any and all business contemplated by this
Agreement to be conducted by such Originator in any state in which a Mortgaged
Property is located to the extent necessary to ensure the enforceability of each
Mortgage Loan in accordance with the terms of this Agreement.
(b) Such Originator has the full corporate power and authority
to originate the Mortgage Loans conveyed by it hereunder and to execute, deliver
and perform, and to enter into and consummate the transactions contemplated by,
this Agreement; the execution, delivery and performance of this Agreement by
such Originator has been duly authorized by all necessary corporate action on
the part of such Originator; and this Agreement, assuming the due authorization,
execution and delivery thereof by Purchaser,
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constitutes a legal, valid and binding obligation of such Originator,
enforceable against such Originator in accordance with its respective terms,
except to the extent that (i) the enforceability thereof may be limited by
federal or state bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to the equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
(c) The execution and delivery of this Agreement by such
Originator, the consummation by such Originator of the transactions herein
contemplated, and the fulfillment by such Originator of or compliance by such
Originator with the terms hereof will not (i) result in a breach of any term or
provision of the charter or by-laws of such Originator or (ii) conflict with,
result in a breach, violation or acceleration of, or result in a default under,
the terms of any other material agreement or instrument to which such Originator
is a party or by which it may be bound, or any statute, order or regulation
applicable to such Originator of any court, regulatory body, administrative
agency or governmental body having jurisdiction over such Originator, which
breach, violation, default or non-compliance would have a material adverse
effect on the business, operations, financial condition, properties or assets of
such Originator taken as a whole or the ability of such Originator to perform
its obligations under this Agreement; and such Originator is not a party to,
bound by, or in breach or violation of any material indenture or other material
agreement or instrument, or subject to or in violation of any statute, order or
regulation of any court, regulatory body, administrative agency or governmental
body having jurisdiction over it, which materially and adversely affects or, to
such Originator's knowledge, would in the future reasonably be expected to
materially and adversely affect, the ability of such Originator to perform its
obligations under this Agreement or the business, operations, financial
condition, properties or assets of such Originator taken as a whole.
(d) Such Originator is, and currently intends to remain, in
good standing and qualified to do business in each jurisdiction where failure to
be so qualified or licensed would have a material adverse effect on (i) the
business, operations, financial condition, properties or assets of such
Originator taken as a whole or (ii) the enforceability of any Mortgage Loan in
accordance with the terms of this Agreement.
(e) There is no litigation pending or, to such Originator's
actual knowledge, overtly threatened against such Originator that would
materially and adversely affect the execution, delivery or enforceability of
this Agreement or the ability of such Originator to perform any of its other
obligations hereunder in accordance with the terms hereof.
(f) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery and
performance by such Originator of, or compliance by such Originator with, this
Agreement or the consummation of the transactions contemplated hereby, or if any
such consent, approval, authorization or order is required, such Originator has
obtained the same.
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(g) Such Originator has caused to be performed any and all
acts required to preserve the rights and remedies of Purchaser in any insurance
policies of such Originator applicable to the Mortgage Loans conveyed by such
Originator hereunder.
Section 4.02. Representations and Warranties Regarding
Mortgage Loans. Each Originator represents and warrants to Purchaser as of the
Closing Date that, with respect to each Mortgage Loan conveyed by such
Originator hereunder, each representation and warranty set forth in Exhibit A
hereto is true and correct.
Section 4.03. Representations and Warranties of Purchaser.
Purchaser hereby makes the following representations and warranties, each of
which representations and warranties (i) is material and being relied upon by
the Originators and (ii) is true in all respects as of the date of this
Agreement:
(a) Purchaser has been duly organized and is validly existing
as a corporation under the laws of the State of Delaware.
(b) Purchaser has the requisite power and authority and legal
right to execute and deliver, engage in the transactions contemplated by, and
perform and observe the terms and conditions of, this Agreement to be performed
by it.
(c) This Agreement has been duly authorized and executed by
Purchaser, is valid, binding and enforceable against Purchaser in accordance
with its terms, and the execution, delivery and performance by Purchaser of this
Agreement does not conflict with any material term or provision of any other
agreement to which Purchaser is a party or any term or provision of the
Certificate of Incorporation or the By-laws of Purchaser, or any law, rule,
regulation, order, judgment, writ, injunction or decree applicable to Purchaser
of any court, regulatory body, administrative agency or governmental body having
jurisdiction over Purchaser.
(d) No consent, approval, authorization or order of,
registration or filing with, or notice to any governmental authority or court is
required under applicable law in connection with the execution and delivery by
Purchaser of this Agreement.
(e) To the best knowledge of Purchaser, there is no action,
proceeding or investigation pending or threatened against Purchaser before any
court, administrative agency or other tribunal (i) asserting the invalidity of
this Agreement, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement, or (iii) which is likely to
materially and adversely affect the performance by Purchaser of its obligations
under, or the validity or enforceability of, this Agreement.
(f) The purchase of the Mortgage Loans hereunder shall
constitute a representation by Purchaser to each Originator that Purchaser
understands, and that Purchaser has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of,
its investment in the relevant Mortgage Loans.
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Section 4.04. Remedies for Breach of Representations and
Warranties; Repurchase Obligation. It is understood and agreed that the
representations and warranties set forth in Sections 4.01 and 4.02 shall survive
each sale of the Mortgage Loans to Purchaser and shall inure to the benefit of
Purchaser and its Assignees notwithstanding any restrictive or qualified
endorsement on any related Credit Line Agreement or Assignment of Mortgage or
the examination or failure to examine any Mortgage File. With respect to the
representations and warranties contained in Sections 4.01 and 4.02 which are
made to the best of an Originator's knowledge or to the actual knowledge of an
Originator, if it is discovered by such Originator or Purchaser that the
substance of such representation and warranty is inaccurate and such inaccuracy
materially and adversely affects the value of the related Mortgage Loan or
Purchaser's or any Assignee's interest therein, then notwithstanding such
Originator's lack of knowledge with respect to the inaccuracy at the time the
representation or warranty was made, such Originator shall repurchase the
related Mortgage Loan in accordance with this Section 4.04 as if the applicable
representation or warranty was breached, subject to the terms and conditions of
the Sale and Servicing Agreement. Upon discovery by an Originator or Purchaser
of a breach of any of the foregoing representations and warranties which
materially and adversely affects the value of any Mortgage Loan or Purchaser's
interest therein, the party discovering such breach shall give prompt written
notice to the others.
Within 60 days of the earlier of either discovery by or notice
to an Originator of any breach of a representation or warranty by such
Originator which materially and adversely affects the value of any Mortgage Loan
or Purchaser's or any Assignee's interest therein, such Originator shall use its
best efforts promptly to cure such breach in all material respects and, if such
breach cannot be cured or is not cured or is not being diligently pursued as
evidenced by a notice acceptable to Purchaser, as evidenced by Purchaser's
agreement thereto, at the end of such 60-day period, Originator shall, at
Purchaser's option, either (a) repurchase such Mortgage Loan at the Loan
Purchase Price therefor or (b) substitute in lieu thereof a Qualified
Replacement Mortgage Loan (provided that the Originator has any such loans
available for sale at the time) and deliver to or upon the order of Purchaser
the related Substitution Amount, all in accordance with and subject to the
applicable terms and conditions of the Sale and Servicing Agreement.
At the time of repurchase or substitution, Purchaser and such
Originator shall arrange for the assignment to such Originator of such Mortgage
Loan and the delivery to such Originator of the related Mortgage File.
Each Originator shall indemnify and hold harmless Purchaser
and its Assignees from and against any losses, damages, penalties, fines,
forfeitures, reasonable and necessary 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, a breach by such
Originator of the representations and warranties contained in this Article IV
(notwithstanding any limitation in such representation and warranty as to such
Originator's knowledge). It is understood and agreed that the obligations of
each Originator set forth in this Section 4.04 either to cure or to repurchase
or substitute a non-qualifying Mortgage Loan and to indemnify and hold harmless
17
Purchaser as provided in this Section 4.04 constitute the sole remedies of
Purchaser respecting a breach by such Originator of the foregoing
representations and warranties.
Any cause of action against an Originator relating to or
arising out of the breach by such Originator of any representations and
warranties made in Sections 4.01 and 4.02 shall accrue as to any Mortgage Loan
upon (i) discovery of such breach by Purchaser or notice thereof by the
Originator to Purchaser, (ii) failure by the Originator to cure such breach or
to repurchase or substitute such Mortgage Loan as specified above, and (iii)
demand upon the Originator by Purchaser for compliance with the relevant
provisions of this Agreement.
ARTICLE V
Covenants and Warranties of Originators
So long as this Agreement remains in effect or any Originator
has obligations hereunder, each Originator hereby covenants and agrees with
Purchaser as follows:
Section 5.01. Affirmative Covenants.
(a) Such Originator shall do all things necessary to remain
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and to maintain all requisite authority to conduct
its business in each jurisdiction in which its business is conducted except
where failure to maintain such authority would not have a material adverse
effect on the ability of such Originator to conduct its business or to perform
its obligations under this Agreement.
(b) At all times during this Agreement, such Originator shall
possess sufficient net capital and liquid assets (or ability to access the same)
to satisfy its obligations as they become due in the normal course of business.
(c) Such Originator shall permit Purchaser, its Assignees and
their respective accountants, attorneys and other agents access to all of the
books and records relating to the Mortgage Loans purchased and retained by
Purchaser for inspection and copying during normal business hours at all places
where such Originator conducts business.
(d) Such Originator shall be obligated to sell Additional
Balances to the Trust( to the extent such Additional Balances are related to the
Mortgage Loans).
(e) Such Originators will deliver or cause to be delivered the
Mortgage File with respect to each Mortgage Loan.
Section 5.02. Negative Covenants.
(a) Such Originator shall not assign or attempt to assign this
Agreement or any rights hereunder, without first obtaining the specific written
consent of Purchaser.
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(b) Such Originator shall not amend its articles of
incorporation, articles of association or charter or its by-laws if such
amendment shall have or is likely to have an adverse effect upon Purchaser or
its interests under this Agreement, without the prior written consent of
Purchaser.
(c) Such Originator shall not (i) dissolve or terminate its
existence or (ii) transfer any assets to any affiliate except in the ordinary
course of its business or as otherwise expressly permitted or contemplated
hereby.
(d) Such Originator will not commit any act in violation of
applicable laws or regulations promulgated pursuant thereto that relate to the
Mortgage Loans or that materially and adversely affect the operations or
financial conditions of such Originator.
ARTICLE VI
Sale of Mortgage Loans by Purchaser
It is the intent of the parties hereto that (i) immediately
after the sale of the Mortgage Loans by the Originators to Purchaser as provided
herein, pursuant to the Sale and Servicing Agreement, Purchaser will sell,
assign, transfer, convey and set over to Holding all of Purchaser's right, title
and interest in and to the Mortgage Loans (including the other rights and
properties conveyed to it hereunder), (ii) immediately after the sale of the
Mortgage Loans by Purchaser to Holding, pursuant to the Sale and Servicing
Agreement, Holding will sell, assign, transfer, convey and set over to the Trust
all of Holding's right, title and interest in and to the Mortgage Loans, and
(iii) immediately after the sale of the Mortgage Loans by Holding to the Trust
as described above, pursuant to the Indenture, the Trust will Grant to the
Indenture Trustee all of the Trust's right, title and interest in and to the
Mortgage Loans.
With respect to each such sale or other transfer, each
Originator hereby agrees:
(a) to cooperate fully with Purchaser, Purchaser's Assignees,
Holding and the Trust with respect to all reasonable requests and due diligence
procedures, including participating in meetings with rating agencies, insurers
and such other parties as Purchaser shall designate and participating in
meetings with Purchaser's Assignees, Holding and the Trust and providing
information reasonably requested by Purchaser's Assignees, Holding and the
Trust;
(b) to execute all other necessary documents to effect the
transactions contemplated therein;
(c) to affirm the representations and warranties set forth
herein regarding such Originator and the Mortgage Loans as of the date of the
transfer to Holding and/or the Trust;
19
(d) to deliver to Purchaser for inclusion in any prospectus or
other offering material such publicly available information regarding such
Originator, its financial condition and the mortgage loan delinquency,
foreclosure and loss experience of its portfolio as is customarily set forth in
a prospectus supplement with respect to a comparable mortgage pool, the
underwriting of mortgage loans, the servicer, the servicing and collection of
mortgage loans, lending activities and loan sales of the servicer, regulatory
matters and delinquency and loss experience and any additional information
reasonably requested by Purchaser, or as is otherwise reasonably requested by
Purchaser and which such Originator is capable of providing without unreasonable
effort or expense, and to indemnify Purchaser and its Assignees for material
misstatements or omissions contained in such information;
(e) to deliver to Purchaser, and to any Person designated by
Purchaser, such legal documents and in-house opinions of counsel as are
customarily delivered by originators and reasonably determined by Purchaser or
its Assignees to be necessary in connection with the transactions contemplated
by the Sale and Servicing Agreement, it being understood that the cost of any
opinions of outside special counsel that may be required shall be the
responsibility of such Originator; and
(f) to cooperate fully with Purchaser and its Assignees with
respect to the preparation of Mortgage Loan documents and other documents and
with respect to servicing requirements reasonably requested by the rating
agencies and insurers.
ARTICLE VII
Additional Remedies
Upon the occurrence of a Rapid Amortization Event under the
Indenture due to an act or omission of an Originator, Purchaser and any of its
Assignees shall have, in addition to all other rights and remedies under this
Agreement or otherwise, all other rights and remedies provided under the UCC of
each applicable jurisdiction and other applicable laws, which rights shall be
cumulative. Without limiting the foregoing, the occurrence of any such Rapid
Amortization Event shall not deny to Purchaser or its Assignees any remedy to
which Purchaser or its Assignees may be otherwise appropriately entitled,
whether by statute or applicable law, at law or in equity.
ARTICLE VIII
Term
This Agreement shall terminate on the date of termination of
the Trust as set forth in Article IX of the Trust Agreement.
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ARTICLE IX
Exclusive Benefit of Parties; Assignment
This Agreement is for the exclusive benefit of the parties
hereto and their respective successors and assigns and shall not be deemed to
give any legal or equitable right to any other person except Holding, the Trust,
the Indenture Trustee, the Noteholders and the Insurer. Neither this Agreement
nor any rights hereunder may be assigned by any party hereto without the prior
written consent of the others and the Insurer except to Holding, the Trust and
the Indenture Trustee.
ARTICLE X
Amendment; Waivers
This Agreement may be amended from time to time only by
written agreement of the Originators and Purchaser with the prior written
consent of the Insurer, which consent shall not be unreasonably withheld. Any
forbearance, failure, or delay by a party in exercising any right, power, or
remedy hereunder shall not be deemed to be a waiver thereof, and any single or
partial exercise by a party of any right, power or remedy hereunder shall not
preclude the further exercise thereof. Every right, power and remedy of a party
shall continue in full force and effect until specifically waived by it in
writing. No right, power or remedy shall be exclusive, and each such right,
power or remedy shall be cumulative and in addition to any other right, power or
remedy, whether conferred hereby or hereafter available at law or in equity or
by statute or otherwise.
ARTICLE XI
Execution in Counterparts
This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument. Signatures may be exchanged by
facsimile, and each party hereto agrees to be bound by its own facsimile
signature and to accept the facsimile signature of the other party.
ARTICLE XII
Effect of Invalidity of Provisions
In case any one or more of the provisions contained in this
Agreement should be or become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall in no way be affected, prejudiced or disturbed thereby.
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ARTICLE XIII
Governing Law
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to its rules
regarding conflict of laws.
ARTICLE XIV
Notices
Any notices, consents, directions, demands and other
communications given under this Agreement (unless otherwise specified herein)
shall be in writing and shall be deemed to have been duly given when personally
delivered at or telecopied to the respective addresses or facsimile numbers, as
the case may be. If to the Purchaser, addressed to Advanta Mortgage Conduit
Services, Inc., 10790 Rancho Bernardo Road, San Diego, California 92127; if to
the AFC, addressed to Advanta Finance Corp., 10790 Rancho Bernardo Road, San
Diego, California 92127, if to ANB, addressed to Advanta National Bank, One
Righter Parkway, Wilmington, Delaware 19803, or to such other address or
facsimile number as either party shall give notice to the other party pursuant
to this Article XIV. Notices, consents, and other communications may also be
effected by first class mail, postage prepaid sent to the foregoing addresses
and will be effective upon receipt by the intended recipient.
ARTICLE XV
Entire Agreement
This Agreement, including the Exhibits and Schedules hereto,
contains the entire agreement of the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements between
them, whether oral or written, of any nature whatsoever with respect to the
subject matter hereof.
ARTICLE XVI
Indemnities
Without limiting any other rights which Purchaser or each
Originator may have hereunder or under applicable law, and in addition to any
other indemnity provided hereunder, each Originator hereby agrees to indemnify
Purchaser, its Assignees and their respective officers, directors, agents and
employees (each, an "Indemnified Party") from and against any and all Losses
incurred by any of them relating to or resulting from:
(a) Any representation or warranty made by such Originator (or
any officers, employees or agents of such Originator) under or in connection
with this Agreement, any periodic report required to be furnished hereunder or
any other information or document delivered by such Originator pursuant hereto,
which shall have been false or incorrect in any material respect when made or
deemed made;
22
(b) The failure by such Originator to (i) comply with any
applicable law, rule or regulation with respect to any purchase and sale
hereunder or (ii) perform or observe any material obligation or covenant
hereunder; or
(c) The failure by such Originator (if so requested by
Purchaser) to execute and properly file, or any delay in executing and properly
filing, financing statements or other similar instruments or documents under the
UCC of any applicable jurisdiction or other applicable laws with respect to the
Mortgage Loans.
Promptly after receipt by an Indemnified Party under this
Article XVI of notice of the commencement of any action or other proceeding,
such Indemnified Party will, if a claim in respect thereof is to be made against
the indemnifying party under this Article XVI, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability that it may have to
any Indemnified Party otherwise than under this Article XVI. In case any such
action is brought against any Indemnified Party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party will be entitled to
participate therein, and to the extent that it may elect by written notice
delivered to the Indemnified Party promptly after receiving the aforesaid notice
from such Indemnified Party, to assume the defense thereof, with counsel
satisfactory to such Indemnified Party; provided, however, that if the
defendants in any such action include both the Indemnified Party and the
indemnifying party and the Indemnified Party shall have reasonably concluded
that there may be legal defenses available to it and/or other Indemnified
Parties that are different from or additional to those available to the
indemnifying party, the Indemnified Party shall have the right to elect separate
counsel to assert such legal defenses and to otherwise participate in the
defense of such action on behalf of such Indemnified Party. Upon receipt of
notice from the indemnifying party to such Indemnified Party of its election so
to assume the defense of such action and approval by the Indemnified Party of
counsel, the indemnifying party will not be liable for any legal or other
expenses subsequently incurred by such Indemnified Party in connection with the
defense thereof, unless (i) the Indemnified Party shall have employed separate
counsel in connection with the assertion of legal defenses in accordance with
the proviso to the next preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the expenses of more than one
separate counsel representing the Indemnified Parties under this Article XVI who
are parties to such action), (ii) the indemnifying party shall not have employed
counsel satisfactory to the Indemnified Party to represent the Indemnified Party
within a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the Indemnified
Party at the expense of the indemnifying party; and except that, if clause (i)
or (iii) is applicable, such liability shall only be in respect of the counsel
referred to in such clause (i) or (iii).
23
ARTICLE XVII
RESPA Obligations
Each Originator agrees to discharge, on Purchaser's behalf,
all obligations, including all disclosure obligations, which Purchaser may have
under the Real Estate Settlement Procedures Act of 1974, as amended, in
connection with Purchaser's purchase from such Originator of the Mortgage Loans.
Purchaser agrees to provide the Originator with such information as is
reasonably necessary for the Originator to discharge such obligations and hereby
appoints the Originator as its agent in its name for the purposes of, and only
for the purposes of, performing such obligations. Each Originator hereby agrees
to indemnify Purchaser, its Assignees and their respective officers, directors,
agents and employees from any Losses suffered by any such party in connection
with the Originator's obligations under this provision.
ARTICLE XVIII
Survival
All indemnities and undertakings of Originator and Purchaser
hereunder shall survive the termination of this Agreement.
ARTICLE XIX
Consent to Service
Each party irrevocably consents to the service of process by
registered or certified mail, postage prepaid, to it at its address given
pursuant to Article XIV hereof.
ARTICLE XX
Submission to Jurisdiction; Waiver of Trial by Jury
With respect to any claim arising out of this Agreement each
party irrevocably submits to the exclusive jurisdiction of the courts of the
State of New York and the United States District Court located in the Borough of
Manhattan, City of New York, and each party irrevocably waives any objection
which it may have at any time to the laying of venue of any suit, action or
proceeding arising out of or relating hereto brought in any such court,
irrevocably waives any claim that any such suit, action or proceeding brought in
any such court has been brought in any inconvenient forum and further
irrevocably waives the right to object, with respect to such claim, suit, action
or proceeding brought in any such court, that such court does not have
jurisdiction over such party, provided that service of process is made as set
forth in Article XIX hereof or by any other lawful means. To the extent
permitted by applicable law, Purchaser and the Originators each irrevocably
waive all right of trial by jury in any action, proceeding or counterclaim
arising out of or in connection with this Agreement or any matter arising
hereunder.
24
ARTICLE XXI
Construction
The headings in this Agreement are for convenience only and
are not intended to influence its construction. References to Articles,
Sections, Schedules and Exhibits in this Agreement are to the Articles, Sections
of and Schedules and Exhibits to this Agreement. The Schedules and Exhibits are
hereby incorporated into and form a part of this Agreement. As used in this
Agreement, any form of the word "include" shall be deemed to be followed by the
words "without limitation," the words "and" and "or" are used in the conjunctive
or disjunctive as the sense and circumstances may require, the singular includes
the plural and vice-versa, and terms such as "herein," "hereof," "hereby" and
"hereunder" refer to this Agreement as a whole and not to any particular
provision of this Agreement, unless the context clearly indicates otherwise.
Unless otherwise stated in this Agreement, in the computation of a period of
time from a specified date to a later specified date, the word "from" means
"from and including" and the words "to" and "until" each means "to but
excluding."
ARTICLE XXII
Further Assurances
Each party hereto agrees to execute, acknowledge and deliver
to the other parties and to Purchaser's Assignees such reasonable and
appropriate additional documents, instruments or agreements as any of the other
parties may be necessary or appropriate to effectuate the purposes of this
Agreement.
ARTICLE XXIII
Third Party Beneficiary
The Insurer shall be deemed to be an express third-party
beneficiary of this Agreement and shall be entitled to enforce the terms hereof
as if it were a party hereto.
ARTICLE XXIV
No Petition
The Originators, by entering into this Agreement, hereby
covenant and agree that they will not at any time institute against the Sponsor,
Holding or the Trust, or join in any institution against the Sponsor, Holding or
the Trust of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States Federal or
state bankruptcy or similar law.
************
25
IN WITNESS WHEREOF, the parties hereto have caused their names
to be signed hereto by their respective officers thereunto duly authorized, all
as of the date first written above.
ADVANTA MORTGAGE CONDUIT
SERVICES, INC., as Purchaser
By: /s/ Michael Coco
-------------------------------
Name: Michael Coco
Title: Vice President
ADVANTA NATIONAL BANK,
as an Originator
By: /s/ Michael Coco
-------------------------------
Name: Michael Coco
Title: Vice President
ADVANTA FINANCE CORP.,
as an Originator
By: /s/ Michael Coco
-------------------------------
Name: Michael Coco
Title: Vice President
26
SCHEDULE I
SCHEDULE OF MORTGAGE LOANS
27
EXHIBIT A
MORTGAGE LOAN
REPRESENTATIONS AND WARRANTIES
Each Originator makes the following representations and
warranties to Purchaser solely with respect to the Mortgage Loans conveyed by
such Originator hereunder. Such representations and warranties speak as of the
Closing Date, but shall survive the sale, transfer, and assignment of such
Mortgage Loans first to Holding and then to the Trust pursuant to the Sale and
Servicing Agreement and the pledge of such Mortgage Loans to the Indenture
Trustee pursuant to the Indenture:
(i) All of the original or certified documentation set forth
in the definition of Mortgage File and in Section 2.1(g)(i) of the Sale
and Servicing Agreement (including all material documents related
thereto) with respect to each Mortgage Loan has been or will be
delivered to the Indenture Trustee on the Closing Date. All such
documentation is true and accurate in all material respects. Each of
the documents and instruments specified to be included therein has been
duly executed and in due and proper form, and each such document or
instrument is in a form generally acceptable to prudent mortgage
lenders that regularly originate or purchase mortgage loans comparable
to the Mortgage Loans for sale to prudent investors in the secondary
market that invest in mortgage loans such as the Mortgage Loans.
(ii) Each Mortgage Loan is being serviced by the Master
Servicer or a Master Servicer Affiliate.
(iii) During the period from origination to the Cut-Off Date,
each Mortgage Loan has been serviced in accordance with applicable law.
(iv) As of the Closing Date with respect to the Mortgage Loans
and as of the applicable Transfer Date with respect to any Qualified
Replacement Mortgage Loan, this Agreement constitutes a valid transfer
and assignment to Purchaser of all right, title and interest of such
Originator in and to the related Cut-Off Date Principal Balances with
respect to such Mortgage Loans, all monies due or to become due with
respect thereto (excluding payments in respect of interest collected
prior to the related Cut-Off Date), and all proceeds of the related
Cut-Off Date Principal Balances with respect to such Mortgage Loans and
such funds relating to such Mortgage Loans as are from time to time
deposited in the Accounts (excluding any investment earnings on the
amounts from time to time deposited in the Principal and Interest
Account) and all other related property specified in the definition of
"Mortgage Loan" and, moreover, will constitute a valid transfer and
assignment to Purchaser of all right, title and interest of such
Originator in and to the related Additional Balances, all monies due or
to become due with respect thereto, and all proceeds of such Additional
Balances and all other property specified in the definition of
"Mortgage Loans" relating to such Additional Balances. However, if this
Agreement is not deemed to be a valid transfer and assignment to
Purchaser of such right, title and interest, this Agreement shall in
any event constitute a grant of a security interest (as defined in the
UCC as in effect in New York) in such property to Purchaser. If this
Agreement constitutes the grant of a security interest to Purchaser in
such property,
28
and if the Indenture Trustee maintains possession of the Mortgage File
for each such Mortgage Loan, Purchaser shall have a first priority
perfected security interest in such property (to the extent that
perfection can be achieved by possession by or on behalf of a secured
party), subject to the effect of Section 9-306 of the UCC with respect
to collections on such Mortgage Loans that are deposited in the
Accounts.
(v) As of the Closing Date with respect to the Mortgage Loans
and as of the applicable Transfer Date with respect to any Qualified
Replacement Mortgage Loan, the information set forth in the Schedule of
Mortgage Loans for such Mortgage Loans is true and correct in all
material respects.
(vi) As of the Cut-Off Date, no more than 0.02% of the related
Cut-Off Date Pool Balance is secured by Mortgaged Properties located
within any single zip code area.
(vii) (a) The Mortgages and the Credit Line Agreements
conveyed to Purchaser by the Originators pursuant to Section 2.1 hereof
have not been assigned or pledged by such Originator, and such
Originator is the sole owner and holder of such Mortgages and such
Credit Line Agreements free and clear of any and all liens, claims,
encumbrances, participation interests, equities, pledges, charges or
security interests of any nature, and has full right and authority,
under all governmental and regulatory bodies having jurisdiction over
the holder of the related Mortgage Loans, to sell, assign or transfer
the same and (b) the Mortgages and the Credit Line Agreements conveyed
by such Originator to the Purchaser pursuant to Section 2.01 hereof
have not been assigned or pledged by such Originator, and Originator is
the sole owner and holder of such Mortgages and such Credit Line
Agreements free and clear of any and all liens, claims, encumbrances,
participation interests, equities, pledges, charges or security
interests of any nature, and has full right and authority, under all
governmental and regulatory bodies having jurisdiction over the holder
of the related Mortgage Loans, to sell, assign or transfer the same.
(viii) As of the Closing Date with respect to the Mortgage
Loans and as of the applicable Transfer Date with respect to any
Qualified Replacement Mortgage Loan, there is no valid offset, defense
or counterclaim of any obligor under any Credit Line Agreement or
Mortgage relating to such Mortgage Loans. Neither the operation of any
of the terms of any such Credit Line Agreement or any such Mortgage nor
the exercise of any right thereunder will render either such Credit
Line Agreement or such Mortgage unenforceable, in whole or in part, nor
subject to any right of rescission, set-off, claim, counterclaim or
defense, including the defense of usury and no such right of
rescission, set-off, counterclaim or defense has been asserted with
respect thereto.
(ix) As of the Cut-Off Date with respect to the Mortgage
Loans, no Minimum Monthly Payment is more than 59 days Delinquent
(measured on a contractual basis) and no more than 0.52% (by the
related Cut-Off Date Pool Balance) of the Mortgage Loans were 30-59
days Delinquent (measured on a contractual basis).
29
(x) As of the Cut-Off Date with respect to the Mortgage Loans
and as of the applicable Transfer Date with respect to any Qualified
Replacement Mortgage Loan, each Credit Line Agreement and each Mortgage
Loan relating to such Mortgage Loans is an enforceable obligation of
the related Mortgagor, except as the enforceability thereof may be
limited by the bankruptcy, insolvency or similar laws affecting
creditors' rights generally.
(xi) The weighted average remaining term to maturity of the
Mortgage Loans on a contractual basis as of the Cut-Off Date is
approximately 269 months. With respect to each Mortgage Loan, on each
date that the Coupon Rates have been adjusted, interest rate
adjustments on such Mortgage Loans were made in compliance with the
related Mortgage and Credit Line Agreement and applicable law. With
respect to the Mortgage Loans, the Coupon Rate over the term of each
Mortgage Loan may not exceed the related maximum Coupon Rate, if any.
With respect to the Mortgage Loans as of the Cut-Off Date, (i) the
maximum Coupon Rates range between 15.750% and 24.500%, (ii) the
margins range between 0.000% and 8.750% and the weighted average margin
is approximately 4.548%, and (iii) the current Coupon Rates range
between 7.750% and 16.500% and the weighted average Coupon Rate is
approximately 12.300%.
(xii) The Credit Limits on the Mortgage Loans range between
$8,000.00 and $420,000.00 with an average of approximately $30,418.
(xiii) As of the Cut-Off Date, each Mortgaged Property is
improved by a single (one-to-four) family residential dwelling, which
may include manufactured homes, condominiums and townhouses but shall
not include cooperatives or property which constitutes other than real
property under applicable state law.
(xiv) As of the Cut-Off Date, no Mortgage Loan had a Combined
Loan-to-Value Ratio in excess of 125.00%.
(xv) As of the Cut-Off Date with respect to the Mortgage Loans
and as of the applicable Transfer Date with respect to any Qualified
Replacement Mortgage Loan, each Mortgage is a valid and subsisting
first or second lien of record on the Mortgaged Property (subject in
the case of any Junior Mortgage Loan only to a Senior Lien on such
Mortgaged Property) and subject in all cases to the exceptions to title
set forth in the title insurance policy or title search with respect to
the related Mortgage Loan, which exceptions are generally acceptable to
banking institutions in connection with their regular mortgage lending
activities, and except for liens for (i) real estate taxes and special
assessments not yet delinquent, (ii) income taxes, (iii) any covenants,
conditions and restrictions, rights of way, easements, and other
matters of public record and such other exceptions to which similar
properties are commonly subject and which do not individually, or in
the aggregate, materially and adversely affect the benefits of the
security intended to be provided by such Mortgage.
(xvi) (a) Immediately prior to the transfers and assignments
herein contemplated, such Originator held good and indefeasible title
to, and was the sole owner of, each Mortgage Loan conveyed by such
Originator (including its Cut-Off Date Pool
30
Balance) conveyed by such Originator to the Purchaser pursuant to
Section 2.01 hereof, all monies due or to become due with respect
thereto, and all proceeds of such Cut-Off Date Pool Balances with
respect to such Mortgage Loans subject to no liens, charges, mortgages,
encumbrances or rights of others except liens which will be released
simultaneously with such transfers and assignments; and immediately
upon the transfers and assignments herein contemplated, Purchaser will
hold good and indefeasible title to, and be the sole owner of, each
Mortgage Loan subject to no liens, charges, mortgages, encumbrances or
rights of others except liens which will be released simultaneously
with such transfers and assignments and (b) immediately prior to the
transfers and assignments herein contemplated, such Originator held
good and indefeasible title to, and was the sole owner of, each
Mortgage Loan (including its Cut-Off Date Principal Balance) conveyed
by such Originator to the Purchaser pursuant to Section 2.1 hereof, all
monies due or to become due with respect thereto, and all proceeds of
such Cut-Off Date Principal Balances with respect to such Mortgage
Loans subject to no liens, charges, mortgages, encumbrances or rights
of others except liens which will be released simultaneously with such
transfers and assignments; and immediately upon the transfers and
assignments herein contemplated, the Purchaser will hold good and
indefeasible title to, and be the sole owner of, each Mortgage Loan
subject to no liens, charges, mortgages, encumbrances or rights of
others except liens which will be released simultaneously with such
transfers and assignments
(xvii) There is no delinquent tax or assessment lien or
mechanic's lien on any Mortgaged Property relating to a Mortgage Loan,
and each such Mortgaged Property is free of substantial damage and is
in good repair.
(xviii) Each Mortgage Loan at the time it was made complied in
all material respects with all applicable state and federal laws and
regulations, including the federal Truth-in-Lending Act and other
consumer protection laws, real estate settlement procedure, usury,
equal credit opportunity, disclosure and recording laws.
(xix) With respect to each Mortgage Loan that is a First
Mortgage Loan, and, to the best of such Originator's knowledge, with
respect to each Mortgage Loan that is a Junior Mortgage Loan, a
lender's title insurance policy, issued in standard California Land
Title Association form or American Land Title Association form, or
other form acceptable in a particular jurisdiction by a title insurance
company authorized to transact business in the state in which the
related Mortgaged Property is situated, was issued on the date of
origination of such Mortgage Loan, and as of the Closing Date with
respect to the Mortgage Loans and each applicable Transfer Date with
respect to any Qualified Replacement Mortgage Loan, each such policy is
valid and remains in full force and effect, or a title search or
guaranty of title customary in the relevant jurisdiction was obtained
with respect to any Mortgage Loan as to which no title insurance policy
or binder was issued.
(xx) As of the Closing Date with respect to the Mortgage Loans
and as of the applicable Transfer Date with respect to any Qualified
Replacement Mortgage Loan, each Credit Line Agreement is the legal,
valid, binding and enforceable obligation of the maker thereof and is
enforceable in accordance with its terms, except only as such
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enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law), and
all parties to each Mortgage Loan had full legal capacity to execute
all documents relating to such Mortgage Loan and convey the estate
therein purported to be conveyed.
(xxi) The terms of each Credit Line Agreement and each related
Mortgage have not been impaired, cancelled, subordinated, rescinded,
altered or modified in any material respect, and the related Mortgaged
Property has not been released from the lien of the related Mortgage,
in whole or in part and no instrument has been executed that would
effect such release, cancellation, subordination or rescission, except
by a written instrument which (if such instrument is secured by real
property) has been recorded, if necessary, to protect the interest of
the Noteholders and which has been delivered to the Indenture Trustee.
(xxii) Except as otherwise required by law or the terms of the
Credit Line Agreement, pursuant to the statute under which the related
Mortgage Loan was made, the related Credit Line Agreement is not and
has not been secured by any collateral, pledged account or other
security except the lien of the corresponding Mortgage.
(xxiii) Each Mortgaged Property relating to a Mortgage Loan is
located in the state identified in the Schedule of Mortgage Loans and
consists of one or more parcels of real property with a residential
dwelling erected thereon.
(xxiv) There is no proceeding pending or threatened for the
total or partial condemnation of any Mortgaged Property relating to a
Mortgage Loan, nor is such a proceeding currently occurring, and each
such Mortgaged Property is undamaged by waste, fire, earthquake or
earth movement, flood, tornado or other casualty, so as to affect
adversely the value of such Mortgaged Property as security for the
related Mortgage Loan or the use for which the premises were intended.
(xxv) With respect to each Mortgage Loan that is a Junior
Mortgage Loan, either (A) no consent for such Mortgage Loan was
required by the holder of any related Senior Lien prior to the making
of such Mortgage Loan or (B) such consent has been obtained and is
contained in the related Mortgage File.
(xxvi) Each Mortgage relating to a Mortgage Loan contains
customary and enforceable provisions which render the rights and
remedies of the holder thereof adequate for the realization against the
related Mortgaged Property of the benefits of the security, including
(A) in the case of a Mortgage designated as a deed of trust, by
trustee's sale and (B) otherwise by judicial foreclosure. To the best
of such Originator's knowledge, there is no homestead or other
exemption available which materially interferes with the right to sell
the related Mortgaged Property at a trustee's sale or the right to
foreclose the related Mortgage.
(xxvii) As of the Closing Date with respect to the Mortgage
Loans and as of the applicable Transfer Date with respect to a
Qualified Replacement Mortgage Loan,
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there is no default, breach, violation or event of acceleration
existing under any Mortgage or Credit Line Agreement relating thereto
and no event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration, and such Originator has not
waived any default, breach, violation or event of acceleration;
provided, however, that the foregoing shall not apply to the extent
that the relevant default, breach, violation or other event relates to
one or more of the Mortgage Loans being Delinquent.
(xxviii) To the best knowledge of such Originator, all parties
to each Credit Line Agreement and the related Mortgage had legal
capacity to execute such Credit Line Agreement and the related Mortgage
and each such Credit Line Agreement and the related Mortgage have been
duly and properly executed by such parties.
(xxix) No selection procedures reasonably believed by such
Originator to be adverse to the interests of the Noteholders or the
Insurer was utilized in selecting the Mortgage Loans.
(xxx) As of the Closing Date with respect to the Mortgage
Loans, no Mortgagor has been released, in whole or in part, except in
connection with an assumption agreement which has been approved by the
applicable title insurer (to the extent required by such title insurer)
and which is part of the related Mortgage File delivered to the
Indenture Trustee.
(xxxi) At the time of origination of each Mortgage Loan that
is not a First Mortgage Loan, the related prior lien was not more than
30 days delinquent.
(xxxii) To the best of such Originator's knowledge, all
required inspections, licenses and certificates with respect to the use
and occupancy of all occupied portions of all property securing the
Mortgages relating to the Mortgage Loans have been made, obtained or
issued, as applicable.
(xxxiii) As of the Cut-Off Date, no more than 90.55% of the
Mortgage Loans are Junior Mortgage Loans.
(xxxiv) With respect to each Mortgage Loan that is not a First
Mortgage Loan, the related prior lien does not provide for negative
amortization.
(xxxv) With respect to each Mortgage Loan that is not a First
Mortgage Loan, the maturity date of the Mortgage Loan is prior to the
maturity date of the related prior lien if such prior lien provides for
a balloon payment.
(xxxvi) Each Mortgage Loan is secured by a property having an
appraised value of not more than $1,526,384.
(xxxvii) With respect to each Mortgage Loan, (1) the
improvements upon each related Mortgaged Property are covered by a
valid and existing hazard insurance policy with a carrier generally
acceptable to the Master Servicer that provides for fire and extended
coverage representing coverage not less than (a) the Credit Limit of
such
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Mortgage Loan or (b) the maximum insurable value of the related
Mortgaged Property, or (2) the Master Servicer has obtained and will
maintain a blanket policy insuring against fire, flood and hazards of
extended coverage with respect to all of the Mortgage Loans
(xxxviii)With respect to any Mortgage Loan which is a Senior
Lien, such Originator has caused and will cause to be performed any and
all acts required to be performed to preserve the rights and remedies
of the Master Servicer and the Indenture Trustee in any Insurance
Policies applicable to any such Mortgage Loan delivered by such
Originator hereunder, including any necessary notifications of
insurers, assignments of policies or interests therein and
establishments of co-insured, joint loss payee and mortgagee rights in
favor of the Trust and its assignees in care of the Master Servicer or
the Indenture Trustee.
(xxxix) To the best of such Originator's knowledge, each
Mortgage Loan was underwritten in all material respects in accordance
with the credit underwriting guidelines of such Originator as set forth
in such Originator's underwriting guidelines, as in effect on the date
of origination.
(xi) As of the Closing Date, to the best of such Originator's
knowledge, such Originator has received no notice of default of any
First Mortgage Loan secured by any Mortgaged Property that also secures
a Mortgage Loan which has not been cured by a party other than such
Originator.
(xii) At the Cut-Off Date with respect to the Mortgage Loans,
no Mortgagor had been identified on the records of such Originator as
being the subject of a current bankruptcy proceeding.
(xiii) Reserved.
(xiii) To the best of such Originator's knowledge, each party
which had any interest in a Mortgage Loan, whether as mortgagee,
assignee, pledgee or otherwise (including such Originator), is (or,
during the period in which such party held and disposed of such
interest, was) in substantial compliance with any and all applicable
licensing requirements of the law of the state wherein the property
securing the Mortgage Loan is located.
(xiv) To the best of such Originator's knowledge, with
respect to the Mortgage Loans, the documents, instruments and
agreements submitted by each Mortgagor for loan underwriting were not
falsified and contain no untrue statement of a material fact and do not
omit to state a material fact required to be stated therein or
necessary to make the information and the statements contained therein
not misleading.
(xv) Except as previously disclosed in writing to the
Indenture Trustee and the Insurer, with respect to each Mortgage Loan,
there is only one originally executed Mortgage and Credit Line
Agreement not stamped as a duplicate.
(xvi) With respect to the Mortgage Loans as of the Cut-Off
Date, each such Mortgage Loan conforms, and all such Mortgage Loans in
the aggregate conform, in all material respects to the description
thereof set forth in the Registration Statement.