Exhibit 4.3
Draft: 25/02/03
THIS AMENDED AND RESTATED MORTGAGE SALE AGREEMENT is made on [6th March], 2003
BETWEEN:
(1) HALIFAX PLC (registered number 02367076), a public limited company
incorporated under the laws of England and Wales, whose registered office
is at Trinity Road, Halifax, West Yorkshire HX1 2RG, acting in its
capacities as the Seller and one of the Beneficiaries;
(2) PERMANENT FUNDING (NO. 1) LIMITED (registered number 4267660), a private
limited company incorporated under the laws of England and Wales, whose
registered office is at Blackwell House, Guildhall Yard, London EC2V 5AE,
acting in its capacities as Funding 1 and one of the Beneficiaries;
(3) PERMANENT MORTGAGES TRUSTEE LIMITED (registered number 83116), a private
limited company incorporated under the laws of Jersey, Channel Islands,
whose registered office is at 47 Esplanade, St Helier, Jersey JE1 0BD,
Channel Islands, acting in its capacity as the Mortgages Trustee;
(4) STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company
organised under the laws of the Commonwealth of Massachusetts, United
States of America, acting through its office at 225 Franklin Street,
Boston, Massachusetts 02110 acting as a co-trustee in its capacity as
Security Trustee; and
(5) U.S. BANK NATIONAL ASSOCIATION, a national banking association formed under
the laws of the United States of America, acting through its office at 1
Federal Street, 3rd Floor, Boston, Massachusetts 02110, acting as a
co-trustee in its capacity as Security Trustee.
WHEREAS:
(A) The Seller carries on the business of, inter alia, originating mortgage
loans to individual borrowers secured on residential properties in England
and Wales.
(B) The Seller has assigned to the Mortgages Trustee certain of the above
mentioned mortgage loans together with the benefit of the related security
for the same on the terms and subject to the conditions set out in the
Mortgage Sale Agreement dated 14th June, 2002 (as amended and/or restated
from time to time, the "MORTGAGE SALE AGREEMENT").
(C) The Mortgages Trustee holds all of the above mentioned assigned mortgage
loans as bare trustee for the Beneficiaries upon, with and subject to the
trusts, powers and provisions of the Mortgages Trust Deed dated 13th June,
2002 (as amended and/or restated from time to time, the "MORTGAGES TRUST
DEED").
(D) The parties to the Mortgage Sale Agreement have agreed to amend and restate
the terms of the Mortgage Sale Agreement as set out herein and the Seller
will assign a new portfolio of mortgage loans and their related security to
the Mortgages Trustee on or about the date hereof on such amended terms.
IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND CONSTRUCTION
1.1 The Amended and Restated Master Definitions and Construction Schedule
signed for the purposes of identification by Allen & Overy and Sidley
Austin Brown & Wood on [5th March], 2003 (as the same may be amended,
varied or supplemented from time to time with the consent of the parties
hereto) is expressly and specifically incorporated into this Agreement and,
accordingly, the expressions defined in the Amended and Restated Master
Definitions and Construction Schedule (as so amended, varied or
supplemented) shall, except where the context otherwise requires and save
where otherwise defined herein, have the same meanings in this Agreement,
including the Recitals hereto and this Agreement shall be construed in
accordance with the interpretation provisions set out in CLAUSE 2 of that
Amended and Restated Master Definitions and Construction Schedule.
1.2 Any reference in this Agreement to any discretion, power, right, duty or
obligation on the part of the Mortgages Trustee shall be as exercised by
the Mortgages Trustee subject in each case to the provisions of CLAUSE 16.2
of the Mortgages Trust Deed.
1.3 For the purposes of Section 2 of the Law of Property (Miscellaneous
Provisions) Act 1989, the terms of the Transaction Documents are, so far as
applicable, incorporated herein.
1.4 The Initial Portfolio contained as PART 1 of the EXHIBIT to this Agreement
and any schedule of New Loans attached to any New Portfolio Notice may be
provided in a document stored upon electronic media (including, but not
limited to, a CD-ROM) in a form acceptable to the Mortgages Trustee, the
Security Trustee and Funding 1 (each acting reasonably).
1.5 This Agreement amends and restates the Mortgage Sale Agreement made on the
14th June, 2002 between the parties hereto (the "PRINCIPAL AGREEMENT"). As
of the date of this Agreement, any future rights or obligations (excluding
such obligations accrued to the date of this Agreement) of a party under
the Principal Agreement shall be extinguished and shall instead be governed
by this Agreement.
2. SALE AND PURCHASE OF INITIAL PORTFOLIO
2.1 Subject to CLAUSE 2.2, in consideration of the Purchase Price (which shall
be paid in accordance with CLAUSE 3.3) and the covenant of the Mortgages
Trustee to hold the Trust Property upon trust, with and subject to all the
trusts, powers and provisions of the Mortgages Trust Deed, the Seller
hereby agrees to sell and assign to the Mortgages Trustee with full title
guarantee, the Initial Portfolio on the Initial Closing Date.
2.2 The obligation of the Seller under CLAUSE 2.1 shall be subject to and
conditional upon:
(a) the issue by the First Issuer of the Issuer Notes on the Initial
Closing Date and the borrowing by Funding 1 of the Term Advances under
the First Issuer Intercompany Loan Agreement;
(b) the constitution of the Mortgages Trust on or prior to the Initial
Closing Date; and
(c) the Transaction Documents having been executed and delivered by the
parties thereto on or before the Initial Closing Date.
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2.3 The sale of the Portfolio shall not include any obligation to pay any
Delayed Cashbacks, Home Cash Reserve Drawings or Flexible Loan Drawings (if
any), which obligation shall at all times, and notwithstanding the sale of
the Portfolio, remain an obligation of the Seller.
3. INITIAL CLOSING DATE
3.1 (a) A meeting shall take place at 11 a.m. on the Initial Closing
Date at the offices of Allen & Overy, One New Change, London EC4M
9QQ or such other time or offices as the parties may agree at
which the Seller shall deliver to the Security Trustee or its
representative the following documents:
(i) two originals of the power of attorney dated as at the
Initial Closing Date and substantially in the form set out
in SCHEDULE 5 hereto, duly executed by the Seller;
(ii) a certified copy of each of the duly executed Insurance
Acknowledgements;
(iii) a certified copy of each of the duly executed Insurance
Endorsements;
(iv) a duly executed assignment of the Halifax Mortgage Re
Limited MIG Policies to the extent that they relate to the
Mortgages comprised in the Initial Portfolio from the Seller
to the Mortgages Trustee and a certified copy of a notice
(the original of which shall be served by the Seller by
courier or by special delivery) of such assignment from the
Seller to HBOS Insurance (PCC) Guernsey Limited dated as at
the Initial Closing Date and in the form (mutatis mutandis)
set out in SCHEDULES 8 and 9 hereto respectively and a
certified copy of consent to assignment of the Halifax
Mortgage Re Limited MIG Policies (or acknowledgement that
the Mortgages Trustee will be an insured in respect of the
Initial Portfolio under the Halifax Mortgage Re Limited MIG
Policies following such assignment) from HBOS Insurance
(PCC) Guernsey Limited in such form as HBOS Insurance (PCC)
Guernsey Limited reasonably requires;
(v) a certificate of a duly authorised officer of the Seller
dated as at the Initial Closing Date attaching a copy of the
board minute of the Seller authorising its duly appointed
representatives to agree the sale of the Portfolio and
authorising execution and performance of this Agreement, the
Servicing Agreement, the other Transaction Documents to
which the Seller is a party (in any capacity) and all of the
documentation to be entered into pursuant to this Agreement
and confirming that the resolutions referred to therein are
in full force and effect and have not been amended or
rescinded as at the date of the certificate;
(vi) a duly executed assignment of rights against third parties
comprised in the Initial Portfolio dated as at the Initial
Closing Date and in the form of the Assignment of Third
Party Rights; and
(vii) a solvency certificate from an authorised signatory of the
Seller dated the Initial Closing Date in a form acceptable
to the Mortgages Trustee, Funding 1 and the Security Trustee
(each acting reasonably).
(b) The parties hereto acknowledge that completion on the Initial
Closing Date of the sale and assignment to the Mortgages Trustee
of all of the Seller's right, title, interest and
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benefit in and to the Initial Portfolio subject to the terms and
provisions of the Mortgages Trust Deed shall occur as indicated in
this CLAUSE 3 Provided That the matters described in CLAUSES 6.2
and 6.3 shall not occur until the relevant time indicated in
CLAUSE 6 or, as applicable, CLAUSE 7.4.
3.2 The Seller undertakes that from the Initial Closing Date until the
perfection of the assignment in accordance with CLAUSES 6.2 and 6.3, the
Seller shall hold the Title Deeds and Customer Files relating to the
Portfolio that are in its possession or under its control or held to its
order to the order of the Mortgages Trustee or as the Mortgages Trustee
shall otherwise direct.
3.3 Subject to fulfilment of the conditions referred to in CLAUSES 2.2 and 3,
the Seller shall be paid the Purchase Price by telegraphic transfer by
Funding 1 on the Initial Closing Date.
3.4 The Seller shall provide all reasonable co-operation to the Mortgages
Trustee, Funding 1 and the Security Trustee to enable them to carry out
their respective duties and enforce their rights under the Transaction
Documents. Without prejudice to the generality of the foregoing, the Seller
shall:
(a) upon reasonable prior notice and during normal office hours, permit
the Mortgages Trustee, Funding 1, the Security Trustee and their
authorised employees and agents and other persons nominated by the
Security Trustee and approved by the Seller (such approval not to be
unreasonably withheld or delayed), to review the Customer Files and
the Title Deeds in relation to the Portfolio (subject to such
person(s) agreeing to keep the same confidential but provided that
disclosure shall be permitted to the professional advisors and
auditors of the party to whom such disclosure is made and/or to the
extent that such disclosure is required by law or for the purpose of
any judicial or other proceedings); and/or
(b) give promptly all such information and explanations relating to the
Loans and their Related Security as the Mortgages Trustee, Funding 1
or the Security Trustee may reasonably request (including a list of
the Loans and their Related Security in the Portfolio along with
details of the location of the Title Deeds relating thereto),
provided that prior to completion in accordance with CLAUSE 6, the Seller
shall be under no obligation to provide any information or documentation to
any person other than the Mortgages Trustee and/or the Security Trustee or
their respective employees and/or professional advisors or allow such
person access to the Customer Files or Title Deeds if to do so would result
in a breach of the applicable Mortgage Terms or the Data Protection Act
1998.
4. SALE AND PURCHASE OF NEW PORTFOLIOS
4.1 Subject to fulfilment of the conditions set out in CLAUSES 2.2, 3.1, 4.2
(or as applicable, 4.3) and 4.4, if the Seller shall, at any time and from
time to time serve a properly completed New Portfolio Notice on the
Mortgages Trustee and Funding 1 with a copy to the Security Trustee (such
service to be in the Seller's sole discretion), the Seller agrees that on
the date for completion of the assignment specified in such New Portfolio
Notice the Seller shall sell and assign with full title guarantee to the
Mortgages Trustee the relevant New Portfolio.
4.2 The conditions to be met as at each Assignment Date are:
(a) no event of default under the Transaction Documents shall have
occurred which is continuing as at the relevant Assignment Date;
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(b) the Principal Deficiency Ledger shall not have a debit balance as at
the most recent Funding 1 Interest Payment Date after applying all
Funding 1 Available Revenue Receipts on that Funding 1 Interest
Payment Date;
(c) the Mortgages Trustee is not aware that the purchase of the New
Portfolio on the relevant Assignment Date will adversely affect the
then current rating by the Ratings Agencies (or any of them) of the
Notes;
(d) as at the relevant Assignment Date, the Seller has not received any
notice that the short term, unsecured, unguaranteed and unsubordinated
debt obligations of the Seller are not rated at least P-1 by Moody's,
A-1 by S&P and F1 by Fitch at the time of, and immediately following,
the assignment of the New Loans to the Mortgages Trustee;
(e) as at the relevant Assignment Date, the aggregate Outstanding
Principal Balances of the Loans in the Mortgages Trust, in respect of
which the aggregate amount in arrears is more than three times the
Monthly Payment then due, is less than 5 per cent. of the aggregate
Outstanding Principal Balances of the Loans in the Mortgages Trust;
(f) except where Funding 1 pays amounts to the Mortgages Trustee in
consideration of New Loans to be assigned to it, the aggregate
Outstanding Principal Balance (excluding Arrears of Interest) of New
Loans transferred in any one Interest Period must not exceed 15 per
cent. of the aggregate Outstanding Principal Balance of Loans
(excluding Arrears of Interest) in the Mortgages Trust as at the
beginning of that Interest Period;
(g) the assignment of the New Portfolio on the relevant Assignment Date
does not result in the product of WAFF and WALS for the Portfolio
after such purchase calculated on the relevant Assignment Date in the
same way as for the Initial Portfolio (or as agreed by the Servicer
and the Rating Agencies from time to time) exceeding the product of
WAFF and WALS for the Portfolio calculated on the most recent Closing
Date plus 0.25 per cent.;
(h) the yield (as calculated below) of the Loans in the Mortgages Trust
together with the yield of the New Loans to be assigned to the
Mortgages Trustee on the relevant Assignment Date (together for the
purposes of this paragraph, the "RELEVANT LOANS") is at least 0.50 per
cent. greater than Sterling-LIBOR for three-month sterling deposits as
at the previous Interest Payment Date, after taking into account the
average yield on the Loans which are Variable Rate Loans, Tracker Rate
Loans and Fixed Rate Loans and the margins on the Funding 1 Swap(s),
in each case as at the relevant Assignment Date. The yield of the
Relevant Loans is to be calculated as follows:
(A X B)+(C X (D-E+F))+(G X (H+I))
---------------------------------
J
where,
A = the Outstanding Principal Balance, on the relevant Assignment
Date, of the Relevant Loans which are Fixed Rate Loans
B = the interest rate receivable by Funding 1 under the Funding 1
Fixed-Floating Rate Swap as at the relevant Assignment Date
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C = the Outstanding Principal Balance, on the relevant Assignment
Date, of the Relevant Loans which are Variable Rate Loans
D = the weighted average Variable Base Rate of the Relevant Loans
which are Variable Rate Loans on the relevant Assignment Date
E = the Variable Rate Swap SVR for the Relevant Loans which are
Variable Rate Loans on the relevant Assignment Date
F = the interest rate receivable by Funding 1 under the Funding 1
Variable Rate Swap as at the relevant Assignment Date
G = the Outstanding Principal Balance, on the relevant Assignment
Date, of the Relevant Loans which are Tracker Rate Loans
H = the interest rate receivable by Funding 1 under the Tracker
Rate Swap as at the relevant Assignment Date
I = the weighted average margin of the Relevant Loans which are
Tracker Rate Loans over or under the Bank of England Repo Rate on
the relevant Assignment Date
J = the Outstanding Principal Balance of the Relevant Loans on the
relevant Assignment Date;
(i) the assignment of the New Loans on the relevant Assignment Date does
not result in the loan-to-value ratio of the Loans and the New Loans
after application of the LTV Test on the relevant Assignment Date
exceeding the loan-to-value ratio (based on the LTV Test) of Loans in
the Portfolio on the most recent Closing Date plus 0.25 per cent.;
(j) the assignment of the New Loans on the relevant Assignment Date does
not result in Loans (other than Fixed Rate Loans) which after taking
into account the Funding 1 Swap will yield less than Sterling-LIBOR
plus 0.50 per cent. as at the relevant Assignment Date and that have
more than 2 years remaining on their incentive period accounting for
more than 10 per cent. of the aggregate Outstanding Principal Balance
of all Loans comprising the Trust Property;
(k) the assignment of the New Loans on the relevant Assignment Date does
not result in the Fixed Rate Loans which have more than 1 year
remaining on their incentive period accounting for more than 50 per
cent. of the aggregate Outstanding Principal Balance of Loans
comprising the Trust Property;
(l) no assignment of the New Portfolio may occur after the Interest
Payment Date falling in December 2008 if the option to redeem the
First Issuer Notes on the Interest Payment date in December 2008
pursuant to the Terms and Conditions of the First Issuer Notes is not
exercised;
(m) as at the Assignment Date, the adjusted Reserve Fund is equal to or
greater than the Reserve Fund Threshold;
(n) if the assignment of New Loans includes the assignment of New Loan
Types to the Mortgages Trustee, the Security Trustee has received
written confirmation from each
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of the Rating Agencies that such New Loan Types may be assigned to the
Mortgages Trustee and that such assignment of New Loan Types would not
have an adverse effect on the then current ratings of the Notes;
(o) the Funding 1 Swap Agreement has been modified as required (or, if
appropriate, Funding 1 has entered into a new swap agreement) to hedge
against the interest rates payable in respect of such New Loans and
the floating rate of interest payable on the Issuer Intercompany Loan;
and
(p) no Trigger Event has occurred on or before the relevant Assignment
Date.
In this CLAUSE 4.2 references to any Monthly Payment due at any date means
the Monthly Payment payable in respect of the month in which that date
falls.
4.3 The obligations of the Seller under CLAUSE 4.1 shall be subject to and
conditional upon no Insolvency Event having occurred which is continuing as
at the relevant Assignment Date.
4.4 Subject to fulfilment of the conditions referred to in CLAUSES 4.2, 4.3,
4.4 and 4.6, the consideration to be provided to the Seller for the
assignment of the New Portfolio to the Mortgages Trustee on an Assignment
Date shall be the aggregate of:
(a) the payment by Funding 1 to the Seller by telegraphic transfer on the
relevant Assignment Date of the proceeds of any New Intercompany Loan
advanced to Funding 1 by a New Issuer; and
(b) the covenant of the Mortgages Trustee to hold the Trust Property on
trust pursuant to the terms of the Mortgages Trust Deed.
4.5 (a) On the date of the assignment of the relevant New Portfolio the
Seller shall deliver to the Security Trustee or its representative the
following documents:
(i) a duly executed assignment of the Halifax Mortgage Re Limited
MIG Policies to the extent that they relate to the Mortgages
comprised in the relevant New Portfolio from the Seller to the
Mortgages Trustee and a certified copy of a notice (the original
of which shall be served by the Seller by courier or by special
delivery) of such assignment from the Seller to HBOS Insurance
(PCC) Guernsey Limited dated as of the relevant Assignment Date
and in the form (mutatis mutandis) set out in Schedules 8 and 9
hereof respectively and a certified copy of consent to
assignment of the Halifax Mortgage Re Limited MIG policies (or
acknowledgement that the Mortgages Trustee will be an insured
under the Halifax Mortgage Re Limited MIG Policies following the
assignment) from HBOS Insurance (PCC) Guernsey Limited in such
form as HBOS Insurance (PCC) Guernsey Limited reasonably
requires;
(ii) a duly executed assignment of rights against third parties
comprised in the relevant New Portfolio dated as at the relevant
Assignment Date and in the form of the Assignment of Third Party
Rights;
(iii) a certified copy of each of the duly executed Insurance
Acknowledgements;
(iv) on any Assignment Date that Funding 1 provides consideration for
New Loans to be assigned to the Mortgages Trustee pursuant to
CLAUSE 4.5(A)
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above only, a certificate of a duly authorised officer of the
Seller dated as at the relevant Assignment Date attaching a copy
of the board minute referred to in CLAUSE 3.1(A)(IV) and
confirming that the resolutions referred to therein are in full
force and effect and have not been amended or rescinded as at the
date of the certificate; and
(v) on any Assignment Date that Funding 1 provides consideration for
New Loans to be assigned to the Mortgages Trustee pursuant to
CLAUSE 4.5(A) above only, a solvency certificate from an
authorised signatory of the Seller dated as at the relevant
Assignment Date.
(b) The parties hereto acknowledge that completion on each relevant
Assignment Date of the sale and assignment to the Mortgages Trustee of
all of the Seller's right, title, interest and benefit in and to the
relevant New Portfolio subject to the terms and provisions of the
Mortgages Trust Deed shall occur as indicated in this CLAUSE 4
Provided That the matters described in CLAUSES 6.2 and 6.3 shall not
occur until the relevant time indicated in CLAUSE 6 or, as applicable,
CLAUSE 7.4.
4.6 The Seller undertakes that from the relevant Assignment Date until the
perfection of the assignment in accordance with CLAUSES 6.2 and 6.3, the
Seller shall hold the Title Deeds and Customer Files relating to the New
Portfolio that are in its possession or under its control or held to its
order to the order of the Mortgages Trustee or as the Mortgages Trustee
shall direct.
4.7 Prior to the earlier to occur of:
(a) a Trigger Event; and
(b) (i) if Funding 1 does not enter into a New Intercompany Loan
Agreement, the Interest Payment Date in [December, 2008]; or
(ii) if Funding 1 does enter into New Intercompany Loan Agreements,
the latest Interest Payment Date specified by Funding 1 by notice
in writing to the Seller and the Mortgages Trustee as applying in
relation to this covenant,
the Seller undertakes to use all reasonable endeavours to offer to
assign, in accordance with the provisions of this CLAUSE 4, to the
Mortgages Trustee and the Mortgages Trustee undertakes to use all
reasonable endeavours to acquire from the Seller and to hold pursuant
to the terms of the Mortgages Trust Deed until the earlier of the
Interest Payment Date falling in December 2007 (or such later date as
may be notified by Funding 1) and the occurrence of a Trigger Event,
sufficient New Loans and their Related Security so that the aggregate
Outstanding Principal Balance of Loans in the Portfolio is not less
than (pound)15,750,000,000 before December 2007 (or such other amount
or amounts specified by Funding 1 in the notice referred to in CLAUSE
4.78(B)(II) above) provided that the Seller shall not be obliged to
assign to the Mortgages Trustee, and the Mortgages Trustee shall not
be obliged to acquire, New Loans and their Related Security if in the
reasonable opinion of the Seller the assignment to the Mortgages
Trustee of New Loans and their Related Security would adversely affect
the business of the Seller.
4.8 On each Assignment Date that Funding 1 provides consideration for New Loans
to be assigned to the Mortgages Trustee pursuant to CLAUSE 4.5(A) above,
the Beneficiaries shall appoint a firm of independent auditors to undertake
a due diligence exercise on a sample of the Customer Files relating to the
New Loans to be assigned to the Mortgages Trustee on the
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relevant Assignment Date. The costs of such independent auditors shall be
borne by the relevant New Issuer (which shall be procured by Funding 1).
5. TRUST OF MONIES
5.1 Notwithstanding the assignments effected by this Agreement, if at, or at
any other time after, the Closing Date (but prior to any repurchase in
accordance with CLAUSE 8.5) the Seller holds, or there is held to its
order, or it receives, or there is received to its order any property,
interests, rights or benefits and/or the proceeds thereof hereby agreed to
be sold, the Seller undertakes to each of the Mortgages Trustee, Funding 1
and the Security Trustee that, subject to CLAUSE 6, it will promptly remit,
assign and/or transfer the same to the Mortgages Trustee or, if
appropriate, the Security Trustee and until it does so or to the extent
that the Seller is unable to effect such remittance, assignment or
transfer, it will hold such property, interests, rights or benefits and/or
the proceeds thereof upon trust for the Mortgages Trustee subject at all
times to the Mortgages Trust.
5.2 If at, or any time after, the Closing Date the Mortgages Trustee holds, or
there is held to its order, or it receives, or there is received to its
order, any property, interests, rights or benefits relating to:
(a) any Loan or Loans under a Mortgage Account and its Related Security
repurchased by the Seller pursuant to CLAUSE 8.5; or
(b) (without prejudice to Clause 11) amounts owed by a Borrower to the
Seller which the Seller has not agreed to sell under CLAUSE 2.1,
and/or the proceeds thereof, the Mortgages Trustee undertakes to the Seller
that it will remit, assign, re-assign or transfer the same to the Seller,
as the case may require, and until it does so or to the extent that the
Mortgages Trustee is unable to effect such remittance, assignment,
re-assignment or transfer, the Mortgages Trustee undertakes to hold such
property, interests, rights or benefits and/or the proceeds thereof upon
trust for the Seller as the beneficial owner thereof or as the Seller may
direct provided that the Mortgages Trustee shall not be in breach of its
obligations under this CLAUSE 5 if, having received any such monies and
paid them to third parties in error, it pays an amount equal to the monies
so paid in error to the Seller in accordance with the Servicing Agreement.
6. PERFECTION OF THE ASSIGNMENT
6.1 The assignments contemplated by this Agreement shall be perfected on the
twentieth London Business Day after the earliest to occur of:
(a) the service of an Intercompany Loan Acceleration Notice or a Note
Acceleration Notice in relation to any Notes of any Issuer; or
(b) the Seller being required to perfect legal title to the Mortgages, or
procure any or all of the acts referred to in this CLAUSE 6 by an
order of a court of competent jurisdiction or by any regulatory
authority of which the Seller is a member or any organisation whose
members comprise (but are not necessarily limited to) mortgage lenders
and with whose instructions it is customary for the Seller to comply;
or
(c) it becoming necessary by law to do any or all of the acts referred to
in this CLAUSE 6; or
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(d) the Security Trustee certifying that, in its reasonable opinion, the
property, assets and rights of Funding 1 comprised in the security
constituted by the Funding 1 Deed of Charge or any material part
thereof is/are in jeopardy and that the doing of any or all of the
acts referred to in PARAGRAPHS (A) to (C) inclusive of CLAUSE 6.3 is
necessary in order materially to reduce such jeopardy; or
(e) unless otherwise agreed in writing by the Rating Agencies and the
Security Trustee, the termination of the Seller's role as Servicer
under the Servicing Agreement; or
(f) the Seller calling for perfection by serving notice in writing to that
effect on the Mortgages Trustee, Funding 1 and the Security Trustee;
or
(g) the date on which the Seller ceases to be assigned a long term
unsecured, unsubordinated debt obligation rating from S&P of at least
BBB- or from Moody's of at least Baa3 or from Fitch of at least BBB- ;
or
(h) the occurrence of an Insolvency Event in relation to the Seller; or
(i) the latest of the last repayment dates of the Intercompany Loans where
any Intercompany Loan has not been discharged in full;
6.2 Perfection of the transfer of Mortgages in the Portfolio over Registered
Land shall be effected by means of a transfer in the form of the Registered
Transfer and, in the case of Mortgages in the Portfolio over Unregistered
Land, by a transfer in the form of the Unregistered Transfer, and in
respect of any other matter comprised in the Portfolio, shall be in such
form as the Mortgages Trustee may reasonably require.
6.3 Subject to CLAUSE 7.4, prior to perfection pursuant to CLAUSE 6.1, neither
the Mortgages Trustee nor Funding 1 nor the Security Trustee will:
(a) submit or require the submission of any notice, form, request or
application to or pay any fee for the registration of, or the noting
of any interest at the Land Charges Department of H.M. Land Registry
or at H.M. Land Registry in relation to, the Mortgages Trustee's
and/or Funding 1's interests in the Portfolio;
(b) give or require the giving of any notice to any Borrower of the
assignment of that Borrower's Loan and its Related Security to the
Mortgages Trustee or the charge by Funding 1 of Funding 1's interest
in that Borrower's Loan and its Related Security to the Security
Trustee pursuant to the Funding 1 Deed of Charge; or
(c) send or require to be sent to any solicitor who has acted on behalf of
the Seller in respect of any Mortgage with respect to which the Seller
has not received a complete set of the Title Deeds a letter or other
communication requiring such solicitor to hold such documents to the
order of the Mortgages Trustee or the Security Trustee (as the case
may be).
6.4 Within 25 London Business Days following perfection pursuant to CLAUSE 6.1,
the Seller will do such of the acts or things referred to in CLAUSE 6.3 as
the Security Trustee or the Mortgages Trustee requires the Seller to do.
6.5 The Seller shall indemnify each of the Mortgages Trustee, Funding 1 and the
Security Trustee from and against any and all costs, fees and expenses
(including, without limitation, legal fees and expenses and any applicable
Value Added Tax thereon) which may be incurred by the
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Mortgages Trustee and/or Funding 1 and/or the Security Trustee by reason of
the doing of any act, matter or thing referred to in this CLAUSE 6 and
CLAUSE 7.4.
7. UNDERTAKINGS
7.1 The Mortgages Trustee and Funding 1 undertake to the Seller that they will
at all times (or will direct the Servicer at all times to) use reasonable
endeavours to administer and enforce (and exercise their powers and rights
and perform their obligations under) the Loans comprised in the Portfolio
and their Related Security in accordance with the Seller's Policy (for so
long as it exists and thereafter in accordance with such policies as would
be applied by a reasonable, prudent mortgage lender in the conduct of its
business), provided that if the Seller fails to comply with its obligations
to repurchase any Loan and its Related Security pursuant to CLAUSE 8.5 the
Mortgages Trustee shall be entitled to waive any Early Repayment Fee in
respect of such Loan and its Related Security if, in the Mortgages
Trustee's reasonable opinion, such waiver is reasonably necessary in order
to effect an interest rate change.
7.2 The Seller hereby undertakes to the Mortgages Trustee and Funding 1 that,
in the event that any Borrower establishes that it has at any time prior to
the Initial Closing Date or, as the case may be, the relevant Assignment
Date, paid to the Seller any amounts in excess of sums due to the Seller as
at the date of payment under the Mortgage Conditions applicable to that
Loan, the Seller will reimburse the Borrower for such overpayment together
with any interest, cost or other expense associated therewith. The Seller
further agrees to hold the Mortgages Trustee and Funding 1 harmless against
any such claims and to indemnify the Mortgages Trustee and Funding 1 on an
after Tax basis in relation to any costs, expense, loss or other claim
which may arise in connection therewith. Any payment made by the Seller to
the Mortgages Trustee and Funding 1 in discharge of the foregoing indemnity
shall be regarded as a rebate of part of the Purchase Price of the relevant
Loan.
7.3 Each of the Seller and the Mortgages Trustee and Funding 1 undertakes to
each other and to the Security Trustee that if and to the extent that any
determination shall be made by any court or other competent authority or
any ombudsman in respect of any Loan and its Related Security that:
(a) any term which relates to the recovery of interest under the Standard
Documentation applicable to that Loan and its Related Security is
unfair; or
(b) the interest payable under any Loan is to be set by reference to HVR 1
or HVR 2 (as applicable) (and not a rate set by the Seller's
successors or assigns or those deriving title from them); or
(c) the variable margin above the Bank of England repo rate under any
Tracker Rate Loan must be set by the Seller (rather than by its
successors or assigns or those deriving title from them); or
(d) the interest payable under any Loan is to be set by reference to an
interest rate other than that set or purported to be set by either the
Servicer or the Mortgages Trustee as a result of the Seller having
more than one variable mortgage rate,
then, at Funding 1's direction (subject to the prior written consent of the
Security Trustee), the Mortgages Trustee will serve upon the Seller a
notice in the form of the Loan Repurchase Notice requiring the Seller to
repurchase the relevant Loan and all other Loans under the relevant
Mortgage Account and its Related Security in accordance with CLAUSE 8.5
(but in the case of a determination in respect of (b) above, only if at any
time on or after such
11
determination, HVR 1 or HVR 2 (as applicable) shall be below or shall fall
below the standard variable rate of interest set by such successors or
assigns or those deriving title from them).
7.4 The Seller hereby undertakes to the Mortgages Trustee, Funding 1 and the
Security Trustee that:
(a) if the long term unsecured, unsubordinated and unguaranteed debt
obligations of the Seller cease to be assigned a rating of Baa2 or
higher from Moody's and BBB or higher from S&P and BBB or higher from
Fitch, the Seller shall deliver to the Mortgages Trustee, Funding 1,
the Security Trustee and the Rating Agencies a draft letter of notice
to each of the Borrowers of the assignment, sale and purchase effected
by this Agreement; and
(b) if the long term unsecured, unsubordinated and unguaranteed debt
obligations of the Seller cease to be assigned a rating of Baa3 or
higher from Moody's and BBB- or higher from S&P and BBB- or higher
from Fitch, then the Seller shall, within 20 London Business Days of
it becoming aware of such a rating being assigned, give notice of the
sale and purchase effected by this Agreement to each Borrower.
7.5 The Seller undertakes to the Mortgages Trustee, Funding 1 and the Security
Trustee that, pending perfection under CLAUSE 6, the Seller:
(a) shall not do or omit to do any act or thing which might, in the
reasonable opinion of the Security Trustee, prejudice the interests of
the Mortgages Trustee, Funding 1 and/or the Security Trustee in the
Portfolio;
(b) shall promptly notify the Mortgages Trustee, Funding 1 and the
Security Trustee in writing if it receives written notice of any
litigation or claim calling into question in any material way the
Seller's or the Mortgages Trustee's title to any Loan comprised in the
Portfolio or its Related Security or if it becomes aware of any
material breach of any of the Representations and Warranties or other
obligations under this Agreement;
(c) shall, if reasonably required so to do by the Mortgages Trustee or the
Security Trustee, participate or join in any legal proceedings to the
extent necessary to protect preserve and enforce the Seller's or the
Mortgages Trustee's or Funding 1's or the Security Trustee's title to
or interest in any Loan or its Related Security;
(d) shall use all reasonable efforts to obtain the title numbers to each
Property in respect of which a Mortgage is registered to the extent
that such title number does not appear in the Exhibit to this
Agreement (or, as the case may be, the relevant New Portfolio Notice)
and shall in any event obtain each such title number prior to the
Interest Payment Date falling in the month during which the first
anniversary of the Closing Date (or, as the case may be, the relevant
Assignment Date) falls; and
(e) shall make and enforce claims under the Buildings Policies and the
Halifax Insurance Policies and hold the proceeds of such claims on
trust for the Mortgages Trustee or as the Mortgages Trustee may
direct.
7.6 The Seller hereby further undertakes to the Mortgages Trustee and Funding 1
that it is and at all times shall remain solely responsible for funding any
Delayed Cashbacks and any Home Cash Reserve Drawings and Flexible Loan
Drawings (if any) made by a Borrower and for
12
funding any request for any Further Advance made by a Borrower and, for the
avoidance of doubt, neither the Mortgages Trustee nor Funding 1 will be
required to advance moneys to the Seller or to a Borrower in order to fund
such a Delayed Cashback, Home Cash Reserve Drawing, Flexible Loan Drawing
(if any), or Further Advance in any circumstances whatsoever.
7.7 The Seller shall grant security powers of attorney to the Mortgages
Trustee, Funding 1 and the Security Trustee in the form set out in SCHEDULE
5 allowing any of the Mortgages Trustee, Funding 1 and the Security Trustee
and their delegates from time to time (inter alia) to set the Seller's
Variable Base Rate in the circumstances referred to in CLAUSE 4 of the
Servicing Agreement and/or following perfection pursuant to CLAUSE 6.1
PROVIDED THAT nothing in this CLAUSE 7.7 shall prevent the Seller (or any
of its attorneys from time to time) from setting a higher Seller's Variable
Base Rate than those set or to be set or required or to be required by the
Mortgages Trustee, Funding 1 or the Security Trustee.
8. WARRANTIES AND REPURCHASE BY THE SELLER
8.1 (a) The Seller hereby makes the Representations and Warranties:
(i) in respect of each Loan and its Related Security in the Initial
Portfolio as at the date hereof and on the Initial Closing Date;
and
(ii) in relation to each New Loan and its Related Security in a New
Portfolio, on the date of the service of the relevant New
Portfolio Notice and on the relevant Assignment Date.
(b) Each statement comprised in the Representations and Warranties shall
be construed as a separate statement and (save as expressly provided
to the contrary) shall not be limited or restricted by reference to or
inference from the terms of any other such statement.
(c) The Seller acknowledges:
(i) that the Representations and Warranties are made with a view to
inducing the Mortgages Trustee, Funding 1 and the Security
Trustee (as the case may be) either to enter into this Agreement
and the other Transaction Documents to which is a party or to
agree to purchase the New Loans and their Related Security
comprised in each New Portfolio, and
(ii) that each of the Mortgages Trustee, Funding 1 and the Security
Trustee has entered into this Agreement and the other Transaction
Documents to which it is a party in reliance upon the
Representations and Warranties notwithstanding any information in
fact possessed or discoverable by the Mortgages Trustee, Funding
1 and/or the Security Trustee or otherwise disclosed to any of
them, and
(iii) that prior to entering into this Agreement and the other
Transaction Documents to which each is a party neither the
Mortgages Trustee nor Funding 1 nor the Security Trustee has made
any enquiries of any matter.
8.2 The Mortgages Trustee's, Funding 1's and the Security Trustee's sole remedy
in respect of a breach of any of the Representations and Warranties shall
be to take action under this CLAUSE 8 or under CLAUSE 6 of the Mortgages
Trust Deed.
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8.3 In the event of a material breach of any of the Representations or
Warranties in respect of any Loan and/or its Related Security made under
CLAUSE 8.1 or if any of those Representations or Warranties proves to be
materially untrue as at the Closing Date or, as the case may be, the
relevant Assignment Date, and provided that:
(a) the Mortgages Trustee has given the Seller not less than 20 London
Business Days' notice in writing;
(b) the Mortgages Trustee has obtained the prior written consent of the
Security Trustee; and
(c) such breach or untruth, where capable of remedy, is not remedied to
the reasonable satisfaction of Funding 1 and the Security Trustee
within the 20 London Business Days period referred to in (a) (or such
longer period as Funding 1 and the Security Trustee may direct the
Mortgages Trustee in writing),
then at Funding 1's direction (subject to the prior written consent of the
Security Trustee) the Mortgages Trustee shall serve upon the Seller a
notice in the form of the Loan Repurchase Notice requiring the Seller to
repurchase the relevant Loan and its Related Security (and any other Loan
secured or intended to be secured by that Related Security or any part of
it) in accordance with CLAUSE 8.5.
8.4 (a) If the Seller accepts an application from, or makes an offer
(which is accepted) to, a Borrower for a Further Advance then (save in
the case of any Loan which is then in arrears), at Funding 1's
direction (subject to the prior written consent of the Security
Trustee), the Mortgages Trustee will serve upon the Seller a notice in
the form of the Loan Repurchase Notice requiring the Seller to
repurchase the relevant Loan and its Related Security (and any other
Loan secured or intended to be secured by that Related Security or any
part of it) in accordance with CLAUSE 8.5.
(b) If the Seller accepts an application from, or makes an offer (which is
accepted) to, a Borrower for a Product Switch and (except as provided
in paragraph (c) below) on the immediately preceding Distribution
Date, the Seller is in breach of the conditions referred to in CLAUSES
4.2(A) to (P) inclusive as if references therein to "New Loans" and
"New Portfolio" were references to the Loan which would result from
the implementation of such Product Switch and as if references to
"Assignment Date" were references to the date when the Seller and
relevant Borrower complete such Product Switch then (save in the case
of any Loan which is then in arrears) from and including the relevant
Distribution Date to but excluding the date when such conditions have
been satisfied, at Funding 1's direction (subject to the prior written
consent of the Security Trustee), the Mortgages Trustee will serve
upon the Seller a notice in the form of the Loan Repurchase Notice
requiring the Seller to repurchase the relevant Loan and its Related
Security (and any other Loan secured or intended to be secured by that
Related Security or any part of it) in accordance with CLAUSE 8.5.
(c) If the Seller accepts an application from, or makes an offer (which is
accepted) to, a Borrower for a Product Switch, the effect of which is
to extend the final maturity date of the relevant Loan beyond June
2040 then, at Funding 1's direction (subject to the prior written
consent of the Security Trustee), the Mortgages Trustee will serve
upon the Seller a notice in the form of the Loan Repurchase Notice
requiring the Seller to repurchase the relevant Loan and its Related
Security in accordance with CLAUSES 8.5 notwithstanding that the
conditions referred to in CLAUSES 4.2(A) to (P) have been satisfied.
14
(d) For the avoidance of doubt, the Seller shall not accept an application
from nor make an offer (which is accepted) to a Borrower for a Further
Advance or a Product Switch if the relevant Loan to which such Further
Advance or Product Switch relates is then in arrears subject only to
such exceptions as made on a case by case basis as would be acceptable
to a reasonable, prudent mortgage lender.
8.5 Upon receipt of a Loan Repurchase Notice duly signed on behalf of the
Mortgages Trustee, the Seller shall sign and return a duplicate copy and
shall repurchase from the Mortgages Trustee, and the Mortgages Trustee
shall re-assign to the Seller free from the Security Interests created by
the Funding 1 Deed of Charge, the relevant Loan (and any other Loan secured
or intended to be secured by that Related Security or any part of it) and
their Related Security. Completion of such repurchase shall take place on
the Distribution Date after receipt by the Seller of such Loan Repurchase
Notice or such other date as the Mortgages Trustee may direct in the Loan
Repurchase Notice (provided that the date so specified by the Mortgages
Trustee shall not be later than 90 days after receipt by the Seller of such
notice) when the Seller shall pay to the Mortgages Trustee GIC Account (or
as the Mortgages Trustee shall direct) an amount equal to the aggregate
Outstanding Principal Balance of such Loan or Loans and any Related
Security and all Arrears of Interest and Accrued Interest relating thereto
(save for the repurchase of any Loan and its Related Security which is
subject to a Further Advance or a Product Switch pursuant to CLAUSE 8.4 in
which case the Seller shall pay to the Mortgages Trustee GIC Account (or as
the Mortgages Trustee shall direct) an amount equal to the aggregate
Outstanding Principal Balance of such Loan and its Related Security and
Accrued Interest relating thereto only) as at the date of such repurchase
and the provisions of CLAUSE 8.6 shall apply.
8.6 On the date of completion of any repurchase of a Loan and its Related
Security in accordance with CLAUSE 8.5 above, the Security Trustee, the
Mortgages Trustee and Funding 1 shall at the cost of the Seller execute and
deliver, or cause their respective duly authorised attorneys to execute and
deliver, to the Seller:
(a) a memorandum of release of such Loan and its Related Security from the
security constituted by the Funding 1 Deed of Charge in a form
reasonably acceptable to the Seller;
(b) if perfection of the assignment to the Mortgages Trustee has occurred
in accordance with CLAUSE 6:
(i) if the relevant Mortgage is over Registered Land, a transfer of
such Mortgage to the Seller in the form of the Registered
Transfer; or
(ii) if the relevant Mortgage is over Unregistered Land, a transfer of
such Mortgage to the Seller in the form of the Unregistered
Transfer;
(c) a re-assignment of the rights of the Mortgages Trustee in respect of
the relevant Related Security each in a form reasonably acceptable to
the Seller (which shall, in the case of the re-assignment of the MIG
Policies, be substantially in the form of the Assignment of MIG
Policies); and
(d) a notification to the Servicer that all further sums due in respect of
such repurchased Loan are for the Seller's account.
15
Upon such completion the Seller shall cease to be under any further
obligation to hold any Title Deeds or other documents relating to such Loan
or Loans and its/their Related Security to the order of the Mortgages
Trustee and if the Mortgages Trustee holds the Title Deeds it will return
them to the Seller. Any repurchase by the Seller of or in respect of a Loan
or Loans and its or their Related Security shall constitute a discharge and
release of the Seller from any claims which the Mortgages Trustee and/or
Funding 1 or the Security Trustee may have against the Seller arising from
the relevant Representation or Warranty in relation to that Loan or Loans
and its or their Related Security only but shall not affect any rights
arising from a breach of any other express provision of this Agreement or
any Representation or Warranty in relation to any other Loan and other
Related Security.
8.7 After the Seller becomes aware of any event and/or fact which may
reasonably give rise to an obligation under any clause of this Agreement to
repurchase any Loan it shall notify the Mortgages Trustee, Funding 1 and
the Security Trustee in writing thereof as soon as reasonably practicable.
8.8 The terms of this CLAUSE 8 shall not prejudice the rights of the Mortgages
Trustee or the Beneficiaries under the Mortgages Trust Deed.
8.9 The parties to this Agreement may, with the prior written consent of the
Security Trustee, waive or amend the Representations and Warranties. In
determining whether to give its consent to the proposed waiver or
amendments to the Representations and Warranties, the Security Trustee
shall exercise its discretion in accordance with the terms of clause 25.8
of the Funding 1 Deed of Charge.
9. OTHER WARRANTIES
On the date of this Agreement, the Closing Date, and each Assignment Date,
the Seller represents and warrants to each of the Mortgages Trustee,
Funding 1 and the Security Trustee that:
(a) the Seller has not acquired or owned or possessed any rights in any
Issuer, the Mortgages Trustee or Funding 1 such that it would
"control" such Issuer within the meaning of Section 416 ICTA 1988; and
(b) there is not any "connection" (within the meaning of Section 87
Finance Act 1996) between any Issuer and any Borrower.
10. FURTHER ASSURANCE
The parties hereto agree that they will co-operate fully to do all such
further acts and things and execute any further documents that may be
necessary or desirable to give full effect to the transactions contemplated
by this Agreement (but subject always to CLAUSE 6).
11. CONSEQUENCES OF BREACH
Without prejudice to CLAUSES 7 and 8, Funding 1, the Mortgages Trustee and
the Security Trustee severally acknowledge to and agree with the Seller,
and the Security Trustee acknowledges to and agrees with Funding 1 and the
Mortgages Trustee, that the Seller shall have no liability or
responsibility (whether, in either case, contractual or tortious, express
or implied) for any loss or damage for or in respect of any breach of, or
any act or omission in respect of, any of its obligations hereunder other
than loss or damage directly (and not indirectly or consequentially)
suffered by the Mortgages Trustee and/or Funding 1 or the
16
assets comprised in the Funding 1 Security constituted by the Funding 1
Deed of Charge by reason of such breach, act or omission. For this purpose
(and without limiting the scope of the above exclusion in respect of
indirect or consequential loss or damage) any loss or damage suffered by
the Mortgages Trustee and/or Funding 1 or such assets as a result of the
breach, act or omission in question also having been or given rise to an
Event of Default or enforcement of the Funding 1 Security contributed by
the Funding 1 Deed of Charge shall be treated as indirect or consequential
loss or damage PROVIDED THAT this sentence shall not apply to any direct or
non-consequential loss or damage arising from any such breach, act or
omission.
12. SUBORDINATION
The Seller agrees with Funding 1, the Mortgages Trustee and the Security
Trustee that on the enforcement of any Mortgage any sums owed to the Seller
by a Borrower and which are secured under such Mortgage and the rights and
remedies of the Seller in respect of the sums owed to the Seller shall at
all times be subject and subordinated to any sums owed to the Mortgages
Trustee by the Borrower and which are secured under such Mortgage and to
the rights and remedies of the Mortgages Trustee in respect of such sums
owed to the Mortgages Trustee by the Borrower.
13. NON-MERGER
Any term of this Agreement to which effect is not given on the Closing Date
or on any Assignment Date (including in particular, but without limitation,
the liability of the Seller under the Representations and Warranties and
the indemnity in CLAUSE 6.5 and the provisions of CLAUSE 4) shall not merge
and shall remain in full force and effect notwithstanding the sale and
purchase contemplated by this Agreement.
14. NO AGENCY OR PARTNERSHIP
It is hereby acknowledged and agreed by the parties that nothing in this
Agreement shall be construed as giving rise to any relationship of agency,
save as expressly provided herein, or partnership between the parties and
that in fulfilling its obligations hereunder, each party shall be acting
entirely for its own account.
15. PAYMENTS
Except as otherwise specifically provided, all payments to be made pursuant
to this Agreement shall be made in sterling in immediately available funds
without exercising or seeking to exercise any right of set-off as may
otherwise exist and shall be deemed to be made when they are received by
the payee and shall be accounted for accordingly unless failure to receive
any payment is due to an error by the payee's bank.
16. WAIVERS AND VARIATION
16.1 Exercise or failure to exercise any right under this Agreement shall not,
unless otherwise herein provided, constitute a waiver of that or any other
right.
16.2 Subject to CLAUSE 25 of the Funding 1 Deed of Change any amendments to this
Agreement will be made only with the prior written consent of each party to
this Agreement.
17
17. NOTICES
Any notices to be given pursuant to this Agreement to any of the parties
hereto shall be in writing and shall be sufficiently served if sent by
prepaid first class post, by hand or by facsimile transmission and shall be
deemed to be given (in the case of facsimile transmission) when despatched
or (in the case of first class post) when it would be received in the
ordinary course of the post and shall be sent:
(a) in the case of the Seller, to Halifax plc, Trinity Road, Halifax, West
Yorkshire HX1 2RG, London (facsimile number +44 (0) 1422 391777) for
the attention of the Mortgage Securitisation Manager with a copy to
HBOS Treasury Services PLC, 33 Old Broad Street, London EC2N 1HZ
(facsimile number +44 (020) 7574 8784) for the attention of Head of
Capital Markets and Securitisation,;
(b) in the case of Funding 1, to Permanent Funding (No. 1) Limited ,
Blackwell House, Guildhall Yard, London EC2V 5AE (facsimile number +44
(020) 7556 0975) for the attention of the Secretary with a copy to
HBOS Treasury Services PLC, 33 Old Broad Street, London EC2N 1HZ
(facsimile number +44 (020) 7574 8784) for the attention of Head of
Capital Markets and Securitisation;
(c) in the case of the Mortgages Trustee, to Permanent Mortgages Trustee
Limited, 47 Esplanade, St Helier, Jersey JE1 0BD, (facsimile number
+44 (0) 1534 726391) for the attention of the Secretary with a copy to
HBOS Treasury Services PLC, 33 Old Broad Street, London EC2N 1HZ
(facsimile number +44 (020) 7574 8784) for the attention of Head of
Capital Markets and Securitisation; and
(d) in the case of the Security Trustee, to:
(i) State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02110, (facsimile number + 1 (617) 662
2919) for the attention of Mark Nelson; and
(ii) U.S. Bank National Association, 1 Federal Street, 3rd Floor,
Boston, Massachusetts 02110, (facsimile number + 1 (617) 603
6638) for the attention of Corporate Trust Services,
or to such other address or facsimile number or for the attention of such
other person or entity as may from time to time be notified by any party to
the others by written notice in accordance with the provisions of this
CLAUSE 17.
18. ASSIGNMENT
18.1 Subject always to the provisions of CLAUSE 19, no party hereto shall be
entitled to assign all or any part of its rights or obligations hereunder
to any other party without the prior written consent of each of the other
parties hereto (which shall not, if requested, be unreasonably withheld)
save that Funding 1 shall be entitled to assign whether by way of security
or otherwise all or any of its rights under this Agreement without such
consent to the Security Trustee pursuant to the Funding 1 Deed of Charge
and the Security Trustee may at its sole discretion assign all or any of
its rights under or in respect of this Agreement without such consent to
any successor Security Trustee in exercise of its rights under the Funding
1 Deed of Charge.
18
18.2 The Seller acknowledges that on the assignment pursuant to the Funding 1
Deed of Charge by Funding 1 to the Security Trustee of Funding 1's rights
under this Agreement the Security Trustee may enforce such rights in the
Security Trustee's own name without joining Funding 1 in any such action
(which right the Seller hereby waives) and the Seller hereby waives as
against the Security Trustee any rights or equities in its favour arising
from any course of dealing between the Seller and Funding 1.
19. CHANGE OF SECURITY TRUSTEE
19.1 If there is any change in the identity of the Security Trustee in
accordance with the Funding 1 Deed of Charge, the Seller, the Mortgages
Trustee and Funding 1 shall execute such documents and take such action as
the successor Security Trustee and the outgoing Security Trustee may
reasonably require for the purpose of vesting in the successor Security
Trustee the rights and obligations of the outgoing Security Trustee
hereunder and releasing the outgoing Security Trustee from its future
obligations under this Agreement and the Seller shall give notice thereof
to the Rating Agencies.
19.2 It is hereby acknowledged and agreed that by its execution of this
Agreement the Security Trustee shall not assume or have any of the
obligations or liabilities of the Seller or Funding 1 or the Mortgages
Trustee hereunder.
20. NOT USED
21. THIRD PARTY RIGHTS
A person who is not a party to this agreement may not enforce any of its
terms under the Contracts (Rights of Third Parties) Act 1999.
22. GOVERNING LAW
22.1 This Agreement shall be governed by and construed in accordance with the
laws of England.
22.2 Each party to this Agreement hereby irrevocably submits to the
non-exclusive jurisdiction of the English courts in any action or
proceeding arising out of or relating to this Agreement, and hereby
irrevocably agrees that all claims in respect of such action or proceeding
may be heard and determined by such courts. Each party to this Agreement
hereby irrevocably waives, to the fullest extent it may possibly do so, any
defence or claim that the English courts are an inconvenient forum for the
maintenance or hearing of such action or proceeding. The Mortgages Trustee
irrevocably appoints Structured Finance Management Limited of Blackwell
House, Guildhall Yard, London EC2V 5AE as its agent for service of process.
22.3 This Agreement may be executed (manually or by facsimile) in any number of
counterparts and all such counterparts taken together shall be deemed to
constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have executed and delivered this Agreement
on the day and year first before written.
19
SCHEDULE 1
REPRESENTATIONS AND WARRANTIES
1. LOANS
1.1 The particulars of the Loans set out in the Exhibit (or, as the case may
be, the relevant New Portfolio Notice) are true, complete and accurate in
all material respects.
1.2 Each Loan was originated by the Seller and was originated and is
denominated in pounds sterling (or was originated and is denominated in
euro if the euro has been adopted as the lawful currency for the time being
of the United Kingdom).
1.3 Each Loan in the Portfolio as at the Closing Date was made not earlier than
1st February, 1996 and not later than 15th November, 2002.
1.4 Each Loan matures for repayment not later than June 2040.
1.5 No Loan has an Outstanding Principal Balance of more than(pound)400,000.
1.6 The Lending Criteria are the lending criteria applicable to the Loans and
their Related Security.
1.7 Prior to the making of each Initial Advance and Further Advance:
(a) the Lending Criteria and all preconditions to the making of any Loan
were satisfied in all material respects subject only to such
exceptions as made on a case by case basis as would be acceptable to a
reasonable, prudent mortgage lender; and
(b) the requirements of the relevant MIG Policy were met, so far as
applicable to that Loan.
1.8 (a) Each Loan was made and its Related Security taken or received
substantially on the terms of the Standard Documentation without any
material variation thereto and nothing has been done subsequently to
add to, lessen, modify or otherwise vary the express provisions of any
of the same in any material respect.
(b) The brochures, application forms, offers, offer conditions and
marketing material distributed by the Seller to the Borrower when
offering a Loan to a Borrower:
(A) do not conflict in any material respect with the terms applicable
to the relevant Loan and its Related Security at the time that
the Loan was entered into;
(B) do not conflict with and would not prohibit or otherwise limit
the terms of, the Transaction Documents or the matters
contemplated thereby, including for the avoidance of doubt and
without limitation:
(i) the assignment of the Loans and their Related Security to
the Mortgages Trustee;
(ii) the administration of the Loans and their Related Security
by the Seller or a delegate of the Seller or the
appointment of a new Servicer
20
following the occurrence of an Insolvency Event in relation
to the Seller; and
(iii) so far as the Seller is aware to the best of its knowledge,
information and belief, the ability of the Mortgages
Trustee or the Security Trustee to set the variable rate
payable under any Variable Rate Loan independently of (and
without regard to the level of) the Seller's standard
variable rate of interest or if the Seller has more than
one standard variable rate of interest, the relevant
Seller's standard variable rate of interest, subject to any
applicable cap on that variable rate which is not itself
linked to any rate set by the Seller and to set the
variable margin above the Bank of England repo rate under
any Tracker Rate Loan independently of (and without regard
to the level of) any differential set by the Seller,
subject to any applicable cap on that variable margin above
the Bank of England repo rate which is not itself linked to
any margin set by the Seller.
(c) There is no restriction on the Seller's successors' and assigns' to
the legal title of the Loans (including, without limitation, the
Mortgages Trustee if and when legal title to the Loans is transferred
to it) right:
(A) to set the variable rate payable under any Variable Rate Loan
independently of (and without regard to the level of) the
Seller's standard variable rate of interest or if the Seller has
more than one standard variable rate of interest, the relevant
Seller's standard variable rate of interest, subject to any
applicable cap on that variable rate which is not itself linked
to any rate set by the Seller (subject to complying with the
obligations under the Standard Documents as to changes in
interest rates generally and so that in particular the successors
will not be able to change the interest rate following a transfer
of legal title unless the reasons for changing the interest rate
set out in the Standard Documents apply) and provided that in
relation to Loans which are subject to HVR 2, the differential
between that rate and the Loans which are subject to HVR 1 is
maintained; and
(B) to set the variable margin above the Bank of England repo rate
under any Tracker Rate Loan independently of (and without regard
to the level of) any differential set by the Seller, subject to
any applicable cap on that variable margin above the Bank of
England repo rate which is not itself linked to any margin set by
the Seller (subject to complying with the obligations under the
Standard Documents as to changes in margins generally and so that
in particular the successors will not be able to change the
margin following a transfer of legal title unless the reasons for
changing the margin set out in the Standard Documents apply).
1.9 The Seller is under no obligation to make Further Advances (other than
Flexible Loan Drawings (if any), Delayed Cashbacks and Home Cash Reserve
Drawings) or to release retentions or to pay fees or other sums relating to
any Loan or its Related Security to any Borrower.
1.10 Each Borrower has made at least two Monthly Payments.
1.11 Other than with respect to monthly interest payments or as provided in
paragraph 1.12 below, no Borrower is or has, since the date of the relevant
Mortgage, been in material breach of any
21
obligation owed in respect of the relevant Loan or under the Related
Security and accordingly no steps have been taken by the Seller to enforce
any Related Security.
1.12 The total amount of arrears of interest or principal, together with any
fees, commissions and premiums payable at the same time as such interest
payment or principal repayment, on any Loan is not on the Initial Closing
Date or the relevant Assignment Date (as applicable), nor has been during
the 12 months immediately preceding the Initial Closing Date or the
relevant Assignment Date (as applicable) more than the amount of the
Monthly Payment then due.
1.13 No Loan is guaranteed by a third party save where the guarantee constitutes
legal, valid and binding obligations of the guarantor enforceable in
accordance with their terms.
1.14 The Outstanding Principal Balance, all Accrued Interest and all Arrears of
Interest on each Loan and its Related Security (other than any agreement
for Flexible Loan Drawings (if any), Delayed Cashbacks, Home Cash Reserve
Drawings and any other Further Advances) constitute a legal, valid, binding
and enforceable debt due to the Seller from the relevant Borrower and the
terms of each Loan and its Related Security constitute valid and binding
obligations of the Borrower enforceable in accordance with their terms
(other than any agreement for Flexible Loan Drawings (if any), Delayed
Cashbacks, Home Cash Reserve Drawings and any other Further Advance).
1.15 Interest on each Loan is charged in accordance with the Standard
Documentation.
1.16 Interest on each Loan is payable monthly in arrear.
1.17 No Loan or any part of it:
(a) is or has ever been a regulated agreement within Section 8 of the
Consumer Credit Act 1974 (as amended, extended or re-enacted from time
to time);
(b) is or has ever been a linked transaction within Section 19 of the
Consumer Credit Act 1974 (as amended, extended or re-enacted from time
to time);
(c) is to be or has ever been treated as a regulated agreement under
Section 82(3) of the Consumer Credit Act 1974 (as amended, extended or
re-enacted from time to time or otherwise); or
(d) is or has ever been or may become liable to be re-opened on the ground
that the credit bargain is extortionate under Sections 137 to 140 of
the Consumer Credit Act 1974 (as amended, extended or re-enacted from
time to time).
1.18 No Loan or any part of it is unenforceable under the Consumer Protection
(Contracts Concluded away from Business Premises) Regulations 1987 (as
amended, extended or re-enacted from time to time).
1.19 All of the Borrowers are individuals and were aged 18 years or older at the
date he or she executed the relevant Mortgage.
1.20 Not used.
1.21 Each loan in the relevant Portfolio is either:
(a) a Variable Rate Loan, Tracker Rate Loan or Fixed Rate Loan; or
22
(b) a New Loan Type which each of the Rating Agencies has confirmed in
writing may be included in the relevant New Portfolio.
2. MORTGAGES
2.1 The whole of the Outstanding Principal Balance on each Loan and any Arrears
of Interest and all Accrued Interest is secured by a Mortgage.
2.2 Each Mortgage is in the form of the pro forma contained in the Standard
Documentation which was applicable at the time the Mortgage was executed.
2.3 Each Mortgage constitutes a valid and subsisting first charge by way of
legal mortgage over the relevant Property subject only in certain
appropriate cases to applications for registrations at H.M. Land Registry
which where requisite have been made and are pending and in relation to
such cases the Seller is not aware of any caution, notice or any other
matter that would prevent such registration.
2.4 Each Mortgage has first priority for the whole of the Outstanding Principal
Balance on the Loan and all Arrears of Interest and Accrued Interest
thereon and all future interest, fees, costs and expenses payable under or
in respect of such Mortgage.
2.5 Each Loan and its Related Security is, save in relation to any Loan and
Related Security which is not binding by virtue of the Unfair Terms in
Consumer Contracts Regulations 1994 or (as the case may be) the Unfair
Terms in Consumer Contracts Regulations 1999, valid and binding and
enforceable in accordance with its terms. To the best of the Seller's
knowledge, none of the Loans or their Related Security is not binding by
virtue of its being unfair pursuant to the Unfair Terms in Consumer
Contracts Regulations 1994 or (as the case may be) the Unfair Terms in
Consumer Contracts Regulations 1999.
3. THE PROPERTIES
3.1 All of the Properties are in England or Wales.
3.2 Each Property constitutes a separate dwelling unit and is either freehold
or leasehold.
3.3 Save for children of Borrowers and children of someone living with the
Borrower, every person who, at the date upon which a Mortgage was granted,
had attained the age of eighteen and was in or about to be in actual
occupation of the relevant Property, is either named as a Borrower or has
signed a Deed of Consent in the form of the pro forma contained in the
Standard Documentation which was applicable at the time the Mortgage was
executed.
3.4 No Property has been let otherwise than by way of:
(a) an assured shorthold tenancy which meets the requirements of Section
19A or Section 20 of the Housing Act 1988; or
(b) an assured tenancy;
in each case which meets the Seller's Policy in connection with lettings to
non-owners.
3.5 No Property is the subject of a shared ownership lease arrangement or
staircase purchasing arrangement.
23
4. VALUERS' AND SOLICITORS' REPORTS
4.1 Not more than twelve months prior to the grant of each Mortgage (or such
longer period as may be acceptable to a reasonable, prudent mortgage
lender) the Seller received a Valuation Report from a Valuer on the
relevant Property (or such other form of report concerning the valuation of
the relevant Property as would be acceptable to a reasonable, prudent
mortgage lender), the contents of which were such as would be acceptable to
a reasonable, prudent mortgage lender.
4.2 The principal amount of the Initial Advance (including any retention(s)
subsequently advanced to the Borrower but disregarding Capitalised
Expenses) is either:
(a) not more than 75 per cent. of the lower of the purchase price and the
appraised value of the Property as stated in the Valuation Report
referred to above in paragraph 4.1 (the "APPRAISED VALUE") (or, in
case of a remortgage, of the appraised value) of the Property; or
(b) greater than 75 per cent. (but not more than 97 per cent.) of the
lower of the purchase price and the appraised value (or, in the case
of a remortgage, of the appraised value), in which case for those
Loans originated prior to 1st January, 2001 only that part of the
Initial Advance which exceeds 75 per cent. of the lower of the
purchase price and the appraised value (or, in the case of a
remortgage, of the appraised value) is covered under the terms of a
MIG Policy.
4.3 Prior to the taking of each Mortgage (other than a remortgage), the Seller:
(a) instructed the Seller's solicitor or licensed conveyancer to carry out
an investigation of title to the relevant Property and to undertake
such other searches, investigation, enquiries and other actions on
behalf of the Seller as are set out in the instructions which the
Seller issued to the relevant solicitor as are set out in the CML's
Lenders' Handbook for England and Wales (or such comparable,
predecessor or successor instructions and/or guidelines as may for the
time being be in place), subject only to such variations made on a
case by case basis as would have been acceptable to a reasonable,
prudent mortgage lender at the relevant time;
(b) received a Certificate of Title from the solicitor or licensed
conveyancer referred to in paragraph (a) relating to such Property the
contents of which were such as would have been acceptable to a
reasonable, prudent mortgage lender at that time.
4.4 The benefit of all Valuation Reports any other valuation report referred to
in PARAGRAPH 4.1 and Certificates of Title which were provided to the
Seller not more than two years prior to the date of this Agreement can be
validly assigned to the Mortgages Trustee without obtaining the consent of
the relevant Valuer, solicitor or licensed conveyancer.
5. BUILDINGS INSURANCE
5.1 Each Property is insured under:
(a) a buildings insurance policy arranged by the Borrower in accordance
with the relevant Mortgage Conditions or in accordance with the
Alternative Insurance Recommendations; or
24
(b) the Halifax Policies ; or
(c) a buildings insurance policy arranged by the relevant landlord; or
(d) the Properties in Possession Cover.
5.2 No act, event or circumstance has occurred which would adversely affect the
Properties in Possession Cover or entitle the insurers to refuse to make
payment thereunder or to reduce the amount payable in respect of any claim
thereunder.
5.3 All claims under the Properties in Possession Cover have been paid in full
within a reasonable time of the date of submission of the claim and, save
in respect of minor claims, there are no claims outstanding.
6. MIG POLICIES
6.1 Where applicable, the MIG Policies are in full force and effect in relation
to the Initial Portfolio or, as the case may be, each New Portfolio and all
premiums thereon have been paid.
6.2 The benefit of the Halifax Mortgage Re Limited MIG Policies can be and will
have been, with effect from the Closing Date, validly assigned to the
Mortgages Trustee and charged to the Security Trustee, insofar as they
relate to the Initial Portfolio or, as the case may be, each New Portfolio
in each case in the manner and to the extent contemplated by the
Transaction Documents.
6.3 To the best of the knowledge of the Seller no act, event or circumstance
has occurred which would adversely affect the MIG Policies or entitle the
insurers to refuse to make payment thereunder or to reduce the amount
payable in respect of any claim thereunder insofar as they relate to the
Initial Portfolio or, as the case may be, each New Portfolio.
6.4 All valid claims under the MIG Policies have been paid in full within a
reasonable time of the date of submission of the claim.
7. THE SELLER'S TITLE
7.1 The Seller has good title to, and is the absolute unencumbered legal and
beneficial owner of, all property, interests, rights and benefits agreed to
be sold and/or assigned by the Seller to the Mortgages Trustee pursuant to
this Agreement free and clear of all mortgages, charges, liens,
Encumbrances, claims and equities (including, without limitation, rights of
set-off or counterclaim and overriding interests within the meaning of
Section 3 (xvi) of the Land Registration Act 1925) and the Seller is not in
breach of any covenant implied by reason of its selling the Portfolio with
full title guarantee (or which would be implied if the Registered Transfers
or Unregistered Transfers, as applicable, were completed).
7.2 All steps necessary to perfect the Seller's title to the Loans and the
Related Security were duly taken at the appropriate time or are in the
process of being taken, in each case (where relevant) within any applicable
priority periods or time limits for registration with all due diligence and
without undue delay.
7.3 Save for Title Deeds held at H.M. Land Registry, the Title Deeds and the
Customer Files relating to each of the Loans and their Related Security are
held by, or are under the control of:
25
(a) the Seller; or
(b) the Seller's solicitors or licensed conveyancers to the order of the
Seller,
and the Title Deeds held at H.M. Land Registry have been sent to it with a
request that any such Title Deeds will be returned to the Seller or its
solicitors on its behalf.
7.4 Neither the entry by the Seller into this Agreement nor any transfer,
assignment or creation of trust contemplated by this Agreement affects or
will adversely affect any of the Loans and their Related Security
(including, without limitation, the Insurance Policies) and the Seller may
freely assign all its rights, title, interests and benefits therein as
contemplated in this Agreement without breaching any term or condition
applying to any of them.
7.5 The Seller has not knowingly waived or acquiesced in any breach of any of
its rights in respect of a Loan or its Related Security, other than waivers
and acquiescence such as a reasonable, prudent mortgage lender might make
on a case by case basis.
8. GENERAL
8.1 The Seller has, since the making of each Loan, kept or procured the keeping
of full and proper accounts, books and records showing clearly all
transactions, payments, receipts, proceedings and notices relating to such
Loan.
8.2 Neither the Seller nor as far as the Seller is aware any of its agents has
received written notice of any litigation, claim, dispute or complaint (in
each case, subsisting, threatened or pending) in respect of any Borrower,
Property, Loan, Related Security, Halifax Policy, MIG Policy or Properties
in Possession Cover which (if adversely determined) might have a material
adverse effect on the Trust Property or any part of it.
8.3 The Seller has received from each Borrower a variable direct debit
instruction in favour of the Seller signed by the relevant Borrower and
addressed to its bank, variable as to the amount payable by such Borrower
by unilateral notice given from time to time by the Seller to such
Borrower's bank without further instruction or consent from such Borrower
or such other method of payment as may be acceptable to a reasonable,
prudent mortgage lender.
8.4 There are no authorisations, approvals, licences or consents required as
appropriate for the Seller to enter into or to perform the obligations
under this Agreement or to render this Agreement legal, valid, binding,
enforceable and admissible in evidence.
8.5 The Insurance Acknowledgements are valid, binding and enforceable against
the relevant insurer by the Mortgages Trustee and the Security Trustee.
26
SCHEDULE 2
REGISTERED TRANSFER
IN THE FORM OF HM LAND REGISTRY FORM TR4 AS SHOWN OVERLEAF WITH SUCH AMENDMENTS
AS THE MORTGAGES TRUSTEE MAY REASONABLY REQUIRE TO GIVE EFFECT TO THIS AGREEMENT
OR IN SUCH OTHER FORM AS THE MORTGAGES TRUSTEE MAY REASONABLY REQUIRE TO TAKE
ACCOUNT OF CHANGES IN LAW OR PRACTICE.
27
SCHEDULE 3
UNREGISTERED TRANSFER
THIS DEED OF TRANSFER OF MORTGAGES is made the day of
BY:
(1) HALIFAX PLC whose registered office is at Trinity Road, Halifax, West
Yorkshire HX1 2RG (hereinafter called the "TRANSFEROR") of the one part;
and
IN FAVOUR OF:
(2) PERMANENT MORTGAGES TRUSTEE LIMITED whose registered office is 47
Esplanade, St Helier, Jersey JE1 0BD (hereinafter called the "TRANSFEREE")
of the other part.
WHEREAS:
(A) By the charges by way of legal mortgage (the "MORTGAGES") brief particulars
of which are set out in the Annexure hereto the properties brief
particulars of which are similarly set out became security for the
repayment of the monies therein mentioned.
(B) By a Mortgage Sale Agreement (as amended and/or restated from time to time)
made between, inter alia, the Transferor and the Transferee on 13th June,
2002 (as the same may be or have been amended, varied or supplemented from
time to time with the consent of the parties hereto, the "MORTGAGE SALE
AGREEMENT"), the Transferor agreed to sell and the Transferee agreed to buy
all right, title, interest, benefit and obligation (both present and
future) of the Transferor in and under those Mortgages and all other
mortgages in favour of the Transferor over such properties which do not
relate to registered land for the consideration mentioned in the said
Mortgage Sale Agreement.
NOW THIS DEED WITNESSETH as follows:
1. In consideration for the sums payable and other consideration indicated
under the Mortgage Sale Agreement (receipt of which is hereby
acknowledged), the Transferor hereby transfers unto the Transferee with
full title guarantee all rights, title, interests, benefits and obligations
(both present and future) of the mortgagee in and under the Mortgages
including for the avoidance of doubt:
(a) the right to demand, sue for, recover, receive and give receipts for all
principal moneys payable or to become payable under the relevant Mortgages
or the unpaid part thereof and the interest due or to become due thereon;
(b) the benefit of all securities for such principal moneys and interest, the
benefit of all consents to mortgage signed by occupiers of the mortgaged
properties and the benefit of and the right to sue on all covenants with,
or vested in, the mortgagee in relation to each Mortgage and the rights to
exercise all powers of the mortgagee in relation to each Mortgage;
(c) all the estate and interest in the relevant mortgaged properties vested in
the mortgagee subject to redemption or cesser; and
28
(d) all causes of action of the mortgagee against any person in connection with
any report, valuation, opinion, certificate, consent to mortgage or other
statement of fact or opinion given in connection with any Mortgage or
affecting the decision to make the relevant advance.
2. This Deed shall be governed by and construed in accordance with English
law.
IN WITNESS WHEREOF this document has been executed and delivered as a deed the
day and year first before written.
EXECUTED as a DEED by )
HALIFAX PLC )
acting by its attorney in )
the presence of: )
Witness:
Name:
Address:
ANNEXURE
Account No. Property address Date of Mortgage Borrower
29
SCHEDULE 4
LENDING CRITERIA
LENDING CRITERIA
The Loans in the Initial Portfolio or, as the case may be, the relevant New
Portfolio were originated according to the Seller's lending policy at the
relevant time, which in the case of the Initial Portfolio included the criteria
set out below. However, the Seller retains the right to revise its lending
policy from time to time, and so the criteria applicable to the New Loans may
not be the same as those set out below.
(1) Types of Property
Properties may be either freehold or leasehold. In the case of leasehold
properties, the unexpired portion of the lease must in most cases not
expire earlier than 30 years after the term of the Loan. The property must
be used solely for residential purposes (with extremely limited case by
case exceptions) and must be in sound structural condition and repair or be
capable of being put into such state. House boats, mobile homes and any
property on which buildings insurance cannot be arranged are not
acceptable. All persons who are to be legal owners of the Property on
completion of the relevant Mortgage must be Borrowers.
All properties have been valued by a valuer approved by the Seller or,
where appropriate, according to a methodology which would meet the
standards of a reasonable, prudent mortgage lender and which has been
approved by the Seller.
(2) Term of Loan
There is no minimum term on home purchase Loans and the maximum term is 25
years for repayment Mortgages. A maximum term of 40 years is available for
interest-only Mortgages. A repayment period for a new Further Advance that
would extend beyond the term of the original advance may also be accepted
at the Seller's discretion, subject to the following:
(a) the consent of any subsequent lender or guarantor to the Further
Advance;
(b) the Seller may in its discretion extend the period of the original
advance, provided that, in all leasehold cases, not less than 30 years
of the lease must be left unexpired at the end of the term of the
Mortgage; and
(c) the approval of the valuer where the valuer has previously recommended
a term which is shorter than the maximum Loan terms referred to above.
If a Borrower requests to increase the term of the existing Loan, the
maximum term for a repayment Loan is 25 years from the date from which the
extended term is granted. However, the total term from the start date of
the account must not exceed 40 years.
(3) Age of Applicant
All Borrowers must be aged 18 or over. There is no maximum age limit.
However, if the term of the Mortgage extends into retirement, the Seller
will attempt to ascertain the Borrower's anticipated income in retirement.
If the Seller determines the Borrower will not be able to afford the
Mortgage into retirement, the application will be declined. If the Borrower
is already retired, the Seller will consider the Borrower's ability to
support the Loan.
30
(4) Loan to Value (or LTV) Ratio
The maximum original LTV ratio of Loans in the Initial Portfolio is 97 per
cent. At the date of this Agreement, for Properties of (pound)150,000 or
less, the Seller may lend up to 97 per cent. of the improved valuation of
the Property (the original valuation plus the increase in value deriving
from any improvements). For Properties in excess of (pound)150,000, the
permissible LTV ratio decreases as the Loan amount increases. The Seller
has approved measures whereby it may lend up to 97 per cent. of the LTV for
properties of (pound)250,000 or less but this measure has not been
implemented at the date of this Agreement. The Seller will not provide
Loans in excess of 100 per cent. of the sum of the purchase price and the
increase in value deriving from any improvements.
In the case of a Property that is being purchased, value is determined by
the lower of the valuation and the purchase price. In the case of a
remortgage or Further Advance, value is determined on the basis of a
valuation only.
(5) Mortgage Indemnity Guarantee Policies/High LTV Fees
Borrowers are currently required to pay high LTV fees to the Seller for
each Mortgage account where the aggregate of the outstanding principal
balance of the relevant Loan(s) at origination (excluding any capitalised
high LTV fees and/or booking fees and/or valuation fees) exceeds certain
specified percentages.
If the LTV ratio exceeds 90 per cent., the Borrower pays high LTV fees
based on the difference between the actual LTV ratio and a 75 per cent. LTV
ratio.
Prior to 1st January, 2001, the Seller required cover under mortgage
indemnity guarantee, or MIG, policies for Mortgages where the LTV ratio
exceeded 75 per cent., though during 1999 and 2000 the Seller paid the
premium for the MIG cover if the LTV ratio was between 75 per cent. and 90
per cent. Since 1st January, 2001, the Seller has not required cover under
MIG policies for any Loans.
(6) Status of Applicant(s)
The maximum amount of the aggregate Loan(s) under a mortgage account is
determined by a number of factors, including the applicant's income. In
determining income, the Seller includes basic salary as primary income,
along with performance or profit-related pay, allowances, mortgage
subsidies, pensions, annuities and state benefits. Payments for overtime,
bonus and commissions will not be automatically included in income. The
Seller will deduct the annual cost of existing commitments from the
applicant's gross income, depending on the applicant's credit score. The
Seller will also verify the applicant's employment.
In cases where a single Borrower is attempting to have the Seller take a
secondary income into account, the Seller will consider the sustainability
of the Borrower's work hours, the similarity of the jobs and/or skills, the
commuting time and distance between the jobs, the length of employment at
both positions and whether the salary is consistent with the type of
employment. The Seller will determine, after assessing the above factors,
if it is appropriate to use both incomes. If so, both incomes will be used
as part of the normal income calculation.
31
When there are two applicants, the Seller adds joint incomes together for
the purpose of deciding which income band to use. The Seller may, at its
discretion, consider the income of additional applicants as well but only a
maximum rate of one times that income.
The Seller may exercise discretion within its lending criteria in applying
those factors which are used to determine the maximum amount of the
Loan(s). Accordingly, these parameters may vary for some Loans. The Seller
may take the following into account when exercising discretion: credit
score result, existing customer relationship, percentage of LTV, stability
of employment and career progression, availability of living allowances
and/or mortgage subsidy from the employer, employer's standing, regularity
of overtime, bonus or commission (up to a maximum of 60 per cent. of the
income), credit commitments, quality of security (such as type of property,
repairs, location or saleability), and the increase in income needed to
support the Loan.
The Seller may not exercise discretion where it is lending over 95 per
cent. of value or the Borrower's credit score fails. There is an exception
from this policy for existing Borrowers who are moving home and the
Seller's overall position is improved.
(7) Credit History
(a) Credit Search
With the exception, in some circumstances, of Further Advances to existing
Borrowers, a credit search is carried out in respect of all applicants.
Applications may be declined where an adverse credit history (for example,
county court judgement, default, or bankruptcy notice) is revealed.
(b) Existing Lender's Reference
In some cases, the Seller may also seek a reference from any existing
and/or previous lender. Any reference must satisfy the Seller that the
account has been properly conducted and that no history of material arrears
exists.
(c) First Time Buyers/Applicants in rented accommodation
Where applicants currently reside in rented accommodation, the Seller may
seek a landlord's reference. In addition, if considered appropriate, a
further reference may be taken in connection with any other property rented
by the applicant(s) within the preceding 18 months.
(d) Bank Reference
A bank reference may be sought or the applicants may be required to provide
bank statements in support of his or her application.
(8) Scorecard
The Seller uses some of the above criteria and various other criteria to
provide an overall score for the application that reflects a statistical
analysis of the risk of advancing the Loan. The lending policies and
processes are determined centrally to ensure consistency in the management
and monitoring of credit risk exposure. Full use is made of software
technology in credit scoring new applications. Credit scoring applies
statistical analysis to publicly available data and customer-provided data
to assess the likelihood of an account going into arrears. In addition, the
Seller is currently developing behavioural scoring, which will enable
32
it to use customer data on existing accounts to make further lending
decisions and to prioritise action in the case of arrears. Mortgage
collection is conducted through a number of payment collection departments.
The Seller reserves the right to decline an application that has received a
passing score. The Seller does have an appeals process if an applicant
believes his or her application to be unfairly denied. It is the Seller's
policy to allow only authorised individuals to exercise discretion in
granting variances from the scorecard.
33
SCHEDULE 5
POWER OF ATTORNEY IN FAVOUR OF FUNDING 1, THE MORTGAGES TRUSTEE
AND THE SECURITY TRUSTEE
THIS DEED OF POWER OF ATTORNEY is made on the [o], 2003 by:
(1) HALIFAX PLC whose registered office is at Trinity Road, Halifax, West
Yorkshire HX1 2RG (registered number 02367076) (the "SELLER")
IN FAVOUR OF each of:
(2) PERMANENT FUNDING (NO. 1) LIMITED whose registered office is at Blackwell
House, Guildhall Yard, London EC2V 5AE (registered number 4267660)
("FUNDING 1");
(3) PERMANENT MORTGAGES TRUSTEE LIMITED whose registered office is at 47
Esplanade, St Helier, Jersey JE1 0BD (registered number 83116) (the
"MORTGAGES TRUSTEE");
(4) STATE STREET BANK AND TRUST COMPANY a Massachusetts trust company organised
under the laws of the Commonwealth of Massachusetts, United States of
America, acting through its office at 225 Franklin Street, Boston,
Massachusetts 02110 acting as co-trustee in its capacity as trustee (the
"SECURITY TRUSTEE", which expression shall include such company and all
other persons or companies for the time being acting as the security
trustee or security trustees under the Funding 1 Deed of Charge); and
(5) U.S. BANK NATIONAL ASSOCIATION a national banking association formed under
the laws of the United States of America, acting through its office at 1
Federal Street, 3rd Floor, Boston, Massachusetts 02110 acting as co-trustee
in its capacity as trustee (the "SECURITY TRUSTEE", which expression shall
include such company and all other persons or companies for the time being
acting as the security trustee or security trustees under the Funding 1
Deed of Charge).
WHEREAS:
(1) By virtue of a mortgage sale agreement (the "MORTGAGE SALE AGREEMENT")
dated 14th June, 2002 and made between the Seller (1) Funding 1 (2) the
Mortgages Trustee (3) and State Street Bank and Trust Company (4) provision
was made for the execution by the Seller of this Power of Attorney.
(2) Words and phrases in this Power of Attorney shall (save where expressed to
the contrary) have the same meanings respectively as the words and phrases
in the Master Definitions and Construction Schedule dated 13th June, 2002
and signed for the purposes of identification by Allen & Overy and Sidley
Austin Brown & Wood.
NOW THIS DEED WITNESSETH as follows:
1. The Seller irrevocably and by way of security for the performance of the
covenants, conditions and undertakings on the part of the Seller contained
in the Mortgage Sale Agreement and the Servicing Agreement HEREBY APPOINTS
each of Funding 1, the Mortgages Trustee and the Security Trustee and any
receiver and/or administrator appointed from time to time in respect of
Funding 1 and/or the Mortgages Trustee or their assets (each an "ATTORNEY")
severally to be its true and lawful attorney for the Seller and in the
Seller's
34
name or otherwise to do any act matter or thing which any Attorney
considers necessary or desirable for the protection, preservation or
enjoyment of that Attorney's interest in the Loans and their Related
Security and/or which ought to be done under the covenants, undertakings
and provisions contained in the Mortgage Sale Agreement including (without
limitation) any or all of the following:
(a) to execute, sign, seal and deliver (using the company seal of the
Seller where appropriate) any conveyance or transfer of the Loans or
any of them to the Mortgages Trustee and its successors in title or to
any other person or persons entitled to the benefit thereof;
(b) to execute, sign, seal and deliver (using the company seal of the
Seller where appropriate) any conveyance, assignment or transfer of
the Related Security or any item comprised therein (to the extent only
that such item or items relate to the Loans) to the Mortgages Trustee
and its successors in title or to any other person or persons entitled
to the benefit thereof or entitled to be registered at H.M. Land
Registry as proprietor thereof (as the case may be);
(c) to do every other act or thing which the Seller is obliged to do under
the Mortgage Sale Agreement or which that Attorney may otherwise
consider to be necessary proper or expedient for fully and effectually
vesting or transferring the interests sold thereunder in the Loans and
their Related Security or any or each of them and/or the Seller's
estate right and title therein or thereto in or to the Mortgages
Trustee and its successors in title or to any other person or persons
entitled to the benefit thereof (as the case may be) in the same
manner and as fully and effectually in all respects as the Seller
could have done including, without limitation, any of the acts
referred to in CLAUSE 6.3(A) to (C) of the Mortgage Sale Agreement;
(d) to exercise its rights, powers and discretions under the Loans
including the right to fix the rate or rates of interest payable under
the Loans in accordance with the terms thereof including, for the
avoidance of doubt, whilst such Loans subsist and subject to the
consent of the Mortgages Trustee being given to the setting of such
rates, setting the Seller's Variable Base Rate in the circumstances
referred to in CLAUSE 4 of the Servicing Agreement and/or following
perfection pursuant to CLAUSE 6.1 of the Mortgages Sale Agreement
PROVIDED THAT nothing in the Clause shall prevent the Seller (or any
of its attorneys from time to time) from setting a higher rate than
those set or to be set or required or to be required by the Mortgages
Trustee or Funding 1 under this Power of Attorney;
(e) to discharge the Mortgages or any of them and to sign, seal, deliver
and execute such receipts releases surrenders instruments and deeds as
may be requisite or advisable in order to discharge the relevant
Property or Properties from the Mortgages or any of them; and
(f) to exercise all the powers of the Seller in relation to such Loans and
their Related Security.
2. Each Attorney shall have the power by writing under its hand by an officer
of the Attorney from time to time to appoint a substitute who shall have
power to act on behalf of the Seller as if that substitute shall have been
originally appointed Attorney by this Power of Attorney (including, without
limitation, the power of further substitution) and/or to revoke any such
appointment at any time without assigning any reason therefor.
35
3. The Seller hereby agrees at all times hereafter to ratify and confirm
whatsoever the said Attorney or its attorneys shall lawfully do or cause to
be done in and concerning the Loans or their Related Security by virtue of
this Power of Attorney.
4. The laws of England shall apply to this Power of Attorney and the
interpretation thereof.
36
IN WITNESS WHEREOF the Seller has executed and delivered this document as a deed
the day and year first before written.
THE COMMON SEAL of )
HALIFAX PLC )
was hereunto affixed in )
the presence of: )
......................... Authorised Signatory
......................... Authorised Signatory
37
SCHEDULE 6
LOAN REPURCHASE NOTICE
Dated [ ]
1. It is hereby agreed that for the purpose of this notice the "PRINCIPAL
AGREEMENT" shall mean the Mortgage Sale Agreement dated 14th June, 2002
made between HALIFAX plc (the "SELLER") (1) PERMANENT FUNDING (NO. 1)
LIMITED (2) PERMANENT MORTGAGES TRUSTEE LIMITED (the "MORTGAGES TRUSTEE")
(3) STATE STREET BANK AND TRUST COMPANY (4) and U.S. BANK NATIONAL
ASSOCIATION (5) (as the same may be or have been amended, varied or
supplemented from time to time with the consent of those parties).
2. Save where the context otherwise requires, words and expressions in this
notice shall have the same meanings respectively as when used in the
Principal Agreement.
3. In accordance with CLAUSE 8.4 of the Principal Agreement, upon receipt of
this Loan Repurchase Notice by the Seller there shall exist between the
Seller and the Mortgages Trustee an agreement (the "AGREEMENT FOR SALE")
for the sale by the Mortgages Trustee to the Seller of the Loans and their
Related Security more particularly described in the Schedule hereto.
Completion of such sale shall take place on o.
4. The Agreement for Sale shall incorporate, mutatis mutandis, the relevant
provisions of the Principal Agreement.
.............................
Signed for and on behalf of
PERMANENT MORTGAGES TRUSTEE LIMITED
[On duplicate
We hereby acknowledge receipt of and confirm the contents of the Loan Repurchase
Notice dated [ ].
.............................
Signed for and on behalf of
HALIFAX PLC]
38
SCHEDULE
1. 2. 3. 4. 5.
Title No. Borrower Account No. Property Date of Mortgage
(if registered) Postcode
39
SCHEDULE 7
ASSIGNMENT OF THIRD PARTY RIGHTS
THIS DEED OF ASSIGNMENT is made on [o], 2003
BY:
(1) HALIFAX PLC (registered number 02367076), a public limited company
incorporated under the laws of England and Wales, whose registered office
is at Trinity Road, Halifax, West Yorkshire HX1 2RG (the "TRANSFEROR"); and
IN FAVOUR OF:
(2) PERMANENT MORTGAGES TRUSTEE LIMITED (registered number 83116), a private
limited company incorporated under the laws of Jersey, Channel Islands,
whose registered office is at 47 Esplanade, St Helier, Jersey JE1 0BD (the
"TRANSFEREE").
WHEREAS:
(A) By the charges by way of legal mortgage (the "MORTGAGES") brief particulars
of which are set out in the Annexure hereto the properties brief
particulars of which are similarly set out became security for the
repayment of the moneys therein mentioned.
(B) By a Mortgage Sale Agreement made between, inter alia, the Transferor and
the Transferee on 14th June, 2002 as amended and restated on 6th March,
2003, the Transferor agreed to sell and the Transferee agreed to buy all
right, title, interest and benefit (both present and future) of the
Transferor in and under those Mortgages and all Related Security and all
monies secured by those Mortgages and Related Security.
NOW THIS DEED WITNESSETH as follows:
1. Capitalised terms in this Deed (including the recitals) shall, except where
the context otherwise requires and save where otherwise defined in this
Deed, bear the meanings given to them in the Amended and Restated Master
Definitions and Construction Schedule signed (in connection with, amongst
other things, this Deed) for the purposes of identification by Allen &
Overy and Sidley Austin Brown & Wood on 5th March, 2003 (as the same may be
amended, varied or supplemented from time to time with the consent of the
parties hereto) and this Deed shall be construed in accordance with the
interpretation provisions set out in Clause 2 thereof.
2. The Transferor hereby assigns absolutely unto the Transferee with full
title guarantee:
(a) the benefit of all Related Security relating to the Mortgages
(including without limitation all securities for the principal moneys
and interest secured by the Mortgages and the benefit of all consents
to mortgage signed by occupiers of the mortgaged properties and the
benefit of all guarantees, indemnities and surety contracts relating
to the Mortgages) other than any such Related Security which has been
transferred to the Transferee by other means or which is not otherwise
capable of such transfer; and
40
(b) all causes of action of the Transferor against any person in
connection with any report, valuation, opinion, certificate, consent
or other statement of fact or opinion given in connection with any
Related Security relating to the Mortgages or affecting the decision
to make any advance in connection with such Mortgages.
3. This Deed shall be governed by and construed in accordance with English
law.
IN WITNESS WHEREOF this document has been executed and delivered as a deed the
day and year first before written.
EXECUTED as a DEED by )
HALIFAX PLC )
acting by its attorney in )
the presence of: )
Witness's signature:
Name:
Address:
ANNEXURE
Account No. Property address Borrower Date of Mortgage
41
SCHEDULE 8
ASSIGNMENT OF HALIFAX MORTGAGE RE LIMITED MIG POLICIES
THIS DEED is made on [o], 2003
BY:
(1) HALIFAX PLC (registered number 02367076), a public limited company
incorporated under the laws of England and Wales, whose registered office
is at Trinity Road, Halifax, West Yorkshire HX1 2RG (the "SELLER"); and
IN FAVOUR OF:
(2) PERMANENT MORTGAGES TRUSTEE LIMITED (registered number 83116), a private
limited company incorporated under the laws of Jersey, Channel Islands,
whose registered office is at 47 Esplanade, St Helier, Jersey, JE1 0BD (the
"MORTGAGES TRUSTEE").
WHEREAS:
(A) By a Mortgage Sale Agreement made between, inter alia, the Seller and the
Mortgages Trustee on 14th June, 2002 as amended and restated on 6th March,
2003 the Seller agreed to transfer to the Mortgages Trustee certain charges
by way of legal mortgage secured on residential property in England and
Wales together with the benefit of any monies secured thereby.
(B) The Seller has the benefit of mortgage indemnity insurance policies brief
details of which are set out in the Schedule to this Deed (the "HMRL MIG
POLICIES").
(C) The Seller has agreed with the Mortgages Trustee to assign to the Mortgages
Trustee the benefit of the HMRL MIG Policies to the extent that they relate
to the Loans in the Portfolio.
(D) The insurance businesses (including, for the avoidance of doubt, the HMRL
MIG Policies) of Halifax Mortgage Re Limited were acquired by HBOS
Insurance (PCC) Guernsey Limited on 21st December, 2001.
NOW THIS DEED WITNESSETH as follows:
1. Capitalised terms in this Deed (including the recitals) shall, except where
the context otherwise requires and save where otherwise defined in this
Deed, bear the meanings given to them in the Amended and Restated Master
Definitions and Construction Schedule signed (in connection with, among
other things, this Deed) for the purposes of identification by Allen &
Overy and Sidley Austin Brown & Wood on 5th March, 2003, (as the same may
be amended, varied or supplemented from time to time with the consent of
the parties hereto) and this Deed shall be construed in accordance with the
interpretation provisions set out in CLAUSE 2 thereof.
2. The Seller with full title guarantee hereby conveys, transfers and assigns
to the Mortgages Trustee absolutely all its right, title, interest and
benefit in the HMRL MIG Policies to the extent that they relate to the
Mortgages which as at this date are comprised in the Portfolio, and all
moneys and proceeds to become payable under any of the same and all
covenants relating thereto and all powers and remedies for enforcing the
same.
42
3. This Deed shall be governed by and construed in accordance with English
law.
IN WITNESS WHEREOF which this document has been executed and delivered as a deed
the day and year first before written.
EXECUTED as a DEED by )
HALIFAX PLC )
acting by its attorney in )
the presence of: )
Witness:
Name:
Address:
SCHEDULE
Mortgage indemnity guarantee policies numbered 227001, 227001(A), 227002,
227003 and 227006 respectively issued to Halifax plc by Halifax Mortgage Re
Limited.
43
SCHEDULE 9
HALIFAX MORTGAGE RE LIMITED MIG POLICIES ASSIGNMENT NOTICE
To: HBOS Insurance (PCC) Guernsey Ltd
c/o AON Insurance Managers (Guernsey) Limited
(as Managers of HBOS Insurance (PCC) Ltd)
PO Box 33
Maison Trinity
Trinity Square
St Peter Port
Guernsey GY1 4AT
[o], 2003
Dear Sirs,
RE: ASSIGNMENT OF MORTGAGE INDEMNITY INSURANCE POLICIES NUMBERED 227001,
227001(A), 227002, 227003 AND 227006 RESPECTIVELY (THE "MIG POLICIES")
We hereby give you notice that, by an Assignment dated [o], 2003 and made
between ourselves and Permanent Mortgages Trustee Limited (the "MORTGAGES
TRUSTEE") (a copy of which is attached to this notice), we assigned all of our
right, title, benefit and interest in the MIG Policies to the Mortgages Trustee
(to the extent that they relate to the loans and the mortgages in a portfolio
referred to in a mortgage sale agreement dated 14th June, 2002 as amended and
restated on 6th March, 2003 between ourselves, Permanent Funding (No. 1)
Limited, the Mortgages Trustee and State Street Bank and Trust Company).
Yours faithfully,
.........................
For and on behalf of
HALIFAX PLC
Copy: Permanent Mortgages Trustee Limited
Permanent Funding (No. 1) Limited
State Street Bank and Trust Company
U.S. Bank National Association
44
SCHEDULE 10
INSURANCE ENDORSEMENT
ON THE HEADED NOTEPAPER OF [THE RELEVANT INSURER ]
ENDORSEMENT [X] attaching to and forming part of policy number [policy number]
(the "POLICY") issued by [name of Insurer] (the "INSURER").
It is hereby noted and agreed that with effect from the date of this
Endorsement:-
1. The definition of "Insured" shall be deleted in its entirety and replaced
with the following wording:
"(a) Halifax plc ("HALIFAX") whose registered office is at Trinity Road,
Halifax, West Yorkshire, HX1 2RG;
(b) any assignee to whom Halifax has assigned (whether legally or
equitably and whether by way of security or otherwise) any loans
and/or mortgages and related collateral and/or assets to which this
Policy relates (an "ASSIGNEE") (whether or not any such Assignee holds
the same on trust for another or others); and
(c) any person benefiting from security granted by the Halifax or its
Assignee over any loans and/or mortgages and related collateral and/or
assets to which this Policy relates in connection with the financing
or re-financing of such loans and/or mortgages and related collateral
and/or assets."
2. Each term of the Policy which is inconsistent with the intent and/or effect
of the amended definition of "Insured" contemplated in paragraph 1 above
(the "NEW DEFINITION") shall be subject to the New Definition and shall not
apply to the extent that such term of the Policy is inconsistent with the
New Definition.
3. The Insurer acknowledges and agrees that any Insured under the Policy may
from time to time appoint Halifax plc or any other person as agent of that
Insured to deal with the Insurer on its behalf in the administration of and
making and payment of claims under the Policy.
All other terms, clause and conditions of the Policy remain unchanged.
This Endorsement is signed for and on behalf of the Insurer by a duly authorised
signatory:
.................................
[Name]
[Position]
[Insurer]
Dated , 2002
45
SCHEDULE 11
INSURANCE ACKNOWLEDGEMENTS
PART 1
ON THE HEADED NOTEPAPER OF GE MORTGAGE INSURANCE LIMITED
To: Halifax plc (the "SELLER")
Trinity Road
Halifax
West Yorkshire
HX1 2RG
Permanent Mortgages Trustee Limited (the "MORTGAGES TRUSTEE")
47 Esplanade
St Helier
Jersey
JE1 08D
Channel Islands
Permanent Funding (No. 1) Limited ("FUNDING 1")
Blackwell House
Guildhall Yard
London
EC2V 5AE
State Street Bank and Trust Company (the "SECURITY TRUSTEE")
225 Franklin Street
Boston
Massachusetts 02110
U.S. Bank National Association (the "SECURITY TRUSTEE")
1 Federal Street
3rd Floor
Boston
Massachusetts 02110
[date]
Dear Sirs,
MORTGAGE INDEMNITY GUARANTY POLICIES NUMBERS GECM-UK-003 AND GECM-UK-004 (THE
"MIG POLICIES")
We refer to the transaction entered into or to be entered into between, inter
alios, each of the parties to whom this letter is addressed, pursuant to which:
(a) the Seller may assign or agree to transfer its interest in properties which
are (or may from time to time be) covered by the MIG Policies to the
Mortgages Trustee;
46
(b) the Mortgages Trustee may declare a trust over its interest in such
properties in favour of Funding 1 and the Seller; and
(c) Funding 1 may charge its interest in such properties to the Security
Trustee.
In consideration of the payment of (pound)1 made by each of the Seller, the
Mortgages Trustee, Funding 1 and the Security Trustee (receipt whereof is hereby
acknowledged), we hereby confirm that the arrangements set out in PARAGRAPHS (A)
to (C) inclusive above will not cause the MIG Policies to lapse or terminate
and, notwithstanding any such arrangements, we will continue to pay claims under
the MIG Policies in the same way and in the same amount as we would have paid
them, had the said arrangements not been entered into.
Yours faithfully,
FOR AND ON BEHALF OF GE MORTGAGE INSURANCE LIMITED
47
PART 2
ON THE HEADED NOTEPAPER OF HBOS INSURANCE (PCC) GUERNSEY LTD
To: Halifax plc (the "SELLER")
Trinity Road
Halifax
West Yorkshire
HX1 2RG
Permanent Mortgages Trustee Limited (the "MORTGAGES TRUSTEE")
47 Esplanade
St Helier
Jersey
JE1 08D
Channel Islands
Permanent Funding (No. 1) Limited ("FUNDING 1")
Blackwell House
Guildhall Yard
London
EC2V 5AE
State Street Bank and Trust Company (the "SECURITY TRUSTEE")
225 Franklin Street
Boston
Massachusetts 02110
U.S. Bank National Association (the "SECURITY TRUSTEE")
1 Federal Street
3rd Floor
Boston
Massachusetts 02110
[date]
Dear Sirs,
MORTGAGE INDEMNITY GUARANTEE POLICY NUMBERS 227001, 227001(A), 227002, 227003 &
227006 (THE "MIG POLICIES")
We refer to the transaction entered into or to be entered into between, inter
alios, each of the parties to whom this letter is addressed, pursuant to which:
(a) all of the Seller's right, title, benefit and interest in the MIG Policies
(to the extent that the same relate to the mortgage loans and their
collateral security to be assigned by the Seller to the Mortgages Trustee
pursuant to a mortgage sale agreement to be entered into between each of
the parties to whom this letter is addressed) shall be assigned by the
Seller to the Mortgages Trustee;
(b) the Seller may assign or agree to transfer its interest in properties which
are (or may from time to time be) covered by the MIG Policies to the
Mortgages Trustee;
48
(c) the Mortgages Trustee may declare a trust over its interest in such
properties in favour of Funding 1 and the Seller; and
(d) Funding 1 may charge its beneficial interest in such properties to the
Security Trustee.
In consideration of the payment of (pound)1 made by each of the Seller, the
Mortgages Trustee, Funding 1 and the Security Trustee (receipt whereof is hereby
acknowledged), we hereby confirm that the arrangements set out in PARAGRAPHS (A)
to (D) inclusive above will not cause the MIG Policies to lapse or terminate
and, notwithstanding any such arrangements, we will continue to pay claims under
the MIG Policies in the same way and in the same amount as we would have paid
them, had the said arrangements not been entered into.
Yours faithfully,
FOR AND ON BEHALF OF HBOS INSURANCE (PCC) GUERNSEY LIMITED
49
SCHEDULE 12
NEW PORTFOLIO NOTICE
Dated [ ]
1. It is hereby agreed for the purpose of this notice the "PRINCIPAL
AGREEMENT" shall mean the Mortgage Sale Agreement dated 14th June, 2002 (as
amended and/or restated from time to time) made between HALIFAX plc (the
"SELLER") (1) PERMANENT FUNDING (NO. 1) LIMITED ("FUNDING 1") (2) PERMANENT
MORTGAGES TRUSTEE LIMITED (the "MORTGAGES TRUSTEE") (3) and STATE STREET
BANK AND TRUST COMPANY (4) (as the same may be or have been amended, varied
or supplemented from time to time with the consent of those parties).
2. Save where the context otherwise requires, words and expressions in this
notice shall have the same meanings respectively as when used in the
Principal Agreement.
3. In accordance with and subject to CLAUSE 4.1 of the Principal Agreement,
upon receipt by the Seller of the duplicate of this notice signed by
Funding 1 and the Mortgages Trustee, there shall exist between the Seller,
Funding 1 and the Mortgages Trustee an agreement (the "AGREEMENT FOR SALE")
for the sale by the Seller to the Mortgages Trustee of the New Loans and
the Related Security more particularly described in the Schedule hereto
(other than any New Loans and their Related Security which have been
redeemed in full prior to the next following Assignment Date). Completion
of such sale shall take place on [ ].
4. The Agreement for Sale shall incorporate, mutatis mutandis, the relevant
provisions of the Principal Agreement.
...............................................
Signed for and on behalf of
HALIFAX PLC
[On duplicate:
We hereby acknowledge receipt of the New Portfolio Notice dated [ ], and
confirm that we are prepared to purchase New Loans as set out in that notice.
...............................................
Signed for and on behalf of
PERMANENT FUNDING (NO. 1) LIMITED
...............................................
Signed for and on behalf of
PERMANENT MORTGAGES TRUSTEE LIMITED]
50
SCHEDULE
1. 2. 3. 4. 5.
Title No. (if Borrower Property Postcode Account No. Date of Mortgage
registered)
51
EXHIBIT
PART 1: INITIAL PORTFOLIO
PART 2: STANDARD DOCUMENTATION
52
EXHIBIT
PART 1
INITIAL PORTFOLIO
This is Part 1 (on accompanying CD-ROM) of the Exhibit to a Mortgage Sale
Agreement dated 14th June, 2002 made between Halifax plc (1) Permanent Funding
(No. 1) Limited (2) Permanent Mortgages Trustee Limited (3) and State Street
Bank and Trust Company (4).
Ian G Stewart
HALIFAX PLC
David Balai
PERMANENT FUNDING (NO. 1) LIMITED
David Balai
PERMANENT MORTGAGES TRUSTEE LIMITED
David Duclos
STATE STREET BANK AND TRUST COMPANY
[o]
U.S. BANK NATIONAL ASSOCIATION
53
EXHIBIT
PART 2
STANDARD DOCUMENTATION
This is Part 2 of the Exhibit to a Mortgage Sale Agreement dated 14th June, 2002
made between Halifax plc (1) Permanent Funding (No. 1) Limited (2) Permanent
Mortgages Trustee Limited (3) and State Street Bank and Trust Company (4).
Ian G Stewart
HALIFAX PLC
David Balai
PERMANENT FUNDING (NO. 1) LIMITED
David Balai
PERMANENT MORTGAGES TRUSTEE LIMITED
David Duclos
STATE STREET BANK AND TRUST COMPANY
[o]
U.S. BANK NATIONAL ASSOCIATION
54
SIGNATORIES
SIGNED by )
for and on behalf of )
HALIFAX PLC )
SIGNED by )
for and on behalf of )
PERMANENT FUNDING (NO. 1) LIMITED )
SIGNED by )
for and on behalf of )
PERMANENT MORTGAGES )
TRUSTEE LIMITED )
SIGNED by )
for and on behalf of )
STATE STREET BANK AND )
TRUST COMPANY )
SIGNED by )
for and on behalf of )
U.S. BANK NATIONAL ASSOCIATION )
55
DATED [6TH MARCH], 2003
HALIFAX PLC
as Seller and one of the Beneficiaries
and
PERMANENT FUNDING (NO. 1) LIMITED
as Funding 1 and one of the Beneficiaries
and
PERMANENT MORTGAGES TRUSTEE LIMITED
as Mortgages Trustee
and
STATE STREET BANK AND TRUST COMPANY
as Security Trustee
and
U.S. BANK NATIONAL ASSOCIATION
as Security Trustee
-----------------------------------
AMENDED AND RESTATED
MORTGAGE SALE AGREEMENT
-----------------------------------