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EXHIBIT 10(a)
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MORTGAGE LOAN PURCHASE AND WARRANTIES AGREEMENT
D&N CAPITAL CORPORATION
PURCHASER
D&N BANK
SELLER
DATED AS OF [__________], 1997
CONVENTIONAL RESIDENTIAL MORTGAGE LOANS
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TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. AGREEMENT TO PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
[SECTION 3. RESERVED.] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4. PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 5. EXAMINATION OF MORTGAGE FILES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 6. CONVEYANCE FROM SELLER TO PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Subsection 6.01. Conveyance of Mortgage Loans; Possession of Servicing Files . . . . . . . . . . 11
Subsection 6.02. Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Subsection 6.03. Delivery of Mortgage Loan Documents . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 7. SERVICING OF THE MORTGAGE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SELLER; REMEDIES FOR BREACH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Subsection 8.01. Representations and Warranties Regarding the Seller . . . . . . . . . . . . . . 13
Subsection 8.02. Representations and Warranties Regarding Individual Mortgage Loans . . . . . . . 15
Subsection 8.03. Remedies for Breach of Representations and Warranties . . . . . . . . . . . . . 27
SECTION 9. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 10. CLOSING DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 11. COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 12. MERGER OR CONSOLIDATION OF THE SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 13. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 14. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 15. SEVERABILITY CLAUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 16. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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SECTION 17. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 18. INTENTION OF THE PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 19. SUCCESSORS AND ASSIGNS; ASSIGNMENT OF
PURCHASE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 20. WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 21. EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 22. GENERAL INTERPRETIVE PRINCIPLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 23. REPRODUCTION OF DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 24. FURTHER AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 25. RECORDATION OF ASSIGNMENTS OF MORTGAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
EXHIBITS
EXHIBIT A CONTENTS OF EACH MORTGAGE FILE
EXHIBIT B FORM OF SERVICING AGREEMENT
EXHIBIT C FORM OF SELLER'S/SERVICER'S OFFICER'S CERTIFICATE
EXHIBIT D FORM OF OPINION OF COUNSEL TO THE SELLER/SERVICER
EXHIBIT E FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT F FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT G FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT H MORTGAGE LOAN SCHEDULE
EXHIBIT I THE UNDERWRITING GUIDELINES OF D&N BANK
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MORTGAGE LOAN PURCHASE AND WARRANTIES AGREEMENT
This MORTGAGE LOAN PURCHASE AND WARRANTIES AGREEMENT (the
"Agreement"), dated as of [__________,] 1997, by and between D&N Capital
Corporation, a Delaware corporation, having an office at 400 Quincy Street,
Hancock, Michigan 49930 (the "Purchaser") and D&N Bank, a federally chartered
savings bank, having an office at 400 Quincy Street, Hancock, Michigan 49930
(the "Seller").
W I T N E S S E T H:
WHEREAS, the Seller desires to sell to the Purchaser, and the
Purchaser desires to purchase from the Seller, certain conventional residential
first mortgage loans (the "Mortgage Loans") on a servicing retained basis as
described herein, and which shall be delivered as whole loans on the Closing
Date, as defined below;
WHEREAS, each Mortgage Loan is secured by a mortgage, deed of trust or
other security instrument creating a first lien on a residential dwelling
located in the jurisdiction indicated on the Mortgage Loan Schedule; and
WHEREAS, the Purchaser and the Seller wish to prescribe the manner of
the conveyance, servicing and control of the Mortgage Loans.
NOW, THEREFORE, in consideration of the promises and mutual agreements
set forth herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Purchaser and the Seller
agree as follows:
SECTION 1. DEFINITIONS.
For purposes of this Agreement the following capitalized terms shall
have the respective meanings set forth below. Other capitalized terms used in
this Agreement and not defined herein shall have the respective meanings set
forth in the Servicing Agreement attached as Exhibit B hereto.
"Accepted Servicing Practices" means, with respect to any Mortgage
Loan, those mortgage servicing practices of prudent mortgage lending
institutions which service mortgage loans of the same type as such Mortgage
Loan in the jurisdiction where the related Mortgaged Property is located.
"Act" means The National Housing Act, as amended from time to time.
"Adjustable Rate Mortgage Loan" means any individual Mortgage Loan
purchased pursuant to this Agreement the interest rate of which adjusts
periodically.
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect
to any specified Person means the power to direct
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the management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement" means this Mortgage Loan Purchase and Warranties Agreement
and all amendments hereof and supplements hereto.
"ALTA" means The American Land Title Association or any successor
thereto.
"Ancillary Income" means all late charges, assumption fees, escrow
account benefits, reinstatement fees, and similar types of fees arising from or
in connection with any Mortgage, to the extent not otherwise payable to the
Mortgagor under applicable law or pursuant to the terms of the related Mortgage
Note.
"Appraised Value" means the value set forth in an appraisal made in
connection with the origination of the related Mortgage Loan as the value of
the Mortgaged Property.
"Assignment and Assumption Agreement" has the meaning set forth in
Section 19.
"Assignment of Mortgage" means an assignment of the Mortgage delivered
in blank, notice of transfer or equivalent instrument in recordable form,
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect the sale of the Mortgage to the Purchaser.
"Business Day" means any day other than (i) a Saturday or Sunday, or
(ii) a day on which banking and savings and loan institutions, in the State of
Michigan are authorized or obligated by law or executive order to be closed.
"Closing Date" means [_________], 1997, or such other date as is
mutually agreed upon by the parties.
"Code" means Internal Revenue Code of 1986, as amended.
"Condemnation Proceeds" means all awards or settlements in respect of
a Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
"Conventional Loan" means a conventional residential first lien
mortgage loan which is a Mortgage Loan.
"Convertible Mortgage Loan" means any individual Mortgage Loan
purchased pursuant to this Agreement which contains a provision whereby the
Mortgagor is permitted to convert the Mortgage Loan to a fixed rate Mortgage
Loan in accordance with the terms of the related Mortgage Note.
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"Custodial Account" means the separate trust account created and
maintained pursuant to Section 2.04 of the Servicing Agreement.
"Cut-off Date" means [__________], 1997.
"Deleted Mortgage Loan" means a Mortgage Loan that is repurchased or
replaced with a Qualified Substitute Mortgage Loan by the Seller in accordance
with the terms of this Agreement.
"Determination Date" means the earlier of two (2) Business Days prior
to the related Remittance Date or the 15th day of the month in which the
related Remittance Date occurs.
"Due Date" means the day of the month on which the Monthly Payment is
due on a Mortgage Loan, exclusive of any days of grace.
"Escrow Account" means the separate account created and maintained
pursuant to Section 2.06 of the Servicing Agreement with respect to each
Mortgage Loan, as specified in the Servicing Agreement.
"Escrow Payments" means, with respect to any Mortgage Loan, the
amounts constituting taxes, assessments, water rates, sewer rents, municipal
charges, mortgage insurance premiums, fire and hazard insurance premiums,
condominium charges, and any other payments required to be escrowed by the
Mortgagor with the mortgagee pursuant to the Mortgage or any other document.
"FHA" means the Federal Housing Administration, an agency within the
United States Department of Housing and Urban Development, or any successor
thereto and including the Federal Housing Commissioner and the Secretary of
Housing and Urban Development where appropriate under the FHA Regulations.
"FHLMC" means the Federal Home Loan Mortgage Corporation, or any
successor thereto.
"FNMA" means the Federal National Mortgage Association, or any
successor thereto.
"Gross Margin" means, with respect to each Adjustable Rate Mortgage
Loan, the fixed percentage amount set forth in the related Mortgage Note which
amount is added to the Index in accordance with the terms of the related
Mortgage Note to determine on each Interest Rate Adjustment Date the Mortgage
Interest Rate for such Mortgage Loan.
"HUD" means the Department of Housing and Urban Development, or any
federal agency or official thereof which may from time to time succeed to the
functions thereof with regard to FHA mortgage insurance. The term "HUD," for
purposes of this Agreement, is also deemed to include subdivisions thereof such
as the FHA and Government National Mortgage Association.
"Index" means, with respect to each Interest Rate Adjustment Date of
any Adjustable Rate Mortgage Loan sold pursuant to this Agreement, the weekly
average yield on United States
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Treasury securities adjusted to a constant maturity of one year, as made
available by the Federal Reserve Board.
"Insurance Proceeds" means, with respect to each Mortgage Loan,
proceeds of insurance policies insuring the Mortgage Loan or the related
Mortgaged Property.
"Interest Rate Adjustment Date" means, with respect to each Adjustable
Rate Mortgage Loan, the date, specified in the related Mortgage Note and the
Mortgage Loan Schedule, on which the Mortgage Interest Rate is adjusted.
"Lifetime Rate Cap" means the provision of each Mortgage Note related
to an Adjustable Rate Mortgage Loan which provides for an absolute maximum
Mortgage Interest Rate thereunder. The Mortgage Interest Rate during the terms
of each Adjustable Rate Mortgage Loan shall not at any time exceed the amount
per annum set forth on Exhibit H hereto.
"Liquidation Proceeds" means cash received in connection with the
liquidation of a defaulted Mortgage Loan, whether through the sale or
assignment of such Mortgage Loan, trustee's sale, foreclosure sale or
otherwise, or the sale of the related Mortgaged Property if the Mortgaged
Property is acquired in satisfaction of the Mortgage Loan.
"Loan-to-Value Ratio" or "LTV" means, with respect to any Mortgage
Loan, the ratio (expressed as a percentage) of the original principal amount of
the Mortgage Loan to the lesser of (a) the Appraised Value of the Mortgaged
Property at origination and (b) if the Mortgage Loan was made to finance the
acquisition of the related Mortgaged Property, the purchase price of the
Mortgaged Property.
"Monthly Payment" means the scheduled monthly payment of principal and
interest on a Mortgage Loan.
"Mortgage" means the mortgage, deed of trust or other instrument
securing a Mortgage Note, which creates a first lien on an unsubordinated
estate in fee simple in real property securing the Mortgage Note.
"Mortgage File" means the items pertaining to a particular Mortgage
Loan referred to in Exhibit A annexed hereto, and any additional documents
required to be added to the Mortgage File pursuant to this Agreement.
"Mortgage Interest Rate" means the annual rate of interest borne on a
Mortgage Note, which, in the case of an Adjustable Rate Mortgage Loan, shall be
adjusted from time to time, with respect to each Mortgage Loan.
"Mortgage Interest Rate Cap" means, with respect to each Adjustable
Rate Mortgage Loan, the limit on each Mortgage Interest Rate adjustment as set
forth in the related Mortgage Note.
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"Mortgage Loan" means an individual Mortgage Loan which is the subject
of this Agreement, each Mortgage Loan originally sold and subject to this
Agreement being identified on the applicable Mortgage Loan Schedule, which
Mortgage Loan includes without limitation the Mortgage File, the Monthly
Payments, Principal Prepayments, Liquidation Proceeds, Condemnation Proceeds,
Insurance Proceeds, and all other rights, benefits, proceeds and obligations
arising from or in connection with such Mortgage Loan, excluding replaced or
repurchased mortgage loans.
"Mortgage Loan Documents" means, with respect to each Mortgage Loan,
the following documents pertaining to such Mortgage Loan:
a. The original Mortgage Note (or, with respect to the
Mortgage Loan listed on Schedule I to Exhibit A
hereto, a lost note affidavit, executed by an officer
of the Seller, with a copy of the original note
attached thereto) bearing all intervening
endorsements, endorsed "Pay to the order of
______________ without recourse" and signed in the
name of the Seller by an authorized officer. To the
extent that there is no room on the face of the
Mortgage Notes for endorsements, the endorsement may
be contained on an allonge, if state law so allows.
If the Mortgage Loan was acquired by the Seller in a
merger, the endorsement must be by "[Seller],
successor by merger to [name of predecessor]". If
the Mortgage Loan was acquired or originated by the
Seller while doing business under another name, the
endorsement must be by "[Seller], formerly known as
[previous name]"; and
b. The original Assignment of Mortgage for each Mortgage
Loan in form and substance acceptable for recording
endorsed "Pay to the order of _____________" and
signed in the name of the Seller. If the Mortgage
Loan was acquired by the Seller in a merger, the
Assignment of Mortgage must be made by "[Seller],
successor by merger to [name of predecessor]". If
the Mortgage Loan was acquired or originated by the
Seller while doing business under another name, the
Assignment of Mortgage must be by "[Seller], formerly
known as [previous name]". With respect to Co-op
Loans, the Assignment of Mortgage shall include an
assignment of Security Instruments.
c. The original of any guarantee executed in connection
with the Mortgage Note.
d. The original Mortgage, with evidence of recording
thereon. If in connection with any Mortgage Loan,
the Seller cannot deliver or cause to be delivered
the original Mortgage with evidence of recording
thereon on or prior to the Closing Date because of a
delay caused by the public recording office where
such Mortgage has been delivered for recordation, a
photocopy of such Mortgage certified by the Seller to
be true and correct
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will be delivered; if such Mortgage has been lost or
if such public recording office retains the original
recorded Mortgage, the Seller shall deliver or cause
to be delivered to the Purchaser, a photocopy of such
Mortgage, certified by such public recording office
to be a true and complete copy of the original
recorded Mortgage.
e. The originals of all assumption, modification,
consolidation or extension agreements, if any, with
evidence of recording thereon or certified copies of
such documents if the originals thereof are
unavailable.
f. Originals of all intervening assignments of the
Mortgage with evidence of recording thereon, if such
intervening assignment has been recorded.
g. The original mortgagee policy of title insurance or,
in the event such original title policy is
unavailable, a certified true copy of the related
policy binder or commitment for title certified to be
true and complete by the title insurance company.
h. Any security agreement, chattel mortgage or
equivalent executed in connection with the Mortgage.
i. For Mortgage Loans with original LTV's greater than
85%, evidence of a Primary Insurance Policy.
"Mortgage Loan Schedule" means the schedule of
Mortgage Loans attached hereto as Exhibit H setting
forth at least the following information with respect
to each Mortgage Loan: (1) the Seller's Mortgage Loan
identifying number; (2) the Mortgagor's name; (3) the
street address of the Mortgaged Property including
the city, state and zip code; (4) a code indicating
whether the Mortgaged Property is owner occupied,
second home or investor owned; (5) the type of
residential units constituting the Mortgaged
Property; (6) the original months to maturity; (7)
the remaining months to maturity from the Cut-off
Date, based on the original amortization schedule,
and, if different, the maturity expressed in the same
manner but based on the actual amortization schedule;
(8) the Loan-to-Value Ratio at origination; (9) the
Mortgage Interest Rate as of the Cut-off Date; (10)
the stated maturity date; (11) the amount of the
Monthly Payment as of the Cut-off Date; (12) the
original principal amount of the Mortgage Loan; (13)
the principal balance of the Mortgage Loan as of the
close of business on the Cut-off Date, after
deduction of payments of principal due on or before
the Cut-off Date whether or not collected; (14) a
code indicating the purpose of the loan (i.e.,
purchase, rate and term refinance, equity take-out
refinance); (15) a code indicating the documentation
style (i.e. full, alternative or reduced); (16) a
code indicating whether the Mortgage Loan is a
Convertible Mortgage Loan; (17) the number of times
during the 12 month period preceding the Closing Date
that any Monthly Payment has been received thirty or
more days after
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its Due Date; (18) the type of Mortgage Loan product,
if any; (19) the first payment Due Date; (19) the
initial Mortgage Interest Rate; (20) the amount of
the first Monthly Payment; (21) the name of any
Qualified Insurer with respect to a PMI Policy; and
(22) the Servicing Fee Rate. With respect to any
Adjustable Rate Mortgage Loan, (1) the Interest Rate
Adjustment Dates; (2) the Gross Margin; (3) the
Lifetime Rate Cap; (4) any Periodic Rate Caps; (5)
any minimum interest rate, if other than the Gross
Margin; (6) the first Rate Adjustment Date after the
Cut-off Date; and (8) the name of the applicable
Index, in each case, under the terms of the Mortgage
Note. With respect to the Mortgage Loans in the
aggregate, the Mortgage Loan Schedule shall set forth
the following information, as of the Cut-off Date:
(1) the number of Mortgage Loans; (2) the current
aggregate outstanding principal balance of the
Mortgage Loans; (3) the weighted average Mortgage
Interest Rate of the Mortgage Loans; and (4) the
weighted average maturity of the Mortgage Loans.
"Mortgage Note" means the note or other evidence of
the indebtedness of a Mortgagor secured by a
Mortgage.
"Mortgaged Property" means the real property securing repayment of the
debt evidenced by a Mortgage Note.
"Mortgagor" means the obligor on a Mortgage Note.
"Officer's Certificate" means a certificate signed by the Chairman of
the Board or the Vice Chairman of the Board or a President or a Vice President
and by the Treasurer or the Secretary or one of the Assistant Treasurers or
Assistant Secretaries of the Seller, as the case may be, and delivered to the
Purchaser as required by this Agreement.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Seller, reasonably acceptable to the Purchaser.
"Periodic Rate Cap" means the provision of each Mortgage Note related
to each Adjustable Rate Mortgage Loan which provides for an absolute maximum
amount by which the Mortgage Interest Rate therein may increase or decrease on
an Interest Rate Adjustment Date above or below the Mortgage Interest Rate
previously in effect. The Periodic Rate Cap for each Adjustable Rate Mortgage
Loan is the rate set forth on Exhibit H hereto.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, limited liability company,
unincorporated organization, government or any agency or political subdivision
thereof.
"PMI Policy" or "Primary Insurance Policy" means a policy of primary
mortgage guaranty insurance issued by a Qualified Insurer.
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"Prime Rate" means the prime rate announced to be in effect from time
to time, as published as the average rate in The Wall Street Journal (Chicago
edition).
"Principal Prepayment" means any payment or other recovery of
principal on a Mortgage Loan which is received in advance of its scheduled Due
Date, including any prepayment penalty or premium thereon and which is not
accompanied by an amount of interest representing scheduled interest due on any
date or dates in any month or months subsequent to the month of prepayment.
"Purchase Price" means the price paid on the Closing Date by the
Purchaser to the Seller in exchange for the Mortgage Loans purchased on the
Closing Date as set forth in Section 4 of this Agreement.
"Purchaser" means D&N Capital Corporation or its successor in interest
or assigns or any successor to the Purchaser under this Agreement as herein
provided.
"Qualified Appraiser" means an appraiser who had no interest, direct
or indirect in the Mortgaged Property or in any loan made on the security
thereof, and whose compensation is not affected by the approval or disapproval
of the Mortgage Loan, and such appraiser and the appraisal made by such
appraiser both satisfy the requirements of Title XI of the Federal Institutions
Reform, Recovery, and Enforcement Act of 1989 and the regulations promulgated
thereunder, all as in effect on the date the Mortgage Loan was originated.
"Qualified Insurer" means an insurance company duly qualified as such
under the laws of the states in which the Mortgaged Properties are located,
duly authorized and licensed in such states to transact the applicable
insurance business and to write the insurance provided, approved as an insurer
by FNMA and FHLMC with respect to primary mortgage insurance and, in addition,
in the two highest rating categories by Best's with respect to hazard and flood
insurance.
"Qualified Substitute Mortgage Loan" means a mortgage loan eligible to
be substituted by the Seller for a Deleted Mortgage Loan which must, on the
date of such substitution, (i) have an outstanding principal balance, after
deduction of all scheduled payments due in the month of substitution (or in the
case of a substitution of more than one mortgage loan for a Deleted Mortgage
Loan, an aggregate principal balance), not in excess of the outstanding
principal balance of the Deleted Mortgage Loan (the amount of any shortfall
will be deposited in the Custodial Account by the Seller in the month of
substitution); (ii) have a Mortgage Interest Rate not less than and not more
than 1.00% greater than the Mortgage Interest Rate of the Deleted Mortgage
Loan; (iii) have a remaining term to maturity not greater than and not more
than one year less than that of the Deleted Mortgage Loan (iv) be of the same
type as the Deleted Mortgage Loan (i.e., Mortgage Loan with the same Mortgage
Interest Rate Caps or fixed rate); and (v) comply with each representation and
warranty (respecting individual Mortgage Loans) set forth in Section 8.02
hereof.
"Remittance Date" means the date specified in the Servicing Agreement
(with respect to each Mortgage Loan, as specified therein).
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"Repurchase Price" means, with respect to any Mortgage Loan, a price
equal to (i) the unpaid principal balance of such Mortgage Loan plus (ii)
interest on such unpaid principal balance of such Mortgage Loan at the Mortgage
Interest Rate from the last date through which interest has been paid and
distributed to the Purchaser to the date of repurchase, less amounts received
or advanced, if any, by the Seller in respect of such repurchased Mortgage
Loan.
"RESPA" means Real Estate Settlement Procedures Act, as amended from
time to time.
"Seller" means D&N Bank, its successors in interest and assigns.
"Servicing Agreement" means the agreement, attached as Exhibit B
hereto, to be entered into by the Purchaser and the Seller, as servicer,
providing for the Seller to service the Mortgage Loans as specified by the
Servicing Agreement.
"Servicing Fee" means, with respect to each Mortgage Loan, subject to
the Servicing Agreement, the amount of the annual fee the Purchaser shall pay
to the Seller, which shall for a period of one full month be equal to
one-twelfth of the product of (a) the Servicing Fee Rate and (b) the
outstanding principal balance of such Mortgage Loan. Such fee shall be payable
monthly, and shall be pro rated for any portion of a month during which the
Mortgage Loan is serviced by the Seller under the Servicing Agreement. The
obligation of the Purchaser to pay the Servicing Fee is limited to, and the
Servicing Fee is payable solely from, the interest portion (including
recoveries with respect to interest from Liquidation Proceeds, to the extent
permitted by this Agreement) of such Monthly Payment collected by the Seller,
or as otherwise provided under this Agreement. In addition to the Servicing
Fee, the Seller shall be entitled to retain Ancillary Income.
"Servicing Fee Rate" means, with respect to each Mortgage Loan, the
rate specified in the Mortgage Loan Schedule with respect to such Mortgage
Loan.
"Servicing File" means with respect to each Mortgage Loan, the file
retained by the Seller during the period in which the Seller is acting as
servicer pursuant to the Servicing Agreement consisting of originals of all
documents in the Mortgage File which are not delivered to the Purchaser or its
designee and copies of the Mortgage Loan Documents.
"Stated Principal Balance" means as to each Mortgage Loan, (i) the
principal balance of the Mortgage Loan at the Cut-off Date after giving effect
to payments of principal due on or before such date, whether or not received,
minus (ii) all amounts previously received by the Purchaser with respect to the
related Mortgage Loan representing payments or recoveries of principal or
advances in lieu thereof.
SECTION 2. AGREEMENT TO PURCHASE.
The Seller agrees to sell and the Purchaser agrees to purchase
Mortgage Loans having an aggregate principal balance on the Cut-off Date in an
amount equal to $[__________], or in such
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other amount as agreed by the Purchaser and the Seller as evidenced by the
actual aggregate principal balance of the Mortgage Loans accepted by the
Purchaser on the Closing Date.
[SECTION 3. RESERVED.]
SECTION 4. PURCHASE PRICE.
The Purchase Price for the Mortgage Loans listed on the Mortgage Loan
Schedule shall be $[__________,] or in such other amount as agreed by the
Purchaser and the Seller as evidenced by the actual aggregate principal balance
of the Mortgage Loans accepted by the Purchaser on the Closing Date. The
initial principal amount of the Mortgage Loans shall be the aggregate principal
balance of the Mortgage Loans, so computed as of the Cut-off Date, after
application of scheduled payments of principal due on or before the Cut-off
Date whether or not collected.
In addition to the Purchase Price as described above, the Purchaser
shall pay to the Seller, at closing, accrued interest on the initial principal
amount of the related Mortgage Loans at the weighted average Mortgage Interest
Rate of those Mortgage Loans, minus any amounts attributable to Servicing Fees
as provided in the Servicing Agreement from the Cut-off Date through the day
prior to the Closing Date, inclusive.
The Purchase Price plus accrued interest as set forth in the preceding
paragraph shall be paid on the Closing Date by wire transfer of immediately
available funds.
The Purchaser shall be entitled to (l) all scheduled principal due
after the Cut-off Date, (2) all other recoveries of principal collected on or
after the Cut-off Date (provided, however, that all scheduled payments of
principal due on or before the Cut-off Date and collected after the Cut-off
Date shall belong to the Seller), and (3) all payments of interest on the
Mortgage Loans net of applicable Servicing Fees collected on or after the
Cut-off Date (minus that portion of any such payment which is allocable to the
period prior to the Cut-off Date). The outstanding principal balance of each
Mortgage Loan as of the Cut-off Date is determined after application of
payments of principal due on or before the Cut-off Date whether or not
collected, together with any unscheduled principal prepayments collected prior
to the Cut-off Date; provided, however, that payments of scheduled principal
and interest prepaid for a Due Date beyond the Cut-off Date shall not be
applied to the principal balance as of the Cut-off Date. Such prepaid amounts
shall be the property of the Purchaser. Any such prepaid amounts shall be
deposited into the Custodial Account, which account is established for the
benefit of the Purchaser for subsequent remittance to the Purchaser.
SECTION 5. EXAMINATION OF MORTGAGE FILES.
Prior to the date hereof, the Seller has (a) delivered to the
Purchaser or its designee in escrow, for examination with respect to each
Mortgage Loan to be purchased, the related Mortgage File, including a copy of
the Assignment of Mortgage, pertaining to each Mortgage Loan, or (b) made the
related Mortgage File available to the Purchaser for examination at the
Seller's offices or such other location as shall otherwise be agreed upon by
the Purchaser and the
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Seller. The fact that the Purchaser or its designee has conducted or has
failed to conduct any partial or complete examination of the Mortgage Files
shall not affect the Purchaser's (or any of its successor's) rights to demand
repurchase, substitution or other relief as provided herein.
SECTION 6. CONVEYANCE FROM SELLER TO PURCHASER.
SUBSECTION 6.01. CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF
SERVICING FILES.
The Seller hereby agrees to sell, transfer, assign, set over and
convey to the Purchaser on the Closing Date, without recourse, but subject to
the terms of this Agreement, all right, title and interest of the Seller in and
to the Mortgage Loans and the Mortgage Files and all rights and obligations
arising under the documents contained therein. The Servicing File shall be
retained by the Seller in accordance with the terms of the Servicing Agreement
and, as provided therein, shall be appropriately identified in the Seller's
computer system and/or books and records, as appropriate, to clearly reflect
the sale of the related Mortgage Loan to the Purchaser.
SUBSECTION 6.02. BOOKS AND RECORDS.
Record title to each Mortgage Loan as of the Closing Date shall be in
the name of the Seller. Notwithstanding the foregoing, each Mortgage and
related Mortgage Note shall be possessed solely by the Purchaser or the
appropriate designee of the Purchaser, as the case may be. All rights arising
out of the Mortgage Loans including, but not limited to, all funds received by
the Seller after the Cut-off Date on or in connection with a Mortgage Loan
shall be vested in the Purchaser or one or more of its designees; provided,
however, that all funds received on or in connection with a Mortgage Loan shall
be received and held by the Seller in trust for the benefit of the Purchaser or
its designee, as the case may be, as the owner of the Mortgage Loans pursuant
to the terms of this Agreement.
The sale of each Mortgage Loan shall be reflected on the Seller's
balance sheet and other financial statements as a sale of assets by the Seller.
SUBSECTION 6.03. DELIVERY OF MORTGAGE LOAN DOCUMENTS.
The Seller shall deliver and release to the Purchaser or its designee
on the Closing Date the Mortgage Loan Documents with respect to each Mortgage
Loan set forth on the Mortgage Loan Schedule.
The Seller shall forward to the Purchaser or its designee original
documents evidencing an assumption, modification, consolidation, conversion or
extension of any Mortgage Loan entered into in accordance with this Agreement
within two (2) weeks of their execution, provided, however, that the Seller
shall provide the Purchaser or its designee with a certified true copy of any
such document submitted for recordation within two (2) weeks of its execution,
and shall promptly provide the original of any document submitted for
recordation or a copy of such document certified by the appropriate public
recording office to be a true and complete copy of the original within ninety
(90) days of its submission for recordation.
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In the event that such original or copy of any document submitted for
recordation to the appropriate public recording office is not so delivered to
the Purchaser or its designee within 90 days following the Closing Date (other
than with respect to the Assignments of Mortgage which shall be delivered to
the Purchaser or its designee in blank, and in the event that the Seller does
not cure such failure within 30 days of discovery or receipt of written
notification of such failure from the Purchaser, the related Mortgage Loan
shall, upon the request of the Purchaser, be repurchased by the Seller at the
price and in the manner specified in Subsection 8.03. The foregoing repurchase
obligation shall not apply in the event that the Seller cannot deliver, or
cause to be delivered, such original or copy of any document submitted for
recordation to the appropriate public recording office within the specified
period due to a delay caused by the recording office in the applicable
jurisdiction; provided that the Seller shall instead deliver, or cause to be
delivered, a recording receipt of such recording office or, if such recording
receipt is not available, an officer's certificate of a servicing officer of
the Seller, confirming that such documents have been accepted for recording;
provided that, upon request of the Purchaser and delivery by the Purchaser to
the Seller of a schedule of the related Mortgage Loans, the Seller shall
reissue and deliver to the Purchaser or its designee said officer's certificate
relating to the related Mortgage Loans.
The Seller shall pay all initial recording fees, if any, for the
Assignments of Mortgage and any other fees or costs in transferring all
original documents to the Purchaser or its designee. The Purchaser or its
designee shall be responsible for recording the Assignments of Mortgage and
shall be reimbursed by the Seller for the reasonable costs associated therewith
pursuant to the preceding sentence.
SECTION 7. SERVICING OF THE MORTGAGE LOANS.
The Mortgage Loans have been sold by the Seller to the Purchaser on a
servicing retained basis.
The Purchaser shall retain the Seller as independent contract servicer
of the Mortgage Loans pursuant to and in accordance with the terms and
conditions contained in the Servicing Agreement. The Purchaser and the Seller
shall execute the Servicing Agreement on the Closing Date in the form attached
hereto as Exhibit B.
Pursuant to the Servicing Agreement, the Seller shall begin servicing
the Mortgage Loans on behalf of the Purchaser and shall be entitled to the
Servicing Fee and any Ancillary Income with respect to such Mortgage Loans from
the Closing Date until the termination of the Servicing Agreement with respect
to any of the Mortgage Loans as set forth in the Servicing Agreement. The
Seller shall conduct such servicing in accordance with the terms of the
Servicing Agreement.
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SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SELLER; REMEDIES FOR BREACH.
SUBSECTION 8.01. REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER.
The Seller represents, warrants and covenants to the Purchaser that as
of the date hereof and as of the Closing Date:
(a) Due Organization and Authority; Enforceability. The
Seller is a federally chartered savings bank duly
organized and validly existing under the laws of the
United States and has all licenses necessary to carry
on its business as now being conducted and is
licensed, qualified and in good standing in each
state wherein it owns or leases any material
properties or where a Mortgaged Property is located,
if the laws of such state require licensing or
qualification in order to conduct business of the
type conducted by the Seller, and in any event the
Seller is in compliance with the laws of any such
state to the extent necessary to ensure the
enforceability of the related Mortgage Loan in
accordance with the terms of this Agreement; the
Seller has the full corporate power, authority and
legal right to hold, transfer and convey the Mortgage
Loans and to execute and deliver this Agreement and
to perform its obligations hereunder; the execution,
delivery and performance of this Agreement (including
all instruments of transfer to be delivered pursuant
to this Agreement) by the Seller and the consummation
of the transactions contemplated hereby have been
duly and validly authorized; this Agreement and all
agreements contemplated hereby have been duly
executed and delivered and constitute the valid,
legal, binding and enforceable obligations of the
Seller subject to bankruptcy laws and other similar
laws of general application affecting rights of
creditors and subject to the application of the rules
of equity, including those respecting the
availability of specific performance, none of which
will materially interfere with the realization of the
benefits provided thereunder, regardless of whether
such enforcement is sought in a proceeding in equity
or at law; and all requisite corporate action has
been taken by the Seller to make this Agreement and
all agreements contemplated hereby valid and binding
upon the Seller in accordance with their terms;
(b) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in
the ordinary course of business of the Seller, and
the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller
pursuant to this Agreement are not subject to the
bulk transfer or any similar statutory provisions in
effect in any applicable jurisdiction;
(c) No Conflicts. Neither the execution and delivery of
this Agreement, the sale of the Mortgage Loans to the
Purchaser, the consummation of the
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transactions contemplated hereby, nor the fulfillment
of or compliance with the terms and conditions of
this Agreement, will conflict with or result in a
breach of any of the terms, conditions or provisions
of the Seller's charter or by-laws or any legal
restriction or any agreement or instrument to which
the Seller is now a party or by which it is bound, or
constitute a default or result in an acceleration
under any of the foregoing, or result in the
violation of any law, rule, regulation, order,
judgment or decree to which the Seller or its
property is subject, or result in the creation or
imposition of any lien, charge or encumbrance that
would have an adverse effect upon any of its
properties pursuant to the terms of any mortgage,
contract, deed of trust or other instrument, or
impair the ability of the Purchaser to realize on the
Mortgage Loans, impair the value of the Mortgage
Loans, or impair the ability of the Purchaser to
realize the full amount of any mortgage insurance
benefits accruing pursuant to this Agreement;
(d) Ability to Perform: Solvency. The Seller does not
believe, nor does it have any reason or cause to
believe, that it cannot perform each and every
covenant contained in this Agreement. The Seller is
solvent and the sale of the Mortgage Loans will not
cause the Seller to become insolvent. The sale of
the Mortgage Loans is not undertaken with the intent
to hinder, delay or defraud any of the Seller's
creditors;
(e) No Litigation Pending. There is no action, suit,
proceeding or investigation pending or threatened
against the Seller, before any court, administrative
agency or other tribunal asserting the invalidity of
this Agreement, seeking to prevent the consummation
of any of the transactions contemplated by this
Agreement or which, either in any one instance or in
the aggregate, could result in any material adverse
change in the business, operations, financial
condition, properties or assets of the Seller, or in
any material impairment of the right or ability of
the Seller to carry on its business substantially as
now conducted, or in any material liability on the
part of the Seller, or which would draw into question
the validity of this Agreement or the Mortgage Loans
or of any action taken or to be taken in connection
with the obligations of the Seller contemplated
herein, or which would be likely to impair materially
the ability of the Seller to perform under the terms
of this Agreement;
(f) No Consent Required. No consent, approval,
authorization or order of, or registration or filing
with, or notice to any court or governmental agency
or body including HUD is required for the execution,
delivery and performance by the Seller of or
compliance by the Seller with this Agreement or the
Mortgage Loans, the delivery of a portion of the
Mortgage Files to the Purchaser or its designee or
the sale of the Mortgage Loans or the consummation of
the transactions contemplated by this
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Agreement, or if required, such approval has been
obtained prior to the Closing Date;
(g) Selection Process. The Mortgage Loans were selected
from among the outstanding one- to four-family
mortgage loans in the Seller's portfolio at the
Closing Date as to which the representations and
warranties set forth in Subsection 8.02 could be made
and such selection was not made in a manner so as to
affect adversely the interests of the Purchaser;
(h) Initial Portfolio. The aggregate characteristics of
the Mortgage Loans are as set forth under the heading
"Business and Strategy--Description of Initial
Portfolio" in the Prospectus of the Purchaser dated
[___________,] 1997;
(i) No Untrue Information. Neither this Agreement nor
any information, statement, tape, diskette, report,
form, or other document furnished or to be furnished
pursuant to this Agreement or in connection with the
transactions contemplated hereby contains or will
contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary
to make the statements contained herein or therein
not misleading; and
(j) No Brokers. The Seller has not dealt with any
broker, investment banker, agent or other person that
may be entitled to any commission or compensation in
connection with the sale of the Mortgage Loans.
SUBSECTION 8.02. REPRESENTATIONS AND WARRANTIES REGARDING INDIVIDUAL
MORTGAGE LOANS.
The Seller hereby represents and warrants to the Purchaser that, as to
each Mortgage Loan, as of the Closing Date for such Mortgage Loan:
(a) Mortgage Loans as Described. The information set
forth in the Mortgage Loan Schedule is complete, true
and correct in all material respects;
(b) Payments Current; Status. All payments required to
be made up to, but not including, the Cut-off Date
for the Mortgage Loan under the terms of the Mortgage
Note have been made and credited. No payment
required under the Mortgage Loan is delinquent nor
has any payment under the Mortgage Loan been 30 days
or more delinquent more than once within the period
falling twelve (12) months prior to the Cut-off Date.
The Mortgage Loan is not, and has not been at any
time in the preceding twelve months, (i) classified,
(ii) in nonaccrual status or (iii) renegotiated due
to the financial deterioration of the Mortgagor;
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(c) No Outstanding Charges. There are no defaults in
complying with the terms of the Mortgage, and all
taxes, governmental assessments, insurance premiums,
or water, sewer and municipal charges which
previously became due and owing have been paid, or an
escrow of funds has been established in an amount
sufficient to pay for every such item which remains
unpaid and which has been assessed but is not yet due
and payable. The Seller has not advanced funds, or
induced, solicited or knowingly received any advance
of funds by a party other than the Mortgagor,
directly or indirectly, for the payment of any amount
required under the Mortgage Loan, except for interest
accruing from the date of the Mortgage Note or date
of disbursement of the Mortgage Loan proceeds,
whichever is earlier, to the day which precedes by
one month the Due Date of the first installment of
principal and interest;
(d) Original Terms Unmodified. The terms of the Mortgage
Note and Mortgage have not been impaired, waived,
altered or modified in any respect, from the date of
origination except by a written instrument which has
been recorded, if necessary to protect the interests
of the Purchaser, and which has been delivered to the
Purchaser or its designee and the terms of which are
reflected in the Mortgage Loan Schedule, if
applicable. The substance of any such waiver,
alteration or modification has been approved by the
title insurer, if any, to the extent required by the
policy, and its terms are reflected on the Mortgage
Loan Schedule, if applicable. No Mortgagor has been
released, in whole or in part, except in connection
with an assumption agreement, which assumption
agreement is part of the Mortgage Loan File delivered
to the Purchaser or its designee and the terms of
which are reflected in the Mortgage Loan Schedule;
(e) No Defenses. The Mortgage Loan is not subject to any
right of rescission, set-off, counterclaim or
defense, including without limitation the defense of
usury, nor will the operation of any of the terms of
the Mortgage Note or the Mortgage, or the exercise of
any right thereunder, render either the Mortgage Note
or the Mortgage unenforceable, in whole or in part
and no such right of rescission, set-off,
counterclaim or defense has been asserted with
respect thereto, and no Mortgagor is now or was, at
the time of origination of the related Mortgage Loan,
a debtor in any state or Federal bankruptcy or
insolvency proceeding;
(f) Hazard Insurance. Pursuant to the terms of the
Mortgage, all buildings or other improvements upon
the Mortgaged Property are insured by a generally
acceptable insurer against loss by fire, hazards of
extended coverage and such other hazards as are set
forth in Section 2.10 of the Servicing Agreement
attached hereto as Exhibit B. If required by the
Flood Disaster Protection Act of 1973, as amended,
the Mortgage Loan is covered by a flood insurance
policy meeting the requirements of the current
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guidelines of the Federal Insurance Administration
which policy conforms to FNMA and FHLMC, as well as
all additional requirements set forth in Section 2.10
of the Servicing Agreement attached hereto as Exhibit
B. All individual insurance policies contain a
standard mortgagee clause naming the Seller and its
successors and assigns as mortgagee, and all premiums
thereon have been paid. The Mortgage for each
Mortgage Loan obligates the Mortgagor thereunder to
maintain the hazard insurance policy at the
Mortgagor's cost and expense, and on the Mortgagor's
failure to do so, authorizes the holder of the
Mortgage to obtain and maintain such insurance at
such Mortgagor's cost and expense, and to seek
reimbursement therefor from the Mortgagor. Where
required by state law or regulation, the Mortgagor
has been given an opportunity to choose the carrier
of the required hazard insurance, provided the policy
is not a "master" or "blanket" hazard insurance
policy covering a condominium, or any hazard
insurance policy covering the common facilities of a
planned unit development. The hazard insurance
policy is the valid and binding obligation of the
insurer, is in full force and effect, and will be in
full force and effect and inure to the benefit of the
Purchaser upon the consummation of the transactions
contemplated by this Agreement. The Seller has not
engaged in, and has no knowledge of the Mortgagor's
having engaged in, any act or omission which would
impair the coverage of any such policy, the benefits
of the endorsement provided for herein, or the
validity and binding effect of either including,
without limitation, no unlawful fee, commission,
kickback or other unlawful compensation or value of
any kind has been or will be received, retained or
realized by any attorney, firm or other person or
entity, and no such unlawful items have been
received, retained or realized by the Seller;
(g) Compliance with Applicable Laws. Any and all
requirements of any federal, state or local law
including, without limitation, usury,
truth-in-lending, real estate settlement procedures,
consumer credit protection, fair housing, equal
credit opportunity and disclosure laws applicable to
the Mortgage Loan have been complied with, the
consummation of the transactions contemplated hereby
will not involve the violation of any such laws or
regulations, and the Seller shall maintain in its
possession, available for the Purchaser's inspection,
and shall deliver to the Purchaser upon demand,
evidence of compliance with all such requirements;
(h) No Satisfaction of Mortgage. The Mortgage has not
been satisfied, canceled, subordinated or rescinded,
in whole or in part, and the Mortgaged Property has
not been released from the lien of the Mortgage, in
whole or in part, nor has any instrument been
executed that would effect any such release,
cancellation, subordination or rescission. The
Seller has not waived the performance by the
Mortgagor of any action, if the
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Mortgagor's failure to perform such action would
cause the Mortgage Loan to be in default, nor has the
Seller waived any default resulting from any action
or inaction by the Mortgagor;
(i) Location and Type of Mortgaged Property. The
Mortgaged Property is located in the state identified
in the Mortgage Loan Schedule and consists of a
single parcel of real property with a detached single
family residence erected thereon, or a townhouse, or
a two- to four-family dwelling, or an individual
condominium unit in a condominium project, or an
individual unit in a planned unit development,
provided, however, that any condominium unit or
planned unit development shall conform with
requirements acceptable to FNMA or FHLMC regarding
such dwellings and that no residence or dwelling is a
single parcel of real property with a cooperative
housing corporation erected thereon, a mobile home or
a manufactured dwelling. As of the date of
origination, no portion of the Mortgaged Property is
used for commercial purposes, and since the date of
origination no portion of the Mortgaged Property is
used for commercial purposes;
(j) Valid First Lien. The Mortgage is a valid,
subsisting, enforceable and perfected first lien on
the Mortgaged Property, including all buildings and
improvements on the Mortgaged Property and all
installations and mechanical, electrical, plumbing,
heating and air conditioning systems located in or
annexed to such buildings, and all additions,
alterations and replacements made at any time with
respect to the foregoing. The lien of the Mortgage
is subject only to:
(1) the lien of current real property taxes and
assessments not yet due and payable;
(2) covenants, conditions and restrictions,
rights of way, easements and other matters of
the public record as of the date of recording
acceptable to prudent mortgage lending
institutions generally and specifically
referred to in the lender's title insurance
policy delivered to the originator of the
Mortgage Loan and (a) specifically referred
to or otherwise considered in the appraisal
made for the originator of the Mortgage Loan
or (b) which do not adversely affect the
Appraised Value of the Mortgaged Property set
forth in such appraisal; and
(3) other matters to which like properties are
commonly subject which do not materially
interfere with the benefits of the security
intended to be provided by the Mortgage or
the use, enjoyment, value or marketability of
the related Mortgaged Property.
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Any security agreement related to and delivered in connection with the
Mortgage Loan establishes and creates a valid, subsisting, enforceable and
perfected first lien and first priority security interest on the property
described therein and the Seller has full right to sell and assign the same to
the Purchaser. The Mortgaged Property was not, as of the date of origination
of the Mortgage Loan, subject to a mortgage, deed of trust, deed to secure debt
or other security instrument creating a lien subordinate to the lien of the
Mortgage (except any such subordinate loan which was created in connection with
the origination of the related Mortgage Loan details of which are contained in
the related Mortgage File);
(k) Validity of Mortgage Documents. The Mortgage Note
and the Mortgage and any other agreement executed and
delivered by a Mortgagor in connection with a
Mortgage Loan are genuine, and each is the legal,
valid and binding obligation of the maker thereof
enforceable in accordance with its terms. All
parties to the Mortgage Note, the Mortgage and any
other such related agreement had legal capacity to
enter into the Mortgage Loan and to execute and
deliver the Mortgage Note, the Mortgage and any such
agreement, and the Mortgage Note, the Mortgage and
any other such related agreement have been duly and
properly executed by such parties. No fraud, error,
omission, misrepresentation, negligence or similar
occurrence with respect to a Mortgage Loan has taken
place on the part of any Person, including without
limitation, the Mortgagor, any appraiser, any builder
or developer, or any other party involved in the
origination of the Mortgage Loan. The Seller has
reviewed all of the documents constituting the
Servicing File and has made such inquiries as it
deems necessary to make and confirm the accuracy of
the representations set forth herein;
(l) Full Disbursement of Proceeds. The Mortgage Loan has
been closed and the proceeds of the Mortgage Loan
have been fully disbursed and there is no requirement
for future advances thereunder, and any and all
requirements as to completion of any on-site or
off-site improvement and as to disbursements of any
escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making or
closing the Mortgage Loan and the recording of the
Mortgage were paid, and the Mortgagor is not entitled
to any refund of any amounts paid or due under the
Mortgage Note or Mortgage;
(m) Ownership. The Seller is the sole owner of record
and holder of the Mortgage Loan and the indebtedness
evidenced by each Mortgage Note, except for the
assignments of mortgage which have been sent for
recording, and upon recordation the Seller will be
the owner of record of each Mortgage and the
indebtedness evidenced by each Mortgage Note, and
upon the sale of the Mortgage Loans to the Purchaser,
the Seller will retain the Mortgage Files or any part
thereof with respect thereto not delivered to the
Purchaser or its designee in trust only for the
purpose of servicing and supervising the servicing of
each Mortgage Loan. The Mortgage Loan is
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not assigned or pledged, and the Seller has good,
indefeasible and marketable title thereto, and has
full right to transfer and sell the Mortgage Loan to
the Purchaser free and clear of any encumbrance,
equity, participation interest, lien, pledge, charge,
claim or security interest, and has full right and
authority subject to no interest or participation of,
or agreement with, any other party, to sell and
assign each Mortgage Loan pursuant to this Agreement
and following the sale of each Mortgage Loan, the
Purchaser will own such Mortgage Loan free and clear
of any encumbrance, equity, participation interest,
lien, pledge, charge, claim or security interest.
The Seller intends to relinquish all rights to
possess, control and monitor the Mortgage Loan,
except indirectly for purposes of servicing the
Mortgage Loan as set forth in the Servicing
Agreement. After the Closing Date, the Seller will
have no right to modify or alter the terms of the
sale of the Mortgage Loan and the Seller will have no
obligation or right to repurchase the Mortgage Loan
or substitute another Mortgage Loan, except as
provided in this Agreement;
(n) Doing Business. All parties which have had any
interest in the Mortgage Loan, whether as mortgagee,
assignee, pledgee or otherwise, are (or, during the
period in which they held and disposed of such
interest, were) (1) in compliance with any and all
applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and
(2) either (i) organized under the laws of such
state, or (ii) qualified to do business in such
state, or (iii) a federal savings and loan
association, a savings bank or a national bank having
a principal office in such state, or (3) not doing
business in such state;
(o) LTV, PMI Policy. No Conventional Loan has an LTV
greater than 95%. The original LTV of each
Conventional Loan either was not more than 85% or the
excess over 80% is and will be insured as to payment
defaults by a PMI Policy until the LTV of such
Conventional Loan is reduced to 85%. All provisions
of such PMI Policy have been and are being complied
with, such policy is valid and remains in full force
and effect, and all premiums due thereunder have been
paid. No action, inaction, or event has occurred and
no state of facts exists that has, or will result in
the exclusion from, denial of, or defense to coverage
by the PMI Policy. Any Conventional Loan subject to
a PMI Policy obligates the Mortgagor thereunder to
maintain the PMI Policy and to pay all premiums and
charges in connection therewith. The Mortgage
Interest Rate for each Conventional Loan as set forth
on the Mortgage Loan Schedule is net of any such
insurance premium;
(p) Title Insurance. The Mortgage Loan is covered by an
ALTA lender's title insurance policy or other
generally acceptable form of policy or insurance
acceptable to FNMA or FHLMC and each such title
insurance policy is
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issued by a title insurer acceptable to FNMA or FHLMC
and qualified to do business in the jurisdiction
where the Mortgaged Property is located, insuring the
Seller, its successors and assigns, as to the first
priority lien of the Mortgage in the original
principal amount of the Mortgage Loan, subject only
to the exceptions contained in clauses (1), (2) and
(3) of paragraph (j) of this Subsection 8.02, and
against any loss by reason of the invalidity or
unenforceability of the lien resulting from the
provisions of the Mortgage providing for adjustment
to the Mortgage Interest Rate and Monthly Payment.
Where required by state law or regulation, the
Mortgagor has been given the opportunity to choose
the carrier of the required mortgage title insurance.
Additionally, such lender's title insurance policy
affirmatively insures ingress and egress, and against
encroachments by or upon the Mortgaged Property or
any interest therein. The Seller, its successor and
assigns, are the sole insurers of such lender's title
insurance policy, and such lender's title insurance
policy is valid and remains in full force and effect
and will be in force and effect upon the consummation
of the transactions contemplated by this Agreement.
No claims have been made under such lender's title
insurance policy, and no prior holder of the related
Mortgage, including the Seller, has done, by act or
omission, anything which would impair the coverage of
such lender's title insurance policy, including
without limitation, no unlawful fee, commission,
kickback or other unlawful compensation or value of
any kind has been or will be received, retained or
realized by any attorney, firm or other person or
entity, and no such unlawful items have been
received, retained or realized by the Seller;
(q) No Defaults. There is no default, breach, violation
or event which would permit acceleration existing
under the Mortgage or the Mortgage Note and no event
which, with the passage of time or with notice and
the expiration of any grace or cure period, would
constitute a default, breach, violation or event
which would permit acceleration, and neither the
Seller nor its predecessors have waived any default,
breach, violation or event which would permit
acceleration;
(r) No Mechanics' Liens. There are no mechanics' or
similar liens or claims which have been filed for
work, labor or material (and no rights are
outstanding that under law could give rise to such
liens) affecting the related Mortgaged Property which
are or may be liens prior to, or equal or coordinate
with, the lien of the related Mortgage;
(s) Location of Improvements; No Encroachments. All
improvements which were considered in determining the
Appraised Value of the Mortgaged Property lay wholly
within the boundaries and building restriction lines
of the Mortgaged Property, and no improvements on
adjoining properties encroach upon the Mortgaged
Property. No improvement located on or
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being part of the Mortgaged Property is in violation
of any applicable zoning law or regulation;
(t) Origination; Payment Terms. The Mortgage Loan was
originated by a mortgagee approved by the Secretary
of Housing and Urban Development pursuant to Sections
203 and 211 of the Act, a savings and loan
association, a savings bank, a commercial bank,
credit union, insurance company or similar
institution which is supervised and examined by a
federal or state authority. The documents,
instruments and agreements submitted for loan
underwriting were not falsified and contain no untrue
statement of material fact or omit to state a
material fact required to be stated therein or
necessary to make the information and statements
therein not misleading. Principal payments on the
Mortgage Loan commenced no more than sixty (60) days
after funds were disbursed in connection with the
Mortgage Loan. The Mortgage Interest Rate, as well
as the Lifetime Rate Cap and the Periodic Rate Cap if
the Mortgage Loan is an Adjustable Rate Mortgage
Loan, are as set forth on Exhibit J and/or Exhibit K
hereto. The Mortgage Note is payable on the first
day of each month in equal monthly installments of
principal and interest, which installments of
interest are subject to change if the Mortgage Loan
is an Adjustable Rate Mortgage Loan due to the
adjustments to the Mortgage Interest Rate on each
Interest Rate Adjustment Date, with interest
calculated and payable in arrears, sufficient to
amortize the Mortgage Loan fully by the stated
maturity date, over an original term of not more than
thirty years from commencement of amortization.
There is no negative amortization with respect to any
Mortgage Loan. Each Convertible Mortgage Loan
contains a provision allowing the Mortgagor to
convert the Mortgage Note from an adjustable interest
rate Mortgage Note to a fixed interest rate Mortgage
Note in accordance with the terms of the Mortgage
Note or a rider to the related Mortgage Note;
(u) Customary Provisions. The Mortgage contains
customary and enforceable provisions such as to
render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged
Property of the benefits of the security provided
thereby, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and
(ii) otherwise by judicial foreclosure. Upon default
by a Mortgagor on a Mortgage Loan and foreclosure on,
or trustee's sale of, the Mortgaged Property pursuant
to the proper procedures, the holder of the Mortgage
Loan will be able to deliver good and merchantable
title to the Mortgaged Property. There is no
homestead or other exemption available to a Mortgagor
which would interfere with the right to sell the
Mortgaged Property at a trustee's sale or the right
to foreclose the Mortgage, subject to applicable
federal and state laws and judicial precedent with
respect to bankruptcy and right of redemption or
similar law. The Mortgage contains due-on-sale
provisions
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providing for the acceleration of the payment of the
unpaid principal balance of such Mortgage Loan in the
event that all or any part of the Mortgaged Property
is sold or transferred without the prior written
consent of the Mortgagee;
(v) Conformance with Agency and Underwriting Standards.
The Mortgage Loan was underwritten in accordance with
the underwriting standards of D&N Bank (a copy of
which is attached hereto as Exhibit I), or FNMA's
underwriting standards (except that the principal
balance of certain Mortgage Loans may have exceeded
the limits of FNMA), in each case in effect at the
time the Mortgage Loan was originated. The Mortgage
Note and Mortgage are on forms acceptable to FHLMC or
FNMA, except with respect to Mortgage Loans
underwritten in accordance with the underwriting
guidelines of D&N Bank, which are on forms acceptable
to the Purchaser, in the Purchaser's sole discretion,
as evidenced by the Purchaser's purchase of the
related Mortgage Loans, and, in either case, the
Seller has not made any representations to a
Mortgagor that are inconsistent with the mortgage
instruments used. All Mortgage Loans have full asset
verification;
(w) Occupancy of the Mortgaged Property. As of the
Closing Date, the Mortgaged Property is lawfully
occupied under applicable law. All inspections,
licenses and certificates required to be made or
issued with respect to all occupied portions of the
Mortgaged Property and, with respect to the use and
occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting
certificates, have been made or obtained from the
appropriate authorities. Unless otherwise specified
on the description of characteristics for the
Mortgage Loans delivered pursuant to Section 10 on
the Closing Date in the Mortgage Loan Schedule
attached as Exhibit H hereto, the Mortgagor
represented at the time of origination of the
Mortgage Loan that the Mortgagor would occupy the
Mortgaged Property as the Mortgagor's primary
residence;
(x) No Additional Collateral. The Mortgage Note is not
and has not been secured by any collateral except the
lien of the corresponding Mortgage and the security
interest of any applicable security agreement or
chattel mortgage referred to in clause (j) above;
(y) Deeds of Trust. In the event the Mortgage
constitutes a deed of trust, a trustee, authorized
and duly qualified under applicable law to serve as
such, has been properly designated and currently so
serves and is named in the Mortgage, and no fees or
expenses are or will become payable by the Purchaser
to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the
Mortgagor;
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(z) Acceptable Investment. There are no circumstances or
conditions with respect to the Mortgage, the
Mortgaged Property, the Mortgagor, the Mortgage File
or the Mortgagor's credit standing that can
reasonably be expected to cause the Mortgage Loan to
become delinquent, or adversely affect the value or
marketability of the Mortgage Loan;
(aa) Delivery of Mortgage Documents. The Mortgage Note,
the Mortgage, the Assignment of Mortgage and any
other Mortgage Loan Documents for each Mortgage Loan
have been delivered to the Purchaser or its designee.
The Seller is in possession of a complete, true and
accurate Mortgage File in compliance with Exhibit A
hereto, except for such documents the originals of
which have been delivered to the Purchaser or its
designee;
(bb) Condominiums/Planned Unit Developments. If the
Mortgaged Property is a condominium unit or a planned
unit development, such condominium or planned unit
development project is acceptable to FNMA or FHLMC or
is located in a condominium or planned unit
development project which has received project
approval from FNMA or FHLMC;
(cc) Transfer of Mortgage Loans. The Assignment of
Mortgage with respect to each Mortgage Loan is in
recordable form and is acceptable for recording under
the laws of the jurisdiction in which the Mortgaged
Property is located;
(dd) Assumability. The Mortgage Loan Documents provide
that a related Mortgage Loan may only be assumed if
the party assuming such Mortgage Loan meets certain
credit requirements stated in the Mortgage Loan
Documents;
(ee) No Buydown Provisions; No Graduated Payments or
Contingent Interests. The Mortgage Loan does not
contain provisions pursuant to which Monthly Payments
are paid or partially paid with funds deposited in
any separate account established by the Seller, the
Mortgagor, or anyone on behalf of the Mortgagor, or
paid by any source other than the Mortgagor nor does
it contain any other similar provisions which may
constitute a "buydown" provision. The Mortgage Loan
is not a graduated payment mortgage loan and the
Mortgage Loan does not have a shared appreciation or
other contingent interest feature;
(ff) RESERVED
(gg) Mortgaged Property Undamaged; No Condemnation
Proceedings. There is no proceeding pending or
threatened for the total or partial condemnation of
the Mortgaged Property. The Mortgaged Property is
undamaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or
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other casualty so as to affect adversely the value of
the Mortgaged Property as security for the Mortgage
Loan or the use for which the premises were intended
and each Mortgaged Property is in good repair. There
have not been any condemnation proceedings with
respect to the Mortgaged Property and the Seller has
no knowledge of any such proceedings in the future;
(hh) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. The origination and collection
practices used by the Seller with respect to the
Mortgage Loan have been in all respects in compliance
with Accepted Servicing Practices, applicable laws
and regulations, and have been in all respects legal
and proper. With respect to escrow deposits and
Escrow Payments, all such payments are in the
possession of, or under the control of, the Seller
and there exist no deficiencies in connection
therewith for which customary arrangements for
repayment thereof have not been made. All Escrow
Payments have been collected in full compliance with
state and federal law and the provisions of the
related Mortgage Note and Mortgage. An escrow of
funds is not prohibited by applicable law and has
been established in an amount sufficient to pay for
every item that remains unpaid and has been assessed
but is not yet due and payable. No escrow deposits
or Escrow Payments or other charges or payments due
the Seller have been capitalized under the Mortgage
or the Mortgage Note. All Mortgage Interest Rate
adjustments to the Monthly Payment, if the Mortgage
Loan is an Adjustable Rate Mortgage Loan, have been
made in strict compliance with state and federal law
and the terms of the related Mortgage and Mortgage
Note on the related Interest Rate Adjustment Date.
With respect to each Adjustable Rate Mortgage Loan,
the Mortgage Interest Rate adjusts annually as set
forth herein. If, pursuant to the terms of the
Mortgage Note, another index was selected for
determining the Mortgage Interest Rate, the same
index was used with respect to each Mortgage Note
which required a new index to be selected, and such
selection did not conflict with the terms of the
related Mortgage Note. The Seller executed and
delivered any and all notices required under
applicable law and the terms of the related Mortgage
Note and Mortgage regarding the Mortgage Interest
Rate and the Monthly Payment adjustments. Any
interest required to be paid pursuant to state,
federal and local law has been properly paid and
credited;
(ii) Other Insurance Policies. No action, inaction or
event has occurred and no state of facts exists or
has existed that has resulted or could result in the
exclusion from, denial of, or defense to coverage
under any hazard insurance policy or PMI Policy. In
connection with the placement of any such insurance,
no commission, fee, or other compensation has been or
will be received by the Seller or by any officer,
director, or employee of the Seller or any designee
of the Seller or any corporation in which the Seller
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or any officer, director, or employee had a financial
interest at the time of placement of such insurance;
[CONFIRM]
(jj) No Violation of Environmental Laws. There is no
pending action or proceeding directly involving the
Mortgaged Property in which compliance with any
environmental law, rule or regulation is an issue;
there is no violation of any environmental law, rule
or regulation with respect to the Mortgaged Property;
and nothing further remains to be done to satisfy in
full all requirements of each such law, rule or
regulation constituting a prerequisite to use and
enjoyment of said property;
(kk) Soldiers' and Sailors' Civil Relief Act. The
Mortgagor has not notified the Seller and the Seller
has no knowledge of any relief requested or allowed
to the Mortgagor under the Soldiers' and Sailors'
Civil Relief Act of 1940;
(ll) Appraisal. The Mortgage File contains an appraisal
of the related Mortgaged Property signed prior to the
approval of the Mortgage Loan application by a
Qualified Appraiser who had no interest, direct or
indirect in the Mortgaged Property or in any loan
made on the security thereof, and whose compensation
is not affected by the approval or disapproval of the
Mortgage Loan, and the appraisal and appraiser both
satisfy the requirements of FNMA or FHLMC and Title
XI of the Federal Institutions Reform, Recovery, and
Enforcement Act of 1989 and the regulations
promulgated thereunder, all as in effect on the date
the Mortgage Loan was originated;
(mm) Disclosure Materials. The Mortgagor has received all
disclosure materials required by and the Seller
complied with all applicable law with respect to the
making of the Mortgage Loans;
(nn) Construction or Rehabilitation of Mortgaged Property.
No Mortgage Loan was made in connection with the
construction or rehabilitation of a Mortgaged
Property or facilitating the trade-in or exchange of
a Mortgaged Property;
(oo) Value of Mortgaged Property. The Seller has no
knowledge of any circumstances existing that could
reasonably be expected to adversely affect the value
or the marketability of any Mortgaged Property or
Mortgage Loan;
(pp) No Defense to Insurance Coverage. No action has been
taken or failed to be taken, no event has occurred
and no state of facts exists or has existed on or
prior to the Closing Date (whether or not known to
the Seller on or prior to such date) which has
resulted or will result in an exclusion from, denial
of, or defense to coverage under any primary mortgage
insurance
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policy (including, without limitation, any
exclusions, denials or defenses which would limit or
reduce the availability of the timely payment of the
full amount of the loss otherwise due thereunder to
the insured) whether arising out of actions,
representations, errors, omissions, negligence, or
fraud of the Seller, the related Mortgagor or any
party involved in the application for such coverage,
including the appraisal, plans and specifications and
other exhibits or documents submitted therewith to
the insurer under such insurance policy, or for any
other reason under such coverage, but not including
the failure of such insurer to pay by reason of such
insurer's breach of such insurance policy or such
insurer's financial inability to pay;
(qq) Escrow Analysis. With respect to each Mortgage,
Seller has within the last twelve months (unless such
Mortgage was originated within such twelve month
period) analyzed the required Escrow Payments for
each Mortgage and adjusted the amount of such
payments so that, assuming all required payments are
timely made, any deficiency will be eliminated on or
before the first anniversary of such analysis, or any
overage will be refunded to the Mortgagor, in
accordance with RESPA and any other applicable law;
and
(rr) Prior Servicing. Each Mortgage Loan has been
serviced in all material respects in compliance with
Accepted Servicing Practices; provided that, in the
event of any breach of the representation and
warranty set forth in this Subsection (rr), the
Seller shall not be required to repurchase any such
Mortgage Loan unless such breach had, and continues
to have, a material and adverse effect on the value
of the related Mortgage Loan or the interest of the
Purchaser therein.
SUBSECTION 8.03. REMEDIES FOR BREACH OF REPRESENTATIONS AND
WARRANTIES.
It is understood and agreed that the representations and warranties
set forth in Subsections 8.01 and 8.02 shall survive the sale of the Mortgage
Loans to the Purchaser and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note
or Assignment of Mortgage or the examination or failure to examine any Mortgage
File. Upon discovery by either the Seller or the Purchaser of a breach of any
of the foregoing representations and warranties which materially and adversely
affects the value of the Mortgage Loans or the interest of the Purchaser (or
which materially and adversely affects the interests of the Purchaser in the
related Mortgage Loan in the case of a representation and warranty relating to
a particular Mortgage Loan), the party discovering such breach shall give
prompt written notice to the other.
The Seller, promptly after discovery of a breach of any representation
or warranty, shall notify the Purchaser of such breach and the details thereof.
Within sixty (60) days of the earlier of (i) notice by the Seller pursuant to
the immediately preceding sentence or (ii) notice by the
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Purchaser to the Seller of any breach of a representation or warranty with
respect to a Mortgage Loan, the Seller shall use its best efforts promptly to
cure such breach in all material respects and, if such breach cannot be cured,
the Seller shall, at the Purchaser's option and subject to Subsection 8.04,
repurchase such Mortgage Loan at the Repurchase Price, unless the Seller elects
to substitute a Qualified Substitute Mortgage Loan for such Mortgage Loan
pursuant to this Subsection. In the event that a breach shall involve any
representation or warranty set forth in Subsection 8.01, and such breach cannot
be cured within sixty (60) days of the earlier of either discovery by or notice
to the Seller of such breach, all of the Mortgage Loans shall, at the
Purchaser's option and subject to Subsection 8.04, be repurchased by the Seller
at the Repurchase Price. However, if the breach shall involve a representation
or warranty set forth in Subsection 8.02 and the Seller discovers or receives
notice of any such breach within two (2) years of the Closing Date, the Seller
may, at the Seller's option and provided that the Seller has a Qualified
Substitute Mortgage Loan, rather than repurchase the Mortgage Loan as provided
above, remove such Mortgage Loan (a "Deleted Mortgage Loan") and substitute in
its place a Qualified Substitute Mortgage Loan or Loans, provided that any such
substitution shall be effected not later than two (2) years after the Closing
Date. If the Seller has no Qualified Substitute Mortgage Loan, it shall
repurchase the deficient Mortgage Loan. Any repurchase of a Mortgage Loan or
Loans pursuant to the foregoing provisions of this Subsection 8.03 shall be
accomplished by either (a) if the Servicing Agreement is in effect, deposit in
the Custodial Account of the amount of the Repurchase Price for payment to the
Purchaser on the next scheduled Remittance Date, after deducting therefrom any
amount received in respect of such repurchased Mortgage Loan or Loans and being
held in the Custodial Account for future distribution or (b) if the Servicing
Agreement is no longer in effect, by direct remittance of the Repurchase Price
to the Purchaser or its designee in accordance with the Purchaser's
instructions.
At the time of repurchase or substitution, the Purchaser and the
Seller shall arrange for the reassignment of the Deleted Mortgage Loan to the
Seller and the delivery to the Seller of any documents held by the Purchaser or
its designee relating to the Deleted Mortgage Loan. In addition, upon any such
repurchase, all funds maintained in the Escrow Account with respect to such
Deleted Mortgage Loan shall be transferred to the Seller. In the event of a
repurchase or substitution, the Seller shall, simultaneously with such
reassignment, give written notice to the Purchaser that such repurchase or
substitution has taken place, amend the Mortgage Loan Schedule to reflect the
withdrawal of the Deleted Mortgage Loan from this Agreement, and, in the case
of substitution, identify a Qualified Substitute Mortgage Loan and amend the
Mortgage Loan Schedule to reflect the addition of such Qualified Substitute
Mortgage Loan to this Agreement. In connection with any such substitution, the
Seller shall be deemed to have made as to such Qualified Substitute Mortgage
Loan the representations and warranties set forth in this Agreement except that
all such representations and warranties set forth in this Agreement shall be
deemed made as of the date of such substitution. The Seller shall effect such
substitution by delivering to the Purchaser or its designee for such Qualified
Substitute Mortgage Loan the documents required by Subsection 6.03, with the
Mortgage Note endorsed as required by Subsection 6.03. No substitution will be
made in any calendar month after the Determination Date for such month. The
Seller shall deposit in the Custodial Account the Monthly Payment, or in the
event that the Servicing Agreement is no longer in effect remit directly to the
Purchaser or its designee in accordance with the Purchaser's instructions the
Monthly Payment less the Servicing Fee due, if
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any, on such Qualified Substitute Mortgage Loan or Loans in the month following
the date of such substitution. Monthly Payments due with respect to Qualified
Substitute Mortgage Loans in the month of substitution shall be retained by the
Seller. For the month of substitution, payments to the Purchaser shall include
the Monthly Payment due on any Deleted Mortgage Loan in the month of
substitution, and the Seller shall thereafter be entitled to retain all amounts
subsequently received by the Seller in respect of such Deleted Mortgage Loan.
For any month in which the Seller substitutes a Qualified Substitute
Mortgage Loan for a Deleted Mortgage Loan, the Seller shall determine the
amount (if any) by which the aggregate principal balance of all Qualified
Substitute Mortgage Loans as of the date of substitution is less than the
aggregate Stated Principal Balance of all Deleted Mortgage Loans (after
application of scheduled principal payments due in the month of substitution).
The amount of such shortfall shall be distributed by the Seller directly to the
Purchaser or its designee in accordance with the Purchaser's instructions
within two (2) Business Days of such substitution.
In addition to such repurchase or substitution obligation, the Seller
shall indemnify the Purchaser and hold it harmless against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and other costs and expenses resulting from any claim,
demand, defense or assertion based on or grounded upon, or resulting from, a
breach of the Seller representations and warranties contained in this
Agreement. It is understood and agreed that the obligations of the Seller set
forth in this Subsection 8.03 to cure, substitute for or repurchase a defective
Mortgage Loan and to indemnify the Purchaser as provided in this Subsection
8.03 constitute the sole remedies of the Purchaser respecting a breach of the
foregoing representations and warranties.
Any cause of action against the Seller relating to or arising out of
the breach of any representations and warranties made in Subsections 8.01 and
8.02 shall accrue as to any Mortgage Loan upon (i) discovery of such breach by
the Purchaser or notice thereof by the Seller to the Purchaser, (ii) failure by
the Seller to cure such breach or repurchase such Mortgage Loan as specified
above, and (iii) demand upon the Seller by the Purchaser for compliance with
this Agreement.
SECTION 9. CLOSING.
The closing for the purchase and sale of the Mortgage Loans shall take
place on the Closing Date. At the Purchaser's option, the closing shall be
either: by telephone, confirmed by letter or wire as the parties shall agree,
or conducted in person, at such place as the parties shall agree.
The closing for the Mortgage Loans to be purchased on the Closing Date
shall be subject to each of the following conditions:
(a) all of the representations and warranties of the
Seller under this Agreement and under the Servicing
Agreement (with respect to each Mortgage Loan, as
specified therein) shall be true and correct as of
the Closing Date and no
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event shall have occurred which, with notice or the
passage of time, would constitute a default under
this Agreement or an Event of Default under the
Servicing Agreement;
(b) the Purchaser shall have received, or the Purchaser's
attorneys shall have received in escrow, all closing
documents as specified in Section 10 of this
Agreement, in such forms as are agreed upon and
acceptable to the Purchaser, duly executed by all
signatories other than the Purchaser as required
pursuant to the terms hereof;
(c) the Seller shall have delivered and released to the
Purchaser or its designee all Mortgage Loan Documents
with respect to each Mortgage Loan; and
(d) all other terms and conditions of this Agreement
shall have been complied with.
Subject to the foregoing conditions, the Purchaser shall pay to the
Seller on the Closing Date the Purchase Price, plus accrued interest pursuant
to Section 4 of this Agreement, by wire transfer of immediately available funds
to the account designated by the Seller.
SECTION 10. CLOSING DOCUMENTS.
The closing documents for the Mortgage Loans to be purchased on the
Closing Date shall consist of fully executed originals of the following
documents:
1. this Agreement;
2. the Servicing Agreement, dated as of the Cut-off
Date, in the form of Exhibit B hereto;
3. a Custodial Account Letter Agreement or a Custodial
Account Certification, as applicable, as required
under the Servicing Agreement;
4. an Escrow Account Letter Agreement or an Escrow
Account Certification, as applicable, as required
under the Servicing Agreement;
5. an Officer's Certificate, in the form of Exhibit C
hereto, including all attachments thereto;
6. an Opinion of Counsel of the Seller/Servicer (who may
be an employee of the Seller/Servicer), in the form
of Exhibit D hereto;
7. a Security Release Certification, in the form of
Exhibit E or Exhibit F, if applicable, hereto
executed by any person, as requested by the Purchaser,
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if any of the Mortgage Loans have at any time been
subject to any security interest, pledge or
hypothecation for the benefit of such person;
8. a certificate or other evidence of merger or change
of name, signed or stamped by the applicable
regulatory authority, if any of the Mortgage
Loans were acquired by the Seller by merger or
acquired or originated by the Seller while conducting
business under a name other than its present name, if
applicable; and
9. the underwriting guidelines of D&N Bank, to be
attached hereto as Exhibit I.
The Seller shall bear the risk of loss of the closing documents until
such time as they are received by the Purchaser or its attorneys.
SECTION 11. COSTS.
The Purchaser shall pay the legal fees and expenses of its attorneys.
All other costs and expenses incurred in connection with the transfer and
delivery of the Mortgage Loans including recording fees, fees for recording
Assignments of Mortgage, fees for title policy endorsements and continuations,
if applicable, the Seller's attorney's fees, shall be paid by the Seller.
SECTION 12. MERGER OR CONSOLIDATION OF THE SELLER.
The Seller will keep in full effect its existence, rights and
franchises as a federally chartered savings bank and will obtain and preserve
its qualification to do business as a foreign corporation in each jurisdiction
in which such qualification is or shall be necessary to protect the validity
and enforceability of this Agreement, or any of the Mortgage Loans and to
perform its duties under this Agreement.
Any Person into which the Seller may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Seller shall be a party, or any Person succeeding to the business of the
Seller, shall be the successor of the Seller hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; provided, however,
that the successor or surviving Person shall have a tangible net worth of at
least $30,000,000.
SECTION 13. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST.
The sale and delivery on the Closing Date of the Mortgage Loans
described on the Mortgage Loan Schedule is mandatory from and after the date of
the execution of this Agreement, it being specifically understood and agreed
that each Mortgage Loan is unique and identifiable on the date hereof and that
an award of money damages would be insufficient to compensate the Purchaser for
the losses and damages incurred by the Purchaser (including damages to
prospective purchasers of the Mortgage Loans) in the event of the Seller's
failure to deliver (i) each of the
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Mortgage Loans or (ii) one or more Qualified Substitute Mortgage Loans or (iii)
one or more Mortgage Loans otherwise acceptable to the Purchaser on or before
the Closing Date. The Seller hereby grants to the Purchaser a lien on and a
continuing security interest in each Mortgage Loan and each document and
instrument evidencing each such Mortgage Loan to secure the performance by the
Seller of its obligations under this Agreement, and the Seller agrees that it
shall hold such Mortgage Loans in custody for the Purchaser subject to the
Purchaser's (i) right to reject any Mortgage Loan (or Qualified Substitute
Mortgage Loan) under the terms of this Agreement and to require another
Mortgage Loan (or Qualified Substitute Mortgage Loan) to be substituted
therefor, and (ii) obligation to pay the Purchase Price plus accrued interest
as set forth in Section 4 hereof for the Mortgage Loans. All rights and
remedies of the Purchaser under this Agreement are distinct from, and
cumulative with, any other rights or remedies under this Agreement or afforded
by law or equity and all such rights and remedies may be exercised
concurrently, independently or successively.
SECTION 14. NOTICES.
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if mailed, by registered or
certified mail, return receipt requested, or, if by other means, when received
by the other party at the address as follows:
(i) if to the Seller:
D&N Bank
400 Quincy Street
Hancock, Michigan 49930
Attention: Corporate Secretary
(ii) if to the Purchaser:
D&N Capital Corporation
400 Quincy Street
Hancock, Michigan 49930
Attention: Corporate Secretary
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
SECTION 15. SEVERABILITY CLAUSE.
Any part, provision, representation or warranty of this Agreement
which is prohibited or unenforceable or is held to be void or unenforceable in
any jurisdiction shall be ineffective, as to such jurisdiction, to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as
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to any Mortgage Loan shall not invalidate or render unenforceable such
provision in any other jurisdiction. To the extent permitted by applicable
law, the parties hereto waive any provision of law which prohibits or renders
void or unenforceable any provision hereof. If the invalidity of any part,
provision, representation or warranty of this Agreement shall deprive any party
of the economic benefit intended to be conferred by this Agreement, the parties
shall negotiate, in good faith, to develop a structure the economic effect of
which is nearly as possible the same as the economic effect of this Agreement
without regard to such invalidity.
SECTION 16. COUNTERPARTS.
This Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
SECTION 17. GOVERNING LAW.
The Agreement shall be construed in accordance with the laws of the
State of Michigan and the obligations, rights and remedies of the parties
hereunder shall be determined-in accordance with the substantive laws of the
State of Michigan (without regard to conflicts of laws principles), except to
the extent preempted by Federal law.
SECTION 18. INTENTION OF THE PARTIES.
It is the intention of the parties that the Purchaser is purchasing,
and the Seller is selling the Mortgage Loans and not a debt instrument of the
Seller or another security. Accordingly, the parties hereto each intend to
treat the transaction for Federal income tax purposes as a sale by the Seller,
and a purchase by the Purchaser, of the Mortgage Loans.
SECTION 19. SUCCESSORS AND ASSIGNS; ASSIGNMENT OF
PURCHASE AGREEMENT.
This Agreement shall bind and inure to the benefit of and be
enforceable by the Seller and the Purchaser and the respective permitted
successors and assigns of the Seller and the successors and assigns of the
Purchaser. This Agreement shall not be assigned, pledged or hypothecated by
the Seller to a third party without the consent of the Purchaser. This
Agreement may be assigned, pledged or hypothecated by the Purchaser without the
prior consent of the Seller. If the Purchaser assigns all or any of its rights
as Purchaser hereunder, the assignee of the Purchaser will become the
"Purchaser" hereunder to the extent of such assignment, provided that at no
time shall there be more than fifteen (15) persons having the status of
"Purchaser" hereunder. Any assignment by the Purchaser shall be accompanied by
the delivery and execution of an Assignment and Assumption Agreement (the
"Assignment and Assumption Agreement") substantially in the form attached
hereto as Exhibit G. The Servicer shall be required to remit all amounts
required to be remitted to the Purchaser hereunder to said assignee commencing
with the first Remittance Date falling after receipt of said copy of the
related Assignment and Assumption Agreement provided
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37
that the Seller receives said copy no later than three (3) Business Days
immediately prior to the first day of the month of the related Remittance Date.
SECTION 20. WAIVERS.
No term or provision of this Agreement may be waived or modified
unless such waiver or modification is in writing and signed by the party
against whom such waiver or modification is sought to be enforced.
SECTION 21. EXHIBITS.
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
SECTION 22. GENERAL INTERPRETIVE PRINCIPLES.
For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings
assigned to them in this Agreement and include the
plural as well as the singular, and the use of any
gender herein shall be deemed to include the other
gender;
(b) accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with
generally accepted accounting principles;
(c) references herein to "Articles," "Sections,"
"Subsections," "Paragraphs," and other subdivisions
without reference to a document are to designated
Articles, Sections, Subsections, Paragraphs and other
subdivisions of this Agreement;
(d) reference to a Subsection without further reference
to a Section is a reference to such Subsection as
contained in the same Section in which the reference
appears, and this rule shall also apply to Paragraphs
and other subdivisions;
(e) the words "herein," "hereof," "hereunder" and other
words of similar import refer to this Agreement as a
whole and not to any particular provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
34
38
SECTION 23. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by any party at the closing, and (c) financial
statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
SECTION 24. FURTHER AGREEMENTS.
The Seller and the Purchaser each agree to execute and deliver to the
other such reasonable and appropriate additional documents, instruments or
agreements as may be necessary or appropriate to effectuate the purposes of
this Agreement.
SECTION 25. RECORDATION OF ASSIGNMENTS OF MORTGAGE.
To the extent permitted by applicable law, each of the Assignments of
Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or their comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected at the Seller's expense for a single recordation with respect to each
Assignment of Mortgage in the event recordation is either necessary under
applicable law or requested by the Purchaser at its sole option.
35
39
IN WITNESS WHEREOF, the parties have executed this Agreement under
seal as of the date and year first above written.
D&N CAPITAL CORPORATION
(the Purchaser)
By:___________________________________________
Name:_________________________________________
Title:________________________________________
D&N BANK
(the Seller)
By:___________________________________________
Name:_________________________________________
Title:________________________________________
36
40
EXHIBIT A
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, which shall be available for inspection by the
Purchaser and any prospective Purchaser, and which shall be delivered to the
Purchaser or its designee pursuant to Section 6.03 of the Mortgage Loan
Purchase and Warranties Agreement to which this Exhibit is attached (the
"Agreement"):
1. The original Mortgage Note (or, with respect to the Mortgage
Loan listed on Schedule I hereto, a lost note affidavit, executed by an officer
of the Seller, with a copy of the original note attached thereto) bearing all
intervening endorsements, endorsed "Pay to the order of _______, without
recourse" and signed in the name of the Seller by an authorized officer. To
the extent that there is no room on the face of the Mortgage Notes for
endorsements, the endorsement may be contained on an allonge, if state law so
allows. If the Mortgage Loan was acquired by the Seller in a merger, the
endorsement must be by "[Seller], successor by merger to [name of
predecessor]". If the Mortgage Loan was acquired or originated by the Seller
while doing business under another name, the endorsement must be by "[Seller],
formerly known as [previous name]".
2. The original of any guarantee executed in connection with the
Mortgage Note.
3. The original Mortgage, with evidence of recording thereon. If
in connection with any Mortgage Loan, the Seller cannot deliver or cause to be
delivered the original Mortgage with evidence of recording thereon on or prior
to the Closing Date because of a delay caused by the public recording office
where such Mortgage has been delivered for recordation, a photocopy of such
Mortgage certified by the Seller to be true and correct will be delivered; if
such Mortgage has been lost or if such public recording office retains the
original recorded Mortgage, the Seller shall deliver or cause to be delivered
to the Purchaser, a photocopy of such Mortgage, certified by such public
recording office to be a true and complete copy of the original recorded
Mortgage.
4. The originals of all assumption, modification, consolidation
or extension agreements, if any, with evidence of recording thereon or
certified copies of such documents if the originals thereof are unavailable.
5. The original Assignment of Mortgage for each Mortgage Loan
endorsed "Pay to the order of ____________________" and signed in the name of
the Seller by an authorized officer. If the Mortgage Loan was acquired by the
Seller in a merger, the Assignment of Mortgage must be made by "[Seller],
successor by merger to [name of predecessor]". If the Mortgage Loan was
acquired or originated by the Seller while doing business under another name,
the Assignment of Mortgage must be by "[Seller], formerly known as [previous
name]".
6. Originals of all intervening assignments of the Mortgage with
evidence of recording thereon if such intervening assignment has been recorded.
41
7. The original mortgagee policy of title insurance or, in the
event such original title policy is unavailable, a certified true copy of the
related policy binder or commitment for title certified to be true and complete
by the title insurance company.
8. Any original security agreement executed in connection with
the Mortgage.
9. The original hazard insurance policy and, if required by law,
flood insurance policy, in accordance with Section 8.02(f) of the Agreement.
10. Residential loan application.
11. Mortgage Loan closing statement.
12. Verification of employment and income.
13. Verification of acceptable evidence of source and amount of
down payment.
14. Credit report on the Mortgagor.
15. Residential appraisal report.
16. Photograph of the Mortgaged Property.
17. Survey of the Mortgaged Property, if any.
18. Copy of each instrument necessary to complete identification
of any exception set forth in the exception schedule in the title policy, i.e.,
map or plat, restrictions, easements, sewer agreements, home association
declarations, etc.
19. All required disclosure statements.
20. If available, termite report, structural engineer's report,
water potability and septic certification.
21. Sales contract.
22. Tax receipts, insurance premium receipts, ledger sheets,
insurance claim files, correspondence, current and historical computerized data
files, and all other processing, underwriting and closing papers and records
which are customarily contained in a mortgage loan file and which are required
to document the Mortgage Loan or to service the Mortgage Loan.
23. For Mortgage Loans with original LTV's greater than 85%,
evidence of a Primary Insurance Policy.
A-2
42
In the event that such original or copy of any document submitted
for recordation to the appropriate public recording office is not so delivered
to the Purchaser or its designee within 90 days following the Closing Date
(other than with respect to the Assignments of Mortgage which shall be
delivered to the Purchaser or its designee in blank), and in the event that the
Seller does not cure such failure within 30 days of discovery or receipt of
written notification of such failure from the Purchaser, the related Mortgage
Loan shall, upon the request of the Purchaser, be repurchased by the Seller at
the price and in the manner specified in Subsection 8.03 of the Agreement. The
foregoing repurchase obligation shall not apply in the event that the Seller
cannot deliver such original or copy of any document submitted for recordation
to the appropriate public recording office within the specified period due to a
delay caused by the recording office in the applicable jurisdiction; provided
that the Seller shall instead deliver a recording receipt of such recording
office or, if such recording receipt is not available, an officer's certificate
of a servicing officer of the Seller, confirming that all such documents have
been accepted for recording; provided that, upon request of the Purchaser and
delivery by the Purchaser to the Seller of a schedule of the related Mortgage
Loans, the Seller shall reissue and deliver to the Purchaser or its designee
said officer's certificate relating to the related Mortgage Loans.
A-3
43
EXHIBIT B
44
EXHIBIT C
FORM OF SELLER'S/SERVICER'S OFFICER'S CERTIFICATE
I, _____________, hereby certify that I am the duly elected [Vice]
President of D&N Bank, a federally chartered savings bank (the "Seller") and
further as follows:
1. Attached hereto as Exhibit 1 is a true, correct and complete
copy of the restated charter of the Seller which is in full
force and effect on the date hereof and which has been in
effect without amendment, waiver, rescission or modification
since [_________.]
2. Attached hereto as Exhibit 2 is a true, correct and complete
copy of the bylaws of the Seller which are in effect on the
date hereof and which have been in effect without amendment,
waiver, rescission or modification since [_________.]
3. Attached hereto as Exhibit 3 is an original certificate of due
incorporation and valid existence of the Seller issued within
ten days of the date hereof, and no event has occurred since
the date thereof which would impair such standing.
4. Attached hereto as Exhibit 4 is a true, correct and complete
copy of the corporate resolutions of the Board of Directors of
the Seller authorizing the Seller to execute and deliver each
of the Mortgage Loan Purchase and Warranties Agreements, dated
as of __________, 1997, by and between D&N Capital Corporation
(the "Purchaser") and the Seller (the "Purchase Agreement"),
to endorse the mortgage notes and execute the assignments of
mortgages by original [or facsimile] signature, and to execute
and deliver each of the Servicing Agreements dated as of
______, 1997, by and between D&N Capital Corporation (the
"Purchaser") and the Seller as Servicer (the "Servicing
Agreement") and such resolutions are in effect on the date
hereof and have been in effect without amendment, waiver,
rescission or modification since [_________.]
5. Either (i) no consent, approval, authorization or order of any
court or governmental agency or body is required for the
execution, delivery and performance by the Seller of or
compliance by the Seller with the Purchase Agreement and the
Servicing Agreement, the sale of the mortgage loans or the
consummation of the transactions contemplated by the Purchase
Agreement and the Serving Agreement; or (ii) any required
consent, approval, authorization or order has been obtained by
the Seller.
6. Neither the consummation of the transactions contemplated by,
nor the fulfillment of the terms of, the Purchase Agreement
and the Servicing Agreement conflicts or will conflict with or
results or will result in a breach of or constitutes or will
constitute a default under the charter or by-laws of the
Seller, the terms of any indenture or other agreement or
instrument to which the Seller is a party or by which it is
bound or to which it is subject, or any statute or order,
rule,
45
regulations, writ, injunction or decree of any court,
governmental authority or regulatory body to which the Seller
is subject or by which it is bound.
7. To the best of my knowledge, there is no action, suit,
proceeding or investigation pending or threatened against the
Seller which, in my judgment, either in any one instance or in
the aggregate, may result in any material adverse change in
the business, operations, financial condition, properties or
assets of the Seller or in any material impairment of the
right or ability of the Seller to carry on its business
substantially as now conducted or in any material liability on
the part of the Seller or which would draw into question the
validity of the Purchase Agreement and the Servicing Agreement
or the mortgage loans or of any action taken or to be taken in
connection with the transactions contemplated hereby, or which
would be likely to impair materially the ability of the Seller
to perform under the terms of the Purchase Agreement and the
Servicing Agreement.
8. Each person listed on Exhibit 5 attached hereto who, as an
officer or representative of the Seller, signed the Purchase
Agreement and any other document delivered prior to or on the
date hereof in connection with any purchase described in the
Purchase Agreement was, at the respective times of such
signing and delivery, and is now, a duly elected or appointed,
qualified and acting officer or representative of the Seller,
who holds the office set forth opposite his or her name on
Exhibit 5, and the signatures of such persons appearing on
such documents are their genuine signatures. The person who,
as an officer or representative of the Seller, signed the
Servicing Agreement and any other document delivered prior to
or on the date hereof in connection with any servicing duties
described in the Servicing Agreement was, at the respective
times of such signing and delivery, and is now, a duly elected
or appointed, qualified and acting officer or representative
of the Seller, who holds the office set forth beneath his or
her name on the Servicing Agreement and the signature of such
person appearing on such document is his or her genuine
signature.
9. The Seller is duly authorized to engage in the transactions
described and contemplated in the Purchase Agreement and
Servicing Agreement.
C-2
46
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Seller.
Dated:____________, 1997 By:_____________________________
Name:___________________________
Title: [VICE] President
[Seal]
I, _________________________, an [ASSISTANT] [VICE PRESIDENT] of D&N
Bank, hereby certify that _____________________ is the duly elected, qualified
and acting [Vice] President of the Seller and that the signature appearing
above is [HIS] genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:______________, 1997 By:_____________________________
Name:___________________________
Title: [ASSISTANT] [VICE PRESIDENT]
C-3
47
EXHIBIT 5
to Seller's/Servicer's Officer's Certificate
NAME TITLE SIGNATURE
48
EXHIBIT D
FORM OF OPINION OF COUNSEL TO THE SELLER/SERVICER
_________________, 1997
D&N Capital Corporation
400 Quincy Street
Hancock, Michigan 49930
Dear Sirs:
You have requested my opinion, as General Counsel to D&N Bank (the
"Seller"), with respect to certain matters in connection with the sale by the
Seller of the Mortgage Loans pursuant to that certain Mortgage Loan Purchase
and Warranties Agreement by and between the Seller and D&N Capital Corporation
(the "Purchaser"), dated as of __________, 1997 (the "Purchase Agreement")
which sale is in the form of whole loans, delivered pursuant to a Purchase
Agreement and serviced pursuant to an Servicing Agreement, dated as of
__________, 1997, by and between the Purchaser and the Seller as Servicer (the
"Servicing Agreement"). Capitalized terms not otherwise defined herein have
the meanings set forth in the Purchase Agreement and the Servicing Agreement.
I have examined the following documents:
1. the Purchase Agreement;
2. the Servicing Agreement;
3. the form of Assignment of Mortgage;
4. the form of endorsement of the Mortgage Notes; and
5. such other documents, records and papers as we have deemed
necessary and relevant as a basis for this opinion.
To the extent I have deemed necessary and proper, I have relied upon
the representations and warranties of the Seller contained in the Purchase
Agreement and the Servicing Agreement. I have assumed the authenticity of all
documents submitted to me as originals, the genuineness of all signatures, the
legal capacity of natural persons and the conformity to the originals of all
documents.
Based upon the foregoing, it is my opinion that:
1. The Seller is a federally chartered savings bank duly
organized and validly existing under the laws of the United
States and is qualified to transact business in, and is in
good standing under, the laws of Michigan.
49
2. The Seller has the power to engage in the transactions
contemplated by the Purchase Agreement and the Servicing
Agreement and all requisite power, authority and legal right
to execute and deliver the Purchase Agreement and the
Servicing Agreement and to perform and observe the terms and
conditions of such agreements.
3. The Purchase Agreement and Servicing Agreement have been duly
authorized, executed and delivered by the Seller and are
legal, valid and binding agreements enforceable in accordance
with their respective terms against the Seller, subject to
bankruptcy laws and other similar laws of general application
affecting rights of creditors and subject to the application
of the rules of equity, including those respecting the
availability of specific performance, none of which will
materially interfere with the realization of the benefits
provided thereunder or with the Purchaser's ownership of the
Mortgage Loans.
4. The Seller has been duly authorized to allow any of its
officers to execute any and all documents by original
signature in order to complete the transactions contemplated
by the Purchase Agreement and the Servicing Agreement and by
original or facsimile signature in order to execute the
endorsements to the Mortgage Notes and the Assignments of
Mortgages, and the original or facsimile signature of the
officer at the Seller executing the endorsements to the
Mortgage Notes and the Assignments of Mortgages represents the
legal and valid signature of said officer of the Seller.
5. Either (i) no consent, approval, authorization or order of any
court or governmental agency or body is required for the
execution, delivery and performance by the Seller of or
compliance by the Seller with the Purchase Agreement and the
Servicing Agreement and the sale of the Mortgage Loans or the
consummation of the transactions contemplated by the Purchase
Agreement and the Servicing Agreement or (ii) any required
consent, approval, authorization or order has been obtained
and the Servicing Agreement by the Seller.
6. Neither the consummation of the transactions contemplated by,
nor the fulfillment of the terms of, the Purchase Agreement
and the Servicing Agreement conflicts or will conflict with or
results or will result in a breach of or constitutes or will
constitute a default under the charter or by-laws of the
Seller, the terms of any indenture or other agreement or
instrument to which the Seller is a party or by which it is
bound or to which it is subject, or violates any statute or
order, rule, regulations, writ, injunction or decree of any
court, governmental authority or regulatory body to which the
Seller is subject or by which it is bound.
7. There is no action, suit, proceeding or investigation pending
or, to the best of my knowledge, threatened against the Seller
which, in my judgment, either in any one instance or in the
aggregate, may result in any material adverse change in the
business, operations, financial condition, properties or
assets of the Seller or in any
D-2
50
material impairment of the right or ability of the Seller to
carry on its business substantially as now conducted or in any
material liability on the part of the Seller or which would
draw into question the validity of the Purchase Agreement and
the Servicing Agreement or the Mortgage Loans or of any action
taken or to be taken in connection with the transactions
contemplated thereby, or which would be likely to impair
materially the ability of the Seller to perform under the
terms of the Purchase Agreement and the Servicing Agreement.
8. The sale of each Mortgage Note and Mortgage as and in the
manner contemplated by the Purchase Agreement is sufficient to
fully transfer to the Purchaser all right, title and interest
of the Seller thereto as noteholder and mortgagee.
9. The Mortgages have been duly assigned and the Mortgage Notes
have been duly endorsed as provided in the Purchase Agreement.
The Assignments of Mortgage are in recordable form, except
for the insertion of the name of the assignee, and upon the
name of the assignee being inserted, and to the best of my
knowledge, with respect to all other states, the Assignments
of Mortgage are in recordable form, except for the insertion
of the name of the assignee, and upon the name of the assignee
being inserted, are acceptable for recording under the laws of
such other states. The endorsement of the Mortgage Notes, the
delivery to the Purchaser, or its designee, of the Assignments
of Mortgage, and the delivery of the original endorsed
Mortgage Notes to the Purchaser, or its designee, are
sufficient to permit the Purchaser to avail itself of all
protection available under applicable law against the claims
of any present or future creditors of the Seller, and are
sufficient to prevent any other sale, transfer, assignment,
pledge or hypothecation of the Mortgages and the Mortgage
Notes by the Seller from being enforceable.
This opinion is given to you for your sole benefit, and no other
person or entity is entitled to rely hereon except that the purchaser or
purchasers to which you initially and directly resell the Mortgage Loans may
rely on this opinion as if it were addressed to them as of its date.
Very truly yours,
Peter L. Lemmer
General Counsel
D-3
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EXHIBIT E
______________________, 1997
Federal Home Loan Bank of ______(the "Association")
___________________________________________________
___________________________________________________
Attention: ___________________________________________________
___________________________________________________
Re: Notice of Sale and Release of Collateral
Dear Sirs:
This letter serves as notice that D&N Bank, a federally chartered
savings bank (the "Bank") has committed to sell to D&N Capital Corporation
under a Mortgage Loan Purchase and Warranties Agreement, dated as of
__________, 1997, certain mortgage loans originated or owned by the Bank. The
Bank warrants that the mortgage loans to be sold to D&N Capital Corporation are
in addition to and beyond any collateral required to secure advances made by
the Association to the Bank.
The Bank acknowledges that the mortgage loans to be sold to D&N
Capital Corporation shall not be used as additional or substitute collateral
for advances made by the Association. D&N Capital Corporation understands that
the balance of the Bank's mortgage loan portfolio may be used as collateral or
additional collateral for advances made by the Association, and confirms that
it has no interest therein.
Execution of this letter by the Association shall constitute a full
and complete release of any security interest, claim, or lien which the
Association may have against the mortgage loans to be sold to D&N Capital
Corporation.
Very truly yours,
________________________________________
By:_____________________________________
Name:___________________________________
Title:__________________________________
Date:___________________________________
Acknowledge and approved:
FEDERAL HOME LOAN BANK OF
________________________________
By:_____________________________
Name:___________________________
Title:__________________________
Date:___________________________
52
EXHIBIT F
FORM OF SECURITY RELEASE CERTIFICATION
I. RELEASE OF SECURITY INTEREST
The financial institution named below hereby relinquishes any and all
right, title and interest it may have in all Mortgage Loans to be purchased by
D&N Capital Corporation from D&N Bank pursuant to that certain Mortgage Loan
Purchase and Warranties Agreement, dated as of [__________, 1997,] and
certifies that all notes, mortgages, assignments and other documents in its
possession relating to such Mortgage Loans have been delivered and released to
D&N Bank or its designees, as of the date and time of the sale of such Mortgage
Loans to D&N Capital Corporation.
Name and Address of Financial Institution
________________________________
(name)
________________________________
(Address)
By:_____________________________
II. CERTIFICATION OF RELEASE
D&N Bank hereby certifies to D&N Capital Corporation that, as of the
date and time of the sale of the above-mentioned Mortgage Loans to D&N Capital
Corporation, the security interests in the Mortgage Loans released by the
above-named financial institution comprise all security interests relating to
or affecting any and all such Mortgage Loans. The Company warrants that, as of
such time, there are and will be no other security interests affecting any or
all of such Mortgage Loans.
_________________________________
By: _____________________________
Title: __________________________
Date:____________________________
53
EXHIBIT G
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated [__________________,]
between D&N Bank, a federally chartered savings bank ("Assignor") and D&N
Capital Corporation, a Delaware corporation ("Assignee"):
For good and valuable consideration the receipt and sufficiency of
which hereby are acknowledged, and in consideration of the mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. The Assignor hereby grants, transfers and assigns to Assignee,
as Purchaser, all of the right, title and interest of Assignor
with respect to the mortgage loans listed on Exhibit A
attached hereto (the "Mortgage Loans"), and with respect to
such Mortgage Loans, in, to and under (a) that certain
Mortgage Loan Purchase and Warranties Agreement dated
[__________,] 1997 by and between D&N Bank (the "Seller") and
D&N Capital Corporation (the "Purchase Agreement"), and (b)
that certain Servicing Agreement dated as of [_______], by and
between the Purchaser and the Seller (the "Servicing
Agreement"; the Servicing Agreement and the Purchase Agreement
are collectively referred to as the "Agreements").
2. The Assignor warrants and represents to, and covenants with,
the Assignee that:
a. the Assignor is the lawful owner of the Mortgage
Loans with the full right to transfer the Mortgage
Loans free from any and all claims and encumbrances
whatsoever;
b. the Assignor has not received notice of, and has no
knowledge of, any offsets, counterclaims or other
defenses available to the Seller with respect to the
Agreements or the Mortgage Loans;
c. the Assignor has not waived or agreed to any waiver
under, or agreed to any amendment or other
modification of, the Agreements. The Assignor has no
knowledge of, and has not received notice of, any
waivers under or amendments or other modifications
of, or assignments of rights or obligations under,
the Agreements; and
d. Neither the Assignor nor anyone acting on its behalf
has offered, transferred, pledged, sold or otherwise
disposed of the Mortgage Loans or any interest in the
Mortgage Loans, or solicited any offer to buy or
accept a transfer, pledge or other disposition of the
Mortgage Loans, or any interest in the Mortgage Loans
or otherwise approached or negotiated with respect to
the Mortgage Loans, or any interest in the Mortgage
with any person in any manner, or made any general
solicitation by means of general advertising or in
any other manner, or taken any other action which
would
54
constitute a distribution of the Mortgage Loans under the Securities Act of
1933, as amended (the "1933 Act") or which would render the disposition of the
Mortgage Loans a violation of Section 5 of the 1933 Act or require registration
pursuant thereto.
3. The Assignee warrants and represents to, and covenants with,
the Assignor and the Seller pursuant to the Agreements that:
a. the Assignee is a corporation duly organized, validly
existing and in good standing under the laws of the
jurisdiction of its incorporation, and has all
requisite corporate power and authority to acquire,
own and purchase the Mortgage Loans;
b. the Assignee has full corporate power and authority
to execute, deliver and perform under this Assignment
and Assumption Agreement, and to consummate the
transactions set forth herein. The execution,
delivery and performance of the Assignee of this
Assignment and Assumption Agreement, and the
consummation by it of the transactions contemplated
hereby, have been duly authorized by all necessary
corporate action of the Assignee. This Assignment
and Assumption Agreement has been duly executed and
delivered by the Assignee and constitutes the valid
and legally binding obligation of the Assignee
enforceable against the Assignee in accordance with
its respective terms;
c. To the best of Assignee's knowledge, no material
consent, approval, order or authorization of, or
declaration, filing or registration with, any
governmental entity is required to be obtained or
made by the Assignee in connection with the
execution, delivery or performance by the Assignee of
this Assignment and Assumption Agreement, or the
consummation by it of the transactions contemplated
hereby;
d. The Assignee agrees to be bound, as Purchaser, by all
of the terms, covenants and conditions of the
Agreements, the Mortgage Loans, and from and after
the date hereof, the Assignee assumes for the benefit
of each of the Seller and the Assignor all of the
Assignor' s obligations as Purchaser thereunder,
including, without limitation, the limitation on
assignment set forth in Section 19 of the Purchase
Agreement;
e. The Assignee understands that the Mortgage Loans have
not been registered under the 1933 Act or the
securities laws of any state;
f. The purchase price being paid by the Assignee for the
Mortgage Loans is in excess of $250,000 and will be
paid by cash remittance of the full purchase price
within sixty (60) days of the sale;
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g. The Assignee is acquiring the Mortgage Loans for
investment for its own account only and not for any
other person;
h. The Assignee considers itself a sophisticated
institutional investor having such knowledge and
experience in financial and business matters that it
is capable of evaluating the merits and risks of
investment in the Mortgage Loans;
i. The Assignee has been furnished with all information
regarding the Mortgage Loans that it has requested
from the Assignor or the Seller;
j. Neither the Assignee nor anyone acting on its behalf
has offered, transferred, pledged, sold or otherwise
disposed of the Mortgage Loans or any interest in the
Mortgage Loans, or solicited any offer to buy or
accept a transfer, pledge or other disposition of the
Mortgage Loans or any interest in the Mortgage Loans,
or otherwise approached or negotiated with respect to
the Mortgage Loans or any interest in the Mortgage
Loans with any person in any manner which would
constitute a distribution of the Mortgage Loans under
the 1933 Act or which would render the disposition of
the Mortgage Loans a violation of Section 5 of the
1933 Act or require registration pursuant thereto,
nor will it act, nor has it authorized or will it
authorize any person to act, in such manner with
respect to the Mortgage Loans; and
k. Either: (1) the Assignee is not an employee benefit
plan ("Plan") within the meaning of section 3(3) of
the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") or a plan (also "Plan") within
the meaning of section 4975(e)(1) of the Internal
Revenue Code of 1986 ("Code"), and the Assignee is
not directly or indirectly purchasing the Mortgage
Loans on behalf of, investment manager of, as named
fiduciary of, as Trustee of, or with assets of, a
Plan; or (2) the Assignee's purchase of the Mortgage
Loans will not result in a prohibited transaction
under section 406 of ERISA or section 4975 of the
Code.
4. (a) The Assignee's address for purposes of all notices
and correspondence related to the Mortgage Loans and
the Agreements is: 400 Quincy Street, Hancock,
Michigan 49930.
The Assignee's wire instructions for purposes of all remittances and
payments related to the Mortgage Loans are to be confirmed in writing.
(b) The Assignor's address for purposes for all notices
and correspondence related to the Mortgage Loans and
this Agreement is: 400 Quincy Street, Hancock,
Michigan 49930.
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5. This Agreement shall be construed in accordance with the
substantive laws of the State of Michigan (without regard to
conflicts of laws principles) and the obligations, rights and
remedies of the parties hereunder shall be determined in
accordance with such laws, except to the extent preempted by
federal law.
6. This Agreement shall inure to the benefit of the successors
and assigns of the parties hereto. This Agreement may not be
assigned by the Assignee without the express written consent
of the Assignor. Any entity into which the Assignor or
Assignee may be merged or consolidated shall, without the
requirement for any further writing, be deemed the Assignor or
Assignee, respectively, hereunder.
7. No term or provision of this Agreement may be waived or
modified unless such waiver or modification is in writing and
signed by the party against whom such waiver or modification
is sought to be enforced.
8. This Agreement shall survive the conveyance of the Mortgage
Loans and the assignment of the Agreements by the Assignor.
9. Notwithstanding the assignment of the Agreements by either the
Assignor or Assignee, this Agreement shall not be deemed
assigned by the Assignor or the Assignee unless assigned by
separate written instrument.
10. For the purpose for facilitating the execution of this
Agreement as herein provided and for other purposes, this
Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be
an original, and such counterparts shall constitute and be one
and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Assignment and
Assumption Agreement to be executed by their duly authorized officers as of the
date first above written.
- ------------------------- -----------------------------
Assignor Assignee
By:______________________ By:__________________________
Its:_____________________ Its:_________________________
Taxpayer Taxpayer
Identification No._______ Identification No.________
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