Exhibit 4.3
DRAFT: 07.11.03
AMENDED AND RESTATED
MORTGAGE SALE AGREEMENT
DATED [25TH NOVEMBER], 2003
HALIFAX PLC
as Seller and one of the Beneficiaries
AND
PERMANENT FUNDING (NO. 1) LIMITED
as Funding 1 and one of the Beneficiaries
AND
PERMANENT MORTGAGES TRUSTEE LIMITED
as Mortgages Trustee
AND
THE BANK OF NEW YORK
as Security Trustee
ALLEN & OVERY
London
CONTENTS
CLAUSE PAGE
1. Definitions and Construction......................................... 1
2. Sale and Purchase and Initial Portfolio.............................. 2
3. Initial Closing Date................................................. 3
4. Sale and Purchase of New Portfolios.................................. 4
5. Trust of Monies...................................................... 9
6. Perfection of the Assignment......................................... 9
7. Undertakings......................................................... 11
8. Warranties and Repurchase by the Seller.............................. 13
9. Other Warranties..................................................... 17
10. Further Assurance.................................................... 17
11. Consequences of Breach............................................... 17
12. Subordination........................................................ 17
13. Non-Merger........................................................... 18
14. No Agency or Partnership............................................. 18
15. Payments............................................................. 18
16. Waiver and Variation................................................. 18
17. Notices.............................................................. 18
18. Assignment........................................................... 19
19. Change of Security Trustee........................................... 19
20. Not Used............................................................. 20
21. Third Party Rights................................................... 20
22. Governing Law........................................................ 20
SCHEDULE
1. Representations and warranties....................................... 21
2. Registered Transfer.................................................. 29
3. Unregistered Transfer................................................ 30
4. Lending Criteria..................................................... 33
5. Power of Attorney in favour of Funding 1, The Mortgages trustee and
the Security Trustee................................................. 37
6. Loan Repurchase Notice............................................... 41
7. Assignment of Third Party Rights..................................... 42
8. Assignment of Halifax Mortgage Re Limited MIG Policies............... 45
9. Halifax Mortgage Re Limited MIG Policies Assignment notice........... 47
10. Insurance Endorsement................................................ 48
11. Insurance Acknowledgements........................................... 49
12. New Portfolio Notice................................................. 53
13. Appendix
Part 1 .................................................................... 55
Part 2 Standard Documentation.............................................. 56
THIS AMENDED AND RESTATED MORTGAGE SALE AGREEMENT is made on [25th November],
2003
BETWEEN:
(1) HALIFAX PLC (registered number 02367076), a public limited company
incorporated under the laws of England and Wales, whose registered office
is at Trinity Road, Halifax, West Yorkshire HX1 2RG, acting in its
capacities as the Seller and one of the Beneficiaries;
(2) PERMANENT FUNDING (NO. 1) LIMITED (registered number 4267660), a private
limited company incorporated under the laws of England and Wales, whose
registered office is at Blackwell House, Guildhall Yard, London EC2V 5AE,
acting in its capacities as Funding 1 and one of the Beneficiaries;
(3) PERMANENT MORTGAGES TRUSTEE LIMITED (registered number 83116), a private
limited company incorporated under the laws of Jersey, Channel Islands,
whose registered office is at 47 Esplanade, St Helier, Jersey JE1 0BD,
Channel Islands, acting in its capacity as the Mortgages Trustee;
(4) THE BANK OF NEW YORK, acting through its offices at 48th Floor, One
Canada Square, London E14 5AL in its capacity as Security Trustee, which
expression shall include such company and all other persons or companies
for the time being acting as security trustee (or co-trustee) pursuant to
the terms of the Funding 1 Deed of Charge.
WHEREAS:
(A) The Seller carries on the business of, inter alia, originating mortgage
loans to individual borrowers secured on residential properties in
England and Wales.
(B) The Seller has assigned to the Mortgages Trustee certain of the above
mentioned mortgage loans together with the benefit of their related
security for the same on the terms and subject to the conditions set out
in the Mortgage Sale Agreement as amended and restated by this Agreement
and from time to time, the MORTGAGE SALE AGREEMENT).
(C) The Mortgages Trustee holds all of the above mentioned assigned mortgage
loans as bare trustee for the Beneficiaries upon, with and subject to the
trusts, powers and provisions of the Mortgages Trust Deed (as amended
and/or restated by this Deed and from time to time, the MORTGAGES TRUST
DEED).
(D) The parties to the Mortgage Sale Agreement have agreed to amend and
restate the terms of the Mortgage Sale Agreement as set out herein and
the Seller may assign new portfolios of mortgage loans and their related
security to the Mortgages Trustee on such amended terms.
IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND CONSTRUCTION
1.1 The amended and restated master definitions and construction schedule
signed by, amongst others, the parties to this Deed and dated [25th
November], 2003 (as the same may be amended, varied or supplemented from
time to time with the consent of the parties to
1
this Deed) (the MASTER DEFINITIONS AND CONSTRUCTION SCHEDULE) is expressly
and specifically incorporated into this Agreement and, accordingly, the
expressions defined in the Master Definitions and Construction Schedule
(as so amended, varied or supplemented from time to time) shall, except
where the context otherwise requires and save where otherwise defined
herein, have the same meanings in this Agreement, including the Recitals
hereto and this Agreement shall be construed in accordance with the
interpretation provisions set out in Clause 2 of that the Master
Definitions and Construction Schedule.
1.2 Any reference in this Agreement to any discretion, power, right, duty or
obligation on the part of the Mortgages Trustee shall be as exercised by
the Mortgages Trustee subject in each case to the provisions of Clause
16.2 of the Mortgages Trust Deed.
1.3 For the purposes of Section 2 of the Law of Property (Miscellaneous
Provisions) Act 1989, the terms of the Transaction Documents are, so far
as applicable, incorporated herein.
1.4 The Initial Portfolio contained as Part 1 of the Exhibit to this
Agreement and any schedule of New Loans attached to any New Portfolio
Notice may be provided in a document stored upon electronic media
(including, but not limited to, a CD-ROM) in a form acceptable to the
Mortgages Trustee, the Security Trustee and Funding 1 (each acting
reasonably).
1.5 This Agreement amends and restates the Mortgage Sale Agreement made on
the 14th June, 2002 as amended and restated on the 6th March, 2003 (the
PRINCIPAL AGREEMENT). As of the date of this Agreement, any future
rights or obligations (excluding such obligations accrued to the date of
this Agreement) of a party under the Principal Agreement shall be
extinguished and shall instead be governed by this Agreement.
2. SALE AND PURCHASE AND INITIAL PORTFOLIO
2.1 Subject to Clause 2.2, in consideration of the Purchase Price (which shall
be paid in accordance with Clause 3.3) and the covenant of the Mortgages
Trustee to hold the Trust Property upon trust, with and subject to all
the trusts, powers and provisions of the Mortgages Trust Deed, the Seller
hereby agrees to sell and assign to the Mortgages Trustee with full title
guarantee, the Initial Portfolio on the Initial Closing Date.
2.2 The obligation of the Seller under Clause 2.1 shall be subject to and
conditional upon:
(a) the issue by the First Issuer of the Issuer Notes on the Initial
Closing Date and the borrowing by Funding 1 of the Term Advances
under the First Issuer Intercompany Loan Agreement;
(b) the constitution of the Mortgages Trust on or prior to the Initial
Closing Date; and
(c) the Transaction Documents having been executed and delivered by
the parties thereto on or before the Initial Closing Date.
2.3 The sale of the Portfolio shall not include any obligation to pay any
Delayed Cashbacks, Home Cash Reserve Drawings or Flexible Loan Drawings
(if any), which obligation shall at all times, and notwithstanding the
sale of the Portfolio, remain an obligation of the Seller.
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3. INITIAL CLOSING DATE
3.1 (a) A meeting shall take place at 11 a.m. on the Initial Closing Date
at the offices of Allen & Overy, One New Change, London EC4M 9QQ or
such other time or offices as the parties may agree at which the
Seller shall deliver to the Security Trustee or its representative
the following documents:
(i) two originals of the power of attorney dated as at the
Initial Closing Date and substantially in the form set out
in Schedule 5 hereto, duly executed by the Seller;
(ii) a certified copy of each of the duly executed Insurance
Acknowledgements;
(iii) a certified copy of each of the duly executed Insurance
Endorsements;
(iv) a duly executed assignment of the Halifax Mortgage Re
Limited MIG Policies to the extent that they relate to the
Mortgages comprised in the Initial Portfolio from the Seller
to the Mortgages Trustee and a certified copy of a notice
(the original of which shall be served by the Seller by
courier or by special delivery) of such assignment from the
Seller to HBOS Insurance (PCC) Guernsey Limited dated as at
the Initial Closing Date and in the form (mutatis mutandis)
set out in Schedule 8 and Schedule 9 hereto respectively and
a certified copy of consent to assignment of the Halifax
Mortgage Re Limited MIG Policies (or acknowledgement that
the Mortgages Trustee will be an insured in respect of the
Initial Portfolio under the Halifax Mortgage Re Limited MIG
Policies following such assignment) from HBOS Insurance
(PCC) Guernsey Limited in such form as HBOS Insurance (PCC)
Guernsey Limited reasonably requires;
(v) a certificate of a duly authorised officer of the Seller
dated as at the Initial Closing Date attaching a copy of the
board minute of the Seller authorising its duly appointed
representatives to agree the sale of the Portfolio and
authorising execution and performance of this Agreement, the
Servicing Agreement, the other Transaction Documents to
which the Seller is a party (in any capacity) and all of the
documentation to be entered into pursuant to this Agreement
and confirming that the resolutions referred to therein are
in full force and effect and have not been amended or
rescinded as at the date of the certificate;
(vi) a duly executed assignment of rights against third parties
comprised in the Initial Portfolio dated as at the Initial
Closing Date and in the form of the Assignment of Third
Party Rights; and
(vii) a solvency certificate from an authorised signatory of the
Seller dated the Initial Closing Date in a form acceptable
to the Mortgages Trustee, Funding 1 and the Security Trustee
(each acting reasonably).
(b) The parties hereto acknowledge that completion on the Initial
Closing Date of the sale and assignment to the Mortgages Trustee
of all of the Seller's right, title, interest and benefit in and
to the Initial Portfolio subject to the terms and provisions of
the Mortgages Trust Deed shall occur as indicated in this Clause
3 Provided that the
3
matters described in Clauses 6.2 and 6.4 shall not occur until the
relevant time indicated in Clause 6 or, as applicable, Clause 7.4.
3.2 The Seller undertakes that from the Initial Closing Date until the
perfection of the assignment in accordance with Clauses 6.2 and 6.3, the
Seller shall hold the Title Deeds and Customer Files relating to the
Portfolio that are in its possession or under its control or held to its
order to the order of the Mortgages Trustee or as the Mortgages Trustee
shall otherwise direct.
3.3 Subject to fulfilment of the conditions referred to in Clauses 2.2 and 3,
the Seller shall be paid the Purchase Price by telegraphic transfer by
Funding 1 on the Initial Closing Date.
3.4 The Seller shall provide all reasonable co-operation to the Mortgages
Trustee, Funding 1 and the Security Trustee to enable them to carry out
their respective duties and enforce their rights under the Transaction
Documents. Without prejudice to the generality of the foregoing, the
Seller shall:
(a) upon reasonable prior notice and during normal office hours,
permit the Mortgages Trustee, Funding 1, the Security Trustee and
their authorised employees and agents and other persons nominated
by the Security Trustee and approved by the Seller (such approval
not to be unreasonably withheld or delayed), to review the
Customer Files and the Title Deeds in relation to the Portfolio
(subject to such person(s) agreeing to keep the same confidential
but provided that disclosure shall be permitted to the
professional advisors and auditors of the party to whom such
disclosure is made and/or to the extent that such disclosure is
required by law or for the purpose of any judicial or other
proceedings); and/or
(b) give promptly all such information and explanations relating to
the Loans and their Related Security as the Mortgages Trustee,
Funding 1 or the Security Trustee may reasonably request
(including a list of the Loans and their Related Security in the
Portfolio along with details of the location of the Title Deeds
relating thereto),
provided that prior to completion in accordance with Clause 6, the Seller
shall be under no obligation to provide any information or documentation
to any person other than the Mortgages Trustee and/or the Security
Trustee or their respective employees and/or professional advisors or
allow such person access to the Customer Files or Title Deeds if to do so
would result in a breach of the applicable Mortgage Terms or the Data
Protection Act 1998.
4. SALE AND PURCHASE OF NEW PORTFOLIOS
4.1 Subject to fulfilment of the conditions set out in Clauses 2.2, 3.1, 4.2
(or as applicable, 4.3) and 4.4, if the Seller shall, at any time and from
time to time serve a properly completed New Portfolio Notice on the
Mortgages Trustee and Funding 1 with a copy to the Security Trustee (such
service to be in the Seller's sole discretion), the Seller agrees that on
the date for completion of the assignment specified in such New Portfolio
Notice the Seller shall sell and assign with full title guarantee to the
Mortgages Trustee the relevant New Portfolio.
4.2 The conditions to be met as at each Assignment Date are:
(a) no event of default under the Transaction Documents shall have
occurred which is continuing as at the relevant Assignment Date;
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(b) the Principal Deficiency Ledger shall not have a debit balance as
at the most recent Funding 1 Interest Payment Date after applying
all Funding 1 Available Revenue Receipts on that Funding 1
Interest Payment Date;
(c) the Mortgages Trustee is not aware that the purchase of the New
Portfolio on the relevant Assignment Date will adversely affect
the then current rating by the Ratings Agencies (or any of them)
of the Notes;
(d) as at the relevant Assignment Date, the Seller has not received
any notice that the short term, unsecured, unguaranteed and
unsubordinated debt obligations of the Seller are not rated at
least P-1 by Moody's, A-1 by S&P and F1 by Fitch at the time of,
and immediately following, the assignment of the New Loans to the
Mortgages Trustee;
(e) as at the relevant Assignment Date, the aggregate Outstanding
Principal Balances of the Loans in the Mortgages Trust, in respect
of which the aggregate amount in arrears is more than three times
the Monthly Payment then due, is less than 5 per cent. of the
aggregate Outstanding Principal Balances of the Loans in the
Mortgages Trust;
(f) except where Funding 1 pays amounts to the Mortgages Trustee in
consideration of New Loans to be assigned to it, the aggregate
Outstanding Principal Balance (excluding Arrears of Interest) of
New Loans transferred in any one Interest Period must not exceed
15 per cent. of the aggregate Outstanding Principal Balance of
Loans (excluding Arrears of Interest) in the Mortgages Trust as at
the beginning of that Interest Period;
(g) the assignment of the New Portfolio on the relevant Assignment
Date does not result in the product of WAFF and WALS for the
Portfolio after such purchase calculated on the relevant
Assignment Date in the same way as for the Initial Portfolio (or
as agreed by the Servicer and the Rating Agencies from time to
time) exceeding the product of WAFF and WALS for the Portfolio
calculated on the most recent Closing Date plus 0.25 per cent.;
(h) the yield (as calculated below) of the Loans in the Mortgages
Trust together with the yield of the New Loans to be assigned to
the Mortgages Trustee on the relevant Assignment Date (together
for the purposes of this paragraph, the RELEVANT LOANS) is at
least 0.50 per cent. greater than Sterling-LIBOR for three-month
sterling deposits as at the previous Interest Payment Date, after
taking into account the average yield on the Loans which are
Variable Rate Loans, Tracker Rate Loans and Fixed Rate Loans and
the margins on the Funding 1 Swap(s), in each case as at the
relevant Assignment Date. The yield of the Relevant Loans is to
be calculated as follows:
(A x B)+(C x (D-E+F)+(G x (H+I))
---------------------------------
J
where,
(A) = the Outstanding Principal Balance, on the relevant
Assignment Date, of the Relevant Loans which are Fixed Rate
Loans;
(B) = the interest rate receivable by Funding 1 under the
Funding 1 Fixed-Floating Rate Swap as at the relevant
Assignment Date;
5
(C) = the Outstanding Principal Balance, on the relevant
Assignment Date, of the Relevant Loans which are Variable
Rate Loans;
(D) = the weighted average Variable Base Rate of the
Relevant Loans which are Variable Rate Loans on the
relevant Assignment Date;
(E) = the Variable Rate Swap SVR for the Relevant
Loans which are Variable Rate Loans on the relevant
Assignment Date;
(F) = the interest rate receivable by Funding 1 under
the Funding 1 Variable Rate Swap as at the relevant
Assignment Date;
(G) = the Outstanding Principal Balance, on the relevant
Assignment Date, of the Relevant Loans which are Tracker
Rate Loans;
(H) = the interest rate receivable by Funding 1 under the Tracker
Rate Swap as at the relevant Assignment Date;
(I) = the weighted average margin of the Relevant Loans which
are Tracker Rate Loans over or under the Bank of England
Repo Rate on the relevant Assignment Date;
(J) = the Outstanding Principal Balance of the Relevant Loans on
the relevant Assignment Date;
(i) the assignment of the New Loans on the relevant Assignment Date
does not result in the loan-to-value ratio of the Loans and the
New Loans after application of the LTV Test on the relevant
Assignment Date exceeding the loan-to-value ratio (based on the
LTV Test) of Loans in the Portfolio on the most recent Closing
Date plus 0.25 per cent.;
(j) the assignment of the New Loans on the relevant Assignment Date
does not result in Loans (other than Fixed Rate Loans) which after
taking into account the Funding 1 Swap will yield less than
Sterling-LIBOR plus 0.50 per cent. as at the relevant Assignment
Date and that have more than 2 years remaining on their incentive
period accounting for more than 15 per cent. of the aggregate
Outstanding Principal Balance of all Loans comprising the Trust
Property;
(k) the assignment of the New Loans on the relevant Assignment Date
does not result in the Fixed Rate Loans which have more than 1
year remaining on their incentive period accounting for more than
50 per cent. of the aggregate Outstanding Principal Balance of
Loans comprising the Trust Property;
(l) no assignment of the New Loans may occur, if, as at the relevant
Assignment Date, the Step-up Date in respect of any Note issued
after 1st January, 2003 and still outstanding has been reached and
such Note has not been redeemed in full. For the avoidance of
doubt, this prohibition on the assignment of New Loans of the
Mortgage Trustee shall remain in effect only for so long as any
such Note remains outstanding and, upon its redemption, the
assignment of New Loan to the Mortgages Trustee may be resumed in
accordance with the terms of this Agreement;
6
(m) as at the Assignment Date, the adjusted Reserve Fund is equal to
or greater than the Reserve Fund Threshold;
(n) if the assignment of New Loans includes the assignment of New Loan
Types to the Mortgages Trustee, the Security Trustee has received
written confirmation from each of the Rating Agencies that such
New Loan Types may be assigned to the Mortgages Trustee and that
such assignment of New Loan Types would not have an adverse effect
on the then current ratings of the Notes;
(o) the Funding 1 Swap Agreement has been modified as required (or, if
appropriate, Funding 1 has entered into a new swap agreement) to
hedge against the interest rates payable in respect of such New
Loans and the floating rate of interest payable on the Issuer
Intercompany Loan; and
(p) no Trigger Event has occurred on or before the relevant Assignment
Date.
In this Clause 4.2 references to any Monthly Payment due at any date means
the Monthly Payment payable in respect of the month in which that date
falls.
4.3 The obligations of the Seller under Clause 4.1 shall be subject to and
conditional upon no Insolvency Event having occurred which is continuing
as at the relevant Assignment Date.
4.4 Subject to fulfilment of the conditions referred to in Clauses 4.2, 4.3,
4.4 and 4.6, the consideration to be provided to the Seller for the
assignment of the New Portfolio to the Mortgages Trustee on an Assignment
Date shall be the aggregate of:
(a) the payment by Funding 1 to the Seller by telegraphic transfer on
the relevant Assignment Date of the proceeds of any New
Intercompany Loan advanced to Funding 1 by a New Issuer; and
(b) the covenant of the Mortgages Trustee to hold the Trust Property
on trust pursuant to the terms of the Mortgages Trust Deed.
4.5 (a) On the date of the assignment of the relevant New Portfolio the
Seller shall deliver to the Security Trustee or its
representative the following documents:
(i) a duly executed assignment of the Halifax Mortgage Re
Limited MIG Policies to the extent that they relate to the
Mortgages comprised in the relevant New Portfolio from the
Seller to the Mortgages Trustee and a certified copy of a
notice (the original of which shall be served by the Seller
by courier or by special delivery) of such assignment from
the Seller to HBOS Insurance (PCC) Guernsey Limited dated as
of the relevant Assignment Date and in the form (mutatis
mutandis) set out in and hereof respectively and a
certified copy of consent to assignment of the Halifax
Mortgage Re Limited MIG policies (or acknowledgement that
the Mortgages Trustee will be an insured under the Halifax
Mortgage Re Limited MIG Policies following the assignment)
from HBOS Insurance (PCC) Guernsey Limited in such form as
HBOS Insurance (PCC) Guernsey Limited reasonably requires;
7
(ii) a duly executed assignment of rights against third parties
comprised in the relevant New Portfolio dated as at the
relevant Assignment Date and in the form of the Assignment
of Third Party Rights;
(iii) a certified copy of each of the duly executed Insurance
Acknowledgements;
(iv) on any Assignment Date that Funding 1 provides consideration
for New Loans to be assigned to the Mortgages Trustee
pursuant to Clause 4.4(a) above only, a certificate of a duly
authorised officer of the Seller dated as at the relevant
Assignment Date attaching a copy of the board minute referred
to in Clause 3.1(a)(v) and confirming that the resolutions
referred to therein are in full force and effect and have not
been amended or rescinded as at the date of the certificate;
and
(v) on any Assignment Date that Funding 1 provides consideration
for New Loans to be assigned to the Mortgages Trustee
pursuant to Clause 4.4(a) above only, a solvency certificate
from an authorised signatory of the Seller dated as at the
relevant Assignment Date.
(b) The parties hereto acknowledge that completion on each relevant
Assignment Date of the sale and assignment to the Mortgages
Trustee of all of the Seller's right, title, interest and benefit
in and to the relevant New Portfolio subject to the terms and
provisions of the Mortgages Trust Deed shall occur as indicated in
this Clause 4 PROVIDED THAT the matters described in Clauses 6.4
and 6.3shall not occur until the relevant time indicated in Clause
6 or, as applicable, Clause 7.5.
4.6 The Seller undertakes that from the relevant Assignment Date until the
perfection of the assignment in accordance with Clauses 6.2 and 6.3, the
Seller shall hold the Title Deeds and Customer Files relating to the New
Portfolio that are in its possession or under its control or held to its
order to the order of the Mortgages Trustee or as the Mortgages Trustee
shall direct.
4.7 Prior to the earlier to occur of:
(a) a Trigger Event; and
(b) (i) if Funding 1 does not enter into a New Intercompany Loan
Agreement, the Interest Payment Date in [December, 2010]; or
(ii) if Funding 1 does enter into New Intercompany Loan
Agreements, the latest Interest Payment Date specified by
Funding 1 by notice in writing to the Seller and the
Mortgages Trustee as applying in relation to this covenant,
the Seller undertakes to use all reasonable endeavours to offer to
assign, in accordance with the provisions of this Clause 4, to the
Mortgages Trustee and the Mortgages Trustee undertakes to use all
reasonable endeavours to acquire from the Seller and to hold pursuant to
the terms of the Mortgages Trust Deed until the earlier of the Interest
Payment Date falling in [June 2008] (or such later date as may be
notified by Funding 1) and the occurrence of a Trigger Event, sufficient
New Loans and their Related Security so that the aggregate Outstanding
Principal Balance of Loans in the Portfolio is not less than
{pound-sterling}[15,750,000,000] before [June 2008] (or such other amount
or amounts specified by Funding 1 in the notice
8
referred to in Clause 4.7(b)(ii) above) provided that the Seller shall
not be obliged to assign to the Mortgages Trustee, and the Mortgages
Trustee shall not be obliged to acquire, New Loans and their Related
Security if in the reasonable opinion of the Seller the assignment to the
Mortgages Trustee of New Loans and their Related Security would adversely
affect the business of the Seller.
4.8 On each Assignment Date that Funding 1 provides consideration for New
Loans to be assigned to the Mortgages Trustee pursuant to Clause 4.4(a)
above, the Beneficiaries shall appoint a firm of independent auditors to
undertake a due diligence exercise on a sample of the Customer Files
relating to the New Loans to be assigned to the Mortgages Trustee on the
relevant Assignment Date. The costs of such independent auditors shall
be borne by the relevant New Issuer (which shall be procured by Funding
1).
5. TRUST OF MONIES
5.1 Notwithstanding the assignments effected by this Agreement, if at, or at
any other time after, the Closing Date (but prior to any repurchase in
accordance with Clause 8.5) the Seller holds, or there is held to its
order, or it receives, or there is received to its order any property,
interests, rights or benefits and/or the proceeds thereof hereby agreed
to be sold, the Seller undertakes to each of the Mortgages Trustee,
Funding 1 and the Security Trustee that, subject to Clause 6, it will
promptly remit, assign and/or transfer the same to the Mortgages Trustee
or, if appropriate, the Security Trustee and until it does so or to the
extent that the Seller is unable to effect such remittance, assignment or
transfer, it will hold such property, interests, rights or benefits
and/or the proceeds thereof upon trust for the Mortgages Trustee subject
at all times to the Mortgages Trust.
5.2 If at, or any time after, the Closing Date the Mortgages Trustee holds,
or there is held to its order, or it receives, or there is received to
its order, any property, interests, rights or benefits relating to:
(a) any Loan or Loans under a Mortgage Account and its Related
Security repurchased by the Seller pursuant to Clause 8.5; or
(b) (without prejudice to Clause 11) amounts owed by a Borrower to the
Seller which the Seller has not agreed to sell under Clause 2.1,
and/or the proceeds thereof, the Mortgages Trustee undertakes to the
Seller that it will remit, assign, re-assign or transfer the same to the
Seller, as the case may require, and until it does so or to the extent
that the Mortgages Trustee is unable to effect such remittance,
assignment, re-assignment or transfer, the Mortgages Trustee undertakes
to hold such property, interests, rights or benefits and/or the proceeds
thereof upon trust for the Seller as the beneficial owner thereof or as
the Seller may direct provided that the Mortgages Trustee shall not be in
breach of its obligations under this Clause 5 if, having received any
such monies and paid them to third parties in error, it pays an amount
equal to the monies so paid in error to the Seller in accordance with the
Servicing Agreement.
6. PERFECTION OF THE ASSIGNMENT
6.1 The assignments contemplated by this Agreement shall be perfected on the
twentieth London Business Day after the earliest to occur of:
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(a) the service of an Intercompany Loan Acceleration Notice or a Note
Acceleration Notice in relation to any Notes of any Issuer; or
(b) the Seller being required to perfect legal title to the Mortgages,
or procure any or all of the acts referred to in this Clause 6 by
an order of a court of competent jurisdiction or by any regulatory
authority of which the Seller is a member or any organisation
whose members comprise (but are not necessarily limited to)
mortgage lenders and with whose instructions it is customary for
the Seller to comply; or
(c) it becoming necessary by law to do any or all of the acts referred
to in this Clause 6; or
(d) the Security Trustee certifying that, in its reasonable opinion,
the property, assets and rights of Funding 1 comprised in the
security constituted by the Funding 1 Deed of Charge or any
material part thereof is/are in jeopardy and that the doing of any
or all of the acts referred to in paragraphs (a) to (c) inclusive
of Clause 6.3 is necessary in order materially to reduce such
jeopardy; or
(e) unless otherwise agreed in writing by the Rating Agencies and the
Security Trustee, the termination of the Seller's role as Servicer
under the Servicing Agreement; or
(f) the Seller calling for perfection by serving notice in writing to
that effect on the Mortgages Trustee, Funding 1 and the Security
Trustee; or
(g) the date on which the Seller ceases to be assigned a long term
unsecured, unsubordinated debt obligation rating from S&P of at
least BBB- or from Moody's of at least Baa3 or from Fitch of at
least BBB-; or
(h) the occurrence of an Insolvency Event in relation to the Seller;
or
(i) the latest of the last repayment dates of the Intercompany Loans
where any Intercompany Loan has not been discharged in full.
6.2 Perfection of the transfer of Mortgages in the Portfolio over Registered
Land shall be effected by means of a transfer in the form of the
Registered Transfer and, in the case of Mortgages in the Portfolio over
Unregistered Land, by a transfer in the form of the Unregistered
Transfer, and in respect of any other matter comprised in the Portfolio,
shall be in such form as the Mortgages Trustee may reasonably require.
6.3 Subject to Clause 7.5, prior to perfection pursuant to Clause 6.1, neither
the Mortgages Trustee nor Funding 1 nor the Security Trustee will:
(a) submit or require the submission of any notice, form, request or
application to or pay any fee for the registration of, or the
noting of any interest at the Land Charges Department of H.M. Land
Registry or at H.M. Land Registry in relation to, the Mortgages
Trustee's and/or Funding 1's interests in the Portfolio;
(b) give or require the giving of any notice to any Borrower of the
assignment of that Borrower's Loan and its Related Security to the
Mortgages Trustee or the charge by Funding 1 of Funding 1's
interest in that Borrower's Loan and its Related Security to the
Security Trustee pursuant to the Funding 1 Deed of Charge; or
10
(c) send or require to be sent to any solicitor who has acted on
behalf of the Seller in respect of any Mortgage with respect to
which the Seller has not received a complete set of the Title
Deeds a letter or other communication requiring such solicitor to
hold such documents to the order of the Mortgages Trustee or the
Security Trustee (as the case may be).
6.4 Within 25 London Business Days following perfection pursuant to Clause
6.1, the Seller will do such of the acts or things referred to in Clause
6.3 as the Security Trustee or the Mortgages Trustee requires the Seller
to do.
6.5 The Seller shall indemnify each of the Mortgages Trustee, Funding 1 and
the Security Trustee from and against any and all costs, fees and
expenses (including, without limitation, legal fees and expenses and any
applicable Value Added Tax thereon) which may be incurred by the
Mortgages Trustee and/or Funding 1 and/or the Security Trustee by reason
of the doing of any act, matter or thing referred to in this Clause 6 and
Clause 7.5.
7. UNDERTAKINGS
7.1 The Mortgages Trustee and Funding 1 undertake to the Seller that they
will at all times (or will direct the Servicer at all times to) use
reasonable endeavours to administer and enforce (and exercise their
powers and rights and perform their obligations under) the Loans
comprised in the Portfolio and their Related Security in accordance with
the Seller's Policy (for so long as it exists and thereafter in
accordance with such policies as would be applied by a reasonable,
prudent mortgage lender in the conduct of its business), provided that if
the Seller fails to comply with its obligations to repurchase any Loan
and its Related Security pursuant to Clause the Mortgages Trustee shall
be entitled to waive any Early Repayment Fee in respect of such Loan and
its Related Security if, in the Mortgages Trustee's reasonable opinion,
such waiver is reasonably necessary in order to effect an interest rate
change.
7.2 The Seller hereby undertakes to the Mortgages Trustee and Funding 1 that,
in the event that any Borrower establishes that it has at any time prior
to the Initial Closing Date or, as the case may be, the relevant
Assignment Date, paid to the Seller any amounts in excess of sums due to
the Seller as at the date of payment under the Mortgage Conditions
applicable to that Loan, the Seller will reimburse the Borrower for such
overpayment together with any interest, cost or other expense associated
therewith. The Seller further agrees to hold the Mortgages Trustee and
Funding 1 harmless against any such claims and to indemnify the Mortgages
Trustee and Funding 1 on an after Tax basis in relation to any costs,
expense, loss or other claim which may arise in connection therewith.
Any payment made by the Seller to the Mortgages Trustee and Funding 1 in
discharge of the foregoing indemnity shall be regarded as a rebate of
part of the Purchase Price of the relevant Loan.
7.3 Each of the Seller and the Mortgages Trustee and Funding 1 undertakes to
each other and to the Security Trustee that if and to the extent that any
determination shall be made by any court or other competent authority or
any ombudsman in respect of any Loan and its Related Security that:
(a) any term which relates to the recovery of interest under the
Standard Documentation applicable to that Loan and its Related
Security is unfair; or
11
(b) the interest payable under any Loan is to be set by reference to
HVR 1 or HVR 2 (as applicable) (and not a rate set by the Seller's
successors or assigns or those deriving title from them); or
(c) the variable margin above the Bank of England repo rate under any
Tracker Rate Loan must be set by the Seller (rather than by its
successors or assigns or those deriving title from them); or
(d) the interest payable under any Loan is to be set by reference to
an interest rate other than that set or purported to be set by
either the Servicer or the Mortgages Trustee as a result of the
Seller having more than one variable mortgage rate,
then, at Funding 1's direction (subject to the prior written consent of
the Security Trustee), the Mortgages Trustee will serve upon the Seller a
notice in the form of the Loan Repurchase Notice requiring the Seller to
repurchase the relevant Loan and all other Loans under the relevant
Mortgage Account and its Related Security in accordance with Clause 8.5
(but in the case of a determination in respect of (b) above, only if at
any time on or after such determination, HVR 1 or HVR 2 (as applicable)
shall be below or shall fall below the standard variable rate of interest
set by such successors or assigns or those deriving title from them).
7.4 The Seller hereby undertakes to the Mortgages Trustee, Funding 1 and the
Security Trustee that:
(a) if the long term unsecured, unsubordinated and unguaranteed debt
obligations of the Seller cease to be assigned a rating of Baa2 or
higher from Moody's and BBB or higher from S&P and BBB or higher
from Fitch, the Seller shall deliver to the Mortgages Trustee,
Funding 1, the Security Trustee and the Rating Agencies a draft
letter of notice to each of the Borrowers of the assignment, sale
and purchase effected by this Agreement; and
(b) if the long term unsecured, unsubordinated and unguaranteed debt
obligations of the Seller cease to be assigned a rating of Baa3 or
higher from Moody's and BBB- or higher from S&P and BBB- or higher
from Fitch, then the Seller shall, within 20 London Business Days
of it becoming aware of such a rating being assigned, give notice
of the sale and purchase effected by this Agreement to each
Borrower.
7.5 The Seller undertakes to the Mortgages Trustee, Funding 1 and the
Security Trustee that, pending perfection under Clause 6, the Seller:
(a) shall not do or omit to do any act or thing which might, in the
reasonable opinion of the Security Trustee, prejudice the
interests of the Mortgages Trustee, Funding 1 and/or the Security
Trustee in the Portfolio;
(b) shall promptly notify the Mortgages Trustee, Funding 1 and the
Security Trustee in writing if it receives written notice of any
litigation or claim calling into question in any material way the
Seller's or the Mortgages Trustee's title to any Loan comprised in
the Portfolio or its Related Security or if it becomes aware of
any material breach of any of the Representations and Warranties
or other obligations under this Agreement;
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(c) shall, if reasonably required so to do by the Mortgages Trustee or
the Security Trustee, participate or join in any legal proceedings
to the extent necessary to protect preserve and enforce the
Seller's or the Mortgages Trustee's or Funding 1's or the Security
Trustee's title to or interest in any Loan or its Related
Security;
(d) shall use all reasonable efforts to obtain the title numbers to
each Property in respect of which a Mortgage is registered to the
extent that such title number does not appear in the Exhibit to
this Agreement (or, as the case may be, the relevant New Portfolio
Notice) and shall in any event obtain each such title number prior
to the Interest Payment Date falling in the month during which the
first anniversary of the Closing Date (or, as the case may be, the
relevant Assignment Date) falls; and
(e) shall make and enforce claims under the Buildings Policies and the
Halifax Insurance Policies and hold the proceeds of such claims on
trust for the Mortgages Trustee or as the Mortgages Trustee may
direct.
7.6 The Seller hereby further undertakes to the Mortgages Trustee and Funding
1 that it is and at all times shall remain solely responsible for funding
any Delayed Cashbacks and any Home Cash Reserve Drawings and Flexible
Loan Drawings (if any) made by a Borrower and for funding any request for
any Further Advance made by a Borrower and, for the avoidance of doubt,
neither the Mortgages Trustee nor Funding 1 will be required to advance
moneys to the Seller or to a Borrower in order to fund such a Delayed
Cashback, Home Cash Reserve Drawing, Flexible Loan Drawing (if any), or
Further Advance in any circumstances whatsoever.
7.7 The Seller shall grant security powers of attorney to the Mortgages
Trustee, Funding 1 and the Security Trustee in the form set out in
Schedule 5 allowing any of the Mortgages Trustee, Funding 1 and the
Security Trustee and their delegates from time to time (inter alia) to
set the Seller's Variable Base Rate in the circumstances referred to in
Clause 4 of the Servicing Agreement and/or following perfection pursuant
to Clause 6.1 PROVIDED THAT nothing in this Clause 7.7 shall prevent the
Seller (or any of its attorneys from time to time) from setting a higher
Seller's Variable Base Rate than those set or to be set or required or to
be required by the Mortgages Trustee, Funding 1 or the Security Trustee.
8. WARRANTIES AND REPURCHASE BY THE SELLER
8.1 (a) The Seller hereby makes the Representations and Warranties:
(i) in respect of each Loan and its Related Security in the
Initial Portfolio as at the date hereof and on the Initial
Closing Date; and
(ii) in relation to each New Loan and its Related Security in a
New Portfolio, on the date of the service of the relevant
New Portfolio Notice and on the relevant Assignment Date.
(b) Each statement comprised in the Representations and Warranties
shall be construed as a separate statement and (save as expressly
provided to the contrary) shall not be limited or restricted by
reference to or inference from the terms of any other such
statement.
(c) The Seller acknowledges:
13
(i) that the Representations and Warranties are made with a view
to inducing the Mortgages Trustee, Funding 1 and the
Security Trustee (as the case may be) either to enter into
this Agreement and the other Transaction Documents to which
is a party or to agree to purchase the New Loans and their
Related Security comprised in each New Portfolio, and
(ii) that each of the Mortgages Trustee, Funding 1 and the
Security Trustee has entered into this Agreement and the
other Transaction Documents to which it is a party in
reliance upon the Representations and Warranties
notwithstanding any information in fact possessed or
discoverable by the Mortgages Trustee, Funding 1 and/or the
Security Trustee or otherwise disclosed to any of them, and
(iii) that prior to entering into this Agreement and the other
Transaction Documents to which each is a party neither the
Mortgages Trustee nor Funding 1 nor the Security Trustee has
made any enquiries of any matter.
8.2 The Mortgages Trustee's, Funding 1's and the Security Trustee's sole
remedy in respect of a breach of any of the Representations and
Warranties shall be to take action under this Clause 8 or under Clause 6
of the Mortgages Trust Deed.
8.3 In the event of a material breach of any of the Representations or
Warranties in respect of any Loan and/or its Related Security made under
Clause 8.1 or if any of those Representations or Warranties proves to be
materially untrue as at the Closing Date or, as the case may be, the
relevant Assignment Date, and provided that:
(a) the Mortgages Trustee has given the Seller not less than 20 London
Business Days' notice in writing;
(b) the Mortgages Trustee has obtained the prior written consent of
the Security Trustee; and
(c) such breach or untruth, where capable of remedy, is not remedied
to the reasonable satisfaction of Funding 1 and the Security
Trustee within the 20 London Business Days period referred to in
(a) (or such longer period as Funding 1 and the Security Trustee
may direct the Mortgages Trustee in writing),
then at Funding 1's direction (subject to the prior written consent of
the Security Trustee) the Mortgages Trustee shall serve upon the Seller a
notice in the form of the Loan Repurchase Notice requiring the Seller to
repurchase the relevant Loan and its Related Security (and any other Loan
secured or intended to be secured by that Related Security or any part of
it) in accordance with Clause 8.5.
8.4 (a) If the Seller accepts an application from, or makes an offer
(which is accepted) to, a Borrower for a Further Advance then
(save in the case of any Loan which is then in arrears), at
Funding 1's direction (subject to the prior written consent of the
Security Trustee), the Mortgages Trustee will serve upon the
Seller a notice in the form of the Loan Repurchase Notice
requiring the Seller to repurchase the relevant Loan and its
Related Security (and any other Loan secured or intended to be
secured by that Related Security or any part of it) in accordance
with Clause 8.5.
14
(b) If the Seller accepts an application from, or makes an offer
(which is accepted) to, a Borrower for a Product Switch and
(except as provided in paragraph (c) below) on the immediately
preceding Distribution Date, the Seller is in breach of the
conditions referred to in Clauses 4.2(a) to (p) inclusive as if
references therein to NEW LOANS and NEW PORTFOLIO were references
to the Loan which would result from the implementation of such
Product Switch and as if references to ASSIGNMENT DATE were
references to the date when the Seller and relevant Borrower
complete such Product Switch then (save in the case of any Loan
which is then in arrears) from and including the relevant
Distribution Date to but excluding the date when such conditions
have been satisfied, at Funding 1's direction (subject to the
prior written consent of the Security Trustee), the Mortgages
Trustee will serve upon the Seller a notice in the form of the
Loan Repurchase Notice requiring the Seller to repurchase the
relevant Loan and its Related Security (and any other Loan secured
or intended to be secured by that Related Security or any part of
it) in accordance with Clause 8.5.
(c) If the Seller accepts an application from, or makes an offer
(which is accepted) to, a Borrower for a Product Switch, the
effect of which is to extend the final maturity date of the
relevant Loan beyond June 2040 then, at Funding 1's direction
(subject to the prior written consent of the Security Trustee),
the Mortgages Trustee will serve upon the Seller a notice in the
form of the Loan Repurchase Notice requiring the Seller to
repurchase the relevant Loan and its Related Security in
accordance with Clauses 8.5 notwithstanding that the conditions
referred to in clauses 4.2(a) to 4.2(p) have been satisfied.
(d) For the avoidance of doubt, the Seller shall not accept an
application from nor make an offer (which is accepted) to a
Borrower for a Further Advance or a Product Switch if the relevant
Loan to which such Further Advance or Product Switch relates is
then in arrears subject only to such exceptions as made on a case
by case basis as would be acceptable to a reasonable, prudent
mortgage lender.
8.5 Upon receipt of a Loan Repurchase Notice duly signed on behalf of the
Mortgages Trustee, the Seller shall sign and return a duplicate copy and
shall repurchase from the Mortgages Trustee, and the Mortgages Trustee
shall re-assign to the Seller free from the Security Interests created by
the Funding 1 Deed of Charge, the relevant Loan (and any other Loan
secured or intended to be secured by that Related Security or any part of
it) and their Related Security. Completion of such repurchase shall take
place on the Distribution Date after receipt by the Seller of such Loan
Repurchase Notice or such other date as the Mortgages Trustee may direct
in the Loan Repurchase Notice (provided that the date so specified by the
Mortgages Trustee shall not be later than 90 days after receipt by the
Seller of such notice) when the Seller shall pay to the Mortgages Trustee
GIC Account (or as the Mortgages Trustee shall direct) an amount equal to
the aggregate Outstanding Principal Balance of such Loan or Loans and any
Related Security and all Arrears of Interest and Accrued Interest
relating thereto (save for the repurchase of any Loan and its Related
Security which is subject to a Further Advance or a Product Switch
pursuant to Clause 8.4 in which case the Seller shall pay to the Mortgages
Trustee GIC Account (or as the Mortgages Trustee shall direct) an amount
equal to the aggregate Outstanding Principal Balance of such Loan and its
Related Security and Accrued Interest relating thereto only) as at the
date of such repurchase and the provisions of Clause 8.6 shall apply.
8.6 On the date of completion of any repurchase of a Loan and its Related
Security in accordance with Clause 8.5 above, the Security Trustee, the
Mortgages Trustee and Funding 1 shall at the
15
cost of the Seller execute and deliver, or cause their respective duly
authorised attorneys to execute and deliver, to the Seller:
(a) a memorandum of release of such Loan and its Related Security from
the security constituted by the Funding 1 Deed of Charge in a form
reasonably acceptable to the Seller;
(b) if perfection of the assignment to the Mortgages Trustee has
occurred in accordance with Clause 6:
(i) if the relevant Mortgage is over Registered Land, a transfer
of such Mortgage to the Seller in the form of the Registered
Transfer; or
(ii) if the relevant Mortgage is over Unregistered Land, a
transfer of such Mortgage to the Seller in the form of the
Unregistered Transfer;
(c) a re-assignment of the rights of the Mortgages Trustee in respect
of the relevant Related Security each in a form reasonably
acceptable to the Seller (which shall, in the case of the re-
assignment of the MIG Policies, be substantially in the form of
the Assignment of MIG Policies); and
(d) a notification to the Servicer that all further sums due in
respect of such repurchased Loan are for the Seller's account.
Upon such completion the Seller shall cease to be under any further
obligation to hold any Title Deeds or other documents relating to such
Loan or Loans and its/their Related Security to the order of the
Mortgages Trustee and if the Mortgages Trustee holds the Title Deeds it
will return them to the Seller. Any repurchase by the Seller of or in
respect of a Loan or Loans and its or their Related Security shall
constitute a discharge and release of the Seller from any claims which
the Mortgages Trustee and/or Funding 1 or the Security Trustee may have
against the Seller arising from the relevant Representation or Warranty
in relation to that Loan or Loans and its or their Related Security only
but shall not affect any rights arising from a breach of any other
express provision of this Agreement or any Representation or Warranty in
relation to any other Loan and other Related Security.
8.7 After the Seller becomes aware of any event and/or fact which may
reasonably give rise to an obligation under any clause of this Agreement
to repurchase any Loan it shall notify the Mortgages Trustee, Funding 1
and the Security Trustee in writing thereof as soon as reasonably
practicable.
8.8 The terms of this Clause 8 shall not prejudice the rights of the Mortgages
Trustee or the Beneficiaries under the Mortgages Trust Deed.
8.9 The parties to this Agreement may, with the prior written consent of the
Security Trustee, waive or amend the Representations and Warranties. In
determining whether to give its consent to the proposed waiver or
amendments to the Representations and Warranties, the Security Trustee
shall exercise its discretion in accordance with the terms of clause 25.8
of the Funding 1 Deed of Charge.
16
9. OTHER WARRANTIES
On the date of this Agreement, the Closing Date, and each Assignment
Date, the Seller represents and warrants to each of the Mortgages
Trustee, Funding 1 and the Security Trustee that:
(a) the Seller has not acquired or owned or possessed any rights in
any Issuer, the Mortgages Trustee or Funding 1 such that it would
CONTROL such Issuer within the meaning of Section 416 ICTA 1988;
and
(b) there is not any CONNECTION (within the meaning of Section 87
Finance Act 1996) between any Issuer and any Borrower.
10. FURTHER ASSURANCE
The parties hereto agree that they will co-operate fully to do all such
further acts and things and execute any further documents that may be
necessary or desirable to give full effect to the transactions
contemplated by this Agreement (but subject always to Clause 6).
11. CONSEQUENCES OF BREACH
Without prejudice to Clauses 7 and 8, Funding 1, the Mortgages Trustee
and the Security Trustee severally acknowledge to and agree with the
Seller, and the Security Trustee acknowledges to and agrees with Funding
1 and the Mortgages Trustee, that the Seller shall have no liability or
responsibility (whether, in either case, contractual or tortious, express
or implied) for any loss or damage for or in respect of any breach of, or
any act or omission in respect of, any of its obligations hereunder other
than loss or damage directly (and not indirectly or consequentially)
suffered by the Mortgages Trustee and/or Funding 1 or the assets
comprised in the Funding 1 Security constituted by the Funding 1 Deed of
Charge by reason of such breach, act or omission. For this purpose (and
without limiting the scope of the above exclusion in respect of indirect
or consequential loss or damage) any loss or damage suffered by the
Mortgages Trustee and/or Funding 1 or such assets as a result of the
breach, act or omission in question also having been or given rise to an
Event of Default or enforcement of the Funding 1 Security contributed by
the Funding 1 Deed of Charge shall be treated as indirect or
consequential loss or damage PROVIDED THAT this sentence shall not apply
to any direct or non-consequential loss or damage arising from any such
breach, act or omission.
12. SUBORDINATION
The Seller agrees with Funding 1, the Mortgages Trustee and the Security
Trustee that on the enforcement of any Mortgage any sums owed to the
Seller by a Borrower and which are secured under such Mortgage and the
rights and remedies of the Seller in respect of the sums owed to the
Seller shall at all times be subject and subordinated to any sums owed to
the Mortgages Trustee by the Borrower and which are secured under such
Mortgage and to the rights and remedies of the Mortgages Trustee in
respect of such sums owed to the Mortgages Trustee by the Borrower.
17
13. NON-MERGER
Any term of this Agreement to which effect is not given on the Closing
Date or on any Assignment Date (including in particular, but without
limitation, the liability of the Seller under the Representations and
Warranties and the indemnity in Clause 6.5 and the provisions of Clause 4)
shall not merge and shall remain in full force and effect notwithstanding
the sale and purchases contemplated by this Agreement.
14. NO AGENCY OR PARTNERSHIP
It is hereby acknowledged and agreed by the parties that nothing in this
Agreement shall be construed as giving rise to any relationship of
agency, save as expressly provided herein, or partnership between the
parties and that in fulfilling its obligations hereunder, each party
shall be acting entirely for its own account.
15. PAYMENTS
Except as otherwise specifically provided, all payments to be made
pursuant to this Agreement shall be made in sterling in immediately
available funds without exercising or seeking to exercise any right of
set-off as may otherwise exist and shall be deemed to be made when they
are received by the payee and shall be accounted for accordingly unless
failure to receive any payment is due to an error by the payee's bank.
16. WAIVER AND VARIATION
16.1 Exercise or failure to exercise any right under this Agreement shall not,
unless otherwise herein provided, constitute a waiver of that or any
other right.
16.2 Subject to Clause 25 of the Funding 1 Deed of Change any amendments to
this Agreement will be made only with the prior written consent of each
party to this Agreement.
17. NOTICES
Any notices to be given pursuant to this Agreement to any of the parties
hereto shall be in writing and shall be sufficiently served if sent by
prepaid first class post, by hand or by facsimile transmission and shall
be deemed to be given (in the case of facsimile transmission) when
despatched or (in the case of first class post) when it would be received
in the ordinary course of the post and shall be sent:
(a) in the case of the Seller, to Halifax plc, Trinity Road, Halifax,
West Yorkshire HX1 2RG, (LP/3/3/SEC) (facsimile number +44 (0) 113
235 7511) for the attention of the Head of Mortgage Securitisation
with a copy to HBOS Treasury Services PLC, 33 Old Broad Street,
London EC2N 1HZ (facsimile number +44 (020) 7574 8784) for the
attention of Head of Capital Markets and Securitisation,;
(b) in the case of Funding 1, to Permanent Funding (No. 1) Limited,
Blackwell House, Guildhall Yard, London EC2V 5AE (facsimile number
+44 (020) 7556 0975) for the attention of the Secretary with a
copy to HBOS Treasury Services PLC, 33 Old Broad Street, London
EC2N 1HZ (facsimile number +44 (020) 7574 8784) for the attention
of Head of Capital Markets and Securitisation;
18
(c) in the case of the Mortgages Trustee, to Permanent Mortgages
Trustee Limited, 47 Esplanade, St Helier, Jersey JE1 0BD,
(facsimile number +44 (0) 1534 726391) for the attention of the
Secretary with a copy to HBOS Treasury Services PLC, 33 Old Broad
Street, London EC2N 1HZ (facsimile number +44 (020) 7574 8784) for
the attention of Head of Capital Markets and Securitisation; and
(d) in the case of the Security Trustee, to The Bank of New York, One
Canada Square, London E14 5AL (facsimile number + 44 (020) 7964
6061/6399) for the attention of Global Structural Finance -
Corporate Trust
or to such other address or facsimile number or for the attention
of such other person or entity as may from time to time be
notified by any party to the others by written notice in
accordance with the provisions of this Clause 17.
18. ASSIGNMENT
18.1 Subject always to the provisions of Clause 19, no party hereto shall be
entitled to assign all or any part of its rights or obligations hereunder
to any other party without the prior written consent of each of the other
parties hereto (which shall not, if requested, be unreasonably withheld)
save that Funding 1 shall be entitled to assign whether by way of
security or otherwise all or any of its rights under this Agreement
without such consent to the Security Trustee pursuant to the Funding 1
Deed of Charge and the Security Trustee may at its sole discretion assign
all or any of its rights under or in respect of this Agreement without
such consent to any successor Security Trustee in exercise of its rights
under the Funding 1 Deed of Charge.
18.2 The Seller acknowledges that on the assignment pursuant to the Funding 1
Deed of Charge by Funding 1 to the Security Trustee of Funding 1's rights
under this Agreement the Security Trustee may enforce such rights in the
Security Trustee's own name without joining Funding 1 in any such action
(which right the Seller hereby waives) and the Seller hereby waives as
against the Security Trustee any rights or equities in its favour arising
from any course of dealing between the Seller and Funding 1.
19. CHANGE OF SECURITY TRUSTEE
19.1 If there is any change in the identity of the Security Trustee in
accordance with the Funding 1 Deed of Charge, the Seller, the Mortgages
Trustee and Funding 1 shall execute such documents and take such action
as the successor Security Trustee and the outgoing Security Trustee may
reasonably require for the purpose of vesting in the successor Security
Trustee the rights and obligations of the outgoing Security Trustee
hereunder and releasing the outgoing Security Trustee from its future
obligations under this Agreement and the Seller shall give notice thereof
to the Rating Agencies.
19.2 It is hereby acknowledged and agreed that by its execution of this
Agreement the Security Trustee shall not assume or have any of the
obligations or liabilities of the Seller or Funding 1 or the Mortgages
Trustee hereunder.
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20. NOT USED
21. THIRD PARTY RIGHTS
A person who is not a party to this agreement may not enforce any of its
terms under the Contracts (Rights of Third Parties) Act 1999.
22. GOVERNING LAW
22.1 This Agreement shall be governed by the laws of England.
22.2 Each party to this Agreement hereby irrevocably submits to the non-
exclusive jurisdiction of the English courts in any action or proceeding
arising out of or relating to this Agreement, and hereby irrevocably
agrees that all claims in respect of such action or proceeding may be
heard and determined by such courts. Each party to this Agreement hereby
irrevocably waives, to the fullest extent it may possibly do so, any
defence or claim that the English courts are an inconvenient forum for
the maintenance or hearing of such action or proceeding. The Mortgages
Trustee irrevocably appoints Structured Finance Management Limited of
Blackwell House, Guildhall Yard, London EC2V 5AE as its agent for service
of process.
22.3 This Agreement may be executed (manually or by facsimile) in any number
of counterparts and all such counterparts taken together shall be deemed
to constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have executed this Agreement on the day
and year first before written.
20
SCHEDULE 1
REPRESENTATIONS AND WARRANTIES
1. LOANS
1.1 The particulars of the Loans set out in the Exhibit (or, as the case may
be, the relevant New Portfolio Notice) are true, complete and accurate in
all material respects.
1.2 Each Loan was originated by the Seller and was originated and is
denominated in pounds sterling (or was originated and is denominated in
euro if the euro has been adopted as the lawful currency for the time
being of the United Kingdom).
1.3 Each Loan in the Portfolio as at the Closing Date was made not earlier
than 1st February, 1996 and not later than [2nd July, 2003].
1.4 Each Loan matures for repayment not later than June 2040.
1.5 No Loan has an Outstanding Principal Balance of more than
{pound-sterling}400,000.
1.6 The Lending Criteria are the lending criteria applicable to the Loans and
their Related Security.
1.7 Prior to the making of each Initial Advance and Further Advance:
(a) the Lending Criteria and all preconditions to the making of any
Loan were satisfied in all material respects subject only to such
exceptions as made on a case by case basis as would be acceptable
to a reasonable, prudent mortgage lender; and
(b) the requirements of the relevant MIG Policy were met, so far as
applicable to that Loan.
1.8 (a) Each Loan was made and its Related Security taken or received
substantially on the terms of the Standard Documentation without
any material variation thereto and nothing has been done
subsequently to add to, lessen, modify or otherwise vary the xpress
provisions of any of the same in any material respect.
(b) The brochures, application forms, offers, offer conditions and
marketing material distributed by the Seller to the Borrower when
offering a Loan to a Borrower:
(i) do not conflict in any material respect with the terms
applicable to the relevant Loan and its Related Security at
the time that the Loan was entered into;
(ii) do not conflict with and would not prohibit or otherwise
limit the terms of, the Transaction Documents or the matters
contemplated thereby, including for the avoidance of doubt
and without limitation:
(A) the assignment of the Loans and their Related Security
to the Mortgages Trustee;
21
(B) the administration of the Loans and their Related
Security by the Seller or a delegate of the Seller or
the appointment of a new Servicer following the
occurrence of an Insolvency Event in relation to the
Seller; and
(C) so far as the Seller is aware to the best of its
knowledge, information and belief, the ability of the
Mortgages Trustee or the Security Trustee to set the
variable rate payable under any Variable Rate Loan
independently of (and without regard to the level of)
the Seller's standard variable rate of interest or if
the Seller has more than one standard variable rate of
interest, the relevant Seller's standard variable rate
of interest, subject to any applicable cap on that
variable rate which is not itself linked to any rate
set by the Seller and to set the variable margin above
the Bank of England repo rate under any Tracker Rate
Loan independently of (and without regard to the level
of) any differential set by the Seller, subject to any
applicable cap on that variable margin above the Bank
of England repo rate which is not itself linked to any
margin set by the Seller.
(b) There is no restriction on the Seller's successors' and assigns'
to the legal title of the Loans (including, without limitation,
the Mortgages Trustee if and when legal title to the Loans is
transferred to it) right:
(i) to set the variable rate payable under any Variable Rate
Loan independently of (and without regard to the level of)
the Seller's standard variable rate of interest or if the
Seller has more than one standard variable rate of interest,
the relevant Seller's standard variable rate of interest,
subject to any applicable cap on that variable rate which is
not itself linked to any rate set by the Seller (subject to
complying with the obligations under the Standard Documents
as to changes in interest rates generally and so that in
particular the successors will not be able to change the
interest rate following a transfer of legal title unless the
reasons for changing the interest rate set out in the
Standard Documents apply) and provided that in relation to
Loans which are subject to HVR 2, the differential between
that rate and the Loans which are subject to HVR 1 is
maintained; and
(ii) to set the variable margin above the Bank of England repo
rate under any Tracker Rate Loan independently of (and
without regard to the level of) any differential set by the
Seller, subject to any applicable cap on that variable
margin above the Bank of England repo rate which is not
itself linked to any margin set by the Seller (subject to
complying with the obligations under the Standard Documents
as to changes in margins generally and so that in particular
the successors will not be able to change the margin
following a transfer of legal title unless the reasons for
changing the margin set out in the Standard Documents
apply).
1.9 The Seller is under no obligation to make Further Advances (other than
Flexible Loan Drawings (if any), Delayed Cashbacks and Home Cash Reserve
Drawings) or to release retentions or to pay fees or other sums relating
to any Loan or its Related Security to any Borrower.
22
1.10 Each Borrower has made at least two Monthly Payments.
1.11 Other than with respect to monthly interest payments or as provided in
paragraph 1.12 below, no Borrower is or has, since the date of the
relevant Mortgage, been in material breach of any obligation owed in
respect of the relevant Loan or under the Related Security and
accordingly no steps have been taken by the Seller to enforce any Related
Security.
1.12 The total amount of arrears of interest or principal, together with any
fees, commissions and premiums payable at the same time as such interest
payment or principal repayment, on any Loan is not on the Initial Closing
Date or the relevant Assignment Date (as applicable), nor has been during
the 12 months immediately preceding the Initial Closing Date or the
relevant Assignment Date (as applicable) more than the amount of the
Monthly Payment then due.
1.13 No Loan is guaranteed by a third party save where the guarantee
constitutes legal, valid and binding obligations of the guarantor
enforceable in accordance with their terms.
1.14 The Outstanding Principal Balance, all Accrued Interest and all Arrears
of Interest on each Loan and its Related Security (other than any
agreement for Flexible Loan Drawings (if any), Delayed Cashbacks, Home
Cash Reserve Drawings and any other Further Advances) constitute a legal,
valid, binding and enforceable debt due to the Seller from the relevant
Borrower and the terms of each Loan and its Related Security constitute
valid and binding obligations of the Borrower enforceable in accordance
with their terms (other than any agreement for Flexible Loan Drawings (if
any), Delayed Cashbacks, Home Cash Reserve Drawings and any other Further
Advance).
1.15 Interest on each Loan is charged in accordance with the Standard
Documentation.
1.16 Interest on each Loan is payable monthly in arrear.
1.17 No Loan or any part of it:
(a) is or has ever been a regulated agreement within Section 8 of the
Consumer Credit Act 1974 (as amended, extended or re-enacted from
time to time);
(b) is or has ever been a linked transaction within Section 19 of the
Consumer Credit Act 1974 (as amended, extended or re-enacted from
time to time);
(c) is to be or has ever been treated as a regulated agreement under
Section 82(3) of the Consumer Credit Act 1974 (as amended,
extended or re-enacted from time to time or otherwise); or
(d) is or has ever been or may become liable to be re-opened on the
ground that the credit bargain is extortionate under Sections 137
to 140 of the Consumer Credit Act 1974 (as amended, extended or
re-enacted from time to time).
1.18 No Loan or any part of it is unenforceable under the Consumer Protection
(Contracts Concluded away from Business Premises) Regulations 1987 (as
amended, extended or re-enacted from time to time).
1.19 All of the Borrowers are individuals and were aged 18 years or older at
the date he or she executed the relevant Mortgage.
23
1.20 Not used.
1.21 Each loan in the relevant Portfolio is either:
(a) a Variable Rate Loan, Tracker Rate Loan or Fixed Rate Loan; or
(b) a New Loan Type which each of the Rating Agencies has confirmed in
writing may be included in the relevant New Portfolio.
2. MORTGAGES
2.1 The whole of the Outstanding Principal Balance on each Loan and any
Arrears of Interest and all Accrued Interest is secured by a Mortgage.
2.2 Each Mortgage is in the form of the pro forma contained in the Standard
Documentation which was applicable at the time the Mortgage was executed.
2.3 Each Mortgage constitutes a valid and subsisting first charge by way of
legal mortgage over the relevant Property subject only in certain
appropriate cases to applications for registrations at H.M. Land Registry
which where requisite have been made and are pending and in relation to
such cases the Seller is not aware of any caution, notice or any other
matter that would prevent such registration.
2.4 Each Mortgage has first priority for the whole of the Outstanding
Principal Balance on the Loan and all Arrears of Interest and Accrued
Interest thereon and all future interest, fees, costs and expenses
payable under or in respect of such Mortgage.
2.5 Each Loan and its Related Security is, save in relation to any Loan and
Related Security which is not binding by virtue of the Unfair Terms in
Consumer Contracts Regulations 1994 or (as the case may be) the Unfair
Terms in Consumer Contracts Regulations 1999, valid and binding and
enforceable in accordance with its terms. To the best of the Seller's
knowledge, none of the Loans or their Related Security is not binding by
virtue of its being unfair pursuant to the Unfair Terms in Consumer
Contracts Regulations 1994 or (as the case may be) the Unfair Terms in
Consumer Contracts Regulations 1999.
3. THE PROPERTIES
3.1 All of the Properties are in England or Wales.
3.2 Each Property constitutes a separate dwelling unit and is either freehold
or leasehold.
3.3 Save for children of Borrowers and children of someone living with the
Borrower, every person who, at the date upon which a Mortgage was
granted, had attained the age of eighteen and was in or about to be in
actual occupation of the relevant Property, is either named as a Borrower
or has signed a Deed of Consent in the form of the pro forma contained in
the Standard Documentation which was applicable at the time the Mortgage
was executed.
3.4 No Property has been let otherwise than by way of:
(a) an assured shorthold tenancy which meets the requirements of
Section 19A or Section 20 of the Housing Act 1988; or
24
(b) an assured tenancy;
in each case which meets the Seller's Policy in connection with lettings
to non-owners.
3.5 No Property is the subject of a shared ownership lease arrangement or
staircase purchasing arrangement.
4. VALUERS' AND SOLICITORS' REPORTS
4.1 Not more than twelve months prior to the grant of each Mortgage (or such
longer period as may be acceptable to a reasonable, prudent mortgage
lender) the Seller received a Valuation Report from a Valuer on the
relevant Property (or such other form of report concerning the valuation
of the relevant Property as would be acceptable to a reasonable, prudent
mortgage lender), the contents of which were such as would be acceptable
to a reasonable, prudent mortgage lender.
4.2 The principal amount of the Initial Advance (including any retention(s)
subsequently advanced to the Borrower but disregarding Capitalised
Expenses) is either:
(a) not more than 75 per cent. of the lower of the purchase price and
the appraised value of the Property as stated in the Valuation
Report referred to above in paragraph 4.1 (the APPRAISED VALUE)
(or, in case of a remortgage, of the appraised value) of the
Property; or
(b) greater than 75 per cent. (but not more than 97 per cent.) of the
lower of the purchase price and the appraised value (or, in the
case of a remortgage, of the appraised value), in which case for
those Loans originated prior to 1st January, 2001 only that part
of the Initial Advance which exceeds 75 per cent. of the lower of
the purchase price and the appraised value (or, in the case of a
remortgage, of the appraised value) is covered under the terms of
a MIG Policy.
4.3 Prior to the taking of each Mortgage (other than a remortgage), the
Seller:
(a) instructed the Seller's solicitor or licensed conveyancer to carry
out an investigation of title to the relevant Property and to
undertake such other searches, investigation, enquiries and other
actions on behalf of the Seller as are set out in the instructions
which the Seller issued to the relevant solicitor as are set out
in the CML's Lenders' Handbook for England and Wales (or such
comparable, predecessor or successor instructions and/or
guidelines as may for the time being be in place), subject only to
such variations made on a case by case basis as would have been
acceptable to a reasonable, prudent mortgage lender at the
relevant time;
(b) received a Certificate of Title from the solicitor or licensed
conveyancer referred to in paragraph (a) relating to such Property
the contents of which were such as would have been acceptable to a
reasonable, prudent mortgage lender at that time.
4.4 The benefit of all Valuation Reports any other valuation report referred
to in paragraph 4.1 and Certificates of Title which were provided to the
Seller not more than two years prior to the date of this Agreement can be
validly assigned to the Mortgages Trustee without obtaining the consent
of the relevant Valuer, solicitor or licensed conveyancer.
25
5. BUILDINGS INSURANCE
5.1 Each Property is insured under:
(a) a buildings insurance policy arranged by the Borrower in
accordance with the relevant Mortgage Conditions or in accordance
with the Alternative Insurance Recommendations; or
(b) the Halifax Policies; or
(c) a buildings insurance policy arranged by the relevant landlord; or
(d) the Properties in Possession Cover.
5.2 No act, event or circumstance has occurred which would adversely affect
the Properties in Possession Cover or entitle the insurers to refuse to
make payment thereunder or to reduce the amount payable in respect of any
claim thereunder.
5.3 All claims under the Properties in Possession Cover have been paid in
full within a reasonable time of the date of submission of the claim and,
save in respect of minor claims, there are no claims outstanding.
6. MIG POLICIES
6.1 Where applicable, the MIG Policies are in full force and effect in
relation to the Initial Portfolio or, as the case may be, each New
Portfolio and all premiums thereon have been paid.
6.2 The benefit of the Halifax Mortgage Re Limited MIG Policies can be and
will have been, with effect from the Closing Date, validly assigned to
the Mortgages Trustee and charged to the Security Trustee, insofar as
they relate to the Initial Portfolio or, as the case may be, each New
Portfolio in each case in the manner and to the extent contemplated by
the Transaction Documents.
6.3 To the best of the knowledge of the Seller no act, event or circumstance
has occurred which would adversely affect the MIG Policies or entitle the
insurers to refuse to make payment thereunder or to reduce the amount
payable in respect of any claim thereunder insofar as they relate to the
Initial Portfolio or, as the case may be, each New Portfolio.
6.4 All valid claims under the MIG Policies have been paid in full within a
reasonable time of the date of submission of the claim.
7. THE SELLER'S TITLE
7.1 The Seller has good title to, and is the absolute unencumbered legal and
beneficial owner of, all property, interests, rights and benefits agreed
to be sold and/or assigned by the Seller to the Mortgages Trustee
pursuant to this Agreement free and clear of all mortgages, charges,
liens, Encumbrances, claims and equities (including, without limitation,
rights of set-off or counterclaim and unregistered interests which falls
within any of the paragraphs of schedules 1 or 3 of the Land Registration
Act 2002 (as such schedules have effect in accordance with section 90(5)
and Schedule 12 of the Land Registration Act 2002) and the Seller is not
26
in breach of any covenant implied by reason of its selling the Portfolio
with full title guarantee (or which would be implied if the Registered
Transfers or Unregistered Transfers, as applicable, were completed).
7.2 All steps necessary to perfect the Seller's title to the Loans and the
Related Security were duly taken at the appropriate time or are in the
process of being taken, in each case (where relevant) within any
applicable priority periods or time limits for registration with all due
diligence and without undue delay.
7.3 Save for Title Deeds held at H.M. Land Registry, the Title Deeds and the
Customer Files relating to each of the Loans and their Related Security
are held by, or are under the control of:
(a) the Seller; or
(b) the Seller's solicitors or licensed conveyancers to the order of
the Seller,
and the Title Deeds held at H.M. Land Registry have been sent to it with
a request that any such Title Deeds will be returned to the Seller or its
solicitors on its behalf.
7.4 Neither the entry by the Seller into this Agreement nor any transfer,
assignment or creation of trust contemplated by this Agreement affects or
will adversely affect any of the Loans and their Related Security
(including, without limitation, the Insurance Policies) and the Seller
may freely assign all its rights, title, interests and benefits therein
as contemplated in this Agreement without breaching any term or condition
applying to any of them.
7.5 The Seller has not knowingly waived or acquiesced in any breach of any of
its rights in respect of a Loan or its Related Security, other than
waivers and acquiescence such as a reasonable, prudent mortgage lender
might make on a case by case basis.
8. GENERAL
8.1 The Seller has, since the making of each Loan, kept or procured the
keeping of full and proper accounts, books and records showing clearly
all transactions, payments, receipts, proceedings and notices relating to
such Loan.
8.2 Neither the Seller nor as far as the Seller is aware any of its agents
has received written notice of any litigation, claim, dispute or
complaint (in each case, subsisting, threatened or pending) in respect of
any Borrower, Property, Loan, Related Security, Halifax Policy, MIG
Policy or Properties in Possession Cover which (if adversely determined)
might have a material adverse effect on the Trust Property or any part of
it.
8.3 The Seller has received from each Borrower a variable direct debit
instruction in favour of the Seller signed by the relevant Borrower and
addressed to its bank, variable as to the amount payable by such Borrower
by unilateral notice given from time to time by the Seller to such
Borrower's bank without further instruction or consent from such Borrower
or such other method of payment as may be acceptable to a reasonable,
prudent mortgage lender.
8.4 There are no authorisations, approvals, licences or consents required as
appropriate for the Seller to enter into or to perform the obligations
under this Agreement or to render this Agreement legal, valid, binding,
enforceable and admissible in evidence.
27
8.5 The Insurance Acknowledgements are valid, binding and enforceable against
the relevant insurer by the Mortgages Trustee and the Security Trustee.
28
SCHEDULE 2
REGISTERED TRANSFER
IN THE FORM OF HM LAND REGISTRY FORM TR4 AS SHOWN OVERLEAF WITH SUCH AMENDMENTS
AS THE MORTGAGES TRUSTEE MAY REASONABLY REQUIRE TO GIVE EFFECT TO THIS
AGREEMENT OR IN SUCH OTHER FORM AS THE MORTGAGES TRUSTEE MAY REASONABLY REQUIRE
TO TAKE ACCOUNT OF CHANGES IN LAW OR PRACTICE.
29
SCHEDULE 3
UNREGISTERED TRANSFER
THIS DEED OF TRANSFER OF MORTGAGES is made the day of
BY:
(1) HALIFAX PLC whose registered office is at Trinity Road, Halifax, West
Yorkshire HX1 2RG (hereinafter called the TRANSFEROR) of the one part;
and
IN FAVOUR OF:
(1) PERMANENT MORTGAGES TRUSTEE LIMITED whose registered office is 47
Esplanade, St Helier, Jersey JE1 0BD (hereinafter called the TRANSFEREE)
of the other part.
WHEREAS:
(A) By the charges by way of legal mortgage (the MORTGAGES) brief particulars
of which are set out in the Annexure hereto the properties brief
particulars of which are similarly set out became security for the
repayment of the monies therein mentioned.
(B) By a Mortgage Sale Agreement (as amended and/or restated from time to
time) made between, inter alia, the Transferor and the Transferee on 14th
June, 2002 (as the same may be or have been amended, varied or
supplemented from time to time with the consent of the parties hereto,
the MORTGAGE SALE AGREEMENT), the Transferor agreed to sell and the
Transferee agreed to buy all right, title, interest, benefit and
obligation (both present and future) of the Transferor in and under those
Mortgages and all other mortgages in favour of the Transferor over such
properties which do not relate to registered land for the consideration
mentioned in the said Mortgage Sale Agreement.
NOW THIS DEED WITNESSETH as follows:
1. In consideration for the sums payable and other consideration indicated
under the Mortgage Sale Agreement (receipt of which is hereby
acknowledged), the Transferor hereby transfers unto the Transferee with
full title guarantee all rights, title, interests, benefits and
obligations (both present and future) of the mortgagee in and under the
Mortgages including for the avoidance of doubt:
(a) the right to demand, sue for, recover, receive and give receipts
for all principal moneys payable or to become payable under the
relevant Mortgages or the unpaid part thereof and the interest due
or to become due thereon;
(b) the benefit of all securities for such principal moneys and
interest, the benefit of all consents to mortgage signed by
occupiers of the mortgaged properties and the benefit of and the
right to sue on all covenants with, or vested in, the mortgagee in
relation to each Mortgage and the rights to exercise all powers of
the mortgagee in relation to each Mortgage;
30
(c) all the estate and interest in the relevant mortgaged properties
vested in the mortgagee subject to redemption or cesser; and
(d) all causes of action of the mortgagee against any person in
connection with any report, valuation, opinion, certificate,
consent to mortgage or other statement of fact or opinion given in
connection with any Mortgage or affecting the decision to make the
relevant advance.
2. This Deed shall be governed by and construed in accordance with English
law.
IN WITNESS WHEREOF this document has been executed and delivered as a deed the
day and year first before written.
EXECUTED as a DEED by )
HALIFAX PLC )
acting by its attorney in )
the presence of: )
Witness:
Name:
Address:
31
ANNEX 1
Account No. Property address Date of Mortgage Borrower
32
SCHEDULE 4
LENDING CRITERIA
LENDING CRITERIA
The Loans in the Initial Portfolio or, as the case may be, the relevant New
Portfolio were originated according to the Seller's lending policy at the
relevant time, which in the case of the Initial Portfolio included the criteria
set out below. However, the Seller retains the right to revise its lending
policy from time to time, and so the criteria applicable to the New Loans may
not be the same as those set out below.
1. Types of Property
Properties may be either freehold or leasehold. In the case of leasehold
properties, the unexpired portion of the lease must in most cases not
expire earlier than 30 years after the term of the Loan. The property
must be used solely for residential purposes (with extremely limited case
by case exceptions) and must be in sound structural condition and repair
or be capable of being put into such state. House boats, mobile homes
and any property on which buildings insurance cannot be arranged are not
acceptable. All persons who are to be legal owners of the Property on
completion of the relevant Mortgage must be Borrowers.
All properties have been valued by a valuer approved by the Seller or,
where appropriate, according to a methodology which would meet the
standards of a reasonable, prudent mortgage lender and which has been
approved by the Seller.
2. Term of Loan
There is no minimum term on home purchase Loans and the maximum term is
40 years for all loans. A repayment period for a new Further Advance
that would extend beyond the term of the original advance may also be
accepted at the Seller's discretion, subject to the following:
(a) the consent of any subsequent lender or guarantor to the Further
Advance;
(b) the Seller may in its discretion extend the period of the original
advance, provided that, in all leasehold cases, not less than 30
years of the lease must be left unexpired at the end of the term
of the Mortgage; and
(c) the approval of the valuer where the valuer has previously
recommended a term which is shorter than the maximum Loan terms
referred to above.
If a Borrower requests to increase the term of the existing Loan, the
maximum term for a repayment Loan is 25 years from the date from which
the extended term is granted. However, the total term from the start
date of the account must not exceed 40 years.
3. Age of Applicant
All Borrowers must be aged 18 or over. There is no maximum age limit.
However, if the term of the Mortgage extends into retirement, the Seller
will attempt to ascertain the
33
Borrower's anticipated income in retirement. If the Seller determines the
Borrower will not be able to afford the Mortgage into retirement, the
application will be declined. If the Borrower is already retired, the
Seller will consider the Borrower's ability to support the Loan.
4. Loan to Value (or LTV) Ratio
The maximum original LTV ratio of Loans in the Initial Portfolio is 97
per cent. At the date of this Agreement, for Properties of
{pound-sterling}150,000 or less, the Seller may lend up to 97 per cent.
of the improved valuation of the Property (the original valuation plus
the increase in value deriving from any improvements). For Properties in
excess of {pound-sterling}150,000, the permissible LTV ratio decreases as
the Loan amount increases. The Seller will not provide Loans in excess
of 100 per cent. of the sum of the purchase price and the increase in
value deriving from any improvements.
In the case of a Property that is being purchased, value is determined by
the lower of the valuation and the purchase price. In the case of a
remortgage or Further Advance, value is determined on the basis of a
valuation only.
5. Mortgage Indemnity Guarantee Policies/High LTV Fees
Borrowers are currently required to pay high LTV fees to the Seller for
each Mortgage account where the aggregate of the outstanding principal
balance of the relevant Loan(s) at origination (excluding any capitalised
high LTV fees and/or booking fees and/or valuation fees) exceeds certain
specified percentages.
If the LTV ratio exceeds 90 per cent., the Borrower pays high LTV fees
based on the difference between the actual LTV ratio and a 75 per cent.
LTV ratio.
Prior to 1st January, 2001, the Seller required cover under mortgage
indemnity guarantee, or MIG, policies for Mortgages where the LTV ratio
exceeded 75 per cent., though during 1999 and 2000 the Seller paid the
premium for the MIG cover if the LTV ratio was between 75 per cent. and
90 per cent. Since 1st January, 2001, the Seller has not required cover
under MIG policies for any Loans.
6. Status of Applicant(s)
The maximum amount of the aggregate Loan(s) under a mortgage account is
determined by a number of factors, including the applicant's income. In
determining income, the Seller includes basic salary as primary income,
along with performance or profit-related pay, allowances, mortgage
subsidies, pensions, annuities and state benefits. Payments for
overtime, bonus and commissions will not be automatically included in
income. The Seller will deduct the annual cost of existing commitments
from the applicant's gross income, depending on the applicant's credit
score. The Seller will also verify the applicant's employment.
In cases where a single Borrower is attempting to have the Seller take a
secondary income into account, the Seller will consider the
sustainability of the Borrower's work hours, the similarity of the jobs
and/or skills, the commuting time and distance between the jobs, the
length of employment at both positions and whether the salary is
consistent with the type of employment. The Seller will determine, after
assessing the above factors, if it is appropriate
34
to use both incomes. If so, both incomes will be used as part of the
normal income calculation.
When there are two applicants, the Seller adds joint incomes together for
the purpose of deciding which income band to use. The Seller may, at its
discretion, consider the income of additional applicants as well but only
a maximum rate of one times that income.
The Seller may exercise discretion within its lending criteria in
applying those factors which are used to determine the maximum amount of
the Loan(s). Accordingly, these parameters may vary for some Loans. The
Seller may take the following into account when exercising discretion:
credit score result, existing customer relationship, percentage of LTV,
stability of employment and career progression, availability of living
allowances and/or mortgage subsidy from the employer, employer's
standing, regularity of overtime, bonus or commission (up to a maximum of
60 per cent. of the income), credit commitments, quality of security
(such as type of property, repairs, location or saleability), and the
increase in income needed to support the Loan.
The Seller may not exercise discretion where it is lending over 95 per
cent. of value or the Borrower's credit score fails. There is an
exception from this policy for existing Borrowers who are moving home and
the Seller's overall position is improved.
7. Credit History
(a) Credit Search
With the exception, in some circumstances, of Further Advances to
existing Borrowers, a credit search is carried out in respect of all
applicants. Applications may be declined where an adverse credit history
(for example, county court judgement, default, or bankruptcy notice) is
revealed.
(a) Existing Lender's Reference
In some cases, the Seller may also seek a reference from any existing
and/or previous lender. Any reference must satisfy the Seller that the
account has been properly conducted and that no history of material
arrears exists.
(a) First Time Buyers/Applicants in rented accommodation
Where applicants currently reside in rented accommodation, the Seller may
seek a landlord's reference. In addition, if considered appropriate, a
further reference may be taken in connection with any other property
rented by the applicant(s) within the preceding 18 months.
(a) Bank Reference
A bank reference may be sought or the applicants may be required to
provide bank statements in support of his or her application.
8. Scorecard
The Seller uses some of the above criteria and various other criteria to
provide an overall score for the application that reflects a statistical
analysis of the risk of advancing the Loan.
35
The lending policies and processes are determined centrally to ensure
consistency in the management and monitoring of credit risk exposure.
Full use is made of software technology in credit scoring new
applications. Credit scoring applies statistical analysis to publicly
available data and customer- provided data to assess the likelihood of an
account going into arrears. In addition, the Seller is currently
developing behavioural scoring, which will enable it to use customer data
on existing accounts to make further lending decisions and to prioritise
action in the case of arrears. Mortgage collection is conducted through a
number of payment collection departments.
The Seller reserves the right to decline an application that has received
a passing score. The Seller does have an appeals process if an applicant
believes his or her application to be unfairly denied. It is the
Seller's policy to allow only authorised individuals to exercise
discretion in granting variances from the scorecard.
36
SCHEDULE 5
POWER OF ATTORNEY IN FAVOUR OF FUNDING 1, THE MORTGAGES TRUSTEE
AND THE SECURITY TRUSTEE
THIS DEED OF POWER OF ATTORNEY is made on the [{circle}], 2002 by:
(1) HALIFAX PLC whose registered office is at Trinity Road, Halifax, West
Yorkshire HX1 2RG (registered number 02367076) (the SELLER);
IN FAVOUR OF each of:
(2) PERMANENT FUNDING (NO. 1) LIMITED whose registered office is at Blackwell
House, Guildhall Yard, London EC2V 5AE (registered number 4267660)
(FUNDING 1);
(3) PERMANENT MORTGAGES TRUSTEE LIMITED whose registered office is at 47
Esplanade, St Helier, Jersey JE1 0BD (registered number 83116) (the
MORTGAGES TRUSTEE);
(4) STATE STREET BANK AND TRUST COMPANY a Massachusetts trust company
organised under the laws of the Commonwealth of Massachusetts, United
States of America, with a branch office at 1 Canada Square, Canary Wharf,
London E14 5AF in its capacity as trustee (the SECURITY TRUSTEE, which
expression shall include such company and all other persons or companies
for the time being acting as the security trustee or security trustees
under the Funding 1 Deed of Charge).
WHEREAS:
(A) By virtue of a mortgage sale agreement (the MORTGAGE SALE AGREEMENT)
dated 14th June, 2002 and made between the Seller (1) Funding 1 (2) the
Mortgages Trustee (3) and State Street Bank and Trust Company (4)
provision was made for the execution by the Seller of this Power of
Attorney.
(B) Words and phrases in this Power of Attorney shall (save where expressed
to the contrary) have the same meanings respectively as the words and
phrases in the Master Definitions and Construction Schedule dated 13th
June, 2002 and signed for the purposes of identification by Allen & Overy
and Sidley Austin Brown & Wood.
NOW THIS DEED WITNESSETH as follows:
1. The Seller irrevocably and by way of security for the performance of the
covenants, conditions and undertakings on the part of the Seller
contained in the Mortgage Sale Agreement and the Servicing Agreement
HEREBY APPOINTS each of Funding 1, the Mortgages Trustee and the Security
Trustee and any receiver and/or administrator appointed from time to time
in respect of Funding 1 and/or the Mortgages Trustee or their assets
(each an ATTORNEY) severally to be its true and lawful attorney for the
Seller and in the Seller's name or otherwise to do any act matter or
thing which any Attorney considers necessary or desirable for the
protection, preservation or enjoyment of that Attorney's interest in the
Loans and their Related Security and/or which ought to be done under the
covenants, undertakings and provisions contained in the Mortgage Sale
Agreement including (without limitation) any or all of the following:
37
(a) to execute, sign, seal and deliver (using the company seal of the
Seller where appropriate) any conveyance or transfer of the Loans
or any of them to the Mortgages Trustee and its successors in
title or to any other person or persons entitled to the benefit
thereof;
(b) to execute, sign, seal and deliver (using the company seal of the
Seller where appropriate) any conveyance, assignment or transfer
of the Related Security or any item comprised therein (to the
extent only that such item or items relate to the Loans) to the
Mortgages Trustee and its successors in title or to any other
person or persons entitled to the benefit thereof or entitled to
be registered at H.M. Land Registry as proprietor thereof (as the
case may be);
(c) to do every other act or thing which the Seller is obliged to do
under the Mortgage Sale Agreement or which that Attorney may
otherwise consider to be necessary proper or expedient for fully
and effectually vesting or transferring the interests sold
thereunder in the Loans and their Related Security or any or each
of them and/or the Seller's estate right and title therein or
thereto in or to the Mortgages Trustee and its successors in title
or to any other person or persons entitled to the benefit thereof
(as the case may be) in the same manner and as fully and
effectually in all respects as the Seller could have done
including, without limitation, any of the acts referred to in
Clause 6.3(a) to (c) of the Mortgage Sale Agreement;
(d) to exercise its rights, powers and discretions under the Loans
including the right to fix the rate or rates of interest payable
under the Loans in accordance with the terms thereof including,
for the avoidance of doubt, whilst such Loans subsist and subject
to the consent of the Mortgages Trustee being given to the setting
of such rates, setting the Seller's Variable Base Rate in the
circumstances referred to in Clause 44 of the Servicing Agreement
and/or following perfection pursuant to Clause 6.1 of the Mortgages
Sale Agreement PROVIDED THAT nothing in the Clause shall prevent
the Seller (or any of its attorneys from time to time) from
setting a higher rate than those set or to be set or required or
to be required by the Mortgages Trustee or Funding 1 under this
Power of Attorney;
(e) to discharge the Mortgages or any of them and to sign, seal,
deliver and execute such receipts releases surrenders instruments
and deeds as may be requisite or advisable in order to discharge
the relevant Property or Properties from the Mortgages or any of
them; and
(f) to exercise all the powers of the Seller in relation to such Loans
and their Related Security.
2. Each Attorney shall have the power by writing under its hand by an
officer of the Attorney from time to time to appoint a substitute who
shall have power to act on behalf of the Seller as if that substitute
shall have been originally appointed Attorney by this Power of Attorney
(including, without limitation, the power of further substitution) and/or
to revoke any such appointment at any time without assigning any reason
therefor.
3. The Seller hereby agrees at all times hereafter to ratify and confirm
whatsoever the said Attorney or its attorneys shall lawfully do or cause
to be done in and concerning the Loans or their Related Security by
virtue of this Power of Attorney.
38
4. The laws of England shall apply to this Power of Attorney and the
interpretation thereof.
39
IN WITNESS WHEREOF the Seller has executed and delivered this document as a
deed the day and year first before written.
THE COMMON SEAL of )
HALIFAX PLC )
was hereunto affixed in )
the presence of: )
.................................................Authorised Signatory
.................................................Authorised Signatory
40
SCHEDULE 6
LOAN REPURCHASE NOTICE
Dated [ ]
1. It is hereby agreed that for the purpose of this notice the PRINCIPAL
AGREEMENT shall mean the Mortgage Sale Agreement dated 14th June, 2002 as
amended on 6th March, 2003 and or as amended and restated on [25th
November, 2003] and from time to time made between, amongst others,
HALIFAX PLC (the SELLER) (1) PERMANENT FUNDING (NO. 1) LIMITED (2)
PERMANENT MORTGAGES TRUSTEE LIMITED (the MORTGAGES TRUSTEE) (3) THE BANK
OF NEW YORK (as the same may be or have been amended, varied or
supplemented from time to time with the consent of those parties).
2. Save where the context otherwise requires, words and expressions in this
notice shall have the same meanings respectively as when used in the
Principal Agreement.
3. In accordance with Clause 8.5 of the Principal Agreement, upon receipt of
this Loan Repurchase Notice by the Seller there shall exist between the
Seller and the Mortgages Trustee an agreement (the AGREEMENT FOR SALE)
for the sale by the Mortgages Trustee to the Seller of the Loans and
their Related Security more particularly described in the Schedule
hereto. Completion of such sale shall take place on {circle}.
4. The Agreement for Sale shall incorporate, mutatis mutandis, the relevant
provisions of the Principal Agreement.
............................................
Signed for and on behalf of
PERMANENT MORTGAGES TRUSTEE LIMITED
[On duplicate
We hereby acknowledge receipt of and confirm the contents of the Loan
Repurchase Notice dated [ ].
............................................
Signed for and on behalf of
HALIFAX PLC]
SCHEDULE
5. 6. 7. 8. 9.
Title No. Borrower Account No. Property Postcode Date of Mortgage
(if registered)
41
SCHEDULE 7
ASSIGNMENT OF THIRD PARTY RIGHTS
THIS DEED OF ASSIGNMENT is made on [{circle}]
BY:
(1) HALIFAX PLC (registered number 02367076), a public limited company
incorporated under the laws of England and Wales, whose registered office
is at Trinity Road, Halifax, West Yorkshire HX1 2RG (the TRANSFEROR); and
IN FAVOUR OF:
(2) PERMANENT MORTGAGES TRUSTEE LIMITED (registered number 83116), a private
limited company incorporated under the laws of Jersey, Channel Islands,
whose registered office is at 47 Esplanade, St Helier, Jersey JE1 0BD
(the TRANSFEREE).
WHEREAS:
(A) By the charges by way of legal mortgage (the MORTGAGES) brief particulars
of which are set out in the Annexure hereto the properties brief
particulars of which are similarly set out became security for the
repayment of the moneys therein mentioned.
(B) By the Mortgage Sale Agreement, the Transferor agreed to sell and the
Transferee agreed to buy all right, title, interest and benefit (both
present and future) of the Transferor in and under those Mortgages and
all Related Security and all monies secured by those Mortgages and
Related Security.
NOW THIS DEED WITNESSETH as follows:
1. Terms used (but not defined) in this Deed (including the recitals) shall,
except where the context otherwise requires and save where otherwise
defined in this Deed, have the meanings given to them in the master
definitions and construction schedule dated [25th November,] 2003 as
amended and/or restated from time to time signed by, amongst others, the
parties to this Deed (as the same may be amended, varied or supplemented
from time to time with the consent of the parties to this Deed) (the
MASTER DEFINITIONS AND CONSTRUCTION SCHEDULE) and this Deed shall be
construed in accordance with the interpretation provisions set out in
Clause thereof.
2. The Transferor hereby assigns absolutely unto the Transferee with full
title guarantee:
(a) the benefit of all Related Security relating to the Mortgages
(including without limitation all securities for the principal
moneys and interest secured by the Mortgages and the benefit of
all consents to mortgage signed by occupiers of the mortgaged
properties and the benefit of all guarantees, indemnities and
surety contracts relating to the Mortgages) other than any such
Related Security which has been transferred to the Transferee by
other means or which is not otherwise capable of such transfer;
and
42
(b) all causes of action of the Transferor against any person in
connection with any report, valuation, opinion, certificate,
consent or other statement of fact or opinion given in connection
with any Related Security relating to the Mortgages or affecting
the decision to make any advance in connection with such
Mortgages.
3. This Deed shall be governed by and construed in accordance with English
law.
IN WITNESS WHEREOF this document has been executed and delivered as a deed the
day and year first before written.
EXECUTED AS A DEED by )
HALIFAX PLC )
acting by its attorney in )
the presence of: )
Witness's signature:
Name:
Address:
43
ANNEX 2
Account No. Property address Borrower Date of Mortgage
44
SCHEDULE 8
ASSIGNMENT OF HALIFAX MORTGAGE RE LIMITED MIG POLICIES
THIS DEED is made on [{circle}]
BY:
(1) HALIFAX PLC (registered number 02367076), a public limited company
incorporated under the laws of England and Wales, whose registered office
is at Trinity Road, Halifax, West Yorkshire HX1 2RG (the SELLER);
IN FAVOUR OF:
(2) PERMANENT MORTGAGES TRUSTEE LIMITED (registered number 83116), a private
limited company incorporated under the laws of Jersey, Channel Islands,
whose registered office is at 47 Esplanade, St Helier, Jersey, JE1 0BD
(the MORTGAGES TRUSTEE).
WHEREAS:
(A) By a Mortgage Sale Agreement dated 14th June, 2002, as amended and
restated on 6th March, 2003 and as further amended and rested on [25th
November, 2002] made between, amongst others, the parties hereto, the
Seller agreed to transfer to the Mortgages Trustee certain charges by way
of legal mortgage secured on residential property in England and Wales
together with the benefit of any monies secured thereby from time to
time.
(B) The Seller has the benefit of mortgage indemnity insurance policies brief
details of which are set out in the Schedule to this Deed (the HMRL MIG
POLICIES).
(C) The Seller has agreed with the Mortgages Trustee to assign to the
Mortgages Trustee the benefit of the HMRL MIG Policies to the extent that
they relate to the Loans in the Portfolio.
(D) The insurance businesses (including, for the avoidance of doubt, the HMRL
MIG Policies) of Halifax Mortgage Re Limited were acquired by HBOS
Insurance (PCC) Guernsey Limited on 21st December, 2001.
NOW THIS DEED WITNESSETH as follows:
1. Terms used (but not defined) in this Deed (including the recitals) shall,
except where the context otherwise requires and save where otherwise
defined in this Deed, have the meanings given to them in the master
definitions and construction schedule dated [25th November,] 2003 as
amended and/or restated from time to time, signed by amongst others, the
parties to this Deed, (as the same may be amended, varied or supplemented
from time to time with the consent of the parties hereto) (the MASTER
DEFINITIONS CONSTRUCTION SCHEDULE) and this Deed shall be construed in
accordance with the interpretation provisions set out in Clause thereof.
2. The Seller with full title guarantee hereby conveys, transfers and
assigns to the Mortgages Trustee absolutely all its right, title,
interest and benefit in the HMRL MIG Policies to the extent that they
relate to the Mortgages which as at this date are comprised in the
Portfolio
45
and all moneys and proceeds to become payable under any of the
same and all covenants relating thereto and all powers and remedies for
enforcing the same.
3. This Deed shall be governed by and construed in accordance with English
law.
IN WITNESS WHEREOF which this document has been executed and delivered as a
deed the day and year first before written.
EXECUTED AS A DEED by )
HALIFAX PLC )
acting by its attorney in )
the presence of: )
Witness:
Name:
Address:
SCHEDULE
46
SCHEDULE 9
HALIFAX MORTGAGE RE LIMITED MIG POLICIES ASSIGNMENT NOTICE
To: HBOS Insurance (PCC) Guernsey Ltd
c/o AON Insurance Managers (Guernsey) Limited
(as Managers of HBOS Insurance (PCC) Ltd)
PO Box 33
Maison Trinity
Trinity Square
St Peter Port
Guernsey GY1 4AT
[{circle}{circle}]
Dear Sirs,
RE: ASSIGNMENT OF MORTGAGE INDEMNITY INSURANCE POLICIES NUMBERED [{circle}]
RESPECTIVELY (THE MIG POLICIES)
We hereby give you notice that, by an Assignment dated [{circle}] and made
between ourselves and Permanent Mortgages Trustee Limited (the MORTGAGES
TRUSTEE) (a copy of which is attached to this notice), we assigned all of our
right, title, benefit and interest in the MIG Policies to the Mortgages Trustee
(to the extent that they relate to the loans and the mortgages in a portfolio
referred to in [the mortgage sale agreement dated [25th November, 2003] as
amended and/or restated from time to time between ourselves, Permanent Funding
(No. 1) Limited, the Mortgages Trustee and The Bank of New York/the New
Portfolio Notice dated [{circle}] between ourselves, Permanent Funding (No.1)
Limited and the Mortgages Trustee).
Yours faithfully,
....................................................
For and on behalf of
HALIFAX PLC
Copy: Permanent Mortgages Trustee Limited
Permanent Funding (No. 1) Limited
The Bank of New York
47
SCHEDULE 10
INSURANCE ENDORSEMENT
ON THE HEADED NOTEPAPER OF [THE RELEVANT INSURER ]
ENDORSEMENT [X] attaching to and forming part of policy number [policy number]
(the POLICY) issued by [name of Insurer] (the INSURER).
It is hereby noted and agreed that with effect from the date of this
Endorsement:
1. The definition of INSURED shall be deleted in its entirety and replaced
with the following wording:
(a) "Halifax plc (HALIFAX) whose registered office is at Trinity Road,
Halifax, West Yorkshire, HX1 2RG;
(b) any assignee to whom Halifax has assigned (whether legally or
equitably and whether by way of security or otherwise) any loans
and/or mortgages and related collateral and/or assets to which
this Policy relates (an ASSIGNEE) (whether or not any such
Assignee holds the same on trust for another or others); and
(c) any person benefiting from security granted by the Halifax or its
Assignee over any loans and/or mortgages and related collateral
and/or assets to which this Policy relates in connection with the
financing or re-financing of such loans and/or mortgages and
related collateral and/or assets."
2. Each term of the Policy which is inconsistent with the intent and/or
effect of the amended definition of INSURED contemplated in paragraph 1
above (the NEW DEFINITION) shall be subject to the New Definition and
shall not apply to the extent that such term of the Policy is
inconsistent with the New Definition.
3. The Insurer acknowledges and agrees that any Insured under the Policy may
from time to time appoint Halifax plc or any other person as agent of
that Insured to deal with the Insurer on its behalf in the administration
of and making and payment of claims under the Policy.
All other terms, clause and conditions of the Policy remain unchanged.
This Endorsement is signed for and on behalf of the Insurer by a duly
authorised signatory:
.....................................
[Name]
[Position]
[Insurer]
Dated , 2003
48
SCHEDULE 11
INSURANCE ACKNOWLEDGEMENTS
PART 1
ON THE HEADED NOTEPAPER OF GE MORTGAGE INSURANCE LIMITED
To: Halifax plc (the SELLER)
Trinity Road
Halifax
West Yorkshire
HX1 2RG
Permanent Mortgages Trustee Limited (the MORTGAGES TRUSTEE)
47 Esplanade
St Helier
Jersey
JE1 08D
Channel Islands
Permanent Funding (No. 1) Limited (FUNDING 1)
Blackwell House
Guildhall Yard
London
EC2V 5AE
The Bank of New York
One Canada Square
London E14 5AL
[date]
Dear Sirs,
MORTGAGE INDEMNITY GUARANTY POLICIES NUMBERS [{circle}] AND [{circle}] (THE MIG
POLICIES)
We refer to the transaction entered into or to be entered into between, inter
alios, each of the parties to whom this letter is addressed, pursuant to which:
(a) the Seller may assign or agree to transfer its interest in properties
which are (or may from time to time be) covered by the MIG Policies to
the Mortgages Trustee;
(b) the Mortgages Trustee may declare a trust over its interest in such
properties in favour of Funding 1 and the Seller; and
(c) Funding 1 may charge its interest in such properties to the Security
Trustee.
In consideration of the payment of {pound-sterling}1 made by each of the
Seller, the Mortgages Trustee, Funding 1 and the Security Trustee (receipt
whereof is hereby acknowledged), we hereby confirm that the
49
arrangements set out in PARAGRAPHS (A) to (C) inclusive above will not cause the
MIG Policies to lapse or terminate and, notwithstanding any such arrangements,
we will continue to pay claims under the MIG Policies in the same way and in the
same amount as we would have paid them, had the said arrangements not been
entered into.
Yours faithfully,
FOR AND ON BEHALF OF GE MORTGAGE INSURANCE LIMITED
50
PART 2
ON THE HEADED NOTEPAPER OF HBOS INSURANCE (PCC) GUERNSEY LTD
To: Halifax plc (the SELLER)
Trinity Road
Halifax
West Yorkshire
HX1 2RG
Permanent Mortgages Trustee Limited (the MORTGAGES TRUSTEE)
47 Esplanade
St Helier
Jersey
JE1 08D
Channel Islands
Permanent Funding (No. 1) Limited (FUNDING 1)
Blackwell House
Guildhall Yard
London
EC2V 5AE
State Street Bank and Trust Company (the SECURITY TRUSTEE)
225 Franklin Street
Boston
Massachusetts 02110
[date]
Dear Sirs,
MORTGAGE INDEMNITY GUARANTEE POLICY NUMBERS [{circle}] AND [{circle}] (THE MIG
POLICIES)
We refer to the transaction entered into or to be entered into between, inter
alios, each of the parties to whom this letter is addressed, pursuant to which:
(a) all of the Seller's right, title, benefit and interest in the MIG
Policies (to the extent that the same relate to the mortgage loans and
their collateral security to be assigned by the Seller to the Mortgages
Trustee pursuant to a mortgage sale agreement to be entered into between
each of the parties to whom this letter is addressed) shall be assigned
by the Seller to the Mortgages Trustee;
(b) the Seller may assign or agree to transfer its interest in properties
which are (or may from time to time be) covered by the MIG Policies to
the Mortgages Trustee;
(c) the Mortgages Trustee may declare a trust over its interest in such
properties in favour of Funding 1 and the Seller; and
(d) Funding 1 may charge its beneficial interest in such properties to the
Security Trustee.
51
In consideration of the payment of {pound-sterling}1 made by each of the
Seller, the Mortgages Trustee, Funding 1 and the Security Trustee (receipt
whereof is hereby acknowledged), we hereby confirm that the arrangements set
out in PARAGRAPHS (A) to (C) inclusive above will not cause the MIG Policies to
lapse or terminate and, notwithstanding any such arrangements, we will continue
to pay claims under the MIG Policies in the same way and in the same amount as
we would have paid them, had the said arrangements not been entered into.
Yours faithfully,
FOR AND ON BEHALF OF HBOS INSURANCE (PCC) GUERNSEY LIMITED
52
SCHEDULE 12
NEW PORTFOLIO NOTICE
Dated [ ]
1. It is hereby agreed for the purpose of this notice the PRINCIPAL AGREEMENT
shall mean the Mortgage Sale Agreement dated 14th June, 2002 as amended and
restated on 6th March, 2003 and as further amended and restated on [25th
November], 2003 and from time to time made between HALIFAX PLC (the SELLER)
(1) PERMANENT FUNDING (NO. 1) LIMITED (FUNDING 1) (2) PERMANENT MORTGAGES
TRUSTEE LIMITED (the MORTGAGES TRUSTEE) (3) and THE BANK OF NEW YORK (as
the same may be or have been amended, varied or supplemented from time to
time with the consent of those parties).
2. Save where the context otherwise requires, words and expressions in this
notice shall have the same meanings respectively as when used in the
Principal Agreement.
3. In accordance with and subject to Clause 4.1 of the Principal Agreement,
upon receipt by the Seller of the duplicate of this notice signed by
Funding 1 and the Mortgages Trustee, there shall exist between the Seller,
Funding 1 and the Mortgages Trustee an agreement (the AGREEMENT FOR SALE)
for the sale by the Seller to the Mortgages Trustee of the New Loans and
their Related Security more particularly described in the Schedule hereto
(other than any New Loans and their Related Security which have been
redeemed in full prior to the next following Assignment Date). Completion
of such sale shall take place on [ ].
4. The Agreement for Sale shall incorporate, mutatis mutandis, the relevant
provisions of the Principal Agreement.
.................................................................
Signed for and on behalf of
HALIFAX PLC
[On duplicate:
We hereby acknowledge receipt of the New Portfolio Notice dated
[ ], and confirm that we are prepared to purchase New Loans as set out in that
notice.
.................................................................
Signed for and on behalf of
PERMANENT FUNDING (NO. 1) LIMITED
.................................................................
Signed for and on behalf of
[PERMANENT MORTGAGES TRUSTEE LIMITED]
SCHEDULE
1. 2. 3. 4. 5.
Title No. Borrower Property Postcode Account No. Date of Mortgage
(if registered)
53
APPENDIX 1
PART 1 INITIAL PORTFOLIO
PART 2 STANDARD DOCUMENTATION
54
APPENDIX 2
PART 1
INITIAL PORTFOLIO
This is Part 1 (on accompanying CD-ROM) of the Exhibit to a Mortgage Sale
Agreement dated 14th June, 2002 made between Halifax plc (1) Permanent Funding
(No. 1) Limited (2) Permanent Mortgages Trustee Limited (3) and State Street
Bank and Trust Company (4).
Ian G Stewart
HALIFAX PLC
David Balai
PERMANENT FUNDING (NO. 1) LIMITED
David Balai
PERMANENT MORTGAGES TRUSTEE LIMITED
David Duclos
STATE STREET BANK AND TRUST COMPANY
55
PART 2
STANDARD DOCUMENTATION
This is Part 2 of the Exhibit to a Mortgage Sale Agreement dated 14th June,
2002 made between Halifax plc (1) Permanent Funding (No. 1) Limited (2)
Permanent Mortgages Trustee Limited (3) and State Street Bank and Trust Company
(4).
Ian G Stewart
HALIFAX PLC
David Balai
PERMANENT FUNDING (NO. 1) LIMITED
David Balai
PERMANENT MORTGAGES TRUSTEE LIMITED
David Duclos
STATE STREET BANK AND TRUST COMPANY
56
SIGNATORIES
SIGNED by )
for and on behalf of )
HALIFAX PLC )
SIGNED by )
for and on behalf of )
PERMANENT FUNDING (NO. 1) LIMITED )
SIGNED by )
for and on behalf of )
PERMANENT MORTGAGES )
TRUSTEE LIMITED )
SIGNED by )
for and on behalf of )
THE BANK OF NEW YORK )
57