Document:

Exhibit 10.3

 

EXECUTION VERSION

 

 

 

CUSTODIAL AGREEMENT

 

Among

 

MERRILL LYNCH COMMERCIAL FINANCE CORP.

 

as Buyer

 

and

 

MORTGAGEIT, INC.,

as Seller

 

and

 

DEUTSCHE BANK NATIONAL TRUST COMPANY,

 

as Custodian

 

Dated as of June 20, 2003

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.

  	
   

  	
  Definitions.

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.

  	
   

  	
  Deposit of Mortgage Loans; Effecting a Transaction.

  	
   

  	
  5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.

  	
   

  	
  Mortgage Loan Schedule or Exception Report.

  	
   

  	
  6

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.

  	
   

  	
  Obligations of the Custodian.

  	
   

  	
  8

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.

  	
   

  	
  Additional Purchased Mortgage Loans.

  	
   

  	
  8

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.

  	
   

  	
  Future Defects

  	
   

  	
  9

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.

  	
   

  	
  Release for Servicing.

  	
   

  	
  9

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.

  	
   

  	
  Limitation on Release.

  	
   

  	
  9

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 9.

  	
   

  	
  Release for Payment.

  	
   

  	
  10

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 10.

  	
   

  	
  Covenants of the Seller.

  	
   

  	
  11

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 11.

  	
   

  	
  Repurchase Date.

  	
   

  	
  11

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 12.

  	
   

  	
  Transfer of Purchased Mortgage Loans Upon Termination of a
  Transaction.

  	
   

  	
  12

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 13.

  	
   

  	
  Shipment of Documents.

  	
   

  	
  12

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 14.

  	
   

  	
  Examination and Copies of Mortgage Files.

  	
   

  	
  12

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 15.

  	
   

  	
  Insurance of the Custodian.

  	
   

  	
  13

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 16.

  	
   

  	
  Periodic Statements.

  	
   

  	
  13

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 17.

  	
   

  	
  Fees and Expenses of the Custodian.

  	
   

  	
  13

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 18.

  	
   

  	
  Custodian Representations

  	
   

  	
  13

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 19.

  	
   

  	
  No Adverse Interest of the Custodian.

  	
   

  	
  14

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 20.

  	
   

  	
  Concerning the Custodian.

  	
   

  	
  15

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 21.

  	
   

  	
  Indemnification.

  	
   

  	
  15

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 22.

  	
   

  	
  Merger or Consolidation of Custodian.

  	
   

  	
  16

  	
   

  

 

i

 

	
  Section 23.

  	
   

  	
  Removal of the Custodian With Respect to Some or All of the Purchased
  Mortgage Loans

  	
   

  	
  17

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 24.

  	
   

  	
  Termination by the Custodian.

  	
   

  	
  17

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 25.

  	
   

  	
  Successors and Assigns.

  	
   

  	
  18

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 26.

  	
   

  	
  Authorized Representatives.

  	
   

  	
  18

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 27.

  	
   

  	
  Notices.

  	
   

  	
  18

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 28.

  	
   

  	
  Reproduction of Documents.

  	
   

  	
  19

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 29.

  	
   

  	
  Amendments; Entire Agreement.

  	
   

  	
  19

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 30.

  	
   

  	
  Entire Agreement; Severability.

  	
   

  	
  19

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 31.

  	
   

  	
  Governing Law; Counterparts.

  	
   

  	
  20

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 32.

  	
   

  	
  Submission to Jurisdiction.

  	
   

  	
  20

  	
   

  

 

EXHIBITS

 

	
  EXHIBIT 1

  	
   

  	
  Mortgage File

  	
   

  	
   

  	
   

  
	
  EXHIBIT 2

  	
   

  	
  Form of Trust Receipt

  	
   

  	
   

  	
   

  
	
  EXHIBIT 3

  	
   

  	
  Form of Request for Release of Documents
  and Receipt

  	
   

  	
   

  	
   

  
	
  EXHIBIT 4

  	
   

  	
  Authorized Representatives of the Custodian

  	
   

  	
   

  	
   

  
	
  EXHIBIT 5

  	
   

  	
  Authorized Representatives of the Seller

  	
   

  	
   

  	
   

  
	
  EXHIBIT 6

  	
   

  	
  Authorized Representatives of the Buyer

  	
   

  	
   

  	
   

  
	
  EXHIBIT 7

  	
   

  	
  Form of Mortgage Loan Schedule

  	
   

  	
   

  	
   

  
	
  EXHIBIT 8

  	
   

  	
  Form of Repurchase Release

  	
   

  	
   

  	
   

  
	
  EXHIBIT 9

  	
   

  	
  Form of Lost Note Affidavit

  	
   

  	
   

  	
   

  
	
  EXHIBIT 10

  	
   

  	
  Form of Wet-Ink Trust Receipt

  	
   

  	
   

  	
   

  
	
  EXHIBIT 11

  	
   

  	
  Approved Bailees

  	
   

  	
   

  	
   

  
	
  EXHIBIT 12

  	
   

  	
  Approved Takeout Investors

  	
   

  	
   

  	
   

  
	
  EXHIBIT 13

  	
   

  	
  Form of Bailee Letter

  	
   

  	
   

  	
   

  
	
  EXHIBIT 14

  	
   

  	
  Form of Bailee Violation Letter

  	
   

  	
   

  	
   

  

 

ii

 

THIS CUSTODIAL
AGREEMENT, dated as of June 20, 2003 (this “Agreement“) is made by and
between Merrill Lynch Commercial Finance Corp. (the “Buyer”), Mortgage
IT, Inc. (the “Seller”) and Deutsche Bank National Trust Company, as
Custodian (the “Custodian”).

 

W
I  T  N  E  S  S  E  T  H:

 

WHEREAS, the
Buyer and the Seller may, from time to time, enter into transactions (each, a “Transaction”)
in which the Buyer shall purchase from the Seller certain Mortgage Loans, with
a simultaneous agreement by the Seller to repurchase such Purchased Mortgage
Loans as provided in that certain Master Repurchase Agreement dated as of June
20, 2003 between the Seller and the Buyer (the “Repurchase Agreement”);
and

 

WHEREAS, the
Buyer has requested the Custodian to act as custodian on behalf of the Buyer
for purposes of holding the Purchased Mortgage Loans purchased by Buyer from
the Seller pursuant to the Repurchase Agreement; and

 

WHEREAS, the
Custodian is a national banking association, is otherwise authorized to act as
the Custodian pursuant to this Agreement, and has agreed to act as
custodian/bailee for hire for the Buyer, all as more particularly set forth
herein; and

 

WHEREAS, the
Seller shall from time to time deliver Purchased Mortgage Loans to the Custodian
that are subject to a Transaction, and has agreed to deliver or cause to be
delivered to the Custodian certain documents with respect to the Purchased
Mortgage Loans subject to each Transaction in accordance with the terms and
conditions hereof;

 

NOW,
THEREFORE, in consideration of the mutual undertakings herein expressed, the
parties hereto hereby agree as follows:

 

Section 1.                                            Definitions.

 

Capitalized
terms used but not defined herein shall have the meanings assigned to them in
the Repurchase Agreement.

 

“Additional
Purchased Mortgage Loans” shall have the meaning set forth in Section 5
hereof.

 

“Agency”
shall mean Freddie Mac, Fannie Mae or GNMA, as applicable.

 

“Agreement”
shall mean this Custodial Agreement and all amendments and attachments hereto
and supplements hereof.

 

“Anticipated
Settlement Date” shall mean the anticipated settlement date for any Takeout
Commitment.

 

 

“Approved
Bailee” shall mean an Approved Takeout Investor or an Approved Bailee
listed on Exhibit 11 hereto.

 

“Approved
Takeout Investor” shall mean (i) any Agency, (ii) any institution listed on
Exhibit 12 which has made a Takeout Commitment and has been approved by
Buyer or (iii) any other institution which has otherwise been approved in
writing by Buyer.

 

“Assignment
of Mortgage” shall mean an assignment of the Mortgage, notice of transfer
or equivalent instrument in recordable form sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
transfer of the Mortgage to the party indicated therein.

 

“Authorized
Representative“ shall have the meaning set forth in Section 26 hereof.

 

“Bailee
Letter” shall mean a master bailee letter, in the form of Exhibit 13,
for use by Custodian in connection with the delivery of a Mortgage File as
contemplated in Section 9 hereof.

 

“Bailee
Violation Letter” shall mean a letter in the form of Exhibit 14
hereto.

 

“Business
Day” shall mean any day excluding (i) Saturday, Sunday or (ii) any day on
which banks located in the States of New York or California are authorized or
permitted to close for business or (iii) any day on which the New York Stock
Exchange is closed.

 

“Buyer”
shall mean Merrill Lynch Commercial Finance Corp. or its successor in interest
or assigns.

 

“Committed
Mortgage Loan” shall mean any Mortgage Loan which is the subject of a
Takeout Commitment with an Approved Takeout Investor.

 

“Custodian”
shall mean Deutsche Bank National Trust Company, or any successor in interest
or assigns, or any successor to the Custodian under this Agreement as herein
provided.

 

“Electronic
Agent” shall mean MERSCORP, Inc., or its successor in interest or assigns.

 

“Event of
Default” shall mean any event of default under the Repurchase Agreement or
any confirmation thereunder.

 

“Fannie Mae”
shall mean Fannie Mae, and any successor thereto.

 

“Freddie
Mac” shall mean Freddie Mac, and any successor thereto.

 

“GNMA”
shall mean the Government National Mortgage Association, and any successor
thereto.

 

“Indemnitee”
shall have the meaning set forth in Section 21(a) hereof.

 

“Last
Endorsee” shall have the meaning set forth in Section 3 hereof.

 

2

 

“MERS”
shall mean Mortgage Electronic Registration Systems, Inc., or its successors or
assigns.

 

“MERS
System” shall mean the Electronic Agent’s mortgage electronic registry
system.

 

“Mortgage”
shall mean the mortgage, deed of trust or other instrument securing a Mortgage
Note, which creates a first or second lien on the Mortgaged Property described
therein.

 

“Mortgage
File” shall have the meaning set forth in Exhibit 1 attached hereto.

 

“Mortgage
Loan” shall mean any residential real estate secured loan, including,
without limitation: (i) a promissory note, any reformation thereof and related
deed of trust (or mortgage) and security agreement; (ii) all guaranties and
insurance policies, including, without limitation, all mortgage and title
insurance policies and all fire and extended coverage insurance policies and
rights of the Seller to return premiums or payments with respect thereto; and
(iii) all right, title and interest of the Seller in the property covered by
such deed of trust (or mortgage).

 

“Mortgage
Loan Schedule” shall mean a schedule in written and computer readable
formats of Purchased Mortgage Loans, containing the information set forth in Exhibit
7 hereto and otherwise acceptable to the Buyer.

 

“Mortgage
Loan Schedule and Exception Report” shall mean a list of Purchased Mortgage
Loans delivered by the Custodian to the Buyer, reflecting the Mortgage Loans
held by the Custodian for the benefit of the Buyer, which includes codes
indicating any exceptions with respect to each Mortgage Loan listed
thereon.  Each Mortgage Loan Schedule
and Exception Report shall set forth (a) the Mortgage Loans being purchased by
the Buyer on any applicable Purchase Date as well as the Mortgage Loans
previously purchased by the Buyer and held by the Custodian hereunder, and (b)
all exceptions with respect thereto, with any updates thereto from time to time
last delivered.

 

“Mortgage
Note” shall mean the note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage, as the same may be reformed or amended from
time to time.

 

“Mortgaged
Property” shall mean the real property securing repayment of the debt
evidenced by a Mortgage Note.

 

“Mortgagor”
shall mean the obligor or obligors on a Mortgage Note, including any Person who
has assumed or guaranteed the obligations of the obligor thereunder.

 

“Notice of
Bailment” shall mean a notice, in the form of Schedule 1 to the
Bailee Letter, delivered by Custodian to an Approved Bailee in connection with
each delivery to such Approved Bailee of the applicable portion of each
Submission Package.

 

“Notice of
Default” shall mean written notice delivered by the Buyer to the Custodian
and the Seller stating that an Event of Default has occurred.

 

“Officer’s
Certificate” shall mean a certificate signed by a Responsible Officer of
the Person delivering such certificate and delivered as required by this
Custodial Agreement.

 

3

 

“Person”
shall mean any individual, corporation, limited liability company, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof.

 

“Primary
Insurance Policy” shall mean a policy of primary mortgage guaranty
insurance issued by a Qualified Insurer, as required under the Repurchase
Agreement with respect to certain Mortgage Loans.

 

“Purchase
Date” shall mean with respect to each Purchased Mortgage Loan, the date on
which such Purchased Mortgage Loan is purchased by the Buyer pursuant to the
Repurchase Agreement.

 

“Purchased
Mortgage Loan” shall mean each Mortgage Loan, and/or any other evidence of
ownership of a Mortgage Loan mutually agreed upon by the Buyer and the Seller
and identified to the Custodian transferred or caused to be transferred by the
Seller to the Buyer or its designee (including the Custodian) in a Transaction
under the Repurchase Agreement and any Additional Purchased Mortgage Loans
delivered pursuant to this Agreement.

 

“Qualified
Insurer” shall mean a mortgage guaranty insurance company duly authorized
and licensed where required by law to transact mortgage guaranty insurance
business and acceptable under the Seller’s underwriting guidelines.

 

“Repurchase
Agreement” shall have the meaning set forth in the first paragraph of the
recitals hereto.

 

“Repurchase
Date” shall mean, with respect to each Purchased Mortgage Loan, the date on
which such Purchased Mortgage Loan is to be repurchased by the Seller pursuant
to the Repurchase Agreement.

 

“Repurchase
Release” shall have the meaning set forth in Section 11 hereof.

 

“Request
for Release” shall have the meaning set forth in Section 7 hereof.

 

“Responsible
Officer” shall mean, with respect to the Custodian, any officer, including
any managing director, principal, vice president, assistant vice president,
assistant treasurer, assistant secretary, trust officer or any other officer of
the Custodian customarily performing functions similar to those performed by
any of the above designated officers and having direct responsibility for the
administration of this Agreement, and also, with respect to a particular
matter, any other officer, to whom such matter is referred because of such
officer’s knowledge and familiarity with the particular subject.

 

“Seller”
shall mean MortgageIT Inc., a New York corporation, or its successors in
interest or assigns.

 

“Takeout
Commitment“ shall mean a commitment of Seller to sell one or more Mortgage
Loans to an Approved Takeout Investor and the corresponding Approved Takeout
Investor’s commitment back to Seller to effectuate the foregoing.

 

4

 

“Transaction”
shall have the meaning set forth in the first paragraph of the recitals hereto.

 

“Trust
Receipt” shall mean a trust receipt issued by the Custodian evidencing the
Purchased Mortgage Loans it holds, in the form attached hereto as Exhibit 2
and delivered to the Buyer by the Custodian in accordance with Section 2
hereof.

 

“Wet-Ink
Delivery Date” shall mean with respect to each Wet-Ink Mortgage Loan, no
later than 5:00 p.m. (New York City time) on the seventh Business Day following
the Purchase Date.

 

“Wet-Ink
Mortgage Loan” shall mean a Purchased Mortgage Loan which is purchased by
the Buyer simultaneously with the origination thereof by the Seller.

 

“Wet-Ink
Trust Receipt” shall mean a trust receipt issued by Custodian evidencing
Purchased Mortgage Loans which are Wet-Ink Mortgage Loans, substantially in the
form attached hereto as Exhibit 10, and delivered to Buyer by Custodian
in accordance with Section 3 hereof.

 

“Written
Instructions” shall mean written communications received by the Custodian
from an Authorized Representative of the Buyer or the Seller, including
communications received by facsimile, or other telecommunications device
capable of transmitting or creating a written record.

 

Section 2.                                            Deposit
of Mortgage Loans; Effecting a Transaction.

 

(a)                                  With
respect to each Purchased Mortgage Loan (other than a Wet-Ink Mortgage Loan),
no later than 3:00 p.m. (New York City time) one Business Day prior to each
Purchase Date, the Seller shall deliver or cause to be delivered to the
Custodian (i) the Mortgage Files with respect to the related Purchased Mortgage
Loans and (ii) the related Mortgage Loan Schedule.  With respect to each Wet-Ink Mortgage Loan, no later than 12 noon
(New York City time) on the related Purchase Date, the Seller shall deliver or
cause to be delivered to the Custodian the related Mortgage Loan Schedule
listing the Wet-Ink Mortgage Loans.  On
the Wet-Ink Delivery Date, the Seller shall deliver or cause to be delivered to
the Custodian (i) the Mortgage Files with respect to the related Wet-Ink
Mortgage Loans and (ii) the related Mortgage Loan Schedule.  No more than 200 Purchased Mortgage Loans
shall be delivered to the Custodian on any one Business Day.

 

The Custodian
shall deliver to the Buyer via electronic mail (with the original to follow),
no later than 4:00 p.m. (New York City time) on the Purchase Date, a Mortgage
Loan Schedule and Exception Report of all Mortgage Loans then held or to be
held by the Custodian for the Buyer’s benefit (including Mortgage Loans to be
purchased on such Purchase Date) in an electronic format acceptable to the
Buyer, which schedule shall include all information included in the Mortgage
Loan Schedule and such additional information as the Buyer and the Custodian
may agree.

 

(b)                                 On
each Purchase Date with respect to Purchased Mortgage Loans other than Wet-Ink
Mortgage Loans, upon receipt of the Mortgage Loan Schedule and Exception Report
from the Custodian, in form and substance acceptable to the Buyer, the Buyer
shall transfer to

 

5

 

the Seller immediately available funds in an
amount equal to the related Purchase Price. 
With respect to Wet-Ink Mortgage Loans, upon receipt of the Wet-Ink
Trust Receipt and Mortgage Loan Schedule from the Custodian, in form and
substance acceptable to the Buyer, the Buyer shall transfer to the Seller
immediately available funds in an amount equal to the related Purchase Price.

 

(c)                                  On
and after the Purchase Date for any Mortgage Loan, until the related Repurchase
Date, as such date may be extended by Written Instructions signed by both the
Buyer and the Seller and delivered to the Custodian, or until the Custodian
shall receive a Notice of Default, the Custodian shall hold the Purchased
Mortgage Loans related to such Transaction as the custodian and bailee for hire
for the exclusive benefit of the Buyer and shall not act upon instructions of
the Seller to deliver the Purchased Mortgage Loans other than as expressly
provided in this Agreement.

 

(d)                                 Custodian
shall deliver to Buyer, no later than 4:00 p.m. (New York City time) on the
related Purchase Date, electronically followed by overnight courier a Mortgage
Loan Schedule and Exception Report having appended thereto a schedule of all
Mortgage Loans with respect to which Custodian has completed the procedures set
forth in Section 3 hereof and certify that it is holding each related Mortgage
File for the benefit of Buyer in accordance with the terms hereof (provided
that the Custodian has timely received the items pursuant to Section 2(a)
herein).

 

(e)                                  In
addition to the foregoing, on the initial Purchase Date, the Custodian shall
deliver to the Buyer, no later than 4:00 p.m. (New York City time), a Trust
Receipt with a Mortgage Loan Schedule and Exception Report attached thereto
(provided that the Custodian has timely received the items pursuant to Section
2(a) herein).  Each Mortgage Loan
Schedule and Exception Report delivered by the Custodian to the Buyer shall
supersede and cancel the Mortgage Loan Schedule and Exception Report previously
delivered by the Custodian to the Buyer hereunder, and shall replace the then
existing Mortgage Loan Schedule and Exception Report to be attached to the
Trust Receipt.  Notwithstanding anything
to the contrary set forth herein, in the event that the Mortgage Loan Schedule
and Exception Report attached to the Trust Receipt is different from the most
recently delivered Mortgage Loan Schedule and Exception Report, then the most
recently delivered Mortgage Loan Schedule and Exception Report shall control
and be binding upon the parties thereto.

 

Section 3.                                            Mortgage
Loan Schedule or Exception Report.

 

No later than
4:00 p.m. (New York City time) on the Purchase Date (provided that the
Custodian has timely received the items required pursuant to Section 2(a)
herein), or with respect to Wet-Ink Mortgage Loans, by 5:00 p.m. (New York City
time) on the Business Day following the Wet-Ink Delivery Date, the Custodian
shall issue and deliver to the Buyer via facsimile a Mortgage Loan Schedule and
Exception Report relating to the Purchased Mortgage Loans to the effect that
with respect to each such Purchased Mortgage Loan, except as noted in any
attached exception report, (i) all of the documents in paragraphs (a), (c),
(e), (f), (g), and, to the extent provided, (b), (d), and (h) on Exhibit 1
attached hereto are in its possession, (ii) such documents have been reviewed
by it and appear regular on their face and relate to such Mortgage Loan; (iii)
based on its examination and only as to the foregoing document s, the
information set forth in

 

6

 

the Mortgage Loan Schedule respecting such
Mortgage Loan accurately reflects the information contained in the documents in
the Mortgage File as to (A) the name of the mortgagor, (B) the address of the
Mortgaged Property, (C) the interest rate on the Mortgage Note, (D) the
original principal amount of the Mortgage Note, and (E) the maturity date of
the Mortgage Note; (iv) the Mortgage Note and the Mortgage, each bears an
original signature or signatures purporting to be the signature or signatures
of the person or persons named as the maker and mortgagor or grantor; or, in
the case of certified copies of the Mortgage, if any, such copies bear a
reproduction of such signature or signatures; (v) all signatures on the
Mortgage properly relate to the Mortgage Note, as applicable, and the Custodian
has examined the Mortgage for the completions of any required notarization and
has verified that any rider or addendum properly relates to the Mortgage and
that the signatures on any rider or addendum match the signatures on the
Mortgage; (vi) the original principal amount of the indebtedness secured by the
Mortgage is identical to the original principal amount of the Mortgage Note;
(vii) if the Mortgage Note does not name the Seller as the holder or payee, the
Mortgage Note bears original endorsements that complete the chain of ownership
from the original holder or payee to the last endorsee (the “Last Endorsee”);
(viii) if the Mortgage does not name the Seller or MERS as the mortgagee or
beneficiary, the original of the Assignment of Mortgage from the named
mortgagee or beneficiary bears the original signature purporting to be the
signature of the named mortgagee or beneficiary (including any subsequent
assignors) or in the case of copies certified by the Seller, such copies bear a
reproduction of such signature or signatures and that the Assignment of
Mortgage and any intervening assignments of mortgage complete the chain of
title from the originator to the Last Endorsee; (ix) the Mortgagor name on the
Assignment of Mortgage agrees with the related Mortgage Loan Schedule; (x) each
Mortgage Note in its possession has been endorsed as provided in Exhibit 1
hereto; and (xi) each Assignment of Mortgage has been executed as provided in Exhibit
1 hereto.

 

With respect
to each Wet-Ink Mortgage Loan, on or prior to 4:00 p.m. (New York City time) on
the related Purchase Date, the Custodian shall issue to Buyer a Wet-Ink Trust
Receipt certifying that the Custodian has received the Mortgage Loan Schedule
identifying such Wet-Ink Mortgage Loans as Purchased Mortgage Loans.

 

With respect
to any modifications or revisions occurring after the Purchase Date or the
related Wet-Ink Delivery Date with respect to Wet-Ink Mortgage Loans, not later
than the Business Day following each Purchase Date, the Custodian shall deliver
to the Buyer a revised Mortgage Loan Schedule and Exception Report relating to
the Purchased Mortgage Loans.

 

The Seller
shall be solely responsible for providing each and every document required for
each Mortgage File to the Custodian in a timely manner and for completing or
correcting any missing, incomplete or inconsistent documents, and the Custodian
shall not be responsible or liable for taking any such action, causing the
Seller or any other person or entity to do so or notifying any Person (other
than the Buyer to the extent specifically required in this Agreement) that any
such action has or has not been taken. 
The Custodian makes no representations as to and shall not be
responsible to determine or verify (i) the validity, legality, enforceability,
sufficiency, due authorization, filing of recording status or history,
recordability, or genuineness of any document in any Mortgage File or any of
the Purchased Mortgage Loans identified on the Mortgage Loan Schedule and
Exception Report or (ii) the collectability, insurability, effectiveness or
suitability of any such Purchased Mortgage Loan.  The Custodian shall not be

 

7

 

required to review the content (except as
necessary to certify its presence or absence) of any document described in the
preceding paragraph except as expressly required herein in order to deliver the
Mortgage Loan Schedule and Exception Report.

 

Section 4.                                            Obligations
of the Custodian.

 

(a)                                  With
respect to the Mortgage Files delivered to the Custodian or which come into the
possession of the Custodian, following the related transfer pursuant to Section
2(b) above until the interests of the Buyer have been released pursuant to this
Agreement, the Custodian is the custodian for the Buyer, exclusive ly.  The Custodian shall, following the related
transfer pursuant to Section 2(b) above until the interests of the Buyer have
been released pursuant to this Agreement, hold all documents received by it for
the exclusive use and benefit of the Buyer and shall make disposition thereof
only in accordance with this Agreement and the Written Instructions furnished
by the Buyer.  The Custodian shall
segregate and maintain continuous custody of the Mortgage Files in secure and
fire-resistant facilities in accordance with customary standards for such
custody.

 

(b)                                 The
Custodian shall promptly notify the Buyer if (i) the Seller fails to pay any
amount due to the Custodian under this Agreement or (ii) a Responsible Officer
of the Custodian has actual knowledge that any Mortgage, pledge, lien, security
interest or other charge or encumbrance has been placed on the Mortgage Files.

 

Section 5.                                            Additional
Purchased Mortgage Loans.

 

(a)                                  The
Seller may, from time to time, deliver to the Custodian one or more additional
Mortgage Loans (each an “Additional Purchased Mortgage Loans”) as an
addition to the Purchased Mortgage Loans already held by the Custodian with
respect to a Transaction.  In such
event, the Seller shall deliver to the Custodian the Mortgage File for each
Additional Purchased Mortga ge Loans together with a Mortgage Loan Schedule,
with a copy to the Buyer, stating that the Additional Purchased Mortgage Loan
is being delivered with respect to an identified Transaction.  It is expressly understood and agreed that
the Custodian shall have no duty to perform any valuation of collateral and
shall have no responsibility to ascertain the adequacy of any Additional Purchased
Mortgage Loans other than undertaking a review of the related Mortgage File in
accordance with Section 3 hereof.

 

(b)                                 The
Custodian shall deliver to the Buyer no later than one Business Day after
receipt of such Additional Purchased Mortgage Loan and Mortgage Loan Schedule
from the Seller, a Mortgage Loan Schedule and Exception Report that reflects
the delivery of each Additiona l Purchased Mortgage Loan; provided that in the event that the
Custodian does not receive the items required to be delivered pursuant to
Section 5(a) above by no later than 3:00 p.m. (New York City time) on the
Business Day prior to the date of delivery, then the Custodian shall deliver
such Mortgage Loan Schedule and Exception Report within one Business Day after
the date of delivery.  In issuing such
Mortgage Loan Schedule and Exception Report, the Custodian shall employ the
same procedures as set forth in Section 3 in reviewing the Mortgage Files.

 

8

 

Section 6.                                            Future
Defects.

 

During the
term of this Agreement, if the Custodian discovers any defect with respect to
any Mortgage File, the Custodian shall give written specification of such
defect to the Seller and the Buyer.  For
purposes of this Section, “defect” shall mean a failure of a document to
correspond to the information set forth in the applicable Mortgage Loan
Schedule or the absence of a Mortgage File or any part thereof or any other
document required pursuant to this Agreement. 
The Seller shall be solely responsible for completing or correcting any
missing, incomplete or inconsistent documents, and the Custodian shall not be
responsible or liable for taking any such action, causing the Seller or any
other person or entity to do so or notifying any Person that any such action
has or has not been taken.

 

Section 7.                                            Release
for Servicing.

 

(a)                                  From
time to time and as appropriate for the servicing of any of the Purchased
Mortgage Loans, the Custodian shall, upon receipt of a Request for Release of
Documents and Receipt in the form of Exhibit 3 attached hereto (“Request
for Release”), release or cause to be released to the Seller or the
Seller’s Authorized Representative the related Mortgage File or the documents
of the related Mortgage File set forth in such Request for Release.  The Seller shall send a copy of any such
Request for Release to the Buyer.  Any
document released to the Seller or the Seller’s Authorized Representative
pursuant to a Request for Release shall be returned to the Custodian no later
than 10 Business Days from the date on such Request for Release, and the
Custodian shall notify the Buyer of any failure by the Seller to so return any
such document.

 

All Mortgage
Files or documents from Mortgage Files released by the Custodian to the Seller
or, upon the Seller’s Written Instructions, the Seller’s Authorized
Representative, pursuant to this Section 7 shall be held by the Seller or the
Seller’s Authorized Representative, as applicable, in trust for the benefit of
the Buyer.  The Seller or the Seller’s
Authorized Representative, as applicable, shall return to the Custodian the
Mortgage File or other such documents from Mortgage Files when the need
therefor in connection with such servicing no longer exists (but in any event
no later than 10 Business Days from the date on such Request for Release),
unless the Mortgage Loan shall be liquidated, in which case, the Seller or, if
the Mortgage File or documents were released to the Seller’s Authorized
Representative, the Seller’s Authorized Representative shall deliver to the
Custodian an additional Request for Release that has been acknowledged and
agreed to by the Buyer certifying such liquidation.  Upon receipt of the related Mortgage File or other such documents
from the Seller, the Custodian shall return the related Request for Release to
the Seller, with a copy to the Buyer, acknowledging receipt of such Mortgage
File or other such documents.

 

Section 8.                                            Limitation
on Release.

 

The foregoing
Section 7 shall be operative only to the extent that at any time the Custodian
shall not have released to the Seller or the Seller’s Authorized Representative
in total active Mortgage Files or documents (including those requested)
pertaining to ten Mortgage Loans at the time being held by the Custodian under
this Agreement.  If ten Mortgage Loans
or more have been, and remain released to the Seller at the time of request,
the Mortgage Note and/or Assignment of Mortgage or any additional Mortgage
Files or documents requested to be

 

9

 

released by the Seller or the Seller’s
Authorized Representative may be released only upon the written acknowledgment
of the Request for Release by the Buyer. 
The limitations of this paragraph shall not apply to the release of
Mortgage Files to the Seller or, upon the Seller’s Written Instructions, the
Seller’s Authorized Representative, under Section 9 below.

 

Section 9.                                            Release
for Payment ; Takeout Provisions; Funding by a Takeout Investor.

 

(a)                                  Release
for Payment.  Upon the payment in
full, liquidation or repurchase of any Mortgage Loan, and upon receipt by the
Custodian of a Request for Release certifying that all proceeds related to such
payment in full, liquidation, or repurchase have been received (provided that the Seller shall have
delivered a copy of such Request for Release to the Buyer and the Custodian
shall not have received a Notice of Default from the Buyer), the Custodian
shall promptly release the related Mortgage File to the Seller or, upon the
Seller’s Written Instructions, the Seller’s Authorized Representative.  After such release the Custodian shall amend
the Mortgage Loan Schedule and Exception Report to reflect the release of the
applicable Mortgage Loan and shall deliver to the Buyer such amended Mortgage
Loan Schedule and Exception Report.

 

(b)                                 Takeout
Provisions.  Fund ing by a Takeout
Investor.

 

(i)                                     Seller
shall provide to Custodian a completed Request for Release (signed by the
Seller and acknowledged by the Buyer) with respect to the related Committed
Mortgage Loans.  The Mortgage Files
relating to the Committed Mortgage Loans included in a Request for Release
shall be sent for delivery by Custodian to the applicable Approved Bailee
specified by the Seller to Buyer and Custodian in writing by 5:00 p.m. (New
York City time) on the Business Day following the Business Day on which the
completed Request for Release is received by Custodian.  In the event that the Request for Release is
not received prior to 12 noon New York City time, Custodian shall use
reasonable efforts to effect same day shipment of the related Mortgage Files,
but in any event shall send such Mortgage Files on the following Business
Day.  Such Mortgage Files shall be sent
via overnight courier at the Seller’s expense in accordance with the Seller’s
delivery instructions on the Request for Release and under cover of a fully
completed Notice of Bailment prepared by Custodian in accordance with the terms
of the Bailee Letter.  Custodian shall
not deliver any Mortgage File to any potential Approved Bailee unless such
Approved Bailee was identified by the Seller to Buyer and Custodian on the
Purchase Date in the Mortgage Loan Schedule or as otherwise agreed to in
writing by Buyer (with a copy to Custodian) pursuant to the terms hereof.  Custodian shall deliver such documents
accompanied by a Bailee Letter (to be prepared by Seller and sent to Buyer and
Custodian for execution) to the Approved Bailee.  The location of the Approved Bailee’s office specified on the
Notice of Bailment may only be changed with the prior written approval of
Buyer.

 

(ii)                                  At
any time following the delivery of a Request for Release, in the event
Custodian becomes aware of any defect with respect to a related Mortgage File
or the related forms, including the return of documents to Custodian from an
Approved Bailee due to a defect in such documents, the Custodian shall give
prompt oral or electronic notice of such defect to Buyer, followed by a written
specification thereof to Buyer

 

10

 

within one
Business Day.  In addition, Custodian
shall provide a Bailee Violation Letter to Buyer and the Approved Bailee in the
event that Buyer notifies Custodian that any documents remain in the possession
of an Approved Bailee for thirty days and the related Mortgage Loans have not
been purchased by Approved Bailee prior to such date.

 

(iii)                               On
the Anticipated Settlement Date, unless Custodian receives on or prior to such
Anticipated Settlement Date a Notice of Default or Written Instructions from
both Buyer and Seller that the Anticipated Settlement Date has been extended,
Buyer irrevocably instructs Custodian to release to the Approved Bailee the
Purchased Mortgage Loans with respect to such Transaction with a fully
completed Notice of Bailment. 
Notwithstanding anything to the contrary herein, in the event the
Purchased Mortgage Loans are repurchased prior to the related Anticipated
Settlement Date pursuant to the Repurchase Agreement, Buyer irrevocably
instructs Custodian, upon receipt of written notice thereof from Buyer, to
release to Seller such Purchased Mortgage Loans as more particularly described
in Section 9(a) above.

 

(iv)                              In
the event that an Approved Takeout Investor rejects a Mortgage Loan for
purchase pursuant to a Takeout Commitment for any reason whatsoever, Custodian
shall promptly notify Buyer and Seller upon receipt of the returned Mortgage
File or notification from the Approved Takeout Investor (and Custodian shall
provide to Buyer the loan identification number).

 

Section 10.                                      Covenants
of the Seller.

 

The Seller
covenants to the Buyer as of the date that any Mortgage File documents are
released to the Seller or the Seller’s subservicer pursuant to a Request for
Release that:

 

(a)                                  if
the Request for Release has been submitted for the release of a Purchased
Mortgage Loan that has been paid in full, all amounts received in connection
with the payment in full of the Purchased Mortgage Loan have been credited to
the Buyer as provided in the Repurchase Agreement;

 

(b)                                 if
item No. 1 has been checked on the Request for Release, the Repurchase Price
for the applicable Purchased Mortgage Loan has been credited to the Buyer as
provided in the Repurchase Agreement; and

 

(c)                                  if
item No. 4 has been checked on the Request for Release, all proceeds of
foreclosure, insurance, condemnation or other liquidation have been finally
received and credited to the Buyer pursuant to the Repurchase Agreement.

 

Section 11.                                      Repurchase
Date.

 

The Seller
shall provide the Buyer and the Custodian with Written Instructions prior to
10:00 a.m. (New York City time) on each Repurchase Date on which the Seller
intends to remove Purchased Mortgage Loans from the repurchase facility
governed by the Repurchase Agreement, which Written Instructions shall include
a schedule of Purchased Mortgage Loans to be removed on such date (unless all
Purchased Mortgage Loans are to be removed, in which case the Written
Instructions shall indicate this fact). 
The Buyer shall send a Repurchase Release in

 

11

 

the form of Exhibit 8 hereto (a “Repurchase
Release”) to the Seller and the Custodian by 10:00 a.m. (New York City
time) on the Repurchase Date listing the Purchased Mortgage Loans to be
released on such Repurchase Date.  On
the Repurchase Date for each Transaction, unless the Custodian receives on the
Business Day prior to such Repurchase Date a Notice of Default from the Buyer
or Written Instructions from both the Buyer and the Seller that the Repurchase
Date has been extended, the Buyer hereby irrevocably instructs the Custodian to
release to the Seller or its designee the Purchased Mortgage Loans designated
in such Repurchase Release upon receipt of notification by the Custodian from
the Buyer that it has received the Repurchase Price.  The Buyer shall notify the Custodian immediately upon
confirmation that the Seller has transmitted the Repurchase Price.

 

Section 12.                                      Transfer
of Purchased Mortgage Loans Upon Termination of a Transaction.

 

If the
Custodian is furnished with Written Instructions in the form of Exhibit 8
attached hereto (i) from the Buyer and the Seller that a Transaction with
respect to the Repurchase Agreement has been terminated, or (ii) from the Buyer
that an Event of Default under the Repurchase Agreement has occurred as to any
or all of the Purchased Mortgage Loans, the Custodian shall release to such
Persons as are designated in such Written Instructions the Mortgage Files
relating to the Purchased Mortgage Loans that are no longer subject to the
Transaction, and shall deliver to the Buyer an updated Mortgage Loan Schedule
and Exception Report listing all of the Purchased Mortgage Loans still subject
to a Transaction.

 

Section 13.                                      Shipment
of Documents.

 

Written
Instructions as to the method of shipment and shipper(s) that Custodian is
directed to utilize in connection with transmission of Mortgage Files in the
performance of the Custodian’s duties hereunder shall be delivered by the
Seller or the Buyer to Custodian prior to any shipment of any Mortgage Files
hereunder.  The requesting party will
arrange for the provision of such services at its sole cost and expense (or, at
such party’s option, reimburse Custodian for all costs and expenses incurred by
Custodian consistent with such Written Instructions) and will maintain such insurance
against loss or damage to the Mortgage Files as the requesting party deems
appropriate.  Without limiting the
generality of the provisions of Section 20 below, it is expressly agreed that
in no event shall Custodian have any liability for any losses or damages to any
person, arising out of actions of Custodian in accordance with instructions of
the requesting party, unless such performance constitutes negligence, lack of
good faith or willful misconduct on the part of the Custodian or any of its directors,
officers, agents or employees.  In the
absence of Written Instructions from the Seller or the Buyer, the Custodian
shall not ship the related Mortgage Files.

 

Section 14.                                      Examination
and Copies of Mortgage Files.

 

Upon the
written request of the Buyer, Buyer and its respective agents, accountants,
attorneys, auditors and prospective purchasers will be permitted, upon one
Business Day’s prior notice, during normal business hours to examine the
Mortgage Files and any other documents, records and papers in the possession of
or under the control of the Custodian relating to any or all of the Purchased
Mortgage Loans.  The Seller shall be
responsible for any reasonable expenses in connection with such examinations.

 

12

 

Upon the
written request of the Seller or the Buyer, the Custodian shall provide such
party, at such party’s expense, with copies of the Mortgage Notes, Mortgages,
Assignment of Mortgages and other documents relating to one or more of the
Mortgage Loans.

 

Section 15.                                      Insurance
of the Custodian.

 

At its own
expense, the Custodian shall maintain at all times during the existence of this
Agreement and keep in full force and effect a fidelity bond, errors and
omissions insurance and document hazard insurance.  All such insurance shall be in amounts, with standard coverage
and subject to standard deductibles, all as is customary for insurance
typically maintained by institutions which act as custodian.  A certificate of an Authorized
Representative of the Custodian shall be furnished to the Seller and the Buyer,
upon written request, stating that such insurance is in full force and effect.

 

Section 16.                                      Periodic
Statements.

 

Upon the
reasonable Written Instructions of the Buyer or the Seller at any time, at the
expense of the Sellers, the Custodian shall provide to the Buyer or the Seller,
as the case may be, a list of all the Purchased Mortgage Loans for which the
Custodian holds a Mortgage File.

 

Section 17.                                      Fees
and Expenses of the Custodian.

 

The Custodian
shall charge such fees for its services under this Agreement as are set forth
in a separate agreement between the Custodian and the Seller, the payment of
which fees, together with the Custodian’s expenses (including legal fees and
expenses) in connection herewith, shall be solely the obligation of the Seller.

 

The foregoing
obligation to pay the Custodian its fees and reimburse the Custodian for its
expenses in connection with services provided by the Custodian hereunder shall
survive any resignation or removal of the Custodian (for all fees and expenses
incurred prior to such resignation or removal) or the termination or assignment
of this Agreement.

 

Section 18.                                      Custodian
Representations.

 

The Custodian
(and any successor Custodian subject to this Agreement as of the date of
appointment of such custodian) hereby represents and warrants as of the date
hereof and as of each date it delivers a Mortgage Loan Schedule and Exception
Report that:

 

(a)                                  The
Custodian is (i) a national banking association duly authorized, validly
existing and in good standing under the laws of the United States and (ii) duly
qualified and in good standing and in possession of all requisite authority,
power, licenses, permits and franchises in order to execute, deliver and comply
with its obligations under the terms of this Agreement;

 

(b)                                 The
execution, delivery and performance of this Agreement have been duly authorized
by all necessary corporate action and the execution and delivery of this
Agreement by the Custodian in the manner contemplated herein and the
performance of and compliance with the terms hereof by it will not (i) violate,
contravene or create a default under any applicable

 

13

 

laws, licenses or permits, or (ii) violate,
contravene or create a default under any charter document or bylaw of the
Custodian;

 

(c)                                  The
execution and delivery of this Agreement by the Custodian and the performance
of and compliance with its obligations and covenants hereunder do not require
the consent or approval of any governmental authority or, if such consent is
required, it has been obtained;

 

(d)                                 This
Agreement, and the original Trust Receipt issued hereunder (when executed and
delivered by the Custodian) will constitute valid, legal and binding
obligations of the Custodian, enforceable against the Custodian in accordance
with their respective terms, except as the enforcement thereof may be limited
by applicable bankruptcy or other debtor relief laws and that certain equitable
remedies may not be available regardless of whether enforcement is sought in
equity or at law;

 

(e)                                  To
the Custodian’s knowledge, there is no litigation pending which, if determined
adversely to Custodian, would adversely affect the execution, delivery or
enforceability of this Agreement, or any of the duties or obligations of
Custodian hereunder;

 

(f)                                    The
Custodian shall follow the Written Instructions of the Buyer, at the Buyer’s
expense, to protect or maintain any interest in real property securing the
Mortgage Loan subject to this Agreement and any insurance applicable thereto;

 

(g)                                 The
Custodian shall not be responsible or liable for, and makes no representation
or warranty with respect to, the validity, adequacy or perfection of any lien
upon or security interest in any Mortgage Loans or Mortgage Files (other than
the Custodian’s obligation to take possession of the Mortgage File for each
Mortgage Loan in accordance with the terms of this Agreement); and

 

(h)                                 The
Custodian is not controlled by, under common control with or otherwise
affiliated with or related to Seller, and the Custodian covenants and agrees
with Buyer that prior to any such affiliation in the future, it shall notify
Buyer.

 

Section 19.                                      No
Adverse Interest of the Custodian.

 

By execution
of this Agreement, the Custodian represents and warrants that it currently
holds, and during the existence of this Agreement shall hold, no adverse
interest, by way of security or otherwise, in any Purchased Mortgage Loan, and
hereby waives and releases any such interest which it may have in any Purchased
Mortgage Loan as of the date hereof. 
The Purchased Mortgage Loans shall not be subject to any security
interest, lien or right of set-off by the Custodian or any third party claiming
through the Custodian, and the Custodian shall not pledge, encumber,
hypothecate, transfer, dispose of, or otherwise grant any third party interest
in, the Purchased Mortgage Loans.

 

Section 20.                                      Concerning
the Custodian.

 

(a)                                  The
Custodian shall have no duties or responsibilities except those specifically
set forth herein.  The Custodian shall
have no responsibility nor duty with respect to any Mortgage

 

14

 

Files while not in its possession.  If the Custodian requests instructions from
the Buyer with respect to any act, action or failure to act in connection with
this Agreement, the Custodian shall be entitled to refrain from taking such
action and continue to refrain from acting unless and until the Custodian shall
have received Written Instructions from the Buyer with respect to a Mortgage
File without incurring any liability therefore to the Buyer, the Seller or any
other Person.

 

(b)                                 The
Custodian shall not be liable for any action or omission to act hereunder
except for its own negligence or lack of good faith or willful misconduct.  In no event shall the Custodian have any
responsibility to ascertain or take action except as expressly provided herein.

 

(c)                                  Without
limiting the generality of the foregoing, the Custodian may conclusively rely
upon and shall be fully protected in acting in good faith upon any Written
Instructions, notice or other communication from the Buyer or Seller received
by it and which it reasonably believes to be genuine and duly authorized with
respect to all matters pertaining to this Agreement and its duties hereunder.

 

(d)                                 The
Custodian shall not be liable to the Seller, the Buyer, or any other Person
with respect to any action taken or not taken by it in good faith in the
performance of its obligations under this Agreement.  The obligations of the Custodian shall be determined solely by
the express provisions of this Agreement. 
No representation, warranty, covenant, agreement, obligation or duty of
the Custodian shall be implied with respect to this Agreement or the
Custodian’s services hereunder.

 

(e)                                  The
Custodian shall be under no duty or obligation to inspect, review or examine
the Mortgage Files to determine that the contents thereof are genuine,
enforceable or appropriate for the represented purpose or that they have been
actually recorded, are in the proper form for recordation or that they are not
other than what they purport to be on their face.

 

(f)                                    No
provision of this Agreement shall require the Custodian to expend or risk its
own funds or otherwise incur financial liability (other than expenses or
liabilities otherwise required to be incurred by the terms of this Agreement)
in the performance of its duties under this Agreement if it shall have a good
faith belief that repayment of such funds or indemnity satisfactory to it is
not reasonably assured to it.

 

(g)                                 The
Custodian shall use the same degree of care and skill as is reasonably expected
of financial institutions acting in comparable capacities which are held to a
standard of care of ordinary negligence, and this Section 20 shall not be
interpreted to impose upon the Custodian a higher standard of care than that
set forth in this sentence.

 

Section 21.                                      Indemnification.

 

(a)                                  Seller
agrees to reimburse, indemnify and hold harmless the Custodian and its
directors, officers, employees, or agents (each, an “Indemnitee”) from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suit, costs, expenses, or disbursements of any kind or
nature whatsoever including reasonable fees and expenses of counsel, court
costs and costs of appeal that may be imposed on, incurred by, or asserted
against it or them in any way in connection with or related to Custodian’s
execution and performance of

 

15

 

this Agreement and any transactions
contemplated hereby, including but not limited to the claims of any third
parties, including Buyer, except in the case of loss, liability or expense
resulting from a Custodial Delivery Failure (as defined below), the Custodian’s
negligence, lack of good faith or willful misconduct.  Such indemnification shall survive the termination of this
Agreement and the resignation or removal of the Custodian hereunder.

 

(b)                                 In
the event that the Custodian fails to produce a Mortgage Note, Assignment of
Mortgage or any other document related to a Purchased Mortgage Loan that was in
its possession within two (2) Business Days after required or requested by
Seller or Buyer, or otherwise determines that a document that it had previously
certified as in its possession, is no longer in its possession, and that (i)
such document is not outstanding pursuant to a Request for Release and Receipt
in the form annexed hereto as Exhibit 3; and (ii) such document was held
by the Custodian, as evidenced by a previously delivered Mortgage Loan Schedule
and Exception Report, on behalf of Seller or Buyer, as applicable, (a “Custodial
Delivery Failure”) then the Custodian shall (a) with respect to any missing
Mortgage Note, promptly deliver to Buyer or Seller upon request, a Lost Note
Affidavit in the form of Exhibit 9 hereto and (b) with respect to any
missing document related to such Mortgage Loan, including but not limited to a
missing Mortgage Note, indemnify the Seller and Buyer in accordance with the
succeeding paragraph of this Section.

 

(c)                                  The
Custodian agrees to indemnify and hold the Buyer and Seller, and their
respective trustees, shareholders, officers, designees, successors and assigns
harmless against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever, including reasonable attorneys’ fees, court costs
and costs of appeal that may be imposed on, incurred by, or asserted against it
or them in any way relating to or arising from the claims of any third party in
connection with or related to a Custodial Delivery Failure or the Custodian’s
breach of this Agreement, or the negligence, lack of good faith or willful misconduct
on the part of the Custodian.  The
foregoing indemnification shall survive the termination of this Agreement and
the resignation or removal of the Custodian hereunder.

 

Section 22.                                      Merger
or Consolidation of Custodian.

 

Any Person
into which the Custodian may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Custodian shall be a party, or any Person succeeding
to the business of the Custodian, shall be the successor of the Custodian
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding.

 

Section 23.                                      Removal
of the Custodian With Respect to Some or All of the Purchased Mortgage Loans.

 

Upon an Event
of Default under the Repurchase Agreement the Buyer may (i) require, at the
Seller’s expense, the Custodian to complete the endorsements on the Mortgage
Notes in the name of the Buyer and to complete the Assignments of Mortgage in
the name of the Buyer and/or (ii) remove and discharge the Custodian from the
performance of its duties under this

 

16

 

Agreement with respect to some or all of the
Mortgage Loans by 30 days’ written notice from the Buyer to the Custodian with
a copy to the Seller.  In the event that
the Buyer removes the Custodian from the performance of its duties under this
Agreement with respect to all of the Mortgage Loans, the Buyer may, in its sole
discretion, after notice to the Seller, either appoint a successor Custodian to
act on behalf of the Buyer by written instrument, or terminate this
Agreement.  In the event of any such new
appointment, the Custodian shall promptly transfer to the successor Custodian
or the Buyer, as directed by the Buyer, the applicable Mortgage Loan documents
being administered under this Agreement. 
In the event of any such appointment, the Buyer shall be responsible for
the fees of the successor Custodian unless otherwise agreed by the Seller and
the Buyer.

 

In the event
of termination of this Agreement pursuant to this Section 23, the Custodian
shall follow the reasonable Written Instructions of Buyer with respect to the
disposition of the respective Mortgage Loan documents.  Concurrently with the transfer and release
of all of the Mortgage Files by the Custodian, the Buyer shall submit the
related Trust Receipts to the Custodian for cancellation.  Notwithstanding the foregoing, in the event
that the Buyer terminates this Agreement with respect to some, but not all, of
the Mortgage Loans, this Agreement shall remain in full force and effect with
respect to any Purchased Mortgage Loans for which this Agreement is not
terminated hereunder.  In addition, the
Buyer and the Custodian may, at the sole option of the Buyer, enter into a
separate custodial agreement which shall be mutually acceptable to the parties
with respect to any or all or the Mortgage Loans with respect to which this
Agreement is terminated.

 

Section 24.                                      Termination
by the Custodian.

 

The Custodian
may terminate its obligations hereunder upon 60 days’ prior written notice to
the Buyer and the Seller.  Such
resignation shall take effect upon (i) the appointment of a successor Custodian
acceptable to the Buyer within such 60 day period; and (ii) delivery of all
Mortgage Files to the successor Custodian or, if no successor Custodian has
been appointed, to Buyer.

 

Upon such
termination and appointment of a successor Custodian and surrender of all
outstanding Trust Receipts, the Custodian shall (i) promptly transfer to the
successor Custodian, as directed in writing by the Buyer, all Mortgage Files
being administered under this Agreement, and (ii) if the endorsements on the
Mortgage Notes and the Assignments of Mortgage have been completed in the name
of the Custodian, assign the Mortgages and endorse without recourse the
Mortgage Notes to the successor Custodian or as otherwise directed in writing
by the Buyer.

 

Section 25.                                      Successors
and Assigns.

 

This Agreement
shall inure to the benefit of the successors and assigns of the parties
hereto.  Neither Seller nor Custodian
shall assign their respective rights or obligations hereunder or any interest
therein without the prior written consent of Buyer.  The Buyer may assign its rights hereunder without the prior
consent of either the Seller or the Custodian.

 

17

 

Section 26.                                      Authorized
Representatives.

 

Each
individual designated as an authorized representative of the Custodian, the
Seller and the Buyer (each, an “Authorized Representative”), is
authorized to give and receive notices, requests and instructions and to
deliver certificates and documents in connection with this Agreement on behalf
of the Custodian, the Seller or the Buyer, respectively, (in each case subject
to their designated limit of authority, if any) and the specimen signature for
each such Authorized Representative of the Custodian, the Seller and the Buyer
initially authorized hereunder is set forth on Exhibits 4, 5 and 6,
respectively.  From time to time, the
Custodian, the Seller and the Buyer may, by delivering to the other parties a
revised exhibit, change the information previously given pursuant to this
Section, but each of the parties hereto shall be entitled to rely conclusively
on the then current exhibit until receipt of a superseding exhibit.  The Seller shall deliver or cause to be
delivered to the Custodian an Authorized Representatives exhibit for each
subservicer designated by the Seller in connection with this Agreement; provided that the Custodian shall not
recognize any request from the Seller’s subservicer unless and until the Seller
has given the Custodian written notice identifying such subservicer and such
Authorized Representatives exhibit is received by the Custodian.  The Custodian shall be entitled to rely
conclusively upon (i) written notice from the Seller identifying a subservicer
authorized to give instructions (including Written Instructions) under this
Agreement until receipt of written notice from the Seller revoking such
authority and (ii) the most recent Authorized Representatives exhibit delivered
to it by a subservicer of the Seller until receipt of a superseding
exhibit.  If the Custodian shall at any
time receive conflicting instructions from the Seller and a subservicer of the
Seller, the Custodian shall be entitled to rely on the instructions of the
Seller.

 

Section 27.                                      Notices.

 

Any and all
notices, statements, demands or other communications hereunder may be given by
a party to the other by mail, facsimile, telegraph, messenger or otherwise to
the address listed below, or such other address as may be specified in a notice
of change of address hereafter received by the other:

 

	
  SELLER:

  	
   

  	
  Mortgage IT, Inc.

  
	
   

  	
   

  	
  33 Maiden Lane

  
	
   

  	
   

  	
  6th Floor

  
	
   

  	
   

  	
  New York, New York 10038

  
	
   

  	
   

  	
  Attention: 
  Chief Operating Officer

  
	
   

  	
   

  	
  Telephone: 
  (212) 651-4691

  
	
   

  	
   

  	
  Facsimile: 
  (212) 651-4680

  
	
   

  	
   

  	
   

  
	
  BUYER:

  	
   

  	
  Merrill Lynch Commercial Finance Corp.

  
	
   

  	
   

  	
  4 World Financial Center

  
	
   

  	
   

  	
  10th Floor

  
	
   

  	
   

  	
  New York, New York 10080

  
	
   

  	
   

  	
  Attention: 
  James B. Cason

  
	
   

  	
   

  	
  Telephone: 
  (212) 449-1219

  
	
   

  	
   

  	
  Facsimile: 
  (212) 449-3673

  

 

18

 

	
  CUSTODIAN:

  	
   

  	
  Deutsche Bank National Trust Company

  
	
   

  	
   

  	
  1761 East St. Andrew Place

  
	
   

  	
   

  	
  Santa Ana, California 92705

  
	
   

  	
   

  	
  Attention: 
  Mortgage Custody-MG030C

  
	
   

  	
   

  	
  Telephone: 
  (714) 247-6000

  
	
   

  	
   

  	
  Facsimile: 
  (714) 247-6082

  

 

All notices,
demands and requests hereunder may be made orally, to be confirmed promptly in
writing, or by other communication as specified in the preceding sentence.  Any such notice, demand or request shall be
deemed to have been received on the date delivered to the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt, or in the case of facsimile or other
telecommunication or electronic communication device, the date noted on the
confirmation of such transmission).

 

Section 28.                                      Reproduction
of Documents.

 

This Agreement
and all documents relating thereto, including, without limitation, (i)
consents, waivers and modifications which may hereafter be executed, (ii)
documents received by any party at closing, and (iii) certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, microcard, miniature photographic or
other similar process.  The parties
agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not
the original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.

 

Section 29.                                      Amendments;
Entire Agreement.

 

No amendment
or waiver of any provision of this Agreement nor consent to any departure
herefrom shall in any event be effective unless the same shall be in writing
and signed by all the parties hereto, and then such amendment, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.  The Custodian shall
not be required to execute any amendment which adversely affects its rights,
duties, indemnities or immunities hereunder.

 

Section 30.                                      Entire
Agreement; Severability.

 

This
Agreement, together with the exhibits, annexes and other writings referred to
herein or delivered pursuant hereto, constitute the entire agreement and
understanding of the parties with respect to the matters and transactions
contemplated by this Agreement and supersede any prior agreement and
understandings with respect to those matters and transactions.  Each provision and agreement herein shall be
treated as separate and independent from any other provision or agreement
herein and shall be enforceable notwithstanding the unenforceability of any
such other provision or agreement.

 

19

 

Section 31.                                      Governing
Law; Counterparts.

 

This Agreement
shall be governed by the internal laws of the State of New York, without giving
effect to the conflict of laws principles thereof.  For the purpose of facilitating the execution of this Agreement
as herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute and be one
and the same instrument.

 

Section 32.                                      Submission
to Jurisdiction.

 

With respect
to any claim arising out of this Agreement each party (a) irrevocably submits
to the nonexclusive jurisdiction of the courts of the State of New York and the
United States District Court located in the Borough of Manhattan in New York
City, and (b) irrevocably waives (i) any objection which it may have at any
time to the laying of venue of any suit, action or proceeding arising out of or
relating hereto brought in any such court, (ii) any claim that any such suit,
action or proceeding brought in any such court has been brought in any inconvenient
forum and (iii) the right to object, with respect to such claim, suit, action
or proceeding brought in any such court, that such court does not have
jurisdiction over such party.  Nothing
herein will be deemed to preclude any party hereto from bringing an action or
proceeding in respect of this Agreement in any jurisdiction other than as set
forth in this Section 32.

 

20

 

IN WITNESS
WHEREOF, the Buyer, the Seller and the Custodian have caused their name to be
duly signed to this Custodial Agreement by their respective officers thereunto
duly authorized, all as of the date first above written.

 

 

	
   

  	
  MERRILL
  LYNCH COMMERCIAL

  FINANCE CORP.,

  
	
   

  	
  Buyer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ JAMES B. CASON

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  JAMES B. CASON

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  VICE PRESIDENT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MORTGAGEIT, INC.,  Seller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ LARRY P. LEWIS

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  LARRY P. LEWIS

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  CHIEF OPERATING OFFICER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DEUTSCHE
  BANK TRUST NATIONAL

  COMPANY,

  
	
   

  	
  as Custodian

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ JAMES W. HARNEY

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  JAMES W. HARNEY

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  VICE PRESIDENT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ ALMEE KEMMETER

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Almee Kemmeter

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Assistant Vice President

  

 

21Exhibit
10.4

 

AMENDED AND
RESTATED MORTGAGE LOAN PURCHASE AGREEMENT

 

	
  PURCHASER:

  	
   

  	
  UBS WARBURG REAL
  ESTATE SECURITIES INC.

  
	
   

  	
   

  	
   

  
	
  ADDRESS:

  	
   

  	
  1285 AVENUE OF
  THE AMERICAS

  
	
   

  	
   

  	
  NEW YORK, NEW
  YORK  10019

  
	
   

  	
   

  	
  ATTENTION:

  	
  GEORGE
  MANGIARACINA

  
	
   

  	
   

  	
  TELEPHONE:

  	
  (212) 713-3734

  
	
   

  	
   

  	
  ATTENTION:

  	
  ROBERT CARPENTER

  
	
   

  	
   

  	
  TELEPHONE:

  	
  (212) 713-8749

  
	
   

  	
   

  	
   

  
	
  SELLER:

  	
   

  	
  MORTGAGEIT, INC.

  
	
   

  	
   

  	
   

  
	
  ADDRESS:

  	
   

  	
  33 MAIDEN LANE

  
	
   

  	
   

  	
  NEW YORK, NEW
  YORK  10038

  
	
   

  	
   

  	
  ATTENTION:

  	
  MIKE ZIGROSSI

  
	
   

  	
   

  	
   

  
	
  DATE OF
  AGREEMENT:

  	
   

  	
  JANUARY 10,
  2003

  

 

 

TABLE OF CONTENTS

 

	
  Section 1.

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 2.

  	
  Procedures
  for Purchases of Mortgage Loans

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 3.

  	
  Sale of
  Mortgage Loans to Takeout Investor

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section 4.

  	
  Servicing of the
  Mortgage Loans

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 5.

  	
  Trade Assignments

  	
  15

  
	
   

  	
   

  	
   

  
	
  Section 6.

  	
  Transfers of
  Mortgage Loans by Purchaser

  	
  15

  
	
   

  	
   

  	
   

  
	
  Section 7.

  	
  Record
  Title to Mortgage Loans;  Intent of
  Parties;  Security Interest

  	
  16

  
	
   

  	
   

  	
   

  
	
  Section 8.

  	
  Representations and
  Warranties

  	
  17

  
	
   

  	
   

  	
   

  
	
  Section 9.

  	
  Covenants of Seller

  	
  20

  
	
   

  	
   

  	
   

  
	
  Section 10.

  	
  Confidentiality

  	
  24

  
	
   

  	
   

  	
   

  
	
  Section 11.

  	
  Term

  	
  24

  
	
   

  	
   

  	
   

  
	
  Section 12.

  	
  Exclusive
  Benefit of Parties; Assignment

  	
  24

  
	
   

  	
   

  	
   

  
	
  Section 13.

  	
  Amendments;
  Waivers; Cumulative Rights

  	
  24

  
	
   

  	
   

  	
   

  
	
  Section 14.

  	
  Execution in Counterparts

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 15.

  	
  Effect of Invalidity
  of Provisions

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 16.

  	
  Governing Law

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 17.

  	
  Notices

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 18.

  	
  Entire Agreement

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 19.

  	
  Costs of Enforcement

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 20.

  	
  Consent to Service

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 21.

  	
  Construction

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 22.

  	
  Effect of Amendment
  and Restatement

  	
  26

  
	
   

  	
   

  	
   

  
	
  Schedule I

  	
  Representations
  and Warranties

  	
   

  
	
  Exhibit A

  	
  Loan
  Purchase Detail

  	
   

  
	
  Exhibit A-1

  	
  Data
  Layout Instructions

  	
   

  
	
  Exhibit B-1

  	
  Warehouse
  Lender’s Release

  	
   

  
	
  Exhibit B-2

  	
  Warehouse
  Lender’s Wire Instructions

  	
   

  
	
  Exhibit C-1

  	
  Seller’s
  Release

  	
   

  
	
  Exhibit C-2

  	
  Seller’s
  Wire Instructions

  	
   

  
	
  Exhibit D

  	
  Purchaser’s
  Wire Instructions to Seller

  	
   

  
	
  Exhibit E

  	
  UCC-
  1 Financing Statement

  	
   

  
	
  Exhibit F

  	
  Authorized
  Signatories

  	
   

  
	
  Exhibit G

  	
  Form
  of Opinion

  	
   

  

 

i

 

	
  Exhibit H

  	
  Cash
  Account Adjustment Notice

  	
   

  
	
  Exhibit I

  	
  Cash
  Account Wire Instructions

  	
   

  
	
  Exhibit J

  	
  Withdrawal/Deposit
  Notice: Cash Account

  	
   

  
	
  Exhibit K

  	
  Takeout
  Proceeds Identification Letter

  	
   

  

 

ii

 

AMENDED AND RESTATED
MORTGAGE LOAN PURCHASE AGREEMENT

 

This Amended and
Restated Mortgage Loan Purchase Agreement (“Agreement”), dated as of the
date set forth on the cover page hereof, between UBS WARBURG REAL ESTATE
SECURITIES INC. (“Purchaser”) and the Seller whose name is set
forth on the cover page hereof (“Seller”).

 

RECITALS

 

WHEREAS, the
Purchaser and the Seller are parties to the Mortgage Loan Purchase Agreement,
dated as of March 26, 2001 (the “Original Mortgage Loan Purchase Agreement”);

 

WHEREAS, pursuant
to the Original Mortgage Loan Purchase Agreement, Seller may have, in its sole
discretion, offered to sell to Purchaser from time to time Mortgage Loans (as
defined therein), and Purchaser, in its sole discretion, may have agreed to
purchase such Mortgage Loans from Seller in accordance with the terms and
conditions set forth in the Original Mortgage Loan Purchase Agreement;

 

WHEREAS, the
Seller and the Purchaser desire to amend and restate the Original Mortgage Loan
Purchase Agreement as provided herein;

 

NOW, THEREFORE,
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree that the Original Mortgage
Loan Purchase Agreement be amended and restated in its entirety as follows:

 

PRELIMINARY STATEMENT

 

Seller may, in its
sole discretion, offer to sell to Purchaser from time to time Mortgage Loans,
and Purchaser, in its sole discretion, may agree to purchase such Mortgage
Loans from Seller in accordance with the terms and conditions set forth in this
Agreement.  Seller, subject to the terms
hereof, will cause each Mortgage Loan to be purchased by Takeout Investor.  During the period from the purchase of a
Mortgage Loan to the sale of the Mortgage Loan to Takeout Investor, Purchaser
expects to rely entirely upon Seller to service each such Mortgage Loan.

 

The parties hereto
hereby agree as follows:

 

Section 1.                                            Definitions.  Capitalized terms used but not defined
herein shall have the meanings set forth in the Custodial Agreement.  As used in this Agreement, the following
terms shall have the following meanings:

 

“Accepted
Servicing Practices”:  With respect
to each Mortgage Loan, such standards which comply with the applicable
standards and requirements under: (i) an applicable Agency Program and related
provisions of the applicable Agency Guide pursuant to which the related
Mortgage Loan is intended to be purchased, and/or (ii) any applicable FHA
and/or VA program and related provisions of applicable FHA and/or VA servicing
guidelines.

 

 

“Act of
Insolvency”:  With respect to
Seller, (a) the commencement by Seller as debtor of any case or proceeding
under any bankruptcy, insolvency, reorganization, liquidation, dissolution or
similar law, or Seller’s seeking the appointment of a receiver, trustee,
custodian or similar official for Seller or any substantial part of its
property, or (b) the commencement of any such case or proceeding against
Seller, or another’s seeking such appointment, or the filing against Seller of
an application for a protective decree which (1) is consented to or not
timely contested by Seller, (2) results in the entry of an order for
relief, such an appointment, the issuance of such a protective decree or the
entry of an order having a similar effect, or (3) is not dismissed within
sixty (60) days, (c) the making by Seller of a general assignment for
the benefit of creditors, or (d) the admission in writing by Seller that
Seller is unable to pay its debts as they become due or the nonpayment
generally by Seller of its debts as they become due.

 

“Affiliate”:  With respect to any Person, any “affiliate”
of such Person, as such term is defined in the Bankruptcy Code.

 

“Agency”:  The Government National Mortgage Association
(“GNMA”), the Federal National Mortgage Association (“Fannie Mae”),
and the Federal Home Loan Mortgage Corporation (“Freddie Mac”), as
applicable.

 

“Agency
Approvals”:  As defined in
Section 8(a)(viii) of this Agreement.

 

“Agency
Eligible Mortgage Loan”:  A mortgage
loan that is in strict compliance with the eligibility requirements for swap or
purchase by the designated Agency, under the applicable Agency Guide and/or
applicable Agency Program.

 

“Agency Guide”:
The GNMA Mortgage-Backed Securities Guide; the Fannie Mae Selling Guide and the
Fannie Mae Servicing Guide; the Freddie Mac Sellers’ and Servicers’ Guide; as
applicable, in each case as such Agency Guide may be amended from time to time.

 

“Agency Program”:  The specific purchase program under the
relevant Agency Guide or as otherwise approved by the Agency.

 

“Applicable
Guide”:  The Takeout Investor’s
eligibility requirements for Mortgage Loans, as applicable, and as each may be
amended or supplemented from time to time.

 

“Applicable
Purchase Agreement”:  The applicable
agreement, providing for the purchase by Takeout Investor of Mortgage Loans
from Seller as such agreement may be amended from time to time.

 

“Asset Value”:  With respect to each Mortgage Loan, the
outstanding principal balance of such Mortgage Loan less the Discount;
provided, that, the Asset Value shall be deemed to be zero with respect to each
Mortgage Loan (1) in respect of which there is a breach of a
representation and warranty set forth in Schedule 1 (assuming each
representation and warranty is made as of the date Asset Value is determined)
or (2) which has been released from the possession of the Custodian under
the Custodial Agreement to the Seller for a period in excess of ten (10)
calendar days; provided that the Purchaser may, in its sole and absolute
discretion, assign an Asset Value above zero with respect to any Mortgage Loan
that would otherwise be deemed to have an Asset Value of zero.

 

2

 

“Assignee”:  With respect to this Agreement and any Mortgage
Loan, any assignee of the Purchaser pursuant to a pledge or rehypothecation of
the Mortgage Loan.

 

“Authorized
Signatory”:  An officer of the
Seller who is authorized and empowered to request a purchase of Mortgage Loans
by the Purchaser pursuant to a request for purchase, and is indicated on the
Authorized Signatories of the Seller attached hereto as Exhibit F.

 

“Bankruptcy
Code”: The United States Bankruptcy Code of 1978, as amended from time to
time.

 

“Business Day”:  Any day other than (a) a Saturday,
Sunday or other day on which banks located in the City of New York, New York
are authorized or obligated by law or executive order to be closed, or
(b) any day on which UBS Warburg Real Estate Securities Inc.  is closed for business, provided that notice thereof
shall have been given not less than seven calendar days prior to such day.

 

“Cash Account”:  A separate cash account established and
maintained by Seller at the Purchaser under the conditions set forth in
Section 2.1.

 

“Cash Account
Adjustment”:  An adjustment to the
Cash Account Balance pursuant to a Cash Account Adjustment Notice.

 

“Cash Account
Adjustment Notice”:  The cash
account adjustment notice, in the form of Exhibit H; to be used by
Purchaser to notify Seller of any adjustments to the Cash Account Balance.

 

“Cash Account
Balance”:  As of any date, the net
amount of funds in the Cash Account on such date.

 

“Cash Account
Interest Accrual”:  The simple
interest calculation posted on the last Business Day of each month resulting
from the product of each Business Day’s Cash Account Balance and Cash Account
Interest Rate.

 

“Cash Account
Interest Rate”:  With respect to
each month, the average opening federal funds rate for such month.  The opening federal funds rate on a Business
Day shall be counted as the Cash Account Interest Rate until the next Business
Day.

 

“Cash Account
Wire Instructions”:  The wire
instructions, set forth in a letter in the form of Exhibit I, to be used
for the payment of funds to Seller.

 

“Cash Window
Mortgage Loan”: Any Mortgage Loan to be sold to an Agency for cash.

 

“Cash Window
Transaction”:  A transaction in
which a Cash Window Mortgage Loan is sold.

 

3

 

“Collateral”:  Each of the following items or types of
property, whether now owned or hereafter acquired, now existing or hereafter
created and wherever located:  any cash
or United Status Treasury obligations delivered to Purchaser pursuant to
Section 7(d), and any and all replacements, substitutions, distributions on
or proceeds of any and all of the foregoing.

 

“Commitment
Date”:  The date set forth in a
Takeout Commitment as the commitment date.

 

“Commitment
Expiration Date”:  With respect to
any Mortgage Loan, the date set forth in the related Takeout Commitment as the
commitment date.

 

“Commitment
Requirements”:  The requirements
issued by Takeout Investor in the Applicable Guide regarding the issuance of
Takeout Commitments, as amended from time to time by Takeout Investor.

 

“Conduit”:  As defined in the Custodial Agreement.

 

“Conduit
Submission Package”:  As defined in
the Custodial Agreement.

 

“Co-op”
shall mean a private, cooperative housing corporation, having only one class of
stock outstanding, which owns or leases land and all or part of a building or
buildings, including apartments, spaces used for commercial purposes and common
areas therein and whose board of directors authorizes the sale of stock and the
issuance of a Co-op Lease.

 

“Co-op Lease”
shall mean, with respect to a Co-op Loan, the lease with respect to a dwelling
unit occupied by the Mortgagor and relating to the stock allocated to the
related dwelling unit.

 

“Co-op Loan”
shall mean a Mortgage Loan, which is secured by the pledge of stock allocated
to a dwelling unit in a Co-op and a collateral assignment of the related Co-op
Lease.

 

“Co-op Security
Agreement” shall mean the agreement creating a first lien security interest
in the stock allocated to a dwelling unit in the residential cooperative
housing corporation that was pledged to secure such Co-op Loan and the related
Co-op Lease.

 

“Credit File”:  All papers and records of whatever kind or
description, whether developed or originated by Seller or others, required to
document or service the Mortgage Loan; provided, however, that such Mortgage Loan
papers, documents and records shall not include any Mortgage Loan papers,
documents or records which are contained in the Conduit Submission Package.

 

“Cure
Expiration Date”:  With respect to a
Defective Mortgage Loan in a Cash Window Transaction, the date occurring five
Business Days after the Commitment Expiration Date.

 

4

 

“Custodial
Account”:  A separate custodial
account, established and maintained by Seller under the conditions set forth in
Section 4(b), for the deposit by Seller of all collections in respect of a
Mortgage Loan that are payable to Purchaser as the owner of the Mortgage Loan.

 

“Custodial
Agreement”:  The Amended and
Restated Mortgage Loan Custodial Agreement, dated as of the date set forth on
the cover sheet thereof, among Seller, Purchaser and Custodian, as amended from
time to time.

 

“Custodial Fee”:  With respect to each Mortgage Loan, the
amount set forth on the related Funding Confirmation as the “Custodial Fee.”

 

“Custodian”:
The custodian named in the Custodial Agreement and its permitted successors.

 

“Defect Amount”:  An amount (expressed as a positive number)
equal to the aggregate Asset Value of the Mortgage Loans owned by Purchaser
hereunder less the aggregate Purchase Price for all such Mortgage Loans if at
any time the aggregate Asset Value of the Mortgage Loans is less than the
aggregate Purchase Price for all such Mortgage Loans.

 

“Defective
Mortgage Loan”:  A Mortgage Loan
that is not in compliance with the Applicable Guide and this Agreement.

 

“Discount”:  With respect to each Mortgage Loan, the
amount set forth on such related Funding Confirmation as the Discount.

 

“Document File”:  The Credit File and the Conduit Submission
Package.

 

“Due Date”:  The day of the month on which the Monthly
Payment is due on a Mortgage Loan.

 

“Electronic
Tracking Agreement”:  The Electronic
Tracking Agreement, dated as of the date hereof, among Purchaser, Seller,
MERSCORP, Inc. and Mortgage Electronic Registration Systems, Inc.; provided that
if no Mortgage Loans are or will be MERS Designated Mortgage Loans, all
references herein to the Electronic Tracking Agreement shall be disregarded.

 

“Electronic
Transmission” shall mean the delivery of information in an electronic
format acceptable to the applicable recipient thereof.

 

“FDIC”:  The Federal Deposit Insurance Corporation or
any successor thereto.

 

“FHA”:  The Federal Housing Administration.

 

“Funding
Confirmation”:  With respect to all
Mortgage Loans purchased by Purchaser from Seller via a single wire funds
transaction on a particular Business Day, the trade confirmation from Purchaser
to Seller confirming the terms of Purchaser’s purchase of such Mortgage Loans.

 

5

 

“HUD”:  The United States Department of Housing and
Urban Development.

 

“Incremental
Pass-Through Rate”:  The amount by
which the Pass-Through Rate is increased upon the occurrence of (i) a
Commitment Expiration Date or (ii) any event giving Purchaser the right to
elect a remedy pursuant to Section 3, which amount shall be set forth in a
Funding Confirmation as the “Incremental Pass-Through Rate”.

 

“Interim Funder”:  With respect to each MERS Designated
Mortgage Loan, the Person named on the MERS® System as the interim funder pursuant
to the MERS Procedures Manual.

 

“Investor”:  With respect to each MERS Designated
Mortgage Loan, the Person named on the MERS® System as the investor pursuant to
the MERS Procedures Manual.

 

“Loan Purchase
Detail”:  A loan purchase detail,
transmitted via Electronic Transmission in the appropriate data layout set
forth on Exhibit A-1, prepared by Seller, containing each data point set forth
on Exhibit A or as may be requested by the Purchaser regarding the
characteristics of all Mortgage Loans being offered for sale by Seller on a
particular Business Day.

 

“Losses”:  Any and all losses, claims, damages,
liabilities or expenses (including reasonable attorneys’ fees) incurred by
any person specified; provided, however, that “Losses” shall not
include any losses, claims, damages, liabilities or expenses which would have
been avoided had such person taken reasonable actions to mitigate such losses,
claims, damages, liabilities or expenses.

 

“MERS
Designated Mortgage Loan”:  Mortgage
Loans for which (a) the Seller has designated or will designate MERS as,
and has taken or will take such action as is necessary to cause MERS to be, the
mortgagee of record, as nominee for the Seller, in accordance with MERS
Procedure Manual and (b) the Seller has designated or will designate the
Purchaser as the Investor and Interim Funder on the MERS® System.

 

“MERS Procedure
Manual”:  The MERS Procedures Manual
attached as Exhibit B to the Electronic Tracking Agreement, as it may be
amended, supplemented or otherwise modified from time to time.

 

“MERS Report”:  The schedule listing MERS Designated
Mortgage Loans and other information prepared by the Electronic Agent pursuant
to the Electronic Tracking Agreement.

 

“MERS® System”:  The Electronic Agent’s mortgage electronic
registry system, as more particularly described in the MERS Procedures Manual.

 

“Monthly
Payment”:  The scheduled monthly
payment of principal and interest on a Mortgage Loan.

 

“Mortgage”:  With respect to a Mortgage Loan that is not
a Co-op Loan, the mortgage, deed of trust or other instrument creating a first
lien on an estate in fee simple in real

 

6

 

property securing a Mortgage Note and, with respect to a Co-op Loan,
the Co-op Security Agreement.

 

“Mortgage Loan”:  A mortgage loan which is subject to this
Agreement, and which satisfies the Commitment Requirements as the same may be
modified from time to time.

 

“Mortgage Note”:  The note or other evidence of the
indebtedness of a Mortgagor secured by a Mortgage.

 

“Mortgaged
Property”:  With respect to a
Mortgage Loan that is not a Co-op Loan, the property subject to the lien of the
Mortgage securing a Mortgage Note.  With
respect to a Co-op Loan, the stock allocated to a dwelling unit in the
residential cooperative housing corporation that was pledged to secure such
Co-op Loan and the related Co-op Lease.

 

“Mortgagor”:  The obligor on a Mortgage Note.

 

“NCUA”:  The National Credit Union Administration, or
any successor thereto.

 

“Original
Mortgage Loan Purchase Agreement”: 
Shall have the meaning assigned to such term in the recitals hereof.

 

“OTS”:  The Office of Thrift Supervision, or any
successor thereto.

 

“Parent Company”:  A corporation or other entity owning at
least 50% of the outstanding shares of voting stock of Seller.

 

“Pass-Through
Rate”:  With respect to each
Mortgage Loan, the rate at which interest is passed through to Purchaser which
initially shall be the rate of interest specified on a Funding Confirmation as
the Pass-Through Rate.

 

“Performance
Fee”:  With respect to each Mortgage
Loan, an amount equal to the Discount less the Custodial Fee, plus the Yield
Compensation Adjustment plus or minus any other adjustments permitted
hereunder, which amount shall be payable to Seller by Purchaser as compensation
to Seller for its services hereunder.

 

“Person”:  Any individual, corporation, company,
voluntary association, partnership, joint venture, limited liability company,
trust, unincorporated association or government (or any agency, instrumentality
or political subdivision thereof).

 

“Property”:
Any right or interest in or to property of any kind whatsoever, whether real,
personal or mixed and whether tangible or intangible.

 

“Purchase
Advice”:  An approved purchase list
delivered to Purchaser by the Takeout Investor via electronic or facsimile
transmission, confirming the amount of Takeout Proceeds allocable to each
Mortgage Loan purchased by Takeout Investor.

 

“Purchase Date”:  With respect to any Mortgage Loan, the date
of payment thereof by Purchaser to Seller of the Purchase Price.

 

7

 

“Purchase Price”:  With respect to each Mortgage Loan, an
amount equal to the Trade Principal less an amount equal to the product of the
Trade Principal and the Discount. 
Accrued interest shall be allocated in accordance with
Section 2(c).

 

“Purchaser”:  UBS Warburg Real Estate Securities Inc.  and its successors.

 

“Purchaser’s
Wire Instructions to Seller”:  The
wire instructions, set forth in a notice delivered by Purchaser to Seller
containing the information set forth in Exhibit D, to be used for the payment
of all amounts due and payable to Purchaser hereunder.

 

“Qualified
Insurer”:  A mortgage guaranty
insurance company duly authorized and licensed where required by law to
transact mortgage guaranty insurance business and approved as an insurer by
Fannie Mae or Freddie Mac and GNMA.

 

“RTC”:  The Resolution Trust Corporation or any
successor thereto.

 

“Seller”:  The Seller whose name is set forth on the
cover page hereof, and its permitted successors hereunder.

 

“Seller’s
Release”:  A letter in the form of
Exhibit C-1, delivered by Seller when no Warehouse has an interest in a
Mortgage Loan, conditionally releasing all of Seller’s interest in a Mortgage
Loan upon receipt of payment by Seller.

 

“Seller’s Wire
Instructions”:  The wire
instructions, set forth in a letter in the form of Exhibit C-2, to be used for
the payment of funds to Seller when no Warehouse Lender has an interest in the
Mortgage Loans to which such payment relates.

 

“Servicing
Rights”: Any and all of the following: 
(a) any and all rights to service the Mortgage Loans; (b) any
payments to or monies received by Seller or any other Person for servicing the
Mortgage Loans; (c) any late fees, penalties or similar payments with
respect to the Mortgage Loans; (d) all agreements or documents creating,
defining or evidencing any such servicing rights to the extent they relate to
such servicing rights and all rights of Seller or any other Person thereunder;
(e) escrow payments or other similar payments with respect to the Mortgage
Loans and any amounts actually collected by Seller or any other Person with
respect thereto; and (f) all accounts and other rights to payment related
to the Mortgage Loans.

 

“Settlement
Date”:  With respect to any Mortgage
Loan, the date the allocable Pass-Through Rate shall cease to accrue upon
payment by Takeout Investor to Purchaser of the Takeout Proceeds as confirmed
by Purchaser’s receipt from Seller of the related Settlement Information in
accordance with Section 3(a).

 

“Settlement
Information”:  The Purchase Advice
or group of Purchase Advices which shall identify each Mortgage Loan by the
Mortgagor’s name, and of which the aggregate disbursement amount equals the
precise dollar amount of Takeout Proceeds to be received by Purchaser from this
Agreement and, when applicable, a Takeout Proceeds Identification Letter.

 

“Subsidiary”:  With respect to any Person, any corporation,
partnership or other entity of which at least a majority of the securities or
other ownership interests having by the

 

8

 

terms thereof ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions of such corporation,
partnership or other entity (irrespective of whether or not at the time
securities or other ownership interests of any other class or classes of such
corporation, partnership or other entity shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more Subsidiaries of
such Person or by such Person and one or more Subsidiaries of such Person.

 

“Successor
Servicer”:  An entity designated by
Purchaser, in conformity with Section 16, to replace Seller as servicer
for Purchaser.

 

“Takeout
Commitment”:  Commitment of Seller
to sell one or more Mortgage Loans to Takeout Investor and of Takeout Investor
to purchase one or more Mortgage Loans from Seller.

 

“Takeout
Investor”:  The applicable Conduit.

 

“Takeout
Proceeds”:  The amount of funds
Takeout Investor pays to Purchaser on a particular Business Day as identified
by the related Settlement Information.

 

“Takeout
Proceeds Identification Letter”:  A letter
in the form of Exhibit K, delivered by Seller to Purchaser identifying Takeout
Proceeds received by Purchaser from an Agency or Takeout Investor which funds
do not relate to Mortgage Loans purchased by Purchaser from Seller.

 

“Third Party
Underwriter”:  Any third party,
including but not limited to a mortgage loan pool insurer, who underwrites the
Mortgage Loan(s) prior to the purchase by Purchaser.

 

“Third Party
Underwriter’s Certificate”:  A
certificate issued by a Third Party Underwriter with respect to a Mortgage
Loan, certifying that such Mortgage Loan complies with its underwriting
requirements.

 

“Trade Price”:  The trade price set forth on a Takeout
Commitment.

 

“Trade
Principal”:  With respect to any
Mortgage Loan, the outstanding principal balance of the Mortgage Loan
multiplied by a percentage equal to the Trade Price.

 

“Transaction”:  Any sale of a Mortgage Loan by Seller to
Purchaser pursuant to a Funding Confirmation in accordance with this Agreement.

 

“UBSRES
Purchase Program”:  Purchaser’s Cash
Window Funding Program, Conduit Funding Program, or MBS Swap Funding Program as
applicable.

 

“Underlying
Mortgaged Property” shall mean with respect to each Co-op Loan, the
underlying real property owned by the related residential cooperative housing
corporation.

 

“VA”:  The Department of Veterans Affairs.

 

9

 

“Warehouse
Lender”:  Any lender, including,
without limitation, Purchaser, providing financing to the Seller in any
fractional amount for the purpose of originating or purchasing Mortgage Loans
which lender has a security interest in such Mortgage Loans as collateral for
the obligations of Seller to such lender.

 

“Warehouse
Lender’s Release”:  A letter in the
form of Exhibit B-1, from a Warehouse Lender to Purchaser, conditionally
releasing all of Warehouse Lender’s right, title and interest in certain
Mortgage Loans identified therein upon receipt of payment by Warehouse Lender.

 

“Warehouse
Lender’s Wire Instructions”:  The
wire instructions, set forth in a letter in the form of Exhibit B-2, from a
Warehouse Lender to Purchaser, setting forth wire instructions for all amounts
due and payable to such Warehouse Lender hereunder.

 

“Withdrawal/Deposit
Notice”:  A notice, substantially in
the form of Exhibit J, delivered by Seller to Purchaser, from time to
time, in connection with withdrawals from and deposits to the Cash Account.

 

“Wire Fee”:  For each disbursement relating to a
Transaction, a fee payable to Purchaser by Seller as set forth in the Funding
Confirmation.

 

“Yield
Compensation Adjustment”:  Subject
to any further adjustment provided in this Agreement, an amount (which may be a
negative number) equal to:

 

A(BC-DE)

360

 

where (i) A
equals the number of days in the period beginning on the Purchase Date to but
not including the Settlement Date, (ii) B equals the principal amount of
the Mortgage Loan, (iii) C equals the interest rate (expressed as a
decimal) on the Mortgage Loan, (iv) D equals the Purchase Price and
(v) E equals the Pass-Through Rate (expressed as a decimal).

 

Section 2.                                            Procedures
for Purchases of Mortgage Loans. (a)                          (1)  Purchaser may, in its sole discretion, from
time to time, purchase one or more Mortgage Loans from Seller.  Seller shall be deemed to make for the
benefit of Purchaser, as of the applicable dates specified in Section 8,
the representations and warranties set forth in Section 8 in respect of
each such Mortgage Loan.

 

(a)                                  (2)                                  Prior
to Purchaser’s election to purchase any Mortgage Loan, Purchaser shall have
received from Seller (i) a Loan Purchase Detail, via Electronic Transmission,
(ii) a MERS Report reflecting the Purchaser as Investor or Interim Funder for
each MERS Designated Mortgage Loan and (iii) Custodian shall have received all
applicable documents required by Section 2 of the Custodial
Agreement.  The terms and conditions of
such purchase shall be set forth in this Agreement and in each Funding
Confirmation.

 

(b)                                 (1)                                  If
Purchaser elects to purchase any Mortgage Loan, Purchaser shall pay the amount
of the Purchase Price for such Mortgage Loan by wire transfer of immediately
available funds (i) if a Warehouse Lender’s Release has been included in
the related Conduit

 

10

 

Submission Package, in accordance with the Warehouse Lender’s Wire
Instructions or (ii) if there is no Warehouse Lender’s Release included in
the related Conduit Submission Package, in accordance with the Seller’s Wire
Instructions.  If Purchaser is the
Warehouse Lender with respect to a Mortgage Loan, the amount transferred shall
be reduced to account for amounts previously advanced by Purchaser with respect
to such Mortgage Loan.  With respect to
each Mortgage Loan which Purchaser has elected to purchase, Custodian shall
deliver to Takeout Investor the applicable portion of the Conduit Submission
Package, in the manner and at the time set forth in the Custodial
Agreement.  Seller shall thereafter
promptly deliver to Takeout Investor any and all additional documents requested
by Takeout Investor to enable Takeout Investor to make payment to Purchaser of
the Takeout Proceeds.

 

(b)                                 (2)                                  Simultaneously
with the payment by Purchaser of the Purchase Price of a Mortgage Loan, in
accordance with the Warehouse Lender’s Wire Instructions or the Seller’s Wire
Instructions, as applicable, with respect to a Mortgage Loan, Seller hereby
conveys to Purchaser all of Seller’s right, title and interest in and to such
Mortgage Loan, free and clear of any lien, claim or encumbrance.

 

(c)                                  With
respect to each Mortgage Loan that Purchaser elects to purchase hereunder,
Purchaser shall owe to Seller a Performance Fee.  The Yield Compensation Adjustment component of the Performance
Fee shall include an accrued interest calculation.  Purchaser’s accrued interest calculation shall be identical to
that of Takeout Investor, therefore the amount of accrued interest included in
a settlement calculation will represent accrued interest paid to Purchaser and
paid by Purchaser.

 

(d)                                 Notwithstanding
the satisfaction by Seller of the conditions specified in Section 2(a),
Purchaser is not obligated to purchase any Mortgage Loan offered to it
hereunder.  In the event that Purchaser
rejects a Mortgage Loan for purchase for any reason and/or does not transmit
the Purchase Price, any Conduit Submission Package delivered to Custodian in
anticipation of such purchase shall be returned by Custodian in accordance with
the terms of the bailee letter under which it was received.

 

Section 2.1.                                   Cash
Account.

 

(a)                                  Seller
hereby authorizes and directs Purchaser to create the Cash Account.  The Cash Account shall be held by Purchaser
for Seller subject to the terms and conditions of this Agreement.  Purchaser shall notify Seller, via
electronic or facsimile transmission, of the Cash Account Balance on each
Business Day when the Cash Account Balance is greater than zero and on each
Business Day on which a Transaction occurs hereunder.

 

(b)                                 Purchaser
shall credit the Cash Account for (i) any deposits therein by Seller upon
Seller’s written direction pursuant to a Withdrawal/Deposit Notice,
(ii) any amounts due Seller and payable by Purchaser under any UBSRES
Purchase Program to the extent not otherwise netted as described hereunder,
(iii) any Cash Account Interest Accruals and (iv) any deposits by
Seller hereunder.

 

(c)                                  Purchaser
shall debit the Cash Account for (i) any withdrawals therefrom by Seller
upon Seller’s written direction pursuant to a Withdrawal/Deposit Notice,
(ii) any

 

11

 

amounts due Purchaser and
payable by Seller under any UBSRES Purchase Program, (iii) any debit
pursuant to a Cash Account Adjustment and (iv) any Wire Fees.

 

(d)                                 Upon
termination of this Agreement and payment in full of all obligations owing by
Seller hereunder, under the Custodial Agreement Purchaser shall remit to Seller
the Cash Account Balance.

 

Section 3.                                            Sale
of Mortgage Loans to Takeout Investor. 
(a)(1)  Upon the sale to Takeout
Investor of a Mortgage Loan previously purchased by Purchaser hereunder, Seller
shall cause Takeout Proceeds relating to such Mortgage Loan to be paid to
Purchaser in accordance with Purchaser’s Wire Instructions to Seller. Since a
Takeout Investor or an Agency may aggregate Takeout Proceeds from several
Mortgage Loans in one wire transfer, it may be necessary, from time to time,
for Seller to cause a Takeout Investor or an Agency to also pay to Purchaser
Takeout Proceeds relating to Mortgage Loans not purchased by Purchaser.

 

(a)                                  (2)                                  Upon
receipt by Purchaser of any Takeout Proceeds, Purchaser will attempt to
identify such Takeout Proceeds by reviewing the Settlement Information that has
been supplied by Seller in advance of the purchase of Mortgage Loans by the
Agency.

 

(a)                                  (3)                                  The
Settlement Date will occur on the earliest date Settlement Information is made
available by Seller to Purchaser, 
Purchaser will (i) place all unidentified Takeout Proceeds in a
non-interest bearing account and (ii) continue to accrue interest at the
Pass-Through Rate on all Mortgage Loans which relate to such unidentified Takeout
Proceeds until the Settlement Date of such Mortgage Loans.

 

(a)                                  (4)                                  All
Takeout Proceeds received by Purchaser from Takeout Investor after 3:00
P.M.  New York City time on a Business
Day (or at any time on a day which is not a Business Day) shall be deemed,
with regard to determining the Settlement Date, received by Purchaser on the
next succeeding Business Day.

 

(b)                                 (1)                                  If
any Mortgage Loan is rejected by Takeout Investor because it is a Defective
Mortgage Loan, Seller shall promptly notify Purchaser.  If any Mortgage Loan is a Defective Mortgage
Loan on the Purchase Date and in Purchaser’s sole judgement the defects in such
Mortgage Loan will not be cured (or in fact are not cured) by Seller prior
to the Commitment Expiration Date, the Pass-Through Rate applicable to such
Defective Mortgage Loan shall, on such Commitment Expiration Date, increase by
the Incremental Pass-Through Rate and Purchaser, at its election, may require
that Seller, upon receipt of notice from Purchaser, immediately repurchase
Purchaser’s ownership interest in such Defective Mortgage Loan by remitting to
Purchaser (in immediately available funds in accordance with Purchaser’s
instructions) the amount paid by Purchaser for such Defective Mortgage
Loan plus interest at the Pass-Through Rate on the principal amount thereof
from the Purchase Date of such Mortgage Loan to the date of such
repurchase.  If at any time prior to the
repurchase of a Defective Mortgage Loan by Seller or the purchase of a Mortgage
Loan by Takeout Investor, Seller receives the Mortgage Note or any other
portion of the Conduit Submission Package, Seller shall promptly forward such
Mortgage Note and/or other portion of the Conduit Submission Package to
Purchaser.

 

12

 

(b)                                 (2)                                  If
Seller fails to comply with its obligations in the manner described in
Section 3(b)(1), upon receipt by Seller of notice from Purchaser, Seller’s
rights and obligations to service Mortgage Loans, as provided in this
Agreement, shall terminate.  If an Act
of Insolvency occurs at any time, Seller’s rights and obligations to service
the Mortgage Loans, as provided in this Agreement, shall terminate immediately,
without any notice or action by Purchaser. 
Upon any such termination, Purchaser is hereby authorized and empowered
as the exclusive agent for Seller to sell and transfer such rights to service
the Mortgage Loans for such price and on such terms and conditions as Purchaser
shall reasonably determine, and Seller shall not otherwise attempt to sell or
transfer such rights to service without the prior consent of Purchaser.  Seller shall perform all acts and take all
action so that all files and documents relating to the Mortgage Loans held by
Seller, together with all escrow amounts relating to such Mortgage Loans, are
delivered to Successor Servicer.  To the
extent that the approval of a Third Party Underwriter or any other person is
required for any such sale or transfer, Seller shall fully cooperate with
Purchaser to obtain such approval.  Upon
exercise by Purchaser of its remedies under this Section 3(b)(2), Seller
hereby authorizes Purchaser to receive all amounts paid by any purchaser of
such rights to service the Mortgage Loans and to remit such amounts to Seller
subject to Purchaser’s rights of set-off under this Agreement.  Upon exercise by Purchaser of its remedies
under this Section 3(b)(2), Purchaser’s obligation to pay and Seller’s
right to receive any portion of the Performance Fee relating to such Mortgage
Loans shall automatically be canceled and become null and void, provided
that such cancellation shall in no way relieve Seller or otherwise affect the
obligation of Seller to indemnify and hold Purchaser harmless as specified in
Section 3(c).

 

(b)                                 (3)                                  Each
Mortgage Loan required to be delivered to Successor Servicer by
Section 3(b)(2) shall be delivered free of any servicing rights in
favor of Seller and free of any title, interest, lien, encumbrance or claim of
any kind of Seller.  Seller shall
deliver or cause to be delivered all files and documents relating to each
Mortgage Loan held by Seller to Successor Servicer.  Seller shall promptly take such actions and furnish to Purchaser
such documents that Purchaser deems necessary or appropriate to enable
Purchaser to cure any defect in each such Mortgage Loan or to enforce such
Mortgage Loans, as appropriate.

 

(c)                                  Seller
agrees to indemnify and hold Purchaser and its assignees harmless from and
against all Losses resulting from or relating to any breach or failure to
perform by Seller of any representation, warranty, covenant, term or condition
made or to be performed by Seller under this Agreement.

 

(d)                                 No
exercise by Purchaser of its rights under this Section 3 shall relieve
Seller of responsibility or liability for any breach of this Agreement.

 

(e)                                  Seller
hereby grants Purchaser a right of set-off against the payment of any amounts
that may be due and payable to Purchaser from Seller, such right to be upon any
and all monies or other property of Seller held or received by Purchaser, or
due and owing from Purchaser to Seller.

 

Section 4.                                            Servicing
of the Mortgage Loans.  (a)  It is expressly acknowledged that the
Servicing Rights relating to each Mortgage Loan purchased by Purchaser
hereunder have been sold, assigned, and transferred by Seller to Purchaser
along with such

 

13

 

Mortgage Loan.  Seller shall service and administer each
Mortgage Loan on behalf of Purchaser on an interim basis in accordance with
accepted and prudent mortgage loan servicing standards and procedures generally
accepted in the mortgage banking industry for the same type of mortgage loans
as the Mortgage Loans and in a manner at least equal in quality to the
servicing the Seller provides for mortgage loans which it owns and in
accordance with the requirements of the Takeout Investor as though the Takeout
Investor’s requirements were set forth in an independent contract between
Seller and Purchaser, provided that Seller shall at all times comply with
applicable law and the requirements of any applicable insurer or guarantor so
that the insurance and any applicable guarantee in respect of any Mortgage Loan
is not voided or reduced.  Seller shall
at all times maintain accurate and complete records of its servicing of each
Mortgage Loan, and Purchaser may, at any time during Seller’s business hours,
on reasonable notice, examine and make copies of such records.  On the 2nd day of each calendar
month, or at any other time upon Purchaser’s request Seller shall deliver to Purchaser
reports regarding the status of each Mortgage Loan in accordance with
Section 9(l) and Section 9(m), which shall include, with respect to
any MERS Designated Mortgage Loan, MERS Reports, and any circumstances that
could materially adversely affect any such Mortgage Loan, Purchaser’s ownership
of any such Mortgage Loan or the collateral securing any such Mortgage
Loan.  The Seller agrees and
acknowledges that Purchaser may, at any time, terminate the servicing of the
Mortgage Loans by Seller and transfer servicing to another Person on such date
as Purchaser may determine in its sole discretion.  In the event that anything in this Agreement is interpreted as
constituting one or more interim servicing contracts, each such servicing
contract shall terminate automatically upon the earlier of (i) the
repurchase of a Mortgage Loan by the Seller or (ii) the Purchaser’s notice
to Seller directing Seller to transfer servicing (provided, Seller’s
obligations as set forth herein to cooperate in the transfer of such servicing
shall not terminate until such servicing has actually been transferred in
full).

 

(b)                                 Within
two Business Days of notice from Purchaser or with respect to each Mortgage
Loan, on the Commitment Expiration Date:

 

(i)                                     Seller
shall establish and maintain a Custodial Account entitled “MortgageIT, Inc., in
trust for UBS Warburg Real Estate Securities Inc. and its assignees under the
Amended and Restated Mortgage Loan Purchase Agreement dated January 10,
2003” and shall promptly deposit into such Custodial Account, in the form
received with any necessary endorsements, all collections received in respect
of each Mortgage Loan that are payable to Purchaser as the owner of each such
Mortgage Loan; and

 

(ii)                                  at
the Purchaser’s sole option, upon written notice from the Purchaser, the Seller
shall transfer servicing of the Mortgage Loans to a Successor Servicer
designated by the Purchaser.

 

(c)                                  Amounts
deposited in the Custodial Account with respect to any Mortgage Loan shall be
held in trust for Purchaser as the owner of such Mortgage Loan and shall be
released only as follows:

 

(i)                                     Except
as otherwise provided in this Section 4(c), following receipt by Purchaser
or its designee of the Takeout Proceeds for such Mortgage Loan from Takeout
Investor or Seller amounts deposited in the Custodial Account shall be paid in
accordance

 

14

 

with
Section 2(c).  Notwithstanding the
foregoing, all amounts deposited in the Custodial Account shall be paid to
Seller upon the purchase by Takeout Investor of the related Mortgage
Loan(s) from Purchaser if, and to the extent that, the amounts due and
payable to Purchaser hereunder have been set off against the Purchase Price for
the Mortgage Loan or the Performance Fee relating to the Mortgage Loan.  The amounts paid to Seller (if
any) pursuant to this Section 4(c)(1) shall constitute Seller’s
sole compensation for servicing the Mortgage Loans as provided in this
Section 4.

 

(ii)                                  If
a Successor Servicer is appointed by Purchaser (either under the circumstances
set forth in clause (b)(ii) above, or otherwise), all amounts deposited in the
Custodial Account shall be paid to Purchaser promptly upon such delivery.

 

(iii)                               During
the period that Seller acts as servicer, all amounts deposited in the Custodial
Account shall be released only in accordance with Purchaser’s written
instructions.

 

(iv)                              With
respect to a Cash Window Transaction, if a Mortgage Loan is not purchased by
the Agency on or before the Cure Expiration Date, during the period thereafter
that Seller acts as servicer, all amounts deposited in the Custodial Account
shall be released only in accordance with Purchaser’s written instructions.

 

(d)                                 In
the event the Seller or its Affiliate is servicing the Mortgage Loans, the Seller
shall permit the Purchaser to inspect the Seller’s or its Affiliate’s servicing
facilities, as the case may be, for the purpose of satisfying the Purchaser
that the Seller or its Affiliate, as the case may be, has the ability to
service the Mortgage Loans as provided in this Agreement.

 

(e)                                  If
the servicer of the Mortgage Loans is Seller or the servicer is an Affiliate of
Seller, Seller shall provide to Purchaser a letter from Seller or such
Affiliate, as the case may be, to the effect that upon 1 day’s notice from
Purchaser, Seller’s rights and obligations to service the Mortgage Loans shall
terminate immediately, without any further notice or action by Purchaser and
Seller shall transfer servicing to Purchaser’s designee, at no cost or expense
to the Purchaser, it being agreed that the Seller will pay any and all fees
required to terminate the Servicing Agreement and to effectuate the transfer of
servicing to the designee of the Purchaser.

 

Section 5.                                            Trade
Assignments.  Seller hereby assigns
to Purchaser, free of any security interest, lien, claim or encumbrance of any
kind, Seller’s rights, under each Takeout Commitment to the full extent
permitted by Takeout Investor, to deliver the Mortgage Loan(s) specified
therein to Takeout Investor and to receive the Takeout Proceeds therefor from
Takeout Investor.  Purchaser shall not
be deemed to have accepted such rights of Seller which relate to a particular
Mortgage Loan unless and until it purchases the Mortgage Loan, and nothing set
forth herein shall be deemed to impair Purchaser’s right to reject any Mortgage
Loan for any reason, in its sole discretion.

 

Section 6.                                            Transfers
of Mortgage Loans by Purchaser. 
Purchaser may, in its sole discretion, assign all of its right, title
and interest in or grant a security interest in any Mortgage Loan sold by
Seller hereunder and all rights of Purchaser under this Agreement and the
Custodial Agreement, in respect of such Mortgage Loan to Assignee, subject only
to an

 

15

 

obligation on the part of
Assignee to deliver each such Mortgage Loan to Takeout Investor pursuant to
Section 5 or to Purchaser to permit Purchaser or its designee to make
delivery thereof to Takeout Investor pursuant to Section 5.  It is anticipated that such assignment to
Assignee will be made by Purchaser, and Seller hereby irrevocably consents to
such assignment.  No notice of such
assignment shall be given by Purchaser to Seller or Takeout Investor.  Assignment by Purchaser of the Mortgage
Loans as provided in this Section 6 shall not release Purchaser from its
obligations otherwise under this Agreement.

 

Without limitation
of the foregoing, an assignment of a Mortgage Loan to Assignee, as described in
this Section 6, shall be effective upon delivery to Assignee of a Conduit
Submission Package.

 

Section 7.                                            Record
Title to Mortgage Loans;  Intent of
Parties;  Security Interest.  (a) 
From and after the delivery of the related Conduit Submission Package,
and subject to the remedies of Purchaser in Section 3, Seller shall remain
the last named payee or endorsee of each Mortgage Note and the mortgagee or
assignee of record of each Mortgage (except with respect to a MERS Designated
Mortgage Loan) in trust for the benefit of Purchaser, for the sole purpose of facilitating
the servicing of such Mortgage Loan.

 

(b)                                 Seller
shall maintain a complete set of books and records for each Mortgage Loan which
shall be clearly marked to reflect the ownership interest in each Mortgage Loan
of Purchaser and with respect to each MERS Designated Mortgage Loan, Seller
shall designate the Purchaser as the Investor and Interim Funder on the MERS®
System.

 

(c)                                  Purchaser
and Seller confirm that the transactions contemplated herein are intended to be
sales of the Mortgage Loans by Seller to Purchaser rather than borrowings
secured by the Mortgage Loans.  In the
event, for any reason, any transaction is construed by any court or regulatory
authority as a borrowing rather than as a sale, the Seller and Purchaser intend
that Purchaser or Assignee, as the case may be, shall have a perfected first
priority security interest in the Mortgage Loans (including all servicing
rights related thereto), any Custodial Accounts, the Takeout Commitments and
the proceeds of any and all of the foregoing and, free and clear of adverse
claims (collectively, the “Mortgage Collateral”).  In such case, Seller shall be deemed to have
hereby granted to Purchaser or Assignee, as the case may be, a first priority
security interest in and lien upon the Mortgage Collateral, free and clear of
adverse claims.  In such event, this
Agreement shall constitute a security agreement, the Custodian shall be deemed
to be an independent custodian for purposes of perfection of the security
interest granted to Purchaser or Assignee, as the case may be, and Purchaser or
Assignee, as the case may be, shall have all of the rights of a secured party
under applicable law.  Seller shall, not
later than the date of the first purchase of a Mortgage Loan by Purchaser under
this Agreement, deliver to Purchaser a UCC-1 Financing Statement, executed by
Seller, containing a description of the Mortgage Collateral in the form
attached hereto in Exhibit E.

 

(d)                                 Seller
acknowledges that Purchaser’s purchase of Mortgage Loan hereunder will be based
in part on the existence of one or more Takeout Commitments with respect to
such Mortgage Loans, Seller’s representations and warranties with respect to
such Takeout Commitments and the related Takeout Investors and Seller’s
covenants with respect to such Takeout Commitments and Takeout Investors.  In order to secure Seller’s obligations with

 

16

 

respect thereto, and as a
condition to Purchaser’s purchase of any Mortgage Loans hereunder, Seller
hereby grants to Purchaser a first priority perfected security interest in and
lien upon the Collateral, free and clear of adverse claims.  If at any time there exists a Defect Amount,
then Seller shall deliver to the Purchaser cash or United States Treasury
obligations approved by the Purchaser in an amount equal to the Defect Amount
as security for its obligations hereunder. 
If Purchaser delivers notice of the existence of such Defect Amount (a “Defect
Notice”) to Seller on or prior to 10:00 a.m. (New York City time)
on any Business Day, then Seller shall deliver to Purchaser an amount equal to
the Defect Amount no later than 5:00 p.m. (New York City time) on
such Business Day.  In the event
Purchaser delivers a Defect Notice to Seller after 10:00 a.m.
(New York City time) on any Business Day, then such Defect Notice shall be
deemed to have been delivered on the following Business Day and Seller shall be
required to deliver to Purchaser an amount equal to the Defect Amount no later
than 5:00 p.m. (New York City time) on such subsequent Business Day.  At such time as a Defect Amount ceases to
exist or Seller has delivered cash or United States Treasury obligations in an
amount in excess of such Defect Amount to Purchaser (such amounts the “Repurchase
Excesses”) pursuant to this Section 7(d), Purchaser shall remit to
Seller such Repurchase Excesses.  In the
event Purchaser determines that Seller fails to perform in any material respect
any of its obligations with respect to any Takeout Commitment or Takeout
Investor, or any of Seller’s representations, warranties or covenants with
respect thereto, Purchaser shall have all rights and remedies available to it
with respect to the Collateral under applicable law. In addition to any rights
and remedies of the Purchaser provided by this Agreement and by law, Purchaser
shall have the right, without prior notice to the Seller, any such notice being
expressly waived by the Seller to the extent permitted by applicable law, upon
any amount becoming due and payable by the Seller hereunder to set-off and
appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct
or indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Purchaser or any Affiliate thereof to or for the credit or the
account of the Seller.

 

Section 8.                                            Representations
and Warranties.  (a)  Seller hereby represents and warrants to
Purchaser as of the date hereof and as of the date of each delivery of a
Conduit Submission Package that:

 

(i)                                     Seller
is duly organized, validly existing and in good standing under the laws of the
state of its organization or of the United States of America and has all
licenses necessary to carry on its business as now being conducted and is
licensed, qualified and in good standing in the state where the Mortgaged
Property is located if the laws of such state require licensing or
qualification in order to conduct business of the type conducted by
Seller.  Seller has all requisite power
and authority (including, if applicable, corporate power) to execute and
deliver this Agreement, the Electronic Tracking Agreement and the Custodial
Agreement and to perform in accordance herewith and therewith; the execution,
delivery and performance of this Agreement, the Electronic Tracking Agreement
and the Custodial Agreement (including all instruments of transfer to be
delivered pursuant to this Agreement, the Electronic Tracking Agreement or the
Custodial Agreement) by Seller and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized.  Each of this Agreement, the Electronic
Tracking Agreement and the Custodial Agreement evidences the valid,

 

17

 

binding and
enforceable obligation of Seller and all requisite action (including, if
applicable, corporate action) has been taken by Seller to make this Agreement,
the Electronic Tracking Agreement and the Custodial Agreement valid and binding
upon Seller in accordance with its terms;

 

(ii)                                  No
approval of the transactions contemplated by this Agreement, the Electronic
Tracking Agreement or the Custodial Agreement from the OTS, the NCUA, the FDIC
or any similar federal or state regulatory authority having jurisdiction over
Seller is required, or if required, such approval has been obtained.  The transfers, assignments and conveyances
provided for herein and therein are not subject to the bulk transfer or any
similar statutory provisions in effect in any applicable jurisdiction;

 

(iii)                               The
consummation of the transactions contemplated by this Agreement, the Electronic
Tracking Agreement and the Custodial Agreement are in the ordinary course of
business of Seller and will not result in the breach of any term or provision
of the charter or by-laws of Seller or result in the breach of any term or
provision of, or conflict with or constitute a default under or result in the
acceleration of any obligation under, an agreement, indenture or loan or credit
agreement or other instrument to which Seller or its property is subject, or
result in the violation of any law, rule, regulation, order, judgment or decree
to which Seller or its property is subject;

 

(iv)                              This
Agreement, the Custodial Agreement, the Electronic Tracking Agreement and every
document to be executed by Seller pursuant hereto and thereto is and will be
valid, binding and a subsisting obligation of Seller, enforceable in accordance
with its respective terms.  No consents
or approvals are required to be obtained by Seller or its Parent Company for
the execution, delivery and performance of this Agreement, the Electronic
Tracking Agreement or the Custodial Agreement by Seller;

 

(v)                                 Purchaser
will be the sole owner of the related Mortgage Loan, free and clear of any
lien, claim or encumbrance;

 

(vi)                              All
information relating to Seller that Seller has delivered or caused to be
delivered to Purchaser, including, but not limited to, all documents related to
this Agreement, the Electronic Tracking Agreement, the Custodial Agreement or
Seller’s financial statements, and all such information hereafter furnished by
Seller, does not and will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made therein
or herein in light of the circumstances under which they were made, not
misleading.  Seller has disclosed in
writing any and all facts relating to Seller that materially and adversely
affect or may affect the business operations or financial condition of Seller
or the ability of Seller to perform its obligations under this Agreement, the
Electronic Tracking Agreement or the Custodial Agreement;

 

(vii)                           There
are no actions, suits or proceedings pending, or to the knowledge of Seller
threatened, including any claims for which an action, suit or proceeding has
not been commenced, against or affecting Seller or any of its assets in any
court or before any arbitrator or before any governmental commission, board,
bureau or other

 

18

 

administrative
agency that, in any such case, if adversely determined, would have a material
adverse effect on the financial condition or business of Seller or the ability
of Seller to perform under this Agreement, the Electronic Tracking Agreement,
each Funding Confirmation and the Custodial Agreement;

 

(viii)                        If
applicable with respect to each Mortgage Loan sold hereunder, Seller (and each
servicer) is approved by GNMA as an approved issuer, Fannie Mae as an approved
lender, Freddie Mac as an approved seller/servicer (as the case may be) and by
FHA as an approved mortgagee and by VA as an approved VA lender, in each case
in good standing (such collective approvals and conditions, “Agency
Approvals”), with no event having occurred or Seller (or any subservicer)
having any reason whatsoever to believe or suspect will occur prior to the
purchase of the Mortgage Loan by the related Agency, including without limitation
a change in insurance coverage which would either make Seller (or any servicer)
unable to comply with the eligibility requirements for maintaining all such
Agency Approvals or require notification to the relevant Agency or  to HUD, FHA or VA.  Should Seller (or any servicer), for any reason, cease to possess
all such Agency Approvals, or should notification to the relevant Agency or to
HUD, FHA or VA be required, Seller shall so notify Purchaser immediately in
writing.  Notwithstanding the preceding
sentence, Seller shall take all necessary action to maintain all of its (and
each servicer’s) Agency Approvals at all times during the term of this
Agreement.  Seller (and any servicer)
has adequate financial standing, servicing facilities, procedures and experienced
personnel necessary for the sound servicing of mortgage loans of the same types
as may from time to time constitute Mortgage Loans and in accordance with
Accepted Servicing Practices;

 

(ix)                                The
Custodian is an eligible custodian under the Agency Guide and Agency Program;

 

(x)                                   Seller
and its Subsidiaries have filed all Federal income tax returns and all other
material tax returns that are required to be filed by them and have paid all
taxes due pursuant to such returns or pursuant to any assessment received by it
or any of its Subsidiaries, except for any such taxes as are being
appropriately contested in good faith by appropriate proceedings diligently
conducted and with respect to which adequate reserves have been provided.  The charges, accruals and reserves on the
books of Seller and its Subsidiaries in respect of taxes and other governmental
charges are, in the opinion of Seller, adequate;

 

(xi)                                Neither
Seller nor any of its Subsidiaries is an “investment company”, or a company
“controlled” by an “investment company”, within the meaning of the Investment
Company Act of 1940, as amended;

 

(xii)                             Upon
the filing of financing statements on Form UCC-1 naming Purchaser as “Secured
Party”, Seller as “Debtor” and describing the Collateral, in the jurisdictions
and recording offices listed on Exhibit E attached hereto, the
security interests granted hereunder in the Collateral will constitute fully
perfected security interests under the Uniform Commercial Code in all right,
title and interest of Seller in, to and under such Collateral, which can be
perfected by filing under the Uniform Commercial Code;

 

19

 

(xiii)                          As
of the date hereof, and during the four months immediately preceding the date
hereof, Seller’s chief executive office, is, and has been located at 33 Maiden
Lane, New York, New York.  As of the
date hereof, Seller’s jurisdiction of organization is New York;

 

(xiv)                         As
of the date hereof, with respect to the Original Mortgage Loan Purchase
Agreement, no default has occurred and is continuing thereunder and there is no
breach of a representation and warranty thereunder.

 

(b)                                 Seller
hereby represents, warrants and covenants to Purchaser with respect to each
Mortgage Loan as of the related Purchase Date each of the representations and
warranties set forth on Schedule I hereto is true and correct in all
respects;

 

The
representations and warranties of Seller in this Section 8 are unaffected
by and supersede any provision in any endorsement of any Mortgage Loan or in
any assignment with respect to such Mortgage Loan to the effect that such
endorsement or assignment is without recourse or without representation or
warranty.  With respect to each Mortgage
Loan purchased by Purchaser hereunder, to the extent that any representation or
warranty made by Seller is either not required by Takeout Investor or is waived
by Takeout Investor, Purchaser hereby agrees to waive such representation or
warranty if such Mortgage Loan is purchased by Takeout Investor from Purchaser,
in accordance with the terms of the related Takeout Commitment.

 

Section 9.                                            Covenants
of Seller.  Seller hereby covenants
and agrees with Purchaser as follows:

 

(a)                                  Seller
shall deliver to Purchaser:

 

(i)                                     Within
one hundred twenty (120) days after the end of each fiscal year of Seller,
consolidated balance sheets of Seller and its consolidated subsidiaries and the
related consolidated statements of income showing the financial condition of
Seller and its consolidated subsidiaries as of the close of such fiscal year
and the results of operations during such year, and a consolidated statement of
cash flows, as of the close of such fiscal year, setting forth, in each case,
in comparative form the corresponding figures for the preceding year, all the foregoing
consolidated financial statements to be reported on by, and to carry the report
(acceptable in form and content to Purchaser) of an independent public
accountant of national standing acceptable to Purchaser;

 

(ii)                                  Within
sixty (60) days after the end of each of the first three fiscal quarters
of each fiscal year of Seller, unaudited consolidated balance sheets and
consolidated statements of income, all to be in a form acceptable to Purchaser,
showing the financial condition and results of operations of Seller and its
consolidated subsidiaries on a consolidated basis as of the end of each such
quarter and for the then elapsed portion of the fiscal year, setting forth, in
each case, in comparative form the corresponding figures for the corresponding
periods of the preceding fiscal year, certified by a financial officer of
Seller (acceptable to Purchaser) as presenting fairly the financial
position and results of operations of Seller and its consolidated subsidiaries
and as having been prepared in

 

20

 

accordance with
generally accepted accounting principles consistently applied, in each case,
subject to normal year-end audit adjustments;

 

(iii)                               Within
20 days after the end of each of the first eleven months of each fiscal year of
such Seller, unaudited consolidated balance sheets and consolidated statements
of income, all to be in a form acceptable to Purchaser, showing the financial
condition and results of operation of such Seller and its consolidated subsidiaries
on a consolidated basis as of the end of each such month and for the then
elapsed portion of the fiscal year, setting forth, in each case, in comparative
form the corresponding figures for the corresponding periods of the preceding
fiscal year, certified by a financial officer of such Seller (acceptable to
Purchaser) as presenting fairly the financial position and results of
operations of such Seller and its consolidated subsidiaries and as having been
prepared in accordance with generally accepted accounting principles
consistently applied, in each case, subject to normal year-end audit
adjustments;

 

(iv)                              Promptly
upon receipt thereof, a copy of each other report submitted to Seller by its
independent public accountants in connection with any annual, interim or
special audit of Seller;

 

(v)                                 Promptly
upon becoming aware thereof, notice of (1) the commencement of, or any
determination in, any legal, judicial or regulatory proceedings, (2) any
dispute between Seller or its Parent Company and any governmental or regulatory
body, (3) any event or condition, which, in any case of (1) or
(2) if adversely determined, would have a material adverse effect on
(A) the validity or enforceability of this Agreement, (B) the
financial condition or business operations of Seller, or (C) the ability
of Seller to fulfill its obligations under this Agreement or (4) any
material adverse change in the business, operations, prospects or financial
condition of Seller, including, without limitation, the insolvency of Seller or
its Parent Company;

 

(vi)                              Promptly
upon becoming available, copies of all financial statements, reports, notices
and proxy statements sent by its Parent Company, Seller or any of Seller’s
consolidated subsidiaries in a general mailing to their respective stockholders
and of all reports and other material (including copies of all registration
statements under the Securities Act of 1933, as amended) filed by any of
them with any securities exchange or with the Securities and Exchange
Commission or any governmental authority succeeding to any or all of the
functions of said Commission;

 

(vii)                           Promptly
upon becoming available, copies of any press releases issued by its Parent
Company or Seller and copies of any annual and quarterly financial reports and
any reports on Form H-(b) 12 which its Parent Company or Seller may be
required to file with the OTS or the RTC or comparable reports which a Parent
Company or Seller may be required to file with the FDIC or any other federal
banking agency containing such financial statements and other information
concerning such Parent Company’s or Seller’s business and affairs as is
required to be included in such reports in accordance with the rules and
regulations of the OTS, the RTC, the FDIC or such other banking agency, as may
be promulgated from time to time;

 

21

 

(viii)                        Such
supplements to the aforementioned documents and such other information
regarding the operations, business, affairs and financial condition of its
Parent Company, Seller or any of Seller’s consolidated subsidiaries as
Purchaser may request;

 

(ix)                                Prior
to the date of any purchase of a Mortgage Loan by Purchaser hereunder, a copy
of (1) the articles of incorporation of Seller and any amendments thereto
certified by the Secretary of State of Seller’s state of incorporation,
(2) a copy of Seller’s by-laws, together with any amendments thereto,
(3) a copy of the resolutions adopted by Seller’s Board of Directors
authorizing Seller to enter into this Agreement, the Electronic Tracking
Agreement and the Custodial Agreement and authorizing one or more of Seller’s
officers to execute the documents related to this Agreement, the Electronic
Tracking Agreement and the Custodial Agreement, (4) a certificate of incumbency
and signature of each officer of Seller executing any document in connection
with this Agreement, the Electronic Tracking Agreement and the Custodial
Agreement; (5) a certificate reflecting each Authorized Signatory of the
Seller, in the form of Exhibit F hereto and (6) an opinion of counsel
to Seller, in the form of Exhibit G hereto; and

 

(x)                                   On
or before the date hereof, a copy of an opinion of counsel to Seller in the
form of Exhibit G hereto.

 

(b)                                 The
consideration received by the Seller upon the sale of each Mortgage Loan will
constitute reasonably equivalent value and fair consideration for the ownership
interest in the Mortgage Loan.

 

(c)                                  Neither
the Seller nor any affiliate thereof will acquire at any time any Mortgage Loan
or any other economic interest in or obligation with respect to any Mortgage
Loan.

 

(d)                                 Under
generally accepted accounting principles (“GAAP”) and for federal
income tax purposes, the Seller will report each sale of a Mortgage Loan to the
Purchaser as a sale of the ownership interest in the Mortgage Loan.  The Seller has been advised by or has
confirmed with its independent public accountants that the foregoing
transactions will be so classified under GAAP.

 

(e)                                  The
Seller will be solvent at all relevant times prior to, and will not be rendered
insolvent by, any sale of a Mortgage Loan to the Purchaser.

 

(f)                                    The
Seller will not sell any Mortgage Loan to the Purchaser with any intent to
hinder, delay or defraud any of the Seller’s creditors.

 

(g)                                 Seller
shall comply, in all material respects, with all laws, rules and regulations to
which it is or may become subject.

 

(h)                                 Seller
shall, upon request of Purchaser, promptly execute and deliver to Purchaser all
such other and further documents and instruments of transfer, conveyance and
assignment, and shall take such other action as Purchaser may require more
effectively to

 

22

 

transfer, convey, assign
to and vest in Purchaser and to put Purchaser in possession of the property to
be transferred, conveyed, assigned and delivered hereunder and otherwise to
carry out more effectively the intent of the provisions under this Agreement.

 

(i)                                     Seller
shall ensure that all Takeout Proceeds paid by Takeout Investor resulting from
Takeout Commitments that relate to Mortgage Loans purchased by Purchaser
pursuant to the terms of this Agreement are paid to Purchaser by Takeout
Investor in accordance with Purchaser’s Wire Instructions to Seller.

 

(j)                                     The
consideration received by Seller upon sale of each Mortgage Loan will
constitute reasonably equivalent value and fair consideration for the Mortgage
Loan.

 

(k)                                  The
Seller acknowledges that the Purchaser has the right to perform continuing due
diligence reviews with respect to the Mortgage Loans, for purposes of verifying
compliance with the representations, warranties and specifications made
hereunder, or otherwise, and the Seller agrees that upon reasonable (but no
less than one (1) Business Day’s) prior notice to the Seller, the
Purchaser or its authorized representatives will be permitted during normal
business hours to examine, inspect, make copies of, and make extracts of, the
Mortgage Files and any and all documents, records, agreements, instruments or
information relating to such Mortgage Loans in possession, or under the
control, of the Seller and/or Custodian. 
The Seller also shall make available to the Purchaser a knowledgeable
financial or accounting officer for the purpose of answering questions
respecting the Mortgage Files and Mortgage Loans.  The Seller and Purchaser further agree that all out-of-pocket
costs and expenses incurred by the Purchaser in connection with the Purchaser’s
activities pursuant to this Section 9(k) shall be paid for by the
Seller, provided
that, Purchaser shall pay any such costs if such due diligence is
conducted more often than two (2) times in a calendar year.

 

(l)                                     Seller
shall provide Purchaser with a monthly report, which report shall include,
among other items, a summary of the Seller’s delinquency and loss experience
with respect to mortgage loans serviced by the Seller, any Servicer or any
designee of either, with respect to any MERS Designated Mortgage Loan, MERS
Reports, plus any such additional reports as Purchaser may reasonably request
with respect to the Seller’s or any Servicer’s servicing portfolio or pending
originations of mortgage loans. Seller shall not cause the Mortgage Loans to be
serviced by any servicer other than a servicer expressly approved in writing by
Purchaser.

 

(m)                               On the second Business Day of each month, Seller
shall furnish to Purchaser or shall cause the Servicer to furnish to Purchaser,
a remittance report, in hard copy and electronic format acceptable to
Purchaser, containing information regarding funds collected during the prior
calendar month.  This report shall
contain the following information:

 

(i)                                     Mortgage Loan number;

 

(ii)                                  Note Rate;

 

(iii)                               Remittances allocable to principal and interest;

 

(iv)                              Paid through date;

 

23

 

(v)                                 Mortgage Loan balance;

 

(vi)                              Delinquency
status;

 

(vii)                           Whether the Mortgaged Property is in foreclosure
or has become an real state owned property;

 

(viii)                        Whether any Mortgagor is the subject of any
bankruptcy action; and

 

(ix)                                Any other information that Purchaser may
reasonably request.

 

(n)                                 Seller
shall pay and discharge all taxes, assessments and governmental charges or
levies imposed on it or on its income or profits or on any of its Property
prior to the date on which penalties attach thereto, except for any such tax,
assessment, charge or levy the payment of which is being contested in good
faith and by proper proceedings and against which adequate reserves are being
maintained.

 

(o)                                 Seller
covenants and agrees to take all actions required of it in compliance with the
terms of the Electronic Tracking Agreement.

 

Section 10.                                      Confidentiality.  Seller hereby acknowledges and agrees that
(i) all written or computer-readable information provided by Purchaser to
Seller regarding Purchaser and (ii) the terms of this Agreement (the “Purchaser
Confidential Information”), shall be kept confidential and each of their
respective contents will not be divulged to any party without Purchaser’s
consent except to the extent that (i) Seller deems appropriate to do so in
working with legal counsel, auditors, taxing authorities or other governmental
agencies or regulatory bodies or in order to comply with any applicable federal
or state laws, (ii) any portion of Purchaser Confidential Information is
in the public domain other than due to a breach of this covenant,
(iii) Seller deems appropriate in connection with exercising any or all of
Seller’s rights or remedies or complying with any obligations under this
Agreement.

 

Section 11.                                      Term.  This Agreement shall continue in effect until
terminated as to future transactions by written instruction signed by either
Seller or Purchaser and delivered to the other, provided that no termination
will affect the obligations hereunder as to any of the Mortgage Loans with
respect to which Conduit Submission Packages have been delivered to Custodian
pursuant to the terms of this Agreement or the Custodial Agreement.

 

Section 12.                                      Exclusive
Benefit of Parties; Assignment. 
This Agreement is for the exclusive benefit of the parties hereto and
their respective successors and assigns and shall not be deemed to give any
legal or equitable right to any other person, including the Custodian.  Except as provided in Section 6, no
rights or obligations created by this Agreement may be assigned by any party hereto
without the prior written consent of the other parties.

 

Section 13.                                      Amendments;
Waivers; Cumulative Rights.  This
Agreement may be amended from time to time only by written agreement of Seller
and Purchaser.  Any forbearance, failure
or delay by either party in exercising any right, power or remedy hereunder
shall not be deemed to be a waiver thereof, and any single or partial exercise
by Purchaser of any right, power or remedy hereunder shall not preclude the
further exercise thereof.  Every right,

 

24

 

power and remedy of
Purchaser shall continue in full force and effect until specifically waived by
Purchaser in writing.  No right, power
or remedy shall be exclusive, and each such right, power or remedy shall be
cumulative and in addition to any other right, power or remedy, whether
conferred hereby or hereafter available at law or in equity or by statute or
otherwise.

 

Section 14.                                      Execution
in Counterparts.  This Agreement may
be executed in any number of counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument.

 

Section 15.                                      Effect
of Invalidity of Provisions.  In
case any one or more of the provisions contained in this Agreement should be or
become invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein or therein
shall in no way be affected, prejudiced or disturbed thereby.

 

Section 16.                                      Governing
Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
without regard to conflict of laws rules.

 

Section 17.                                      Notices.  Any notices, consents, elections, directions
and other communications given under this Agreement shall be in writing and
shall be deemed to have been duly given when telecopied or delivered by
overnight courier to, personally delivered to, or on the third day following
the placing thereof in the mail, first class postage prepaid to, the respective
addresses set forth on the cover page hereof for Seller and Purchaser, or to
such other address as either party shall give notice to the other party
pursuant to this Section 17. 
Notices to Assignee shall be given to such address as Assignee shall
provide to Seller in writing.

 

Section 18.                                      Entire
Agreement.  This Agreement, the
Funding Confirmations and the Custodial Agreement contain the entire agreement
between the parties hereto with respect to the subject matter hereof, and
supersede all prior and contemporaneous agreements between them, oral or
written, of any nature whatsoever with respect to the subject matter hereof.

 

Section 19.                                      Costs
of Enforcement.  In addition to any
other indemnity specified in this Agreement, in the event of a breach by Seller
of this Agreement, the Custodial Agreement or a Takeout Commitment, Seller
agrees to pay the reasonable attorneys’ fees and expenses of Purchaser and,
when applicable, Assignee incurred as a consequence of such breach.

 

Section 20.                                      Consent
to Service.  Each party irrevocably
consents to the service of process by registered or certified mail, postage
prepaid, to it at its address given in or pursuant to Section 16.

 

Section 21.                                      Construction.  The headings in this Agreement are for
convenience only and are not intended to influence its construction.  References to Sections, Exhibits, Schedules
and Annexes in this Agreement are to the Sections of, and Exhibits, Schedules
and Annexes to this Agreement.  The
Exhibits are part of this Agreement, and are incorporated herein by
reference.  The singular includes the
plural, the plural the singular, and the words “and” and “or” are used in the
conjunctive or disjunctive as the sense and circumstances may require.

 

25

 

Section 22.                                      Effect
of Amendment and Restatement.  Upon
the execution of this Agreement by all parties hereto and the delivery of the
opinion required by Section 9(a)(x), the Original Mortgage Loan Purchase
Agreement shall be amended, restated and superseded in its entirety by this
Agreement.  The parties hereto
acknowledge and agree that (a) the liens and security interests granted under
the Original Mortgage Loan Purchase Agreement are in full force and effect and,
upon the amendment and restatement of the Original Mortgage Loan Purchase
Agreement and the related documents, such liens and security interests secure
and continue to secure the payment and performance of Seller’s obligations
under this Agreement and the related documents, and (b) upon the effectiveness
of such amendment and restatement, all outstanding Mortgage Loans under, and as
defined in, the Original Mortgage Loan Agreement, shall be deemed to be
outstanding as Mortgage Loans hereunder mutatis mutandis, in each case on the
terms and conditions set forth in this Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

26

 

IN WITNESS WHEREOF
Purchaser and Seller have duly executed this Agreement as of the date and year
set forth on the cover page hereof.

 

	
   

  	
  UBS
  WARBURG REAL ESTATE

  
	
   

  	
    SECURITIES INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ GEORGE A. MANGIARACINA

  	
   

  
	
   

  	
   

  	
  Name: George A. Mangiaracina

  
	
   

  	
   

  	
  Title: Executive Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ROBERT CARPENTER

  	
   

  
	
   

  	
   

  	
  Name: Robert Carpenter

  
	
   

  	
   

  	
  Title: Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MORTGAGEIT,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ LARRY P. LEWIS

  	
   

  
	
   

  	
   

  	
  Name: Larry P. Lewis

  
	
   

  	
   

  	
  Title: Chief Operating Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:  (if
  different from cover page):

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