Document:

Exhibit
10.7

 

CUSTODIAL AGREEMENT

 

	
  PARTICIPANT:

  	
   

  	
  UBS WARBURG REAL ESTATE
  SECURITIES INC.

  
	
   

  	
   

  	
   

  
	
  ADDRESS:

  	
   

  	
  1285 AVENUE OF THE
  AMERICAS

  
	
   

  	
   

  	
  NEW YORK, NEW YORK
  10019

  
	
   

  	
   

  	
  ATTENTION:  GEORGE A. MANGIARACINA

  
	
   

  	
   

  	
  TELEPHONE:  (212) 713-3734

  
	
   

  	
   

  	
  ATTENTION:  ROBERT CARPENTER

  
	
   

  	
   

  	
  TELEPHONE:  (212) 713-8749

  
	
   

  	
   

  	
   

  
	
  CUSTODIAN:

  	
   

  	
  FEDERAL
  NATIONAL MORTGAGE ASSOCIATION

  
	
   

  	
   

  	
   

  
	
  SELLER:

  	
   

  	
  MORTGAGEIT, INC.

  
	
   

  	
   

  	
   

  
	
  ADDRESS:

  	
   

  	
  33 MAIDEN LANE

  
	
   

  	
   

  	
  NEW YORK, NEW YORK
  10038

  
	
   

  	
   

  	
  ATTENTION: MIKE
  ZIGROSSI

  
	
   

  	
   

  	
   

  
	
  DATE:

  	
   

  	
  DECEMBER 1, 2003

  

 

 

TABLE OF CONTENTS

 

	
  SECTION 1.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
  DELIVERY OF DOCUMENTS

  	
  6

  
	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
  CUSTODIAN
  AS CUSTODIAN FOR, AND BAILEE OF, PARTICIPANT AND ASSIGNEES

  	
  8

  
	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
  CERTIFICATION OF
  RECEIPT BY CUSTODIAN

  	
  9

  
	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
  CUSTODIAN’S
  FEES AND EXPENSES; SUCCESSOR CUSTODIAN

  	
  11

  
	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
  DEFAULT

  	
  12

  
	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
  ACCESS TO DOCUMENTS

  	
  12

  
	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
  ASSIGNMENT BY PARTICIPANT

  	
  13

  
	
   

  	
   

  	
   

  
	
  SECTION 9.

  	
  INSURANCE

  	
  13

  
	
   

  	
   

  	
   

  
	
  SECTION 10.

  	
  REPRESENTATIONS,
  WARRANTIES AND COVENANTS OF THE CUSTODIAN

  	
  13

  
	
   

  	
   

  	
   

  
	
  SECTION 11.

  	
  INDEMNIFICATION BY
  CUSTODIAN

  	
  14

  
	
   

  	
   

  	
   

  
	
  SECTION 12.

  	
  NO ADVERSE INTERESTS

  	
  14

  
	
   

  	
   

  	
   

  
	
  SECTION 13.

  	
  AMENDMENTS

  	
  14

  
	
   

  	
   

  	
   

  
	
  SECTION 14.

  	
  RECORDATION OF AGREEMENT

  	
  14

  
	
   

  	
   

  	
   

  
	
  SECTION 15.

  	
  EXECUTION IN COUNTERPARTS

  	
  15

  
	
   

  	
   

  	
   

  
	
  SECTION 16.

  	
  AGREEMENT
  FOR EXCLUSIVE BENEFIT OF PARTIES; ASSIGNMENT

  	
  15

  
	
   

  	
   

  	
   

  
	
  SECTION 17.

  	
  EFFECT OF INVALIDITY
  OF PROVISIONS

  	
  15

  
	
   

  	
   

  	
   

  
	
  SECTION 18.

  	
  GOVERNING LAW

  	
  15

  
	
   

  	
   

  	
   

  
	
  SECTION 19.

  	
  CONSENT TO SERVICE

  	
  15

  
	
   

  	
   

  	
   

  
	
  SECTION 20.

  	
  SUBMISSION TO JURISDICTION

  	
  15

  

 

i

 

	
  SECTION 21.

  	
  JURISDICTION NOT EXCLUSIVE

  	
  15

  
	
   

  	
   

  	
   

  
	
  SECTION 22.

  	
  WAIVER OF JURY TRIAL

  	
  15

  
	
   

  	
   

  	
   

  
	
  SECTION 23.

  	
  NOTICES

  	
  16

  
	
   

  	
   

  	
   

  
	
  SECTION 24.

  	
  AUTHENTICATION

  	
  16

  
	
   

  	
   

  	
   

  
	
  SECTION 25.

  	
  CONSTRUCTION

  	
  16

  

 

ii

 

	
  Exhibit A

  	
  Participation
  Certificate

  
	
   

  	
   

  
	
  Exhibit B-1

  	
  Warehouse Lender’s
  Release

  
	
   

  	
   

  
	
  Exhibit B-2

  	
  Seller’s Release

  
	
   

  	
   

  
	
  Exhibit C-1

  	
  GNMA Document List

  
	
   

  	
   

  
	
  Exhibit C-2

  	
  FNMA Document List

  
	
   

  	
   

  
	
  Exhibit C-3

  	
  FHLMC Document List

  
	
   

  	
   

  
	
  Exhibit D

  	
  Limited Power of
  Attorney

  
	
   

  	
   

  
	
  Exhibit E

  	
  Wire Instructions

  
	
   

  	
   

  
	
  Exhibit F

  	
  Confirmation of Payment

  
	
   

  	
   

  
	
  Exhibit G

  	
  Form of Electronic
  Tracking Agreement

  

 

iii

 

CUSTODIAL AGREEMENT

 

THIS AGREEMENT, dated as
of the date set forth on the cover page hereof, among UBS Warburg Real Estate
Securities Inc. (the “Participant”), the Custodian whose name is set
forth on the cover page hereof (the “Custodian”) and the Seller whose
name is set forth on the cover page hereof (the “Seller”).

 

WHEREAS, the Participant
has agreed to purchase, from time to time, at its sole election from the
Seller, participation certificates (the “Participation Certificates”)
representing 100% ownership interest in certain residential first mortgage
loans (the “Mortgage Loans”) pursuant to the terms and conditions of a
Mortgage Loan Participation Agreement dated as of the date set forth on the
cover page thereof (the “Participation Agreement”) between the
Participant and the Seller; and

 

WHEREAS, the Seller is
obligated to service the Mortgage Loans pursuant to the terms and conditions of
the Participation Agreement; and

 

WHEREAS, the Participant
desires to have the Custodian (1) take possession of the mortgage notes
evidencing the Mortgage Loans, along with certain other documents specified
herein, as the custodian for and bailee for the benefit of the Participant or
any assignees of the Participant in accordance with the terms and conditions
hereof and (2) act as authenticating agent for the Participation Certificates;
and

 

WHEREAS, the Seller will
cause the Mortgage Loans evidenced by a Participation Certificate to back a
Security (as defined below), which the Participant or its designee will receive
in substitution for the related Participation Certificate; and

 

WHEREAS, upon an
assignment by the Participant to an assignee relating to the financing of the
Participant’s purchase of Participation Certificates, the rights of the
Participant under this Agreement shall be exercisable solely by such assignee;

 

NOW, THEREFORE, the
parties, intending to be legally bound, agree as follows:

 

Section 1.               Definitions.

 

As used in this
Agreement, the following terms shall have the following meanings:

 

“Applicable
Agency”:  GNMA, FNMA or FHLMC, as
applicable.

 

“Applicable
Agency Documents”: As defined in Section 2(b).

 

“Assigned
Mortgage Loans”:  As defined in
Section 3(b).

 

1

 

“Assignee”:  Any person to whom the Participant makes an
assignment.

 

“Assignment of
Mortgage”:  An assignment of
mortgage.

 

“Certification”:  As defined in Section 4(a).

 

“Custodian”:  The Custodian set forth on the cover page
hereof and its permitted successors hereunder.

 

“Discount”:  With respect to each Participation
Certificate, the amount of the adjustment to the Trade Price of the related
Security agreed upon by Seller and Participant to reserve for the possibility
that Seller may be unable to perform its obligations under the Participation
Agreement in accordance with their terms.

 

“Electronic
Agent”:  The electronic agent
identified in the Electronic Tracking Agreement.

 

“Electronic
Tracking Agreement”:  The Electronic
Tracking Agreement, substantially in the form set forth in Exhibit G hereto,
dated as of the date hereof, among the Participant, the Seller, an electronic
agent and Mortgage Electronic Registration Systems, Inc., as the same shall be
amended, supplemented or otherwise modified from time to time; 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.

 

“Exhibit B-1
Letter”:  As defined in Section
2(a).

 

“Exhibit B-2
Letter”:  As defined in Section
2(a).

 

“Exhibit F
Letter”:  A letter substantially in
the form of Exhibit F.

 

“FHA”:  The Federal Housing Administration or any
successor thereto.

 

“FHLMC”:  Federal Home Loan Mortgage Corporation or
any successor thereto.

 

“FHLMC Guide”:  The Freddie Mac Sellers’ and Servicers’
Guide, as such Guide may hereafter from time to time be amended.

 

“FHLMC Mortgage
Loan”:  With respect to any FHLMC
Participation Certificate or any FHLMC Security, a mortgage loan that is in
Strict Compliance with the eligibility requirements specified for the
applicable FHLMC Program described in the FHLMC Guide.

 

“FHLMC
Participation Certificate”:  With
respect to the FHLMC Program, a certificate, in the form of Exhibit A, issued
by Seller and authenticated by the Custodian, evidencing the 100% undivided
ownership interest in the Mortgage Loans that are either (a) set forth on a
copy of the FHLMC Form 11 (Mortgage Submission Schedule) attached to such
Participation Certificate or (b) identified on a computer tape compatible with
MIDANET as belonging to the mortgage loan pool described in such Participation
Certificate.

 

2

 

“FHLMC Program”:  The FHLMC Home Mortgage Guarantor Program or
the FHLMC FHA/VA Home Mortgage Guarantor Program, as such Programs are
described in the FHLMC Guide.

 

“FHLMC Security”:
A modified pass-through mortgage-backed participation certificate, evidenced by
a book-entry credit made by a Securities Intermediary that is a participant of
the Federal Reserve Bank of New York, issued and guaranteed, with respect to
timely payment of interest and ultimate payment of principal, by FHLMC and
backed by a pool of FHLMC Mortgage Loans, in substantially the principal amount
and with substantially the other terms as specified with respect to such FHLMC
Security in the related Takeout Commitment, if any.

 

“FNMA” or “Fannie
Mae”:  Federal National Mortgage
Association or any successor thereto.

 

“FNMA Guide”:  The Fannie Mae MBS Selling and Servicing
Guide, as such Guide may hereafter from time to time be amended.

 

“FNMA Mortgage
Loan”:  With respect to any FNMA
Participation Certificate or any FNMA Security, a mortgage loan that is in
Strict Compliance with the eligibility requirements specified for the
applicable FNMA Program described in the FNMA Guide.

 

“FNMA
Participation Certificate”:  With
respect to the FNMA Program, a certificate, in the form of Exhibit A, issued by
Seller and authenticated by the Custodian and evidencing the 100% undivided
ownership interest in the Mortgage Loans set forth on Fannie Mae Form 2005
(Schedule of Mortgages).

 

“FNMA Program”:  The FNMA Guaranteed Mortgage-Backed
Securities Programs, as described in the FNMA Guide.

 

“FNMA Security”:  An ownership interest in a pool of FNMA
Mortgage Loans, evidenced by a book-entry credit made by a Securities
Intermediary that is a participant of the Federal Reserve Bank of New York, in
substantially the principal amount and with substantially the other terms as
specified with respect to such FNMA Security in the related Takeout Commitment,
if any.

 

“GNMA”:  Government National Mortgage Association or
any successor thereto.

 

“GNMA Guide”:  The GNMA Mortgage-Backed Securities Guide I
or II, as such Guide may hereafter from time to time be amended.

 

“GNMA Mortgage
Loan”:  With respect to any GNMA
Participation Certificate or any GNMA Security, a mortgage loan that is in
Strict Compliance with the eligibility requirements specified for the
applicable GNMA Program in the applicable GNMA Guide.

 

“GNMA
Participation Certificate”:  With
respect to the GNMA Program, a certificate, in the form of Exhibit A, issued by
Seller and authenticated by the Custodian and

 

3

 

evidencing the
100% undivided ownership interest in the Mortgage Loans set forth on the Form
HUD 11706 (Schedule of Pooled Mortgages).

 

“GNMA Program”:  The GNMA Mortgage-Backed Securities
Programs, as described in a GNMA Guide.

 

“GNMA Security”:  A fully-modified pass-through
mortgage-backed certificate guaranteed by GNMA, evidenced by a book-entry
credit made by a Securities Intermediary that is a participant of The
Depository Trust Company and backed by a pool of GNMA Mortgage Loans, in
substantially the principal amount and with substantially the other terms as
specified with respect to such GNMA Security in the related Takeout Commitment,
if any.

 

“HUD”:  The United States Department of Housing and
Urban Development or any successor thereto.

 

“Initial
Purchase Price”:  With respect to
each Participation Certificate, the Trade Price of the Security to be backed by
the Mortgage Loans evidenced by the Participation Certificate less the
Discount.

 

“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.

 

“Limited Power”:  As defined in Section 3(d).

 

“MERS
Designated Mortgage Loan”:  MERS
Designated Mortgage Loan shall have the meaning assigned to such term in
Section 3 of the Electronic Tracking Agreement; provided that no Mortgage
Loan shall be considered a MERS Designated Mortgage Loan unless an Electronic
Tracking Agreement shall have been entered into.

 

“MERS
Identification Number”:  The
eighteen digit number permanently assigned to each MERS Designated Mortgage
Loan.

 

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

 

“MIDANET”:  The FHLMC automated system by which sellers
and servicers of mortgage loans to FHLMC transfer mortgage summary and record
data or mortgage accounting and servicing information from their computer
system or service bureau to FHLMC, as more fully described in the FHLMC Guide.

 

4

 

“Mortgage”:  A mortgage, deed of trust or other security
instrument securing a Mortgage Note.

 

“Mortgage File”:  As defined in Section 2(a).

 

“Mortgage Loan”:  A GNMA Mortgage Loan, a FNMA Mortgage Loan
or a FHLMC Mortgage Loan.

 

“Mortgage Loan
Schedule”:  As defined in Section 2.

 

“Mortgage Note”:  A promissory note evidencing a Mortgage
Loan.

 

“Mortgaged
Property”:  The property subject to
the lien of the Mortgage securing a Mortgage Note.

 

“Participant”:  UBS Warburg Real Estate Securities Inc. and
its successors in interest, including, but not limited to, any lender, designee
or Assignee to whom a Participation Certificate or a Security shall be pledged
or assigned.

 

“Participation
Agreement”:  As defined in the
recitals hereof.

 

“Participation
Certificate”:  A GNMA Participation
Certificate, a FNMA Participation Certificate or a FHLMC Participation
Certificate.

 

“Securities
Intermediary”:  As defined in
Section 8-102(a)(14) of the Uniform Commercial Code.

 

“Security”:  A GNMA Security, a FNMA Security or a FHLMC
Security.

 

“Strict
Compliance” shall mean compliance of the Seller and the Mortgage Loans with
the requirements of the GNMA, FNMA or FHLMC Guide, as applicable and as amended
by any agreements between the Seller and the Applicable Agency, sufficient to
enable the Seller to issue and GNMA to guarantee, or FNMA or FHLMC to issue and
guarantee a Security, provided, however, that, until copies of any such
agreements between the Seller and the Applicable Agency have been provided to
the Participant by the Seller, such agreements shall be deemed, as between the
Seller and the Participant, not to amend the requirements of the GNMA, FNMA or
FHLMC Guide as applicable.

 

“Successor
Servicer”:  An entity, that is a
GNMA-approved issuer, a GNMA-approved servicer, a FHA-approved mortgagee, a
VA-approved lender, a FNMA-approved lender or FHLMC-approved seller/servicer,
as applicable, in good standing and designated by Participant, to replace
Seller as issuer and servicer, mortgagee or seller/servicer of the Mortgage
Loans or the Securities related thereto.

 

“Takeout
Commitment”:  A trade confirmation
from the Takeout Investor to Seller confirming the details of a forward trade
between the Takeout Investor and Seller with respect to one or more Securities,
which trade confirmation shall be enforceable and in full force and effect, and
shall be validly and effectively assigned to Participant pursuant to a trade

 

5

 

assignment, and
relate to pools of Mortgage Loans that satisfy the “good-delivery guidelines”
of The Bond Market Association as set forth in the Association’s Uniform
Practices Manual.

 

“Takeout
Investor”:  A securities dealer or
other financial institution, acceptable to Participant, who has made a Takeout
Commitment.

 

“Trade Price”:  The price specified in a Takeout Commitment
at which a Takeout Investor is obligated to purchase the Security specified in
such Takeout Commitment.

 

“Warehouse
Lender”:  Any lender providing
financing to the Seller for the purpose of originating Mortgage Loans, which
lender has a security interest in such Mortgage Loans as collateral for the
obligations of the Seller to such lender.

 

“Warehouse
Payment”:  As defined in Section
3(c).

 

“Wire
Instructions”:  The wire
instructions set forth in a letter, in the form of Exhibit E, executed by the
Seller, the Warehouse Lender and the Custodian, receipt of which has been
acknowledged by the Participant.

 

Section 2.               Delivery
of Documents.  (a)  The Seller has delivered and released, or
will deliver and release, to the Custodian the documents identified in the
succeeding paragraph pertaining to each of the Mortgage Loans identified in the
Mortgage Loan Schedule (“Mortgage Loan Schedule”) attached to each
Participation Certificate that may be issued from time to time pursuant to the
Participation Agreement.  A copy of each
such Mortgage Loan Schedule has been, or will be, delivered by the Seller to
the Custodian at or before the time of delivery to the Custodian of such
documents related to the Mortgage Loans identified in such Mortgage Loan
Schedule.  In addition, with respect to
MERS Designated Mortgage Loans, the Seller has delivered, or will deliver, to
the Custodian the related MERS Report.

 

No Participation
Certificate shall be authenticated hereunder unless the Seller shall have
delivered to the Custodian the related Mortgage Loan Schedule and each of the
following with respect to the Mortgage Loans identified in such Mortgage Loan
Schedule, in form and content acceptable to the Participant:

 

(i)            The original Mortgage
Note endorsed, “Pay to the order of MortgageIT, Inc., without recourse” and
signed in the name of the Seller by an authorized officer;

 

(ii)           A Mortgage meeting one
of the following requirements:

 

(A)          The original Mortgage
bearing evidence that the Mortgage has been duly recorded in the records of the
jurisdiction in which the Mortgaged Property is located; or

 

(B)           A copy of the Mortgage
together with an officer’s certificate (which may be a blanket officer’s
certificate of Seller covering all such Mortgage Loans), or a certificate from
the recorder’s office, certifying that such copy represents a true and correct
reproduction of the original Mortgage and that such original has been duly

 

6

 

recorded or delivered for
recordation in the appropriate records of the jurisdiction in which the
Mortgaged Property is located; or

 

(C)           With respect to each
MERS Designated Mortgage Loan, the requirements set forth in the Electronic
Tracking Agreement have been satisfied;

 

(iii)          Except in the case of a
MERS Designated Mortgage Loan, an Assignment of Mortgage to GNMA, FNMA or
FHLMC, as applicable, in recordable form but unrecorded (which Assignment of
Mortgage may be in the form of a blanket assignment of two or more such
Mortgage Loans to the extent permitted by applicable law) signed in the name of
the Seller by an authorized officer;

 

(iv)          If the Seller did not
originate a Mortgage Loan, all necessary intervening assignments to show a
complete chain of title from the originating mortgagee to the Seller (or, in the
case of a MERS Designated Mortgage Loan, Mortgage Electronic Registration
Systems, Inc.);

 

(v)           Except in the case of a
MERS Designated Mortgage Loan, a second Assignment of Mortgage, in blank, in
recordable form but unrecorded (which Assignment of Mortgage may be in the form
of a blanket assignment of two or more such Mortgages to the extent permitted
by applicable law and the GNMA, FNMA or FHLMC Guide, as applicable) signed in
the name of the Seller by an authorized officer; and

 

(vi)          a letter (an “Exhibit
B-1 Letter”) substantially in the form of Exhibit B-1, from any Warehouse
Lender having a security interest in the Mortgage Loans (except when the
Warehouse Lender is the Participant) or, if there is no Warehouse Lender with
respect to such Mortgage Loans, a letter (an “Exhibit B-2 Letter”)
substantially in the form of Exhibit B-2, from Seller, addressed to
Participant, releasing any and all right, title and interest in such Mortgage
Loans.

 

The Mortgage Loan
documents referred to in clause (i), (ii), (iii), (iv) and (v) of this Section
2(a), are referred to herein as the “Mortgage File”, provided, however,
that upon transmission by the Custodian by overnight courier of the document
referenced in clause (i) of Section 2(a) to FHLMC when the Seller has appointed
FHLMC as custodian, the Mortgage File shall not include the document referenced
in clause (i) of Section 2(a).  The
Seller shall promptly deliver to the Custodian all additional original
documents evidencing an assumption or modification of a Mortgage Loan approved
by the Seller.

 

(b)           In addition, the Seller
shall (i) on the date of this Agreement, deliver to Custodian a certificate as
to the incumbency and signature of each officer of the Seller executing any
document in connection with this Agreement or the Participation Agreement and,
thereafter, whenever there is a change in such certificate; and (ii) in respect
of each Mortgage Loan identified in each Mortgage Loan Schedule and prior to
the authentication by the Custodian of the related Participation Certificate,
(A) deliver to the Custodian for transmission to GNMA,

 

7

 

FNMA or FHLMC, as
the case may be, the documents listed in Exhibit C-1, Exhibit C-2 or Exhibit
C-3, as applicable (the “Applicable Agency Documents”), which documents
shall be fully completed and executed and sufficient to permit GNMA, FNMA or
FHLMC, as the case may be, to deliver a Security in respect of the related
Mortgage Loans, and (B) deliver to Participant a copy of the Seller’s letter to
Custodian listing all Applicable Agency Documents delivered by the Seller to
the Custodian with respect to such Participation Certificate and in compliance
with this Section 2(b).

 

(c)           The Custodian, in
accordance with the provisions of Section 4, shall deliver to GNMA, FNMA or
FHLMC, as the case may be, within one (1) business day of Certification (as
defined below) the Applicable Agency Documents, fully completed and executed
and sufficient to permit GNMA, FNMA or FHLMC, as the case may be, to deliver a
Security in respect of the related Mortgage Loans.  If the Custodian, for any reason whatsoever, is unable to
complete and/or deliver the Applicable Agency Documents in compliance with this
Section 2(c), the Custodian shall give prompt oral notice thereof to the
Participant, followed by written notice specifying the reason(s) therefor,
which notice shall be delivered via facsimile transmission on the same day that
oral notice is given.

 

Section 3.               Custodian
as Custodian for the benefit of, and Bailee of, Participant and Assignees.  (a) 
With respect to each Mortgage Note and each Assignment of Mortgage
(except with respect to MERS Designated Mortgage Loans) and all other documents
constituting each Mortgage File which are delivered to the Custodian or which
at any time come into the possession of the Custodian, the Custodian, subject
to the provisions of paragraphs (b) and (c) of this Section, shall act solely
in the capacity of custodian for the benefit of, and bailee of, the
Participant.  The Custodian shall hold
all documents constituting the Mortgage File received by it for the exclusive
use and benefit of the Participant, and shall make disposition thereof only in
accordance with the written instructions furnished by the Participant.  The Custodian shall segregate and maintain
continuous custody of all documents constituting the Mortgage File received by
it in secure and fire-resistant facilities in accordance with customary
standards for such custody and shall mark the file folders therefor to indicate
that the Mortgage File is being held for the Participant.  Notwithstanding anything in this Section 3
to the contrary, upon delivery of a Security to the Participant or its
designee, the Custodian shall automatically cease to hold the related Mortgage
File on behalf of the Participant, and this Agreement shall thereupon cease to
be of any effect with respect thereto.

 

(b)           With respect to each
Participation Certificate and/or each related Mortgage Note, Assignment of
Mortgage and related Security, the Participant shall, upon assigning, pledging
or granting a security interest therein to an Assignee, notify the Custodian
and such Assignee in writing that it has assigned, pledged or granted a
security interest in each Participation Certificate and/or each related
Mortgage Note, Assignment of Mortgage and related Security to such
Assignee.  Subject to any limitations in
any agreement between such Assignee and the Participant, such Assignee, upon
notice, as provided in Section 17, may (i) require the Custodian to act with
respect to the related Mortgage File solely in the capacity of custodian for
the benefit of, and bailee of, such Assignee, (ii) require the Custodian to
hold such Mortgage File for the exclusive use and benefit of such Assignee,
(iii) assume the rights of Participant under this Agreement to furnish written
instructions to the Custodian as to the disposition of such Mortgage File and
such rights shall be exercisable solely by such Assignee, (iv) require the

 

8

 

Custodian to give
such Assignee written acknowledgement to the effect set forth in (i), (ii) and
(iii), and (v) take all such actions under the Electronic Tracking Agreement
which are necessary to effectuate any of the foregoing.  The failure of the Custodian to give the
written acknowledgement referred to in (iv) above shall not affect the validity
of such assignment, pledge or grant of a security interest.  The effects of the Participant’s notice to
the Custodian set forth in (i) to (iii) above shall continue until the
Custodian is otherwise notified in writing by such Assignee, except that upon
the delivery of the Security to the Participant or its designee, the Custodian
shall automatically cease to hold the Mortgage File on behalf of the Assignee,
and this Agreement shall thereupon cease to be of any effect with respect
thereto.  Mortgage Notes and Assignments
of Mortgages as to which the Participant has assigned, pledged or granted a
security interest to an Assignee are sometimes referred to in this Agreement as
“Assigned Mortgage Loans.”

 

(c)           The Seller and the
Participant acknowledge that the Warehouse Lender, if any, identified from time
to time in each Exhibit B-1 Letter to be received by the Custodian pursuant to
Section 2(a), is a Warehouse Lender for the Seller.  The Seller and the Participant acknowledge that, in accordance
with the terms of each Exhibit B-1 Letter to be received by the Custodian
pursuant to Section 2(a) (except when the Warehouse Lender is the Participant),
pursuant to which each such Warehouse Lender conditionally releases its
security interest in Mortgage Loans referred to in the related Exhibit B-1
Letter, such release shall not be effective until the funds referred to in such
Exhibit B-1 Letter (a “Warehouse Payment”) are received in accordance
with the Wire Instructions.  Until
receipt of a Warehouse Payment, the interest of the related Warehouse Lender in
such Mortgage Loans shall continue and remain in full force and effect, and the
Participant shall have no interest in the Mortgage Loans which is not
subordinate to the interest of each Warehouse Lender in such Mortgage
Loans.  The Seller and the Participant
acknowledge and agree to the foregoing arrangements.

 

(d)           In order to enable the
Custodian to make the Certification described in Section 4(a), Participant
shall, promptly after the execution of this Agreement, deliver to Custodian a
limited power of attorney, in the form of Exhibit D (the “Limited Power”),
authorizing the Custodian, as attorney-in-fact of the Participant, upon receipt
of an Exhibit F letter, if applicable (i) to complete a new form HUD 11711A
(Release of Security Interest), Fannie Mae Form 2004 (Security Release
Certification), FHLMC Form 939 (Security Settlement Information and Delivery
Authorization) or FHLMC Form 996 (Warehouse Lender Release of Security
Interest), as applicable, naming the Participant as the “warehouse lender” on
each such form with respect to the applicable Mortgage Loans; (ii) to
substitute such completed forms for the corresponding forms, if any, previously
delivered to the Custodian by the Seller, naming a person other than the
Participant as “warehouse lender;” and (iii) to include such completed
substituted forms among the documents to be delivered by the Custodian pursuant
to Section 4(a)(ii).

 

Section 4.               Certification
of Receipt by Custodian.  (a)  Prior to authenticating a Participation
Certificate, the Custodian shall ascertain that all documents required to be
delivered to it pursuant to Section 2 in respect of each Mortgage Loan Schedule
are in its possession and shall certify (the “Certification”) to
Participant that:

 

9

 

(i)            As to each Mortgage
Loan listed in such Mortgage Loan Schedule, (A) all documents required to be
delivered to it pursuant to Section 2 are in its possession, (B) such documents
have been reviewed by it and appear regular on their face and relate to such
Mortgage Loan, (C) based only on its examination of the foregoing documents,
the information set forth in the Mortgage Loan Schedule respecting such
Mortgage Loan is correct, (D) such Participation Certificate is the only
outstanding Participation Certificate authenticated by it related to such
mortgage pool, (E) each Mortgage Note appears on its face to have been endorsed
as provided in Section 2 and (F) each such Mortgage Loan is listed on a
schedule attached to an Exhibit B-1 Letter or Exhibit B-2 Letter, as the case
may be.

 

(ii)           As to such Mortgage
Loan Schedule, (A) the Applicable Agency Documents were received from the
Seller and have been reviewed by it, have been completed, appear regular on
their face and relate to such Mortgage Loan Schedule, (B) either (x) such
documents have been transmitted by the Custodian by overnight courier to GNMA,
FNMA or FHLMC, as applicable or (y) upon receipt by the Custodian of the
applicable Exhibit F letter, the Applicable Agency Documents will be
transmitted by the Custodian on the same day as such receipt, by overnight
courier, to GNMA, FNMA or FHLMC, as applicable, and (C) with respect to the
written instructions for delivery of the Securities to be issued with respect
to such Mortgage Loans as set forth in the copies, delivered or to be delivered
in completed form to GNMA, FNMA or FHLMC, as applicable, of (x) form HUD 11705
(Schedule of Subscribers) with respect to the GNMA Program, (y) Fannie Mae Form
2014 (Delivery Schedule) with respect to the FNMA Program or (z) FHLMC Form 939
(Settlement and Information Multiple Registration Form) with respect to the
FHLMC Program, such instructions for delivery are identical to the instructions
for delivery of such Securities set forth in the copies of such forms delivered
to the Participant.

 

As to each MERS
Designated Mortgage Loan, the Custodian shall verify the related “MERS
Identification Number” listed on the related Mortgage Note, the Mortgage Loan
Schedule and the MERS Report.

 

Upon receipt of all the
documents required to be delivered to it pursuant to Section 2, Custodian shall
execute the Participation Certificate and deliver to Participant by overnight
courier the fully completed Participation Certificate and Mortgage Loan
Schedule attached thereto, a copy of each Exhibit B-1 Letter or Exhibit B-2
Letter and a fully completed copy of (i) Form HUD 11705 (Schedule of
Subscribers), (ii) Fannie Mae Form 2014 (Delivery Schedule) or (iii) a copy of
FHLMC Form 381 (Contract Delivery Summary) and a copy of FHLMC Form 939
(Settlement and Information Multiple Registration Form), as the case may be,
designating the Participant as the party authorized to receive the Securities,
executed by the Seller and relating to the Securities to be backed by the
Mortgage Loans.  The execution by the
Custodian of each Participation Certificate shall constitute an express representation
and warranty by the Custodian to the Participant that the Custodian has
performed the Certification

 

10

 

with respect to the Participation Certificate, the
Mortgage Loans evidenced thereby and the documents referenced in Section 2
received from the Seller in connection therewith.

 

(iii)          So long as the Custodian
holds a Mortgage File on behalf of the Participant, in the event the Custodian
discovers any defect with respect to such Mortgage File or the related forms,
the Custodian shall give prompt oral notice of such defect to the Seller and
the Participant, followed by a written specification thereof.

 

Section 5.               Custodian’s
Fees and Expenses; Successor Custodian. 
(a)  It is understood that the
Custodian will 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, together with the Custodian’s expenses in connection
herewith, shall be solely the obligation of the Seller.  The Custodian has no lien on, and shall not
attempt to place a lien on, any of the Mortgage Loans or proceeds thereof to
secure the payment of its fees.

 

(b)           The Custodian or any
successor Custodian may resign at any time by giving 30 days’ written notice to
the Seller and the Participant.  Such
resignation shall take effect upon (i) the appointment of a successor Custodian
by the Seller, which successor Custodian shall be a bank or trust company
acceptable to the Participant, each Assignee and to GNMA, FNMA or FHLMC, as
applicable, and (ii) delivery of all the Mortgage Files to the successor
Custodian.

 

(c)           The Seller may (and
shall, upon the written request of the Participant) at any time remove and
discharge the Custodian or any successor Custodian thereafter appointed from
the performance of its duties under this Agreement by written notice from the
Seller to the Custodian or the successor Custodian, with copies to the
Participant.  Such removal shall take
effect upon (i) the appointment of a successor Custodian by the Seller, which
Custodian shall be a bank or trust company acceptable to the Participant, each
Assignee and to GNMA, FNMA or FHLMC, as applicable, and (ii) delivery of all
the Mortgage Files to the successor Custodian.

 

(d)           In the event of any
such resignation or removal, the Custodian shall, at the expense of the Seller,
promptly transfer to the successor Custodian within thirty (30) days all
Mortgage Files being administered under this Agreement and the successor
Custodian shall hold such Mortgage Files in accordance with this
Agreement.  In the event of any such
appointment, the Seller shall be responsible for the fees of the successor
Custodian.

 

(e)           The Seller agrees to
indemnify, reimburse and hold harmless the Custodian, its directors, officers,
employees and agents from and against any and all liability, loss and expense,
including counsel fees and disbursements arising from or connected with the
Custodian’s execution and performance of this Agreement including but not
limited to claims of third parties, including the Participant, except in the
case of loss, liability or expenses resulting from the gross negligence or
willful misconduct on the part of the Custodian.  The foregoing indemnification shall survive the termination or
assignment of this Agreement.

 

(f)            The standard of care
to be exercised by Custodian in the performance of its duties under this
Agreement shall be to exercise the same degree of care as Custodian exercises
when it holds mortgage loan documents as security for its own loans, if any, or

 

11

 

warehouse
loans.  Custodian is an agent, bailee
and custodian only and is not intended to be, nor shall it be construed to be
(except only as agent, bailee and custodian), a representative, trustee or
fiduciary of or for either Seller, the Agency, Participant or Assignee.  The Custodian shall not be bound in any way
by any agreement or contract other than this Agreement and the exhibits and
schedules hereto and any other agreement to which it is a party.  The Custodian shall not be required to
ascertain or inquire as to the performance or observance of any of the
conditions or agreements to be performed or observed by any other party, except
as specifically provided in this Agreement and the exhibits and schedules
hereto.  The Custodian disclaims any
responsibility for the validity or accuracy of the recitals to this Agreement
and any representations and warranties contained herein, unless specifically
identified as recitals, representations or warranties of the Custodian.

 

(i)            Throughout the term of
this Agreement, other than as specifically set forth in this Agreement, the
Custodian shall have no responsibility ascertaining the value, collectibility,
insurability, enforceability, effectiveness or suitability of any collateral,
the title of any party therein, the validity or adequacy of the security
afforded thereby, or the validity of this Agreement (except as to Custodian’s
authority to enter into this Agreement and to perform its obligations
hereunder).

 

(ii)           No provision of this
Agreement shall require the Custodian to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights and powers, if, in its sole
judgment, it shall believe that repayment of such funds or adequate indemnity
against such risk or liability is not assured to it.

 

(iii)          The Custodian is not
responsible for preparing or filing any reports or returns relating to federal,
state or local income taxes with respect to this Agreement, other than for the
Custodian’s compensation or for reimbursement of expenses.

 

Section 6.               Default.  If the Seller fails to fulfill any of its
obligations under the Participation Agreement, the Electronic Tracking
Agreement or hereunder or in connection with the exercise by Participant of any
remedy pursuant to Section 3(c) of the Participation Agreement then, subject to
the provisions of Section 3(b), the Participant may, by written notice to the
Custodian, (a) require the Custodian to complete the endorsements on the
Mortgage Notes held by the Custodian and/or (b) require the Custodian to
deliver to Participant or Successor Servicer the Mortgage Files to which the
failure relates and (c) take such actions under the Electronic Tracking
Agreement on behalf of the Purchaser as are necessary to effectuate the
foregoing.

 

Section 7.               Access
to Documents.  Upon reasonable prior
written notice to the Custodian, the Participant (and with respect to Assigned
Mortgage Loans, each Assignee) and their agents, accountants, attorneys and
auditors will be permitted during normal business hours to examine and copy the
Mortgage Files, documents, records and other papers in possession of or under
the control of the Custodian relating to any or all of the Mortgage Loans in
which the

 

12

 

Participant has an
interest.  Upon the written request of
the Participant (and with respect to Assigned Mortgage Loans, each Assignee)
and at the cost and expense of the Participant, the Custodian shall provide the
Participant (and with respect to Assigned Mortgage Loans, each Assignee) with
copies of the Mortgage Notes, Mortgages, Assignment of Mortgages and other
documents relating to any of the Mortgage Loans in which the Participant (and
with respect to Assigned Mortgage Loans, each Assignee) has an interest.

 

Section 8.               Assignment
by Participant.  The Participant may
assign, pledge or grant a security interest in any or all of its rights under
this Agreement and the Electronic Tracking Agreement to one or more Assignees
in connection with the assignment, pledge or grant of a security interest in a
Participation Certificate, and/or related Mortgage Notes, Assignments of
Mortgages and related Security.  In
addition to the notice required by Section 3(b), the Participant shall give
written notice thereof to the Seller and the Custodian.  The failure of the Participant to give such
notice shall not affect the validity of any such assignment, pledge or grant of
a security interest.  If the Participant
does, however, fail to give such notice to the Seller and the Custodian, then
the Assignee may give such notice to the Seller and the Custodian.  Upon receipt of such notice by the Seller
and the Custodian, copies of all communications required to be sent hereunder
to the Participant shall be sent to both the Participant and each Assignee (at
its address set forth in such notice of assignment).  Subject to any limitations in any agreement between such Assignee
and the Participant, such Assignee may, upon notice as provided in Section 16
hereof, directly enforce and exercise such rights under this Agreement that
have been assigned or pledged to it or are the subject of a security interest
granted to it and, until otherwise notified by such Assignee, the Participant
shall no longer have any of such rights.

 

Section 9.               Insurance.  The Custodian shall, at its own expense,
maintain at all times during the existence of this Agreement (a) fidelity
insurance, (b) theft of documents insurance, (c) forgery insurance and (d)
errors and omissions insurance.  All
such insurance shall be in amounts, with standard coverage and subject to
deductibles, all as is customary for insurance typically maintained by banks
which act as custodians and be in such amounts and with insurance companies
reasonably acceptable to the Participant. 
A certificate of the respective insurer as to each such policy, with a
copy of such policy attached, shall be furnished to the Participant, upon
request, containing the insured’s statement or endorsement that such insurance
shall not terminate prior to receipt by the Participant, by registered mail, of
30 days’ notice thereof.

 

Section 10.             Representations,
Warranties and Covenants of the Custodian. 
The Custodian hereby represents and warrants to, and covenants with, the
Seller and the Participant that, as of the date hereof and at all times while
Custodian is performing services under this Agreement:

 

(a)           The Custodian is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and fully satisfies the requirements for
acting as a GNMA custodian, a FNMA custodian and a FHLMC custodian, and

 

(b)           The Custodian has the
full power and authority to hold each Mortgage Loan and to execute, deliver and
perform, and to enter into and consummate all transactions contemplated by,
this Agreement, has duly authorized the execution, delivery and performance

 

13

 

of this Agreement
and has duly executed and delivered this Agreement, and this Agreement
constitutes a legal, valid and binding obligation of the Custodian, enforceable
against it in accordance with its terms.

 

(c)           Neither the execution
and delivery by the Custodian of this Agreement, nor the consummation by the
Custodian of any of the transactions contemplated hereby, nor the fulfillment
by the Custodian of the terms hereof, will conflict with, or violate, result in
a material breach of or constitute a material default (with or without notice
or lapse of time, or both) under (i) any term or provision of the Certificate
of Incorporation, By-laws or other governing documents of the Custodian or any
governmental rule applicable to the Custodian or (ii) any term or provision of
any indenture or other agreement or instrument, to which the Custodian is a
party or by which the Custodian or any material portion of its properties are
bound.  No governmental action is
required by or with respect to the Custodian in connection with the execution
and delivery of this Agreement by the Custodian or the consummation by the
Custodian of the transactions contemplated hereby.

 

Section 11.             Indemnification
by Custodian.  The Custodian agrees
to indemnify and hold the Seller and Participant, and their respective
designees harmless against any and all liabilities, obligations, losses,
damages, penalties, actions, judgements, suits, costs, or out-of-pocket
expenses, including reasonable attorney’s fees, that may be imposed on,
incurred by, or asserted against it or them in any way relating to or arising
out of the Custodian’s gross negligence or willful misconduct or any breach of
the covenants, conditions, representations or warranties contained herein.  The foregoing indemnification shall survive
any termination or assignment of this Agreement.

 

Section 12.             No
Adverse Interests.  By its
acceptance of each Mortgage File, the Custodian covenants and warrants to the
Participant that the Custodian holds no adverse interests, by way of security
or otherwise, in the related Mortgage Loan and the Custodian hereby waives and
releases any such interest in such Mortgage Loan which it, acting as Custodian,
has or which it may thereafter acquire prior to the time of release of such
Mortgage Loan from the terms of this Agreement.

 

Section 13.             Amendments.  This Agreement may be amended from time to
time only by written agreement of the Seller, the Participant and the Custodian
except that, if this Agreement or any Participation Certificate shall have been
assigned by Participant, no amendment shall affect any Mortgage Loans that
relate to Participation Certificates that have been so assigned.  Participant shall give at least five days’
prior written notice to each Assignee of any proposed amendment to this
Agreement and shall furnish each Assignee with a copy of each such amendment
within five days after it is executed and delivered.

 

Section 14.             Recordation
of Agreement.  To the extent
permitted by applicable law, this Agreement shall be filed and/or recorded by
the Seller at its expense in all appropriate public offices on direction by the
Participant accompanied by an opinion of counsel to the Participant (who may
also be counsel employed by the Participant) to the effect that such filing
and/or recordation would materially and beneficially affect the interests of
the Participant.

 

14

 

Section 15.             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 16.             Agreement
for Exclusive Benefit of Parties; Assignment.  This Agreement is for the exclusive benefit of the parties hereto
and their respective successors and permitted assigns hereunder and shall not
be deemed to give any legal or equitable right, remedy or claim to any other
person whatsoever.  This Agreement shall
bind the parties hereto and their respective successors, but, except as
provided in Section 8, shall not be assigned or pledged by any party without
the prior written consent of the other parties.  Written notice from an Assignee to the Custodian (with a copy to
the Participant) that the Participant has defaulted in any material respect
under any funding or loan agreement relating to the financing of the
Participant’s purchase of Participation Certificates shall be conclusive for
all purposes of this Agreement and after receipt of such notice, the Custodian
shall act in accordance with the written instructions of the Assignee with
respect to the related Mortgage Files.

 

Section 17.             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 18.             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 19.             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 23.

 

Section 20.             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.

 

Section 21.             Jurisdiction
Not Exclusive.  Nothing herein will
be deemed to preclude either party hereto from bringing an action or proceeding
in respect of this Agreement in any other jurisdiction other than as set forth
in Section 20.

 

Section 22.             Waiver
of Jury Trial.  Each party hereto
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating
to this Agreement, any other agreement or the transactions contemplated hereby
or thereby.

 

15

 

Section 23.             Notices.  Any notices, consents, directions and other
communications given under this Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered at, or mailed by
first-class mail, postage prepaid and sent to the addresses of the parties
hereto set forth on the cover page hereof or such other address as any party
shall give in a notice to the other parties pursuant to this Section.

 

Section 24.             Authentication.  No Participation Certificate shall be valid
unless authenticated by the manual signature of an authorized officer of the
Custodian.  The Custodian hereby
acknowledges that each time it authenticates a Participation Certificate, it is
making an express representation and warranty to the Participant that it has
performed the Certification as specified in Section 4(a).

 

Section 25.             Construction.  The headings in this Agreement are for
convenience only and are not intended to influence its construction.  References to Sections and Exhibits in this
Agreement are to the Sections of and Exhibits to this Agreement.  The Exhibits are part of this Agreement.  In this Agreement, 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.

 

SIGNATURES COMMENCE ON THE FOLLOWING PAGE

 

16

 

IN WITNESS WHEREOF, the
Seller and the Participant have caused this Agreement to be duly executed as of
the date and year first above written.

 

 

	
   

  	
  MORTGAGEIT, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ LARRY P.
  LEWIS

  	
   

  
	
   

  	
   

  	
  Name: Larry P.
  Lewis

  
	
   

  	
   

  	
  Title: Chief
  Operating Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  UBS WARBURG REAL
  ESTATE SECURITIES

  
	
   

  	
   

  	
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ GEORGE A.
  MANGIARACINA

  	
   

  
	
   

  	
   

  	
  Name:

  	
  George A. Mangiaracina

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
  Telephone No.:  (212) 713-3734

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ROBERT CARPENTER

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert Carpenter

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
  Telephone No.:  (212) 713-8749Exhibit
10.8

 

MORTGAGE LOAN
PARTICIPATION AGREEMENT

 

	
  PARTICIPANT:

  	
   

  	
  UBS WARBURG REAL ESTATE
  SECURITIES INC.

  
	
   

  	
   

  	
   

  
	
  ADDRESS:

  	
   

  	
  1285 AVENUE OF THE
  AMERICAS

  NEW YORK, NEW YORK 10019

  ATTENTION: GEORGE A. MANGIARACINA

  TELEPHONE:  (212) 713-3734

  ATTENTION:  ROBERT CARPENTER

  TELEPHONE:  (212) 713-8749

  
	
   

  	
   

  	
   

  
	
  SELLER:

  	
   

  	
  MORTGAGEIT, INC.

  
	
   

  	
   

  	
   

  
	
  ADDRESS:

  	
   

  	
  33 MAIDEN LANE

  NEW YORK, NY 10038

  ATTENTION:MIKE ZIGROSSI

  
	
   

  	
   

  	
   

  
	
  DATE OF AGREEMENT:

  	
   

  	
  DECEMBER 1, 2003

  

 

 

TABLE OF CONTENTS

 

	
  Section 1.

  	
  Definitions.

  	
  2

  
	
   

  	
   

  	
   

  
	
  Section 2.

  	
  Procedures
  for Purchases of Participation Certificates.

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 3.

  	
  Issuance of
  Securities.

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 4.

  	
  Servicing of
  the Mortgage Loans.

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section 5.

  	
  Takeout Commitments

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 6.

  	
  Transfers
  of Participation Certificates and Securities by Participant

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 7.

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

  	
  15

  
	
   

  	
   

  	
   

  
	
  Section 8.

  	
  Representations
  and Warranties.

  	
  15

  
	
   

  	
   

  	
   

  
	
  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

  	
  24

  
	
   

  	
   

  	
   

  
	
  Section 15.

  	
  Effect
  of Invalidity of Provisions

  	
  24

  
	
   

  	
   

  	
   

  
	
  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.

  	
  Submission
  to Jurisdiction; Waivers.

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 22.

  	
  Construction

  	
  26

  

 

i

 

	
  Exhibit A

  	
  Participation
  Certificate

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit B

  	
  Trade Assignment

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
  Document List

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit D

  	
  Warehouse Lender’s
  Release

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit E

  	
  Assignment

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit F

  	
  Authorized Signatories

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit G

  	
  Form of Opinion

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit H

  	
  UCC-1 Financing
  Statement

  	
   

  
	
   

  	
   

  	
   

  
	
  Annex A

  	
  Seller’s Delivery
  Instructions

  	
   

  

 

ii

 

MORTGAGE LOAN
PARTICIPATION AGREEMENT

 

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

 

PRELIMINARY STATEMENT

 

Seller desires to
sell to Participant from time to time Participation Certificates evidencing a
100% undivided ownership interest in certain Mortgage Loans eligible in the
aggregate to back Securities with the terms described in related Take-Out
Commitments.

 

Participant
desires and may in its sole discretion purchase such Participation Certificates
from Seller in accordance with the terms and conditions set forth in this
Agreement.  Seller, subject to the terms
hereof, will cause (a) Mortgage Loans evidenced by a Participation Certificate
to back a GNMA Security issued by Seller and guaranteed by GNMA, a FNMA
Security issued and guaranteed by FNMA or a FHLMC Security issued and
guaranteed by FHLMC and (b) Delivery of such GNMA Security, FNMA Security or
FHLMC Security by GNMA, FNMA or FHLMC to Participant or its designee, which
GNMA Security, FNMA Security or FHLMC Security will be purchased by a Takeout
Investor.

 

Participant’s
willingness to purchase any Participation Certificate evidencing particular
Mortgage Loans is based on Participant’s expectation, in reliance upon Seller’s
representations and warranties herein, that such Mortgage Loans in the
aggregate, constitute a pool or pools of mortgage loans that are eligible to
back a Security and that the Security, in the amount and with the terms
described in the related Take-Out Commitment, will be issued and Participant
will receive Delivery thereof within the time period agreed upon between
Participant and Seller and reflected in the terms of such Participation
Certificate.

 

The amount of the
Purchase Price and the Performance Fee to be paid by Participant to Seller with
respect to each Participation Certificate will be calculated on the expectation
of Participant, based upon the representations and warranties of the Seller
herein, that Participant will receive Delivery of the Security to be backed by
the Mortgage Loans evidenced by the Participation Certificate purchased by
Participant on the specified Anticipated Delivery Date and that failure to
receive such Delivery will result in a material decrease in the market value of
the Participation Certificate and the underlying Mortgage Loans considered as a
whole.  During the period from the
purchase of a Participation Certificate to Delivery of the related Security,
Participant expects to rely entirely upon Seller to service the Mortgage Loans
evidenced by the applicable Participation Certificate, it being acknowledged
that the continued effectiveness of Seller’s Agency Approvals during such
period constitutes an essential factor in the calculation by Participant of the
Purchase Price and the Performance Fee paid to Seller for the related
Participation Certificate and that loss of such Agency Approvals by Seller
would result in a material decrease in the market value of the Participation
Certificate and the underlying Mortgage Loans considered as a whole.

 

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, moratorium,
dissolution, delinquency or similar law, or Seller’s seeking the appointment or
election of a receiver, conservator, trustee, custodian or similar official for
Seller or any substantial part of its property, or the convening of any meeting
of creditors for purposes of commencing any such case or proceeding against
Seller, or another seeking such an appointment or election, (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 under the provisions of the Securities Investor Protection
Act of 1970, which (1) is consented to or not timely contested by Seller, (2)
results in the entry of an order for relief, such an appointment or election,
the issuance of such a protective decree or the entry of an order having a
similar effect, or (3) is not dismissed within fifteen (15) days, (c) the
making by Seller of a general assignment for the benefit of creditors, or (d)
the admission in writing by Seller of Seller’s inability to pay its debts as
they become due or the nonpayment generally by Seller of its debts as they
become due.

 

“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 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.

 

“Anticipated
Delivery Date”:  With respect to a
Security, the date specified in the related Form HUD 11705 (Schedule of
Subscribers), Fannie Mae Form 2014 (Delivery Schedule), or FHLMC Form 939
(Settlement and Information Multiple Registration Form), as applicable, on
which it is anticipated that Delivery of the Security by the Applicable Agency
will be made.

 

“Applicable
Agency”  As defined in
Section 3(a)(l).

 

2

 

“Assignee”:  As defined in Section 6.

 

“Assignment of
Mortgage”:  As defined in
Section 6.

 

“Authorized
Signatory”:  An officer of the Seller
who is authorized and empowered to cause Participation Certificates evidencing
Mortgage Loans to back a Security issued by Seller and guaranteed by an Agency,
and is indicated on the Authorized Signatories of the Seller attached hereto as
Exhibit F.

 

“Claim”:  Any right to payment, whether or not such
right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured, or
unsecured; or any right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured,
disputed, undisputed, secured, or unsecured.

 

“Collateral”:  As defined in Section 7(c).

 

“Custodial
Account”:  As defined in
Section 4(b).

 

“Custodial
Agreement”:  The Custodial
Agreement, dated as of the date set forth on the cover sheet thereof, among
Seller, Participant and Custodian.

 

“Custodian”:  The Custodian (which, under the appropriate
circumstance, may include FHLMC or FNMA as Custodian) set forth on the cover
page hereof and its permitted successors under the Custodial Agreement.

 

“Defective
Mortgage Loan”:  With respect to a
Participation Certificate, a mortgage loan that is not in Strict Compliance
with the GNMA Program, FNMA Program or FHLMC Program, as applicable.

 

“Delivery”:  The later to occur of (a) the issuance of
the related Security and (b) the transfer of all of the right, title and
ownership interest in that Security to Participant.

 

“Discount”:  With respect to each Participation
Certificate, the amount of the adjustment to the Trade Price of the related
Security agreed upon by Seller and Participant to reserve for the possibility
that Seller may be unable to perform its obligations under this Agreement in
accordance with their terms.

 

“Electronic
Agent”:  MERSCORP, Inc., and its
successors in interest.

 

“Electronic
Tracking Agreement”:  The Electronic
Tracking Agreement, dated as of the date hereof, among Participant, 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.

 

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

 

3

 

“FHA”:  The Federal Housing Administration or any
successor thereto.

 

“FHLMC”:  Federal Home Loan Mortgage Corporation or
any successor thereto.

 

“FHLMC as
Custodian”:  With respect to FHLMC
Participation Certificates, the circumstances in which Seller elects to appoint
FHLMC (as opposed to some other third party as permitted by the FHLMC Guide) as
Custodian for the FHLMC Mortgage Loans subject to the FHLMC Participation
Certificates to be purchased by Participant hereunder.

 

“FHLMC Guide”:  The Freddie Mac Sellers’ and Servicers’ Guide,
as such Guide may hereafter from time to time be amended.

 

“FHLMC Mortgage
Loan”:  With respect to any FHLMC
Participation Certificate or any FHLMC Security, a mortgage loan that is in
Strict Compliance with the eligibility requirements specified for the
applicable FHLMC Program described in the FHLMC Guide.

 

“FHLMC
Participation Certificate”:  With
respect to the FHLMC Program, a certificate, in the form of Exhibit A, issued
by Seller and authenticated by Custodian, evidencing the 100% undivided
ownership interest in the Mortgage Loans that are either (a) set forth on a
copy of the FHLMC Form 11 (Mortgage Submission Schedule) attached to such
Participation Certificate or (b) identified on a computer tape compatible with
MIDANET as belonging to the mortgage loan pool described in such Participation
Certificate.

 

“FHLMC Program”:  The FHLMC Home Mortgage Guarantor Program or
the FHLMC FHA/VA Home Mortgage Guarantor Program, as described in the FHLMC
Guide.

 

“FHLMC Security”:  A modified pass-through mortgage-backed
participation certificate, evidenced by a book-entry credit made by a
Securities Intermediary that is a participant of the Federal Reserve Bank of
New York, issued and guaranteed, with respect to timely payment of interest and
ultimate payment of principal, by FHLMC and backed by a pool of FHLMC Mortgage
Loans, in substantially the principal amount and with substantially the other
terms as specified with respect to such FHLMC Security in the related Takeout
Commitment, if any.

 

“FNMA” or “Fannie
Mae”:  Federal National Mortgage
Association or any successor thereto.

 

“FNMA as
Custodian”:  With respect to FNMA
Participation Certificates, the circumstances in which Seller elects to appoint
FNMA (as opposed to some other third party as permitted by the FNMA Guide) as
Custodian for the FNMA Mortgage Loans subject to the FNMA Participation
Certificates to be purchased by Participant hereunder.

 

“FNMA Guide”:  The Fannie Mae MBS Selling and Servicing Guide,
as such Guide may hereafter from time to time be amended.

 

“FNMA Mortgage
Loan”:  With respect to any FNMA
Participation Certificate or any FNMA Security, a mortgage loan that is in
Strict Compliance with the eligibility requirements specified for the
applicable FNMA Program described in the FNMA Guide.

 

4

 

“FNMA
Participation Certificate”:  With
respect to the FNMA Program, a certificate, in the form of Exhibit A,
authenticated by Custodian, evidencing the 100% undivided ownership interest in
the Mortgage Loans set forth on Fannie Mae Form 2005 (Schedule of
Mortgages).

 

“FNMA Program”:  The FNMA Guaranteed Mortgage-Backed
Securities Programs, as described in the FNMA Guide.

 

“FNMA Security”:  An ownership interest in a pool of FNMA
Mortgage Loans, evidenced by a book-entry credit made by a Securities
Intermediary that is a participant of the Federal Reserve Bank of New York, in
substantially the principal amount and with substantially the other terms as
specified with respect to such FNMA Security in the related Takeout Commitment,
if any.

 

“GNMA”:  Government National Mortgage Association or
any successor thereto.

 

“GNMA Guide”:  The GNMA Mortgage-Backed Securities Guide I or II,
as such Guide may hereafter from time to time be amended.

 

“GNMA Mortgage
Loan”:  With respect to any GNMA
Participation Certificate or any GNMA Security, a mortgage loan that is in
Strict Compliance with the eligibility requirements specified for the
applicable GNMA Program in the applicable GNMA Guide.

 

“GNMA
Participation Certificate”:  With
respect to the GNMA Program, a certificate, in the form of Exhibit A, issued by
Seller and authenticated by Custodian, evidencing the 100% undivided ownership
interest in the Mortgage Loans set forth on the Form HUD 11706
(Schedule of Pooled Mortgages).

 

“GNMA Program”:  The GNMA Mortgage-Backed Securities
Programs, as described in a GNMA Guide.

 

“GNMA Security”:  A fully-modified pass-through
mortgage-backed certificate guaranteed by GNMA, evidenced by a book-entry
credit made by a Securities Intermediary that is a participant of the
Participant’s Trust Company and backed by a pool of GNMA Mortgage Loans, in
substantially the principal amount and with substantially the other terms as
specified with respect to such GNMA Security in the related Takeout Commitment,
if any.

 

“HUD”:  The United States Department of Housing and
Urban Development or any successor thereto.

 

“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.

 

5

 

“Issuance Date”:  With respect to a Security, the first day of
the month in which the Security is issued.

 

“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
Participant 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.

 

“MIDANET”:  The FHLMC automated system by which sellers
and servicers of mortgage loans to FHLMC transfer mortgage summary and record
data or mortgage accounting and servicing information from their computer
system or service bureau to FHLMC, as more fully described in the FHLMC Guide.

 

“Mortgage”:  A mortgage, deed of trust or other security
instrument, securing a Mortgage Note.

 

“Mortgage Loan”:  A GNMA Mortgage Loan, a FNMA Mortgage Loan
or a FHLMC Mortgage Loan.

 

“Mortgage Note”:  A promissory note evidencing a Mortgage
Loan.

 

“OTS”:  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.

 

“Participant”:  UBS Warburg Real Estate Securities Inc. and
its successors in interest, including, but not limited to, any lender, designee
or assignee to whom a Participation Certificate or a Security shall be pledged
or assigned.

 

6

 

“Participation
Certificate”:  A GNMA Participation
Certificate, a FNMA Participation Certificate or a FHLMC Participation
Certificate.

 

“Pass-Through
Rate”:  With respect to a
Participation Certificate, the rate of interest specified as the Pass-Through
Rate in such Participation Certificate, which rate shall continue in effect
until the latest of (a) the Settlement Date of the related Security, (b) either
the date on which Receipt of the Security occurs or, if such Receipt occurs on
such date after 12:00 noon, New York City time the next business day on which
Participant is permitted under applicable laws and regulations to make delivery
of the Security to the Takeout Investor and, if applicable, (c) the date on
which Seller completes its Performance of its obligations under
Section 3(c)(2).

 

“Performance
Fee”:  With respect to each
Participation Certificate, an amount equal to the Discount plus the Yield
Compensation Adjustment, less any reduction pursuant to Section 3(b),
which amount shall be payable to Seller by Participant as compensation to
Seller for its services in connection with the issuance of a Security.

 

“Purchase Date”:  With respect to a Participation Certificate,
the date on which Participant elects to purchase such Participation
Certificate.

 

“Purchase Price”:  With respect to each Participation
Certificate, the Trade Price of the Security to be backed by the Mortgage Loans
evidenced by the Participation Certificate, less the Discount.  Accrued interest shall be allocated in
accordance with Section 3(a)(3).

 

“Receipt”:  The Delivery of a Security, upon notice by
Seller to Participant, not later than 12:00 noon, New York City time, on the
second business day prior to the applicable Settlement Date, of (a) the amount
of any change in the principal amount of the Mortgage Loans backing such
Security, and (b) with respect to FHLMC Securities, the FHLMC Mortgage Loan
pool number applicable to such Security. 
If the Seller fails to so notify Participant, “Receipt” shall be deemed
to have occurred on the later of (1) the second business day after the date on
which Seller provides such notification to Participant and (2) the date on
which Participant receives Delivery of the Security.

 

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

 

“Securities
Intermediary”:  As defined in
Section 8-102(a)(14) of the Uniform Commercial Code.

 

“Security”:  A GNMA Security, a FNMA Security or a FHLMC
Security.

 

“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.

 

7

 

“Settlement
Date”:  The date specified in a
Takeout Commitment upon which the related Security is scheduled to be
delivered, against payment, to the specified Takeout Investor.

 

“Strict
Compliance” shall mean compliance of Seller and the Mortgage Loans with the
requirements of the GNMA Guide, FNMA Guide or FHLMC Guide, as applicable and as
amended by any agreements between Seller and the Applicable Agency, sufficient
to enable Seller to issue and GNMA to guarantee or FNMA or FHLMC to issue and
guarantee a Security, provided, that until copies of any such
agreements between Seller and the Applicable Agency have been provided to
Participant by Seller, such agreements shall be deemed, as between Seller and
Participant, not to amend the requirements of the GNMA Guide, FNMA Guide or
FHLMC Guide, as applicable.

 

“Successor
Servicer”:  An entity with the
necessary Agency Approvals, as the circumstances may require, and designated by
Participant, in conformity with Section 3(c)(2), to replace Seller as
issuer and servicer, mortgagee or seller/servicer of the Mortgage Loans or the
Securities related thereto.

 

“Takeout
Commitment”:  A trade confirmation
from the Takeout Investor to Seller confirming the details of a forward trade
between the Takeout Investor and Seller with respect to one or more Securities,
which trade confirmation shall be enforceable and in full force and effect, and
shall be validly and effectively assigned to Participant pursuant to a Trade
Assignment, and relate to pools of Mortgage Loans that satisfy the “good
delivery standards” of the Public Securities Association as set forth in the Public
Securities Association Uniform Practices Guide.

 

“Takeout
Investor”:  A securities dealer or
other financial institution, acceptable to Participant, who has made a Takeout
Commitment.

 

“Trade
Assignment”:  A letter substantially
in the form of Exhibit B.

 

“Trade Price”:  The price specified in a Takeout Commitment
at which a Takeout Investor is obligated to purchase the Security specified in
such Takeout Commitment.

 

“UCC” or “Uniform
Commercial Code”:  The Uniform
Commercial Code as in effect in the State of New York as of the date of this
Agreement.

 

“VA”:  The United States Veterans Administration or
any successor thereto.

 

“Warehouse
Lender”:  Any lender providing
financing to the Seller for the purpose of originating Mortgage Loans, which
has a security interest in such Mortgage Loans as collateral for the
obligations of Seller to such lender.

 

“Wire
Instructions”:  The wire
instructions set forth opposite the name of the Warehouse Lender in a letter,
in the form of Exhibit G to the Custodial Agreement, executed by Seller and
Custodian, receipt of which has been acknowledged by Participant.

 

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

 

8

 

A(BC-DE)

360

 

where (i) A equals
the number of days in the period beginning on the date Participant purchases
such Participation Certificate to but not including the Settlement Date, (ii) B
equals the aggregate principal amount of the Mortgage Loans evidenced by a
Participation Certificate, (iii) C equals the interest rate (expressed as a
decimal) on the Security backed by the Mortgage Loans subject to such
Participation Certificate, (iv) D equals the Purchase Price and (v) E equals
the Pass-Through Rate (expressed as a decimal) specified in such Participation
Certificate.

 

Section 2.                                            Procedures
for Purchases of Participation Certificates.

 

(a)                                  Participant
may, in its sole discretion from time to time, purchase one or more
Participation Certificates from Seller. 
Seller, on behalf of Participant, shall arrange for the Delivery to
Participant of a Security backed by the Mortgage Loans evidenced by any
Participation Certificate so purchased, which Security shall be subject to a
Takeout Commitment.  Participant’s
obligation to purchase any Participation Certificate which Participant elects
to purchase, shall be subject to the receipt by the Participant of the documents
listed in Exhibit C from Seller, in form and substance satisfactory to
Participant, and the execution of the Custodial Agreement relating to the
Participation Certificate by Seller and Custodian and delivery thereof to
Participant.  Notwithstanding the satisfaction
of the conditions specified in this Section 2(a), Participant is not
obligated to purchase any Participation Certificate offered to it hereunder.

 

(b)                                 If
Participant elects to purchase any Participation Certificate, Participant shall
pay to Seller, on the Purchase Date, the amount of the Purchase Price for such
Participation Certificate.  In the event
that Participant does not transmit the Purchase Price, (i) any Participation
Certificate delivered by Custodian to Participant in anticipation of such
purchase shall automatically be null and void, (ii) Participant will not
consummate the transactions contemplated in the applicable Trade Assignment and
(iii) to the extent that Participant shall nevertheless receive the Security
backed by the Mortgage Loans to which such Participation Certificate relates
prior to its becoming null and void as provided in clause (i) above,
Participant shall take all reasonable actions necessary to ensure that such
Security shall be delivered in accordance with Seller’s delivery instructions
specified in Annex A.

 

(c)                                  The
terms and conditions of the purchase of each Participation Certificate shall be
as set forth in this Agreement.  Each
Participation Certificate shall be deemed to incorporate, and Seller shall be
deemed to make as of the applicable dates specified in Section 8, for the
benefit of Participant and each Assignee of such Participation Certificate, the
representations and warranties set forth in Section 8 in respect of such
Participation Certificate and the Mortgage Loans evidenced by such Participation
Certificate.

 

Section 3.                                            Issuance
of Securities.

 

(a)                                  (1)                                  With
respect to Mortgage Loans evidenced by a Participation Certificate which
Participant has elected to purchase, Seller shall instruct (and, if Seller
fails to instruct, then Participant may instruct) Custodian to deliver to GNMA,
FNMA or FHLMC, as applicable (the “Applicable Agency”), the documents
listed in Exhibits C-l, C-2 or C-3 of the

 

9

 

Custodial Agreement in
respect of such Mortgage Loans, in the manner and at the time set forth in the
Custodial Agreement.  Seller shall
thereafter promptly deliver to the Applicable Agency any and all additional
documents requested by the Applicable Agency to enable the Applicable Agency to
make Delivery to Participant of a Security backed by such Mortgage Loans on the
related Anticipated Delivery Date. 
Seller shall not revoke such instructions to Custodian and shall not
revoke its instructions to the Applicable Agency to make Delivery to
Participant or its designee of a Security backed by such Mortgage Loans.

 

(2)                                  Seller
shall notify Participant, not later than 12:00 noon, New York City time, on the
second business day prior to the applicable Settlement Date, (i) of the amount
of any change in the principal amount of the Mortgage Loans backing each such
Security related to such Settlement Date and (ii) with respect to FHLMC
Securities, the FHLMC mortgage loan pool number applicable to each Security to
which such Settlement Date relates. 
Upon Delivery of such Security to Participant or its designee,
Participant shall cease to have any interest under such Participation
Certificate in the Mortgage Loans backing such Security, notwithstanding
anything to the contrary in the Participation Certificate.

 

(b)                                 With
respect to each Participation Certificate that Participant elects to purchase
hereunder, Participant shall owe to Seller, on the later to occur of four
business days after the Purchase Date or on the date of Receipt by Participant
of the related Security, a Performance Fee. 
If a Participation Certificate is purchased by Participant after the
first day of the month in which the Settlement Date occurs, Participant shall
also pay to Seller on the date of Receipt by Participant of the Security backed
by the related Mortgage Loans an amount equal to the accrued interest on the
related Security at the rate specified in the related Takeout Commitment from
the first day of such month to and including the day immediately preceding the
date Participant purchased such Participation Certificate.  If a Participation Certificate is purchased
by Participant in the month prior to the month in which the Settlement Date
occurs, Seller, as servicer, shall pay to Participant all interest payments
which accrue on such Participation Certificate during the period from the date
of purchase of such Participation Certificate through and including the last
day of the month prior to the month in which such Settlement Date occurs.  Notwithstanding the foregoing, no amounts
shall be owed by Participant to Seller upon issuance of such Security in the
circumstances contemplated in Section 3(c)(2).  Except as otherwise provided in this Section 3(a)(3) and in
Section 3(b), and subject to Participant’s right of set-off set forth in
Section 3(g), any Performance Fee owed by Participant with respect to a
Participation Certificate shall be paid by Participant to Seller not later than
the Settlement Date of the related Security. 
It is understood by Seller and Participant that, if Seller requests and
Participant agrees to pay the Performance Fee prior to the Settlement Date of
the related Security, the amount of such Performance Fee shall be adjusted as
mutually agreed by Seller and Participant.

 

(c)                                  Unless
Receipt of a Security backed by the Mortgage Loans evidenced by a Participation
Certificate purchased hereunder has occurred by 12:00 noon, New York City time,
on the related Settlement Date, (1) the Performance Fee relating to such
Participation Certificate shall be reduced daily for the period from the
Settlement Date to but not including the earlier of the date of Receipt of such
Security and the date of satisfaction of the obligations of Seller pursuant to
the exercise by Participant of any remedial election authorized by this
Section 3 by an amount equal to (A) the Purchase Price of such
Participation Certificate

 

10

 

multiplied by (B) the
result obtained by dividing (i) the Pass-Through Rate for such Participation
Certificate plus one percent by (ii) three hundred and sixty (360) and (2) the
Performance Fee, if any, relating to such Participation Certificate shall not
be payable until the end of the period specified in clause (1) of this
paragraph.

 

(d)                                 (1)                                  If
a breach by Seller of this Agreement results in any Mortgage Loan being a
Defective Mortgage Loan at the time of the delivery of the related
Participation Certificate to Participant, Participant in its sole discretion
may require that Seller, upon receipt of notice from Participant of its exercise
of such right, either (i) immediately repurchase Participant’s ownership
interest in such Defective Mortgage Loan by remitting to Participant the
allocable amount paid by Participant for such Defective Mortgage Loan plus
interest at the Pass-Through Rate on the principal amount thereof from the date
of Participant’s purchase of such Participation Certificate to the date of such
repurchase, or (ii) deliver to Custodian a Mortgage Loan eligible to back such
Security in exchange for such Defective Mortgage Loan, which newly delivered
Mortgage Loan shall be in all respects acceptable to Participant in
Participant’s sole discretion, and such newly delivered Mortgage Loan will
thereupon become one of the Mortgage Loans evidenced by the Participation Certificate.  If the aggregate principal balance of any
Mortgage Loans that are accepted by Participant pursuant to clause (ii) of the
immediately preceding sentence is less than the aggregate principal balance of
any Defective Mortgage Loan that is being replaced by such Mortgage Loan,
Seller shall remit with such Mortgage Loan to Participant an amount equal to
the difference between the aggregate principal balance of the new Mortgage Loan
accepted by Participant and the aggregate principal balance of the Defective
Mortgage Loan being replaced thereby.

 

(2)                                  If
Seller fails to comply with its obligations in the manner described in
Section 3(c)(1), or Seller is in breach of Section 8(a)(viii) or
8(b)(vii), not later than the third calendar day after receipt by Seller of
notice from Participant (or if such day is not a business day, the next
business day thereafter), Seller’s rights and obligations to service the
Mortgage Loans evidenced by such Participation Certificate, 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 Participant. 
Upon any such termination, Participant 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
Participant shall reasonably determine. 
Seller shall not otherwise attempt to sell or transfer such rights to
service without the prior consent of Participant.  Seller shall perform all acts and take all action so that the
Mortgage Loans and all files and documents relating to such 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 the Applicable Agency is required for any such
sale or transfer, Seller shall fully cooperate with Participant to obtain such
approval.  Upon exercise by Participant
of its remedies under this Section 3(c)(2), Seller hereby authorizes
Participant 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 Participant’s
rights of set-off under this Agreement. 
Upon exercise by Participant of its remedies under this
Section 3(c)(2), Participant’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

 

11

 

way relieve Seller or
otherwise affect the obligation of Seller to indemnify and hold Participant harmless
as specified in Section 3(e).

 

(e)                                  Mortgage
Loans required to be delivered to Successor Servicer by Section 3(c)(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 such Mortgage Loans held by
Seller to Successor Servicer.  Seller
shall promptly take such actions and furnish to Participant such documents that
Participant deems necessary or appropriate to enable Participant to obtain a
Security backed by such Mortgage Loans or to enforce such Mortgage Loans, as
appropriate.

 

(f)                                    Seller
agrees to indemnify and hold Participant and its assigns harmless from and
against all Losses (including, without limitation, Losses incurred by
Participant on account of fees paid by Participant to the Applicable Agency to
cause the Securities to be issued or any Losses in connection with any
indemnification by Participant of the Applicable Agency) 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.

 

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

 

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

 

Section 4.                                            Servicing
of the Mortgage Loans.

 

(a)                                  It
is expressly acknowledged that the Servicing Rights relating to the Mortgage
Loans evidenced by each Participation Certificate purchased by Participant
hereunder have been sold, assigned, and transferred by Seller to Participant
along with the ownership interest in such Mortgage Loans as evidenced by a
Participation Certificate.  Seller shall
service and administer the Mortgage Loans evidenced by a Participation
Certificate on behalf of Participant 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 GNMA Program, FNMA Program or FHLMC
Program, as the case may be, provided, that Seller shall at all times
comply with applicable law, FHA regulations and VA regulations and the
requirements of any private mortgage insurer so that the FHA insurance, VA
guarantee or any other applicable insurance or 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 the Mortgage Loans, and Participant may, at any time during Seller’s
business hours on reasonable notice, examine and make copies of such
records.  On the second (2nd)
day of each calendar month, or at any other time upon Participant’s request,
Seller shall deliver to Participant reports regarding the status of each Mortgage
Loan in accordance with Section 9(g) and Section 9(h), which shall
include, but shall not be limited to, a description of those Mortgage Loans in

 

12

 

default for more than
thirty (30) days, and any circumstances that could materially adversely affect
any of such Mortgage Loans, Participant’s ownership of any of such Mortgage
Loans or the collateral securing any of such Mortgage Loans.  Seller shall deliver such a report to
Participant every thirty (30) days until (i) Delivery of the related Security
to Participant or (ii) the exercise by Participant of any remedial election
pursuant to Section 3.  The Seller
agrees and acknowledges that Participant may, at any time, terminate the
servicing of the Mortgage Loans by Seller and transfer servicing to another
Person on such date as Participant 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)
Delivery of the related Security to Participant or (ii) Participant’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)                                 Upon
notice from Participant or with respect to each Participation Certificate, on
the Settlement Date:

 

(i)                                     Seller
shall authorize Participant to establish and maintain a custodial account as to
which the Participant, or its assignees, as the case may be, shall be (x) the
“customer” (within the meaning of Section 4-104 of the UCC) (the “Customer”)
if the custodial account is a “deposit account” (within the meaning of
Section 9-102(a)(29) of the UCC) or (y) the “entitlement holder” (within
the meaning of Section 8-102(a)(7) of the UCC) if the custodial account is
a “securities account” within the meaning of Section 8-501(a) of the UCC)
(the “Custodial Account”) which shall be entitled “UBS Warburg Real
Estate Securities, Inc., in trust for UBS Warburg Real Estate Securities Inc.
and its assignees under the Mortgage Loan Participation Agreement dated [as of
the date hereof], 2003 by and between MortgageIT, Inc. and UBS Warburg Real
Estate Securities Inc.” 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 evidenced by a Participation Certificate that
are payable to Participant as the owner of such Participation Certificate; and

 

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

 

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

 

(i)                                     Except
as otherwise provided in Section 4(c)(ii), upon Delivery of the Security
backed by such Mortgage Loans to Participant and either (i) receipt by
Participant or its designee of the purchase price for the Security from the
Takeout Investor or (ii) if earlier, on the date required by the GNMA Guide,
FNMA Guide or FHLMC Guide, as the case may be, amounts deposited in the
Custodial Account shall be released in accordance with
Section 3(a)(3).  Notwithstanding
the foregoing, all amounts deposited in the Custodial Account shall be paid to
Seller upon the Delivery of the related

 

13

 

Security to
Participant if, and to the extent that, (x) the amounts due and payable to
Participant hereunder have been set-off against the Purchase Price for the
related Participation Certificate or the Performance Fee relating to the
Mortgage Loans underlying such Participation Certificate and (y) all other
Claims by Participant against Seller and all amounts owed by Seller to
Participant under any agreements between Seller and Participant have been
paid.  The amounts paid to Seller (if
any) pursuant to this Section 4(c)(i) shall constitute Seller’s sole
compensation for servicing the Mortgage Loans as provided in this
Section 4.

 

(ii)                                  If
a Successor Servicer takes delivery of such Mortgage Loans either under the
circumstances set forth in clause (b)(ii) above, or otherwise, all amounts
deposited in the Custodial Account shall be paid to Participant 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 Participant’s written
instructions.

 

Section 5.                                            Takeout
Commitments.  Seller hereby
assigns to Participant, free of any security interest, lien, claim or
encumbrance of any kind, Seller’s rights under each Takeout Commitment to
deliver the Security specified therein to the related Takeout Investor and to
receive the purchase price therefor from such Takeout Investor.  Subject to Participant’s rights under
Section 3, Participant agrees that it will satisfy the Takeout Commitment
on the Settlement Date specified therein. 
Seller understands that, as a result of this Section 5 and each
Trade Assignment, Participant will succeed to the rights and obligations of
Seller with respect to each Takeout Commitment subject to a Trade Assignment,
and that in satisfying each such Takeout Commitment, Participant will stand in
the shoes of Seller and, consequently, will be acting as a non-dealer in exercising
its rights and fulfilling its obligations assigned pursuant to this
Section 5 and each Trade Assignment. 
Each Trade Assignment delivered by Seller to Participant pursuant to
Section 2 shall be delivered by Seller in a timely manner sufficient to
enable Participant to facilitate the settlement of the related trade on the
trade date in accordance with Chapter 8 of the Bond Market Association’s
Uniform Practices for the Clearance and Settlement of Mortgage-Backed
Securities and other Related Securities, as amended from time to time.

 

Section 6.                                            Transfers
of Participation Certificates and Securities by Participant.
Participant may, in its sole discretion and without the consent of Seller,
assign all of its right, title and interest or grant a security interest in any
Participation Certificate, any Mortgage Note, Mortgage and any assignment of
Mortgages (an “Assignment of Mortgage”), each Security in respect
thereof of which Delivery is made to Participant and all rights of Participant
under this Agreement (including, but not limited to, the Custodial Account) in
respect of such Participation Certificate, Mortgage Note, Mortgage, Assignment
of Mortgage and such Security, to any person (an “Assignee”), subject
only to an obligation on the part of the Assignee to deliver each such Security
to a Takeout Investor pursuant to Section 5 or to Participant to permit
Participant or its designee to make delivery thereof to a Takeout Investor
pursuant to Section 5.  Assignment
by Participant of a Participation Certificate as provided in this
Section 6 will not release Participant from its obligations otherwise
under this Agreement.

 

14

 

Without limitation
of the foregoing, an assignment of the Participation Certificate to an
Assignee, as described in this Section 6, shall be effective upon delivery
of the Participation Certificate to the Assignee or its designee, together with
a duly executed Assignment in the Form of Exhibit E.

 

Section 7.                                            Record
Title to Mortgage Loans; Intent of Parties; Security Interest.

 

(a)  From and after the issuance and delivery of
the related Participation Certificate, and subject to the remedies of
Participant 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 Participant, for the sole purpose of facilitating the servicing
of such Mortgage Loan and the issuance of a Security backed by such Mortgage
Loan.  Where Seller has appointed FHLMC
or FNMA, as applicable, as Custodian, the parties hereto acknowledge that the
Mortgage Notes acquired hereunder have been deposited with FHLMC or FNMA, as
applicable, to facilitate the issuance of FHLMC Securities or FNMA Securities,
as applicable, with respect thereto and that prior to such issuance FHLMC or
FNMA, as applicable, is holding such Mortgage Notes as Custodian for
Participant.

 

(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 the holder of the
related Participation Certificate and with respect to each MERS Designated
Mortgage Loan, Seller shall designate the Participant as the Investor and
Interim Funder on the MERS® System.

 

(c)  Participant and Seller confirm that the
transactions contemplated herein are intended to be sales of the Mortgage Loans
by Seller to Participant 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 Participant intend that
Participant or its Assignee, as the case may be, shall have a perfected first
priority security interest in the Participation Certificates, any Custodial
Accounts, the Mortgage Loans subject to each Participation Certificate
(including all servicing rights related thereto), all documents evidencing the
Mortgage Loans, the Securities to be issued as contemplated hereunder and all
proceeds thereof, the Takeout Commitments and the proceeds of any and all of
the foregoing (collectively, the “Collateral”), free and clear of
adverse claims.  In such case, Seller
shall be deemed to have hereby granted to Participant or its Assignee, as the
case may be, a first priority security interest in and lien upon the
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 Participant, and Participant or
each such Assignee shall have all of the rights of a secured party under
applicable law.

 

Section 8.                                            Representations
and Warranties.

 

(a)                                  Seller
hereby represents and warrants to Participant as of the date hereof and as of
the date of each issuance and delivery of a Participation Certificate that:

 

15

 

(i)                                     All
representations and warranties made and all information (including, without
limitation, any financial information concerning Seller) and documents or
copies of documents furnished by Seller to Participant pursuant to or in
connection with this Agreement are and will be true and correct at the time
when made and at all times thereafter or, if limited to a specific date, as of
the date to which they refer;

 

(ii)                                  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 to do business in each jurisdiction in
which it is legally required to do so. 
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 and 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, 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;

 

(iii)                               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;

 

(iv)                              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 provision of the
charter or by-laws of Seller or result in the breach of any provision of, or
conflict with or constitute a default under or result in the acceleration of
any obligation under, any agreement, indenture, loan or credit agreement or
other instrument to which Seller, the Mortgage Loans or any of Seller’s
property is subject, or result in the violation of any law, rule, regulation,
order, judgment or decree to which Seller, the Mortgage Loans or Seller’s
property is subject.  Without limiting
the generality of the foregoing, the consummation of the transactions
contemplated herein or therein will not violate any policy, regulation or
guideline of the FHA or VA or result in the voiding or reduction of the FHA
insurance, VA guarantee or any other insurance or guarantee in respect of any
Mortgage Loan, and such insurance or guarantee is in full force and effect or
shall be in full force and effect as required by the applicable GNMA Guide,
FNMA Guide or FHLMC Guide;

 

16

 

(v)                                 Seller
has not sold, assigned, transferred, pledged or hypothecated any interest in
any Participation Certificate to any person other than Participant, and upon
delivery of a Participation Certificate to Participant, Participant will be the
sole owner thereof, 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 Participant, 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 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 and the Custodial Agreement;

 

(viii)                        If
applicable with respect to each Mortgage Loan evidenced by a Participation
Certificate 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 Delivery of the
Security 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 Participant 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;

 

17

 

(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 Participant as “Secured
Party”, Seller as “Debtor” and describing the Collateral, in the jurisdiction
and recording office listed on Exhibit H attached hereto, the
security interest granted hereunder in the Collateral will constitute a fully
perfected security interest 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; and

 

(xiii)                          As
of the date hereof, Seller’s chief executive office is 33 Maiden Lane, New
York, New York 10038.  As of the date
hereof, and during the one year immediately preceding the date hereof, Seller’s
sole jurisdiction of organization is, and has been, New York State.

 

(xiv)                         Seller’s
exact legal name is, and for the immediately preceding one year has been, as
set forth on the signature page hereto.

 

(xv)                            Seller
has not used any trade name or assumed name.

 

(xvi)                         Seller
has not merged with, or acquired all or substantially all of the assets of, any
other person or entity within the immediately preceding year.

 

(b)                                 Seller
hereby represents and warrants to Participant with respect to each Mortgage
Loan as of the date of the payment by Participant of the Purchase Price of the
related Participation Certificate that:

 

(i)                                     Such
Mortgage Loan was, immediately prior to the sale to Participant of the related
Participation Certificate, owned solely by Seller, is not subject to any lien,
claim or encumbrance, including, without limitation, any such interest pursuant
to a loan or credit agreement for warehousing mortgage loans, and was
originated and serviced in accordance with all applicable law and regulations,
including without limitation the Federal Truth-in-Lending Act, the Real Estate
Settlement Procedures Act, regulations issued pursuant to any of the aforesaid,
and any and all rules, requirements, guidelines

 

18

 

and announcements
of the Applicable Agency, and, as applicable, the FHA and VA, as the same may
be amended from time to time;

 

(ii)                                  The
improvements on the land securing such Mortgage Loan are and will be kept
insured at all times by responsible insurance companies reasonably acceptable
to Participant against fire and extended coverage hazards under policies,
binders or certificates of insurance with a standard mortgagee clause in favor
of Seller and its assigns, providing that such policy may not be canceled without
prior notice to Seller.  Any proceeds of
such insurance shall be held in trust for the benefit of Participant.  The scope and amount of such insurance shall
satisfy the rules, requirements, guidelines and announcements of the Applicable
Agency, and shall in all cases be at least equal to the lesser of (A) principal
amount of such Mortgage Loan or (B) the maximum amount permitted by applicable
law, and shall not be subject to reduction below such amount through the
operation of a coinsurance, reduced rate contribution or similar clause;

 

(iii)                               Each
Mortgage is a valid first lien on the mortgaged property and covered by an
attorney’s opinion of title acceptable to GNMA, FNMA or FHLMC, as applicable,
or by a policy of title insurance on a standard ALTA or similar lender’s form
in favor of Seller and its assigns, subject only to exceptions permitted by the
GNMA, FNMA or FHLMC Program, as applicable. 
Seller shall hold in trust for Participant such policy of title insurance,
and, upon request of Participant, shall immediately deliver such policy to
Participant or to the Custodian on behalf of Participant;

 

(iv)                              To
the extent applicable, such Mortgage Loan is either insured by the FHA under
the National Housing Act, guaranteed by the VA under the Servicemen’s Readjustment
Act of 1944 or is otherwise insured or guaranteed in accordance with the
requirements of the GNMA, FNMA or FHLMC Program, as applicable, and is not
subject to any defect that would prevent recovery in full or in part against
the FHA, VA or other insurer or guarantor, as the case may be;

 

(v)                                 Such
Mortgage Loan is in Strict Compliance with the requirements and specifications
(including, without limitation, all representations and warranties required in
respect thereof) set forth in the GNMA Guide, FNMA Guide or FHLMC Guide, as
applicable;

 

(vi)                              Such
Mortgage Loan conforms in all respects with all requirements of the Takeout
Commitment applicable to the Security to be backed by such Mortgage Loan; and

 

(vii)                           To
the extent applicable, each Mortgage Loan is being serviced by a mortgage
sub-servicer having all Agency Approvals necessary to make such Mortgage Loan
eligible to back a GNMA, FNMA or FHLMC Security, as applicable.

 

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.

 

19

 

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

 

(a)                                  Seller
shall deliver to Participant:

 

(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 Participant) of an independent
public accountant of national standing acceptable to Participant;

 

(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
Participant, 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 Participant) as presenting fairly
the financial position and results of operations of 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;

 

(iii)                               Within
20 days after the end of each of the first eleven months 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 operation of 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 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 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

 

20

 

material adverse
effect on (A) the validity or enforceability of this Agreement, (B) the
financial condition or business operations of Seller, (C) the Agency Approvals
of Seller or (D) 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;

 

(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 Participant
may request;

 

(ix)                                Prior
to the date of any purchase of a Participation Certificate by Participant
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;

 

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

 

21

 

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

 

(xii)                             The
consideration received by the Seller upon the sale of each Participation
Certificate will constitute reasonably equivalent value and fair consideration
for the ownership interest in the Mortgage Loans evidenced by that
Participation Certificate;

 

(xiii)                          The
Seller will be solvent at all relevant times prior to, and will not be rendered
insolvent by, any sale of a Participation Certificate to the Participant; and

 

(xiv)                         The
Seller will not sell any Participation Certificate to the Participant with any
intent to hinder, delay or defraud any of the Seller’s creditors.

 

(b)                                 Seller
shall take all necessary action to maintain its Agency Approvals at all times
during the term of this Agreement.  If,
for any reason, Seller ceases to maintain such Agency Approvals, Seller shall
so notify Participant immediately.

 

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

 

(d)                                 Seller
shall, upon request of Participant, promptly execute and deliver to Participant
all such other and further documents and instruments of transfer, conveyance
and assignment, and shall take such other action as Participant may require
more effectively to transfer, convey, assign to and vest in Participant and to
put Participant 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.

 

(e)                                  Seller
shall ensure that all proceeds paid by a Takeout Investor resulting from
Takeout Commitments that relate to any Security backed by Mortgage Loans
evidenced by a Participation Certificate purchased by Participant pursuant to
the terms of this Agreement are paid to Participant by such Takeout Investor in
accordance with Participant’s wire instructions to Seller.

 

(f)                                    The
Seller acknowledges that the Participant 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
Participant 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 Participant a knowledgeable
financial or accounting officer for the purpose of answering questions
respecting the mortgage files and Mortgage Loans.  The

 

22

 

Seller and Participant
further agree that all out-of-pocket costs and expenses incurred by the
Participant in connection with the Participant’s activities pursuant to this
Section 9(f) shall be paid for by the Seller, provided, that, Participant
shall pay any such costs if such due diligence is conducted more often than two
(2) times in a calendar year.

 

(g)                                 Seller
shall provide Participant 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 Participant 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
Participant.

 

(h)                                 On
the second Business Day of each month, Seller
shall furnish to Participant or shall cause the Servicer to furnish to
Participant, a remittance report, in hard copy and electronic format acceptable
to Participant, 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;

 

(v)                                 Mortgage Loan balance;

 

(vi)                              Delinquency
status;

 

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

 

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

 

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

 

(i)                                     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.

 

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

 

23

 

(k)                                  Unless
Seller shall have given Participant at least 30 days’ prior written notice,
Seller shall not (i) change its name, organizational identity or jurisdiction
of organization or (ii) merge with or into, acquire all or substantially all of
the assets of, or transfer all or substantially all of its assets to, any other
person or entity.

 

Section 10.                                      Confidentiality.  Seller hereby acknowledges and agrees that
(1) all written or computer-readable information provided by Participant
to Seller regarding Participant and (2) the terms of this Agreement (the “Participant
Confidential Information”), shall be kept confidential and each of their
respective contents will not be divulged to any party without Participant’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 Participant Confidential Information is
in the public domain other than due to a breach of this covenant, or
(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 Participant and delivered to the other, provided, that no
termination will affect the obligations hereunder as to any of the
Participation Certificates then outstanding hereunder or any Security not yet
delivered to the related Takeout Investor.

 

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 Takeout Investor
and Custodian.  Except as provided in
Section 6, no rights or obligations created by this Agreement may be
assigned by either party hereto without the prior written consent of the other
party.

 

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

 

24

 

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, Participant or
Custodian, or to such other address as any party shall give notice to the other
parties pursuant to this Section 17. 
Notices to any Assignee shall be given to such address as the Assignee
shall provide to Seller in writing.

 

Section 18.                                      Entire
Agreement.  This Agreement,
the Participation Certificates 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, a Participation Certificate
or a Takeout Commitment, Seller agrees to pay the reasonable attorneys’ fees
and expenses of Participant, and/or, when applicable, any Assignee, incurred in
the enforcement of the Agreement 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 17.

 

Section 21.                                      Submission to
Jurisdiction; Waivers.

 

EACH
PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY:

 

(i)                                    SUBMITS
FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
MORTGAGE LOAN PARTICIPATION AGREEMENT AND THE OTHER DOCUMENTS, OR FOR
RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE
EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE
FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND APPELLATE COURTS FROM ANY THEREOF;

 

(ii)                                CONSENTS
THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND, TO THE
EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE
TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH
ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO
PLEAD OR CLAIM THE SAME;

 

25

 

(iii)                            AGREES
THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY
MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY
SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH ON THE COVER
PAGE HERETO OR AT SUCH OTHER ADDRESS OF WHICH PURCHASER SHALL HAVE BEEN
NOTIFIED;

 

(iv)                               AGREES
THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER
JURISDICTION; AND

 

(v)                                   WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS MORTGAGE
LOAN PARTICIPATION AGREEMENT, ANY OTHER DOCUMENT RELATING THERETO OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

Section 22.                                      Construction.  The headings in this Agreement are for
convenience only and are not intended to influence its construction.  References to Sections, Exhibits and Annexes
in this Agreement are to the Sections of and Exhibits and Annexes to this
Agreement.  The Exhibits and Annexes are
part of this Agreement, and are incorporated herein by reference.  In this Agreement, 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.

 

[SIGNATURES COMMENCE ON
THE FOLLOWING PAGE]

 

26

 

IN WITNESS WHEREOF,
Participant 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:

  	
  Managing 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

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