BANK OF AMERICA, NATIONAL ASSOCIATION
Purchaser,
CHASE HOME FINANCE LLC,
Seller
and
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
Servicer
MORTGAGE LOAN PURCHASE, WARRANTIES AND SERVICING AGREEMENT
Dated as of May 1, 2005
Whole Loan Series 2005 WL-L
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms.............................................................1
ARTICLE II
SERVICING OF MORTGAGE LOANS; RECORD TITLE AND POSSESSION OF
MORTGAGE FILES; BOOKS AND RECORDS; CUSTODIAL AGREEMENT;
DELIVERY OF MORTGAGE LOAN DOCUMENTS
Section 2.01. Agreement to Purchase....................................................12
Section 2.02. Purchase Price...........................................................12
Section 2.03. Servicing of Mortgage Loans..............................................13
Section 2.04. Record Title and Possession of Mortgage Files;
Maintenance of Servicing Files..........................................13
Section 2.05. Books and Records........................................................14
Section 2.06. Transfer of Mortgage Loans...............................................15
Section 2.07. Delivery of Mortgage Loan Documents......................................15
Section 2.08. Quality Control Procedures...............................................17
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER; REPURCHASE;
REVIEW OF MORTGAGE LOANS
Section 3.01. Representations and Warranties of the Seller.............................17
Section 3.02. Representations and Warranties as to Individual Mortgage Loans...........19
Section 3.03. Repurchase; Substitution.................................................29
ARTICLE IV
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 4.01. Seller to Act as Servicer................................................31
Section 4.02. Collection of Mortgage Loan Payments.....................................34
Section 4.03. Realization Upon Defaulted Mortgage Loans................................34
Section 4.04. Establishment of Custodial Accounts; Deposits in Custodial Accounts......35
Section 4.05. Permitted Withdrawals From the Custodial Account.........................36
Section 4.06. Establishment of Escrow Accounts; Deposits in Escrow Accounts............37
Section 4.07. Permitted Withdrawals From Escrow Account................................38
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Section 4.08. Payment of Taxes, Insurance and Other Charges; Maintenance
of Primary Mortgage Insurance Policies; Collections Thereunder..........39
Section 4.09. Transfer of Accounts.....................................................40
Section 4.10. Maintenance of Hazard Insurance..........................................40
Section 4.11. Maintenance of Mortgage Impairment Insurance Policy......................41
Section 4.12. Fidelity Bond, Errors and Omissions Insurance............................41
Section 4.13. Title, Management and Disposition of REO Property........................42
Section 4.14. Notification of Maturity Date............................................44
Section 4.15. Reports of Foreclosures and Abandonments of Mortgaged Property...........44
Section 4.16. Inspections..............................................................44
Section 4.17. Restoration of Mortgaged Property........................................44
Section 4.18. Security Measures/Compliance with Safeguarding Customer
Information Requirements................................................45
Section 4.19. Disaster Recovery/Business Continuity Plan...............................45
Section 4.20. Privacy/Confidential Information.........................................45
ARTICLE V
PAYMENTS TO THE PURCHASER
Section 5.01. Distributions............................................................46
Section 5.02. Statements to the Purchaser..............................................47
Section 5.03. Monthly Advances by the Seller...........................................47
Section 5.04. Liquidation Reports......................................................48
Section 5.05. Automated Servicing Systems..............................................48
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01. Assumption Agreements....................................................48
Section 6.02. Satisfaction of Mortgages and Release of Mortgage Files..................49
Section 6.03. Servicing Compensation...................................................50
Section 6.04. Annual Statement as to Compliance........................................50
Section 6.05. Annual Independent Certified Public Accountants' Servicing Report.......51
Section 6.06. Purchaser's Right to Examine Seller Records..............................52
Section 6.07. Compliance with REMIC Provisions.........................................52
ARTICLE VII
SELLER TO COOPERATE
Section 7.01. Seller Shall Provide Information as Reasonably Required..................52
Section 7.02. Cooperation with Third-party Service Providers...........................53
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ARTICLE VIII
THE SELLER
Section 8.01. Indemnification; Third Party Claims......................................54
Section 8.02. Merger or Consolidation of the Seller....................................54
Section 8.03. Limitation on Liability of the Seller and Others.........................55
Section 8.04. Seller Not to Assign or Resign...........................................55
Section 8.05. No Transfer of Servicing.................................................55
ARTICLE IX
DEFAULT
Section 9.01. Events of Default........................................................56
Section 9.02. Waiver of Defaults.......................................................57
ARTICLE X
TERMINATION
Section 10.01. Termination..............................................................58
Section 10.02. Termination Without Cause................................................58
ARTICLE XI
RECONSTITUTION OF MORTGAGE LOANS
Section 11.01. Reconstitution of Mortgage Loans.........................................58
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Successor to the Seller..................................................60
Section 12.02. Amendment................................................................61
Section 12.03. Recordation of Agreement.................................................61
Section 12.04. Governing Law............................................................61
Section 12.05. Notices..................................................................61
Section 12.06. Severability of Provisions...............................................62
Section 12.07. Exhibits.................................................................62
Section 12.08. General Interpretive Principles..........................................63
Section 12.09. Reproduction of Documents................................................63
Section 12.10. Confidentiality of Information...........................................63
Section 12.11. Recordation of Assignments of Mortgage...................................64
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Section 12.12. Assignment by Purchaser..................................................64
Section 12.13. No Partnership...........................................................64
Section 12.14. Execution; Successors and Assigns........................................65
Section 12.15. Entire Agreement.........................................................65
Section 12.16. No Solicitation..........................................................65
Section 12.17. Further Agreements.......................................................65
Section 12.18. Closing..................................................................65
Section 12.19. Costs....................................................................66
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EXHIBITS
A Contents of Mortgage File
B Custodial Account Letter Agreement
C Escrow Account Letter Agreement
D Form of Assignment and Assumption
E Pool Statistics
F Mortgage Loan Schedule
G Request for Release of Documents and Receipt
H Form of SEC Certification
I Monthly Remittance Advice
J Servicer Requirements
SCHEDULES
A Purchase Price and Terms Letter dated as of March 24, 2005.
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This is a Mortgage Loan Purchase, Warranties and Servicing Agreement,
dated as May 1, 2005, and is executed between Bank of America, National
Association, as Purchaser (the "Purchaser"), and Chase Home Finance LLC, as
Seller (the "Seller"), and JPMorgan Chase Bank, National Association as Servicer
(the "Servicer").
WITNESSETH :
WHEREAS, the Purchaser has heretofore agreed to purchase from the Seller
and the Seller has heretofore agreed to sell to the Purchaser certain Mortgage
Loans, exclusive of the servicing rights associated with such Mortgage Loans,
pursuant to the terms of a letter agreement dated as of March 24, 2005, by and
between the Seller and the Purchaser (the "Purchase Price and Terms Letter").
WHEREAS, each of the Mortgage Loans is secured by a mortgage, deed of
trust or other security instrument creating a first lien on a residential
dwelling located in the jurisdiction indicated on the Mortgage Loan Schedule,
which is annexed hereto as Exhibit F; and
WHEREAS, the Purchaser and the Seller wish to prescribe the
representations and warranties of the Seller with respect to itself and the
Mortgage Loans and the management, servicing, transfer and control of the
Mortgage Loans;
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the Purchaser and the Seller agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms.
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings specified in
this Article:
Accepted Servicing Practices: With respect to any Mortgage Loan, those
mortgage servicing practices (including collection procedures) of prudent
mortgage banking institutions which service mortgage loans of the same type as
such Mortgage Loan in the jurisdiction where the related Mortgaged Property is
located, that comply with applicable federal, state and local laws and which are
in accordance with FNMA servicing practices and procedures, for MBS pool
mortgages, as defined in the FNMA Guides including future updates.
Adjustment Date: As to each ARM Mortgage Loan, the date on which the
Mortgage Interest Rate is adjusted in accordance with the terms of the released
Mortgage Note and Mortgage.
Agreement: This Mortgage Loan Purchase, Warranties and Servicing Agreement
including all exhibits hereto, amendments hereof and supplements hereto.
ALTA: The American Land Title Association or any successor thereto.
Applicable Requirements: Shall mean and include with respect to the
Mortgage Loans: (i) all contractual obligations of Seller, and the Originator
and any Prior Servicers including, without limitation, those contractual
obligations contained in this Agreement, in any agreement with any insurer or in
the Mortgage Loan Documents; (ii) all applicable federal, state and local legal
and regulatory requirements (including statutes, rules, regulations and
ordinances) binding upon Seller, the Originator and any Prior Servicer; (iii)
all other applicable requirements and guidelines of each governmental agency,
board, commission, instrumentality and other governmental body or office having
jurisdiction, including without limitation those of any insurer; (iv) all other
applicable judicial and administrative judgments, orders, stipulations, awards,
writs and injunctions; and (v) Accepted Servicing Practices.
Appraised Value: With respect to any Mortgaged Property, the lesser of (
i) the value thereof as determined by an appraisal made for the Originator of
the Mortgage Loan at the time of origination of the Mortgage Loan and (ii) the
purchase price paid for the related Mortgaged Property by the Mortgagor with the
proceeds of the Mortgage Loan, provided, however, in the case of a Refinanced
Mortgage Loan, such value of the Mortgaged Property is based solely upon the
value determined by an appraisal made for the originator of such Refinanced
Mortgage Loan at the time of origination of such Refinanced Mortgage Loan.
ARM Mortgage Loan: A Mortgage Loan purchased pursuant to this Agreement
the Mortgage Interest Rate of which is adjusted from time to time in accordance
with the terms of the related Mortgage Note.
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale or transfer of the Mortgage Loan.
Assignment and Assumption: An assignment and assumption agreement in the
form of Exhibit D hereto.
BIF: The Bank Insurance Fund, or any successor thereto.
Business Day: Any day other than: (i) a Saturday or Sunday, or (ii) a
legal holiday in the State of New York, or (iii) a day on which banks in the
State of New York are authorized or obligated by law or executive order to be
closed.
Closing Date: May 25, 2005, or such other date as shall be mutually agreed
upon by the parties hereto.
Code: The Internal Revenue Code of 1986, as amended, or any successor
statute thereto.
Condemnation Proceeds: All awards or settlements in respect of a Mortgaged
Property, whether permanent or temporary, partial or entire, by exercise of the
power of eminent domain or
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condemnation, to the extent not required to be released to a Mortgagor in
accordance with the terms of the related Mortgage Loan Documents.
Consumer Information: Information including but not limited to all
personal information about the Mortgagors that is supplied to the Seller on
behalf of the Mortgagors.
Convertible Mortgage Loan: A Mortgage Loan that by its terms and subject
to certain conditions allows the Mortgagor to convert the adjustable Mortgage
Interest Rate thereon to a fixed Mortgage Interest Rate.
Co-op Lease: With respect to a Co-op Loan, the lease with respect to a
dwelling unit occupied by the Mortgagor and relating to the stock allocated to
the related dwelling unit.
Co-op Loan: A Mortgage Loan secured by the pledge of stock allocated to a
dwelling unit in a residential cooperative housing corporation and a collateral
assignment of the related Co-op Lease.
Custodial Account: Each separate demand account or accounts created and
maintained pursuant to Section 4.04 which shall be entitled "Chase Home Finance
LLC In Trust For Bank of America, National Association owner of various whole
loan series P&I" and shall be established in an Eligible Account, in the name of
the Person that is the Purchaser with respect to the related Mortgage Loans.
Cut-off Date: May 1, 2005.
Determination Date: The 15th day (or if such 15th day is not a Business
Day, the Business Day immediately preceding such 15th day) of the month of the
related Remittance Date.
Due Date: The day of the month on which the Monthly Payment is due on a
Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to any Remittance Date, the period commencing on
the second day of the month preceding the month of such Remittance Date and
ending on the first day of the month of such Remittance Date.
Eligible Account: An account established and maintained: (a) within FDIC
insured accounts (or other accounts with comparable insurance coverage
acceptable to the Rating Agencies) created, maintained and monitored by the
Seller so that all funds deposited therein are fully insured, (b) with the
corporate trust department of a financial institution assigned one of the two
highest long-term debt ratings and the highest short term debt rating of each
Rating Agency, and, if ownership of the Mortgage Loans is evidenced by mortgaged
backed securities, the equivalent ratings of the Rating Agencies, and held such
that the rights of the Purchaser and the owner of the Mortgage Loans shall be
fully protected against the claims of any creditors of the Seller and of any
creditors or depositors of the institution in which such account is maintained
and (c) in a separate non-trust account without FDIC or other insurance in an
Eligible Institution. In the event that a Custodial Account is established
pursuant to clause (b) or (c) of the preceding sentence, the Seller shall
provide the Purchaser with written notice on the Business Day
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following the date on which the applicable institution fails to meet the
applicable ratings requirements.
Eligible Institution: An institution having (i) the highest short-term
debt rating, and one of the two highest long-term debt ratings of each Rating
Agency; (ii) with respect to any Custodial Account, an unsecured long-term debt
rating of at least one of the two highest unsecured long-term debt ratings of
the Rating Agencies; or (iii) acceptable as a depository to FNMA or FHLMC under
their respective Guides.
Equity Take-Out Refinanced Mortgage Loan: A Refinanced Mortgage Loan the
proceeds of which were in excess of the outstanding principal balance of the
existing mortgage loan.
Escrow Account: Each separate trust account or accounts created and
maintained pursuant to Section 4.06 which shall be entitled "Chase Home Finance
LLC In Trust For Bank of America, National Association owner of various whole
loan series and various mortgagors T&I" and shall be established in an Eligible
Account, in the name of the Person that is the Purchaser with respect to the
related Mortgage Loans.
Escrow Payments: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.
Event of Default: Any one of the conditions or circumstances enumerated in
Section 9.01.
FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, commonly referred to as
▇▇▇▇▇▇▇ Mac, or any successor thereto.
FHLMC Guide: The FHLMC Single Family Seller/Servicer Guide and all
amendments or additions thereto.
Fidelity Bond: A fidelity bond to be maintained by the Seller pursuant to
Section 4.12.
FIRREA: The Financial Institutions Reform, Recovery, and Enforcement Act
of 1989.
First Remittance Date: June 18, 2005, or if such day is not a Business
Day, the first Business Day immediately preceding such date.
FNMA: The Federal National Mortgage Association, commonly referred to as
▇▇▇▇▇▇ Mae, or any successor thereto.
FNMA Guides: The FNMA Sellers' Guide and the FNMA Servicers' Guide and all
amendments or additions thereto.
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GAAP: Generally accepted accounting principles, consistently applied.
Gross Margin: With respect to each ARM Mortgage Loan, the fixed percentage
amount set forth in each related Mortgage Note and Mortgage which is added to
the Index in order to determine on each Adjustment Date the related Mortgage
Interest Rate.
Guidelines: The FNMA Sellers' Guide, the FNMA Servicers' Guide and the
FHLMC Single Family Seller/Servicer Guide.
HUD: The United States Department of Housing and Urban Development or any
successor thereto.
Index: With respect to each ARM Mortgage Loan, the index as provided in
the related Mortgage Note.
Initial Cap Rate: As to each ARM Mortgage loan, the maximum increase or
decrease in the Mortgage Interest Rate on the first Adjustment Date as provided
in the related Mortgage Note.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Lifetime Rate Cap: As to each ARM Mortgage Loan, the maximum Mortgage
Interest Rate which shall be as permitted in accordance with the provisions of
the related Mortgage Note.
Liquidation Proceeds: Cash received in connection with the liquidation of
a defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or the sale of the
related Mortgaged Property if the Mortgaged Property is acquired in satisfaction
of the Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the ratio
of the original outstanding principal amount of the Mortgage Loan, to (i) the
Appraised Value of the Mortgaged Property at origination with respect to a
Refinanced Mortgage Loan, and (ii) the lesser of the Appraised Value of the
Mortgaged Property at origination or the purchase price of the Mortgaged
Property with respect to all other Mortgage Loans.
Manufactured Home: A single family residential unit that is constructed in
a factory in sections in accordance with the Federal Manufactured Home
Construction and Safety Standards adopted on July 15, 1976, by the Department of
Housing and Urban Development ("HUD Code"), as amended in 2000, which preempts
state and local building codes. Each unit is identified by the presence of a HUD
Plate/Compliance Certificate label. The sections are then transported to the
site and joined together and affixed to a pre-built permanent foundation (which
satisfies the manufacturer's requirements and all state, county, and local
building codes and regulations). The manufactured home is built on a
non-removable, permanent frame chassis that supports the complete unit of walls,
floors, and roof. The underneath part of the home may have running gear (wheels,
axles, and brakes) that enable it to be transported to the permanent site.
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The wheels and hitch are removed prior to anchoring the unit to the permanent
foundation. The manufactured home must be classified as real estate and taxed
accordingly.
Monthly Advance: The aggregate of the advances made by the Seller on any
Remittance Date pursuant to Section 5.03.
Monthly Payment: The scheduled monthly payment of principal and interest
on a Mortgage Loan which is payable by a Mortgagor under the related Mortgage
Note.
Monthly Remittance Advice: The report delivered by the Seller to the
Purchaser pursuant to Section 5.02 of this Agreement in the form annexed hereto
as Exhibit I.
Mortgage: With respect to a Mortgage Loan that is not a Co-op Loan, the
mortgage, deed of trust or other instrument securing a Mortgage Note which
creates a first lien on an unsubordinated estate in fee simple in real property
securing the Mortgage Note. With respect to a Co-op Loan, the security agreement
creating a security interest in the stock allocated to a dwelling unit in the
residential cooperative housing corporation that was pledged to secure such
Co-op Loan and the related Co-op Lease.
Mortgage File: The mortgage documents pertaining to a particular Mortgage
Loan which are specified in Exhibit A hereto and any additional documents
required to be added to the Mortgage File pursuant to this Agreement.
Mortgage Impairment Insurance Policy: A mortgage impairment or blanket
hazard insurance policy as required by Section 4.11.
Mortgage Interest Rate: With respect to each Mortgage Loan, the annual
rate at which interest accrues on such Mortgage Loan in accordance with the
provisions of the related Mortgage Note, including, but not limited to, the
limitations on such interest rate imposed with respect to each ARM Mortgage Loan
by the Initial Rate Cap, the Periodic Rate Cap and the Lifetime Rate Cap.
Mortgage Loan: An individual Mortgage Loan which is the subject of this
Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the Mortgage Loan Schedule, which Mortgage Loan includes
without limitation the Mortgage File, the Monthly Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
REO Disposition Proceeds, and all other rights, benefits, proceeds and
obligations arising from or in connection with such Mortgage Loan, excluding
replaced or repurchased Mortgage Loans.
Mortgage Loan Documents: The documents listed in numbers 1 through 9, 16
and 23 on Exhibit A.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Purchaser, which shall be equal to the
Mortgage Interest Rate minus the Servicing Fee Rate.
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Mortgage Loan Schedule: The schedule of Mortgage Loans annexed hereto as
Exhibit F, such schedule setting forth the following information with respect to
each Mortgage Loan in the related Mortgage Loan Package:
(1) the Seller's Mortgage Loan identifying number;
(2) the Mortgagor's name;
(3) the street address of the Mortgaged Property including the city,
state and zip code;
(4) a code indicating whether the Mortgaged Property is owner-occupied,
a second home or an investor property;
(5) the type of residential property constituting the Mortgaged
Property;
(6) the original months to maturity or the remaining months to maturity
from the Cut-off Date, in any case based on the original amortization schedule
and, if different, the maturity expressed in the same manner but based on the
actual amortization schedule;
(7) the Loan-to-Value Ratio at origination;
(8) the Mortgage Interest Rate at the time of origination;
(9) the stated maturity date;
(10) the amount of the Monthly Payment as of the Cut-off Date;
(11) the original principal amount of the Mortgage Loan;
(12) the Mortgage Interest Rate at time of origination;
(13) the Mortgage Interest Rate as of the related Cut-off Date;
(14) the Index and payment and interest rate adjustment frequencies;
(15) with respect to each ARM Mortgage Loan, the initial Adjustment Date;
(16) with respect to each ARM Mortgage Loan, the next Adjustment Date;
(17) with respect to each ARM Mortgage Loan, the Gross Margin;
(18) with respect to each ARM Mortgage Loan, the minimum Mortgage
Interest Rate under the terms of the Mortgage Note;
(19) with respect to each ARM Mortgage Loan, the maximum Mortgage
Interest Rate under the terms of the Mortgage Note;
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(20) with respect to each ARM Mortgage Loan, the Mortgage Interest Rate
adjustment cap at the initial Interest Rate Adjustment Date;
(21) with respect to each ARM Mortgage Loan, the Mortgage Interest Rate
adjustment cap at all subsequent Interest Rate Adjustment Dates;
(22) with respect to each ARM Mortgage Loan, the original principal
amount of Mortgage Loan;
(23) with respect to each ARM Mortgage Loan, the principal balance of the
Mortgage Loan as of the opening of business on the related Cut-off Date, after
deduction of payments of principal due on or before the related Cut-off Date
whether or not collected;
(24) the principal balance of the Mortgage Loan as of the opening of
business on the Cut-off Date, after deduction of payments of principal due on or
before the Cut-off Date whether or not collected;
(25) a code indicating the purpose of the Mortgage Loan (i.e., purchase,
rate and term refinance, equity take-out refinance);
(26) a code indicating the documentation style (i.e. full, alternative or
reduced);
(27) the number of times during the twelve (12) month period preceding
the Closing Date that any Monthly Payment has been received more than thirty
(30) days after its Due Date;
(28) the date on which the first payment is or was due;
(29) a code indicating whether or not the Mortgage Loan is the subject of
Primary Mortgage Insurance and, if so, the name of the policy issuer; and
(30) the Appraisal Value.
With respect to the Mortgage Loans in the aggregate, the Mortgage Loan
Schedule shall set forth the following information, as of the Cut-off Date:
(1) the number of Mortgage Loans;
(2) the current aggregate outstanding principal balance of the Mortgage
Loans;
(3) the weighted average Mortgage Interest Rate of the Mortgage Loans;
and
(4) the weighted average maturity of the Mortgage Loans;
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
Mortgaged Property: With respect to a Mortgage Loan that is not a Co-op
Loan, the underlying real property securing repayment of a Mortgage Note,
consisting of a single parcel of
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real estate considered to be real estate under the laws of the State in which
such real property is located, which may include condominium units and planned
unit developments, improved by a residential dwelling; except that with respect
to real property located in jurisdictions in which the use of leasehold estates
for residential properties is a widely-accepted practice, a leasehold estate of
the Mortgagor, the term of which is equal to or longer than the term of the
Mortgage. With respect to a Co-op Loan, the stock allocated to a dwelling unit
in the residential cooperative housing corporation that was pledged to secure
such Co-op Loan and the related Co-op Lease.
Mortgagor: The obligor on a Mortgage Note.
Negative Amortization: A gradual increase in the mortgage debt that occurs
when the monthly fixed installment is not sufficient for full application to
both principal and interest. The interest shortage is added to the unpaid
principal balance to create "negative" amortization.
OCC: Office of the Comptroller of the Currency, its successors and
assigns.
Officers' Certificate: A certificate signed by the Chairman of the Board,
the Vice Chairman of the Board, the President, a Senior Vice President or a Vice
President and by the Treasurer or the Secretary or one of the Assistant
Treasurers or Assistant Secretaries of the Seller, and delivered to the
Purchaser as required by this Agreement.
Opinion of Counsel: A written Opinion of Counsel, who may be an employee
of the party on behalf of whom the opinion is being given, reasonably acceptable
to the Purchaser, provided that any Opinion of Counsel relating to (a)
qualification of the Mortgage Loans in a REMIC or (b) compliance with the REMIC
Provisions, must be an Opinion of Counsel who (i) is in fact independent of the
Servicer of the Mortgage Loans, (ii) does not have any material direct or
indirect financial interest in the Servicer of the Mortgage Loans or in an
affiliate of either and (iii) is not connected with the Servicer of the Mortgage
Loans as an officer, employee, director or person performing similar functions.
The cost of the preparation and delivery of any such independent opinion
requested by the Trustee shall be an expense of the Trust Fund unless Purchaser
decides, in its own discretion, to bear such expense for the Trust Fund, in
which case any such cost will be borne by Purchaser.
Originator: With respect to any Mortgage Loan, the entity(ies) that (i)
took the Mortgagor's loan application (ii) processed the Mortgagor's loan
application, or (iii) closed and/or funded the Mortgagor's Mortgage Loan.
Pass-Through Transfer: Either (i) a Securitization or (ii) a synthetic
securitization in which some or all of the Mortgage Loans are included as part
of the reference portfolio relating to such securitization.
Payment Adjustment Date: As to each ARM Mortgage Loan, the date on which
an adjustment to the Monthly Payment on a Mortgage Note becomes effective.
Periodic Rate Cap: As to each Mortgage Loan, the maximum increase or
decrease in the Mortgage Interest Rate, or any Adjustment Date as provided in
the related Mortgage Note.
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Person: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Prepayment Interest Shortfall Amount: With respect to any Mortgage Loan
that is subject to a voluntary (not including discounted payoffs) Principal
Prepayment in full or in part during the related Principal Prepayment Period,
which Principal Prepayment was applied to such Mortgage Loan prior to such
Mortgage Loan's Due Date in such related Principal Prepayment Period, the amount
of interest (net of the related Servicing Fee for Principal Prepayments in full
only) that would have accrued on the amount of such Principal Prepayment during
the period commencing on the date as of which such Principal Prepayment was
applied to such Mortgage Loan and ending on the last day of the Principal
Prepayment Period.
Primary Mortgage Insurance Policy: Each primary policy of mortgage
insurance represented to be in effect pursuant to the Mortgage Loan Schedule, or
any replacement policy therefor obtained by the Seller pursuant to Section 4.08
in each case, in a form acceptable to FNMA or FHLMC and issued by a Qualified
Insurer.
Prime Rate: The prime rate announced to be in effect from time to time as
published as the average rate in The Wall Street Journal (Northeast Edition).
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan full or partial which is received in advance of its scheduled Due
Date, including any prepayment penalty or premium thereon and which is not
accompanied by an amount of interest representing scheduled interest due on any
date or dates in any month or months subsequent to the month of prepayment.
Principal Prepayment Period: With respect to any Remittance Date, the
calendar month immediately preceding the month in which the related Remittance
Date occurs.
Prior Servicer: Any Person that was a servicer of any Mortgage Loan before
Seller became the Servicer of the Mortgage Loan, if applicable.
Purchase Price: As defined in Section 2.02.
Purchase Price and Terms Letter: As defined in the Recitals to this
Agreement.
Purchaser: Bank of America, National Association, its successors in
interest and assigns.
Qualified Appraiser: An appraiser, duly appointed by the Seller, who had
no interest, direct or indirect in the Mortgaged Property or in any loan made on
the security thereof, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and such appraiser and the appraisal made by
such appraiser both satisfy the requirements of Title XI of FIRREA and the
regulations promulgated thereunder, all as in effect on the date the Mortgage
Loan was originated.
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Qualified Insurer: An insurance company duly qualified as such under the
laws of the states in which the Mortgaged Properties are located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided, approved as an insurer by FNMA and
FHLMC.
Rating Agencies: Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies Inc., ▇▇▇▇▇'▇ Investors Service, Inc. or, in the event
that some or all ownership of the Mortgage Loans is evidenced by mortgage-backed
securities, the nationally recognized rating agencies issuing ratings with
respect to such securities, if any.
Reconstitution Agreement: Any of the agreement or agreements entered into
by the Purchaser and/or certain third parties, and if necessary the Seller, on
the Reconstitution Date or Dates with respect to any or all of the Mortgage
Loans conveyed hereunder, in connection with a Whole Loan Transfer, Agency
Transfer, or a Pass-Through Transfer as set forth in Section 11.01.
Reconstitution Date: The date or dates on which any or all of the Mortgage
Loans purchased pursuant to this Agreement shall be reconstituted as part of a
Whole Loan Transfer, Agency Transfer, or a Pass-Through Transfer pursuant to
Section 11.01.
Refinanced Mortgage Loan: A Mortgage Loan which was made to a Mortgagor
who owned the Mortgaged Property prior to the origination of such Mortgage Loan
and the proceeds of which were used in whole or part to satisfy an existing
mortgage.
Regulation X: HUD regulations implementing RESPA.
REMIC: A "real estate mortgage investment conduit," as such term is
defined in the Code.
REMIC Provisions: Provisions of the federal income tax law relating to a
REMIC, which appear at Section 860A through 860G of Subchapter M of Chapter 1,
Subtitle A of the Code, and related provisions, and regulations, rulings or
pronouncements promulgated thereunder, as the foregoing may be in affect from
time to time.
Remittance Date: The 18th day of any month, beginning with the First
Remittance Date, or if such 18th day is not a Business Day, the first Business
Day immediately preceding such 18th day.
REO Disposition: The final sale by the Seller of any REO Property.
REO Disposition Proceeds: Amounts received by the Seller in connection
with a related REO Disposition.
REO Property: A Mortgaged Property acquired by the Seller on behalf of the
Purchaser as described in Section 4.13.
Repurchase Price: During the first 365 days after the Closing Date, the
Repurchase Price shall be a price equal to the Purchase Price Percentage, as
defined in the Purchase Price and
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Terms Letter, times the outstanding principal balance of such Mortgage Loan,
plus accrued interest at the annual rate of interest borne on the Mortgage Note,
less the Servicing Fee. Beginning 365 days following the Closing Date, the
Repurchase Price shall be a price equal to par (100%) times the outstanding
principal balance of such Mortgage Loan, plus accrued interest at the annual
rate of interest borne on the Mortgage Note.
RESPA: The Real Estate Settlement Procedures Act, as amended.
SAIF: The Savings Association Insurance Fund, or any successor thereto.
Sarbanes Certifying Party: A Person who provides certification required
under the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 in connection with a Securitization or
other securitization transaction.
Securitization: The transfer of the Mortgage Loans to a trust formed as
part of a publicly issued and/or privately placed, rated securitization,
including the issuance of the related securities.
Seller's Officer's Certificate: A certificate signed by the Chairman of
the Board, President, any Vice President or Treasurer of Seller which shall (i)
identify the recorded document, (ii) state that the recorded document has not
been delivered to the Purchaser, or its designee, due solely to a delay by the
public recording office, and (iii) specify the date the Seller expects that the
applicable recorded document will be delivered to the Purchaser or its designee.
Servicer: JPMorgan Chase Bank, National Association, its successors and
assigns.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable attorneys' fees and
disbursements) incurred in the performance by the Seller of its servicing
obligations, including, but not limited to, the cost of (a) the preservation,
restoration and protection of the Mortgaged Property, (b) any enforcement,
administrative or judicial proceedings, or any legal work or advice specifically
related to servicing the Mortgage Loans, including but not limited to,
foreclosures, bankruptcies, condemnations, drug seizures, elections,
foreclosures by subordinate or superior lienholders, and other legal actions
incidental to the servicing of the Mortgage Loans (provided that such expenses
are reasonable and that the Seller specifies the Mortgage Loan(s) to which such
expenses relate, and provided further that any such enforcement, administrative
or judicial proceeding does not arise out of a breach of any representation,
warranty or covenant of the Seller hereunder), (c) the management and
liquidation of the Mortgaged Property if the Mortgaged Property is acquired in
full or partial satisfaction of the Mortgage, (d) taxes, assessments, water
rates, sewer rates and other charges which are or may become a lien upon the
Mortgaged Property, and Primary Mortgage Insurance Policy premiums and fire and
hazard insurance coverage, (e) any expenses reasonably sustained by the Seller,
as servicer, with respect to the liquidation of the Mortgaged Property in
accordance with the terms of this Agreement and (f) compliance with the
obligations under Section 4.08.
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Servicing Fee: With respect to each Mortgage Loan, the amount of the
annual fee the Purchaser shall pay to the Seller, which shall, for a period of
one full month, be equal to one-twelfth of the product of (a) the Servicing Fee
Rate and (b) the outstanding principal balance of such Mortgage Loan. Such fee
shall be payable monthly, computed on the basis of the same principal amount and
period respecting which any related interest payment on a Mortgage Loan is
computed. The obligation of the Purchaser to pay the Servicing Fee is limited
to, and the Servicing Fee is payable solely from, the interest portion
(including recoveries with respect to interest from Liquidation Proceeds, to the
extent permitted by Section 4.05) of such Monthly Payment collected by the
Seller, or as otherwise provided under Section 4.05.
Servicing Fee Rate: The Servicing Fee Rate shall be a rate per annum equal
to 25 basis points (0.25%).
Servicing File: With respect to each Mortgage Loan, the file retained by
the Seller consisting of originals of all documents in the Mortgage File which
are not delivered to the Purchaser or its designee and copies of the Mortgage
Loan Documents listed in Exhibit A, the originals of which are delivered to the
Purchaser or its designee pursuant to Section 2.04.
Servicing Officer: Any officer of the Seller involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name appears
on a list of servicing officers furnished by the Seller to the Purchaser upon
request, as such list may from time to time be amended.
Servicing Rights: Means the obligations to collect the payments for the
reduction of principal and application of interest, pay taxes and insurance,
remit collected payments, provide foreclosure services, provide full escrow
administration and otherwise administer the Mortgage Loans in accordance with
Applicable Requirements, together with the right to receive the servicing fee
income and any ancillary income arising from or connected to the Mortgage Loans.
Servicing Rights shall include retention of the related escrow or impound
accounts created and maintained by Seller with respect to the Mortgage Loans for
the deposit and retention of interest and principal, taxes, assessments or
grounds rents, hazard and mortgage insurance and other related escrow or
custodial items.
Stated Principal Balance: As to each Mortgage Loan as of any date of
determination, (i) the principal balance of such Mortgage Loan at the Cut-off
Date after giving effect to payments of principal due on or before such date,
whether or not received, minus (ii) all amounts previously distributed to the
Purchaser with respect to the Mortgage Loan representing payments or recoveries
of principal or advances in lieu thereof.
Subservicer: Any subservicer which is subservicing the Mortgage Loans
pursuant to a Subservicing Agreement. Any Subservicer shall meet the
qualifications set forth in Section 4.01.
Subservicing Agreement: An agreement between the Seller and a Subservicer
for the servicing of the Mortgage Loans.
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Trust: Any trust identified by Purchaser into which Mortgage Loans have
been placed as part of a reconstitution.
Trust Agreement: The agreement pursuant to which the Trust is created.
Trustee: Any trustee identified by Purchaser in connection with any Trust.
Trust Fund: Any trust fund identified by the Trustee with respect to a
Trust.
ARTICLE II
SERVICING OF MORTGAGE LOANS;
RECORD TITLE AND POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS; CUSTODIAL AGREEMENT;
DELIVERY OF MORTGAGE LOAN DOCUMENTS
Section 2.01. Agreement to Purchase.
The Seller agrees to sell and the Purchaser agrees to purchase the
Mortgage Loans, exclusive of the Servicing Rights associated therewith, having
an aggregate principal balance on the Cut-off Date in an amount as set forth in
the Mortgage Loan Schedule. The Seller shall deliver the Mortgage Loan Schedule
for the Mortgage Loans to be purchased on the Closing Date to the Purchaser at
least two (2) Business Days prior to the Closing Date.
Section 2.02. Purchase Price.
The Purchase Price for each Mortgage Loan shall be the percentage of par
as stated in the Purchase Price and Terms Letter (subject to adjustment as
provided therein), multiplied by the aggregate principal balance, as of the
Cut-off Date, of the Mortgage Loans listed on the attached Mortgage Loan
Schedule, after application of scheduled payments of principal due on or before
the Cut-off Date whether or not collected. The initial principal amount of the
Mortgage Loans shall be the aggregate principal balance of the Mortgage Loans,
so computed as of the Cut-off Date.
In addition to the Purchase Price as described above, the Purchaser shall
pay to the Seller, at closing, accrued interest on the Stated Principal Balance
of the Mortgage Loans as of the Cut-off Date at the weighted average Mortgage
Loan Remittance Rate of the Mortgage Loans.
The Purchase Price plus accrued interest as set forth in the preceding
paragraph shall be paid on the Closing Date by wire transfer of immediately
available funds.
The Purchaser shall be entitled to (1) all scheduled principal due after
the Cut-off Date, (2) all other recoveries of principal collected on or after
the Cut-off Date (provided, however, that all scheduled payments of principal
due on or before the Cut-off Date and collected by the Seller or any successor
servicer after the Cut-off Date shall belong to the Seller), and (3) all
payments of interest on the Mortgage Loans net of applicable Servicing Fees
(minus that portion of any such payment which is allocable to the period prior
to the Cut-off Date). The outstanding
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principal balance of each Mortgage Loan as of the Cut-off Date is determined
after application of payments of principal due on or before the Cut-off Date
whether or not collected, together with any unscheduled Principal Prepayments
collected prior to the Cut-off Date; provided, however, that payments of
scheduled principal and interest prepaid for a Due Date beyond the Cut-off Date
shall not be applied to the principal balance as of the Cut-off Date. Such
prepaid amounts shall be the property of the Purchaser. The Seller shall deposit
any such prepaid amounts into the Custodial Account, which account is
established for the benefit of the Purchaser for subsequent remittance by the
Seller to the Purchaser.
If, subsequent to the Closing Date, the amount on which the Purchase Price
with respect to a Mortgage Loan was based is found to be in error, or if, for
any other reason, the Purchase Price or such other amounts are found to be in
error, within ten (10) Business Days of the receipt of information sufficient to
provide notice that payment is due the party benefiting from the error shall pay
an amount sufficient to correct and reconcile the Purchase Price plus interest
thereon at an agreed upon market rate or such other amounts and shall provide a
reconciliation statement and such other documentation sufficient reasonably to
satisfy the other party concerning the accuracy of such reconciliation.
Section 2.03. Servicing of Mortgage Loans.
Simultaneously with the execution and delivery of this Agreement, the
Seller does hereby agree to service the Mortgage Loans listed on the Mortgage
Loan Schedule subject to the terms of this Agreement. The rights of the
Purchaser to receive payments with respect to the related Mortgage Loans shall
be as set forth in this Agreement.
Section 2.04. Record Title and Possession of Mortgage Files; Maintenance
of Servicing Files.
As of the Closing Date, the Seller shall sell, transfer, assign, set over
and convey to the Purchaser, without recourse, and the Seller hereby
acknowledges that as of the Closing Date the Purchaser shall have, subject to
the terms of this Agreement, all of the right, title and interest of the Seller
in and to the Mortgage Loans. The delivery of the Mortgage Files on the Closing
Date shall be at the expense of the Seller. The Seller shall maintain a
Servicing File consisting of a copy of the contents of each Mortgage File and
the originals of the documents in each Mortgage File not delivered to the
Purchaser or its designee. The Servicing File shall contain all documents
necessary to service the Mortgage Loans. The possession of each Servicing File
by the Seller is at the will of the Purchaser, for the sole purpose of servicing
the related Mortgage Loan, and such retention and possession by the Seller is in
a custodial capacity only. From the Closing Date, the ownership of each Mortgage
Loan, including the Mortgage Note, the Mortgage, the contents of the related
Mortgage File and all rights, benefits, proceeds and obligations arising
therefrom or in connection therewith, shall be vested in the Purchaser. All
rights arising out of the Mortgage Loans including, but not limited to, all
funds received on or in connection with the Mortgage Loans and all records or
documents with respect to the Mortgage Loans prepared by or which come into the
possession of the Seller shall be received and held by the Seller in trust for
the benefit of the Purchaser as the owner of the Mortgage Loans. Any portion of
the Mortgage Files retained by the Seller shall be appropriately identified in
the Seller's computer system to clearly
15
reflect the ownership of the Mortgage Loans by the Purchaser. The Seller shall
release its custody of the contents of the Mortgage Files only in accordance
with written instructions of the Purchaser, except when such release is required
as incidental to the Seller's servicing of the Mortgage Loans or is in
connection with a repurchase of any Mortgage Loan or Loans with respect thereto
pursuant to this Agreement, such written instructions shall not be required.
Section 2.05. Books and Records.
The sale of each Mortgage Loan shall be reflected on the Seller's balance
sheet and other financial statements as a sale of assets by the Seller. The
Seller shall be responsible for maintaining, and shall maintain, a complete set
of books and records for the Mortgage Loans which shall be appropriately
identified in the Seller's computer system to clearly reflect the ownership of
the Mortgage Loan by the Purchaser. In particular, the Seller shall maintain in
its possession, available for inspection by the Purchaser, or its designee and
shall deliver to the Purchaser upon demand, evidence of compliance with all
federal, state and local laws, rules and regulations, and requirements of FNMA
or FHLMC, as applicable, including but not limited to documentation as to the
method used in determining the applicability of the provisions of the Flood
Disaster Protection Act of 1973, as amended, to the Mortgaged Property,
documentation evidencing insurance coverage and eligibility of any condominium
project for approval by Seller and periodic inspection reports as required by
Section 4.13. To the extent that original documents are not required for
purposes of realization of Liquidation Proceeds or Insurance Proceeds, documents
maintained by the Seller may be in the form of microfilm or microfiche or such
other reliable means of recreating original documents, including but not limited
to, optical imagery techniques so long as the Seller complies with the
requirements of the FNMA Guides.
The Seller shall maintain with respect to each Mortgage Loan and shall
make available for inspection by any Purchaser or its designee the related
Servicing File during the time the Purchaser retains ownership of a Mortgage
Loan and thereafter in accordance with applicable laws and regulations.
In addition to the foregoing, Seller shall provide to any supervisory
agents or examiners that regulate Purchaser, including but not limited to, the
Office of the Comptroller of the Currency ("OCC") and other comparable
regulatory authorities supervising the Purchaser and other similar entities,
access, during normal business hours, upon reasonable advance notice to Seller
and without charge to Purchaser or such supervisory agents or examiners, to any
documentation regarding the Mortgage Loans that may be required by any
applicable regulator. It is anticipated that Purchaser will reimburse Seller for
its out-of-pocket expenses incurred in complying with this requirement.
Section 2.06. Transfer of Mortgage Loans.
The Seller shall keep at its servicing office books and records in which,
subject to such reasonable regulations as it may prescribe, the Seller shall
note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be made
unless such transfer is in compliance with the terms hereof. For the purposes of
this Agreement, the Seller shall be under no obligation to deal with any person
with respect to this Agreement or any Mortgage Loan unless a notice of the
transfer of
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such Mortgage Loan has been delivered to the Seller in accordance with this
Section 2.06 and the books and records of the Seller show such person as the
owner of the Mortgage Loan. The Purchaser may, subject to the terms of this
Agreement, sell and transfer one or more of the Mortgage Loans, provided,
however, that (i) the transferee will not be deemed to be a Purchaser hereunder
binding upon the Seller unless such transferee shall agree in writing to be
bound by the terms of this Agreement and an original counterpart of the
instrument of transfer and an Assignment and Assumption of this Agreement
substantially in the form of Exhibit D hereto executed by the transferee shall
have been delivered to the Seller, (ii) in no event shall there be more than
four (4) Persons at any given time having the status of "Purchaser" under each
of the Reconstitution Agreements, as more particularly described in Sections
11.01 and 12.12 hereunder, and (iii) if the Seller is to service pursuant to a
Reconstitution Agreement , such agreement will not contain any greater
obligations on the part of the Seller than are contained in this Agreement. The
Purchaser also shall advise the Seller of the transfer. Upon receipt of notice
of the transfer, the Seller shall ▇▇▇▇ its books and records to reflect the
ownership of the Mortgage Loans of such assignee, and the previous Purchaser
shall be released from its obligations hereunder with respect to the Mortgage
Loans sold or transferred.
Section 2.07. Delivery of Mortgage Loan Documents.
The Seller shall deliver and release to the Purchaser or its designee,
Wachovia Bank, National Association, the Mortgage Loan Documents. The Mortgage
Loan Documents shall be delivered by the Seller to the Purchaser or its
designee, Wachovia Bank, National Association, at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇ ▇▇▇▇▇▇, at least five (5) Business
Days prior to the Closing Date pursuant to a bailee letter agreement. All other
documents in Exhibit A hereto, together with all other documents executed in
connection with the Mortgage Loan that Seller may have in its possession, shall
be retained by the Servicer in trust for the Purchaser. If the Seller cannot
deliver the original recorded Mortgage Loan Documents or the original policy of
title insurance, including riders and endorsements thereto, on the Closing Date,
the Seller shall, promptly upon receipt thereof and in any case not later than
180 days from the Closing Date, deliver such original documents, including
original recorded documents, to the Purchaser or its designee (unless the Seller
is delayed in making such delivery by reason of the fact that such documents
shall not have been returned by the appropriate recording office). If delivery
is not completed within 180 days of the Closing Date solely due to delays in
making such delivery by reason of the fact that such documents shall not have
been returned by the appropriate recording office, Seller shall deliver a copy
of such document, if not previously delivered, and a Seller's Officer's
Certificate to Purchaser, or its designee. In the event that documents have not
been received by the date specified in the Seller's Officer's Certificate, a
subsequent Seller's Officer's Certificate shall be delivered by such date
specified in the prior Seller's Officer's Certificate, stating a revised date
for receipt of documentation. The procedure shall be repeated until the
documents have been received and delivered. The Seller shall continue to use
commercially reasonable best efforts to effect delivery within 270 days of the
Closing Date.
The Seller shall pay all initial recording fees, for the Assignments of
Mortgage or Form UCC-3's for Co-op Loans and any other fees in connection with
the transfer of all original documents to the Purchaser or its designee. Seller
shall prepare, in recordable form, all
17
Assignments of Mortgage or Form UCC-3's for Co-op Loans necessary to assign the
Mortgage Loans to Purchaser, or its designee. Seller shall be responsible for
recording the Assignments of Mortgage or Form UCC-3's for Co-op Loans.
Seller shall provide a copy of the title insurance policy to Purchaser or
its designee within ninety (90) days of the receipt of the recorded documents
(required for issuance of such policy) from the applicable recording office.
Any review by the Purchaser, or its designee, of the Mortgage Files shall
in no way alter or reduce the Seller's obligations hereunder.
If the Purchaser or its designee discovers any defect with respect to a
Mortgage File, the Purchaser shall, or shall cause its designee to, give written
specification of such defect to the Seller in the exception report or the
certification delivered pursuant to this Section 2.07, and the Seller shall cure
or repurchase such Mortgage Loan in accordance with Section 3.03.
The Seller shall forward to the Purchaser, or its designee, original
documents evidencing an assumption, modification, consolidation or extension of
any Mortgage Loan entered into in accordance with Section 4.01 or 6.01 in
accordance with the FNMA Guides; provided, however, that the Seller shall
provide the Purchaser, or its designee, with a certified true copy of any such
document submitted for recordation within one week of its execution, and shall
provide the original of any document submitted for recordation or a copy of such
document certified by the appropriate public recording office to be a true and
complete copy of the original within sixty (60) days of its submission for
recordation.
From time to time, in order to fulfill its obligations hereunder, the
Seller may have a need for Mortgage Loan Documents to be released by Purchaser,
or its designee. Purchaser shall, or shall cause its designee, upon the written
request of the Seller, within ten (10) Business Days, deliver to the Seller, any
requested documentation previously delivered to Purchaser or its designee as
part of the Mortgage File, provided that such documentation is promptly returned
to Purchaser, or its designee, when the Seller no longer requires possession of
the document, and provided that during the time that any such documentation is
held by the Seller, such possession is in trust for the benefit of Purchaser.
Seller shall indemnify Purchaser, and its designee, from and against any and all
losses, claims, damages, penalties, fines, forfeitures, costs and expenses
(including court costs and reasonable attorney's fees) resulting from or related
to the loss, damage, or misplacement of any documentation delivered to Seller
pursuant to this paragraph.
Any and all documents required to be delivered pursuant to this Section
2.07 other than those Mortgage Loan Documents required to be delivered within
five (5) Business Days prior to the Closing Date pursuant to a bailee letter
agreement shall be delivered to the following addressee: Wachovia Bank, National
Association, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇ ▇▇▇▇▇▇.
18
Section 2.08. Quality Control Procedures.
The Seller must have an internal quality control program that verifies, on
a regular basis, the existence and accuracy of the legal documents, credit
documents, property appraisals, and underwriting decisions. The program must be
capable of evaluating and monitoring the overall quality of its loan production
and servicing activities. The program is to ensure that the Mortgage Loans are
originated and serviced in accordance with prudent mortgage banking practices
and accounting principles; guard against dishonest, fraudulent, or negligent
acts; and guard against errors and omissions by officers, employees, or other
authorized persons.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE SELLER; REPURCHASE; REVIEW OF MORTGAGE LOANS
Section 3.01. Representations and Warranties of the Seller.
The Seller represents, warrants and covenants to the Purchaser that as of
the Closing Date or as of such date specifically provided herein:
(a) The Seller is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all licenses necessary to carry out its business as now being conducted, and is
licensed and qualified to transact business in and is in good standing under the
laws of each state in which any Mortgaged Property is located or is otherwise
exempt under applicable law from such licensing or qualification or is otherwise
not required under applicable law to effect such licensing or qualification and
no demand for such licensing or qualification has been made upon such Seller by
any such state, and in any event such Seller is in compliance with the laws of
any such state to the extent necessary to ensure the enforceability of each
Mortgage Loan and the servicing of the Mortgage Loans in accordance with the
terms of this Agreement;
(b) The Seller has the full power and authority and legal right to hold,
transfer and convey each Mortgage Loan, to sell each Mortgage Loan and to
execute, deliver and perform, and to enter into and consummate all transactions
contemplated by this Agreement and to conduct its business as presently
conducted, has duly authorized the execution, delivery and performance of this
Agreement and any agreements contemplated hereby, has duly executed and
delivered this Agreement, and any agreements contemplated hereby, and this
Agreement and each Assignment of Mortgage to the Purchaser and any agreements
contemplated hereby, constitutes a legal, valid and binding obligation of the
Seller, enforceable against it in accordance with its terms, and all requisite
corporate action has been taken by the Seller to make this Agreement and all
agreements contemplated hereby valid and binding upon the Seller in accordance
with their terms;
(c) None of the execution and delivery of this Agreement, the
origination of the Mortgage Loans by the Seller, the sale of the Mortgage Loans
to the Purchaser, the consummation of the transactions contemplated hereby, or
the fulfillment of or compliance with
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the terms and conditions of this Agreement will conflict with any of the terms,
conditions or provisions of the Seller's charter or by-laws or materially
conflict with or result in a material breach of any of the terms, conditions or
provisions of any legal restriction or any agreement or instrument to which the
Seller is now a party or by which it is bound, or constitute a default or result
in an acceleration under any of the foregoing, or result in the material
violation of any law, rule, regulation, order, judgment or decree to which the
Seller or its property is subject or impair the ability of the Purchaser to
realize on the Mortgage Loans or impair the value of the Mortgage Loans;
(d) Each Mortgage Note, each Mortgage, each Assignment of Mortgage and
any other documents required pursuant to this Agreement to be delivered to the
Purchaser or its designee, or its assignee for each Mortgage Loan, have been, on
or before the Closing Date, delivered to the Purchaser or its designee, or its
assignee;
(e) There is no litigation, suit, proceeding or investigation pending or
threatened, or any order or decree outstanding, with respect to the Seller which
is reasonably likely to have a material adverse effect on the sale or servicing
of the Mortgage Loans, the execution, delivery, performance or enforceability of
this Agreement, or which is reasonably likely to have a material adverse effect
on the financial condition of the Seller;
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of or compliance by the Seller with this Agreement,
except for consents, approvals, authorizations and orders which have been
obtained;
(g) The consummation of the transactions contemplated by this Agreement
is in the ordinary course of business of the Seller, and the transfer,
assignment and conveyance of the Mortgage Notes and the Mortgages by the Seller
pursuant to this Agreement are not subject to bulk transfer or any similar
statutory provisions in effect in any applicable jurisdiction;
(h) The Seller is a member of MERS in good standing;
(i) The Seller used no adverse selection procedures in selecting from
among the outstanding first lien residential mortgage loans owned by it which
were available for inclusion in the sale to Purchaser;
(j) The Seller will treat the sale of the Mortgage Loans to the
Purchaser as a sale for reporting and accounting purposes and, to the extent
appropriate, for federal income tax purposes;
(k) The Seller is an approved seller/servicer of residential mortgage
loans for FNMA/FHLMC and HUD, with such facilities, procedures and personnel
necessary for the sound servicing of such mortgage loans. The Seller is duly
qualified, licensed, registered and otherwise authorized under all applicable
federal, state and local laws, and regulations, if applicable, meets the minimum
capital requirements set forth by the OCC, and is in good standing to sell
mortgage loans to and service mortgage loans for FNMA/FHLMC and no event
20
has occurred which would make Seller unable to comply with eligibility
requirements or which would require notification to either FNMA or FHLMC;
(l) The Seller does not believe, nor does it have any cause or reason to
believe, that it cannot perform each and every covenant contained in this
Agreement. The Seller is solvent and the sale of the Mortgage Loans will not
cause the Seller to become insolvent. The sale of the Mortgage Loans is not
undertaken with the intent to hinder, delay or defraud any of the Seller's
creditors;
(m) No statement, tape, diskette, form, report or other document
prepared by, or on behalf of, Seller pursuant to this Agreement or in connection
with the transactions contemplated hereby, contains or will contain any
statement that is or will be inaccurate or misleading in any material respect;
(n) The Seller acknowledges and agrees that the Servicing Fee represents
reasonable compensation for performing such services and that the entire
Servicing Fee shall be treated by the Seller, for accounting and tax purposes,
as compensation for the servicing and administration of the Mortgage Loans
pursuant to this Agreement; in the opinion of Seller, the consideration received
by Seller upon the sale of the Mortgage Loans to Purchaser under this Agreement
constitutes fair consideration for the Mortgage Loans under current market
conditions;
(o) If requested by the Purchaser, the Seller has delivered to the
Purchaser financial statements as to its last two complete fiscal years. All
such financial statements fairly present the pertinent results of operations and
changes in financial position for each of such periods and the financial
position at the end of each such period of the Seller and its subsidiaries and
have been prepared in accordance with GAAP consistently applied throughout the
periods involved, except as set forth in the notes thereto. There has been no
change in the business, operations, financial condition, properties or assets of
the Seller since the date of the Seller's financial statements that would have a
material adverse effect on its ability to perform its obligations under this
Agreement; and
(p) The Seller has not dealt with any broker, investment banker, agent
or other person that may be entitled to any commission or compensation in
connection with the sale of the Mortgage Loans.
Section 3.02. Representations and Warranties as to Individual Mortgage
Loans.
The Seller hereby represents and warrants to the Purchaser, as to each
Mortgage Loan, as of the Closing Date (unless another date is specified in the
body of the representation and warranty) as follows:
(a) The information set forth in the Mortgage Loan Schedule and in the
electronic data file provided to the Purchaser by the Seller on or about March
28, 2005, with respect to the Mortgage Loans is complete, true and correct in
all material respects as of the Cut-Off Date;
(b) With respect to a Mortgage Loan that is not a Co-op Loan, the
Mortgage creates a valid, subsisting and enforceable first lien or a first
priority ownership interest in an estate in fee
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simple in real property securing the related Mortgage Note. With respect to a
Mortgage Loan that is a Co-op Loan, the Mortgage creates a first lien or a first
priority ownership interest in the stock ownership associated with the
cooperative unit securing the related Mortgage Note;
(c) All payments due prior to the Cut-off Date for such Mortgage Loan
have been made and credited as of the Closing Date; there are no defaults under
the terms of the Mortgage Loan; the Seller has not advanced funds, or induced,
solicited or knowingly received any advance of funds from a party other than the
Mortgagor, directly or indirectly, for the payment of any amount required by the
Mortgage Loan; and there has been no more than one delinquency during the
preceding twelve-month period, and such delinquency did not last more than
thirty (30) days;
(d) There are no defaults by Seller in complying with the terms of the
Mortgage, and all taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents which previously
became due and owing have been paid, or escrow funds have been established in an
amount sufficient to pay for every such escrowed item which remains unpaid and
which has been assessed but is not yet due and payable;
(e) The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments which have been recorded to the extent any such recordation is
required by law, or, necessary to protect the interest of the Purchaser. No
instrument of waiver, alteration or modification has been executed, and no
Mortgagor has been released, in whole or in part, from the terms thereof except
in connection with an assumption agreement and which assumption agreement is
part of the Mortgage File and the terms of which are reflected in the Mortgage
Loan Schedule; the substance of any such waiver, alteration or modification has
been approved by the issuer of any related Primary Mortgage Insurance Policy and
title insurance policy, to the extent required by the related policies;
(f) The Mortgage Note and the Mortgage are not subject to any right of
rescission, set-off, counterclaim or defense, including, without limitation, the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render the
Mortgage Note or Mortgage unenforceable, in whole or in part, or subject to any
right of rescission, set-off, counterclaim or defense, including the defense of
usury, and no such right of rescission, set-off, counterclaim or defense has
been asserted with respect thereto; and the Mortgagor was not a debtor in any
state or federal bankruptcy or insolvency proceeding at the time the Mortgage
Loan was originated;
(g) All buildings or other customarily insured improvements upon the
Mortgaged Property are insured by an insurer acceptable under the FNMA Guides,
against loss by fire, hazards of extended coverage and such other hazards as are
provided for in the FNMA Guides or by FHLMC, as well as all additional
requirements set forth in Section 4.10 of this Agreement. All such standard
hazard policies are in full force and effect and on the date of origination
contained a standard mortgagee clause naming the Seller and its successors in
interest and assigns as mortgagee loss payee and such clause is still in effect
and all premiums due thereon have been paid. If required by the Flood Disaster
Protection Act of 1973, as amended, the Mortgage Loan is covered by a flood
insurance policy meeting the requirements of the current
22
guidelines of the Federal Insurance Administration which policy conforms to FNMA
and FHLMC requirements, as well as all additional requirements set forth in
Section 4.10 of this Agreement. Such policy was issued by an insurer acceptable
under FNMA or FHLMC guidelines. The Mortgage obligates the Mortgagor thereunder
to maintain all such insurance at the Mortgagor's cost and expense, and on the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to maintain
such insurance at the Mortgagor's cost and expense and to seek reimbursement
therefor from the Mortgagor. The hazard insurance policy is the valid and
binding obligation of the Insurer, is in full force and effect, and will be in
full force and effect and inure to the benefit of the Purchaser upon the
consummation of the transactions contemplated by this Agreement. The Seller has
not engaged in, and has no knowledge of the Mortgagor's or any Originator's or
Prior Servicer's having engaged in, any act or omission which would impair the
coverage of any such policy, the benefits of the endorsement provided for
herein, or the validity and binding effect of either;
(h) Any and all requirements of any federal, state or local law
including, without limitation, all applicable predatory, usury,
truth-in-lending, RESPA, consumer credit protection, equal credit opportunity or
disclosure laws applicable to the Mortgage Loan have been complied with; the
Seller has maintained, and as Servicer shall continue to maintain, evidence of
such compliance as required by applicable law or regulation and shall make such
evidence available for inspection at Seller's office during normal business
hours upon reasonable advance notice;
(i) The Mortgage has not been satisfied, canceled or subordinated, in
whole or in part, or rescinded, and the Mortgaged Property has not been released
from the lien of the Mortgage, in whole or in part nor has any instrument been
executed that would effect any such release, cancellation, subordination or
rescission. The Seller has not waived the performance by the Mortgagor of any
action, if the Mortgagor's failure to perform such action would cause the
Mortgage Loan to be in default, nor has the Seller waived any default resulting
from any action or inaction by the Mortgagor;
(j) The Mortgage is a valid, subsisting, enforceable and perfected first
lien on the Mortgaged Property, including for Mortgage Loans that are not Co-op
Loans, on all buildings on the Mortgaged Property and all installations and
mechanical, electrical, plumbing, heating and air conditioning systems affixed
to such buildings, and all additions, alterations and replacements made at any
time with respect to the foregoing securing the Mortgage Note's original
principal balance. The Mortgage and the Mortgage Note do not contain any
evidence of any security interest or other interest or right thereto. Such lien
is free and clear of all adverse claims, liens and encumbrances having priority
over the first lien of the Mortgage subject only to (1) the lien of
non-delinquent current real property taxes and assessments not yet due and
payable, (2) covenants, conditions and restrictions, rights of way, easements
and other matters of the public record as of the date of recording which are
acceptable to mortgage lending institutions generally and either (A) which are
referred to in either the Originator's title insurance policy (to the extent
short form policies are not utilized) or in the appraisal made for the
Originator of the Mortgage Loan, or (B) which do not adversely affect the
Appraised Value of the Mortgaged Property as set forth in such appraisal, and
(3) other matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be provided
by the Mortgage or the use, enjoyment, value or marketability of the related
Mortgaged Property. Any
23
security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates a valid,
subsisting, enforceable and perfected first lien and first priority security
interest on the property described therein, and the Seller has the full right to
sell and assign the same to the Purchaser;
(k) The Mortgage Note and the related Mortgage are original and genuine
and each is the legal, valid and binding obligation of the maker thereof,
enforceable in all respects in accordance with its terms subject to bankruptcy,
insolvency and other laws of general application affecting the rights of
creditors and the Seller has taken all action necessary to transfer such rights
of enforceability to the Purchaser. All parties to the Mortgage Note and the
Mortgage had the legal capacity to enter into the Mortgage Loan and to execute
and deliver the Mortgage Note and the Mortgage. The Mortgage Note and the
Mortgage have been duly and properly executed by such parties. No fraud, error,
omission, misrepresentation, negligence or similar occurrence with respect to a
Mortgage Loan has taken place on the part of Seller or the Mortgagor, or, to the
best of Seller's knowledge, on the part of any other party involved in the
origination of the Mortgage Loan. The proceeds of the Mortgage Loan have been
fully disbursed and there is no requirement for future advances thereunder, and
any and all requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds therefor have been
satisfied. All costs, fees and expenses incurred in making or closing the
Mortgage Loan and the recording of the Mortgage were paid or are in the process
of being paid, and the Mortgagor is not entitled to any refund of any amounts
paid or due under the Mortgage Note or Mortgage;
(l) The Seller is the sole owner of the Mortgage Loan and the
indebtedness evidenced by each Mortgage Note, and the Seller (or the Seller's
designee, Mortgage Electronic Registration System, Inc. ("MERS"), is the holder
of the Mortgage, except for the Assignments of Mortgage which have not yet been
sent for recording or recorded, and upon recordation the Seller (or its
designee, MERS) will be the holder of record of each Mortgage and the
indebtedness evidenced by each Mortgage Note, and upon the sale of the Mortgage
Loans to the Purchaser, the Seller will retain the Mortgage Files or any part
thereof with respect thereto not delivered to the Purchaser or the Purchaser's
designee, in trust, only for the purpose of servicing and supervising the
servicing of each Mortgage Loan. Immediately prior to the transfer and
assignment to the Purchaser on the Closing Date, the Mortgage Loan, including
the Mortgage Note and the Mortgage, were not subject to an assignment (other
than the assignments to Seller's designee, MERS, if applicable), sale or pledge,
and the Seller had good and marketable title to and was the sole owner thereof
and had full right to transfer and sell the Mortgage Loan to the Purchaser free
and clear of any encumbrance, equity, lien, pledge, charge, claim or security
interest and has the full right and authority subject to no interest or
participation of, or agreement with, any other party, to sell and assign the
Mortgage Loan pursuant to this Agreement and following the sale of the Mortgage
Loan, the Purchaser will own such Mortgage Loan free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest. The Seller intends to relinquish all rights to possess,
control and monitor the Mortgage Loan, except for the purposes of servicing the
Mortgage Loan as set forth in this Agreement. After the Closing Date, the Seller
will have no right to modify or alter the terms of the sale of the Mortgage Loan
and the Seller will have no obligation or right to repurchase the Mortgage Loan
or substitute another Mortgage Loan, except as provided in this Agreement, or as
otherwise agreed to by the Seller and the Purchaser;
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(m) Each Mortgage Loan that is not a Co-op Loan is covered by an ALTA
lender's title insurance policy or other generally acceptable form of policy or
insurance acceptable to FNMA or FHLMC, issued by a title insurer acceptable to
FNMA or FHLMC and qualified to do business in the jurisdiction where the
Mortgaged Property is located, insuring (subject to the exceptions contained in
(j)(1), (2) and (3) above) the Seller, its successors and assigns, as to the
first priority lien of the Mortgage in the original principal amount of the
Mortgage Loan and with respect to ARM Mortgage Loans, against any loss by reason
of the invalidity or unenforceability of the lien resulting from the provisions
of the Mortgage providing for adjustment in the Mortgage Interest Rate or
Monthly Payment. Where required by state law or regulation, the Mortgagor has
been given the opportunity to choose the carrier of the required mortgage title
insurance. The Seller, its successors and assigns, are the sole insureds of such
lender's title insurance policy, such title insurance policy has been duly and
validly endorsed to the Purchaser or the assignment to the Purchaser of the
Seller's interest therein does not require the consent of or notification to the
insurer and such lender's title insurance policy is in full force and effect and
will be in full force and effect upon the consummation of the transactions
contemplated by this Agreement. No claims have been made under such lender's
title insurance policy, and no prior holder of the related Mortgage, including
the Seller, has done, by act or omission, anything which would impair the
coverage of such lender's title insurance policy;
(n) There is no default, breach, violation or event of acceleration
existing under the Mortgage or the related Mortgage Note and no event which,
with the passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event permitting
acceleration; and neither the Seller nor any prior mortgagee has waived any
default, breach, violation or event permitting acceleration;
(o) There are no mechanics' or similar liens or claims which have been
filed for work, labor or material (and no rights are outstanding that under law
could give rise to such liens) affecting the related Mortgaged Property which
are or may be liens prior to or equal to the lien of the related Mortgage;
(p) All improvements subject to the Mortgage which were considered in
determining the Appraised Value of the Mortgaged Property lie wholly within the
boundaries and building restriction lines of the Mortgaged Property (and wholly
within the project with respect to a condominium unit) and no improvements on
adjoining properties encroach upon the Mortgaged Property except those which are
insured against by the title insurance policy referred to in clause (m) above
and all improvements on the Mortgaged Property comply with all applicable zoning
and subdivision laws and ordinances;
(q) The Mortgage Loan was originated by or for the Seller. The Mortgage
Loan complies with all the terms, conditions and requirements of the Seller's
underwriting standards in effect at the time of origination of such Mortgage
Loan, a copy of which have been provided to the Purchaser. The Mortgage Notes
and Mortgages (exclusive of any riders) are on forms acceptable to FNMA or
FHLMC. Seller is currently selling loans to FNMA and/or FHLMC which are the same
document forms as the Mortgage Notes and Mortgages (inclusive of any riders).
The Mortgage Loan bears interest at a fixed rate as set forth in the Mortgage
Loan Schedule, and Monthly Payments under the Mortgage Note are due and payable
on the first day
25
of each month. The Mortgage contains the usual and enforceable provisions for
the acceleration of the payment of the unpaid principal amount of the Mortgage
Loan if the related Mortgaged Property is sold or transferred without the prior
consent of the mortgagee thereunder;
(r) The Mortgaged Property is not subject to any material damage by
waste, fire, earthquake, windstorm, flood or other casualty. At origination of
the Mortgage Loan there was, there has not been, and there currently is, no
proceeding pending, or to the actual knowledge of Seller threatened, for the
total or partial condemnation of the Mortgaged Property. To the best of Seller's
knowledge, there are no such proceedings scheduled to commence at a future date;
(s) The related Mortgage contains customary and enforceable provisions
such as to render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security
provided thereby, including, (1) in the case of a Mortgage designated as a deed
of trust, by trustee's sale, and (2) otherwise by judicial foreclosure. There is
no homestead or other exemption available to the Mortgagor which would interfere
with the right to sell the Mortgaged Property at a trustee's sale or the right
to foreclose the Mortgage;
(t) If the Mortgage constitutes a deed of trust, a trustee, authorized
and duly qualified if required under applicable law to act as such, has been
properly designated and currently so serves and is named in the Mortgage, and no
fees or expenses, except as may be required by local law, are or will become
payable by the Purchaser to the trustee under the deed of trust, except in
connection with a trustee's sale or attempted sale after default by the
Mortgagor;
(u) The Mortgage File contains an appraisal of the related Mortgaged
Property signed prior to the final approval of the mortgage loan application by
a Qualified Appraiser, approved by the Seller, who had no interest, direct or
indirect, in the Mortgaged Property or in any loan made on the security thereof,
and whose compensation is not affected by the approval or disapproval of the
Mortgage Loan, and the appraisal and appraiser both satisfy the requirements of
FNMA or FHLMC and Title XI FIRREA and the regulations promulgated thereunder,
all as in effect on the date the Mortgage Loan was originated. The appraisal is
in a form acceptable to FNMA or FHLMC and was made by a Qualified Appraiser;
(v) All parties which have had any interest in the Mortgage, whether as
mortgagee, assignee, pledgee or otherwise, are (or, during the period in which
they held and disposed of such interest, were) (A) in compliance with any and
all applicable licensing requirements of the laws of the state wherein the
Mortgaged Property is located, and (B) (1) organized under the laws of such
state, or (2) qualified to do business in such state, or (3) federal savings and
loan associations or national banks or a Federal Home Loan Bank or savings bank
having principal offices in such state, or (4) not doing business in such state;
(w) The related Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage and the security
interest of any applicable security agreement or chattel mortgage referred to
above and such collateral does not serve as security for any other obligation;
26
(x) The Mortgagor has received all disclosure materials required by
applicable law with respect to the making of such mortgage loans;
(y) The Mortgage Loan does not contain "graduated payment", "contingent
interest", "shared appreciation" or "buy-down" features;
(z) The Mortgagor was not in bankruptcy on the date of origination of
the Mortgage Loan and, to the best of the Seller's knowledge, as of the Cut-Off
Date, the Mortgagor is not insolvent or in bankruptcy and the Seller has no
knowledge of any circumstances or condition with respect to the Mortgage, the
Mortgaged Property, the Mortgagor or the Mortgagor's credit standing that could
reasonably be expected to cause investors to regard the Mortgage Loan as an
unacceptable investment, cause the Mortgage Loan to become delinquent, or
materially adversely affect the value or marketability of the Mortgage Loan;
(aa) Principal payments on the Mortgage Loan commenced no more than sixty
(60) days after the funds were disbursed in connection with the Mortgage Loan.
The Mortgage Loans have an original term to maturity of not more than thirty
(30) years from the commencement of amortization, with interest payable in
arrears on the first day of each month. As to each ARM Mortgage Loan, on each
applicable Adjustment Date, the Mortgage Interest Rate will be adjusted to equal
the sum of the Index plus the applicable Gross Margin, rounded up or down to the
nearest multiple of 0.125%; provided, however, that the Mortgage Interest Rate
will not increase or decrease by more than the Initial Rate Cap on the first
Adjustment Date or the Periodic Rate Cap on any subsequent Adjustment Date, and
will in no event exceed the Lifetime Rate Cap. Each Mortgage Note requires
monthly payment which is sufficient (i) during the period prior to the first
adjustment to the Mortgage Interest Rate, to amortize the original principal
balance fully over the original term thereof and to pay interest at the related
Mortgage Interest Rate, and (ii) during the period following each Adjustment
Date, to amortize the outstanding principal balance as of the first day of such
period over the then remaining term of such Mortgage Note and to pay interest at
the related Mortgage Interest Rate. No Mortgage Loan contains terms or
provisions which would result in Negative Amortization. No Mortgage Loan is a
Convertible Mortgage Loan.
(bb) In the event any Mortgage Loan has an LTV greater than 80.0% at
origination, (i) the excess of the principal balance of the Mortgage Loan over
75.0% of the Appraised Value of the Mortgaged Property with respect to a
Refinanced Mortgage Loan, or (ii) the lesser of the Appraised Value or the
purchase price of the Mortgaged Property with respect to a purchase money
Mortgage Loan, is insured as to payment defaults by a Primary Mortgage Insurance
Policy issued by a Qualified Insurer, except for any Primary Mortgage Insurance
Policy that is cancelled or terminated as required by law between the Cut-Off
Date and the Closing Date. All provisions of such Primary Mortgage Insurance
Policies referenced in the preceding sentence have been and are being complied
with, such policy is in full force and effect, and all premiums due thereunder
have been paid. No Mortgage Loan requires payment of such premiums, in whole or
in part by the Purchaser. No action, inaction, or event has occurred and no
state of facts exists that has or will result in the exclusion from, denial of,
or defense to coverage. Any Mortgage Loan subject to a Primary Mortgage
Insurance Policy obligates the Mortgagor thereunder to maintain the Primary
Mortgage Insurance Policy and to pay all premiums and charges in connection
therewith. The
27
Mortgage Interest Rate for the Mortgage Loan as set forth on the Mortgage Loan
Schedule is net of any such insurance premium. As of the date of origination, no
Mortgage Loan had an LTV greater than 95%;
(cc) The Assignment of Mortgage is in recordable form and is acceptable
for recording under the laws of the jurisdiction in which the Mortgaged Property
is located;
(dd) As to Mortgage Loans that are not Co-op, the Mortgaged Property is
located in the state identified in the Mortgage Loan Schedule and consists of a
single parcel of real property with a detached single family residence erected
thereon, or a two-to four-family dwelling, or an individual condominium unit in
a condominium project, or an individual unit in a planned unit development,
provided, however, that no residence or dwelling is a mobile home or
Manufactured Home. As of the date of origination, no portion of the Mortgaged
Property was used for commercial purposes (as per the FNMA Guides), and since
the date of origination, to the best of the Seller's knowledge, no portion of
the Mortgaged Property was used for commercial purposes (as per the FNMA
Guides);
(ee) Principal payments on the Mortgage Loan commenced no more than sixty
(60) days after the funds were disbursed in connection with the Mortgage Loan.
The Mortgage Note is payable on the first day of each month in equal monthly
installments of principal and interest, with interest calculated and payable in
arrears, sufficient to amortize the Mortgage Loan fully by the stated maturity
date, over an original term of not more than thirty (30) years from commencement
of amortization;
(ff) As of the date of origination of the Mortgage Loan, the Mortgaged
Property was lawfully occupied under applicable law, and all inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of the Mortgaged Property and, with respect to use and
occupancy of the same, including but not limited to certificates of occupancy
and fire underwriting certificates, have been made or obtained from the
appropriate authorities. With respect to each ARM Mortgage Loan, all Mortgage
Interest Rate adjustments have been made in compliance with state and federal
law and the terms of the related Mortgage Note. Any interest required to be paid
pursuant to state and local law has been properly paid and credited.
(gg) If the Mortgaged Property is a condominium unit or a planned unit
development (other than a de minimis planned unit development), or stock in a
cooperative housing corporation, such condominium, cooperative, or planned unit
development project meets Seller's eligibility requirements as set forth in
Seller's underwriting guidelines;
(hh) To the best of Seller's knowledge, there is no pending action or
proceeding directly involving the Mortgaged Property in which compliance with
any environmental law, rule or regulation is an issue; to the best of Seller's
knowledge, there is no violation of any environmental law, rule or regulation
with respect to the Mortgaged Property, and Seller has not received notice of
any such violation; and nothing further remains to be done to satisfy in full
all requirements of each such law, rule or regulation constituting a
prerequisite to use and enjoyment of said property;
28
(ii) No Mortgage Loan was made in connection with the construction or
rehabilitation of a Mortgaged Property or facilitating the trade-in or exchange
of a Mortgaged Property;
(jj) No action has been taken or failed to be taken by Seller, on or
prior to the Closing Date which has resulted or will result in an exclusion
from, denial of, or defense to coverage under any Primary Mortgage Insurance
Policy (including, without limitation, any exclusions, denials or defenses which
would limit or reduce the availability of the timely payment of the full amount
of the loss otherwise due thereunder to the insured) whether arising out of
actions, representations, errors, omissions, negligence, or fraud of the Seller,
or for any other reason under such coverage;
(kk) The origination, collection and servicing practices used by the
Seller, any Originator and Prior Servicers, with respect to each Mortgage Note
and Mortgage have been in compliance with Applicable Requirements, and in all
material respects proper and prudent in the mortgage origination and servicing
business. With respect to escrow deposits and payments that the Seller is
entitled to collect, all such payments are in the possession of, or under the
control of, the Seller, and there exist no deficiencies in connection therewith
for which customary arrangements for repayment thereof have not been made. All
escrow payments have been collected in full compliance with state and federal
law and the provisions of the related Mortgage Note and Mortgage. As to any
Mortgage Loan that is the subject of an escrow, escrow of funds is not
prohibited by applicable law and has been established in an amount sufficient to
pay for every escrowed item that remains unpaid and has been assessed but is not
yet due and payable. No escrow deposits or other charges or payments due under
the Mortgage Note have been capitalized under any Mortgage or the related
Mortgage Note;
(ll) With respect to each Co-op Loan, the related Mortgage is a valid,
enforceable and subsisting first security interest on the related cooperative
shares securing the related cooperative note and lease, subject only to (a)
liens of the cooperative for unpaid assessments representing the Mortgagor's pro
rata share of the cooperative's payments for its blanket mortgage, current and
future real property taxes, insurance premiums, maintenance fees and other
assessments to which like collateral is commonly subject and (b) other matters
to which like collateral is commonly subject which do not materially interfere
with the benefits of the security intended to be provided by the security
agreement. There are no liens against or security interests in the cooperative
shares relating to each Co-op Loan (except for unpaid maintenance, assessments
and other amounts owed to the related cooperative which individually or in the
aggregate will not have a material adverse effect on such Co-op Loan), which
have priority equal to or over the Seller's security interest in such
cooperative shares;
(mm) With respect to each Co-op Loan, a search for filings of financing
statements has been made by a company competent to make the same, which company
is acceptable to FNMA and qualified to do business in the jurisdiction where the
cooperative unit is located, and such search has not found anything which would
materially and adversely affect the Co-op Loan;
(nn) With respect to each Co-op Loan, the related cooperative corporation
that owns title to the related cooperative apartment building is a "cooperative
housing corporation" within the meaning of Section 216 of the Internal Revenue
Code, and is in material compliance with
29
applicable federal, state and local laws which, if not complied with, could have
a material adverse effect on the Mortgaged Property;
(oo) With respect to each Co-op Loan, there is no prohibition against
pledging the shares of the cooperative corporation or assigning the Co-op Lease;
(pp) The Mortgage Loan was originated by a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to sections 203 and 211 of
the National Housing Act, a savings and loan association, a savings bank, a
commercial bank, credit union, insurance company or similar institution which is
supervised and examined by a federal or state authority;
(qq) The Mortgage Loan is not secured by a leasehold interest under such
ground lease;
(rr) All taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments, ground rents relating to the
Mortgage Loans have been paid by Seller to the extent such items are required to
be paid by Seller pursuant to Applicable Requirements and as herein provided;
(ss) Each Mortgage Loan shall have a tax service contract and flood
insurance monitoring contract which shall have a term of the life of the
Mortgage Loan;
(tt) The Pool Statistics for the Mortgage Loans are as reflected on
Exhibit E attached hereto, which statistics are accurate as of the Cut-Off Date;
(uu) No Mortgage Loan is (a) a "high cost" loan under the Home Ownership
and Equity Protection Act of 1994 as amended, or (b) a "high cost," "threshold,"
"covered," "predatory," "abusive" (as defined by the Rating Agencies), or
similarly defined loan, under any other applicable state, federal or local law
(or a similarly classified loan using different terminology under a law imposing
heightened regulatory scrutiny or additional legal liability for residential
mortgage loans having high interest rates, points and/or fees), provided that
any Mortgage Loan secured by a Mortgaged Property in Illinois characterized as a
"threshold" loan shall not be a "high cost" loan unless it is characterized as
"predatory" under applicable local law or (c) a "High Cost Loan" or "Covered
Loan" as defined in the S&P LEVELS Glossary Version 5.6;
(vv) No proceeds of any Mortgage Loan were used to finance single-premium
credit insurance policies;
(ww) No Mortgage Loan will impose a prepayment premium;
(xx) The Mortgagor has not notified the Seller, and the Seller has no
knowledge of any relief requested or allowed to the Mortgagor under
Servicemembers Civil Relief Act, as amended, or any similar state law;
(yy) No Mortgage Loan secured by a Mortgaged Property located in the
State of Georgia was originated on or after October 1, 2002, and on or before
March 7, 2003, with an initial balance less than or equal to $322,700.00;
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(zz) Article XVI, Section 50(a)(6) of the Texas Constitution is not
applicable to the Mortgage Loan or the origination thereof. If the Mortgage Loan
was originated in Texas, it is not a cash-out refinancing;
(aaa) No Mortgage Loan is a "pledged asset" mortgage loan;
(bbb) To the extent applicable to the originator of the Mortgage Loan, the
Seller or the originator of the Mortgage Loan has complied with the Bank Secrecy
Act, including specifically, the amendment set forth in the USA Patriot Act of
2001;
(ccc) Each Mortgage Loan has a non-zero FICO score and a minimum FICO
score of 625;
(ddd) The Mortgagor related to each Mortgage Loan had a debt-to-income
ratio of 60% or less as of the origination date of the Mortgage Loan. With
respect to each Mortgage Loan with an original principal balance of $1 million
or more (i) the related Mortgagor had a debt-to-income ratio of 50% or less as
of the date of origination of such Mortgage Loan, (ii) the Mortgage Loan has a
reserve of no less than six (6) months, (iii) the LTV is 70% or less, and (iv)
the Mortgage Loan has a Mortgage File that includes (A) a full appraisal of the
Mortgaged Property and (B) full loan origination documentation that includes
income and asset verification forms; and
(eee) The parties hereto agree and understand that it is not intended that
any mortgage loan be included in the sale that is a "High-Cost Home Loan" as
defined in the New Jersey Home Ownership Act effective November 27, 2003 and in
the New Mexico Home Loan Protection Act effective January 1, 2004.
Section 3.03. Repurchase; Substitution.
It is understood and agreed that the representations and warranties set
forth in Sections 3.01 and 3.02 shall survive the sale of the Mortgage Loans,
delivery of the Mortgage Loan Documents to the Purchaser, or its designee, and
shall inure to the benefit of the Purchaser, notwithstanding any restrictive or
qualified endorsement on any Mortgage Note or Assignment of Mortgage or the
examination, or lack of examination, of any Mortgage File. Upon discovery by
either the Seller or the Purchaser of a breach of any of the foregoing
representations and warranties which materially and adversely affects the value
of a Mortgage Loan or the Mortgage Loans or the interest of the Purchaser in any
Mortgage Loan or all of the Mortgage Loans, the party discovering such breach
shall give prompt written notice to the other. The Seller shall have a period of
sixty (60) days from the earlier of its discovery or its receipt of notice of
any such breach within which to correct or cure such breach. The Seller hereby
covenants and agrees that if any such breach is not corrected or cured within
such sixty (60) day period, the Seller shall, at the Purchaser's option and not
later than ninety (90) days after the earlier of its discovery or its receipt of
notice of such breach, repurchase such Mortgage Loan at the Repurchase Price;
provided, however, that in the event such breach constitutes a breach of Section
3.02(uu), then the Repurchase Price shall also include any costs and damages
incurred by Purchaser as a result of such breach; or, with the Purchaser's prior
consent, which consent shall not be unreasonably
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withheld, substitute a Mortgage Loan as provided below. In the event that any
such breach shall involve any representation or warranty set forth in Section
3.01, and such breach is not cured within sixty (60) days after the earlier of
either discovery by or notice to the Seller of such breach, all Mortgage Loans
shall, at the option of the Purchaser, be repurchased by the Seller at the
Repurchase Price. Any such repurchase shall be accomplished by deposit in the
Custodial Account of the amount of the Repurchase Price, after deducting
therefrom any amounts received in respect of such repurchased Mortgage Loan and
being held in the Custodial Account for future distribution. Notwithstanding the
foregoing, upon the discovery or being notified of a breach of any
representation or warranty that would cause a Mortgage Loan to be other than a
"qualified mortgage" within Section 860G(a)(3) of the Code, the Seller shall
either cure or effect a repurchase or substitution within seventy-five (75) days
after the earlier of discovering or being notified of such breach.
If the Seller is required to repurchase any Mortgage Loan pursuant to this
Section 3.03, the Seller may, with the Purchaser's prior consent, which consent
shall not be unreasonably withheld, within 120 days after the Closing Date,
remove such defective Mortgage Loan from the terms of this Agreement and
substitute another mortgage loan for such defective Mortgage Loan, in lieu of
repurchasing such defective Mortgage Loan. Any substitute Mortgage Loan shall
(a) have an outstanding principal balance at the time of substitution, after
deduction of all scheduled payments due in the month of substitution (or in the
case of a substitution of more than one mortgage loan for a removed Mortgage
Loan, an aggregate principal balance), not in excess of the outstanding
principal balance of the removed Mortgage Loan (the amount of any difference,
plus one month's interest thereon at the Mortgage Interest Rate borne by the
defective Mortgage Loan, being paid by the Seller and deemed to be a Principal
Prepayment to be deposited by the Seller in the Custodial Account), (b) have a
Mortgage Interest Rate not less than, and not more than one percentage point
greater than, the Mortgage Interest Rate of the removed Mortgage Loan, (c) have
a remaining term to stated maturity not later than, and not more than one (1)
year less than, the remaining term to stated maturity of the removed Mortgage
Loan, (d) be, in the reasonable determination of the Purchaser, of the same
type, quality and character (including location of the Mortgaged Property) as
the removed Mortgage Loan as if the breach had not occurred, (e) have a
Loan-to-Value Ratio at origination no greater than that of the removed Mortgage
Loan, and (f) have a Gross Margin not less than that of the removed Mortgage
Loan, (g) have the same Periodic Rate Cap as that of the removed Mortgage Loan;
(h) have a minimum rate not less than that of the removed Mortgage Loan, (i) not
permit conversion of the related Mortgage Interest Rate to a permanent fixed
Mortgage Interest Rate, (j) have the same Index as that of the removed Mortgage
Loan, (k) be, in the reasonable determination of the Purchaser, in compliance
with each representation and warranty contained in this Agreement and described
in Section 3.01 and Section 3.02 as of the date of substitution.
The Seller shall amend the Mortgage Loan Schedule to reflect the
withdrawal of the removed Mortgage Loan from this Agreement and the substitution
of such substitute Mortgage Loan therefor. Upon such amendment, the Purchaser
shall review the Mortgage File delivered to it relating to the substitute
Mortgage Loan. In the event of such a substitution, accrued interest on the
substitute Mortgage Loan for the month in which the substitution occurs and any
Principal Prepayments made thereon during such month shall be the property of
the Purchaser and accrued interest for such month on the Mortgage Loan for which
the substitution is made and any
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Principal Prepayments made thereon during such month shall be the property of
the Seller. The principal payment on a substitute Mortgage Loan due on the Due
Date in the month of substitution shall be the property of the Seller and the
principal payment on the Mortgage Loan for which the substitution is made due on
such date shall be the property of the Purchaser.
It is understood and agreed that the obligation of the Seller set forth in
this Section 3.03 to cure, repurchase or substitute for a defective Mortgage
Loan, and to indemnify Purchaser pursuant to Section 8.01, constitutes the sole
remedies of the Purchaser respecting a breach of the foregoing representations
and warranties. If the Seller fails to repurchase or substitute for a defective
Mortgage Loan in accordance with this Section 3.03, or fails to cure a defective
Mortgage Loan to Purchaser's reasonable satisfaction in accordance with this
Section 3.03, or to indemnify Purchaser pursuant to Section 8.01, that failure
shall, upon compliance by the Purchaser with the next to the last paragraph of
this Section 3.03, be an Event of Default and the Purchaser shall be entitled to
pursue all remedies available in this Agreement as a result thereof. No
provision of this paragraph shall affect the rights of the Purchaser to
terminate this Agreement for cause, as set forth in Sections 10.01 and 11.01.
Any cause of action against the Seller relating to or arising out of the
breach of any representations and warranties made in Sections 3.01 and 3.02
shall accrue as to any Mortgage Loan upon (i) the earlier of discovery of such
breach by the Seller or notice thereof by the Purchaser to the Seller, (ii)
failure by the Seller to cure such breach or repurchase such Mortgage Loan as
specified above, and (iii) demand upon the Seller by the Purchaser for
compliance with this Agreement.
In the event that any Mortgage Loan is held by a REMIC, notwithstanding
any contrary provision of this Agreement, with respect to any Mortgage Loan that
is not in default or as to which no default is imminent, Purchaser may elect not
to require repurchase or permit substitution pursuant to Subsection 3.03 after
the applicable REMIC's "start up day" (as defined in Section 860G(a) (9) of the
Code), unless the Seller has obtained an Opinion of Counsel to the effect that
such repurchase or substitution will not (i) result in the imposition of taxes
on "prohibited transactions" of such REMIC (as defined in Section 860F of the
Code) or otherwise subject the REMIC to tax, or (ii) cause the REMIC to fail to
qualify as a REMIC at any time.
ARTICLE IV
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 4.01. Seller to Act as Servicer.
The Seller, as independent contract servicer, shall service and administer
the Mortgage Loans in accordance with this Agreement and with Applicable
Requirements, and shall have full power and authority, acting alone, to do or
cause to be done any and all things in connection with such servicing and
administration which the Seller may deem necessary or desirable and consistent
with the terms of this Agreement and with Applicable Requirements and exercise
the same care that it customarily employs for its own account. Except as set
forth in this Agreement, the Seller shall service the Mortgage Loans in strict
compliance with the servicing provisions of
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the FNMA Guides (special servicing option), which include, but are not limited
to, provisions regarding the liquidation of Mortgage Loans, the collection of
Mortgage Loan payments, the payment of taxes, insurance and other charges, the
maintenance of hazard insurance with a Qualified Insurer, the maintenance of
mortgage impairment insurance, the maintenance of fidelity bond and errors and
omissions insurance, inspections, the restoration of Mortgaged Property, the
maintenance of Primary Mortgage Insurance Policies, insurance claims, the title,
management and disposition of REO Property, permitted withdrawals with respect
to REO Property, liquidation reports, and reports of foreclosures and
abandonments of Mortgaged Property, the transfer of Mortgaged Property, the
release of Mortgage Files, annual statements, and examination of records and
facilities. In the event of any conflict, inconsistency or discrepancy between
any of the servicing provisions of this Agreement and any of the servicing
provisions of the FNMA Guides, the provisions of this Agreement shall control
and be binding upon the Purchaser and the Seller.
Consistent with the terms of this Agreement, the Seller may waive, modify
or vary any term of any Mortgage Loan or consent to the postponement of any such
term or in any manner grant indulgence to any Mortgagor if in the Seller's
reasonable and prudent determination such waiver, modification, postponement or
indulgence is not materially adverse to the Purchaser, provided, however, that
unless the Seller has obtained the prior written consent of the Purchaser, the
Seller shall not permit any modification with respect to any Mortgage Loan that
would change the Mortgage Interest Rate, the Lifetime Rate Cap, the Initial Rate
Cap, the Periodic Rate Cap or the Gross Margin, forgive the payment of principal
or interest, reduce or increase the outstanding principal balance (except for
actual payments of principal) or change the final maturity date on such Mortgage
Loan. In the event of any such modification which has been agreed to in writing
by the Purchaser and which permits the deferral of interest or principal
payments on any Mortgage Loan, the Seller shall, on the Business Day immediately
preceding the Remittance Date in any month in which any such principal or
interest payment has been deferred, deposit in the Custodial Account from its
own funds, in accordance with Section 4.04, the difference between (a) such
month's principal and one month's interest at the Mortgage Loan Remittance Rate
on the unpaid principal balance of such Mortgage Loan and (b) the amount paid by
the Mortgagor. The Seller shall be entitled to reimbursement for such advances
to the same extent as for all other advances pursuant to Section 4.05. Without
limiting the generality of the foregoing, the Seller shall continue, and is
hereby authorized and empowered, to prepare, execute and deliver, all
instruments of satisfaction or cancellation, or of partial or full release,
discharge and all other comparable instruments, with respect to the Mortgage
Loans and with respect to the Mortgaged Properties. Notwithstanding anything
herein to the contrary, the Seller may not enter into a forbearance agreement or
similar arrangement with respect to any Mortgage Loan which runs more than 180
days after the first delinquent Due Date. Any such agreement shall be approved
by any applicable holder of a Primary Mortgage Insurance Policy, if required.
In servicing and administering the Mortgage Loans, the Seller shall employ
Applicable Requirements, giving due consideration to the Purchaser's reliance on
the Seller. Unless a different time period is stated in this Agreement,
Purchaser shall be deemed to have given consent in connection with a particular
matter if Purchaser does not affirmatively grant or deny consent within five (5)
Business Days from the date Purchaser receives a second written request for
consent for such matter from Seller as servicer.
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The Mortgage Loans may be subserviced by the Subservicer on behalf of the
Seller provided that the Subservicer is an entity that engages in the business
of originating, acquiring or servicing loans, and in either case shall be
authorized to transact business, and licensed to service mortgage loans, in the
state or states where the related Mortgaged Properties it is to service are
situated, if and to the extent required by applicable law to enable the
Subservicer to perform its obligations hereunder and under the Subservicing
Agreement, and in either case shall be a FHLMC or FNMA approved mortgage
servicer in good standing, and no event has occurred, including but not limited
to a change in insurance coverage, which would make it unable to comply with the
eligibility requirements for lenders imposed by FNMA or for seller/servicers
imposed by FHLMC, or which would require notification to FNMA or FHLMC. In
addition, each Subservicer will obtain and preserve its qualifications to do
business as a foreign corporation and its licenses to service mortgage loans, in
each jurisdiction in which such qualifications and/or licenses are or shall be
necessary to protect the validity and enforceability of this Agreement, or any
of the Mortgage Loans and to perform or cause to be performed its duties under
the related Subservicing Agreement. The Seller may perform any of its servicing
responsibilities hereunder or may cause the Subservicer to perform any such
servicing responsibilities on its behalf, but the use by the Seller of the
Subservicer shall not release the Seller from any of its obligations hereunder
and the Seller shall remain responsible hereunder for all acts and omissions of
the Subservicer as fully as if such acts and omissions were those of the Seller.
The Seller shall pay all fees and expenses of the Subservicer from its own
funds, and the Subservicer's fee shall not exceed the Servicing Fee. Seller
shall notify Purchaser promptly in writing upon the appointment of any
Subservicer.
At the cost and expense of the Seller, without any right of reimbursement
from the Custodial Account, the Seller shall be entitled to terminate the rights
and responsibilities of the Subservicer and arrange for any servicing
responsibilities to be performed by a successor subservicer meeting the
requirements in the preceding paragraph, provided, however, that nothing
contained herein shall be deemed to prevent or prohibit the Seller, at the
Seller's option, from electing to service the related Mortgage Loans itself. In
the event that the Seller's responsibilities and duties under this Agreement are
terminated pursuant to Section 4.13, 8.04, 9.01, 10.01 or 10.02 and if requested
to do so by the Purchaser, the Seller shall at its own cost and expense
terminate the rights and responsibilities of the Subservicer effective as of the
date of termination of the Seller. The Seller shall pay all fees, expenses or
penalties necessary in order to terminate the rights and responsibilities of the
Subservicer from the Seller's own funds without reimbursement from the
Purchaser.
Notwithstanding any of the provisions of this Agreement relating to
agreements or arrangements between the Seller and the Subservicer or any
reference herein to actions taken through the Subservicer or otherwise, the
Seller shall not be relieved of its obligations to the Purchaser and shall be
obligated to the same extent and under the same terms and conditions as if it
alone were servicing and administering the Mortgage Loans. The Seller shall be
entitled to enter into an agreement with the Subservicer for indemnification of
the Seller by the Subservicer and nothing contained in this Agreement shall be
deemed to limit or modify such indemnification. The Seller will indemnify and
hold Purchaser harmless from any loss, liability or expense arising out of its
use of a Subservicer to perform any of its servicing duties, responsibilities
and obligations hereunder.
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Any Subservicing Agreement and any other transactions or services relating
to the Mortgage Loans involving the Subservicer shall be deemed to be between
the Subservicer and Seller alone, and the Purchaser shall have no obligations,
duties or liabilities with respect to the Subservicer including no obligation,
duty or liability of Purchaser to pay the Subservicer's fees and expenses. For
purposes of distributions and advances by the Seller pursuant to this Agreement,
the Seller shall be deemed to have received a payment on a Mortgage Loan when
the Subservicer has received such payment.
Section 4.02. Collection of Mortgage Loan Payments.
Continuously from the date hereof until the date each Mortgage Loan ceases
to be serviced subject to this Agreement, the Seller will proceed diligently to
collect all payments due under each Mortgage Loan when the same shall become due
and payable and shall, to the extent such procedures shall be consistent with
this Agreement, Applicable Requirements, and the terms and provisions of related
Primary Mortgage Insurance Policy, follow such collection procedures as it
follows with respect to mortgage loans comparable to the Mortgage Loans and held
for its own account. Further, the Seller will take special care in ascertaining
and estimating annual escrow payments, and all other charges that, as provided
in the Mortgage, will become due and payable, so that the installments payable
by the Mortgagors will be sufficient to pay such charges as and when they become
due and payable.
Section 4.03. Realization Upon Defaulted Mortgage Loans.
The Seller shall use its best efforts, consistent with the procedures that
the Seller would use in servicing loans for its own account, consistent with
Applicable Requirements, any Primary Mortgage Insurance Policies and the best
interest of Purchaser, to foreclose upon or otherwise comparably convert the
ownership of properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments pursuant to Section 4.01. Foreclosure or
comparable proceedings shall be initiated within one hundred twenty (120) days
of default for Mortgaged Properties for which no satisfactory arrangements can
be made for collection of delinquent payments. The Seller shall use commercially
reasonable best efforts to realize upon defaulted Mortgage Loans in such manner
as will maximize the receipt of principal and interest by the Purchaser, taking
into account, among other things, the timing of foreclosure proceedings. The
foregoing is subject to the provisions that, in any case in which Mortgaged
Property shall have suffered damage, the Seller shall not be required to expend
its own funds toward the restoration of such property unless it shall determine
in its discretion (i) that such restoration will increase the proceeds of
liquidation of the related Mortgage Loan to the Purchaser after reimbursement to
itself for such expenses, and (ii) that such expenses will be recoverable by the
Seller through Insurance Proceeds or Liquidation Proceeds from the related
Mortgaged Property, as contemplated in Section 4.05. Seller shall obtain prior
approval of Purchaser as to restoration expenses in excess of ten thousand
dollars ($10,000). The Seller shall notify the Purchaser in writing of the
commencement of foreclosure proceedings and prior to the acceptance or rejection
of any offer of reinstatement, and shall provide such information regarding the
Mortgage Loan as the Purchaser reasonably may request. The Seller shall be
responsible for all costs and expenses incurred by it in any such proceedings or
functions; provided, however, that it shall be entitled to
36
reimbursement thereof from the related property, as contemplated in Section
4.05. Notwithstanding anything to the contrary contained herein, with respect to
any Mortgage Loan as to which the Purchaser has received actual notice of, or
has actual knowledge of, the presence of any toxic or hazardous substance on the
related Mortgaged Property, the Purchaser may instruct Seller not to take title
or possession of the Mortgaged Property or any other action reasonable under the
circumstances. In the event that Seller as servicer receives notice that the
Mortgaged Property is contaminated by any toxic or hazardous substance, Seller
shall so notify Purchaser.
In the event that a Mortgage Loan becomes part of a REMIC, and becomes REO
Property, such property shall be disposed of by Seller, with the consent of
Purchaser as required pursuant to this Agreement, within three (3) years after
becoming an REO Property, unless Seller provides to the trustee under such REMIC
an Opinion of Counsel to the effect that the holding of such REO Property
subsequent to three (3) years after its becoming REO Property, will not result
in the imposition of taxes on "prohibited transactions" as defined in Section
860F of the Code, or cause the transaction to fail to qualify as a REMIC at any
time that certificates are outstanding. Seller shall manage, conserve, protect
and operate each such REO Property for the certificate holders solely for the
purpose of its prompt disposition and sale in a manner which does not cause such
property to fail to qualify as "foreclosure property" within the meaning of
Section 860F(a)(2)(E) of the Code, or any "net income from foreclosure property"
which is subject to taxation under the REMIC Provisions. Pursuant to its efforts
to sell such property, the Seller shall either itself or through an agent
selected by Seller, protect and conserve such property in the same manner and to
such an extent as is customary in the locality where such property is located.
Additionally, Seller shall perform the tax withholding and reporting related to
Sections 1445 and 6050J of the Code, if required by the REMIC.
The Purchaser shall have the right, but not the obligation, to terminate
the servicing of any Mortgage Loan, without the payment of a termination fee, as
more particularly described in Section 10.02, once such Mortgage Loan becomes
ninety (90) days or more delinquent.
Section 4.04. Establishment of Custodial Accounts; Deposits in Custodial
Accounts.
The Seller shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts.
The Custodial Account shall be an Eligible Account. Funds deposited in the
Custodial Account may be drawn on in accordance with Section 4.05. The creation
of any Custodial Account shall be evidenced by a letter agreement in the form
shown in Exhibit B hereto. The original of such letter agreement shall be
furnished to the Purchaser on the Closing Date, and upon the request of any
subsequent purchaser.
The Seller shall deposit in the Custodial Account on a daily basis, and
retain therein the following payments and collections received or made by it
subsequent to the Cut-off Date, or received by it prior to the Cut-off Date but
allocable to a period subsequent thereto, other than in respect of principal and
interest on the Mortgage Loans due on or before the Cut-off Date:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
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(ii) all payments on account of interest on the Mortgage Loans adjusted
to the Mortgage Loan Remittance Rate;
(iii) Liquidation Proceeds;
(iv) any amounts required to be deposited by the Seller in connection
with any REO Property pursuant to Section 4.13;
(v) all Insurance Proceeds including amounts required to be deposited
pursuant to Sections 4.08, 4.10 and 4.11, other than proceeds to be held in the
Escrow Account and applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with Applicable
Requirements;
(vi) all Condemnation Proceeds affecting any Mortgaged Property which
are not released to the Mortgagor in accordance with Applicable Requirements;
(vii) Monthly Advances;
(viii) all proceeds of any Mortgage Loan repurchased and other amounts
payable in connection with any substituted Mortgage Loan in accordance with
Section 3.03;
(ix) any amounts required to be deposited by the Seller pursuant to
Section 4.10 in connection with the deductible clause in any blanket hazard
insurance policy, such deposit shall be made from the Seller's own funds,
without reimbursement therefor;
(x) any amounts required to be deposited in the Custodial Account
pursuant to Section 4.01, 4.13 or 6.02; and
(xi) any Prepayment Interest Shortfall Amount.
The foregoing requirements for deposit in the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges and assumption
fees, to the extent permitted by Section 6.01, need not be deposited by the
Seller in the Custodial Account. Any interest paid on funds deposited in the
Custodial Account by the depository institution shall accrue to the benefit of
the Seller and the Seller shall be entitled to retain and withdraw such interest
from the Custodial Account pursuant to Section 4.05(iv).
Section 4.05. Permitted Withdrawals From the Custodial Account.
The Seller may, from time to time, withdraw from the Custodial Account for
the following purposes:
(i) to make payments to the Purchaser in the amounts and in the manner
provided for in Section 5.01;
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(ii) to reimburse itself for Monthly Advances, the Seller's right to
reimburse itself pursuant to this subclause (ii) being limited to amounts
received on the related Mortgage Loan which represent late collections (net of
the related Servicing Fee) of principal and/or interest respecting which any
such advance was made, it being understood that, in the case of such
reimbursement, the Seller's right thereto shall be prior to the rights of the
Purchaser, except that, where the Seller is required to repurchase a Mortgage
Loan, pursuant to Section 3.03, the Seller's right to such reimbursement shall
be subsequent to the payment to the Purchaser of the Repurchase Price pursuant
to such Section and all other amounts required to be paid to the Purchaser with
respect to such Mortgage Loan;
(iii) to reimburse itself for unreimbursed Servicing Advances and any
unpaid Servicing Fees, the Seller's right to reimburse itself pursuant to this
subclause (iii) with respect to any Mortgage Loan being limited to related
proceeds from Liquidation Proceeds, Condemnation Proceeds and Insurance Proceeds
in accordance with the relevant provisions of the FNMA Guides or as otherwise
set forth in this Agreement;
(iv) to pay to itself as part of its servicing compensation: (a) any
interest earned on funds in the Custodial Account (all such interest to be
withdrawn monthly not later than each Remittance Date), and (b) the Servicing
Fee from that portion of any payment or recovery as to interest with respect to
a particular Mortgage Loan;
(v) to pay to itself with respect to each Mortgage Loan that has been
repurchased pursuant to Section 3.03 or Section 3.04 all amounts received
thereon and not distributed as of the date on which the related repurchase price
is determined;
(vi) to transfer funds to another Eligible Account in accordance with
Section 4.09 hereof;
(vii) to remove funds inadvertently placed in the Custodial Account by
the Seller; and
(viii) to clear and terminate the Custodial Account upon the termination
of this Agreement.
The Seller shall keep and maintain separate accounting, on a Mortgage Loan
by Mortgage Loan basis, for the purpose of justifying any withdrawal from the
Custodial Account.
Section 4.06. Establishment of Escrow Accounts; Deposits in Escrow
Accounts.
The Seller shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan which constitute Escrow Payments separate and
apart from any of its own funds and general assets and shall establish and
maintain one or more Escrow Accounts. The Escrow Account shall be an Eligible
Account. Funds deposited in the Escrow Account may be drawn on by the Seller in
accordance with Section 4.07. The creation of any Escrow Account shall be
evidenced by a letter agreement in the form shown in Exhibit C. The original of
such letter agreement shall be furnished to the Purchaser on the Closing Date,
and upon request to any subsequent purchaser.
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The Seller shall deposit in the Escrow Account or Accounts on a daily
basis, and retain therein:
(i) all Escrow Payments collected on account of the Mortgage Loans,
for the purpose of effecting timely payment of any such items as required under
the terms of this Agreement;
(ii) all Insurance Proceeds which are to be applied to the restoration
or repair of any Mortgaged Property; and
(iii) all Servicing Advances for Mortgagors whose Escrow Payments are
insufficient to cover escrow disbursements.
The Seller shall make withdrawals from the Escrow Account only to effect
such payments as are required under this Agreement, and for such other purposes
as shall be as set forth or in accordance with Section 4.07. The Seller shall be
entitled to retain any interest paid on funds deposited in the Escrow Account by
the depository institution other than interest on escrowed funds required by law
to be paid to the Mortgagor and, to the extent required by law, the Seller shall
pay interest on escrowed funds to the Mortgagor notwithstanding that the Escrow
Account is non-interest bearing or that interest paid thereon is insufficient
for such purposes without reimbursement therefor.
Section 4.07. Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account may be made by Seller only:
(i) to effect timely payments of ground rents, taxes, assessments,
water rates, Primary Mortgage Insurance Policy premiums, if applicable, fire and
hazard insurance premiums, condominium assessments and comparable items;
(ii) to reimburse Seller for any Servicing Advance made by Seller with
respect to a related Mortgage Loan but only from amounts received on the related
Mortgage Loan which represent late payments or collections of Escrow Payments
thereunder;
(iii) to refund to the Mortgagor any funds as may be determined to be
overages;
(iv) for transfer to the Custodial Account in accordance with the terms
of this Agreement;
(v) for application to restoration or repair of the Mortgaged
Property;
(vi) to pay to the Seller, or to the Mortgagor to the extent required
by law, any interest paid on the funds deposited in the Escrow Account;
(vii) to clear and terminate the Escrow Account on the termination of
this Agreement. As part of its servicing duties, the Seller shall pay to the
Mortgagors interest on funds in the Escrow Account, to the extent required by
law, and to the extent that interest earned on funds in
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the Escrow Account is insufficient, shall pay such interest from its own funds,
without any reimbursement therefor; and
(viii) to pay to the Mortgagors or other parties Insurance Proceeds
deposited in accordance with Section 4.06.
Section 4.08. Payment of Taxes, Insurance and Other Charges; Maintenance
of Primary Mortgage Insurance Policies; Collections
Thereunder.
With respect to each Mortgage Loan, the Seller shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water rates
and other charges which are or may become a lien upon the Mortgaged Property and
the status of primary mortgage insurance premiums and fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of such
charges, including renewal premiums and shall effect payment thereof prior to
the applicable penalty or termination date and at a time appropriate for
securing maximum discounts allowable, employing for such purpose deposits of the
Mortgagor in the Escrow Account which shall have been estimated and accumulated
by the Seller in amounts sufficient for such purposes, as allowed under the
terms of the Mortgage or applicable law. To the extent that the Mortgage does
not provide for Escrow Payments, the Seller shall determine that any such
payments are made by the Mortgagor at the time they first become due. The Seller
assumes full responsibility for the timely payment of all such bills and shall
effect timely payments of all such bills irrespective of the Mortgagor's
faithful performance in the payment of same or the making of the Escrow Payments
and shall make advances from its own funds to effect such payments.
The Seller will maintain in full force and effect Primary Mortgage
Insurance Policies issued by a Qualified Insurer with respect to each Mortgage
Loan for which such coverage is herein required. Such coverage will be
maintained until the loan-to-value ratio of the related Mortgage Loan is reduced
to 80% or less in the case of a Mortgage Loan having a Loan-to-Value Ratio at
origination in excess of 80%; provided, however, that for purposes hereof, the
Loan-to-Value Ratio shall be determined in accordance with applicable law if
such determination is different from the definition of Loan-to-Value Ratio
provided in this Agreement. The Seller will not cancel or refuse to renew any
Primary Mortgage Insurance Policy in effect on the Closing Date that is required
to be kept in force under this Agreement unless a replacement Primary Mortgage
Insurance Policy for such canceled or nonrenewed policy is obtained from and
maintained with a Qualified Insurer. The Seller shall not take any action which
would result in non-coverage under any applicable Primary Mortgage Insurance
Policy of any loss which, but for the actions of the Seller would have been
covered thereunder. In connection with any assumption or substitution agreement
entered into or to be entered into pursuant to Section 6.01, the Seller shall
promptly notify the insurer under the related Primary Mortgage Insurance Policy,
if any, of such assumption or substitution of liability in accordance with the
terms of such policy and shall take all actions which may be required by such
insurer as a condition to the continuation of coverage under the Primary
Mortgage Insurance Policy. If such Primary Mortgage Insurance Policy is
terminated as a result of such assumption or substitution of liability, the
Seller shall obtain a replacement Primary Mortgage Insurance Policy as provided
above.
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In connection with its activities as servicer, the Seller agrees to
prepare and present, on behalf of itself and the Purchaser, claims to the
insurer under any Private Mortgage Insurance Policy in a timely fashion in
accordance with the terms of such Primary Mortgage Insurance Policy and, in this
regard, to take such action as shall be necessary to permit recovery under any
Primary Mortgage Insurance Policy respecting a defaulted Mortgage Loan. Pursuant
to Section 4.04, any amounts collected by the Seller under any Primary Mortgage
Insurance Policy shall be deposited in the Custodial Account, subject to
withdrawal pursuant to Section 4.05.
Section 4.09. Transfer of Accounts.
The Seller may transfer the Custodial Account or the Escrow Account to a
different Eligible Account from time to time. Such transfer shall be made only
upon obtaining the prior written consent of the Purchaser, which consent will
not be unreasonably withheld.
Section 4.10. Maintenance of Hazard Insurance.
The Seller shall cause to be maintained for each Mortgage Loan fire and
hazard insurance with extended coverage as is acceptable to FNMA and FHLMC and
customary in the area where the Mortgaged Property is located in an amount which
is equal to the lesser of (i) the maximum insurable value of the improvements
securing such Mortgage Loan or (ii) the greater of (a) the outstanding principal
balance of the Mortgage Loan, and (b) an amount such that the proceeds thereof
shall be sufficient to prevent the Mortgagor and/or the mortgagee from becoming
a co-insurer. In the event a hazard insurance policy shall be terminated, or in
the event the insurer shall cease to be acceptable to FNMA or FHLMC, the Seller
shall notify the Purchaser and the related Mortgagor, and shall use its best
efforts, as permitted by applicable law, to obtain from another qualified
insurer a replacement hazard insurance policy substantially and materially
similar in all respects to the original policy. In no event, however, shall a
Mortgage Loan be without a hazard insurance policy at any time, subject only to
Section 4.11 hereof. If required by the Flood Disaster Protection Act of 1973,
as amended, each Mortgage Loan shall be covered by a flood insurance policy
meeting the requirements of the current guidelines of the Federal Insurance
Administration in effect with an insurance carrier acceptable to FNMA and/or
FHLMC, in an amount representing coverage not less than the least of (i) the
outstanding principal balance of the Mortgage Loan, (ii) the maximum insurable
value of the improvements securing such Mortgage Loan or (iii) the maximum
amount of insurance which is available under the Flood Disaster Protection Act
of 1973, as amended. If at any time during the term of the Mortgage Loan, the
Seller determines in accordance with applicable law and pursuant to the FNMA
Guides that a Mortgaged Property is located in a special flood hazard area and
is not covered by flood insurance or is covered in an amount less than the
amount required by the Flood Disaster Protection Act of 1973, as amended, the
Seller shall notify the related Mortgagor that the Mortgagor must obtain such
flood insurance coverage, and if said Mortgagor fails to obtain the required
flood insurance coverage within forty-five (45) days after such notification,
the Seller shall immediately force place the required flood insurance on the
Mortgagor's behalf. The Seller shall also maintain on each REO Property, fire
and hazard insurance with extended coverage in an amount which is at least equal
to the maximum insurable value of the improvements which are a part of such
property, and, to the extent required and available under the Flood Disaster
Protection Act of 1973, as amended, flood insurance in an amount as provided
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above. If a Mortgage is secured by a unit in a condominium project, the Seller
shall verify that the coverage required of the owner's association, including
hazard, flood, liability, and fidelity coverage, is being maintained in
accordance with then current FNMA requirements, and secure from the owner's
association its agreement to notify the Seller promptly of any change in the
insurance coverage or of any condemnation or casualty loss that may have a
material effect on the value of the Mortgaged Property as security. In the event
that the Purchaser shall determine that the Mortgaged Property should be insured
against loss or damage by hazards and risks not covered by the insurance
required to be maintained by the Mortgagor pursuant to the terms of the
Mortgage, the Seller shall, at the Purchaser's request, communicate and consult
with the Mortgagor with respect to the need for such insurance and bring to the
Mortgagor's attention the desirability of protection of the Mortgaged Property.
Any amounts collected by the Seller under any such policies other than amounts
to be deposited in the Escrow Account and applied to the restoration or repair
of the Mortgaged Property or REO Property, or released to the Mortgagor in
accordance with Applicable Requirements, shall be deposited in the Custodial
Account, subject to withdrawal pursuant to Section 4.05. It is understood and
agreed that no other additional insurance need be required by the Seller or the
Mortgagor or maintained on property acquired in respect of the Mortgage Loan,
other than pursuant to this Agreement, the FNMA Guides or such applicable state
or federal laws and regulations as shall at any time be in force and as shall
require such additional insurance. All such policies shall be endorsed with
standard mortgagee clauses with loss payable to the Seller and its successors
and/or assigns and shall provide for at least thirty (30) days prior written
notice of any cancellation, reduction in the amount or material change in
coverage to the Seller. The Seller shall not interfere with the Mortgagor's
freedom of choice in selecting either his insurance carrier or agent, provided,
however, that the Seller shall not accept any such insurance policies from
insurance companies unless such companies are Qualified Insurers.
Section 4.11. Maintenance of Mortgage Impairment Insurance Policy.
In the event that the Seller shall obtain and maintain a blanket policy
issued by an insurer acceptable to FNMA and/or FHLMC insuring against hazard
losses on all of the Mortgage Loans, then, to the extent such policy names the
Seller as loss payee, provides coverage in an amount equal to the amount
required pursuant to Section 4.10 and otherwise complies with all other
requirements of Section 4.10, it shall conclusively be deemed to have satisfied
its obligations as set forth in Section 4.10, it being understood and agreed
that such policy may contain a deductible clause, in which case the Seller
shall, in the event that there shall not have been maintained on the related
Mortgaged Property or REO Property a policy complying with Section 4.10, and
there shall have been a loss which would have been covered by such policy,
deposit in the Custodial Account the amount not otherwise payable under the
blanket policy because of such deductible clause. In connection with its
activities as servicer of the Mortgage Loans, the Seller agrees to prepare and
present, on behalf of the Purchaser, claims under any such blanket policy in a
timely fashion in accordance with the terms of such policy and as otherwise
deemed necessary by the Seller in accordance with Accepted Servicing Practices.
Upon request of the Purchaser, the Seller shall cause to be delivered to the
Purchaser a certified true copy of such policy and shall use commercially
reasonable best efforts to obtain a statement from the insurer thereunder that
such policy shall in no event be terminated or materially modified without
thirty (30) days' prior written notice to the Purchaser.
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Section 4.12. Fidelity Bond, Errors and Omissions Insurance.
The Seller shall maintain, at its own expense, a blanket fidelity bond and
an errors and omissions insurance policy, with broad coverage with responsible
companies on all officers, employees or other persons acting in any capacity
with regard to the Mortgage Loans to handle funds, money, documents and papers
relating to the Mortgage Loans. The Fidelity Bond shall be in the form of the
Mortgage Banker's Blanket Bond and shall protect and insure the Seller against
losses, including those arising out of forgery, theft, embezzlement and fraud of
such Persons. The errors and omissions insurance shall protect and insure the
Seller against losses arising out of errors and omissions and negligent acts of
such Persons. Such errors and omissions insurance shall also protect and insure
the Seller against losses in connection with the failure to maintain any
insurance policies required pursuant to this Agreement and the release or
satisfaction of a Mortgage Loan without having obtained payment in full of the
indebtedness secured thereby. No provision of this Section 4.12 requiring the
Fidelity Bond or errors and omissions insurance shall diminish or relieve the
Seller from its duties and obligations as set forth in this Agreement. The
minimum coverage under any such bond and insurance policy shall be at least
equal to the amounts deemed acceptable to FNMA or FHLMC. The Seller shall
deliver to the Purchaser a certificate from the surety and the insurer as to the
existence of the Fidelity Bond and errors and omissions insurance policy and
shall obtain a statement from the surety and the insurer that such Fidelity Bond
or insurance policy shall in no event be terminated or materially modified
without thirty (30) days' prior written notice to the Purchaser. The Seller
shall notify the Purchaser within five (5) Business Days of receipt of notice
that such Fidelity Bond or insurance policy will be, or has been, materially
modified or terminated. The Purchaser (or any party having the status of
Purchaser hereunder) and any subsidiary thereof and their successors or assigns
as their interests may appear must be named as loss payees on the Fidelity Bond
and as additional insured on the errors and omissions policy. Upon request by
Purchaser, Seller shall provide Purchaser with an insurance certificate
certifying coverage under this Section 4.12, and will provide an update to such
certificate upon request, or upon renewal or material modification of coverage.
Section 4.13. Title, Management and Disposition of REO Property.
In the event that title to the Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Purchaser or its designee, or in the event the
Purchaser or its designee is not authorized or permitted to hold title to real
property in the state where the REO Property is located, or would be adversely
affected under the "doing business" or tax laws of such state by so holding
title, the deed or certificate of sale shall be taken in the name of such Person
or Persons as shall be consistent with an Opinion of Counsel obtained by the
Seller from an attorney duly licensed to practice law in the state where the REO
Property is located. Any Person or Persons holding such title other than the
Purchaser shall acknowledge in writing that such title is being held as nominee
for the benefit of the Purchaser.
The Seller shall notify the Purchaser in accordance with the FNMA Guides
of each acquisition of REO Property upon such acquisition, together with a copy
of the drive by appraisal or brokers price opinion of the Mortgaged Property
obtained in connection with such acquisition,
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and thereafter assume the responsibility for marketing such REO property in
accordance with Applicable Requirements. Thereafter, the Seller shall continue
to provide certain administrative services to the Purchaser relating to such REO
Property as set forth in this Section 4.13.
The fee for such administrative services shall be $1,500 to be paid upon
liquidation of the REO Property; provided, however, such fee shall not exceed
the net Liquidation Proceeds. No Servicing Fee shall be assessed on any REO
Property from and after the date on which it becomes an REO Property. The Seller
shall make monthly distributions on each Remittance Date to the Purchaser of the
net cash flow from the REO Property (which shall equal the revenues from such
REO Property net of the expenses described in this Section 4.13 and of any
reserves reasonably required from time to time to be maintained to satisfy
anticipated liabilities for such expenses).
The Seller shall, either itself or through an agent selected by the
Seller, and in accordance with the FNMA Guides manage, conserve, protect and
operate each REO Property in the same manner that it manages, conserves,
protects and operates other foreclosed property for its own account, and in the
same manner that similar property in the same locality as the REO Property is
managed. The Seller also shall maintain on each REO Property fire and hazard
insurance with extended coverage in amount which is at least equal to the
maximum insurable value of the improvements which are a part of such property,
liability insurance and, to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance in the amount
required above. Any costs incurred by the Seller in connection with maintaining
such insurance shall constitute a Servicing Advance. The Seller shall attempt to
sell the REO Property (and may temporarily rent the same) on such terms and
conditions as the Seller deems to be in the best interest of the Purchaser. The
Seller shall cause each REO Property to be inspected promptly upon the
acquisition of title thereto and shall cause each REO Property to be inspected
at least monthly thereafter or more frequently as required by the circumstances.
The Seller shall make or cause to be made a written report of each such
inspection. Such reports shall be retained in the Mortgage File and copies
thereof shall be forwarded by the Seller to the Purchaser.
The Seller shall use commercially reasonable best efforts to dispose of
the REO Property as soon as possible and shall sell such REO Property in any
event within two (2) years after title has been taken to such REO Property,
unless the Seller determines, and gives an appropriate notice to the Purchaser
to such effect, that a longer period is necessary for the orderly liquidation of
such REO Property. If a longer period than one (1) year is permitted under the
foregoing sentence and is necessary to sell any REO Property, the Seller shall
report monthly to the Purchaser as to the progress being made in selling such
REO Property. No REO Property shall be marketed for less than the Appraised
Value, without the prior consent of Purchaser. No REO Property shall be sold for
less than ninety-five percent (95%) of its Appraised Value, without the prior
consent of Purchaser. If as of the date title to any REO Property was acquired
by or on behalf of the Purchaser there were outstanding unreimbursed Servicing
Advances with respect to the REO Property, the Seller shall be entitled to
immediate reimbursement from the Purchaser for any related unreimbursed
Servicing Advances. All requests for reimbursement of Servicing Advances shall
be in accordance with the FNMA Guides. The disposition of REO Property shall be
carried out by the Seller at such price, and upon such terms and conditions, as
the Seller deems to be in the best interests of the Purchaser. Seller shall
provide monthly reports to
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Purchaser in reference to the status of the marketing of the REO Properties. The
proceeds of sale of the REO Property shall be promptly deposited in the
Custodial Account. As soon as practical thereafter the expenses of such sale
shall be paid and the Seller shall reimburse itself for any related unreimbursed
Servicing Advances, unpaid Servicing Fees and unreimbursed advances made
pursuant to Section 5.03. On the Remittance Date immediately following the
receipt of such sale proceeds, the net cash proceeds of such sale remaining in
the Custodial Account shall be distributed to the Purchaser.
Notwithstanding anything to the contrary contained herein, the Purchaser
may, at the Purchaser's sole option, terminate the Seller as servicer of any
such REO Property without payment of any termination fee with respect thereto,
provided that the Seller shall on the date said termination takes effect be
reimbursed by withdrawal from the Custodial Account for any unreimbursed
advances of the Seller's funds made pursuant to Section 5.03 and any
unreimbursed Servicing Advances in each case relating to the Mortgage Loan
underlying such REO Property notwithstanding anything to the contrary set forth
in Section 4.05. In the event of any such termination, the provisions of Section
11.01 hereof shall apply to said termination and the transfer of servicing
responsibilities with respect to such REO Property to the Purchaser or its
designee.
Section 4.14. Notification of Maturity Date.
With respect to each Mortgage Loan, the Seller shall execute and deliver
to the Mortgagor any and all necessary notices required under applicable law and
the terms of the related Mortgage Note and Mortgage regarding the maturity date
if required under applicable law.
Section 4.15. Reports of Foreclosures and Abandonments of Mortgaged
Property.
Following the foreclosure sale or abandonment of any Mortgaged Property,
the Seller shall report such foreclosure or abandonment as required pursuant to
Section 6050J of the Code. The Seller shall file information reports with
respect to the receipt of mortgage interest received in a trade or business and
information returns relating to cancellation of indebtedness income with respect
to any Mortgaged Property as required by the Code. Such reports shall be in form
and substance sufficient to meet the reporting requirements imposed by the Code.
Section 4.16. Inspections.
If any Mortgage Loan is (i) more than sixty (60) days delinquent and the
Seller has not contacted the Mortgagor during such period or (ii) more than one
hundred twenty (120) days delinquent in any event, the Seller immediately shall
inspect the Mortgaged Property and shall conduct subsequent inspections in
accordance with Acceptable Servicing Practices or as may be required by the
primary mortgage guaranty insurer. The Seller shall keep a written report of
each such inspection.
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Section 4.17. Restoration of Mortgaged Property.
The Seller need not obtain the approval of the Purchaser prior to
releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be
applied to the restoration or repair of the Mortgaged Property if such release
is in accordance with Acceptable Servicing Practices. For claims greater than
$10,000, the Seller shall comply with the following conditions in connection
with any such release of Insurance Proceeds or Condemnation Proceeds:
(i) the Seller shall receive satisfactory independent verification of
completion of repairs and issuance of any required approvals with respect
thereto;
(ii) the Seller shall take all reasonable steps necessary to preserve
the priority of the lien of the Mortgage, including, but not limited to
requiring waivers with respect to mechanics' and materialmen's liens;
(iii) the Seller shall verify that the Mortgage Loan is not in default;
provided, however, that the Seller may still release such proceeds if required
by applicable law; and
(iv) pending repairs or restoration, the Seller shall place the
Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
(v) If the Purchaser is named as an additional loss payee, the Seller
is hereby empowered to endorse any loss draft issued in respect of such a claim
in the name of the Purchaser.
Section 4.18. Security Measures/Compliance with Safeguarding Customer
Information Requirements.
The Servicer has implemented and will maintain such security and
safeguarding measures required of the Servicer and designed to meet the
objectives of the Interagency Guidelines Establishing Standards for Safeguarding
Customer Information published in final form on February 1, 2001, 66 Fed. Reg.
8616, and the rules promulgated thereunder, as amended from time to time (the
"Guidelines"), including without limitation to the provision of the Servicer's
security and safeguarding procedures to any applicable regulator and as required
pursuant to the Guidelines.
Section 4.19. Disaster Recovery/Business Continuity Plan.
The Servicer shall establish, maintain and upon reasonable written
notification, make available for review by the appropriate regulator, Servicer's
contingency plans, recovery plans and risk controls to ensure the Servicer's
continued performance under this Agreement, provided, however, that the
regulator agrees to maintain the proprietary nature of Servicer's information.
The plans must be in place within thirty (30) calendar days after the Closing
Date of this Agreement and shall include, but not be limited to, testing,
control functions, accountability and corrective actions to be immediately
implemented, if necessary.
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Section 4.20. Privacy/Confidential Information.
Each party shall keep confidential and shall not divulge to any party,
without the other party's prior written consent, the price paid by the Purchaser
for the Mortgage Loans, except to the extent that it is reasonable and necessary
for either party to do so in working with legal counsel, auditors, taxing
authorities or other governmental agencies. Each party shall maintain physical,
electronic and procedural safeguards to store, dispose of (if applicable) and
secure nonpublic personal information to protect it from unauthorized access,
use, disclosure, alteration, loss and destruction. The safeguards used by each
party to protect nonpublic personal information shall be no less than those used
by such party to protect its own confidential information. Each party shall
control access to, and, to the extent reasonably possible, use of, nonpublic
personal information and, except as required by law or as otherwise may be
specifically permitted, or under ss. 502(e) of the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act (P.L.
106-102) (15 U.S.C. ss. 6802(e), and accompanying regulations, or by this
Agreement, permit access only to individuals who need access in connection with
the duties to be performed under this Agreement and shall require such
individuals to maintain the confidentiality of such nonpublic personal
information. For purposes of this paragraph, the term "nonpublic personal
information" shall have the meanings set forth in ss. 509 of the
▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act (P.L. 106-102) (15 U.S.C. ss. 6809) and implementing
regulations thereof. The restrictions set forth herein shall survive termination
of this Agreement.
Section 4.21. Notification of Adjustments
With respect to each ARM Mortgage Loan, the Servicer shall adjust the
Mortgage Interest Rate on the related Adjustment Date and shall adjust the
Monthly Payment on the related Payment Adjustment Date in compliance with the
requirements of applicable law and the related Mortgage and Mortgage Note. If,
pursuant to the terms of the Mortgage Note, another index is selected for
determining the Mortgage Interest Rate because the original index is no longer
available, the same index will be used with respect to each Mortgage Note which
requires a new index to be selected, provided that such selection does not
conflict with the terms of the related Mortgage Note. The Servicer shall execute
and deliver any and all necessary notices required under applicable law and the
terms of the related Mortgage Note and Mortgage regarding the Mortgage Interest
Rate and the Monthly Payment adjustments. The Servicer shall promptly, upon
written request therefore, deliver to the Purchaser such notifications and a
description of any additional applicable date regarding such adjustments and the
methods used to calculate and implement such adjustments. Upon the discovery by
the Servicer or the Purchaser that the Servicer has failed to adjust a Mortgage
Interest Rate or a Monthly Payment pursuant to the terms of the related Mortgage
Note and Mortgage, the Servicer shall immediately deposit in the Custodial
Account, from its own funds, the amount of any interest loss caused the
Purchaser thereby without reimbursement therefor.
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ARTICLE V
PAYMENTS TO THE PURCHASER
Section 5.01. Distributions.
On each Remittance Date, the Seller shall distribute by wire transfer to
the Purchaser (i) all amounts credited to the Custodial Account as of the close
of business on the preceding Determination Date, net of charges against or
withdrawals from the Custodial Account pursuant to Section 4.05, plus (ii) all
Monthly Advances, if any, which the Seller is obligated to distribute pursuant
to Section 5.03, plus (iii) any Prepayment Interest Shortfall Amount, provided
that the Servicer's obligation as to payment of such amount shall be limited to
the Servicing Fee earned during the month of the distribution less (iv) any
amounts attributable to Monthly Payments collected but due on a Due Date or
Dates subsequent to the preceding Determination Date, which amounts shall be
remitted on the Remittance Date next succeeding the Due Period for such amounts,
and any Principal Prepayments received during the month of such Remittance Date,
which amounts shall be remitted on the next succeeding Remittance Date. It is
understood that, by operation of Section 4.04, the remittance on the first
Remittance Date is to include principal collected after the Cut-off Date through
the preceding Determination Date plus interest, at the Mortgage Loan Remittance
Rate collected through such Determination Date exclusive of any portion thereof
allocable to the period prior to the Cut-off Date, with the adjustments
specified in clauses (ii), (iii) and (iv) above.
With respect to any remittance received by the Purchaser after the
Business Day on which such payment was due, the Seller shall pay to the
Purchaser interest on any such late payment at an annual rate equal to the Prime
Rate, adjusted as of the date of each change, plus one (1) percentage point, but
in no event greater than the maximum amount permitted by applicable law. Such
interest shall be deposited in the Custodial Account by the Seller on the date
such late payment is made and shall cover the period commencing with the day
following the Business Day on which such payment was due and ending with the
Business Day on which such payment is made, both inclusive. Such interest shall
be remitted along with the distribution payable on the next succeeding
Remittance Date. The payment by the Seller of any such interest shall not be
deemed an extension of time for payment or a waiver of any Event of Default by
the Seller.
The Purchaser's assignee will provide wiring instructions and the names,
addresses and telephone numbers of persons whom Servicer can contact to confirm
receipt of the remittances in the Assignment and Assumption Agreement to be
executed no later than two (2) Business Days after the Closing Date. In the
event the Assignment and Assumption Agreement does not contain such information
and is not executed within such time period, the Purchaser shall provide wiring
instructions and the names, addresses and telephone numbers of employees of the
Purchaser whom the Seller can contact to confirm receipt of the remittances.
Section 5.02. Statements to the Purchaser.
Not later than the fifth (5th) Business Day of each month, the Servicer
shall furnish to the Purchaser, with respect to the preceding month, a monthly
collection report, a monthly paid in
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full report that summarizes Mortgage Loans paid in full during the related Due
Period and a monthly trial balance report that provides a trial balance as of
the last day of the month preceding such Remittance Date in electronic format
agreed upon by the Servicer and the Purchaser.
Not later than the fifth (5th) Business Day of each month, the Servicer
shall furnish to the Purchaser a delinquency report and a Monthly Remittance
Advice, both a physical form and a mutually agreeable electronic format, as to
the remittance on such Remittance Date and as to the period ending on the last
day of the month preceding such Remittance Date.
The Seller shall prepare and file any and all information statements or
other filings required to be delivered to any governmental taxing authority or
to Purchaser pursuant to any applicable law with respect to the Mortgage Loans
and the transactions contemplated hereby. In addition, the Seller shall provide
Purchaser with such information concerning the Mortgage Loans as is necessary
for Purchaser to prepare its federal income tax return as Purchaser may
reasonably request from time to time.
In addition, not more than sixty (60) days after the end of each calendar
year, the Seller shall furnish to each Person who was a Purchaser at any time
during such calendar year an annual statement in accordance with the
requirements of applicable federal income tax law as to the aggregate of
remittances for the applicable portion of such year.
Section 5.03. Monthly Advances by the Seller.
Not later than the close of business on the Business Day preceding each
Remittance Date, the Seller shall deposit in the Custodial Account an amount
equal to all payments not previously advanced by the Seller, whether or not
deferred pursuant to Section 4.01, of principal (due after the Cut-off Date) and
interest not allocable to the period prior to the Cut-off Date, at the Mortgage
Loan Remittance Rate, which were due on a Mortgage Loan and delinquent at the
close of business on the related Determination Date.
The Seller's obligation to make such Monthly Advances as to any Mortgage
Loan will continue through the last Monthly Payment due prior to the payment in
full of the Mortgage Loan, or through the Remittance Date prior to the date on
which the Mortgaged Property is liquidated (including Insurance Proceeds, REO
Disposition Proceeds or Condemnation Proceeds) with respect to the Mortgage
Loan, unless the Seller deems such advance to be nonrecoverable. In such event,
the Seller shall deliver to the Purchaser an Officer's Certificate of the Seller
to the effect that an officer of the Seller has reviewed the related Mortgage
File and has made the reasonable determination that any additional advances are
nonrecoverable.
Section 5.04. Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Purchaser pursuant to a deed-in-lieu of foreclosure, the Seller
shall submit to the Purchaser a liquidation report with respect to such
Mortgaged Property. The Seller shall also provide reports on the status of REO
Property containing such information as Purchaser may reasonably require.
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Section 5.05. Automated Servicing Systems.
On the fifth (5th) day of the succeeding month after closing, The Seller
shall set up, format, maintain and transmit to the Purchaser the Seller's
mortgage servicer file and other electronic data storage and transmission
systems related to the Mortgage Loans (collectively, the "Servicing Systems") in
accordance with the guidelines and requirements set forth in Exhibit J attached
hereto (the "Servicer Requirements"), and the Seller shall cooperate with
Purchaser to receive data from the Purchaser that is to be incorporated in the
Servicing Systems in accordance with the Servicer Requirements.
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01. Assumption Agreements.
The Seller will, to the extent it has knowledge of any conveyance or
prospective conveyance by any Mortgagor of the Mortgaged Property (whether by
absolute conveyance or by contract of sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the maturity of such Mortgage Loan under any
"due-on-sale" clause to the extent permitted by law; provided, however, that the
Seller shall not exercise any such rights if prohibited by law or the terms of
the Mortgage Note from doing so or if the exercise of such rights would impair
or threaten to impair any recovery under the related Primary Mortgage Insurance
Policy, if any. If the Seller reasonably believes it is unable under applicable
law to enforce such "due-on-sale" clause, the Seller, with the approval of the
Purchaser (such approval not to be unreasonably withheld), will enter into an
assumption agreement with the person to whom the Mortgaged Property has been
conveyed or is proposed to be conveyed, pursuant to which such person becomes
liable under the Mortgage Note and, to the extent permitted by applicable state
law, the Mortgagor remains liable thereon. Where an assumption is allowed
pursuant to this Section 6.01, the Seller, with the prior consent of the
Purchaser and the primary mortgage insurer, if any, is authorized to enter into
a substitution of liability agreement with the person to whom the Mortgaged
Property has been conveyed or is proposed to be conveyed pursuant to which the
original mortgagor is released from liability and such Person is substituted as
mortgagor and becomes liable under the related Mortgage Note. Any such
substitution of liability agreement shall be in lieu of an assumption agreement.
Purchaser shall be deemed to have consented to any assumption for which
Purchaser was given notification and requested to consent, but for which neither
a consent nor an objection was given by Purchaser within two (2) Business Days
of such notification.
In connection with any such assumption or substitution of liability, the
Seller shall follow the underwriting practices and procedures of the FNMA
Guides. With respect to an assumption or substitution of liability, the Mortgage
Interest Rate borne by the related Mortgage Note, the Lifetime Rate Cap, the
Initial Rate Cap, the Periodic Rate Cap, the Gross Margin and the amount of the
Monthly Payment and the maturity date may not be changed. If the credit of the
proposed transferee does not meet such underwriting criteria, the Seller
diligently shall, to the extent permitted by the Mortgage or the Mortgage Note
and by applicable law, accelerate the maturity
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of the Mortgage Loan. The Seller shall notify the Purchaser that any such
substitution of liability or assumption agreement has been completed by
forwarding to the Purchaser the original of any such substitution of liability
or assumption agreement, which document shall be added to the related Mortgage
File and shall, for all purposes, be considered a part of such Mortgage File to
the same extent as all other documents and instruments constituting a part
thereof. All fees collected by the Seller for entering into an assumption or
substitution of liability agreement shall belong to the Seller.
Notwithstanding the foregoing paragraphs of this Section or any other
provision of this Agreement, the Seller shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or any assumption which the
Seller may be restricted by law from preventing, for any reason whatsoever. For
purposes of this Section 6.01, the term "assumption" is deemed to also include a
sale of the Mortgaged Property subject to the Mortgage that is not accompanied
by an assumption or substitution of liability agreement.
Section 6.02. Satisfaction of Mortgages and Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Seller of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Seller will immediately notify the Purchaser's
custodian by a certification, which certification shall include a statement to
the effect that all amounts received or to be received in connection with such
payment which are required to be deposited in the Custodial Account pursuant to
Section 4.04 have been or will be so deposited, of a Servicing Officer and shall
request delivery to it of the portion of the Mortgage File held by the
Purchaser. The Purchaser's custodian shall be required no later than five (5)
Business Days after receipt of such certification and request to release or
cause to be released to the Seller, the related Mortgage Loan Documents and,
upon its receipt of such documents, the Seller shall promptly prepare and
execute (pursuant to a power of attorney or limited officer appointment to be
provided by Purchaser to Seller) the requisite satisfaction or release. No
expense incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Custodial Account.
In the event the Seller satisfies or releases a Mortgage without having
obtained payment in full of the indebtedness secured by the Mortgage or should
it otherwise prejudice any right the Purchaser may have under the mortgage
instruments, the Seller, upon written demand, shall remit within two (2)
Business Days to the Purchaser the then outstanding principal balance of the
related Mortgage Loan by deposit thereof in the Custodial Account. The Seller
shall maintain the Fidelity Bond and errors and omissions insurance insuring the
Seller against any loss it may sustain with respect to any Mortgage Loan not
satisfied in accordance with the procedures set forth herein.
From time to time and as appropriate for the servicing or foreclosure of
the Mortgage Loan, including for the purpose of collection under any Primary
Mortgage Insurance Policy, the Purchaser or its designee shall, upon request of
the Seller and delivery to the Purchaser or its designee of a servicing receipt
signed by a Servicing Officer, release the portion of the Mortgage File held by
the Purchaser or its designee to the Seller. Such servicing receipt shall
obligate the
52
Seller to return the related Mortgage Loan Documents to the Purchaser or its
designee when the need therefor by the Seller no longer exists, unless the
Mortgage Loan has been liquidated and the Liquidation Proceeds relating to the
Mortgage Loan have been deposited in the Custodial Account or the Mortgage File
or such document has been delivered to an attorney, or to a public trustee or
other public official as required by law, for purposes of initiating or pursuing
legal action or other proceedings for the foreclosure of the Mortgaged Property
either judicially or non-judicially, and the Seller has delivered to the
Purchaser or its designee a certificate of a Servicing Officer certifying as to
the name and address of the Person to which such Mortgage File or such document
was delivered and the purpose or purposes of such delivery. Upon receipt of a
certificate of a Servicing Officer stating that such Mortgage Loan was
liquidated, the servicing receipt shall be released by the Purchaser or its
designee to the Seller.
Section 6.03. Servicing Compensation.
As compensation for its services hereunder, the Seller shall be entitled
to withdraw from the Custodial Account (to the extent of interest payments
collected on the Mortgage Loans) or to retain from interest payments on the
Mortgage Loans the amounts provided for as the Seller's Servicing Fee, subject
to payment of compensating interest on Principal Prepayments as capped by the
Servicing Fee pursuant to Section 5.01(iii). Additional servicing compensation
in the form of income and other benefits derived from escrow and custodial
accounts and assumption fees, as provided in Section 6.01, late payment charges
and other similar ancillary fees or otherwise shall be retained by the Seller to
the extent not required to be deposited in the Custodial Account. The Seller
shall be required to pay all expenses incurred by it in connection with its
servicing activities hereunder and shall not be entitled to reimbursement
therefor except as specifically provided for herein.
Section 6.04. Annual Statement as to Compliance.
(a) The Seller will deliver to the Purchaser, not later than the earlier
of (a) March 31 of each calendar year (other than the calendar year during which
the Closing Date occurs) or (b) with respect to any calendar year during which
the depositor's annual report on Form 10-K is required to be filed in accordance
with the Securities Exchange Act of 1934, as amended (the "Exchange Act") and
the rules and regulations of the Securities and Exchange Commission (the
"Commission"), 15 calendar days before the date on which the depositor's annual
report on Form 10-K is required to be filed in accordance with the Exchange Act
and the rules and regulations of the Commission (or, in each case, if such day
is not a Business Day, the immediately preceding Business Day), an Officers'
Certificate stating, as to each signatory thereof, that (i) a review of the
activities of the Seller during the preceding calendar year and of performance
under this Agreement has been made under such officers' supervision, and (ii) to
the best of such officers' knowledge, based on such review, the Seller has
fulfilled all of its obligations under this Agreement throughout such year, or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officers and the nature and status
thereof. Copies of such statement shall be provided by the Seller to the
Purchaser upon request.
(b) The Seller will deliver to the Purchaser, with respect to any
Mortgage Loans that are subject to a Securitization or other securitization
transaction, not later than the earlier of (a)
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March 31 of each calendar year (other than the calendar year during which the
Closing Date occurs) or (b) with respect to any calendar year during which the
depositor's annual report on Form 10-K is required to be filed in accordance
with the Exchange Act and the rules and regulations of the Commission, 15
calendar days before the date on which the depositor's annual report on Form
10-K is required to be filed in accordance with the Exchange Act and the rules
and regulations of the Commission (or, in each case, if such day is not a
Business Day, the immediately preceding Business Day), an officer of the
Servicer shall execute and deliver an Officer's Certificate in the form attached
hereto as Exhibit H to the person who provides certification required under the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 in connection with such a Securitization or other
securitization transaction for the benefit of such person and its officers,
directors and affiliates.
(c) The Servicer shall indemnify and hold harmless the Master Servicer
and the Sarbanes Certifying Party (any such person, an "Indemnified Party") from
and against any losses, damages, penalties, fines, forfeitures, reasonable legal
fees and related costs, judgments and other costs and expenses arising out of or
based upon a breach by the Servicer of its obligations under this Section 6.04,
or the negligence, bad faith or willful misconduct of the Servicer in connection
therewith. If the indemnification provided for herein is unavailable or
insufficient to hold harmless any Indemnified Party, then the Servicer agrees
that it shall contribute to the amount paid or payable by the Indemnified Party
as a result of the losses, claims, damages or liabilities of the Indemnified
Party in such proportion as is appropriate to reflect the relative fault of the
Indemnified Party on the one hand and the Servicer in the other in connection
with a breach of the Servicer's obligations under this Section 6.04, or the
Servicer's negligence, bad faith or willful misconduct in connection therewith.
(d) It is acknowledged and agreed that each Master Servicer and the
Sarbanes Certifying Party shall be an express third party beneficiary of the
provisions of this Section 6.04, and shall be entitled independently to enforce
the provisions of this Section 6.04 with respect to any obligations owed to such
entity as if it were a direct party to this Agreement.
Section 6.05. Annual Independent Certified Public Accountants' Servicing
Report.
On the earlier of (a) March 31 or (b) using best efforts, within 15
calendar days prior to the date on which the Purchaser's annual report on Form
10-K is required to be filed, the Seller will deliver to the Purchaser at
Seller's expense and shall cause a firm of independent public accountants, which
is a member of the American Institute of Certified Public Accountants to furnish
a statement to the Purchaser to the effect that such firm has examined certain
documents and records relating to the Seller's servicing of mortgage loans of
the same type as the Mortgage Loans pursuant to servicing agreements
substantially similar to this Agreement, which agreements may include this
Agreement, and that, on the basis of such an examination, conducted
substantially in accordance with the uniform single attestation program for
mortgage bankers, such firm is of the opinion that the Seller's servicing has
been conducted in compliance with the agreements examined pursuant to this
Section 6.05, except for (i) such exceptions as such firm shall believe to be
immaterial, and (ii) such other exceptions as shall be set forth in such
statement. Copies of such statement shall be provided by the Seller to the
Purchaser. In addition, on an annual basis, upon Purchaser's request, Seller
shall provide Purchaser with copies
54
of its audited financial statements upon execution by Purchaser of an agreement
to keep confidential the contents of such financial statements. Notwithstanding
the foregoing, in connection with the effectiveness of final rules promulgated
by the Securities and Exchange Commission related to asset-backed securities
(Release Nos. 33-8518; 34-50905) (as such rules may be amended or modified from
time to time, the "ABS Rules"), the Seller agrees to negotiate in good faith
with the Purchaser with respect to providing such statements or reports as may
be necessary in order to comply with the ABS Rules.
Section 6.06. Purchaser's Right to Examine Seller Records.
The Purchaser, or its designee, shall have the right to examine and audit
upon reasonable notice to the Seller, during business hours or at such other
times as might be reasonable under applicable circumstances, any and all of the
books, records, documentation or other information of the Seller, or held by
another for the Seller or on its behalf or otherwise, which relates to the
performance or observance by the Seller of the terms, covenants or conditions of
this Agreement.
The Seller shall provide to the Purchaser and any supervisory agents or
examiners representing a state or federal governmental agency having
jurisdiction over the Purchaser, including but not limited to the OCC and other
comparable regulatory authorities supervising the Purchaser and other similar
entities, access to any documentation regarding the Mortgage Loans in the
possession of the Seller which may be required by any applicable regulations.
Such access shall be afforded without charge, upon reasonable request, during
normal business hours and at the offices of the Seller, and in accordance with
the federal government, the OCC and other comparable regulatory authorities
supervising the Purchaser, or any other similar regulations.
Section 6.07. Compliance with REMIC Provisions.
If a REMIC election has been made with respect to the arrangement under
which the Mortgage Loans and REO Property are held, the Seller shall not take
any action or fail to take any action that, under the REMIC Provisions, if taken
or not taken, as the case may be, could (i) endanger the status of the REMIC as
a REMIC or (ii) result in the imposition of a tax upon the REMIC (including but
not limited to the tax on "prohibited transactions" as defined in Section
860F(a)(2) of the Code and the tax on contributions to a REMIC set forth in
Section 860G(d) of the Code) unless the Seller has received an Opinion of
Counsel (at the expense of the party seeking to take such action) to the effect
that the contemplated action will not endanger such REMIC status or result in
the imposition of any such tax.
ARTICLE VII
SELLER TO COOPERATE
Section 7.01. Seller Shall Provide Information as Reasonably Required.
Upon reasonable request from the Purchase, the Seller shall use its best
efforts to deliver no later than sixty (60) day after such request any Servicing
File or document therein, or copies
55
or images thereof, to the Purchaser at the direction of the Purchaser. The
Purchaser shall return any original Servicing File or document therein delivered
pursuant to this Section no later than ten (10) days after receipt thereof.
The Seller shall furnish to the Purchaser during the term of this
Agreement, such periodic, special or other reports, information or
documentation, whether or not provided for herein, as shall be necessary,
reasonable or appropriate in respect to the Purchaser, or otherwise in respect
to the Mortgage Loans and the performance of the Seller under this Agreement,
including any reports, information or documentation reasonably required to
comply with any regulations regarding any supervisory agents or examiners of the
Purchaser, all such reports or information to be as provided by and in
accordance with such applicable instructions and directions as the Purchaser may
reasonably request in relation to this Agreement or the performance of the
Seller under this Agreement. The Seller agrees to execute and deliver all such
instruments and take all such action as the Purchaser, from time to time, may
reasonably request in order to effectuate the purpose and to carry out the terms
of this Agreement.
In connection with marketing the Mortgage Loans, the Purchaser may make
available to a prospective purchaser audited financial statements of the Seller
for the most recently completed two (2) fiscal years for which such statements
are available, as well as a Consolidated Statement of Condition at the end of
the last two (2) fiscal years covered by any Consolidated Statement of
Operations. If it has not already done so, upon request, the Seller shall
furnish promptly to the Purchaser or a prospective purchaser copies of the
statements specified above; provided, however, that prior to furnishing such
statements or information to any prospective purchaser, the Seller may require
such prospective purchaser to execute a confidentiality agreement in a form
satisfactory to the Seller.
The Seller shall make reasonably available to the Purchaser or any
prospective Purchaser a knowledgeable financial or accounting officer for the
purpose of answering questions and to permit any prospective purchaser to
inspect the Seller's servicing facilities for the purpose of satisfying such
prospective purchaser that the Seller has the ability to service the Mortgage
Loans as provided in this Agreement.
Section 7.02. Cooperation with Third-party Service Providers.
The Seller shall cooperate with the Purchaser in servicing the Mortgage
Loans in accordance with the usual and customary requirements of any credit
enhancement, risk management and other service providers and shall otherwise
cooperate with the Purchaser in connection with such third-party service
providers and the provision of third-party services; provided, however, that
such requirements are reasonably acceptable to the Seller and pose no greater
risk, obligation or expense to the Seller than otherwise set forth in this
Agreement. Any additional costs and/or expenses will be paid by the requesting
party.
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ARTICLE VIII
THE SELLER
Section 8.01. Indemnification; Third Party Claims.
The Seller agrees to indemnify the Purchaser and hold it harmless against
any and all claims, losses, damages, penalties, fines, forfeitures, legal fees
and related costs, judgments, and any other costs, fees and expenses that the
Purchaser may sustain in any way related to the failure of the Seller to observe
and perform its duties, obligations, covenants, and agreements to service the
Mortgage Loans in strict compliance with the terms of this Agreement; provided
that Seller shall not be required to indemnify Purchaser with respect to any
amounts otherwise paid to the Purchaser with respect to the Repurchase Price, as
provided in Section 3.03. The Seller agrees to indemnify the Purchaser and hold
it harmless against any and all claims, losses, damages, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs, fees
and expenses that the Purchaser may sustain in any way related to the breach of
a representation or warranty set forth in Sections 3.01 or 3.02 of this
Agreement; provided that Seller shall not be required to indemnify Purchaser
with respect to any amounts otherwise paid to the Purchaser with respect to the
Repurchase Price, as provided in Section 3.03. The Seller shall immediately
notify the Purchaser if a claim is made by a third party with respect to this
Agreement or the Mortgage Loans, assume (with the prior written consent of the
Purchaser) the defense of any such claim and pay all expenses in connection
therewith, including counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against it or the Purchaser in respect
of such claim. The Seller shall follow any written instructions received from
the Purchaser in connection with such claim. The Purchaser shall promptly
reimburse the Seller for all amounts advanced by it pursuant to the two
preceding sentences except when the claim relates to the failure of the Seller
to service and administer the Mortgages in strict compliance with the terms of
this Agreement, the breach of representation or warranty set forth in Sections
3.01 or 3.02, or the negligence, bad faith or willful misconduct of Seller. The
provisions of this Section 8.01 shall survive termination of this Agreement.
Section 8.02. Merger or Consolidation of the Seller.
The Seller will keep in full effect its existence, rights and franchises
as a corporation under the laws of the state of its incorporation except as
permitted herein, and will obtain and preserve its qualification to do business
as a foreign corporation in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and enforceability of this Agreement,
or any of the Mortgage Loans and to perform its duties under this Agreement.
Any Person into which the Seller may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Seller shall be a party, or any Person succeeding to the business of the Seller
whether or not related to loan servicing, shall be the successor of the Seller
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person shall
be an institution (i) having a GAAP net worth of not less than $25,000,000, (ii)
the deposits of which are insured
57
by the FDIC, SAIF and/or BIF, or which is a HUD-approved mortgagee whose primary
business is in origination and servicing of first lien mortgage loans, and (iii)
who is a FNMA or FHLMC approved seller/service in good standing. Furthermore, in
the event the Seller transfers or otherwise disposes of all or substantially all
of its assets to an affiliate of the Seller, such affiliate shall satisfy the
condition above, and shall also be fully liable to the Purchaser for all of the
Seller's obligations and liabilities.
Section 8.03. Limitation on Liability of the Seller and Others.
Neither the Seller nor any of the officers, employees or agents of the
Seller shall be under any liability to the Purchaser for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment made in good faith; provided, however, that
this provision shall not protect the Seller or any such person against any
breach of warranties or representations made herein, or failure to perform its
obligations in strict compliance with any standard of care set forth in this
Agreement, or any liability which would otherwise be imposed by reason of
negligence, bad faith or willful misconduct, or any breach of the terms and
conditions of this Agreement. The Seller and any officer, employee or agent of
the Seller may rely in good faith on any document of any kind prima facie
properly executed and submitted by the Purchaser respecting any matters arising
hereunder. The Seller shall not be under any obligation to appear in, prosecute
or defend any legal action which is not incidental to its duties to service the
Mortgage Loans in accordance with this Agreement and which in its reasonable
opinion may involve it in any expenses or liability; provided, however, that the
Seller may, with the consent of the Purchaser, undertake any such action which
it may deem necessary or desirable in respect to this Agreement and the rights
and duties of the parties hereto. In such event, the reasonable legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities for which the Purchaser will be liable, and the
Seller shall be entitled to be reimbursed therefor from the Purchaser upon
written demand unless any such costs result from a breach of the Seller's
representations and warranties made herein or its failure to perform its
obligations in strict compliance with this Agreement.
Section 8.04. Resignation and Assignment by the Servicer
Upon sixty (60) days prior written notice to the Purchaser, the
Servicer shall have the right to assign this Agreement or the servicing
hereunder or delegate to a subservicer (a successor servicer or subservicer
shall be referred to herein as a "successor servicer") its rights or duties
hereunder or any portion hereof provided that the ability of the Servicer to
assign its rights and delegate its duties under this Agreement to a successor
servicer shall be subject to the following conditions:
(i) The Purchaser shall consent in writing to the assignment,
which consent shall not be unreasonably withheld; provided that no consent shall
be required in the event that such assignment or delegation is to an affiliate
of Servicer;
(ii) Such successor servicer must be qualified to service loans
for ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac, and must be an Approved Mortgagee and
a Approved Lender and an Approved Lender, in each case in good standing with the
applicable agency;
58
(iii) Such successor servicer must have a net worth of not less
than $50,000,000;
(iv) Such successor servicer must execute and deliver to the
Purchaser an agreement, in form and substance reasonably satisfactory to the
Purchaser, that contains an assumption by such successor servicer of the due and
punctual performance and observance of each covenant and condition to be
performed and observed by the Servicer under this Agreement;
(v) Any such assignment or delegation shall only be made in
compliance with any related Reconstitution Agreement then in effect and the
requirements of any related trust agreement or similar document governing the
assignment of servicing, including any notice requirements; and
(vi) The Servicer shall, at its cost and expense, take such steps
that may be necessary or appropriate to effectuate and evidence the transfer of
the servicing of the Mortgage Loans to such successor servicer, including, but
not limited to, the following: (A) on or prior to the date of such transfer or
within the period following such transfer that is prescribed by applicable laws
and regulations, the Servicer shall complete all forms, take all actions
required, as applicable, in connection with such transfer of servicing, shall
provide such notices, as applicable, in connection therewith as are required
under applicable laws and regulations, shall obtain all necessary approvals, as
applicable, for such transfer of servicing, and shall provide evidence thereof
(in form reasonably satisfactory to the Purchaser) to the Purchaser and to the
successor servicer; (B) to the extent required by the terms of the Mortgage
Loans and by applicable federal and state laws and regulations, the Servicer
shall timely mail to each obligor under a Mortgage Loan any required notices or
disclosures describing the transfer of servicing of the Mortgage Loans to the
successor servicer; (C) prior to the effective date of such transfer of
servicing, the Servicer shall transmit to any related insurer notification of
such transfer; (D) on or prior to the effective date of such transfer of
servicing, the Servicer shall deliver to the successor servicer all Mortgage
Loan Documents, the Servicing File and any related records or materials in the
custody of the Servicer; (E) on or prior to the effective date of such transfer,
the Servicer shall transfer to the successor servicer all funds held by the
Servicer in respect of the Mortgage Loans, other than amounts payable to the
Servicer pursuant to this Agreement; (F) the Servicer shall, for a period of
ninety (90) days following the effective date of the transfer of servicing to
the successor servicer, continue to forward to such successor, within two (2)
Business Days of receipt, the amount of any payments or other recoveries
received by the Servicer, and the Servicer shall notify the successor servicer
of the source and proper application of each such payment or recovery; (G) the
Servicer shall, after the effective date of transfer of servicing to the
successor servicer, continue to cooperate with the Purchaser and such successor
to facilitate such transfer in such manner and to such extent as the Purchaser
and such successor may reasonably request; and (H) the Servicer shall continue
to be entitled, as and to the extent provided in this Agreement, to
reimbursement from such successor for any Monthly Advances, Servicing Advances
or Liquidation Advances made by it and not reimbursed.
Upon a permitted assignment by the Servicer of this Agreement to a
successor servicer in accordance with the provisions of this Section 8.04, the
original servicer named herein shall be relieved of any liability arising under
this Agreement (including but not limited to any obligation
59
set forth in Section 5.03) arising after the date of such assignment from and
after the effective date of such permitted assignment as set forth in the
agreement described in clause (iii) above.
Notwithstanding the foregoing, the Servicer is not released from liability
to the Purchaser for any breaches of any representations, warranties or
covenants made by the Servicer in this agreement on or prior to the date of such
assignment regardless of when such breaches are discovered or made known.
Without in any way limiting the generality of this Section 8.04, in the
event that the Servicer either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its duties hereunder or any portion
thereof, without the prior written consent of the Purchaser, which consent shall
not be unreasonably withheld, except as permitted under this Section 8.04, then,
in addition to any other rights or remedies available to the Purchaser, the
Purchaser shall have the right to terminate this Agreement upon notice given as
set forth in Section 10.02, without any payment of any penalty or damages and
without any liability whatsoever to the Company, any successor servicer or any
other third party.
Except as otherwise provided herein, the Servicer shall not resign from
the obligations and duties hereby imposed on it except by mutual consent of the
Servicer and the Purchaser or upon the determination that its duties hereunder
are no longer permissible under applicable law and such incapacity cannot be
cured by the Servicer. Any such determination permitting the resignation of the
Servicer shall be evidenced by an Opinion of Counsel to such effect delivered to
the Purchaser which Opinion of Counsel shall be in form and substance acceptable
to the Purchaser. No such resignation shall become effective until a successor
shall have assumed the Servicer's responsibilities and obligations hereunder in
the manner provided in this Section 8.04.
ARTICLE IX
DEFAULT
Section 9.01. Events of Default.
In case one or more of the following Events of Default by the Seller shall
occur and be continuing, that is to say:
(i) any failure by the Seller to remit to the Purchaser any payment
required to be made under the terms of this Agreement which continues unremedied
for a period of two (2) Business Days after the date upon which written notice
of such failure, requiring the same to be remedied, shall have been given to the
Seller by the Purchaser or the date upon which such non-payment is discovered by
Seller; or
(ii) failure on the part of the Seller duly to observe or perform in
any material respect any other of the covenants or agreements on the part of the
Seller set forth in this Agreement which continues unremedied for a period of
thirty (30) days (except that such number of days shall be fifteen (15) in the
case of a failure to pay any premium for any insurance policy required to be
maintained under this Agreement) after the date on which written notice of such
failure,
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requiring the same to be remedied, shall have been given to the Seller by or on
behalf of the Purchaser; or
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, bankruptcy, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Seller and such
decree or order shall have remained in force undischarged or unstayed for a
period of sixty (60) days; or
(iv) the Seller shall consent to the appointment of a conservator or
receiver or liquidation in any insolvency, bankruptcy, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
the Seller or of or relating to all or substantially all of its property; or
(v) the Seller shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
(vi) Seller ceases to be approved by both FNMA and FHLMC as a mortgage
loan seller and servicer for more than twenty (20) days; or
(vii) the Seller attempts to assign its right to servicing compensation
hereunder or the Seller attempts, without the consent of the Purchaser, to sell
or otherwise dispose of all or substantially all of its property or assets or to
assign this Agreement or the servicing responsibilities hereunder or to delegate
its duties hereunder or any portion thereof other than in accordance with the
provisions hereof; or
(viii) the Seller ceases to be (a) licensed to service first lien
residential mortgage loans in each jurisdiction in which a Mortgaged Property is
located and such licensing is required, or (b) qualified to transact business in
any jurisdiction where it is currently so qualified, but only to the extent such
non-qualification materially and adversely affects the Seller's ability to
perform its obligations hereunder; or
(ix) the Seller fails to meet the eligibility criteria set forth in the
penultimate sentence of Section 8.02;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, the Purchaser, by notice in writing to the Seller may, in
addition to whatever rights the Purchaser may have under Sections 3.03 and 8.01
and at law or equity or to damages, including injunctive relief and specific
performance, terminate all the rights and obligations of the Seller under this
Agreement and in and to the Mortgage Loans and the proceeds thereof without
compensating the Seller for the same. On or after the receipt by the Seller of
such written notice, all authority and power of the Seller under this Agreement,
whether with respect to the Mortgage Loans or otherwise, shall pass to and be
vested in the successor appointed pursuant to Section 11.01. Upon written
request from the Purchaser, the Seller shall prepare, execute and deliver,
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any and all documents and other instruments, place in such successor's
possession all Mortgage Files, and do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement or assignment of the Mortgage
Loans and related documents, or otherwise, at the Seller's sole expense. The
Seller agrees to cooperate with the Purchaser and such successor in effecting
the termination of the Seller's responsibilities and rights hereunder,
including, without limitation, the transfer to such successor for administration
by it of all cash amounts which shall at the time be credited by the Seller to
the Custodial Account or Escrow Account or thereafter received with respect to
the Mortgage Loans or any REO Property.
Section 9.02. Waiver of Defaults.
The Purchaser may waive only by written notice any default by the Seller
in the performance of its obligations hereunder and its consequences. Upon any
such waiver of a past default, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived in writing.
ARTICLE X
TERMINATION
Section 10.01. Termination.
The respective obligations and responsibilities of the Seller shall
terminate upon: (i) the later of the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan or the disposition of
all REO Property and the remittance of all funds due hereunder; or (ii) by
mutual consent of the Seller and the Purchaser in writing; or (iii) termination
with or without cause under the terms of this Agreement.
Section 10.02. Termination Without Cause.
The Purchaser may, at its sole option, terminate any rights the Seller may
have hereunder, without cause, upon written notice. Any such notice of
termination shall be in writing and delivered to the Seller as provided in
Section 11.05 of this Agreement. In the event of such termination, the Purchaser
agrees to pay as liquidated damages, a sum equal to a percentage of the
aggregate unpaid principal balance of the Mortgage Loans as of the termination
date, as follows: two and one half percent (2.5%) for any Mortgage Loans having
Mortgaged Property in the states of New York, New Jersey or Connecticut; two
percent (2.0%) for all remaining Mortgage Loans. Notwithstanding the foregoing,
there shall be no fee or liquidated damages for termination pursuant to this
Section with respect to any Mortgage Loans ninety (90) days or more delinquent.
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ARTICLE XI
RECONSTITUTION OF MORTGAGE LOANS
Section 11.01. Reconstitution of Mortgage Loans.
(a) The Seller acknowledges and the Purchaser agrees that with respect
to some or all of the Mortgage Loans, the Purchaser may effect any of the
following:
(i) one or more sales of the Mortgage Loans as whole loan transfers
(each, a "Whole Loan Transfer"); and/or
(ii) one or more Transfers; and/or
(iii) one or more sales of the Mortgage Loans as agency transfers (each,
an "Agency Transfer").
(b) With respect to each Whole Loan Transfer, Agency Transfer or
Pass-Through Transfer, as the case may be, the Seller agrees:
(i) to cooperate fully with the Purchaser and any prospective
purchaser with respect to all reasonable requests and reasonable due diligence
procedures including participating in meetings with rating agencies, bond
insurers and such other parties as the Purchaser shall designate and
participating in meetings with prospective purchasers of the Mortgage Loans or
interests therein and providing information reasonably requested by such
purchasers;
(ii) to execute all agreements required to be executed by the Seller in
connection with such Whole Loan Transfer, Agency Transfer or Pass-Through
Transfer provided that such agreements will not contain any greater obligations
on the part of Seller as are contained in this Agreement and Seller is given an
opportunity to review and reasonably negotiate in good faith the content of such
documents;
(iii) to deliver to the Purchaser and to any Person designated by the
Purchaser for inclusion in any prospectus or other offering material such
publicly available information regarding the Seller, its underwriting standards,
its financial condition and its mortgage loan delinquency, foreclosure
experience and any additional information reasonably requested by the Purchaser,
and to indemnify the Purchaser and its affiliates for material misstatements
contained in such information, and to deliver such statements and audit letters
of reputable, certified public accountants pertaining to information provided by
the Seller as shall be reasonably requested by the Purchaser;
(iv) to deliver to the Purchaser, and to any Person designated by the
Purchaser, such in-house opinions of counsel in a form reasonably acceptable to
the Purchaser as are customarily delivered by servicers and reasonably
determined by the Purchaser to be necessary in connection with Whole Loan
Transfers, Agency Transfers or Pass-Through Transfers;
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(v) to make all representations and warranties with respect to the
Mortgage Loans as of the Closing Date and with respect to the Seller itself as
of the closing date of each Whole Loan Transfer, Agency Transfer or Pass-Through
Transfer;
(vi) to make representations and warranties (1) that the Seller has
serviced the Mortgage Loans in accordance with the terms of this Agreement,
provided accurate statements to the Purchaser pursuant to Section 5.02 of this
Agreement, and otherwise complied with all covenants and obligations hereunder
and (2) that the Seller has taken no action nor omitted to take any required
action the omission of which would have the effect of impairing any mortgage
insurance or guarantee on the Mortgage Loans; and
(vii) the third party costs incurred by Seller in connection with
compliance with this Section 11.01, including but not limited to the costs of
opinions of outside special counsel that may be required for a Whole Loan
Transfer, Agency Transfer or Pass-Through Transfer, shall be the responsibility
of the Purchaser.
All Mortgage Loans not sold or transferred pursuant to Whole Loan
Transfers, Agency Transfers or Pass-Through Transfers shall remain subject to
this Agreement and shall continue to be serviced in accordance with the terms of
this Agreement and with respect thereto this Agreement shall remain in full
force and effect.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Successor to the Seller.
Prior to termination of Seller's responsibilities and duties under this
Agreement pursuant to Sections 4.13, 8.04, 9.01, 10.01 or 10.02, the Purchaser
shall (i) succeed to and assume all of the Seller's responsibilities, rights,
duties and obligations under this Agreement, or (ii) appoint a successor having
the characteristics set forth in Section 8.02 hereof and which shall succeed to
all rights and assume all of the responsibilities, duties and liabilities of the
Seller under this Agreement prior to the termination of Seller's
responsibilities, duties and liabilities under this Agreement. In connection
with such appointment and assumption, the Purchaser may make such arrangements
for the compensation of such successor out of payments on Mortgage Loans as the
Purchaser and such successor shall agree. In the event that the Seller's duties,
responsibilities and liabilities under this Agreement should be terminated
pursuant to any of the aforementioned Sections, the Seller shall discharge such
duties and responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof with the same
degree of diligence and prudence which it is obligated to exercise under this
Agreement, and shall take no action whatsoever that might impair or prejudice
the rights or financial condition of its successor. The resignation or removal
of Seller pursuant to the aforementioned Sections shall not become effective
until a successor shall be appointed pursuant to this Section and shall in no
event relieve the Seller of the representations and warranties made pursuant to
Sections 3.01, 3.02 and 3.03 and the remedies available to the Purchaser
thereunder and under Section 8.01, it being understood and agreed that the
provisions of such Sections 3.01, 3.02, 3.03 and 8.01 shall
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be applicable to the Seller notwithstanding any such resignation or termination
of the Seller, or the termination of this Agreement.
Any successor appointed as provided herein shall execute, acknowledge and
deliver to the Seller and to the Purchaser an instrument accepting such
appointment, whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and liabilities of the
Seller, with like effect as if originally named as a party to this Agreement.
Any termination or resignation of the Seller or this Agreement pursuant to
Section 4.13, 8.04, 9.01, 10.01, or 10.02 shall not affect any claims that the
Purchaser may have against the Seller arising prior to any such termination or
resignation.
The Seller shall promptly deliver to the successor the funds in the
Custodial Account and the Escrow Account and the Mortgage Files and related
documents and statements held by it hereunder and the Seller shall account for
all funds. The Seller shall execute and deliver such instruments and do such
other things all as may reasonably be required to more fully and definitely vest
and confirm in the successor all such rights, powers, duties, responsibilities,
obligations and liabilities of the Seller. The successor shall make arrangements
as it may deem appropriate to reimburse the Seller for unrecovered Servicing
Advances which the successor retains hereunder and which would otherwise have
been recovered by the Seller pursuant to this Agreement but for the appointment
of the successor servicer.
Upon a successor's acceptance of appointment as such, the Seller shall
notify by mail the Purchaser of such appointment.
Section 12.02. Amendment.
This Agreement may be amended from time to time by the Seller and the
Purchaser by written agreement signed by the Seller and the Purchaser.
Section 12.03. Recordation of Agreement.
To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any of all the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Seller at the Seller's expense on direction of the Purchaser accompanied by an
Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interest of the Purchaser or is necessary for the
administration or servicing of the Mortgage Loans.
Section 12.04. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York except to the extent preempted by federal law,
without giving effect to choice of law principles. The obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws.
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Each of the Seller and the Purchaser hereby knowingly, voluntarily and
intentionally waives any and all rights it may have to a trial by jury in
respect or any litigation based on, or arising out of, under, or in connection
with, this Agreement, or any other documents and instruments executed in
connection herewith, or any course of conduct, course of dealing, statements
(whether oral or written), or actions of the Seller or the Purchaser. This
provision is a material inducement for the Purchaser to enter into this
Agreement.
Section 12.05. Notices.
Any demands, notices or other communications permitted or required
hereunder shall be in writing and shall be deemed conclusively to have been
given if personally delivered at or mailed by registered mail, postage prepaid,
and return receipt requested or certified mail, return receipt requested, or
transmitted by telex, telegraph or telecopier and confirmed by a similar mailed
writing, as follows:
(i) if to the Seller:
Chase Home Finance LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
With copy to:
General Counsel
Chase Home Finance LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(ii) if to the Purchaser:
Bank of America, National Association
Hearst Tower
NCI-027-21-04
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Managing Director
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
Section 12.06. Severability of Provisions.
Any part, provision, representation or warranty of this Agreement which is
prohibited or which is held to be void or unenforceable shall be ineffective to
the extent of such prohibition or
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unenforceability without invalidating the remaining provisions hereof. Any part,
provision, representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall
be ineffective, as to such jurisdiction, to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law which prohibits or renders void or unenforceable any
provision hereof. If the invalidity of any part, provision, representation or
warranty of this Agreement shall deprive any party of the economic benefit
intended to be conferred by this Agreement, the parties shall negotiate, in good
faith, to develop a structure the economic effect of which is nearly as possible
the same as the economic effect of this Agreement without regard to such
invalidity.
Section 12.07. Exhibits.
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
Section 12.08. General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:
(i) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the singular, and the
use of any gender herein shall be deemed to include the other gender;
(ii) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
(iii) references herein to "Articles," "Sections," Subsections,"
"Paragraphs," and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
(iv) a reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(v) the words "herein," "hereof ," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision;
(vi) the term "include" or "including" shall mean without limitation by
reason of enumeration; and
(vii) headings of the Articles and Sections in this Agreement are for
reference purposes only and shall not be deemed to have any substantive effect.
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Section 12.09. Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (i) consents, waivers and modifications which may hereafter be
executed, (ii) documents received by any party at the closing, and (iii)
financial statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
Section 12.10. Confidentiality of Information.
Each party recognizes that, in connection with this Agreement, it may
become privy to non-public information regarding the financial condition,
operations and prospects of the other party. Each party agrees to keep all
non-public information regarding the other party strictly confidential, and to
use all such information solely in order to effectuate the purpose of the
Agreement, provided that each party may provide confidential information to its
employees, agents and affiliates who have a need to know such information in
order to effectuate the transaction, provided further that such information is
identified as confidential non-public information. In addition, confidential
information may be provided to a regulatory authority with supervisory power
over Purchaser, provided such information is identified as confidential
non-public information.
Notwithstanding any other express or implied agreement to the contrary,
the parties agree and acknowledge that each of them and each of their employees,
representatives, and other agents may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the transaction
and all materials of any kind (including opinions or other tax analyses) that
are provided to any of them relating to such tax treatment and tax structure,
except to the extent that confidentiality is reasonably necessary to comply with
U.S. federal or state securities laws. For purposes of this paragraph, the terms
"tax treatment" and "tax structure" have the meanings specified in Treasury
Regulation section 1.6011-4(c).
Section 12.11. Recordation of Assignments of Mortgage.
To the extent permitted by applicable law, each of the Assignments of
Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or other comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such initial recordation from
the Seller to the Purchaser or the Purchaser's designee to be effected at the
Seller's expense in the event recordation is either necessary under applicable
law or requested by the Purchaser at its sole option.
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Section 12.12. Assignment by Purchaser.
The Purchaser shall have the right, without the consent of the Seller
hereof, to assign, in whole or in part, its interest under this Agreement with
respect to some or all of the Mortgage Loans, and designate any person to
exercise any rights of the Purchaser hereunder, by executing an Assignment and
Assumption Agreement substantially in the form of Exhibit D hereto and the
assignee or designee shall accede to the rights and obligations hereunder of the
Purchaser with respect to such Mortgage Loans. In no event shall Purchaser sell
a partial interest in any Mortgage Loan without the written consent of Seller,
which consent shall not be unreasonably denied. All references to the Purchaser
in this Agreement shall be deemed to include its assignee or designee. However,
in no event shall there be more than four (4) Persons under the three
Reconstitution Agreements (i.e., Pass-Through Transfer, Whole Loan Transfer and
Agency Transfer) at any given time having the status of "Purchaser" under such
agreements.
Section 12.13. No Partnership.
Nothing herein contained shall be deemed or construed to create a
co-partnership or joint venture between the parties hereto and the services of
the Seller shall be rendered as an independent contractor and not as agent for
Purchaser.
Section 12.14. Execution; Successors and Assigns.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement. Subject to Section 8.04, this Agreement
shall inure to the benefit of and be binding upon the Seller and the Purchaser
and their respective successors and assigns.
Section 12.15. Entire Agreement.
The Seller acknowledges that no representations, agreements or promises
were made to the Seller by the Purchaser or any of its employees other than
those representations, agreements or promises specifically contained herein.
This Agreement sets forth the entire understanding between the parties hereto
and shall be binding upon all successors of both parties. In the event of any
inconsistency between the Purchase Price and Terms Letter and this Agreement,
this Agreement shall control.
Section 12.16. No Solicitation.
From and after the Closing Date, the Seller agrees that it will not take
any action or permit or cause any action to be taken by any of its agents or
affiliates, or by any independent contractors on the Seller's behalf, to
personally, by telephone or mail, solicit the Mortgagor under any Mortgage Loan
to refinance the Mortgage Loan, in whole or in part, without the prior written
consent of the Purchaser. Notwithstanding the foregoing, it is understood and
agreed that promotions undertaken by the Seller or any affiliate of the Seller
which are directed to the general public at large, or segments thereof, provided
that no segment shall consist primarily of the Mortgage Loans, including,
without limitation, mass mailing based on commercially acquired
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mailing lists, newspaper, radio and television advertisements shall not
constitute solicitation under this Section 12.16. This Section 12.16 shall not
be deemed to preclude the Seller or any of its affiliates from soliciting any
Mortgagor for any other financial products or services. In addition, Seller
shall use its commercially reasonable best efforts to prevent the sale of the
name of any Mortgagor to any Person who is not an affiliate of Seller and who
Seller knows will solicit the Mortgagor for refinance.
Section 12.17. Further Agreements.
The Purchaser and the Seller each agree to execute and deliver to the
other such additional documents, instruments or agreements as may be necessary
or appropriate to effectuate the purposes of this Agreement.
Section 12.18. Closing.
The closing for the purchase and sale of the Mortgage Loans shall take
place on the Closing Date. The closing shall be either: by telephone, confirmed
by letter or wire as the parties shall agree, or conducted in person, at such
place as the parties shall agree.
The closing for the Mortgage Loans to be purchased on the Closing Date
shall be subject to each of the following conditions:
(a) at least two (2) Business Days prior to the Closing Date, the Seller
shall deliver to the Purchaser a magnetic diskette, or transmit by modem, a
listing on a loan-level basis of the information contained in the Mortgage Loan
Schedule;
(b) all of the representations and warranties of the Seller under this
Agreement shall be materially true and correct as of the Closing Date and no
event shall have occurred which, with notice or the passage of time, would
constitute a material default under this Agreement;
(c) the Purchaser shall have received, or the Purchaser's attorneys
shall have received in escrow, all closing documents more particularly described
in the Purchase Price and Terms Letter, in such forms as are agreed upon and
acceptable to the Purchaser, duly executed by all signatories other than the
Purchaser as required pursuant to the terms hereof;
(d) the Seller shall have delivered and released to the Purchaser (or
its designee) on or prior to the Closing Date all documents required pursuant to
the terms of this Agreement; and
(e) all other terms and conditions of this Agreement and the Purchase
Price and Terms Letter shall have been materially complied with.
Subject to the foregoing conditions, the Purchaser shall pay to the Seller
on the Closing Date the Purchase Price, plus accrued interest pursuant to
Section 2.02 of this Agreement, by wire transfer of immediately available funds
to the account designated by the Seller.
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Section 12.19. Costs.
The Purchaser shall pay any commissions due its salesmen and the legal
fees and expenses of its attorneys. The Seller shall pay for the physical
delivery of the Mortgage Loan Documents to a location designated by the
Purchaser, and all the costs and expenses incurred in connection with the
transfer and delivery of the Mortgage Loans, including fees for title policy
endorsements and continuations, if required.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the Seller and the Purchaser have caused their names
to be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.
BANK OF AMERICA, NATIONAL ASSOCIATION
Purchaser
By: /s/ ▇▇▇▇▇ ▇. Good
----------------------------------------
Name: ▇▇▇▇▇ ▇. Good
--------------------------------------
Title: Vice President
-------------------------------------
Taxpayer ID Number:
------------------------
CHASE HOME FINANCE LLC
Seller
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
Servicer
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
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EXHIBIT A
CONTENTS OF MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include each
of the following items, which shall be available for inspection by the
Purchaser, and which shall be retained by the Seller in the Servicing File or
delivered to the Purchaser or its designee pursuant to Sections 2.04 and 2.05 of
the Mortgage Loan Purchase, Warranties and Servicing Agreement.
1. The original Mortgage Note endorsed "Pay to the order of
__________________, without recourse," and signed in the name of the Seller by
an authorized officer, with all intervening endorsements showing a complete
chain of title from the originator to the Seller. If the Mortgage Loan was
acquired by the Seller in a merger, the endorsement must be by "[Seller],
successor by merger to the [name of predecessor]". If the Mortgage Loan was
acquired or originated by the Seller while doing business under another name,
the endorsement must be by "[Seller] formerly known as [previous name]". With
respect to no more than 2% of the unpaid principal balance of the Mortgage Loans
as of the Cut-off Date, in the event that the original Mortgage Note is lost, a
lost note affidavit may be provided.
2. The original Mortgage with evidence of recording thereon, or a copy
thereof certified by the public recording office in which such Mortgage has been
recorded or, if the original Mortgage has not been returned from the applicable
public recording office, a true certified copy, certified by the Seller, of the
original Mortgage.
3. The original or certified to be true copy, certified by the Seller, of
the Primary Mortgage Insurance Policy, if required.
4. The original Assignment, from the Seller (or its designee MERS) to
_______________________, or in accordance with Purchaser's instructions, which
assignment shall, but for any blanks requested by Purchaser, be in form and
substance acceptable for recording, or a copy certified by Seller as a true and
correct copy of the original Assignment which has been sent for recordation. If
the Mortgage Loan was acquired or originated by the Seller while doing business
under another name, the Assignment must be by "[Seller] formerly known as
[previous name]".
5. With respect to Mortgage Loans that are not Co-op Loans, the original
policy of title insurance, including riders and endorsements thereto, or if the
policy has not yet been issued, a written commitment or interim binder or
preliminary report of title issued by the title insurance or escrow company.
6. Originals of all recorded intervening Assignments, or copies thereof,
certified by the public recording office in which such Assignments have been
recorded showing a complete chain of title from the originator to the Seller,
with evidence of recording thereon, or a copy thereof certified by the public
recording office in which such Assignment has been recorded or, if the original
Assignment has not been returned from the applicable public recording office, a
true certified copy, certified by the Seller of the original Assignment.
EXHIBIT A - 1
7. Originals, or copies thereof certified by the public recording office
in which such documents have been recorded, of each assumption, extension,
modification, written assurance or substitution agreements, if applicable, or if
the original of such document has not been returned from the applicable public
recording office, a true certified copy, certified by the Seller, of such
original document.
8. If the Mortgage Note or Mortgage or any other material document or
instrument relating to the Mortgage Loan has been signed by a person on behalf
of the Mortgagor, the original power of attorney or other instrument that
authorized and empowered such person to sign bearing evidence that such
instrument has been recorded, if so required in the appropriate jurisdiction
where the Mortgaged Property is located (or, in lieu thereof, a duplicate or
conformed copy of such instrument, together with a certificate of receipt from
the recording office, certifying that such copy represents a true and complete
copy of the original and that such original has been or is currently submitted
to be recorded in the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located), or if the original power
of attorney or other such instrument has been delivered for recording in the
appropriate public recording office of the jurisdiction in which the Mortgaged
Property is located.
9. With respect to a Co-op Loan: (i) a copy of the Co-op Lease and the
assignment of such Co-op Lease to the originator of the Mortgage Loan, with all
intervening assignments showing a complete chain of title and an assignment
thereof by Seller; (ii) the stock certificate together with an undated stock
power relating to such stock certificate executed in blank; (iii) the
recognition agreement in substantially the same form as standard "AZTECH" form;
(iv) copies of the financing statement filed by the originator as secured party
and, if applicable, a filed UCC-3 Assignment of the subject security interest
showing a complete chain of title, together with an executed UCC-3 Assignment of
such security interest by the Seller in a form sufficient for filing.
10. Mortgage Loan closing statement (Form HUD-1) and any other
truth-in-lending or real estate settlement procedure forms required by law.
11. Residential loan application.
12. Uniform underwriter and transmittal summary (FNMA Form 1008) or
reasonable equivalent.
13. Credit report on the mortgagor.
14. Business credit report, if applicable.
15. Residential appraisal report and attachments thereto.
16. The original of any guarantee executed in connection with the Mortgage
Note.
17. Verification of employment and income except for Mortgage Loans
originated under a Limited Documentation Program, all in accordance with
Seller's underwriting guidelines.
EXHIBIT A - 2
18. Verification of acceptable evidence of source and amount of down
payment, in accordance with Seller's underwriting guidelines.
19. Photograph of the Mortgaged Property (may be part of appraisal).
20. Survey of the Mortgaged Property, if any.
21. Sales contract, if applicable.
22. If available, termite report, structural engineer's report, water
portability and septic certification.
23. Any original security agreement, chattel mortgage or equivalent
executed in connection with the Mortgage.
Notwithstanding anything to the contrary herein, Seller may provide one
certificate for all of the Mortgage Loans indicating that the documents were
delivered for recording.
EXHIBIT A - 3
EXHIBIT B
CUSTODIAL ACCOUNT LETTER AGREEMENT
To: JPMorgan Chase Bank, National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(the "Depository")
As "Seller" under the Mortgage Loan Purchase, Warranties and Servicing
Agreement, dated as of May 1, 2005, Whole Loan Series 2005 WL-L (the
"Agreement"), we hereby authorize and request you to establish an account, as a
Custodial Account pursuant to Section 4.04 of the Agreement, to be designated as
"Chase Home Finance LLC In Trust For Bank of America, National Association owner
of various whole loan series P&I". All deposits in the account shall be subject
to withdrawal therefrom by order signed by the Seller. This letter is submitted
to you in duplicate. Please execute and return one original to us.
CHASE HOME FINANCE LLC
By: _______________________________
Name: ______________________________
Title:______________________________
The undersigned, as "Depository", hereby certifies that the above
described account has been established under Account Number ________________, at
the office of the depository indicated above, and agrees to honor withdrawals on
such account as provided above.
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
By:_________________________________
Name:_______________________________
Title:_______________________________
EXHIBIT B - 1
EXHIBIT C
ESCROW ACCOUNT LETTER AGREEMENT
To: JPMorgan Chase Bank, National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(the "Depository")
As "Seller" under the Mortgage Loan Purchase, Warranties and Servicing
Agreement, dated as of May 1, 2005, Whole Loan Series 2005 WL-L (the
"Agreement"), we hereby authorize and request you to establish an account, as an
Escrow Account pursuant to Section 4.06 of the Agreement, to be designated as
"Chase Home Finance LLC In Trust For Bank of America, National Association owner
of various whole loan series and various mortgagors T&I". All deposits in the
account shall be subject to withdrawal therefrom by order signed by the Seller.
This letter is submitted to you in duplicate. Please execute and return one
original to us.
CHASE HOME FINANCE LLC
By:______________________________
Name:____________________________
Title:____________________________
The undersigned, as "Depository", hereby certifies that the above
described account has been established under Account Number ________________, at
the office of the depository indicated above, and agrees to honor withdrawals on
such account as provided above.
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
By:____________________________
Name:__________________________
Title:_________________________
EXHIBIT C - 1
EXHIBIT D
FORM OF ASSIGNMENT AND ASSUMPTION
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT, dated _______________, ______,
between _________________________________________, a _______________ corporation
("Assignor"), and _______________________________, a __________________
corporation ("Assignee"):
For and in consideration of the sum of TEN DOLLARS ($10.00) and other
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
1. The Assignor hereby grants, transfers and assigns to Assignee all of
the right, title and interest of Assignor, as Purchaser, in, to and under (a)
those certain Mortgage Loans listed on Exhibit A attached hereto (the "Mortgage
Loans"), (b) that certain Mortgage Loan Purchase, Warranties and Servicing
Agreement, Whole Loan Series 2005 WL-L (the "Purchase, Warranties and Servicing
Agreement"), dated as of May 1, 2005, by and between Bank of America, National
Association, Purchaser and Chase Home Finance LLC, as Seller and JPMorgan Chase
Bank, National Association, as Servicer, with respect to the Mortgage Loans and
(c) the certain Custody Agreement (the "Custody Agreement"), dated as of ______,
by and between ____________ as Owner and _________ as custodian.
The Assignor specifically reserves and does not assign to the Assignee
hereunder any and all right, title and interest in, to and under and all
obligations of the Assignor with respect to any mortgage loans subject to the
Purchase, Warranties and Servicing Agreement which are not the Mortgage Loans
set forth on Exhibit A attached hereto and are not the subject of this
Assignment and Assumption Agreement.
2. The Assignor warrants and represents to, and covenants with, the
Assignee that:
a. The Assignor is the lawful owner of the Mortgage Loans with the
full right to transfer the Mortgage Loans free from any and all claims and
encumbrances whatsoever;
b. The Assignor has not received notice of, and has no knowledge of,
any offsets, counterclaims or other defenses available to the Seller or the
Servicer with respect to the Purchase, Warranties and Servicing Agreement or the
Mortgage Loans;
c. The Assignor has not waived or agreed to any waiver under, or
agreed to any amendment or other modification of, the Purchase, Warranties and
Servicing Agreement, the Custody Agreement or the Mortgage Loans, including
without limitation the transfer of the servicing obligations under the Purchase,
Warranties and Servicing Agreement. The Assignor has no knowledge of, and has
not received notice of, any waivers under or amendments or other modifications
of, or assignments of rights or obligations under or defaults under, the
Purchase, Warranties and Servicing Agreement, the Custody Agreement or the
Mortgage Loans; and
EXHIBIT D - 1
d. Neither the Assignor nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any
interest in the Mortgage Loans or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Mortgage Loans, any interest in the Mortgage Loans or any other similar security
from, or otherwise approached or negotiated with respect to the Mortgage Loans,
any interest in the Mortgage Loans or any other similar security with, any
person in any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action which would
constitute a distribution of the Mortgage Loans under the Securities Act of 1933
(the "1933 Act") or which would render the disposition of the Mortgage Loans a
violation of Section 5 of the 1933 Act or require registration pursuant thereto.
3. The Assignee warrants and represents to, and covenants with, the
Assignor and the Company that:
a. The Assignee is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
and has all requisite corporate power and authority to acquire, own and purchase
the Mortgage Loans;
b. The Assignee has full corporate power and authority to execute,
deliver and perform under this Assignment and Assumption Agreement, and to
consummate the transactions set forth herein. The execution, delivery and
performance of the Assignee of this Assignment and Assumption Agreement, and the
consummation by it of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action of the Assignee. This Assignment
and Assumption Agreement has been duly executed and delivered by the Assignee
and constitutes the valid and legally binding obligation of the Assignee
enforceable against the Assignee in accordance with its respective terms;
c. To the best of Assignee's knowledge, no material consent,
approval, order or authorization of, or declaration, filing or registration
with, any governmental entity is required to be obtained or made by the Assignee
in connection with the execution, delivery or performance by the Assignee of
this Assignment and Assumption Agreement, or the consummation by it of the
transactions contemplated hereby;
d. The Assignee agrees to be bound, as Purchaser and Owner (as
applicable), by all of the terms, covenants and conditions of the Purchase,
Warranties and Servicing Agreement, the Custody Agreement and the Mortgage
Loans, and from and after the date hereof, the Assignee assumes for the benefit
of each of the Company and the Assignor all of the Assignor's obligations as
Purchaser or Owner thereunder, with respect to the Mortgage Loans;
e. The Assignee understands that the Mortgage Loans have not been
registered under the 1933 Act or the securities laws of any state;
f. The purchase price being paid by the Assignee for the Mortgage
Loans is in excess of $250,000 and will be paid by cash remittance of the full
purchase price within sixty (60) days of the sale;
EXHIBIT D - 2
g. The Assignee is acquiring the Mortgage Loans for investment for
its own account only and not for any other person;
h. The Assignee considers itself a substantial, sophisticated
institutional investor having such knowledge in financial and business matters
that it is capable of evaluating the merits and the risks of investment in the
Mortgage Loans;
i. The Assignee has been furnished with all information regarding
the Mortgage Loans that it has requested from the Assignor or the Company;
j. Neither the Assignee nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any
interest in the Mortgage Loans or any other similar security to, or solicited
any offer to buy or accepted a transfer, pledge or other disposition of the
Mortgage Loans, any interest in the Mortgage Loans or any other similar security
from, or otherwise approached or negotiated with respect to the Mortgage Loans,
any interest in the Mortgage Loans or any other similar security with, any
person in any manner, or made any general solicitation by means of general
advertising within the meaning of Rule 502(c) of Regulation D promulgated under
the 1933 Act or in any other manner, or taken any other action which would
constitute a distribution of the Mortgage Loans under the 1933 Act or which
would render the disposition of the Mortgage Loans a violation of Section 5 of
the 1933 Act or require registration pursuant thereto, nor will it act, nor has
it authorized or will it authorize any person to act, in such manner with
respect to the Mortgage Loans; and
k. Either: (1) the Assignee is not an employee benefit plan ("Plan")
within the meaning of section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or a plan (also "Plan") within the meaning of
section 4975(e)(1) of the Internal Revenue Code of 1986 ("Code"), and the
Assignee is not directly or indirectly purchasing the Mortgage Loans on behalf
of, investment manager of, as named fiduciary of, as trustee of, or with assets
of, a Plan; or (2) the Assignee's purchase of the Mortgage Loans will not result
in a prohibited transaction under section 406 of ERISA or section 4975 of the
Code.
l. The Assignee's address for purpose of all notices and
correspondence related to the Mortgage Loans, the Purchase, Warranties and
Servicing Agreement and this Assignment and Assumption Agreement is:
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
Attention:______________________________
m. The Assignee's wire transfer instructions for purposes of all
remittances and payments related to the Mortgage Loans and the Purchase,
Warranties and Servicing Agreement is:
EXHIBIT D - 3
For the account of:_____________________
ABA#:___________________________________
A/C#:___________________________________
A/C Name:_______________________________
Taxpayer ID#:___________________________
n. The Assignor's address for purposes of all notices and
correspondence related to the Mortgage Loans, the Purchase, Warranties and
Servicing Agreement and this Assignment and Assumption Agreement is:
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
Attention:______________________________
4. The Assignor represents and warrants to the Assignee that (i) attached
hereto as Exhibit B is a true, accurate and complete copy of each of the
Purchase, Warranties and Servicing Agreement, the Custody Agreement and all
amendments and modifications, if any, thereto, (ii) neither the Purchase,
Warranties and Servicing Agreement nor the Custody Agreement has been amended or
modified in any respect, except as set forth in this Assignment and Assumption
Agreement and (iii) no notice of termination has been given to the Company under
the Purchase, Warranties and Servicing Agreement.
EXHIBIT D - 4
IN WITNESS WHEREOF, the parties have caused this Assignment and Assumption
Agreement to be executed by their duly authorized officers as of the date first
above written.
_____________________________________ _______________________________________
_____________________________________ _______________________________________
Assignor Assignee
By:__________________________________ By:____________________________________
Its:_________________________________
Taxpayer Identification Number:__________________
By signing the acknowledgment below, the Company (1) represents and warrants
that through the date hereof the Company has serviced the Mortgage Loans in
accordance with the terms of the Purchase, Warranties and Servicing Agreement
and (2) acknowledges and agrees that from and after the date hereof, the Company
shall (i) note the transfer of the Mortgage Loans to the Assignee in its books
and records, (ii) recognize the Assignee as the owner of the Mortgage Loans and
(iii) service the Mortgage Loans for the benefit of the Assignee pursuant to the
Purchase, Warranties and Servicing Agreement, the terms of which are
incorporated herein by reference, it being the intention of the Assignor, the
Company and the Assignee that the Purchase, Warranties and Servicing Agreement
shall be binding upon and inure to the benefit of the Company and the Assignee
and their respective successors and assigns. Acknowledged:
Chase Home Finance LLC,
Seller
By:_______________________________________
Its:______________________________________
JPMorgan Chase Bank, National Association
Servicer
By:_______________________________________
Its:______________________________________
EXHIBIT D - 5
EXHIBIT D - 1
EXHIBIT A to Assignment and Assumption Agreement
THE MORTGAGE LOANS
EXHIBIT D - 2
EXHIBIT B to Assignment and Assumption Agreement
MORTGAGE LOAN PURCHASE, WARRANTIES AND SERVICING AGREEMENT AND
CUSTODY AGREEMENT
EXHIBIT D - 3
EXHIBIT E
POOL STATISTICS
EXHIBIT E - 1
EXHIBIT F
MORTGAGE LOAN SCHEDULE
EXHIBIT F - 1
EXHIBIT G
REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT
RE: Mortgage Loan #:___________________________________________________________
BORROWER:_______________________________________________________________________
PROPERTY:_______________________________________________________________________
Pursuant to a Mortgage Loan Purchase, Warranties and Servicing Agreement (the
"Agreement") dated as of May 1, 2005, between Chase Home Finance LLC (the
"Seller"), JPMorgan Chase Bank, National Association (the "Servicer") and Bank
of America, National Association (the "Purchaser"), the undersigned hereby
certifies that he or she is an officer of the Servicer requesting release of the
documents for the reason specified below. The undersigned further certifies
that:
(Check one of the items below)
______ On _________________, the above captioned mortgage loan was paid in
full or that the Seller has been notified that payment in full has been or will
be escrowed. The Servicer hereby certifies that all amounts with respect to this
loan which are required under the Agreement have been or will be deposited in
the Custodial Account as required.
______ The above captioned loan is being repurchased pursuant to the terms
of the Agreement. The Servicer hereby certifies that the repurchase price has
been credited to the Custodial Account as required under the Agreement.
______ The above captioned loan is being placed in foreclosure and the
original documents are required to proceed with the foreclosure action. The
Servicer hereby certifies that the documents will be returned to the Purchaser
in the event of reinstatement.
______ Other (explain)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
All capitalized terms used herein and not defined shall have the meanings
assigned to them in the Agreement.
Based on this certification and the indemnities provided for in the Agreement,
please release to the Servicer all original mortgage documents in your
possession relating to this mortgage loan.
Dated:_________________________________ By:_________________________________
Signature
________________________________
________________________________
Title
EXHIBIT G - 1
EXHIBIT G - 2
Send documents to:
_____________________________________
_____________________________________
_____________________________________
_____________________________________
_____________________________________
_____________________________________
Acknowledgement:
Wachovia Bank, National Association hereby acknowledges that all original
documents previously released on the above captioned mortgage loan have been
returned and received by the Purchaser.
Dated:_______________________________ By:___________________________________
Signature
______________________________________
______________________________________
Title
EXHIBIT G - 3
EXHIBIT H
[FORM OF BACK-UP CERTIFICATION]
[Name and address of
master servicer/trustee/depositor
receiving the certification]
Re: [name of securitization]
JPMorgan Chase Bank, National Association, as [servicer] hereby certifies to the
[master servicer] that:
1. Based on our knowledge, the information prepared by the [servicer]
and relating to the mortgage loans serviced by the [servicer] and provided by
the [servicer] to the [master servicer] in its reports to the [master servicer]
is accurate and complete in all material respects as of the last day of the
period covered by such report;
2. Based on our knowledge, the [distribution or servicing] information
required to be provided to the [master servicer] by the [servicer] pursuant to
the [pooling and servicing] agreement has been provided to the [master
servicer];
3. Based upon the review required under the [pooling and servicing]
agreement, and except as disclosed in its reports, the [servicer] as of the last
day of the period covered by such reports has fulfilled its obligations under
the [pooling and servicing] agreement; and
4. The [servicer] has disclosed to its independent auditor, who issues
the independent auditor's report on the Uniform Single Attestation Program for
Mortgage Bankers for the [servicer], any significant deficiencies relating to
the [servicer's] compliance with minimum servicing standards.
JPMorgan Chase Bank, National Association,
as [servicer]
__________________________________________
Authorized Signature
EXHIBIT H - 1
EXHIBIT I
MONTHLY REMITTANCE ADVICE
----------------------------
FOR CUTOFF PERIOD ENDING:
----------------------------
------------------------
INV. LOAN #
------------------------
CHASE LOAN #
------------------------
PAID TO
------------------------
BEG SCH BAL
------------------------
DIFF
------------------------
CURTAILMENT
------------------------
PREPAID
------------------------
INTEREST ADJ.
------------------------
OTHER
------------------------
LIQUIDATIONS
------------------------
NET INTEREST
------------------------
GRS. INTEREST
------------------------
SCH PRIN
------------------------
UNSCH PRIN
------------------------
TOT PRIN
------------------------
REMITTANCE
------------------------
END SCH BAL
------------------------
END UPB
------------------------
TRIAL BALANCE
------------------------
RATE
------------------------
FEE %
------------------------
PASS
------------------------
CONSTANT
------------------------
SER-FEE
------------------------
LOAN TYPE
------------------------
DATE OF PAYOFF
------------------------
PAYOFF RSN
------------------------
BORROWER NAME
------------------------
GROUP#
------------------------
COMMENTS
------------------------
EXHIBIT I - 1
EXHIBIT J
SERVICER REQUIREMENTS
o Loading/Updating Investor Headers
o Assignee will provide investor matrix for input on Servicing Systems,
if applicable. Updates/additions will occur monthly, including new
investor header detail for each new deal that is settled.
o The Seller, acting as servicer ("Servicer"), will load investor
information upon receipt or before month end for inclusion on the next
month-end file to Assignee.
o The Servicer will include the investor information on the monthly
servicer file ("MSF") and the monetary file ("MF").
o Loading Account Numbers
o The Servicer will load account numbers upon receipt or before month
end to ensure inclusion with the next month-end files to Assignee.
o Automated Monetary Transaction File
o The Servicer will establish a process to feed a MSF to Assignee that
contains loan information specified in the MSF layout provided.
o The feed will include all new loans purchased in the previous month,
as well as a maintenance file for all existing loans in the Assignee
portfolio.
o The file will cut-off at month-end, including any changes or
transactions that occur on the last day of the month.
o The file will be transmitted from the Servicer to the specified
mailbox at Assignee.
o Assignee will receive and process the electronic file on the first
business day of the month for the previous month-end file.
o The Servicer will provide an email providing file details for
balancing.
o MSF -- Ongoing Process
o The Servicer will establish a process to feed a MSF to Assignee that
contains loan information specified in the MSF layout provided.
o The feed will include all new loans purchased in the previous month,
as well as a maintenance file for all existing loans in the Assignee
portfolio.
o The file will cut-off at month-end, including any changes or
transactions that occur on the last day of the month.
EXHIBIT J - 1
o The file will be transmitted from the Servicer to the specified
mailbox at Assignee.
o Assignee will receive and process the electronic file on the first
business day of the month for the previous month-end file.
o The Servicer will provide an email providing file details for
balancing.
o MSF -- Test File
For testing purposes, Assignee requests a sample file that represents the MSF.
o The Servicer will load/update investor header information received
from Assignee.
o Assignee will receive and process the file on the first business day
of the month for the previous month-end file.
o The Servicer will provide an email providing file details for
balancing.
o Reporting Requirements
The Servicer will provide the following reports to Assignee by the 5th business
day of the month, unless otherwise specified. Reports will be provided in an
electronic format, unless otherwise specified. The reports listed below are
required for the Assignee's project; reports in addition to these may also be
required.
The description of these reports is as follows:
o Collection Report - Report that summarizes the collections made during
the reporting period.
o Paid In Full Report - Report that summarizes paid in full loans made
during the reporting period.
o Trial Balance Report - Monthly statement of mortgage accounts or a
trial balance as of the cutoff date.
o Scheduled Remittance Reports - Servicers send on a monthly basis. We
would like this report by the 5th business day.
o Delinquency Report - Report from the servicer to be sent by the 5th
business day. Assignee would like this report sent via e-mail or fax.
EXHIBIT J - 2