Execution Copy
EXHIBIT 99.6
▇▇▇▇▇▇ BROTHERS BANK, FSB
Purchaser
and
▇▇▇▇▇ FARGO BANK, N.A.
Company
--------------------------------------------
SELLER'S WARRANTIES AND SERVICING AGREEMENT
Dated as of January 1, 2006
--------------------------------------------
Adjustable Rate Mortgage Loans
WFHM Mortgage Loan Series 2006-W03
TABLE OF CONTENTS
ARTICLE I .....................................................................1
DEFINITIONS ...................................................................1
ARTICLE II ...................................................................13
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF CUSTODIAL
MORTGAGE FILES; BOOKS AND REC0RDS; CUSTODIAL AGREEMENT;
DELIVERY OF DOCUMENTS ........................................................13
ARTICLE III ..................................................................16
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH ...........................16
ARTICLE IV ...................................................................36
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS ...............................36
ARTICLE V ....................................................................54
PAYMENTS TO PURCHASER ........................................................54
ARTICLE VI ...................................................................55
GENERAL SERVICING PROCEDURES .................................................55
ARTICLE VII ..................................................................60
COMPANY TO COOPERATE .........................................................60
ARTICLE VIII .................................................................61
THE COMPANY ..................................................................61
ARTICLE IX ...................................................................63
i
SECURITIZATION TRANSACTIONS ..................................................63
ARTICLE X ....................................................................73
DEFAULT ......................................................................73
ARTICLE XI.. .................................................................75
TERMINATION...................................................................75
ARTICLE XII.. ................................................................75
MISCELLANEOUS PROVISIONS .....................................................75
EXHIBITS
Exhibit A Mortgage Loan Schedule
(WFHM 2006-W03)
Exhibit B Custodial Agreement
Exhibit C Contents of Custodial Mortgage File,
Retained Mortgage File and Servicing File
Exhibit D Contents of the Data File
Exhibit E Underwriting Guidelines
Exhibit F Custodial Account Certifications
Exhibit G Escrow Account Certifications
Exhibit H Servicing Criteria
Exhibit I Sarbanes Certification
Exhibit J Form of Assignment,
Assumption and Recognition Agreement
ii
This is a Seller's Warranties and Servicing Agreement for adjustable rate
residential first lien mortgage loans, dated and effective as of January 1, 2006
and is executed between ▇▇▇▇▇▇ Brothers Bank, FSB, as purchaser (the
"Purchaser"), and ▇▇▇▇▇ Fargo Bank, N.A., as seller and servicer (the
"Company").
WITNESSETH
WHEREAS, the Purchaser has agreed to purchase from the Company and the
Company has agreed to sell to the Purchaser certain first lien adjustable rate
mortgage loans (the "Mortgage Loans") which have an aggregate unpaid scheduled
principal balance as of the close of business on the Cut-off Date, after
deduction of payments due on or before such date, as indicated on the Mortgage
Loan Schedule, which is annexed hereto as Exhibit A;
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;
and
WHEREAS, the Purchaser and the Company wish to prescribe the manner of
purchase of the Mortgage Loans and the conveyance, servicing 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 Company agree as follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the content
otherwise requires, shall have the following meanings:
Accepted Servicing Practices: With respect to any Mortgage Loan, those
mortgage servicing practices of prudent mortgage lending institutions which
service mortgage loans of the same type as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located.
Adjustment Date: As to each adjustable rate Mortgage Loan, the date on
which the Mortgage Interest Rate is adjusted in accordance with the terms of the
related Mortgage Note.
Agency/Agencies: ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ Mac or GNMA, or any of them as
applicable.
Agency Sale: Any sale or transfer of some or all of the Mortgage Loans by
the Purchaser to an Agency which sale or transfer is not a Securitization
Transaction or Whole Loan Transfer.
1
Agreement: This Seller's Warranties and Servicing Agreement and all
exhibits hereto, amendments hereof and supplements hereto.
ALTA: The American Land Title Association or any successor thereto.
Appraised Value: With respect to any Mortgage Loan, the lesser of (i) the
value set forth on the appraisal made in connection with the origination of the
related Mortgage Loan as the value of the related Mortgaged Property, or (ii)
the purchase price paid for the Mortgaged Property; provided, however, that in
the case of a refinanced Mortgage Loan, such value shall be based solely on the
appraisal made in connection with the origination of such Mortgage Loan.
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 the
sale of the Mortgage to the Purchaser or if the related Mortgage has been
recorded in the name of MERS or its designee, such actions as are necessary to
cause the Purchaser to be shown as the owner of the related Mortgage on the
records of MERS for purposes of the system of recording transfers of beneficial
ownership of mortgages maintained by MERS, including assignment of the MIN
Number which will appear either on the Mortgage or the Assignment of Mortgage to
MERS.
Assignment of Mortgage Note and Pledge Agreement: With respect to a
Cooperative Loan, an assignment of the Mortgage Note and Pledge Agreement.
Assignment of Proprietary Lease: With respect to a Cooperative Loan, an
assignment of the Proprietary Lease sufficient under the laws of the
jurisdiction wherein the related Cooperative Apartment is located to effect the
assignment of such Proprietary Lease.
Balloon Loan: A Mortgage Loan for which the Monthly Payments will not
fully amortize the loan by the end of the term, at which time the balance of the
principal is due in a lump sum.
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a day
on which banking and savings and loan institutions in the states where the
parties are located are authorized or obligated by law or executive order to be
closed.
Buydown Agreement: An agreement between the Company and a Mortgagor, or an
agreement among the Company, a Mortgagor and a seller of a Mortgaged Property or
a third party with respect to a Mortgage Loan which provides for the application
of Buydown Funds.
Buydown Funds: In respect of any Buydown Mortgage Loan, any amount
contributed by the seller of a Mortgaged Property subject to a Buydown Mortgage
Loan, the buyer of such property, the Company or any other source, plus interest
earned thereon, in order to enable the Mortgagor to reduce the payments required
to be made from the Mortgagor's funds in the early years of a Mortgage Loan.
2
Buydown Mortgage Loan: Any Mortgage Loan in respect of which, pursuant to
a Buydown Agreement, (i) the Mortgagor pays less than the full monthly payments
specified in the Mortgage Note for a specified period, and (ii) the difference
between the payments required under such Buydown Agreement and the Mortgage Note
is provided from Buydown Funds.
Buydown Period: The period of time when a Buydown Agreement is in effect
with respect to a related Buydown Mortgage Loan.
Closing Date: January 17, 2006.
Code: The Internal Revenue Code of 1986, as it may be amended from time to
time or any successor statute thereto, and applicable U.S. Department of the
Treasury regulations issued pursuant thereto.
Commission: The United States Securities and Exchange Commission.
Commitment Letter: That certain letter agreement, dated December 20, 2005,
between the Company and the Purchaser.
Company: ▇▇▇▇▇ Fargo Bank, N.A., or its successor in interest or assigns,
or any successor to the Company under this Agreement appointed as herein
provided.
Company Information: As defined in Section 9.01(e)(i)(A).
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 condemnation, to the extent not required to be
released to a Mortgagor in accordance with the terms of the related Mortgage
Loan Documents.
Cooperative: The entity that holds title (fee or an acceptable leasehold
estate) to all of the real property that the related Project comprises,
including the land, separate dwelling units and all common areas.
Cooperative Apartment: The specific dwelling unit relating to a
Cooperative Loan.
Cooperative Lien Search: A search for (a) federal tax liens, mechanics'
liens, lis pendens, judgments of record or otherwise against (i) the
Cooperative, (ii) the seller of the Cooperative Apartment and (iii) the Company,
if the Cooperative Loan is a refinanced Mortgage Loan, (b) filings of financing
statements and (c) the deed of the Project into the Cooperative.
Cooperative Loan: A Mortgage Loan that is secured by Cooperative Shares
and a Proprietary Lease granting exclusive rights to occupy the related
Cooperative Apartment.
Cooperative Shares: The shares of stock issued by a Cooperative, owned by
the Mortgagor, and allocated to a Cooperative Apartment.
3
Covered Loan: A Mortgage Loan categorized as "Covered" pursuant to the
Standard & Poor's Glossary for File Format for LEVELS(R) Version 5.6c, Appendix
E, revised August 1, 2005.
Custodial Account: The separate account or accounts created and maintained
pursuant to Section 4.04.
Custodial Agreement: The agreement governing the retention of the
originals of each Mortgage Note, Assignment of Mortgage and other Mortgage Loan
Documents, if applicable, a form of which is annexed hereto as Exhibit B.
Custodial Mortgage File: With respect to each Mortgage Loan, the file
consisting of the Mortgage Loan Documents listed as items 1 through 5 of Exhibit
C attached hereto, which have been delivered to the Custodian as of the Closing
Date.
Custodian: The custodian under the Custodial Agreement, or its successor
in interest or assigns, or any successor to the Custodian under the Custodial
Agreement as provided therein.
Cut-off Date: January 1,2006.
Data File: The electronic data file prepared by the Company and delivered
to the Purchaser including the data fields set forth on Exhibit D with respect
to each Mortgage Loan.
Deleted Mortgage Loan: A Mortgage Loan which is repurchased by the Company
in accordance with the terms of this Agreement and which is, in the case of a
substitution pursuant to Section 3.03, replaced or to be replaced with a
Qualified Substitute Mortgage Loan.
Depositor: The depositor, as such term is defined in Regulation AB, with
respect to any Securitization Transaction.
Determination Date: The Business Day immediately preceding the related
Remittance Date.
Due Date: The first 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 each 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.
Errors and Omissions Insurance Policy: An errors and omissions insurance
policy to be maintained by the Company pursuant to Section 4.12.
Escrow Account: The separate account or accounts created and maintained
pursuant to Section 4.06.
4
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 related
document.
Event of Default: Any one of the conditions or circumstances enumerated in
Section 10.01.
Exchange Act: The Securities Exchange Act of 1934, as amended.
▇▇▇▇▇▇ ▇▇▇: The Federal National Mortgage Association, or any successor
thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.
Fidelity Bond: A fidelity bond to be maintained by the Company pursuant to
Section 4.12.
First Remittance Date: February 21, 2006.
▇▇▇▇▇▇▇ Mac: The Federal Home Loan Mortgage Corporation, or any successor
thereto.
Gross Margin: With respect to each adjustable rate Mortgage Loan, the
fixed percentage amount set forth in the related Mortgage Note which is added to
the Index in order to determine the related Mortgage Interest Rate, as set forth
in the Mortgage Loan Schedule.
High Cost Loan: A Mortgage Loan classified as (a) a "high cost" loan under
the Home Ownership and Equity Protection Act of 1994, (b) a "high cost home,"
"threshold," "covered," "high risk home," "predatory" or similar loan under any
other applicable state, federal or local law or (c) a Mortgage Loan categorized
as "High Cost" pursuant to the Standard & Poor's Glossary for File Format for
LEVELS(R) Version 5.6c, Appendix E, revised August 1, 2005.
Index: With respect to any adjustable rate Mortgage Loan, the index
identified on the Mortgage Loan Schedule and set forth in the related Mortgage
Note for the purpose of calculating the interest thereon.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Interest Only Mortgage Loan: A Mortgage Loan for which an interest-only
payment feature is allowed during the interest-only period set forth in the
related Mortgage Note.
Letter of Credit: With respect to a Pledged Asset Mortgage Loan, a
guaranty issued to the Company by the Pledge Holder for the Pledged Value
Amount.
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,
5
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 loan amount of the Mortgage Loan at its origination (unless
otherwise indicated) to the Appraised Value of the Mortgaged Property.
LPMI Policy: A policy of primary mortgage guaranty insurance evidenced by
an electronic form and certificate number issued by a Qualified Insurer, as
required by this Agreement with respect to certain Mortgage Loans. The premium
on an LPMI Policy is paid by the Company from its own funds, without
reimbursement.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor in interest thereto.
MERS Mortgage Loan: Any Mortgage Loan that has been originated in the name
of or assigned to MERS and registered with MERS on the MERS System.
MERS System: The system of recording transfers of mortgages electronically
maintained by MERS.
MIN: Mortgage Identification Number used to identify mortgage loans
registered under MERS.
Monthly Advance: The portion of each Monthly Payment that is delinquent
with respect to each Mortgage Loan at the close of business on the Determination
Date required to be advanced by the Company pursuant to Section 5.03 on the
Business Day immediately preceding the Remittance Date of the related month.
Monthly Payment: The scheduled monthly payment of principal and interest,
or in the case of an Interest Only Mortgage Loan, payment of interest on such
Mortgage Loan during the interest-only period.
Mortgage: The mortgage, deed of trust or other instrument and riders
thereto securing a Mortgage Note, which creates a first lien on an
unsubordinated estate in fee simple in real property securing the Mortgage Note,
or the Pledge Agreement securing the Mortgage Note for a Cooperative Loan.
Mortgage Impairment Insurance Policy: A mortgage impairment or blanket
hazard insurance policy as described in Section 4.11.
Mortgage Interest Rate: The annual rate of interest borne on a Mortgage
Note in accordance with the provisions of the Mortgage Note.
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
6
Mortgage Loan Schedule, which Mortgage Loan includes without limitation the
Retained Mortgage File, the Custodial 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.
Mortgage Loan Documents: With respect to a Mortgage Loan, the documents
listed on Exhibit C attached hereto.
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
related Mortgage Interest Rate minus the Servicing Fee Rate.
Mortgage Loan Schedule: A schedule of Mortgage Loans annexed hereto as
Exhibit A, such schedule setting forth the following information with respect to
each Mortgage Loan: (1) the Company's Mortgage Loan number; (2) the city state
and zip code of the Mortgaged Property; (3) a code indicating whether the
Mortgaged Property is a single family residence, two-family residence,
three-family residence, four-family residence, planned unit development,
Cooperative Apartment or condominium; (4) the current Mortgage Interest Rate;
(5)the current net Mortgage Interest Rate; (6) the current Monthly Payment; (7)
the Gross Margin; (8) the original term to maturity; (9) the scheduled maturity
date; (10) the principal balance of the Mortgage Loan as of the Cut-off Date
after deduction of payments of principal due on or before the Cut-off Date
whether or not collected; (11) the Loan-to-Value Ratio; (12) the next Adjustment
Date; (13) the lifetime Mortgage Interest Rate cap; (14) whether the Mortgage
Loan is convertible or not; (15) a code indicating the mortgage guaranty
insurance company; (16) a code indicating whether the Mortgage Loan is a
Cooperative Loan; (17) code indicating whether the loan is subject to LPMI; and
(18) the Servicing Fee Rate.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage and riders thereto.
Mortgaged Property: The real property securing repayment of the debt
evidenced by a Mortgage Note, or with respect to a Cooperative Loan, the related
Cooperative Apartment.
Mortgagor: The obligor on a Mortgage Note.
Non-Assigned Letter of Credit: A Letter of Credit in which the named
beneficiary is the Company.
Officer's Certificate: A certificate signed by the Chairman of the Board
or the Vice Chairman of the Board or the President or a Vice President or an
Assistant Vice President and certified by the Treasurer or the Secretary or one
of the Assistant Treasurers or Assistant Secretaries of the Company, 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 Company, reasonably acceptable to the Purchaser.
7
Periodic Interest Rate Cap: As to each adjustable rate Mortgage Loan, the
maximum increase or decrease in the Mortgage Interest Rate on any Adjustment
Date pursuant to the terms of the Mortgage Note.
Person: Any individual, corporation, partnership, joint venture, limited
liability company, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof.
Pledge Account: With respect to a Pledged Asset Mortgage Loan, an account
that is managed by the Pledge Holder to secure a Letter of Credit.
Pledge Agreement: With respect to a Cooperative Loan, the specific
agreement creating a first lien on and pledge of the Cooperative Shares and the
appurtenant Proprietary Lease.
Pledge Holder: With respect to a Pledged Asset Mortgage Loan, the entity
which issued a Letter of Credit.
Pledge Instruments: With respect to a Cooperative Loan, the Stock Power,
the Assignment of the Proprietary Lease and the Assignment of the Mortgage Note
and Pledge Agreement.
Pledged Asset Mortgage Loan: A Mortgage Loan for which the Mortgagor has
pledged financial assets as partial collateral for the Mortgage Loan, in lieu of
a cash down payment.
Pledged Value Amount: With respect to a Pledged Asset Mortgage Loan, a
minimum LTV of 20% of the lower of the purchase price or Appraised Value of a
Mortgaged Property.
PMI Policy: A policy of primary mortgage guaranty insurance evidenced by
an electronic form and certificate number issued by a Qualified Insurer, as
required by this Agreement with respect to certain Mortgage Loans. The premiums
on a PMI Policy may be paid by the Mortgagor or by the Company from its own
funds, without reimbursement. If the premiums are paid by the Company, the PMI
Policy is an LPMI Policy.
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.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date.
Principal Prepayment Period: The calendar month preceding the month in
which the related Remittance Date occurs.
Project: With respect to a Cooperative Loan, all real property owned by
the related Cooperative including the land, separate dwelling units and all
common areas.
Proprietary Lease: With respect to a Cooperative Loan, a lease on a
Cooperative Apartment evidencing the possessory interest of the Mortgagor in
such Cooperative Apartment.
8
Purchaser: ▇▇▇▇▇▇ Brothers Bank, FSB, or its successor in interest or any
successor to the Purchaser under this Agreement as herein provided.
Qualified Correspondent: Any Person from which the Company purchased
Mortgage Loans, provided that the following conditions are satisfied: (i) such
Mortgage Loans were originated pursuant to an agreement between the Company and
such Person that contemplated that such Person would underwrite mortgage loans
from time to time, for sale to the Company, in accordance with underwriting
guidelines designated by the Company ("Designated Guidelines") or guidelines
that do not vary materially from such Designated Guidelines; (ii) such Mortgage
Loans were in fact underwritten as described in clause (i) above and were
acquired by the Company within 180 days after origination; (iii) either (x) the
Designated Guidelines were, at the time such Mortgage Loans were originated,
used by the Company in origination of mortgage loans of the same type as the
Mortgage Loans for the Company's own account or (y) the Designated Guidelines
were, at the time such Mortgage Loans were underwritten, designated by the
Company on a consistent basis for use by lenders in originating mortgage loans
to be purchased by the Company; and (iv) the Company employed, at the time such
Mortgage Loans were acquired by the Company, pre-purchased or post-purchased
quality assurance procedures (which may involve, among other things, review of a
sample of mortgage loans purchased during a particular time period or through
particular channels) designed to ensure that Persons from which it purchased
mortgage loans properly applied the underwriting criteria designated by the
Company.
Qualified Depository: A deposit account or accounts maintained with a
federal or state chartered depository institution the deposits in which are
insured by the FDIC to the applicable limits and the short-term unsecured debt
obligations of which (or, in the case of a depository institution that is a
subsidiary of a holding company, the short-term unsecured debt obligations of
such holding company) are rated A-1 by Standard & Poor's Ratings Group or
Prime-1 by ▇▇▇▇▇'▇ Investors Service, Inc. (or a comparable rating if another
rating agency is specified by the Purchaser by written notice to the Company) at
the time any deposits are held on deposit therein.
Qualified Insurer: A mortgage guaranty insurance company duly authorized
and licensed where required by law to transact mortgage guaranty insurance
business and approved as an insurer by ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac.
Qualified Substitute Mortgage Loan: A mortgage loan eligible to be
substituted by the Company for a Deleted Mortgage Loan which must, on the date
of such substitution, (i) have an outstanding principal balance, after deduction
of all scheduled payments due in the month of substitution (or in the case of a
substitution of more than one mortgage loan for a Deleted Mortgage Loan, an
aggregate principal balance), not in excess of the Stated Principal Balance of
the Deleted Mortgage Loan; (ii) have a Mortgage Loan Remittance Rate not less
than, and not more than two percent (2%) greater, than the Mortgage Loan
Remittance Rate of the Deleted Mortgage Loan; (iii) have a remaining term to
maturity not greater than and not more than one year less than that of the
Deleted Mortgage Loan; (iv) comply with each representation and warranty set
forth in Sections 3.01 and 3.02; and (v) be of the same type as the Deleted
Mortgage Loan.
9
Rating Agencies: Any nationally recognized statistical rating agency, or
its successor, including Standard & Poor's Ratings Services, ▇▇▇▇▇'▇ Investors
Service, Inc. and Fitch Ratings.
Recognition Agreement: An agreement whereby a Cooperative and a lender
with respect to a Cooperative Loan (i) acknowledge that such lender may make, or
intends to make, such Cooperative Loan, and (ii) make certain agreements with
respect to such Cooperative Loan.
Reconstitution: Any Securitization Transaction or Whole Loan Transfer.
Reconstitution Agreement: The agreement or agreements entered into by the
Company and the Purchaser and/or certain third parties on the Reconstitution
Date or Dates with respect to any or all of the Mortgage Loans serviced
hereunder, in connection with a Whole Loan Transfer or Securitization
Transaction.
Reconstitution Date: The date on which any or all of the Mortgage Loans
serviced under this Agreement may be removed from this Agreement and
reconstituted as part of an Agency Sale, Securitization Transaction or Whole
Loan Transfer pursuant to Section 9.01 hereof. The Reconstitution Date shall be
such date which the Purchaser shall designate.
Regulation AB: Subpart 229.1100-Asset Backed Securities (Regulation AB),
17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended from time to time, and
subject to such clarification and interpretation as have been provided by the
Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005) or by the staff
of the Commission, or as may be provided by the Commission or its staff from
time to time.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of 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, regulations, rulings or
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
Remittance Date: The 18th day (or if such 18th day is not a Business Day,
the first Business Day immediately following) of any month, beginning with the
First Remittance Date.
REO Disposition: The final sale by the Company of any REO Property.
REO Disposition Proceeds: All amounts received with respect to an REO
Disposition pursuant to Section 4.16.
REO Property: A Mortgaged Property acquired by the Company on behalf of
the Purchaser through foreclosure or by deed in lieu of foreclosure, as
described in Section 4.16.
10
Repurchase Price: Unless agreed otherwise by the Purchaser and the
Company, a price equal to (i) the Stated Principal Balance of the Mortgage Loan
plus (ii) interest on such Stated Principal Balance at the Mortgage Loan
Remittance Rate from the date on which interest has last been paid and
distributed to the Purchaser through the last day of the month in which such
repurchase takes place, less amounts received or advanced in respect of such
repurchased Mortgage Loan which are being held in the Custodial Account for
distribution in the month of repurchase.
Retained Mortgage File: With respect to each Mortgage Loan, the file
consisting of the Mortgage Loan Documents listed as items 6 through 12 of
Exhibit C attached hereto.
Securities Act: The Securities Act of 1933, as amended.
Securitization Transaction: Any transaction involving either (a) a sale or
other transfer of some or all of the Mortgage Loans directly or indirectly to an
issuing entity in connection with an issuance of publicly offered or privately
placed, rated or unrated mortgage-backed securities or (b) an issuance of
publicly offered or privately placed, rated or unrated securities, the payments
on which are determined primarily by reference to one or more portfolios of
residential mortgage loans consisting, in whole or in part, of some or all of
the Mortgage Loans.
Servicer: As defined in Section 9.01(d)(iii).
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses other than Monthly Advances (including reasonable
attorney's fees and disbursements) incurred in the performance by the Company 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 or judicial proceedings, including foreclosures, (c) the management
and liquidation of any REO Property and (d) compliance with the obligations
under Section 4.08.
Servicing Criteria: The "servicing criteria" set forth in Item 1122(d) of
Regulation AB, as such may be amended from time to time.
Servicing Fee: With respect to each Mortgage Loan, the amount of the
annual fee the Purchaser shall pay to the Company, 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
received. 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
Company, or as otherwise provided under Section 4.05.
Servicing Fee Rate: 0.250% per annum per Mortgage Loan.
Servicing File: With respect to each Mortgage Loan, the file consisting of
the Mortgage Loan Documents listed as items 13 through 28 of Exhibit C attached
hereto plus copies of all
11
Mortgage Loan Documents contained in the Custodial Mortgage File and the
Retained Mortgage File, which are retained by the Company.
Servicing Officer: Any officer of the Company 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 Company to the Purchaser upon
request, as such list may from time to time be amended.
Stated Principal Balance: As to each Mortgage Loan and as of any date of
determination, (i) the principal balance of the Mortgage Loan at the Cut-off
Date after giving effect to payments of principal due on or before such date,
whether or not received, minus (ii) all amounts previously distributed to the
Purchaser with respect to the related Mortgage Loan representing payments or
recoveries of principal or advances in lieu thereof.
Static Pool Information: Static pool information as described in Item
1105(a)(l)-(3) and 1 105(c) of Regulation AB.
Stock Certificate: With respect to a Cooperative Loan, a certificate
evidencing ownership of the Cooperative Shares issued by the Cooperative.
Stock Power: With respect to a Cooperative Loan, an assignment of the
Stock Certificate or an assignment of the Cooperative Shares issued by the
Cooperative.
Subcontractor: Any vendor, subcontractor or other Person that is not
responsible for the overall servicing (as "servicing" is commonly understood by
participants in the mortgage-backed securities market) of Mortgage Loans but
performs one or more discrete functions identified in Item 1122(d) of Regulation
AB with respect to Mortgage Loans under the direction or authority of the
Company or a Subservicer.
Subservicer: Any Person that services Mortgage Loans on behalf of the
Company or any Subservicer and is responsible for the performance (whether
directly or through Subservicers or Subcontractors) of a substantial portion of
the material servicing functions required to be performed by the Company under
this Agreement or any Reconstitution Agreement that are identified in Item
1122(d) of Regulation AB.
Subsidy Account: An account maintained by the Company specifically to hold
all Subsidy Funds to be applied to individual Subsidy Loans.
Subsidy Funds: With respect to any Subsidy Loans, funds contributed by the
employer of a Mortgagor in order to reduce the payments required from the
Mortgagor for a specified period in specified amounts.
Subsidy Loan: Any Mortgage Loan subject to a temporary interest subsidy
agreement pursuant to which the monthly interest payments made by the related
Mortgagor will be less than the scheduled monthly interest payments on such
Mortgage Loan, with the resulting difference in interest payments being provided
by the employer of the Mortgagor. Each Subsidy Loan will be identified as such
in the related Data File.
12
Third-Party Originator: Each Person, other than a Qualified Correspondent,
that originated Mortgage Loans acquired by the Company.
Time$aver(R) Mortgage Loan: A Mortgage Loan which has been refinanced
pursuant to a Company program that allows a rate/term refinance of an existing
Company serviced loan with minimal documentation.
Underwriting Guidelines: The Company's underwriting guidelines attached
hereto as Exhibit E.
Whole Loan Transfer: Any sale or transfer of some or all of the Mortgage
Loans by the Purchaser to a third party, which sale or transfer is not a
Securitization Transaction or Agency Sale.
ARTICLE I1
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF CUSTODIAL
MORTGAGE FILES; BOOKS AND RECORDS; CUSTODIAL AGREEMENT;
DELIVERY OF DOCUMENTS
Section 2.01 Conveyance of Mortgage Loans; Possession of Custodial Mortgage
Files; Maintenance of Retained Mortgage File and Servicing Files.
The Company, simultaneously with the execution and delivery of this
Agreement, does hereby sell, transfer, assign, set over and convey to the
Purchaser, without recourse, but subject to the terms of this Agreement, all the
right, title and interest of the Company in and to the Mortgage Loans. Pursuant
to Section 2.03, the Company has delivered the Custodial Mortgage File to the
Custodian.
The contents of each Retained Mortgage File not delivered to the Custodian
are and shall be held in trust by the Company for the benefit of the Purchaser
as the owner thereof. Additionally and separate to the Retained Mortgage File,
the Company shall maintain a Servicing File, for the sole purpose of servicing
the related Mortgage Loans, consisting of a copy of the contents of the
Custodial Mortgage File and the Retained Mortgage File. The possession of each
Servicing File and Retained Mortgage File held by the Company is at the will of
the Purchaser, and such retention and possession by the Company is in a
custodial capacity only. Upon the sale of the Mortgage Loans the ownership of
each Mortgage Note, the related Mortgage and the related Custodial Mortgage
File, Retained Mortgage File and Servicing File shall vest immediately in the
Purchaser, and the ownership of all records and documents with respect to the
related Mortgage Loan prepared by or which come into the possession of the
Company shall vest immediately in the Purchaser and shall be retained and
maintained by the Company, in trust, at the will of the Purchaser and only in
such custodial capacity. The Company shall release its custody of the contents
of any Retained Mortgage File and Servicing
13
File only in accordance with written instructions from the Purchaser, unless
such release is required as incidental to the Company's servicing of the
Mortgage Loans, in the case of the Servicing File, or is in connection with a
repurchase of any Mortgage Loan pursuant to Section 3.03 or 6.02. All such costs
associated with the release, transfer and re-delivery to the Company shall be
the responsibility of the Purchaser.
In addition, in connection with the assignment of any MERS Mortgage Loan,
the Company agrees that it will cause, the MERSB System to indicate that such
Mortgage Loans have been assigned by the Company to the Purchaser in accordance
with this Agreement by including (or deleting, in the case of Mortgage Loans
which are repurchased in accordance with this Agreement) in such computer files
the information required by the MERSB System to identify the Purchaser as
beneficial owner of such Mortgage Loans.
Section 2.02 Books and Records; Transfers of Mortgage Loans.
From and after the sale of the Mortgage Loans to 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, shall be received and held
by the Company in trust for the benefit of the Purchaser as owner of the
Mortgage Loans, and the Company shall retain record title to the related
Mortgages for the sole purpose of facilitating the servicing and the supervision
of the servicing of the Mortgage Loans.
The sale of each Mortgage Loan shall be reflected on the Company's balance
sheet and other financial statements as a sale of assets by the Company. The
Company shall be responsible for maintaining, and shall maintain, a complete set
of books and records for each Mortgage Loan which shall be marked clearly to
reflect the ownership of each Mortgage Loan by the Purchaser. In particular, the
Company 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 ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac, 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 ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac
and records of periodic inspections 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 Company
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 Company complies with the requirements of the ▇▇▇▇▇▇
Mae Selling and Servicing Guide, as amended from time to time.
The Company shall maintain with respect to each Mortgage Loan and shall
make available for inspection by any Purchaser or its designee the related
Retained Mortgage File and Servicing File during the time the Purchaser retains
ownership of a Mortgage Loan and thereafter in accordance with applicable laws
and regulations.
14
The Company shall keep at its servicing office books and records in which,
subject to such reasonable regulations as it may prescribe, the Company 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 Company shall be under no obligation to deal with any Person
with respect to this Agreement or the Mortgage Loans unless the books and
records 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. The Purchaser also shall advise the Company of the transfer.
Upon receipt of notice of the transfer, the Company shall ▇▇▇▇ its books and
records to reflect the ownership of the Mortgage Loans of such assignee, and
shall release the previous Purchaser from its obligations hereunder with respect
to the Mortgage Loans sold or transferred. If the Company receives notification
of a transfer less than five (5) Business Days before the end of the related Due
Period, the Company's duties to remit and report to the new purchaser(s) as
required by Section 5 shall begin with the next Due Period. Such notification
must include a final schedule of Mortgage Loans transferred.
Section 2.03 Custodial Agreement; Delivery of Documents.
The Company has delivered to the Custodian those Mortgage Loan Documents
as required by Exhibit C to this Agreement with respect to each Mortgage Loan.
The Custodian has certified its receipt of all such Mortgage Loan
Documents in each Custodial Mortgage File pursuant to the Custodial Agreement,
as evidenced by the Initial Certification of the Custodian in the form annexed
to the Custodial Agreement. The Company shall be responsible for recording the
initial Assignments of Mortgage. The Purchaser will be responsible for the fees
and expenses of the Custodian.
Upon the occurrence of the events described in Section 9.01 and Section
11.02 of this Agreement or in the event the Company fails to allow the Purchaser
access to the Retained Mortgage File as required pursuant to Section 2.04 (each
such occurrence, a "Delivery Event"), the Company shall deliver to the Custodian
or any other party per written instructions from the Purchaser, the additional
documents from its Retained Mortgage File required to be delivered pursuant to
the Custodial Agreement within ten (10) days. All of the provisions of this
Section 2.03 relating to a failure to deliver required documentation, delays in
such delivery and the delivery of defective documentation shall apply equally to
any obligation on the part of the Company to deliver documents which arises
after the Closing Date upon the occurrence of a Delivery Event.
The Company shall forward to the Custodian original documents evidencing
an assumption, modification, consolidation or extension of any Mortgage Loan
entered into in accordance with Section 4.01 or 6.01 within one week of their
execution, provided, however, that the Company shall provide the Custodian with
a certified true copy of any such document submitted for recordation within ten
(10) days 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 days of its submission for recordation.
15
In the event the public recording office is delayed in returning any
original document, which the Company is required to deliver at any time to the
Custodian in accordance with the terms of the Custodial Agreement or which the
Company is required to maintain in the Retained Mortgage File, the Company shall
deliver to the Custodian within 180 days of its submission for recordation, a
copy of such document and an Officer's Certificate, which shall (i) identify the
recorded document; (ii) state that the recorded document has not been delivered
to the Custodian due solely to a delay by the public recording office, (iii)
state the amount of time generally required by the applicable recording office
to record and return a document submitted for recordation, and (iv) specify the
date the applicable recorded document will be delivered to the Custodian. The
Company will be required to deliver the document to the Custodian by the date
specified in (iv) above. An extension of the date specified in (iv) above may be
requested from the Purchaser, which consent shall not be unreasonably withheld.
In the event that new, replacement, substitute or additional Stock
Certificates are issued with respect to existing Cooperative Shares, the Company
immediately shall deliver to the Custodian the new Stock Certificates, together
with the related Stock Powers in blank. Such new Stock Certificates shall be
subject to the related Pledge Instruments and shall be subject to all of the
terms, covenants and conditions of this Agreement.
Section 2.04 Examination of Mortgage Loan Documents.
Prior to the Closing Date, the Company shall deliver the Mortgage Loan
Documents included in the Custodial Mortgage File to the Custodian. The
Purchaser or a designee may review such Mortgage Loan Documents to verify that
the documents required to be included in each Custodial Mortgage File are
available. If a Custodial Mortgage File is incomplete or defective or a Mortgage
Loan does not conform to the requirements of this Agreement and such omissions
or defects cannot be cured prior to the Closing Date, the Mortgage Loan shall be
deleted from the Mortgage Loan Schedule. If deleted, the Mortgage Loan may be
replaced, up to one Business Day prior to the Closing Date, by one or more
substitute Mortgage Loans which satisfy the criteria set forth in this
Agreement.
The Company shall make the Retained Mortgage File available to the
Purchaser for examination at the Company's offices or such other location as
shall otherwise be agreed upon by the Purchaser and the Company. Such
examination may be made by the Purchaser or by any prospective purchaser of the
Mortgage Loans from the Purchaser, at any time after the Closing Date upon prior
written notice to the Company. The fact that the Purchaser or any prospective
purchaser of the Mortgage Loans has conducted or has failed to conduct any
partial or complete examination of the Retained Mortgage File shall not affect
the Purchaser's (or any of its successor's) rights to demand repurchase,
substitution or other relief as provided under this Agreement.
ARTICLE 111
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH
16
Section 3.01 Company Representations and Warranties.
The Company hereby represents and warrants to the Purchaser that, as of
the Closing Date:
(a) Due Organization and Authority.
The Company is a national banking association duly organized,
validly existing and in good standing under the laws of the United
States and has all licenses necessary to carry on its business as
now being conducted and is licensed, qualified and in good standing
in each state where a Mortgaged Property is located if the laws of
such state require licensing or qualification in order to conduct
business of the type conducted by the Company, and in any event the
Company is in compliance with the laws of any such state to the
extent necessary to ensure the enforceability of the related
Mortgage Loan and the servicing of such Mortgage Loan in accordance
with the terms of this Agreement; the Company has the full power and
authority to execute and deliver this Agreement and to perform in
accordance herewith; the execution, delivery and performance of this
Agreement (including all instruments of transfer to be delivered
pursuant to this Agreement) by the Company and the consummation of
the transactions contemplated hereby have been duly and validly
authorized; this Agreement evidences the valid, binding and
enforceable obligation of the Company; and all requisite action has
been taken by the Company to make this Agreement valid and binding
upon the Company in accordance with its terms;
(b) Ordinary Course of Business.
The consummation of the transactions contemplated by this Agreement
are in the ordinary course of business of the Company, who is in the
business of selling and servicing loans, and the transfer,
assignment and conveyance of the Mortgage Notes and the Mortgages by
the Company pursuant to this Agreement are not subject to the bulk
transfer or any similar statutory provisions in effect in any
applicable jurisdiction;
(c) No Conflicts.
Neither the execution and delivery of this Agreement, the
acquisition of the Mortgage Loans by the Company, the sale of the
Mortgage Loans to the Purchaser or the transactions contemplated
hereby, nor the fulfillment of or compliance with the terms and
conditions of this Agreement will conflict with or result in a
breach of any of the terms, articles of incorporation or by-laws or
any legal restriction or any agreement or instrument to which the
Company is now a party or by which it is bound, or constitute a
default or result in the violation of any law, rule, regulation,
order, judgment or decree to which the Company 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;
17
(d) Ability to Service.
The Company is an approved seller/servicer of conventional
residential mortgage loans for ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac, with the
facilities, procedures, and experienced personnel necessary for the
sound servicing of mortgage loans of the same type as the Mortgage
Loans. The Company is in good standing to sell mortgage loans to and
service mortgage loans for ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, and no event
has occurred, including but not limited to a change in insurance
coverage, which would make the Company unable to comply with ▇▇▇▇▇▇
Mae or ▇▇▇▇▇▇▇ Mac eligibility requirements or which would require
notification to either ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac;
(e) Reasonable Servicing Fee.
The Company 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 Company, for
accounting and tax purposes, as compensation for the servicing and
administration of the Mortgage Loans pursuant to this Agreement;
(f) Ability to Perform.
The Company does not believe, nor does it have any reason or cause
to believe, that it cannot perform each and every covenant contained
in this Agreement. The Company is solvent and the sale of the
Mortgage Loans will not cause the Company to become insolvent. The
sale of the Mortgage Loans is not undertaken to hinder, delay or
defraud any of the Company's creditors;
(g) No Litigation Pending.
There is no action, suit, proceeding or investigation pending or
threatened against the Company which, either in any one instance or
in the aggregate, may result in any material adverse change in the
business, operations, financial condition, properties or assets of
the Company, or in any material impairment of the right or ability
of the Company to carry on its business substantially as now
conducted, or in any material liability on the part of the Company,
or which would draw into question the validity of this Agreement or
the Mortgage Loans or of any action taken or to be contemplated
herein, or which would be likely to impair materially the ability of
the Company to perform under the terms of this Agreement;
(h) No Consent Required.
No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery
and performance by the Company of or compliance by the Company with
this Agreement or the sale of the
18
Mortgage Loans as evidenced by the consummation of the transactions
contemplated by this Agreement, or if required, such approval has
been obtained prior to the Closing Date;
(i) Selection Process.
The Mortgage Loans were selected from among the outstanding
adjustable rate one- to four-family mortgage loans in the Company's
mortgage banking portfolio at the Closing Date as to which the
representations and warranties set forth in Section 3.02 could be
made and such selection was not made in a manner so as to affect
adversely the interests of the Purchaser;
(j) No Untrue Information.
Neither this Agreement nor any statement, report or other document
furnished or to be furnished pursuant to this Agreement or in
connection with the transactions contemplated hereby contains any
untrue statement of fact or omits to state a fact necessary to make
the statements contained therein not misleading;
(k) Sale Treatment.
The Company has determined that the disposition of the Mortgage
Loans pursuant to this Agreement will be afforded sale treatment for
accounting and tax purposes;
(1) No Material Change.
There has been no material adverse change in the business,
operations, financial condition or assets of the Company since the
date of the Company's most recent financial statements;
(m) No Brokers' Fees.
The Company has not dealt with any broker, investment banker, agent
or other Person that may be entitled to any commission or
compensation in the connection with the sale of the Mortgage Loans;
and
(n) Fair Consideration.
The consideration received by the Company upon the sale of the
Mortgage Loans under this Agreement constitutes fair consideration
and reasonably equivalent value of the Mortgage Loans.
Section 3.02 Representations and Warranties Regarding Individual Mortgage Loans.
19
As to each Mortgage Loan, the Company hereby represents and warrants to
the Purchaser that as of the Closing Date:
(a) Mortgage Loans as Described.
The information set forth in the Mortgage Loan Schedule attached
hereto as Exhibit A and the information contained on the respective
electronic Data File delivered to the Purchaser is true and correct;
(b) Payments Current.
No payment required under any Mortgage Loan will be 30 days or more
delinquent on the Closing Date. No Mortgage Loan will have been 30
days delinquent more than one time within the twelve (12) months
prior to the Closing Date;
(c) No Outstanding Charges.
There are no defaults in complying with the terms of the Mortgages,
and all taxes, governmental assessments, insurance premiums,
leasehold payments, water, sewer and municipal charges, which
previously became due and owing have been paid, or an escrow of
funds has been established in an amount sufficient to pay for every
such item which remains unpaid and which has been assessed but is
not yet due and payable. The Company has not advanced funds, or
induced, or solicited directly or indirectly, the payment of any
amount required under the Mortgage Loan, except for interest
accruing from the date of the Mortgage Note or date of disbursement
of the Mortgage Loan proceeds, whichever is later, to the day which
precedes by one month the Due Date of the first installment of
principal and interest;
(d) Original Terms Unmodified.
The terms of the Mortgage Note and Mortgage have not been impaired,
waived, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary to protect the
interests of the Purchaser and which has been delivered to the
Custodian. The substance of any such waiver, alteration or
modification has been approved by the issuer of any related PMI
Policy and the title insurer, to the extent required by the policy,
and its terms are reflected on the Mortgage Loan Schedule. No
Mortgagor has been released, in whole or in part, except in
connection with an assumption agreement approved by the issuer of
any related PMI Policy and the title insurer, to the extent required
by the policy, and which assumption agreement is part of the
Custodial Mortgage File delivered to the Custodian and the terms of
which are reflected in the Mortgage Loan Schedule;
(e) No Defenses.
20
The Mortgage Loan is not subject to any right of rescission,
set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the
Mortgage Note or the Mortgage, or the exercise of any right
thereunder, render either the Mortgage Note or the Mortgage
unenforceable, in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including without
limitation the defense of usury, and no such right of rescission,
set-off, counterclaim or defense has been asserted with respect
thereto;
(f) No Satisfaction of Mortgage.
Neither the Mortgage nor the Mortgage Note has been satisfied,
canceled, subordinated or rescinded, in whole or in part, and the
Mortgaged Property has not been released from the lien of the
Mortgage, in whole or in part, nor has any instrument been executed
that would effect any such release, cancellation, subordination or
rescission;
(g) Validity of Mortgage Documents.
The Mortgage Note and the Mortgage and related documents are
genuine, and each is the legal, valid and binding obligation of the
maker thereof enforceable in accordance with its terms. All parties
to the Mortgage Note, the Mortgage and any other related document
had legal capacity to enter into the Mortgage Loan and to execute
and deliver the Mortgage Note, the Mortgage and any other related
document, and the Mortgage Note, the Mortgage and any other related
document have been duly and properly executed by such parties. The
Company has reviewed all of the documents constituting the Retained
Mortgage File and Custodial Mortgage File and has made such
inquiries as it deems necessary to make and confirm the accuracy of
the representations set forth herein;
With respect to each Cooperative Loan, the Mortgage Note, the
Mortgage, the Pledge Agreement, and related documents are genuine,
and each is the legal, valid and binding obligation of the maker
thereof enforceable in accordance with its terms. All parties to the
Mortgage Note, the Mortgage, the Pledge Agreement, the Proprietary
Lease, the Stock Power, Recognition Agreement and the Assignment of
Proprietary Lease had legal capacity to enter into the Mortgage Loan
and to execute and deliver such documents, and such documents have
been duly and properly executed by such parties;
(h) No Fraud.
All the documents executed in connection with the Mortgage Loan
including, but not limited to, the Mortgage Note and the Mortgage
are free of fraud and any misrepresentation, are signed by the
persons they purport to be signed by, and witnessed or, as
appropriate, notarized by the persons whose signatures appear as
21
witnesses or notaries, and each such document constitutes the valid
and binding legal obligation of the signatories and is enforceable
in accordance with its terms;
(i) Compliance with Applicable Laws.
Any and all requirements of any federal, state or local law
including, without limitation, usury, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit
opportunity, disclosure, or predatory and abusive lending laws
applicable to the Mortgage Loan have been complied with, and the
Company shall maintain in its possession, available for the
Purchaser's inspection, and shall deliver to the Purchaser upon
demand, evidence of compliance with all such requirements. The
consummation of the transactions contemplated hereby will not
violate any such laws or regulations. All inspections, licenses and
certificates required to be made or issued with respect to all
occupied portions of the Mortgaged Property and, with respect to the
use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have
been made or obtained from the appropriate authorities;
(j) Location and Type of Mortgaged Property.
The Mortgaged Property is located in the state identified in the
Mortgage Loan Schedule and consists of a contiguous 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 or a townhouse, provided, however, that any condominium
project or planned unit development shall conform with the
applicable Underwriting Guidelines regarding such dwellings, or a
cooperative and no residence or dwelling is a mobile home. As of the
respective appraisal date for each Mortgaged Property, no portion of
the Mortgaged Property was being used for commercial purposes,
except as allowed under the Underwriting Guidelines. If the
Mortgaged Property is a condominium unit or a planned unit
development (other than a de minimus planned unit development) such
condominium or planned unit development meets the requirements under
the Underwriting Guidelines;
(k) Valid First Lien.
The Mortgage is a valid, subsisting and enforceable first lien on
the Mortgaged Property, including all buildings on the Mortgaged
Property and all installations and mechanical, electrical, plumbing,
heating and air conditioning systems located in or annexed to such
buildings, and all additions, alterations and replacements made at
any time with respect to the foregoing. The lien of the Mortgage is
subject only to:
(1) the lien of current real property taxes and assessments
not yet due and payable;
22
(2) covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of
the date of recording acceptable to mortgage lending
institutions generally and specifically referred to in
the lender's title insurance policy delivered to the
originator of the Mortgage Loan and (i) referred to or
otherwise considered in the appraisal made for the
originator of the Mortgage Loan and (ii) which do not
adversely affect the Appraised Value of the Mortgaged
Property set forth in such appraisal; and
(3) other matters to which like properties are commonly
subject which do not materially interfere with the
benefits of the security intended to be provided by the
mortgage or the use, enjoyment, value or marketability
of the related Mortgaged Property.
Any security agreement, chattel mortgage or equivalent
document related to and delivered in connection with the
Mortgage Loan establishes and creates a valid, subsisting and
enforceable first lien and first priority security interest on
the property described therein and the Company has full right
to sell and assign the same to the Purchaser;
With respect to each Cooperative Loan, each Pledge Agreement
creates a valid, enforceable and subsisting first security
interest in the Cooperative Shares and Proprietary Lease,
subject only to (i) the lien of the related 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 (ii) 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 Pledge Agreement; provided, however, that the
appurtenant Proprietary Lease may be subordinated or otherwise
subject to the lien of any mortgage on the Project;
(l) Full Disbursement of Proceeds.
The Mortgage Loan has been closed and the proceeds of the Mortgage
Loan have been fully disbursed, except for escrows established or
improvements to the Mortgaged Property not completed prior to the
closing of the related Mortgage Loan, or created due to seasonal
weather conditions, and there is no requirement for future advances
thereunder. All costs, fees and expenses incurred in making or
closing the Mortgage Loan and the recording of the Mortgage were
paid, and the Mortgagor is not entitled to any refund of any amounts
paid or due under the Mortgage Note or Mortgage;
23
(m) Consolidation of Future Advances.
Any future advances made prior to the Cut-off Date, have been
consolidated with the outstanding principal amount secured by the
Mortgage, and the secured principal amount, as consolidated, bears a
single interest rate and single repayment term reflected on the
Mortgage Loan Schedule. The lien of the Mortgage securing the
consolidated principal amount is expressly insured as having first
lien priority by a title insurance policy, an endorsement to the
policy insuring the mortgagee's consolidated interest or by other
title evidence acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac; the
consolidated principal amount does not exceed the original principal
amount of the Mortgage Loan; the Company shall not make future
advances after the Cut-off Date;
(n) Ownership.
The Company is the sole owner of record and holder of the Mortgage
Loan and the related Mortgage Note and the Mortgage are not assigned
or pledged, and the Company has good and marketable title thereto
and has full right and authority to transfer and sell the Mortgage
Loan to the Purchaser. The Company is transferring the Mortgage Loan
free and clear of any and all encumbrances, liens, pledges,
equities, participation interests, claims, charges or security
interests of any nature encumbering such Mortgage Loan;
(o) Origination/Doing Business.
The Mortgage Loan was originated by a savings and loan association,
a savings bank, a commercial bank, a credit union, an insurance
company, or similar institution which is supervised and examined by
a federal or state authority or by a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to Sections 203
and 211 of the National Housing Act. All parties which have had any
interest in the Mortgage Loan, whether as mortgagee, assignee,
pledgee or otherwise, are (or, during the period in which they held
and disposed of such interest, were) (1) in compliance with any and
all applicable licensing requirements of the laws of the state
wherein the Mortgaged Property is located, and (2) organized under
the laws of such state, or (3) qualified to do business in such
state, or (4) federal savings and loan associations or national
banks having principal offices in such state, or (5) not doing
business in such state;
(p) LTV, PMI Policy.
No Mortgage Loan has an LTV greater than 95%. Each Mortgage Loan
with an LTV of greater than 80% at the time of origination, a
portion of the unpaid principal balance of each Mortgage Loan is and
will be insured as to payment defaults by either a lender-paid or
borrower-paid PMI Policy. If the Mortgage Loan is insured by a PMI
Policy for which the Mortgagor pays all premiums, the coverage will
remain in place until (i) the LTV decreases to 78% or (ii) the PMI
24
Policy is otherwise terminated pursuant to the Homeowners Protection
Act of 1998, 12 USC SS.4901, et seq. All provisions of such PMI
Policy have been and are being complied with, such policy is in full
force and effect, and all premiums due thereunder have been paid.
The Qualified Insurer has a claims paying ability acceptable to
▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac. Any Mortgage Loan subject to a PMI Policy
obligates the Mortgagor or the Company, as applicable, to maintain
the PMI Policy and to pay all premiums and charges in connection
therewith;
(q) Title Insurance.
The Mortgage Loan is covered by an ALTA lender's title insurance
policy (or in the case of any Mortgage Loan secured by a Mortgaged
Property located in a jurisdiction where such policies are not
available, an opinion of counsel of the type customarily rendered in
such jurisdiction in lieu of title insurance) or other generally
acceptable form of policy of insurance acceptable to ▇▇▇▇▇▇ ▇▇▇ or
▇▇▇▇▇▇▇ Mac, issued by a title insurer acceptable to ▇▇▇▇▇▇ ▇▇▇ or
▇▇▇▇▇▇▇ Mac and qualified to do business in the jurisdiction where
the Mortgaged Property is located, insuring the Company, its
successors and assigns, as to the first priority lien of the
Mortgage in the original principal amount of the Mortgage Loan,
subject only to the exceptions contained in clauses (I), (2) and (3)
of Paragraph (k) of this Section 3.02, and against any loss by
reason of the invalidity or unenforceability of the lien resulting
from the provisions of the Mortgage providing for adjustment to the
Mortgage Interest Rate and Monthly Payment. The Company is the sole
insured of such lender's title insurance policy, and such lender's
title insurance policy is in full force and effect and will be in
force and effect upon the consummation of the transactions
contemplated by this Agreement. No claims have been made under such
lender's title insurance policy, and no prior holder of the
Mortgage, including the Company, has done, by act or omission,
anything which would impair the coverage of such lender's title
insurance policy;
(r) No Defaults.
There is no default, breach, violation or event of acceleration
existing under the Mortgage or the Mortgage Note and no event which,
with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation
or event of acceleration, and neither the Company nor its
predecessors have waived any default, breach, violation or event of
acceleration;
(s) No Mechanics' Liens.
There are no mechanics' or similar liens or claims which have been
filed for work, labor or material (and no rights are outstanding
that under the law could give rise to such liens) affecting the
related Mortgaged Property which are or may be liens prior to, or
equal or coordinate with, the lien of the related Mortgage which are
25
not insured against by the title insurance policy referenced in
Paragraph (q) above;
(t) Location of Improvements; No Encroachments.
Except as insured against by the title insurance policy referenced
in Paragraph (q) above, all improvements which were considered in
determining the Appraised Value of the Mortgaged Property lay wholly
within the boundaries and building restriction lines of the
Mortgaged Property and no improvements on adjoining properties
encroach upon the Mortgaged Property. No improvement located on or
being part of the Mortgaged Property is in violation of any
applicable zoning law or regulation;
(u) Payment Terms.
Except with respect to the Interest Only Mortgage Loans, principal
payments commenced no more than sixty (60) days after the funds were
disbursed to the Mortgagor in connection with the Mortgage Loan. The
Mortgage Loans have an original term to maturity of not more than 30
years, with interest payable in arrears on the first day of each
month. With respect to each Balloon Loan, the Mortgage Loan is
payable in equal monthly installments of principal and interest
based on a fifteen (15) or thirty (30) year amortization schedule,
as set forth in the related Mortgage Note, and a final lump sum
payment substantially greater than the preceding Monthly Payment is
required which is sufficient to amortize the remaining principal
balance of the Balloon Loan. No Balloon Loan has an original stated
maturity of less than seven (7) years. As to each 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%
indicated by the Mortgage Note; provided that the Mortgage Interest
Rate will not increase or decrease by more than 2.00% on any
Adjustment Date, and will in no event exceed the maximum Mortgage
Interest Rate or be lower than the minimum Mortgage Interest Rate
listed on the Mortgage Loan Schedule for such Mortgage Loan. As to
each Mortgage Loan that is not an Interest Only Mortgage Loan, each
Mortgage Note requires a monthly payment which is sufficient, during
the period prior to the first adjustment to the Mortgage Interest
Rate, to fully 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. As to each Mortgage Loan, if the related Mortgage Interest
Rate changes on an Adjustment Date or, with respect to an Interest
Only Mortgage Loan, on an Adjustment Date following the related
interest only period, the then outstanding principal balance will be
reamortized over the remaining life of such Mortgage Loan. No
Mortgage Loan contains terms or provisions which would result in
negative amortization;
(v) Customary Provisions.
26
The Mortgage and related Mortgage Note contain customary and
enforceable provisions such as to render the rights and remedies of
the holder thereof adequate for the realization against the
Mortgaged Property of the benefits of the security provided thereby,
including, (i) in the case of a Mortgage designated as a deed of
trust, by trustee's sale, and (ii) otherwise by judicial foreclosure
and upon the exercise of such rights and remedies under the law, the
holder of the Mortgage and Mortgage Note will be able to deliver
good and merchantable title to the Mortgaged Property. There is no
homestead or other exemption available to a Mortgagor which would
interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage;
(w) Occupancy of the Mortgaged Property.
As of the date of origination, the Mortgaged Property was lawfully
occupied under all applicable laws.
(x) No Additional Collateral.
Except in the case of a Pledged Asset Mortgage Loan and as indicated
on the related Data File, the Mortgage Note is not and has not been
secured by any collateral, pledged account or other security except
the lien of the corresponding Mortgage and the security interest of
any applicable security agreement or chattel mortgage referred to in
sub clause (k) above;
(y) Deeds of Trust.
In the event the Mortgage constitutes a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in the
Mortgage, and no fees or expenses are or will become payable by the
Mortgagee to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor;
(z) Acceptable Investment.
The Company has no knowledge of any circumstances or conditions with
respect to the Mortgage Loan, the Mortgaged Property, the Mortgagor
or the Mortgagor's credit standing that can reasonably be expected
to cause private institutional investors to regard the Mortgage Loan
as an unacceptable investment, cause the Mortgage Loan to become
delinquent, or adversely affect the value or marketability of the
Mortgage Loan;
(aa) Transfer of Mortgage Loans.
If the Mortgage Loan is not a MERS Mortgage Loan, the Assignment of
Mortgage upon the insertion of the name of the assignee and
recording
27
information is in recordable form and is acceptable for recording
under the laws of the jurisdiction in which the Mortgaged Property
is located;
(bb) Mortgaged Property Undamaged.
The Mortgaged Property is undamaged by water, fire, earthquake or
earth movement, windstorm, flood, tornado or other casualty so as to
affect adversely the value of the Mortgaged Property as security for
the Mortgage Loan or the use for which the premises were intended;
(cc) Collection Practices; Escrow Deposits.
The origination and collection practices used with respect to the
Mortgage Loan have been in accordance with Accepted Servicing
Practices, and have been in all material respects legal and proper.
With respect to escrow deposits and Escrow Payments, all such
payments are in the possession of the Company 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. No escrow deposits or Escrow Payments or other charges
or payments due the Company have been capitalized under the Mortgage
Note;
(dd) No Condemnation.
There is no proceeding pending or to the best of the Company's
knowledge threatened for the total or partial condemnation of the
related Mortgaged Property;
(ee) The Appraisal.
The Mortgage Loan Documents contain an appraisal of the related
Mortgaged Property. As to each Time$aver(R) Mortgage Loan, the
appraisal may be from the original of the existing Company-serviced
loan, which was refinanced via such Time$aver(R) Mortgage Loan. The
appraisal was conducted by an appraiser who is licensed in the state
where the Mortgaged Property is located, and 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
the appraiser both satisfy the applicable requirements of Title XI
of the Financial Institution Reform, Recovery, and Enforcement Act
of 1989 and the regulations promulgated thereunder, all as in effect
on the date the Mortgage Loan was originated;
(ff) Insurance,
The Mortgaged Property securing each Mortgage Loan is insured by an
insurer acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac against loss by fire
and such hazards as
28
are covered under a standard extended coverage endorsement and such
other hazards as are customary in the area where the Mortgaged
Property is located pursuant to insurance policies conforming to the
requirements of Section 4.10, in an amount which is at least equal
to the lesser of (a) 100% of the insurable value, on a replacement
cost basis, of the improvements on the related Mortgaged Property,
and (b) the greater of (i) the outstanding principal balance of the
Mortgage Loan and (ii) an amount such that the proceeds of such
insurance shall be sufficient to prevent the application to the
Mortgagor or the loss payee of any coinsurance clause under the
policy. If the Mortgaged Property is a condominium unit, it is
included under the coverage afforded by a blanket policy for the
project. If the improvements on the Mortgaged Property are in an
area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, a flood insurance
policy meeting the requirements of the current guidelines of the
Federal Insurance Administration is in effect with a generally
acceptable insurance carrier, in an amount representing coverage not
less than the least of (A) the outstanding principal balance of the
Mortgage Loan, (B) the full insurable value and (C) the maximum
amount of insurance which was available under the Flood Disaster
Protection Act of 1973, as amended. All individual insurance
policies contain a standard mortgagee clause naming the Company and
its successors and assigns as mortgagee, and all premiums thereon
have been paid. The Mortgage obligates the Mortgagor thereunder to
maintain a hazard insurance policy at the Mortgagor's cost and
expense, and on the Mortgagor's failure to do so, authorizes the
holder of the Mortgage to obtain and maintain such insurance at such
Mortgagor's cost and expense, and to seek reimbursement therefor
from the Mortgagor. The hazard insurance policy is the valid and
binding obligation of the insurer, is in full force and effect, and
will be in fill force and effect and inure to the benefit of the
Purchaser upon the consummation of the transactions contemplated by
this Agreement. The Company has not acted or failed to act so as to
impair the coverage of any such insurance policy or the validity,
binding effect and enforceability thereof;
(gg) Servicemembers Civil Relief Act.
The Mortgagor has not notified the Company, and the Company has no
knowledge of any relief requested or allowed to the Mortgagor under
the Servicemembers Civil Relief Act, as amended;
(hh) Graduated Payments or Contingent Interests.
The Mortgage Loan is not a graduated payment mortgage loan and the
Mortgage Loan does not have a shared appreciation or other
contingent interest feature.
(ii) No Construction Loans.
No Mortgage Loan was made in connection with (i) the construction or
rehabilitation of a Mortgage Property or (ii) facilitating the
trade-in or exchange
29
of a Mortgaged Property other than a construction-to-permanent loan
which has converted to a permanent Mortgage Loan;
(jj) Underwriting.
Each Mortgage Loan was underwritten in accordance with the
Underwriting Guidelines; and the Mortgage Note and Mortgage are on
forms acceptable to ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae;
(kk) Bankruptcy.
No Mortgagor was a debtor in any state or federal bankruptcy or
insolvency proceeding as of the date the Mortgage loan was closed;
(11) Leasehold Estates.
With respect to Mortgage Loans that are secured by a leasehold
estate, the lease is valid, in full force and effect and conforms to
the Underwriting Guidelines; provided, the term of the leasehold
exceeds the maturity date of the related Mortgage Loan by at least
five (5)years;
(mm) The Mortgagor.
The Mortgagor is one or more natural persons and/or trustees for an
Illinois land trust or a trustee under a "living trust" and such
"living trust" is in compliance with ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac
guidelines;
(nn) Delivery of Custodial Mortgage Files.
The Mortgage Note and any other documents required to be delivered
by the Company under this Agreement for the Mortgage Loans have been
delivered to the Custodian. The Company is in possession of a
complete, true and accurate Retained Mortgage File in compliance
with Exhibit C, except for such documents the originals of which
have been sent for recordation;
(oo) Servicing.
From and after the dated of origination, each Mortgage Loan has been
serviced in accordance with the terms of all federal, state and
local laws and regulations, the terms of the Mortgage Note and
Accepted Servicing Practices in all respects;
(pp) Due on Sale.
The Mortgage or Mortgage Note contains an enforceable provision for
the acceleration of the payment of the unpaid principal balance of
the Mortgage Loan
30
in the event that the Mortgaged Property is sold or transferred
without the prior written consent of the Mortgagee thereunder;
(qq) No Violation of Environmental Laws.
There is no pending action or proceeding directly involving any
Mortgaged Property of which the Company is aware in which compliance
with any environmental law, rule or regulation is an issue; and to
the best of the Company's knowledge, nothing further remains to be
done to satisfy in full all requirements of each such law, rule or
regulation constituting a prerequisite to use, value and enjoyment
of said property;
(rr) Single Premium Credit Life Insurance.
None of the proceeds of the Mortgage Loan were used to finance
single-premium credit life insurance policies;
(ss) Anti-Money Laundering Laws.
The Company has complied with all applicable anti-money laundering
laws and regulations, (the "Anti-Money Laundering Laws"), and has
established an anti-money laundering compliance program as required
by the Anti-Money Laundering Laws;
(tt) No High Cost Loans.
No Mortgage Loan is a High Cost Loan or Covered Loan;
(uu) Contents of the Retained Mortgage File
The Retained Mortgage File contains the documents listed as items 5
through 9 of Exhibit C attached hereto;
(vv) Fair Credit Reporting Act.
The Company, in its capacity as servicer for each Mortgage Loan, has
fully furnished, in accordance with the Fair Credit Reporting Act
and its implementing regulations, accurate and complete information
(e.g., favorable and unfavorable) on its borrower credit files to
Equifax, Experian and Trans Union Credit Information Company (three
of the credit repositories), on a monthly basis;
(ww) Cooperative Loans.
With respect to each Cooperative Loan:
31
(i) The Cooperative Shares are held by a person as a
tenant-stockholder in a Cooperative. Each original UCC
financing statement, continuation statement or other
governmental filing or recordation necessary to create or
preserve the perfection and priority of the first lien and
security interest in the Cooperative Loan and Proprietary
Lease has been timely and properly made. Any security
agreement, chattel mortgage or equivalent document related to
the Cooperative Loan and delivered to Purchaser or its
designee establishes in Purchaser a valid and subsisting
perfected first lien on and security interest in the Mortgaged
Property described therein, and Purchaser has full right to
sell and assign the same. The Proprietary Lease term expires
no less than five years after the Mortgage Loan term or such
other term acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac;
(ii) A Cooperative Lien Search has been made by a company competent
to make the same which company is acceptable to ▇▇▇▇▇▇ Mae or
▇▇▇▇▇▇▇ Mac and qualified to do business in the jurisdiction
where the Cooperative is located;
(iii) (a) The term of the related Proprietary Lease is not less than
the terms of the Cooperative Loan; (b) there is no provision
in any Proprietary Lease which requires the Mortgagor to offer
for sale the Cooperative Shares owned by such Mortgagor first
to the Cooperative; (c) there is no prohibition in any
Proprietary Lease against pledging the Cooperative Shares or
assigning the Proprietary Lease; (d) the Cooperative has been
created and exists in full compliance with the requirements
for residential cooperatives in the jurisdiction in which the
Project is located and qualifies as a cooperative housing
corporation under Section 210 of the Code; (e) the Recognition
Agreement is on a form published by Aztech Document Services,
Inc. or includes similar provisions; and (f) the Cooperative
has good and marketable title to the Project, and owns the
Project either in fee simple or under a leasehold that
complies with the requirements of the ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇
Mac guidelines; such title is free and clear of any adverse
liens or encumbrances, except the lien of any blanket
mortgage;
(iv) The Company has the right under the terms of the Mortgage
Note, Pledge Agreement and Recognition Agreement to pay any
maintenance charges or assessments owed by the Mortgagor; and
(v) Each Stock Power (i) has all signatures guaranteed or (ii) if
all signatures are not guaranteed, then such Cooperative
Shares will be transferred by the stock transfer agent of the
Cooperative if the Company undertakes to convert the ownership
of the collateral securing the related Cooperative Loan;
(xx) No Arbitration Provision.
32
No Mortgagor with respect to any Mortgage Loan originated on or
after August 1, 2004, agreed to submit to arbitration to resolve any
dispute arising out of or relating in any way to the mortgage loan
transaction;
(yy) Buydown Mortgage Loans.
With respect to each Mortgage Loan that is a Buydown Mortgage Loan:
(i) On or before the date of origination of such Mortgage Loan,
the Company and the Mortgagor, or the Company, the Mortgagor
and the seller of the Mortgaged Property or a third party
entered into a Buydown Agreement. The Buydown Agreement
provides that the seller of the Mortgaged Property (or third
party) shall deliver to the Company temporary Buydown Funds in
an amount equal to the aggregate undiscounted amount of
payments that, when added to the amount the Mortgagor on such
Mortgage Loan is obligated to pay on each Due Date in
accordance with the terms of the Buydown Agreement, is equal
to the full scheduled Monthly Payment due on such Mortgage
Loan. The temporary Buydown Funds enable the Mortgagor to
qualify for the Buydown Mortgage Loan. The effective interest
rate of a Buydown Mortgage Loan if less than the interest rate
set forth in the related Mortgage Note will increase within
the Buydown Period as provided in the related Buydown
Agreement so that the effective interest rate will be equal to
the interest rate as set forth in the related Mortgage Note.
The Buydown Mortgage Loan satisfies the requirements of ▇▇▇▇▇▇
Mae or ▇▇▇▇▇▇▇ Mac guidelines;
(ii) The Mortgage and Mortgage Note reflect the permanent payment
terms rather than the payment terms of the Buydown Agreement.
The Buydown Agreement provides for the payment by the
Mortgagor of the full amount of the Monthly Payment on any Due
Date that the Buydown Funds are available. The Buydown Funds
were not used to reduce the original principal balance of the
Mortgage Loan or to increase the Appraised Value of the
Mortgage Property when calculating the Loan-to-Value Ratios
for purposes of the Agreement and, if the Buydown Funds were
provided by the Company and if required under ▇▇▇▇▇▇ Mae or
▇▇▇▇▇▇▇ Mac guidelines as applicable, the terms of the Buydown
Agreement were disclosed to the appraiser of the Mortgaged
Property;
(iii) The Buydown Funds may not be refunded to the Mortgagor unless
the Mortgagor makes a principal payment for the outstanding
balance of the Mortgage Loan;
(iv) As of the date of origination of the Mortgage Loan, the
provisions of the related Buydown Agreement complied with the
requirements of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, as applicable,
regarding buydown agreements; and
33
(zz) Pledged Asset Mortgage Loan.
With respect to a Pledged Asset Mortgage Loan:
(i) The Pledge Holder has a rating of at least "AA" (or the
equivalent) or better from at least two Rating Agencies and
the Pledge Holder is obligated to give the beneficiary of each
Letter of Credit at least sixty (60) days notice of any
non-renewal of any Letter of Credit;
(ii) With respect to each Pledged Asset Mortgage Loan, the Company
is the named beneficiary and no Person has drawn any funds
against such Letter of Credit;
(iii) Each Letter of Credit is for an amount at least equal to an
LTV of 20% of the lower of the purchase price or the Appraised
Value of the related Mortgaged Property;
(iv) As of the Closing Date, the Company has complied with all the
requirements of any Letter of Credit, and each Letter of
Credit is a valid and enforceable obligation of the Pledge
Holder;
(v) The Company has the right to draw on each Letter of Credit if
the related Pledged Asset Mortgage Loan becomes 90 days or
more delinquent and to apply such proceeds as a partial
prepayment thereon;
(vi) The Company has not received notice of any non-renewal of any
Letter of Credit;
(vii) Upon a default by the Pledge Holder, the Company will have a
perfected first priority security interest in the assets
pledged to secure the Letter of Credit and has the right to
obtain possession thereof and the right to liquidate such
assets and apply the proceeds thereof to prepay the related
Pledged Asset Mortgage Loan; and
(viii)The Letter of Credit is required to be in effect (either for
its original term or through renewal) until such time as all
amounts owed under the related Pledged Asset Mortgage Loan by
the related Mortgagor are less than 80% of the lesser of the
Purchase Price or the Appraised Value of the related Mortgaged
Property.
Section 3.03 Repurchase.
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 to
the Purchaser and the delivery of the applicable Mortgage Loan Documents to the
Custodian and shall inure to the benefit of the Purchaser, notwithstanding any
restrictive or qualified endorsement on any Mortgage Note or Assignment of
Mortgage or the examination or failure to examine any Custodial Mortgage File
34
or Retained Mortgage File. Upon discovery by either the Company or the Purchaser
of a breach of any of the foregoing representations and warranties which
materially and adversely affects the value of the Mortgage Loans or the interest
of the Purchaser (or which materially and adversely affects the interests of
Purchaser in the related Mortgage Loan in the case of a representation and
warranty relating to a particular Mortgage Loan), the party discovering such
breach shall give prompt written notice to the other.
Within 90 days of the earlier of either discovery by or notice to the
Company of any breach of a representation or warranty which materially and
adversely affects the value of the Mortgage Loans, the Company shall use its
best efforts promptly to cure such breach in all material respects (although, in
connection with such a breach of Section 3.02 (vv), the cure period shall be
fifteen (15) days) and, if such breach cannot be cured, the Company shall, at
the Purchaser's option, repurchase such Mortgage Loan at the Repurchase Price.
In the event that a breach shall involve any representation or warranty set
forth in Section 3.01, and such breach cannot be cured within 90 days of the
earlier of either discovery by or notice to the Company of such breach, all of
the Mortgage Loans shall, at the Purchaser's option, be repurchased by the
Company at the Repurchase Price. However, if the breach shall involve a
representation or warranty set forth in Section 3.02 and the Company discovers
or receives notice of any such breach within 120 days of the Closing Date, the
Company shall, if the breach cannot be cured, at the Purchaser's option and
provided that the Company has a Qualified Substitute Mortgage Loan, rather than
repurchase the Mortgage Loan as provided above, remove such Mortgage Loan (a
"Deleted Mortgage Loan") and substitute in its place a Qualified Substitute
Mortgage Loan or Loans, provided that any such substitution shall be effected
not later than 120 days after the Closing Date. If the Company has no Qualified
Substitute Mortgage Loan, it shall repurchase the deficient Mortgage Loan within
90 days of the written notice of the breach or the failure to cure, whichever is
later. Any repurchase of a Mortgage Loan or Loans pursuant to the foregoing
provisions of this Section 3.03 shall be accomplished by deposit in the
Custodial Account of the amount of the Repurchase Price for distribution to
Purchaser on the Remittance Date immediately following the Principal Prepayment
Period in which such Repurchase Price is received, after deducting therefrom any
amount received in respect of such repurchased Mortgage Loan or Loans and being
held in the Custodial Account for future distribution.
At the time of repurchase or substitution, the Purchaser and the Company
shall arrange for the reassignment of the Deleted Mortgage Loan to the Company
and the delivery to the Company of any documents held by the Custodian relating
to the Deleted Mortgage Loan. If the Company repurchases a Mortgage Loan that is
a MERS Mortgage Loan, the Company shall cause MERS to designate on the MERSB
System to remove the Purchaser as the beneficial holder with respect to such
Mortgage Loan. In the event of a repurchase or substitution, the Company shall,
simultaneously with such reassignment, give written notice to the Purchaser that
such repurchase or substitution has taken place, amend the Mortgage Loan
Schedule to reflect the withdrawal of the Deleted Mortgage Loan from this
Agreement, and, in the case of substitution, identify a Qualified Substitute
Mortgage Loan and amend the Mortgage Loan Schedule to reflect the addition of
such Qualified Substitute Mortgage Loan to this Agreement. In connection with
any such substitution, the Company shall be deemed to have made as to such
Qualified Substitute Mortgage Loan the representations and warranties set forth
in this Agreement except that all such representations and warranties set forth
in this Agreement shall
35
be deemed made as of the date of such substitution. The Company shall effect
such substitution by delivering to the Custodian for such Qualified Substitute
Mortgage Loan the documents required by Section 2.03, with the Mortgage Note
endorsed as required by Section 2.03. No substitution will be made in any
calendar month after the Determination Date for such month. The Company shall
deposit in the Custodial Account the Monthly Payment less the Servicing Fee due
on such Qualified Substitute Mortgage Loan or Loans in the month following the
date of such substitution. Monthly Payments due with respect to Qualified
Substitute Mortgage Loans in the month of substitution shall be retained by the
Company. With respect to any Deleted Mortgage loan, distributions to Purchaser
shall include the Monthly Payment due on any Deleted Mortgage Loan in the month
of substitution, and the Company shall thereafter be entitled to retain all
amounts subsequently received by the Company in respect of such Deleted Mortgage
Loan.
For any month in which the Company substitutes a Qualified Substitute
Mortgage Loan for a Deleted Mortgage Loan, the Company shall determine the
amount (if any) by which the aggregate principal balance of all Qualified
Substitute Mortgage Loans as of the date of substitution is less than the
aggregate Stated Principal Balance of all Deleted Mortgage Loans (after
application of scheduled principal payments due in the month of substitution).
The amount of such shortfall shall be distributed by the Company in the month of
substitution pursuant to Section 5.01. Accordingly, on the date of such
substitution, the Company shall deposit from its own funds into the Custodial
Account an amount equal to the amount of such shortfall.
In addition to such repurchase or substitution obligation, the Company
shall indemnify the Purchaser and hold it harmless against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and other costs and expenses resulting from any claim, demand,
defense or assertion based on or grounded upon, or resulting from, a breach of
the Company representations and warranties contained in this Agreement. It is
understood and agreed that the obligations of the Company set forth in this
Section 3.03 to cure, substitute for or repurchase a defective Mortgage Loan and
to indemnify the Purchaser as provided in this Section 3.03 constitute the sole
remedies of the Purchaser respecting a breach of the foregoing representations
and warranties.
Any cause of action against the Company 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) discovery of such breach by the
Purchaser or notice thereof by the Company to the Purchaser, (ii) failures by
the Company to cure such breach or repurchase such Mortgage Loan as specified
above, and (iii) demand upon the Company by the Purchaser for compliance with
this Agreement.
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 Company to Act as Servicer.
36
The Company, as an independent contractor, shall service and administer the
Mortgage Loans and shall have full power and authority, acting alone or through
the utilization of a Subservicer or a Subcontractor, to do any and all things in
connection with such servicing and administration which the Company may deem
necessary or desirable, consistent with the terms of this Agreement and with
Accepted Servicing Practices. The Company shall be responsible for any and all
acts of a Subservicer and a Subcontractor, and the Company's utilization of a
Subservicer or a Subcontractor shall in no way relieve the liability of the
Company under this Agreement.
Consistent with the terms of this Agreement, the Company may waive, modify
or vary any term of any Mortgage Loan or consent to the postponement of strict
compliance with any such term or in any manner grant indulgence to any Mortgagor
if in the Company's reasonable and prudent determination such waiver,
modification, postponement or indulgence is not materially adverse to the
Purchaser, provided, however, the Company shall not make any future advances
with respect to a Mortgage Loan. The Company shall not permit any modification
with respect to any Mortgage Loan that would change the Mortgage Interest Rate,
defer or forgive the payment of principal (except for actual payments of
principal) or change the final maturity date on such Mortgage Loan, unless the
Mortgagor is in default with respect to the Mortgage Loan or such default is, in
the judgment of the Company, imminent. In the event that no default exists or is
imminent, the Company shall request written consent from the Purchaser to permit
such a modification and the Purchaser shall provide written consent or notify
the Company of its objection to such modification within five (5) Business Days
of its receipt of the Company's request. In the event of any such modification
which permits the deferral of interest or principal payments on any Mortgage
Loan, the Company 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 5.03, 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 Company shall be entitled to reimbursement for such advances to
the same extent as for all other advances made pursuant to Section 5.03. Without
limiting the generality of the foregoing, the Company shall continue, and is
hereby authorized and empowered, to execute and deliver on behalf of itself and
the Purchaser, 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. If reasonably
required by the Company, the Purchaser shall furnish the Company with any powers
of attorney and other documents necessary or appropriate to enable the Company
to carry out its servicing and administrative duties under this Agreement.
In servicing and administering the Mortgage Loans, the Company shall
employ procedures (including collection procedures) and exercise the same care
that it customarily employs and exercises in servicing and administering
mortgage loans for its own account, giving due consideration to Accepted
Servicing Practices where such practices do not conflict with the requirements
of this Agreement, and the Purchaser's reliance on the Company.
The Company shall cause to be maintained for each Cooperative Loan a copy
of the financing statements and shall file and such financing statements and
continuation statements as necessary, in accordance with the Uniform Commercial
Code applicable in the jurisdiction in
37
which the related Cooperative Apartment is located, to perfect and protect the
security interest and lien of the Purchaser.
The Company is authorized and empowered by the Purchaser, in its own name,
when the Company believes it appropriate in its reasonable judgment to register
any Mortgage Loan on the MERS(R) System, or cause the removal from the
registration of any Mortgage Loan on the MERS(R) System, to execute and deliver,
on behalf of the Purchaser, any and all instruments of assignment and other
comparable instruments with respect to such assignment or re-recording of a
Mortgage in the name of MERS, solely as nominee for the Purchaser and its
successors and assigns.
Section 4.02 Liquidation of Mortgage Loans.
In the event that any payment due under any Mortgage Loan and not
postponed pursuant to Section 4.01 is not paid when the same becomes due and
payable, or in the event the Mortgagor fails to perform any other covenant or
obligation under the Mortgage Loan and such failure continues beyond any
applicable grace period, the Company shall take such action as (1) the Company
would take under similar circumstances with respect to a similar mortgage loan
held for its own account for investment, (2) shall be consistent with Accepted
Servicing Practices, (3) the Company shall determine prudently to be in the best
interest of Purchaser, and (4) is consistent with any related PMI Policy. In the
event that any payment due under any Mortgage Loan is not postponed pursuant to
Section 4.01 and remains delinquent for a period of 90 days or any other default
continues for a period of 90 days beyond the expiration of any grace or cure
period, the Company shall commence foreclosure proceedings, the Company shall
notify the Purchaser in writing of the Company's intention to do so, and the
Company shall not commence foreclosure proceedings if the Purchaser objects to
such action within five (5) Business Days of receiving such notice. In the event
the Purchaser objects to such foreclosure action, the Company shall not be
required to make Monthly Advances with respect to such Mortgage Loan, pursuant
to Section 5.03, and the Company's obligation to make such Monthly Advances
shall terminate on the 90th day referred to above. In such connection, the
Company shall from its own funds make all necessary and proper Servicing
Advances, provided, however, that the Company shall not be required to expend
its own funds in connection with any foreclosure or towards the restoration or
preservation of any Mortgaged Property, unless it shall determine (a) that such
preservation, restoration and/or foreclosure will increase the proceeds of
liquidation of the Mortgage Loan to Purchaser after reimbursement to itself for
such expenses and (b) that such expenses will be recoverable by it either
through Liquidation Proceeds (respecting which it shall have priority for
purposes of withdrawals from the Custodial Account pursuant to Section 4.05) or
through Insurance Proceeds (respecting which it shall have similar priority).
Notwithstanding anything to the contrary contained herein, in connection
with a foreclosure or acceptance of a deed in lieu of foreclosure, in the event
the Company has reasonable cause to believe that a Mortgaged Property is
contaminated by hazardous or toxic substances or wastes, or if the Purchaser
otherwise requests an environmental inspection or review of such Mortgaged
Property, such an inspection or review is to be conducted by a qualified
inspector. The cost for such inspection or review shall be borne by the
Purchaser.
38
Upon completion of the inspection or review, the Company shall promptly provide
the Purchaser with a written report of the environmental inspection.
After reviewing the environmental inspection report, the Purchaser shall
determine how the Company shall proceed with respect to the Mortgaged Property.
In the event (a) the environmental inspection report indicates that the
Mortgaged Property is contaminated by hazardous or toxic substances or wastes
and (b) the Purchaser directs the Company to proceed with foreclosure or
acceptance of a deed in lieu of foreclosure, the Company shall be reimbursed for
all reasonable costs associated with such foreclosure or acceptance of a deed in
lieu of foreclosure and any related environmental clean up costs, as applicable,
from the related Liquidation Proceeds, or if the Liquidation Proceeds are
insufficient to fully reimburse the Company, the Company shall be entitled to be
reimbursed from amounts in the Custodial Account pursuant to Section 4.05
hereof. In the event the Purchaser directs the Company not to proceed with
foreclosure or acceptance of a deed in lieu of foreclosure, the Company shall be
reimbursed for all Servicing Advances made with respect to the related Mortgaged
Property from the Custodial Account pursuant to Section 4.05 hereof.
Section 4.03 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest on all
Mortgage Loans are paid in full, the Company shall proceed diligently to collect
all payments due under each of the Mortgage Loans when the same shall become due
and payable and shall take special care in ascertaining and estimating Escrow
Payments and all other charges that will become due and payable with respect to
the Mortgage Loan and the Mortgaged Property, to the end that the installments
payable by the Mortgagors will be sufficient to pay such charges as and when
they become due and payable.
Section 4.04 Establishment of and Deposits to Custodial Account.
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts,
in the form of time deposit or demand accounts, titled "▇▇▇▇▇ Fargo Bank, N.A.
in trust for the Purchaser and/or subsequent purchasers of Mortgage Loans - P &
I." The Custodial Account shall be established with a Qualified Depository. Any
funds deposited in the Custodial Account shall at all times be insured to the
fullest extent allowed by applicable law. Funds deposited in the Custodial
Account may be drawn on by the Company in accordance with Section 4.05. The
creation of any Custodial Account shall be evidenced by a certification in the
case of an account established with the Company, or by a letter agreement in the
case of an account held by a depository other than the Company each in the forms
attached hereto as Exhibit F. A copy of such certification or letter agreement
shall be furnished to the Purchaser or any subsequent purchaser upon request.
The Company shall deposit in the Custodial Account within one (1) Business
Day of the Company's receipt, and retain therein, the following collections
received by the Company and payments made by the Company after the Cut-off Date,
other than payments of principal and
39
interest due on or before the Cut-off Date, or received by the Company prior to
the Cut-off Date but allocable to a period subsequent thereto:
(i) all payments on account of principal on the Mortgage Loans,
including all Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans adjusted
to the Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts required to be deposited
pursuant to Section 4.10 (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
Section 4.14), Section 4.11 and Section 4.15;
(v) all Condemnation Proceeds which are not applied to the restoration
or repair of the Mortgaged Property or released to the Mortgagor in
accordance with Section 4.14;
(vi) any amount required to be deposited in the Custodial Account
pursuant to Section 4.01, 5.03, 6.01 or 6.02;
(vii) any amounts payable in connection with the repurchase of any
Mortgage Loan pursuant to Section 3.03 and all amounts required to
be deposited by the Company in connection with a shortfall in
principal amount of any Qualified Substitute Mortgage Loan pursuant
to Section 3.03;
(viii) with respect to each Principal Prepayment an amount (to be paid by
the Company out of its funds) which, when added to all amounts
allocable to interest received in connection with the Principal
Prepayment, equals one month's interest on the amount of principal
so prepaid at the Mortgage Loan Remittance Rate;
(ix) any amounts required to be deposited by the Company pursuant to
Section 4.11 in connection with the deductible clause in any blanket
hazard insurance policy;
(x) any amounts received with respect to or related to any REO Property
and all REO Disposition Proceeds pursuant to Section 4.16; and
(xi) an amount from the Subsidy Account that when added to the
Mortgagor's payment will equal the full monthly amount due under the
related Mortgage Note.
The foregoing requirements for deposit into 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
Company into the Custodial Account. Any interest paid on funds
40
deposited in the Custodial Account by the depository institution shall accrue to
the benefit of the Company and the Company shall be entitled to retain and
withdraw such interest from the Custodial Account pursuant to Section 4.05.
Section 4.05 Permitted Withdrawals From Custodial Account.
The Company shall, from time to time, withdraw funds 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;
(ii) to reimburse itself for Monthly Advances of the Company's funds made
pursuant to Section 5.03, the Company's right to reimburse itself
pursuant to this subclause (ii) being limited to amounts received on
the related Mortgage Loan which represent late payments of principal
and/or interest respecting which any such advance was made, it being
understood that, in the case of any such reimbursement, the
Company's right thereto shall be prior to the rights of Purchaser,
except that, where the Company is required to repurchase a Mortgage
Loan pursuant to Section 3.03 or 6.02, the Company's right to such
reimbursement shall be subsequent to the payment to the Purchaser of
the Repurchase Price pursuant to such sections 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 for any
unpaid Servicing Fees, the Company's right to reimburse itself
pursuant to this subclause (iii) with respect to any Mortgage Loan
being limited to related Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds and such other amounts as may be
collected by the Company from the Mortgagor or otherwise relating to
the Mortgage Loan, it being understood that, in the case of any such
reimbursement, the Company's right thereto shall be prior to the
rights of Purchaser, except that where the Company is required to
repurchase a Mortgage Loan pursuant to Section 3.03 or 6.02, in
which case the Company's right to such reimbursement shall be
subsequent to the payment to the Purchaser of the Repurchase Price
pursuant to such sections and all other amounts required to be paid
to the Purchaser with respect to such Mortgage Loan;
(iv) to pay itself interest on funds deposited in the Custodial Account;
(v) to reimburse itself for expenses incurred and reimbursable to it
pursuant to Section 8.01;
(vi) to pay any amount required to be paid pursuant to Section 4.16
related to any REO Property, it being understood that, in the case
of any such expenditure or withdrawal related to a particular REO
Property, the amount of such expenditure
41
or withdrawal from the Custodial Account shall be limited to amounts
on deposit in the Custodial Account with respect to the related REO
Property;
(vii) to reimburse itself for any Servicing Advances or REO expenses after
liquidation of the Mortgaged Property not otherwise reimbursed
above;
(viii)to remove funds inadvertently placed in the Custodial Account by
the Company; and
(ix) to clear and terminate the Custodial Account upon the termination of
this Agreement.
In the event that the Custodial Account is interest bearing, on each
Remittance Date, the Company shall withdraw all funds from the Custodial Account
except for those amounts which, pursuant to Section 5.01, the Company is not
obligated to remit on such Remittance Date. The Company may use such withdrawn
funds only for the purposes described in this Section 4.05.
Section 4.06 Establishment of and Deposits to Escrow Account.
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan constituting Escrow Payments separate and apart from
any of its own funds and general assets and shall establish and maintain one or
more Escrow Accounts, in the form of time deposit or demand accounts, titled,
"▇▇▇▇▇ Fargo Bank, N.A., in trust for the Purchaser and/or subsequent purchasers
of Mortgage Loans, and various Mortgagors - T & I." The Escrow Accounts shall be
established with a Qualified Depository, in a manner which shall provide maximum
available insurance thereunder. Funds deposited in the Escrow Account may be
drawn on by the Company in accordance with Section 4.07. The creation of any
Escrow Account shall be evidenced by a certification in the case of an account
established with the Company, or by a letter agreement in the case of an account
held by a depository other than the Company each in the forms attached hereto as
Exhibit G. A copy of such certification or letter agreement shall be furnished
to the Purchaser or any subsequent purchaser, upon request.
The Company shall deposit in the Escrow Account or Accounts within one (1)
Business Day of Company's receipt, 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 amounts representing Insurance Proceeds or Condemnation Proceeds
which are to be applied to the restoration or repair of any
Mortgaged Property; and
(iii) all payments on account of Buydown Funds.
The Company shall make withdrawals from the Escrow Account only to effect
such payments as are required under this Agreement, as set forth in Section
4.07. The Company shall
42
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. To the extent required by law, the Company
shall pay interest on escrowed funds to the Mortgagor notwithstanding that the
Escrow Account may be non-interest bearing or that interest paid thereon is
insufficient for such purposes.
Section 4.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account or Accounts may be made by the Company
only:
(i) to effect timely payments of ground rents, taxes, assessments, water
rates, mortgage insurance premiums, condominium charges, fire and
hazard insurance premiums or other items constituting Escrow
Payments for the related Mortgage;
(ii) to reimburse the Company for any Servicing Advances made by the
Company pursuant to Section 4.08 with respect to a related Mortgage
Loan, but only from amounts received on the related Mortgage Loan
which represent late collections of Escrow Payments thereunder;
(iii) to refund to any Mortgagor any funds found to be in excess of the
amounts required under the terms of the related Mortgage Loan;
(iv) for transfer to the Custodial Account and application to reduce the
principal balance of the Mortgage Loan in accordance with the terms
of the related Mortgage and Mortgage Note;
(v) for application to the restoration or repair of the Mortgaged
Property in accordance with the procedures outlined in Section 4.14;
(vi) to pay to the Company, or any Mortgagor to the extent required by
law, any interest paid on the funds deposited in the Escrow Account;
(vii) to remove funds inadvertently placed in the Escrow Account by the
Company; and
(viii)to clear and terminate the Escrow Account on the termination of
this Agreement.
Section 4.08 Payment of Taxes, Insurance and Other Charges.
With respect to each Mortgage Loan, the Company shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water rates,
sewer rents, and other charges which are or may become a lien upon the Mortgaged
Property and the status of PMI Policy 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, employing for such purpose deposits
of the Mortgagor in the Escrow Account, which shall have been estimated and
accumulated by
43
the Company in amounts sufficient for such purposes, as allowed under the terms
of the Mortgage. The Company assumes full responsibility for the timely payment
of all such bills and shall effect timely payment of all such charges
irrespective of each Mortgagor's faithful performance in the payment of same or
the making of the Escrow Payments, and the Company shall make advances from its
own funds to effect such payments.
Section 4.09 Protection of Accounts.
The Company may transfer the Custodial Account or the Subsidy Account or
the Escrow Account to a different Qualified Depository from time to time and
shall provide the Purchaser with notice of such transfer. The Company shall bear
any expenses, losses or damages sustained by the Purchaser because the Custodial
Account and/or the Escrow Account are not demand deposit accounts.
Section 4.10 Maintenance of Hazard Insurance.
The Company shall cause to be maintained for each Mortgage Loan hazard
insurance such that all buildings upon the Mortgaged Property are insured by an
insurer acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac against loss by fire, hazards of
extended coverage and such other hazards as are customary in the area where the
Mortgaged Property is located, in an amount which is at least equal to the
lesser of (a) 100% of the insurable value, on a replacement cost basis, of the
improvements on the related Mortgaged Property and (b) the greater of (i) the
outstanding principal balance of the Mortgage Loan and (ii) an amount such that
the proceeds of such insurance shall be sufficient to prevent the application to
the Mortgagor or the loss payee of any coinsurance clause under the policy. In
the event a hazard insurance policy shall be in danger of being terminated, or
in the event the insurer shall cease to be acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇
Mac, the Company 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 upon origination of the Mortgage Loan, the related Mortgaged Property
was located in an area identified by the Flood Emergency Management Agency as
having special flood hazards (and such flood insurance has been made available)
the Company shall cause to be maintained a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
is in effect with a generally acceptable insurance carrier acceptable to ▇▇▇▇▇▇
Mae or ▇▇▇▇▇▇▇ Mac in an amount representing coverage equal to the lesser of (i)
the minimum amount required, under the terms of coverage, to compensate for any
damage or loss on a replacement cost basis (or the unpaid balance of the
mortgage if replacement cost coverage is not available for the type of building
insured) and (ii) 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 Company determines in accordance with the
applicable law and pursuant to the ▇▇▇▇▇▇ Mae Guide, that the 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
44
Company shall notify the related Mortgagor that they must obtain such flood
insurance coverage and if the Mortgagor fails to provide proof of such coverage
within forty-five (45) days of such notice, the Company shall force place the
required flood insurance on the Mortgagor's behalf.
If a Mortgage is secured by a unit in a condominium project, the Company
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 ▇▇▇▇▇▇ ▇▇▇ requirements, and secure from the
owner's association its agreement to notify the Company 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 any Purchaser or the Company 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 Company shall communicate and consult with the
Mortgagor with respect to the need for such insurance and bring to the
Mortgagor's attention the required amount of coverage for the Mortgaged Property
and if the Mortgagor does not obtain such coverage, the Company shall
immediately force place the required coverage on the Mortgagor's behalf.
All policies required hereunder shall name the Company as loss payee and
shall be endorsed with standard or union mortgagee clauses, without
contribution, which shall provide for at least 30 days prior written notice of
any cancellation, reduction in amount or material change in coverage.
The Company shall not interfere with the Mortgagor's freedom of choice in
selecting either his insurance carrier or agent, provided, however, that the
Company shall not accept any such insurance policies from insurance companies
unless such companies are acceptable to ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac and are
licensed to do business in the jurisdiction in which the Mortgaged Property is
located. The Company shall determine that such policies provide sufficient risk
coverage and amounts, that they insure the property owner, and that they
properly describe the property address.
Pursuant to Section 4.04, any amounts collected by the Company under any
such policies (other than amounts to be deposited in the Escrow Account and
applied to the restoration or repair of the related Mortgaged Property, or
property acquired in liquidation of the Mortgage Loan, or to be released to the
Mortgagor, in accordance with the Company's normal servicing procedures as
specified in Section 4.14) shall be deposited in the Custodial Account subject
to withdrawal pursuant to Section 4.05.
Section 4.11 Maintenance of Mortgage Impairment Insurance.
In the event that the Company shall obtain and maintain a blanket policy
insuring against losses arising from fire and hazards covered under extended
coverage on all of the Mortgage Loans, then, to the extent such policy 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.
45
The Company shall prepare and make any claims on the blanket policy as deemed
necessary by the Company in accordance with Accepted Servicing Practices. Any
amounts collected by the Company under any such policy relating to a Mortgage
Loan shall be deposited in the Custodial Account subject to withdrawal pursuant
to Section 4.05. Such policy may contain a deductible clause, in which case, in
the event that there shall not have been maintained on the related Mortgaged
Property a policy complying with Section 4.10, and there shall have been a loss
which would have been covered by such policy, the Company shall deposit in the
Custodial Account at the time of such loss the amount not otherwise payable
under the blanket policy because of such deductible clause, such amount to be
deposited from the Company's funds, without reimbursement therefor. Upon request
of the Purchaser, the Company shall cause to be delivered to such Purchaser a
certificate of insurance and a statement from the insurer thereunder that such
policy shall in no event be terminated or materially modified without 30 days'
prior written notice to such Purchaser.
Section 4.12 Maintenance of Fidelity Bond and Errors and Omissions Insurance.
The Company shall maintain with responsible companies, at its own expense,
a blanket Fidelity Bond and an Errors and Omissions Insurance Policy, with broad
coverage on all officers, employees or other Persons acting in any capacity
requiring such Persons to handle funds, money, documents or papers relating to
the Mortgage Loans ("Company Employees"). Any such Fidelity Bond and Errors and
Omissions Insurance Policy shall be in the form of the Mortgage Banker's Blanket
Bond and shall protect and insure the Company against losses, including forgery,
theft, embezzlement, fraud, errors and omissions and negligent acts of such
Company Employees. Such Fidelity Bond and Errors and Omissions Insurance Policy
also shall protect and insure the Company against losses in connection with 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 such Fidelity Bond and Errors and Omissions Insurance Policy shall
diminish or relieve the Company from its duties and obligations as set forth in
this Agreement. The minimum coverage under any such Fidelity Bond and Errors and
Omissions Insurance Policy shall be acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac.
Upon the request of any Purchaser, the Company shall cause to be delivered to
such Purchaser a certificate of insurance for such Fidelity Bond and Errors and
Omissions Insurance Policy and a statement from the surety and the insurer that
such Fidelity Bond and Errors and Omissions Insurance Policy shall in no event
be terminated or materially modified without 30 days' prior written notice to
the Purchaser.
Section 4.13 Inspections.
If any Mortgage Loan is more than 60 days delinquent, the Company shall
inspect the Mortgaged Property and shall conduct subsequent inspections in
accordance with ▇▇▇▇▇▇ Mae or Accepted Servicing Practices or as may be required
by the primary mortgage guaranty insurer. The Company shall produce a report of
each such inspection upon written request by the Purchaser.
Section 4.14 Restoration of Mortgaged Property.
46
The Company 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 Accepted Servicing Practices. For claims greater than
$15,000, at a minimum the Company shall comply with the following conditions in
connection with any such release of Insurance Proceeds or Condemnation Proceeds:
(i) the Company shall receive satisfactory independent verification of
completion of repairs and issuance of any required approvals with
respect thereto;
(ii) the Company shall take all 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 Company shall verify that the Mortgage Loan is not in default;
and
(iv) pending repairs or restoration, the Company shall place the
Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
If the Purchaser is named as an additional loss payee, the Company is
hereby empowered to endorse any loss draft issued in respect of such a claim in
the name of the Purchaser.
Section 4.15 Maintenance of PMI Policy; Claims.
With respect to each Mortgage Loan with an LTV greater than 80% at the
time of origination, the Company shall, without any cost to the Purchaser,
maintain or cause the Mortgagor to maintain in full force and effect a PMI
Policy insuring that portion of the Mortgage Loan over 78% of value until
terminated pursuant to the Homeowners Protection Act of 1998, 12 USC $4901, et
seq. In the event that such PMI Policy shall be terminated other than as
required by law, the Company shall obtain from another Qualified Insurer a
comparable replacement policy, with a total coverage equal to the remaining
coverage of such terminated PMI Policy. If the insurer shall cease to be a
Qualified Insurer, the Company shall determine whether recoveries under the PMI
Policy are jeopardized for reasons related to the financial condition of such
insurer, it being understood that the Company shall in no event have any
responsibility or liability for any failure to recover under the PMI Policy for
such reason. If the Company determines that recoveries are so jeopardized, it
shall notify the Purchaser and the Mortgagor, if required, and obtain from
another Qualified Insurer a replacement insurance policy. The Company shall not
take any action which would result in noncoverage under any applicable PMI
Policy of any loss which, but for the actions of the Company 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 Company shall
promptly notify the insurer under the related PMI Policy, if any, of such
assumption or substitution of liability in accordance with the terms of such PMI
Policy and shall take all actions which may be required by such insurer as a
condition to the continuation of coverage under such PMI Policy. If such PMI
Policy is terminated as a result of such assumption or substitution of
liability, the Company shall obtain a replacement PMI Policy as provided above.
47
In connection with its activities as servicer, the Company agrees to
prepare and present, on behalf of itself and the Purchaser, claims to the
insurer under any PMI Policy in a timely fashion in accordance with the terms of
such PMI Policy and, in this regard, to take such action as shall be necessary
to permit recovery under any PMI Policy respecting a defaulted Mortgage Loan.
Pursuant to Section 4.04, any amounts collected by the Company under any PMI
Policy shall be deposited in the Custodial Account, subject to withdrawal
pursuant to Section 4.05.
Any premiums payable on LPMI Policies will be paid from the Company's own
funds without reimbursement.
Section 4.16 Title, Management and Disposition of REO Property.
In the event that title to any 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 the Purchaser's designee, or in
the event the Purchaser 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
Company from any attorney duly licensed to practice law in the state where the
REO Property is located. The Person or Persons holding such title other than the
Purchaser shall acknowledge in writing that such title is being held as nominee
for the Purchaser.
The Company shall manage, conserve, protect and operate each REO Property
for the Purchaser solely for the purpose of its prompt disposition and sale. The
Company, either itself or through an agent selected by the Company, shall
manage, conserve, protect and operate the 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 Company shall attempt to sell the same (and
may temporarily rent the same for a period not greater than one year, except as
otherwise provided below) on such terms and conditions as the Company deems to
be in the best interest of the Purchaser.
The Company shall use its best efforts to dispose of the REO Property as
soon as possible and shall sell such REO Property in any event prior to the
close of the third calendar year beginning after the year in which title has
been taken to such REO Property, unless(i) a REMIC election has not been made
with respect to the arrangement under which the Mortgage Loans and the REO
Property are held, and (ii) the Company determines that a longer period is
necessary for the orderly liquidation of such REO Property. If a period longer
than three years is permitted under the foregoing sentence and is necessary to
sell any REO Property, (i) the Company shall report monthly to the Purchaser as
to the progress being made in selling such REO Property and (ii) if no REMIC
election has been made and if a purchase money mortgage is taken in connection
with such sale, such purchase money mortgage shall name the Company as
mortgagee, and such purchase money mortgage shall not be held pursuant to this
Agreement, but instead a separate participation agreement among the Company and
Purchaser shall be entered into with respect to such purchase money mortgage.
48
The Company shall also 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.
The disposition of REO Property shall be carried out by the Company at
such price, and upon such terms and conditions, as the Company deems to be in
the best interests of the Purchaser. 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 Company 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 Principal Prepayment Period in which
such sale proceeds are received the net cash proceeds of such sale remaining in
the Custodial Account shall be distributed to the Purchaser.
The Company shall withdraw from the Custodial Account in accordance with
Section 4.05, the funds necessary for the proper operation management and
maintenance of the REO Property, including the cost of maintaining any hazard
insurance pursuant to Section 4.10 and the fees of any managing agent of the
Company, or the Company itself. The Company 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 4.16 and of any reserves reasonably required from time
to time to be maintained to satisfy anticipated liabilities for such expenses).
Section 4.17 Real Estate Owned Reports.
Together with the statement furnished pursuant to Section 5.02, the
Company shall furnish to the Purchaser on or before the Remittance Date each
month a statement with respect to any REO Property covering the operation of
such MO Property for the previous month and the Company's efforts in connection
with the sale of such REO Property and any rental of such REO Property
incidental to the sale thereof for the previous month. That statement shall be
accompanied by such other information as the Purchaser shall reasonably request.
Section 4.18 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 Company
shall submit to the Purchaser a liquidation report with respect to such
Mortgaged Property.
Section 4.19 Reports of Foreclosures and Abandonments of Mortgaged Property.
Following the foreclosure sale or abandonment of any Mortgaged Property,
the Company shall report such foreclosure or abandonment as required pursuant to
Section 60505 of the Code. The Company shall file information reports with
respect to the receipt of mortgage interest
49
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 4.20 Notification of Adjustments.
With respect to each adjustable rate Mortgage Loan, the Company shall
adjust the Mortgage Interest Rate on the related Interest Rate Adjustment Date
in compliance with the requirements of applicable law and the related Mortgage
and Mortgage Note. The Company 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 adjustments. Upon the
discovery by the Company or the receipt of notice from the Purchaser that the
Company has failed to adjust a Mortgage Interest Rate in accordance with the
terms of the related Mortgage Note, the Company shall immediately deposit in the
Custodial Account from its own funds the amount of any interest loss or deferral
caused the Purchaser thereby.
Section 4.21 Confidentiality/Protection of Customer Information.
The Company shall keep confidential and shall not divulge to any party,
without the Purchaser'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 the Company to do so in working with legal counsel, auditors, taxing
authorities or other governmental agencies. Each party agrees that it shall
comply with all applicable laws and regulations regarding the privacy or
security of Customer Information and shall maintain appropriate administrative,
technical and physical safeguards to protect the security, confidentiality and
integrity of Customer Information, including maintaining security measures
designed to meet the objectives of the Interagency Guidelines Establishing
Standards for Safeguarding Customer Information, 66 Fed. Reg. 8616 (the
"Interagency Guidelines"). For purposes of this Section, the term "Customer
Information" shall have the meaning assigned to it in the Interagency
Guidelines.
Section 4.22 Fair Credit Reporting Act.
The Company, in its capacity as servicer for each Mortgage Loan, agrees to
fully furnish, in accordance with the Fair Credit Reporting Act and its
implementing regulations, accurate and complete information (e.g., favorable and
unfavorable) on its borrower credit files to Equifax, Experian and Trans Union
Credit Information Company (three of the credit repositories), on a monthly
basis.
Section 4.23 Establishment of and Deposits to Subsidy Account.
(a) The Company shall segregate and hold all Subsidy Funds collected and
received pursuant to the Subsidy Loans separate and apart from any of its own
funds and general assets and shall establish and maintain one or more Subsidy
Accounts, in the form of time deposit or demand accounts, titled "▇▇▇▇▇ Fargo
Bank, N.A., in trust for the Purchaser, its successors or assigns, and/or
subsequent purchasers of Residential Mortgage Loans, and various Mortgagors."
The Subsidy Account shall be an eligible deposit account established with an
eligible institution.
50
(b) The Company shall, from time to time, withdraw funds from the Subsidy
Account for the following purposes:
(i) to deposit in the Custodial Account in the amounts and in the
manner provided for in Section 4.04(xi);
(ii) to transfer funds to another eligible institution in
accordance with Section 4.09 hereof;
(iii) to withdraw funds deposited in error; and
(iv) to clear and terminate the Subsidy Account upon the
termination of this Agreement.
(c) Notwithstanding anything to the contrary elsewhere in this Agreement,
the Company may employ the Escrow Account as the Subsidy Account to the extent
that the Company can separately identify any Subsidy Funds deposited therein.
Section 4.24 Application of Buydown Funds.
With respect to each Buydown Mortgage Loan, the Company shall have
deposited into the Escrow Account, no later than the last day of the month,
Buydown Funds in an amount equal to the aggregate undiscounted amount of
payments that, when added to the amount the Mortgagor on such Mortgage Loan is
obligated to pay on all Due Dates in accordance with the terms of the Buydown
Agreement, is equal to the full scheduled Monthly Payments which are required to
be paid by the Mortgagor under the terms of the related Mortgage Note (without
regard to the related Buydown Agreement as if the Mortgage Loan were not subject
to the terms of the Buydown Agreement). With respect to each Buydown Mortgage
Loan, the Company will distribute to the Purchaser on each Remittance Date an
amount of Buydown Funds equal to the amount that, when added to the amount
required to be paid on such date by the related Mortgagor, pursuant to and in
accordance with the related Buydown Agreement, equals the full Monthly Payment
that would otherwise be required to be paid on such Mortgage Loan by the related
Mortgagor under the terms of the related Mortgage Note (as if the Mortgage Loan
were not a Buydown Mortgage Loan and without regard to the related Buydown
Agreement).
If the Mortgagor on a Buydown Mortgage Loan defaults on such Mortgage Loan
during the Buydown Period and the Mortgaged Property securing such Buydown
Mortgage Loan is sold in the liquidation thereof (either by the Company or the
insurer under any related Primary Insurance Policy) the Company shall, on the
Remittance Date following the date upon which Liquidation Proceeds or REO
Disposition proceeds are received with respect to any such Buydown Mortgage
Loan, distribute to the Purchaser all remaining Buydown Funds for such Mortgage
Loan then remaining in the Escrow Account. Pursuant to the terms of each Buydown
Agreement, any amounts distributed to the Purchaser in accordance with the
preceding sentence will be applied to reduce the outstanding principal balance
of the related Buydown Mortgage Loan. If a Mortgagor on a Buydown Mortgage Loan
prepays such Mortgage Loan in its entirety during the related Buydown Period,
the Company shall be required to withdraw from the Escrow
51
Account any Buydown Funds remaining in the Escrow Account with respect to such
Buydown Mortgage Loan in accordance with the related Buydown Agreement. If a
principal prepayment by a Mortgagor on a Buydown Mortgage Loan during the
related Buydown Period, together with any Buydown Funds then remaining in the
Escrow Account related to such Buydown Mortgage Loan, would result in a
principal prepayment of the entire unpaid principal balance of the Buydown
Mortgage Loan, the Company shall distribute to the Purchaser on the Remittance
Date occurring in the month immediately succeeding the month in which such
Principal Prepayment is received, all Buydown Funds related to such Mortgage
Loan so remaining in the Escrow Account, together with any amounts required to
be deposited into the Custodial Account.
Section 4.25 Letter of Credit Compliance.
Notwithstanding any other provision of this Agreement, the Company shall
comply with all the requirements of any Letter of Credit so as to assure the
full benefit of such Letter of Credit to the Purchaser.
Section 4.26 Letter of Credit Draws.
The Company shall take all steps necessary to make draws under any Letter
of Credit in accordance with the provisions thereof and shall draw on each
Letter of Credit all amounts payable thereunder within the time frame required
by the Letter of Credit or such shorter time within which the Company can effect
such draw (not to exceed thirty (30) calendar days) of (i) the date the related
Pledged Asset Mortgage Loan becomes 90 days or more delinquent and (ii) the
receipt of notice of non-renewal from the Pledge Holder at any time prior to the
date that all amounts owed under the related Pledged Asset Mortgage Loan are
less than or equal to 80% of the Appraised Value of the related Mortgaged
Property. The Company shall notify the Purchaser promptly in writing upon
receipt of notice from the Pledge Holder of non-renewal of any Letter of Credit.
Upon receipt of any amounts as a result of a draw on a Letter of Credit because
of the non-renewal of such Letter of Credit or as a result of the Pledged Asset
Mortgage Loan continuing in default for 90 or more days, the Company shall
deposit such amounts in the Custodial Account and such amount shall be treated
as a payment of principal.
Section 4.27 Assignment of the Letter of Credit.
Notwithstanding anything to the contrary in this Agreement (including,
without limitation, the termination or transfer of the servicing rights and/or
obligations of the Company pursuant to Articles X and XI hereof), the Company,
as beneficiary under any Non-Assigned Letters of Credit, shall transfer and
assign, at no cost to the Purchaser, each Non-Assigned Letter of Credit to the
Purchaser in accordance with the provisions thereof within ten (10) days of such
termination or transfer. In addition, the Company shall forward within one (1)
Business Day of receipt any notice received of non-renewal of any Letter of
Credit. Any funds received by the Company from draws on the Non-Assigned Letters
of Credit after the Company is no longer the servicer hereunder shall be
remitted by the Company to the successor servicer for deposit into the Custodial
Account.
Section 4.28 Pledge Holder Defaults.
52
Upon a default under the Letter of Credit by the Pledge Holder, the
Company shall take possession of the assets securing the Letter of Credit and
shall deposit such assets or the proceeds thereof in the Custodial Account and
apply them as a prepayment of the related Pledged Asset Mortgage Loan. If such
default described in the prior sentence occurs at any time that the Company is
no longer the servicer of the related Pledged Asset Mortgage Loan, the Company
shall, upon knowledge of such default or notice from the successor servicer of
such default with respect to any Non-Assigned Letter of Credit forward such
proceeds to the successor servicer for deposit into the Custodial Account.
Section 4.29 Use of Subservicers and Subcontractors.
The Company shall not hire or otherwise utilize the services of any
Subservicer to fulfill any of the obligations of the Company under this
Agreement or any Reconstitution Agreement unless the Company complies with the
provisions of paragraph (a) of this Section 4.29. The Company shall not hire or
otherwise utilize the services of any Subcontractor, and shall not permit any
Subservicer to hire or otherwise utilize the services of any Subcontractor, to
fulfill any of the obligations of the Company under this Agreement or any
Reconstitution Agreement unless the Company complies with the provisions of
paragraph (b) of this Section 4.29.
(a) It shall not be necessary for the Company to seek the consent of the
Purchaser or any Depositor to the utilization of any Subservicer. The
Company shall cause any Subservicer used by the Company (or by any
Subservicer) for the benefit of the Purchaser and any Depositor to comply
with the provisions of this Section 4.29 and with Sections 6.04, 6.06,
9.01(d)(iii), 9.01(d)(v), 9.0l(d)(vi) and 9.01(e) of this Agreement to the
same extent as if such Subservicer were the Company, and to provide the
information required with respect to such Subservicer under Section
9.01(d)(iv) of this Agreement. The Company shall be responsible for
obtaining from each Subservicer and delivering to the Purchaser and any
Depositor any servicer compliance statement required to be delivered by
such Subservicer under Section 6.04 and any assessment of compliance and
attestation required to be delivered by such Subservicer under Section
6.06 and any certification required to be delivered to the Person that
will be responsible for signing the Sarbanes Certification under Section
6.06 as and when required to be delivered.
(b) It shall not be necessary for the Company to seek the consent of the
Purchaser or any Depositor to the utilization of any Subcontractor. The
Company shall promptly upon request provide to the Purchaser and any
Depositor (or any designee of the Depositor, such as a master servicer or
administrator) a written description (in form and substance satisfactory
to the Purchaser and such Depositor) of the role and function of each
Subcontractor utilized by the Company or any Subservicer, specifying (i)
the identity of each such Subcontractor, (ii) which (if any) of such
Subcontractors are "participating in the servicing function" within the
meaning of Item 1122 of Regulation AB, and (iii) which elements of the
Servicing Criteria will be addressed in assessments of compliance provided
by each Subcontractor identified pursuant to clause (ii) of this
paragraph.
53
As a condition to the utilization of any Subcontractor determined to be
"participating in the servicing function" within the meaning of Item 1122 of
Regulation AB, the Company shall cause any such Subcontractor used by the
Company (or by any Subservicer) for the benefit of the Purchaser and any
Depositor to comply with the provisions of Sections 6.06 and 9.01(e) of this
Agreement to the same extent as if such Subcontractor were the Company. The
Company shall be responsible for obtaining from each Subcontractor and
delivering to the Purchaser and any Depositor any assessment of compliance and
attestation required to be delivered by such Subcontractor under Section 6.06,
in each case as and when required to be delivered.
ARTICLE V
PAYMENTS TO PURCHASER
Section 5.01 Remittances.
On each Remittance Date the Company shall remit by wire transfer of
immediately available funds to the Purchaser (a) all amounts deposited in the
Custodial Account as of the close of business on the Determination Date (net of
charges against or withdrawals from the Custodial Account pursuant to Section
4.05), plus (b) all amounts, if any, which the Company is obligated to
distribute pursuant to Section 5.03, minus (c) any amounts attributable to
Principal Prepayments received after the applicable Principal Prepayment Period
which amounts shall be remitted on the following Remittance Date, together with
any additional interest required to be deposited in the Custodial Account in
connection with such Principal Prepayment in accordance with Section 4.04(viii);
minus (d) any amounts attributable to Monthly Payments collected but due on a
Due Date or Dates subsequent to the first day of the month of the Remittance
Date, and minus (e) any amounts attributable to Buydown Funds being held in the
Custodial Account, which amounts shall be remitted on the Remittance Date next
succeeding the Due Period for such amounts.
With respect to any remittance received by the Purchaser after the second
Business Day following the Business Day on which such payment was due, the
Company 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 three percentage points, but in no event greater than the maximum amount
permitted by applicable law. Such interest shall be deposited in the Custodial
Account by the Company on the date such late payment is made and shall cover the
period commencing with the day following such second Business Day 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 Company of any such interest
shall not be deemed an extension of time for payment or a waiver of any Event of
Default by the Company.
Section 5.02 Statements to Purchaser.
Not later than the tenth calendar day of the month, the Company shall
furnish in an agreed upon electronic format to the Purchaser or its designee, a
monthly, loan level, scheduled
54
remittance advice, trial balance report and payment and payoff activity detail,
as to the remittance period ending on the last day of the preceding month.
Section 5.03 Monthly Advances by Company.
On the Business Day immediately preceding each Remittance Date, the
Company shall deposit in the Custodial Account from its own funds or from
amounts held for future distribution an amount equal to all Monthly Payments
(with interest adjusted to the Mortgage Loan Remittance Rate) which were due on
the Mortgage Loans during the applicable Due Period and which were delinquent at
the close of business on the immediately preceding Determination Date or which
were deferred pursuant to Section 4.01. Any amounts held for future distribution
and so used shall be replaced by the Company by deposit in the Custodial Account
on or before any future Remittance Date if funds in the Custodial Account on
such Remittance Date shall be less than payments to the Purchaser required to be
made on such Remittance Date. The Company'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 last
Remittance Date prior to the Remittance Date for the distribution of all
Liquidation Proceeds and other payments or recoveries (including REO Disposition
Proceeds, Insurance Proceeds and Condemnation Proceeds) with respect to the
Mortgage Loan; provided, however, that such obligation shall cease if the
Company determines, in its sole reasonable opinion, that advances with respect
to such Mortgage Loan are non-recoverable by the Company from Liquidation
Proceeds, REO Disposition Proceeds, Insurance Proceeds, Condemnation Proceeds,
or otherwise with respect to a particular Mortgage Loan. In the event that the
Company determines that any such advances are non-recoverable, the Company shall
provide the Purchaser with a certificate signed by two officers of the Company
evidencing such determination. The Company shall not have an obligation to make
such Monthly Advances as to any Mortgage Loan with respect to shortfalls
relating to the Servicemembers Civil Relief Act or similar state and local laws.
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.0 1 Transfers of Mortgaged Property.
The Company shall use its best efforts to enforce any "due-on-sale"
provision contained in any Mortgage or Mortgage Note and to deny assumption by
the person to whom the Mortgaged Property has been or is about to be sold
whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains liable on the Mortgage and the Mortgage Note. When the
Mortgaged Property has been conveyed by the Mortgagor, the Company shall, to the
extent it has knowledge of such conveyance, exercise its rights to accelerate
the maturity of such Mortgage Loan under the "due-on-sale" clause applicable
thereto, provided, however, that the Company shall not exercise such rights if
prohibited by law from doing so or if the exercise of such rights would impair
or threaten to impair any recovery under the related PMI Policy, if any.
55
If the Company reasonably believes it is unable under applicable law to
enforce such "due-on-sale" clause, the Company shall enter into (i) an
assumption and modification agreement with the Person to whom such property has
been conveyed, pursuant to which such Person becomes liable under the Mortgage
Note and the original Mortgagor remains liable thereon or (ii) in the event the
Company is unable under applicable law to require that the original Mortgagor
remain liable under the Mortgage Note and the Company has the prior consent of
the primary mortgage guaranty insurer, a substitution of liability agreement
with the purchaser of the Mortgaged Property pursuant to which the original
Mortgagor is released from liability and the purchaser of the Mortgaged Property
is substituted as Mortgagor and becomes liable under the Mortgage Note. If an
assumption fee is collected by the Company for entering into an assumption
agreement the fee will be retained by the Company as additional servicing
compensation. In connection with any such assumption, neither the Mortgage
Interest Rate borne by the related Mortgage Note, the term of the Mortgage Loan,
the outstanding principal amount of the Mortgage Loan nor any other material
terms shall be changed without Purchaser's consent.
To the extent that any Mortgage Loan is assumable, the Company shall
inquire diligently into the credit worthiness of the proposed transferee, and
shall use the underwriting criteria for approving the credit of the proposed
transferee which are used with respect to underwriting mortgage loans of the
same type as the Mortgage Loan. If the creditworthiness of the proposed
transferee does not meet such underwriting criteria, the Company diligently
shall, to the extent permitted by the Mortgage or the Mortgage Note and by
applicable law, accelerate the maturity of the Mortgage Loan.
Section 6.02 Satisfaction of Mortgages and Release of Retained Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Company of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Company shall notify the Purchaser in the
Monthly Remittance Advice as provided in Section 5.02, and may request the
release of any applicable Mortgage Loan Documents.
If the Company satisfies or releases a Mortgage without first having obtained
payment in full of the indebtedness secured by the Mortgage or should the
Company otherwise prejudice any rights the Purchaser may have under the mortgage
instruments, upon written demand of the Purchaser, the Company shall repurchase
the related Mortgage Loan at the Repurchase Price by deposit thereof in the
Custodial Account within 2 Business Days of receipt of such demand by the
Purchaser. The Company shall maintain the Fidelity Bond and Errors and Omissions
Insurance Policy as provided for in Section 4.12 insuring the Company against
any loss it may sustain with respect to any Mortgage Loan not satisfied in
accordance with the procedures set forth herein.
Section 6.03 Servicing Compensation.
As compensation for its services hereunder, the Company shall be entitled
to retain from the interest payment the amount of its Servicing Fee. The
Servicing Fee shall be payable monthly and shall be computed on the basis of the
same unpaid principal balance and for the
56
period respecting which any related interest payment on a Mortgage Loan is
received. The obligation of the Purchaser to pay the Servicing Fee is limited
to, and payable solely from, the interest portion of such Monthly Payments.
Additional servicing compensation in the form of assumption fees, to the
extent provided in Section 6.01, and late payment charges shall be retained by
the Company to the extent not required to be deposited in the Custodial Account.
The Company shall be required to pay all expenses incurred by it in connection
with its servicing activities hereunder and shall not be entitled to
reimbursement thereof except as specifically provided for herein.
Section 6.04 Annual Statements as to Compliance.
On or before March 1 of each calendar year, commencing in 2007, the
Company shall deliver to the Purchaser and any Depositor a statement of
compliance addressed to the Purchaser and such Depositor and signed by an
authorized officer of the Company, to the effect that (a) a review of the
Company's activities during the immediately preceding calendar year (or
applicable portion thereof) and of its performance under this Agreement and any
applicable Reconstitution Agreement during such period has been made under such
officer's supervision, and (b) to the best of such officers' knowledge, based on
such review, the Company has fulfilled all of its obligations under this
Agreement and any applicable Reconstitution Agreement in all material respects
throughout such calendar year (or applicable portion thereof) or, if there has
been a failure to fulfill any such obligation in any material respect,
specifically identifying each such failure known to such officer and the nature
and the status thereof.
Section 6.05 Annual Independent Public Accountants' Servicing Report.
Except with respect to any Mortgage Loans that are the subject of a
Securitization Transaction, on or before March 1 of each calendar year,
commencing in 2007, the Company, at its expense, shall cause a firm of
independent public accountants which is a member of the American Institute of
Certified Public Accountants to finish a statement to each Purchaser to the
effect that such firm has examined certain documents and records relating to the
servicing of the mortgage loans similar in nature and that such firm is of the
opinion that the provisions of this or similar agreements have been complied
with, and that, on the basis of such examination conducted substantially in
compliance with the Uniform Single Attestation Program for Mortgage Bankers,
nothing has come to their attention which would indicate that such servicing has
not been conducted in compliance therewith, 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. By providing Purchaser a copy of a Uniform
Single Attestation Program Report from their independent public accountant's on
an annual basis, Company shall be considered to have fulfilled its obligations
under this Section 6.05.
Section 6.06 Report on Assessment of Compliance and Attestation.
With respect to any Mortgage Loans that are the subject of a
Securitization Transaction, on or before March 1of each calendar year,
commencing in 2007, the Company shall:
57
(i) deliver to the Purchaser and any Depositor a report (in form and
substance reasonably satisfactory to the Purchaser and such
Depositor) regarding the Company's assessment of compliance with the
Servicing Criteria during the immediately preceding calendar year,
as required under Rules 13a- 18 and 15d-18 of the Exchange Act and
Item 1122 of Regulation AB. Such report shall be addressed to the
Purchaser and such Depositor and signed by an authorized officer of
the Company, and shall address each of the Servicing Criteria
specified substantially in the form of Exhibit H hereto delivered to
the Purchaser at the time of any Securitization Transaction;
(ii) deliver to the Purchaser and any Depositor a report of a registered
public accounting firm reasonably acceptable to the Purchaser and
such Depositor that attests to, and reports on, the assessment of
compliance made by the Company and delivered pursuant to the
preceding paragraph. Such attestation shall be in accordance with
Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities
Act and the Exchange Act;
(iii) cause each Subservicer and each Subcontractor, determined by the
Company pursuant to Section 4.29(b) to be "participating in the
servicing function" within the meaning of Item 1122 of Regulation
AB, to deliver to the Purchaser and any Depositor an assessment of
compliance and accountants' attestation as and when provided in
paragraphs (i) and (ii) of this Section 6.06; and
(iv) if requested by the Purchaser or any Depositor not later than
February 1 of the calendar year in which such certification is to be
delivered, deliver to the Purchaser, any Depositor and any other
Person that will be responsible for signing the certification (a
"Sarbanes Certification") required by Rules 13a-14(d) and 15d-14(d)
under the Exchange Act (pursuant to Section 302 of the ▇▇▇▇▇▇▇▇-
▇▇▇▇▇ Act of 2002) on behalf of an asset-backed issuer with respect
to a Securitization Transaction a certification in the form attached
hereto as Exhibit I.
The Company acknowledges that the parties identified in clause (iv) above
may rely on the certification provided by the Company pursuant to such clause in
signing a Sarbanes Certification and filing such with the Commission. Neither
the Purchaser nor any Depositor will request delivery of a certification under
clause (iv) above unless a Depositor is required under the Exchange Act to file
an annual report on Form 10-K with respect to an issuing entity whose asset pool
includes Mortgage Loans.
Each assessment of compliance provided by a Subservicer pursuant to
Section 6.06(i) shall address each of the Servicing Criteria specified
substantially in the form of Exhibit H hereto delivered to the Purchaser at the
time of any Securitization Transaction or, in the case of a Subservicer
subsequently appointed as such, on or prior to the date of such appointment. An
assessment of compliance provided by a Subcontractor pursuant to Section
6.06(iii) need not address any elements of the Servicing Criteria other than
those specified by the Company pursuant to Section 4.29.
58
Section 6.07 Remedies.
(i) Any failure by the Company, any Subservicer, any Subcontractor or any
Third- Party Originator to deliver any information, report, certification,
accountants' letter or other material when and as required under Article IX,
Sections 4.29, 6.04, 6.05 or 6.06, or any breach by the Company of a
representation or warranty set forth in Section 9.01(d)(vi)(A), or in a writing
furnished pursuant to Section 9.01(d)(vi)(B) and made as of a date prior to the
closing date of the related Securitization Transaction, to the extent that such
breach is not cured by such closing date, or any breach by the Company of a
representation or warranty in a writing furnished pursuant to Section
9.01(d)(vi)(B) to the extent made as of a date subsequent to such closing date,
shall, except as provided in sub-clause (ii) of this Section, immediately and
automatically, without notice or grace period, constitute an Event of Default
with respect to the Company under this Agreement and any applicable
Reconstitution Agreement, and shall entitle the Purchaser or Depositor, as
applicable, in its sole discretion to terminate the rights and obligations of
the Company as servicer under this Agreement and/or any applicable
Reconstitution Agreement without payment (notwithstanding anything in this
Agreement or any applicable Reconstitution Agreement to the contrary) of any
compensation to the Company; provided that to the extent that any provision of
this Agreement and/or any applicable Reconstitution Agreement expressly provides
for the survival of certain rights or obligations following termination of the
Company as servicer, such provision shall be given effect.
(ii) Any failure by the Company, any Subservicer or any Subcontractor to
deliver any information, report, certification or accountants' letter when and
as required under Sections 6.04, 6.05 or 6.06, including (except as provided
below) any failure by the Company to identify any Subcontractor "participating
in the servicing function" within the meaning of Item 1122 of Regulation AB,
which continues unremedied for ten (10) calendar days after the date on which
such information, report, certification or accountants' letter was required to
be delivered shall constitute an Event of Default with respect to the Company
under this Agreement and any applicable Reconstitution Agreement, and shall
entitle the Purchaser or Depositor, as applicable, in its sole discretion to
terminate the rights and obligations of the Company under this Agreement and/or
any applicable Reconstitution Agreement without payment (notwithstanding
anything in this Agreement to the contrary) of any compensation to the Company;
provided that to the extent that any provision of this Agreement and/or any
applicable Reconstitution Agreement expressly provides for the survival of
certain rights or obligations following termination of the Company as servicer,
such provision shall be given effect.
Neither the Purchaser nor any Depositor shall be entitled to terminate the
rights and obligations of the Company pursuant to this Section 6.07(ii) if a
failure of the Company to identify a Subcontractor "participating in the
servicing function" within the meaning of Item 1122 of Regulation AB was
attributable solely to the role or functions of such Subcontractor with respect
to mortgage loans other than the Mortgage Loans.
(iii) The Company shall promptly reimburse the Purchaser (or any designee
of the Purchaser, such as a master servicer) and any Depositor, as applicable,
for all reasonable expenses incurred by the Purchaser (or such designee) or such
Depositor, as such are incurred, in connection with the termination of the
Company as servicer and the transfer of servicing of the
59
Mortgage Loans to a successor servicer. The provisions of this paragraph shall
not limit whatever rights the Purchaser or any Depositor may have under other
provisions of this Agreement and/or any applicable Reconstitution Agreement or
otherwise, whether in equity or at law, such as an action for damages, specific
performance or injunctive relief.
Section 6.08 Right to Examine Company Records.
The Purchaser, or its designee, shall have the right to examine and audit
any and all of the books, records, or other information of the Company, whether
held by the Company or by another on its behalf, with respect to or concerning
this Agreement or the Mortgage Loans, during business hours or at such other
times as may be reasonable under applicable circumstances, upon reasonable
advance notice. The Purchaser shall pay its own expenses associated with such
examination.
Section 6.09 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 Company shall not take
any action, cause the REMIC to 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 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
Company 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
COMPANY TO COOPERATE
Section 7.01 Provision of Information.
During the term of this Agreement, the Company shall furnish to the
Purchaser such periodic, special, or other reports or information, and copies or
originals of any documents contained in the Servicing File for each Mortgage
Loan provided for herein. All other special reports or information not provided
for herein as shall be necessary, reasonable, or appropriate with respect to the
Purchaser or any regulatory agency will be provided at the Purchaser's expense.
All such reports, documents or information shall be provided by and in
accordance with all reasonable instructions and directions which the Purchaser
may give.
The Company shall execute and deliver all such instruments and take all
such action as the Purchaser may reasonably request from time to time, in order
to effectuate the purposes and to carry out the terms of this Agreement.
Section 7.02 Financial Statements; Servicing Facility.
60
In connection with marketing the Mortgage Loans, the Purchaser may make
available to a prospective Purchaser a Consolidated Statement of Operations of
the Company for the most recently completed two fiscal years for which such a
statement is available, as well as a Consolidated Statement of Condition at the
end of the last two fiscal years covered by such Consolidated Statement of
Operations. The Company, upon request, also shall make available any comparable
interim statements to the extent any such statements have been prepared by or on
behalf of the Company (and are available upon request to members or stockholders
of the Company or to the public at large).
The Company also shall make available to Purchaser or prospective
Purchaser a knowledgeable financial or accounting officer for the purpose of
answering questions respecting recent developments affecting the Company or the
financial statements of the Company, and to permit any prospective purchaser to
inspect the Company's servicing facilities for the purpose of satisfying such
prospective purchaser that the Company has the ability to service the Mortgage
Loans as provided in this Agreement.
ARTICLE VIII
THE COMPANY
Section 8.01 Indemnification; Third Party Claims.
The Company shall indemnify the Purchaser and hold it harmless against any
and all claims, losses, damages, penalties, fines, forfeitures, reasonable and
necessary 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
Company to perform its duties, comply with its obligations and covenants under
the terms of this Agreement and service the Mortgage Loans all in strict
compliance with the terms of this Agreement. The Company immediately shall
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 Company shall follow any written instructions received from
the Purchaser in connection with such claim. The Purchaser promptly shall
reimburse the Company for all amounts advanced by it pursuant to the preceding
sentence except when the claim is in any way related to the Company's
indemnification pursuant to Section 3.03, or the failure of the Company to
service and administer the Mortgage Loans in strict compliance with the terms of
this Agreement.
Section 8.02 Merger or Consolidation of the Company.
The Company shall keep in full effect its existence, rights and franchises
and shall obtain and preserve its qualification to do business 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.
61
Any Person into which the Company may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Company shall be a party, or any Person succeeding to the business of the
Company, shall be the successor of the Company 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 net worth
of not less than $15,000,000 and (ii) which is a ▇▇▇▇▇▇ ▇▇▇/▇▇▇▇▇▇▇ Mac-approved
company in good standing. Furthermore, in the event the Company transfers or
otherwise disposes of all or substantially all of its assets to an affiliate of
the Company, such affiliate shall satisfy the condition above, and shall also be
fully liable to the Purchaser for all of the Company's obligations and
liabilities hereunder.
Section 8.03 Limitation on Liability of Company and Others.
Neither the Company nor any of the directors, officers, employees or
agents of the Company 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, provided, however, that
this provision shall not protect the Company 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 other liability which would otherwise be imposed under this
Agreement. The Company and any director, officer, employee or agent of the
Company may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Company 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 opinion may involve it
in any expense or liability, provided, however, that the Company 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 Company shall be entitled to reimbursement
from the Purchaser of the reasonable legal expenses and costs of such action.
Section 8.04 Limitation on Resignation and Assignment by Company.
The Purchaser has entered into this Agreement with the Company and
subsequent Purchaser will purchase the Mortgage Loans in reliance upon the
independent status of the Company, and the representations as to the adequacy of
its servicing facilities, personnel, records and procedures, its integrity,
reputation and financial standing, and the continuance thereof. Therefore, the
Company shall neither assign this Agreement or the servicing rights hereunder or
sell or otherwise dispose of all of its property or assets without the prior
written consent of the Purchaser, which consent shall not be unreasonably
withheld by the Purchaser, with the understanding that any successor servicer
meet the requirements of this Agreement and be acceptable to the Rating Agencies
and trustee upon reconstitution.
The Company shall not resign from the obligations and duties hereby
imposed on it except by mutual consent of the Company and the Purchaser or upon
the determination that its
62
duties hereunder are no longer permissible under applicable law and such
incapacity cannot be cured by the Company. Any such determination permitting the
resignation of the Company 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 Company's responsibilities
and obligations hereunder in the manner provided in Section 12.01.
Without in any way limiting the generality of this Section 8.04, in the
event that the Company either shall assign this Agreement or the servicing
responsibilities hereunder or sell or otherwise dispose of all or substantially
all of its property or assets, without the prior written consent of the
Purchaser, then the Purchaser shall have the right to terminate this Agreement
upon notice given as set forth in Section 10.01, without any payment of any
penalty or damages and without any liability whatsoever to the Purchaser or any
third party.
ARTICLE IX
SECURITIZATION TRANSACTIONS
Section 9.01 Removal of Mortgage Loans from Inclusion Under this Agreement Upon
the Securitization Transaction
The Purchaser and the Company agree that with respect to some or all of
the Mortgage Loans, the Purchaser, at its sole option, may effect Whole Loan
Transfers, Agency Sales or Securitization Transactions, retaining the Company as
the servicer thereof or subservicer if a master servicer is employed, or as
applicable the "seller/servicer." On the Reconstitution Date, the Mortgage Loans
transferred may cease to be covered by this Agreement; provided, however, that,
in the event that any Mortgage Loan transferred pursuant to this Section 9.01 is
rejected by the transferee, the Company shall continue to service such rejected
Mortgage Loan on behalf of the Purchaser in accordance with the terms and
provisions of this Agreement.
The Company shall cooperate with the Purchaser in connection with each
Whole Loan Transfer, Agency Sale or Securitization Transaction in accordance
with this Section 9.01. In connection therewith:
(a) The Company shall make all representations and warranties made
herein with respect to the Mortgage Loans as of the Closing Date and
with respect to the Company itself as of the closing date of each
Whole Loan Transfer, Agency Sale or Securitization Transaction;
(b) The Company shall negotiate in good faith and execute any
seller/servicer agreements or pooling and servicing agreements
required to effectuate the foregoing provided such agreements create
no greater obligation or cost on the part of the Company than
otherwise set forth in this Agreement
63
(c) The Company shall provide such additional representations,
warranties, covenants or opinions of counsel as are reasonably
believed necessary by the trustee, any rating agency or the
Purchaser, as the case may be, in connection with such Whole Loan
Transfers, Agency Sales or Securitization Transactions. The
Purchaser shall pay all third party costs associated with the
preparation of such information. The Company shall execute any
seller/servicer agreements required within a reasonable period of
time after receipt of such seller/servicer agreements which time
shall be sufficient for the Company and Company's counsel to review
such seller/servicer agreements. Under this Agreement, the Company
shall retain a Servicing Fee for each Mortgage Loan at the Servicing
Fee Rate.
(d) In connection with any Securitization Transaction, the Company shall
(1) within five (5) Business Days following request by the Purchaser
or any Depositor, provide to the Purchaser and such Depositor (or,
as applicable, cause each Third- Party Originator and each
Subservicer to provide), in writing and in form and substance
reasonably satisfactory to the Purchaser and such Depositor, the
information and materials specified in paragraphs (i), (ii), (iii)
and (vii) of this subsection (d), and (2) as promptly as practicable
following notice to or discovery by the Company, provide to the
Purchaser and any Depositor (in writing and in form and substance
reasonably satisfactory to the Purchaser and such Depositor) the
information specified in paragraph (iv) of this subsection (d).
(i) If so requested by the Purchaser or any Depositor, the Company
shall provide such information regarding (1) the Company, as
originator of the Mortgage Loans (including as an acquirer of
Mortgage Loans from a Qualified Correspondent), or (2) each
Third-Party Originator, and (3) as applicable, each
Subservicer, as is requested for the purpose of compliance
with Items 1103(a)(l), 1105, 1110, 1117 and 1119 of Regulation
AB. Such information shall include, at a minimum:
(A) the originator's form of organization;
(B) a description of the originator's origination program
and how long the originator has been engaged in
originating residential mortgage loans, which
description shall include a discussion of the
originator's experience in originating mortgage loans of
a similar type as the Mortgage Loans; information
regarding the size and composition of the originator's
origination portfolio; and information that may be
material, in the good faith judgment of the Purchaser or
any Depositor, to an analysis of the performance of the
Mortgage Loans, including the originators'
credit-granting or underwriting criteria for mortgage
loans of similar type(s) as the Mortgage Loans and such
other information as the Purchaser or any Depositor may
reasonably request for the purpose of compliance with
Item 1110(b)(2) of Regulation AB;
64
(C) a description of any material legal or governmental
proceedings pending (or known to be contemplated)
against the Company, each Third-Party Originator and
each Subservicer; and
(D) a description of any affiliation or relationship (of a
type described in Item 1119 of Regulation AB) between
the Company, each Third-Party Originator, each
Subservicer and any of the following parties to a
Securitization Transaction, as such parties are
identified to the Company by the Purchaser or any
Depositor in writing in advance of a Securitization
Transaction:
(1) the sponsor;
(2) the depositor;
(3) the issuing entity;
(4) any servicer;
(5) any trustee;
(6) any originator;
(7) any significant obligor;
(8) any enhancement or support provider; and
(9) any other material transaction party.
(ii) If so requested by the Purchaser or any Depositor, the Company
shall provide (or, as applicable, cause each Third-Party
Originator to provide) Static Pool Information with respect to
the mortgage loans (of a similar type as the Mortgage Loans,
as reasonably identified by the Purchaser as provided below)
originated by (1) the Company, if the Company is an originator
of Mortgage Loans (including as an acquirer of Mortgage Loans
from a Qualified Correspondent), and/or (2) each Third-Party
Originator. Such Static Pool Information shall be prepared by
the Company (or Third- Party Originator) on the basis of its
reasonable, good faith interpretation of the requirements of
Item 1105(a)(l)-(3) of Regulation AB. To the extent that there
is reasonably available to the Company (or Third-Party
Originator) Static Pool Information with respect to more than
one mortgage loan type, the Purchaser or any Depositor shall
be entitled to specify whether some or all of such information
shall be provided pursuant to this paragraph. The content of
such Static Pool Information may be in the form customarily
provided by the Company, and need not be customized for the
Purchaser or any Depositor. Such Static Pool Information for
each vintage origination year or prior securitized pool, as
applicable, shall be presented in increments no less
frequently than quarterly over the life of the mortgage loans
included in the vintage origination year or prior securitized
pool. The most recent periodic increment must be as of a date
no later than 135 days prior to the date of the prospectus or
other offering document in which the Static Pool Information
is to be included or incorporated by reference. The Static
Pool Information shall be provided in an electronic format
that provides a
65
permanent record of the information provided, such as a
portable document format (pdf) file, or other such electronic
format reasonably required by the Purchaser or the Depositor,
as applicable.
Promptly following notice or discovery of a material error in
Static Pool Information provided pursuant to the immediately
preceding paragraph (including an omission to include therein
information required to be provided pursuant to such
paragraph), the Company shall provide corrected Static Pool
Information to the Purchaser or any Depositor, as applicable,
in the same format in which Static Pool Information was
previously provided to such party by the Company.
If so requested by the Purchaser or any Depositor, the Company
shall provide (or, as applicable, cause each Third-Party
Originator to provide), at the expense of the requesting party
(to the extent of any additional incremental expense
associated with delivery pursuant to this Agreement), such
agreed-upon procedures letters of certified public accountants
reasonably acceptable to the Purchaser or Depositor, as
applicable, pertaining to Static Pool Information relating to
prior securitized pools for securitizations closed on or after
January 1, 2006 or, in the case of Static Pool Information
with respect to the Company's or Third-Party Originator's
originations or purchases, to calendar months commencing
January 1, 2006, as the Purchaser or such Depositor shall
reasonably request. Such letters shall be addressed to and be
for the benefit of such parties as the Purchaser or such
Depositor shall designate, which may include, by way of
example, any sponsor, any Depositor and any broker dealer
acting as underwriter, placement agent or initial purchaser
with respect to a Securitization Transaction. Any such
statement or letter may take the form of a standard, generally
applicable document accompanied by a reliance letter
authorizing reliance by the addressees designated by the
Purchaser or such Depositor.
(iii) If so requested by the Purchaser or any Depositor, the Company
shall provide such information regarding the Company, as
servicer of the Mortgage Loans, and each Subservicer (each of
the Company and each Subservicer, for purposes of this
paragraph, a "Servicer"), as is requested for the purpose of
compliance with Items 1108 of Regulation AB. Such information
shall include, at a minimum:
(A) the Servicer's form of organization;
(B) a description of how long the Servicer has been
servicing residential mortgage loans; a general
discussion of the Servicer's experience in servicing
assets of any type as well as a more detailed discussion
of the Servicer's experience in, and procedures for, the
servicing function it will perform under this Agreement
66
and any Reconstitution Agreements; information regarding
the size, composition and growth of the Servicer's
portfolio of residential mortgage loans of a type
similar to the Mortgage Loans and information on factors
related to the Servicer that may be material, in the
good faith judgment of the Purchaser or any Depositor,
to any analysis of the servicing of the Mortgage Loans
or the related asset-backed securities, as applicable,
including, without limitation:
(1) whether any prior securitizations of mortgage
loans of a type similar to the Mortgage Loans
involving the Servicer have defaulted or o
experienced an early amortization or other
performance triggering event because of servicing
during the three-year period immediately preceding
the related Securitization Transaction;
(2) the extent of outsourcing the Servicer utilizes;
(3) whether there has been previous disclosure of
material noncompliance with the applicable
Servicing Criteria with respect to other
securitizations of residential mortgage loans
involving the Servicer as a servicer during the
three- year period immediately preceding the
related Securitization Transaction;
(4) whether the Servicer has been terminated as
servicer in a residential mortgage loan
securitization, either due to a servicing default
or to application of a servicing performance test
or trigger; and
(5) such other information as the Purchaser or any
Depositor may reasonably request for the purpose
of compliance with Item 1108(b)(2) of Regulation
AB;
(C) a description of any material changes during the
three-year period immediately preceding the related
Securitization Transaction to the Servicer's policies or
procedures with respect to the servicing function it
will perform under this Agreement and any Reconstitution
Agreements for mortgage loans of a type similar to the
Mortgage Loans;
(D) information regarding the Servicer's financial
condition, to the extent that there is a material risk
that an adverse financial event or circumstance
involving the Servicer could have a material adverse
effect on the performance by the Company of its
servicing
67
obligations under this Agreement or any Reconstitution
Agreement;
(E) information regarding advances made by the Servicer on
the Mortgage Loans and the Servicer's overall servicing
portfolio of residential mortgage loans for the
three-year period immediately preceding the related
Securitization Transaction, which may be limited to a
statement by an authorized officer of the Servicer to
the effect that the Servicer has made all advances
required to be made on residential mortgage loans
serviced by it during such period, or, if such statement
would not be accurate, information regarding the
percentage and type of advances not made as required,
and the reasons for such failure to advance;
(F) a description of the Servicer's processes and procedures
designed to address any special or unique factors
involved in servicing loans of a similar type as the
Mortgage Loans;
(G) a description of the Servicer's processes for handling
delinquencies, losses, bankruptcies and recoveries, such
as through liquidation of mortgaged properties, sale of
defaulted mortgage loans or workouts; and
(H) information as to how the Servicer defines or determines
delinquencies and charge-offs, including the effect of
any grace period, re-aging, restructuring, partial
payments considered current or other practices with
respect to delinquency and loss experience.
(iv) If so requested by the Purchaser or any Depositor for the
purpose of satisfying its reporting obligation under the
Exchange Act with respect to any class of asset-backed
securities, the Company shall (or shall cause each Subservicer
and Third-Party Originator to) (1) notify the Purchaser and
any Depositor in writing of (A) any material litigation or
governmental proceedings pending against the Company, any
Subservicer or any Third-Party Originator and (B) any
affiliations or relationships that develop following the
closing date of a Securitization Transaction between the
Company, any Subservicer or any Third-Party Originator and any
of the parties specified in Section 9.01(d)(i)(D) (and any
other parties identified in writing by the requesting party)
with respect to such Securitization Transaction, and (2)
provide to the Purchaser and any Depositor a description of
such proceedings, affiliations or relationships.
(v) As a condition to the succession to the Company or any
Subservicer as servicer or Subservicer under this Agreement or
any Reconstitution Agreement by any Person (i) into which the
Company or such Subservicer may be merged or consolidated, or
(ii) which may be appointed as a
68
successor to the Company or any Subservicer, the Company shall
provide to the Purchaser and any Depositor, at least fifteen
(15) calendar days prior to the effective date of such
succession or appointment, (x) written notice to the Purchaser
and any Depositor of such succession or appointment and (y) in
writing and in form and substance reasonably satisfactory to
the Purchaser and such Depositor, all information reasonably
requested by the Purchaser or any Depositor in order to comply
with is reporting obligation under Item 6.02 of Form 8-K with
respect to any class of asset-backed securities.
(vi) (A) The Company shall be deemed to represent to the Purchaser
and to any Depositor, as of the date on which information is
first provided to the Purchaser under this Section 9.01(d)
that, except as disclosed in writing to the Purchaser or such
Depositor prior to such date: (1) the Company is not aware and
has not received notice that any default, early amortization
or other performance triggering event has occurred as to any
other securitization due to any act or failure to act of the
Company; (2) the Company has not been terminated as servicer
in a residential mortgage loan securitization, either due to a
servicing default or to application of a servicing performance
test or trigger; (3) no material noncompliance with the
applicable Servicing Criteria with respect to other
securitizations of residential mortgage loans involving the
Company as servicer has been disclosed or reported by the
Company; (4) no material changes to the Company's policies or
procedures with respect to the servicing function it will
perform under this Agreement and any Reconstitution Agreement
for mortgage loans of a type similar to the Mortgage Loans
have occurred during the three-year period immediately
preceding the related Securitization Transaction; (5) there
are no aspects of the Company's financial condition that could
have a material adverse effect on the performance by the
Company of its servicing obligations under this Agreement or
any Reconstitution Agreement; (6) there are no material legal
or governmental proceedings pending (or known to be
contemplated) against the Company, any Subservicer or any
Third-Party Originator; and (7) there are no affiliations,
relationships or transactions relating to the Company, any
Subservicer or any Third-Party Originator with respect to any
Securitization Transaction and any party thereto identified by
the related Depositor of a type described in Item 11 19 of
Regulation AB.
(B) If so requested by the Purchaser or any Depositor on any
date following the date on which information is first provided
to the Purchaser or any Depositor under this Section 9.01(d),
the Company shall, within five (5) Business Days following
such request, confirm in writing the accuracy of the
representations and warranties set forth in sub clause (A)
above or, if any such representation and warranty is not
accurate as of the date of such request, provide reasonably
adequate disclosure of the pertinent facts, in writing, to the
requesting party.
69
(vii) In addition to such information as the Company, as servicer,
is obligated to provide pursuant to other provisions of this
Agreement, if so requested by the Purchaser or any Depositor,
the Company shall provide such information reasonably
available to the Company regarding the performance or
servicing of the Mortgage Loans as is reasonably required to
facilitate preparation of distribution reports in accordance
with Item 1121 of Regulation AB. Such information shall be
provided concurrently with the monthly reports otherwise
required to be delivered by the servicer under this Agreement,
commencing with the first such report due not less than ten
(10) Business Days following such request.
(e) The Company shall indemnify the Purchaser, each affiliate of the
Purchaser, and each of the following parties participating in a
Securitization Transaction: each sponsor and issuing entity; each
Person responsible for the preparation, execution or filing of any
report required to be filed with the Commission with respect to such
Securitization Transaction, or for execution of a certification
pursuant to Rule 13a-14(d) or Rule 15d-14(d) under the Exchange Act
with respect to such Securitization Transaction; each broker dealer
acting as underwriter, placement agent or initial purchaser, each
Person who controls any of such parties or the Depositor (within the
meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act); and the respective present and former directors,
officers, employees and agents of each of the foregoing and of the
Depositor, and shall hold each of them harmless from and against any
losses, damages, penalties, fines, forfeitures, legal fees and
expenses and related costs, judgments, and any other costs, fees and
expenses that any of them may sustain arising out of or based upon:
(i) (A) any untrue statement of a material fact contained or
alleged to be contained in any information, report,
certification, accountants' letter or other material provided
in written or electronic form under Sections 4.29, 6.04, 6.06,
9.01(c) and (d) by or on behalf of the Company, or provided
under Sections 4.29, 6.04, 6.06, 9.01(c) and (d) by or on
behalf of any Subservicer, Subcontractor or Third-Party
Originator (collectively, the "Company Information"), or (B)
the omission or alleged omission to state in the Company
Information a material fact required to be stated in the
Company Information or necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading; provided, by way of
clarification, that clause (B) of this paragraph shall be
construed solely by reference to the Company Information and
not to any other information communicated in connection with a
sale or purchase of securities, without regard to whether the
Company Information or any portion thereof is presented
together with or separately from such other information;
70
(ii) any failure by the Company, any Subservicer, any Subcontractor
or any Third-Party Originator to deliver any information,
report, certification, accountants' letter or other material
when and as required under Sections 4.29, 6.04, 6.06, 9.01(c)
and (d), including any failure by the Company to identify any
Subcontractor "participating in the servicing function" within
the meaning of Item 1122 of Regulation AB; or
(iii) any breach by the Company of a representation or warranty set
forth in Section 9.01(d)(vi)(A) or in a writing furnished
pursuant to Section 9.0l(d)(vi)(B) and made as of a date prior
to the closing date of the related Securitization Transaction,
to the extent that such breach is not cured by such closing
date, or any breach by the Company of a representation or
warranty in a writing furnished pursuant to Section
9.0l(d)(vi)(B) to the extent made as of a date subsequent to
such closing date.
In the case of any failure of performance described in sub-clause
(ii) of this Section 9.01(e), the Company shall promptly reimburse
the Purchaser, any Depositor, as applicable, and each Person
responsible for the preparation, execution or filing of any report
required to be filed with the Commission with respect to such
Securitization Transaction, or for execution of a certification
pursuant to Rule 13a-14(d) or Rule 15d-14(d) under the Exchange Act
with respect to such Securitization Transaction, for all costs
reasonably incurred by each such party in order to obtain the
information, report, certification, accountants' letter or other
material not delivered as required by the Company, any Subservicer,
any Subcontractor or any Third-Party Originator.
(f) The Purchaser and each Person who controls the Purchaser (within the
meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act) shall indemnify the Company, each affiliate of the
Company, each Person who controls any of such parties or the Company
(within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act) and the respective present and former
directors, officers, employees and agents of each of the foregoing
and of the Company, and shall hold each of them harmless from and
against any losses, damages, penalties, fines, forfeitures, legal
fees and expenses and related costs, judgments, and any other costs,
fees and expenses that any of them may sustain arising out of or
based upon:
(i) any untrue statement of a material fact contained or alleged
to be contained in any offering materials related to a
Securitization Transaction, including without limitation the
registration statement, prospectus, prospectus supplement, any
private placement memorandum, any freewriting prospectuses,
any ABS informational and computational material, any offering
circular, any computational material, and any amendments or
supplements to the foregoing (collectively, the
"Securitization Materials") or
71
(ii) the omission or alleged omission to state in the
Securitization Materials a material fact required to be stated
in the Securitization Materials or necessary in order to make
the statements therein, in the light of the circumstances
under which they were made, not misleading, but only to the
extent that such untrue statement or alleged untrue statement
or omission or alleged omission is other than a statement or
omission arising out of, resulting from, or based upon the
Company Information.
(g) in the event the Mortgage Loans become subject to a ▇▇▇▇▇▇▇ Mac
securitization, negotiate in good faith the terms of such
reconstitution agreements as may be required.
The Purchaser and the Company acknowledge and agree that the purpose of
Section 9.01(d) is to facilitate compliance by the Purchaser and any Depositor
with the provisions of Regulation AB and related rules and regulations of the
Commission. Although Regulation AB is applicable by its terms only to offerings
of asset-backed securities that are registered under the Securities Act, the
Company acknowledges that investors in privately offered securities may require
that the Purchaser or any Depositor provide comparable disclosure in
unregistered offerings. References in this Agreement to compliance with
Regulation AB include provision of comparable disclosure in private offerings.
Neither the Purchaser nor any Depositor shall exercise its right to
request delivery of information or other performance under these provisions
other than in good faith, or for purposes other than compliance with the
Securities Act, the Exchange Act and the rules and regulations of the Commission
thereunder (or provision in a private offering of disclosure comparable to that
required under the Securities Act). The Company acknowledges that
interpretations of the requirements of Regulation AB may change over time,
whether due to interpretive guidance provided by the Commission or its staff,
consensus among participants in the asset-backed securities markets, advice of
counsel, or otherwise, and agrees to comply with requests made by the Purchaser
or any Depositor in good faith for delivery of information under these
provisions on the basis of evolving interpretations of Regulation AB. In
connection with any Securitization Transaction, the Company shall cooperate
fully with the Purchaser to deliver to the Purchaser (including any of its
assignees or designees) and any Depositor, any and all statements, reports,
certifications, records and any other information necessary in the good faith
determination of the Purchaser or any Depositor to permit the Purchaser or such
Depositor to comply with the provisions of Regulation AB, together with such
disclosures relating to the Company, any Subservicer, any Third-Party Originator
and the Mortgage Loans, or the servicing of the Mortgage Loans, reasonably
believed by the Purchaser or any Depositor to be necessary in order to effect
such compliance.
The Purchaser (including any of its assignees or designees) shall
cooperate with the Company by providing timely notice of requests for
information under these provisions and by reasonably limiting such requests to
information required, in the Purchaser's reasonable judgment, to comply with
Regulation AB.
72
In the event the Purchaser has elected to have the Company hold record
title to the Mortgages, prior to the Reconstitution Date the Company shall
prepare an Assignment of Mortgage in blank or to the trustee from the Company
acceptable to the trustee for each Mortgage Loan that is part of the Whole Loan
Transfers, Agency Sales or Securitization Transactions. The Purchaser shall pay
all preparation and recording costs associated therewith, unless the Assignment
of Mortgage is the initial Assignment of Mortgage delivered pursuant to Section
2.03. The Company shall execute each Assignment of Mortgage, track such
Assignments of Mortgage to ensure they have been recorded and deliver them as
required by the trustee upon the Company's receipt thereof. Additionally, the
Company shall prepare and execute, at the direction of the Purchaser, any note
endorsements in connection with any and all seller/servicer agreements. If
required at any time by the Rating Agencies, Purchaser or successor purchaser in
connection with any Whole Loan Transfer, Agency Sale or Securitization
Transaction, the Company shall deliver such additional documents from its
Retained Mortgage File within ten (10) Business Days to the Custodian, successor
purchaser or other designee of the Purchaser as the Rating Agencies, Purchaser
or successor purchaser may require.
Notwithstanding any provisions of this Agreement to the contrary, all
Mortgage Loans sold or transferred to an Agency, shall be serviced in accordance
with the guidelines of the respective Agency. All Mortgage Loans (i) not sold or
transferred pursuant to Whole Loan Transfers, Agency Sales or Securitization
Transactions or (ii) that are subject to a Securitization Transaction for which
the related trust is terminated for any reason, 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 X
DEFAULT
Section 10.0 1 Events of Default.
Each of the following shall constitute an Event of Default on the part of
the Company:
(i) any failure by the Company to remit to the Purchaser any payment
required to be made under the terms of this Agreement which
continues unremedied for a period of five (5) days after the date
upon which written notice of such failure, requiring the same to be
remedied, shall have been given to the Company by the Purchaser; or
(ii) failure by the Company duly to observe or perform in any material
respect any other of the covenants or agreements on the part of the
Company set forth in this Agreement or in the Custodial Agreement
which continues unremedied for a period of thirty (30) days after
the date on which written notice of such failure, requiring the same
to be remedied, shall have been given to the Company by the
Purchaser or by the Custodian; or
73
(iii) failure by the Company to maintain its license to do business in any
jurisdiction where the Mortgaged Property is located if such license
is required; or
(iv) 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, readjustment of debt, including
bankruptcy, marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs,
shall have been entered against the Company and such decree or order
shall have remained in force undischarged or unstayed for a period
of sixty (60) days; or
(v) the Company shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or
relating to the Company or of or relating to all or substantially
all of its property; or
(vi) the Company 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, bankruptcy or reorganization statute,
make an assignment for the benefit of its creditors, voluntarily
suspend payment of its obligations or cease its normal business
operations for three (3) Business Days;
(vii) the Company ceases to meet the qualifications of a ▇▇▇▇▇▇
Mae/▇▇▇▇▇▇▇ Mac servicer; or
(viii)the Company attempts to assign its right to servicing compensation
hereunder or to assign this Agreement or the servicing
responsibilities hereunder in violation of Section 8.04.
In each and every such case, so long as an Event of Default shall not have
been remedied, in addition to whatever rights the Purchaser may have at law or
equity to damages, including injunctive relief and specific performance, the
Purchaser, by notice in writing to the Company, may terminate all the rights and
obligations of the Company under this Agreement and in and to the Mortgage Loans
and the proceeds thereof.
Upon receipt by the Company of such written notice, all authority and
power of the Company 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 12.01. Upon written request from any Purchaser, the Company
shall prepare, execute and deliver to the successor entity designated by the
Purchaser any and all documents and other instruments, place in such successor's
possession all Retained Mortgage Files, and do or cause to be done all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, including but not limited to the transfer and endorsement or
assignment of the Mortgage Loans and related documents, at the Company's sole
expense. The Company shall cooperate with the Purchaser and such successor in
effecting the termination of the Company's responsibilities and rights
hereunder, including without limitation, the transfer to such successor for
administration by it of
74
all cash amounts which shall at the time be credited by the Company to the
Custodial Account or Subsidy Account or Escrow Account or thereafter received
with respect to the Mortgage Loans.
Section 10.02 Waiver of Defaults.
By a written notice, the Purchaser may waive any default by the Company in
the performance of its obligations hereunder and its consequences. Upon any
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.
ARTICLE XI
TERMINATION
Section 11.01 Termination.
This Agreement shall terminate upon either: (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 any REO Property with respect to the last
Mortgage Loan and the remittance of all funds due hereunder; or (ii) mutual
consent of the Company and the Purchaser in writing.
Section 11.02 Termination Without Cause.
The Purchaser may terminate, at its sole option, any rights the Company
may have hereunder, without cause as provided in this Section 11.02. Any such
notice of termination shall be in writing and delivered to the Company by
registered mail as provided in Section 12.05.
The Company shall be entitled to receive, as such liquidated damages, upon
the transfer of the servicing rights, an amount equal to 2.75% of the aggregate
outstanding principal amount of the Mortgage Loans as of the termination date
paid by the Purchaser to the Company with respect to all of the Mortgage Loans.
In the event that it is terminated pursuant to this Section 11.02, the Company
shall be required, at the expense of the Purchaser, to deliver to the Custodian
the entire contents of the Retained Mortgage File, to the extent such contents
were not previously delivered to the Custodian pursuant to this Agreement or the
Custodial Agreement.
ARTICLE XI1
MISCELLANEOUS PROVISIONS
Section 12.01 Successor to Company.
75
Prior to termination of the Company's responsibilities and duties under
this Agreement pursuant to Sections 8.04, 10.01, 11.01 (ii) or pursuant to
Section 11.02, the Purchaser shall, (i) succeed to and assume all of the
Company's responsibilities, rights, duties and obligations under this Agreement,
or (ii) appoint a successor having the characteristics set forth in Section 8.02
and which shall succeed to all rights and assume all of the responsibilities,
duties and liabilities of the Company under this Agreement prior to the
termination of Company'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 it and such successor shall agree. In the event that the
Company's duties, responsibilities and liabilities under this Agreement should
be terminated pursuant to the aforementioned sections, the Company 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 the Company pursuant to the aforementioned sections shall not become
effective until a successor shall be appointed pursuant to this Section 12.01
and shall in no event relieve the Company of the representations and warranties
made pursuant to Sections 3.01 and 3.02 and the remedies available to the
Purchaser under Section 3.03, it being understood and agreed that the provisions
of such Sections 3.01, 3.02, 3.03 and 8.01 shall be applicable to the Company
notwithstanding any such sale, assignment, resignation or termination of the
Company, or the termination of this Agreement.
Any successor appointed as provided herein shall execute, acknowledge and
deliver to the Company and to the Purchaser an instrument accepting such
appointment, wherein the successor shall make the representations and warranties
set forth in Section 3.01, except for subsections (h) with respect to the sale
of the Mortgage Loans and subsections (i) and (k) thereof, whereupon such
successor shall become fully vested with all the rights, powers, duties,
responsibilities, obligations and liabilities of the Company, with like effect
as if originally named as a party to this Agreement. Any termination or
resignation of the Company or termination of this Agreement pursuant to Section
8.04, 10.01, 11.O1 or 11.02 shall not affect any claims that any Purchaser may
have against the Company arising out of the Company's actions or failure to act
prior to any such termination or resignation.
The Company shall deliver promptly to the successor servicer the funds in
the Custodial Account, Subsidy Account and Escrow Account and all Retained
Mortgage Files and related documents and statements held by it hereunder and the
Company shall account for all funds and shall execute and deliver such
instruments and do such other things as may reasonably be required to more fully
and definitively vest in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Company.
Upon a successor's acceptance of appointment as such, the Company shall
notify by mail the Purchaser of such appointment in accordance with the
procedures set forth in Section 12.05.
Section 12.02 Amendment.
76
This Agreement may be amended from time to time by written agreement
signed by the Company and the Purchaser.
Section 12.03 Governing Law.
This Agreement shall be construed in accordance with the laws of the State
of New York and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.
Each of the Company and the Purchaser hereby knowingly, voluntarily and
intentionally waives any and all rights it may have to a trial by jury in
respect of 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 Company or the Purchaser. This
provision is a material inducement for the Purchaser to enter into this
Agreement
Section 12.04 Duration of Agreement.
This Agreement shall continue in existence and effect until terminated as
herein provided. This Agreement shall continue notwithstanding transfers of the
Mortgage Loans by the Purchaser.
Section 12.05 Notices.
All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
registered mail, postage prepaid, addressed as follows:
(i) if to the Company with respect to servicing issues:
▇▇▇▇▇ Fargo Bank, N.A.
1 Home Campus
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, MAC X2401-042
if to the Company with respect to all other issues:
▇▇▇▇▇ Fargo Bank, N.A.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Structured Finance Manager, MAC X3906-012
in each instance, with a copy to:
▇▇▇▇▇ Fargo Bank, N.A.
1 Home Campus
77
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel -MAC X2401-06T
or such other address as may hereafter be furnished to the Purchaser
in writing by the Company;
(ii) if to Purchaser:
▇▇▇▇▇▇ Brothers Bank
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ 100 19
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Section 12.06 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement.
Section 12.07 Relationship of Parties.
Nothing herein contained shall be deemed or construed to create a
partnership or joint venture between the parties hereto and the services of the
Company shall be rendered as an independent contractor and not as agent for the
Purchaser.
Section 12.08 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 Company and the Purchaser
and their respective successors and assigns.
Section 12.09 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 recordation to be
effected at the Company's expense in the event recordation is either necessary
under applicable law or requested by the Purchaser at its sole option. The
Company shall only be responsible for the costs of recording the initial
Assignments of Mortgage. In no event shall the Company be responsible for the
cost of recording Assignments of Mortgage in connection with a subsequent sale
or transfer of the Mortgage Loans by the Purchaser.
78
Section 12.10 Assignment by Purchaser.
The Purchaser shall have the right, without the consent of the Company but
subject to the limit set forth in Section 2.02 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 and the assignee
or designee shall accede to the rights and obligations hereunder of the
Purchaser with respect to such Mortgage Loans. All references to the Purchaser
in this Agreement shall be deemed to include its assignee or designee.
Section 12.11 Solicitation of Mortgagor.
Neither party shall, after the Closing Date, take any action to solicit
the refinancing of any Mortgage Loan. It is understood and agreed that neither
(i) promotions undertaken by the either party or any affiliate of such party
which are directed to the general public at large, including, without
limitation, mass mailings based upon commercially acquired mailing lists,
newspaper, radio, television advertisements nor (ii) serving the refinancing
needs of a Mortgagor who, without solicitation, contacts either party in
connection with the refinance of such Mortgage or Mortgage Loan, shall
constitute solicitation under this Section.
[Intentionally Blank -Next Page Signature Page]
79
IN WITNESS WHEREOF, the Company 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.
▇▇▇▇▇▇ BROTHERS BANK, FSB ▇▇▇▇▇ FARGO BANK, N.A.
By:_______________________________ By:________________________________
Name:_____________________________ Name:______________________________
Title:____________________________ Title:_____________________________
80
STATE OF )
) ss:
COUNTY OF _________________________ )
On the ________ day of ________________,20___ before me, a Notary Public
in and for said State, personally appeared ________________________________,
known to me to be ______________________________ of ▇▇▇▇▇ Fargo Bank, N.A., the
national banking association that executed the within instrument and also known
to me to be the person who executed it on behalf of said bank, and acknowledged
to me that such bank executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal the
day and year in this certificate first above written.
____________________________________
Notary Public
My Commission expires_______________
81
STATE OF )
) ss:
COUNTY OF _________________________ )
On the ________ day of ________________,20___ before me, a Notary Public
in and for said State, personally appeared ________________________________,
known to me to be ______________________________ of __________________________,
the corporation that executed the within instrument and also known to me to be
the person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal the
day and year in this certificate first above written.
____________________________________
Notary Public
My Commission expires_______________
82
EXHIBIT A
MORTGAGE LOAN SCHEDULE
(WFHM 2006-W03)
83
EXHIBIT B
CUSTODIAL AGREEMENT
84
EXHIBIT C
CONTENTS OF CUSTODIAL MORTGAGE FILE,
RETAINED MORTGAGE FILE AND SERVICING FILE
With respect to each Mortgage Loan, the Retained and Custodial Mortgage
Files shall include each of the following items, which shall be available for
inspection by the Purchaser and any prospective Purchaser, and which shall be
retained by the Company in the Retained Mortgage File or Servicing File or
delivered to the Custodian pursuant to Sections 2.01 and 2.03 of the Seller's
Warranties and the Servicing Agreement to which this Exhibit is attached (the
"Agreement"):
With respect to each Custodial Mortgage File:
1 The original Mortgage Note bearing all intervening endorsements,
endorsed "Pay to the order of __________________ without recourse"
and signed in the name of the Company by an authorized officer (in
the event that the Mortgage Loan was acquired by the Company in a
merger, the signature must be in the following form: "[Company],
successor by merger to [name of predecessor]"; and in the event that
the Mortgage Loan was acquired or originated by the Company while
doing business under another name, the signature must be in the
following form: "[Company], formerly known as [previous name] ").
2 The originals or certified true copies of any document sent for
recordation of all assumption, modification, consolidation or
extension agreements, with evidence of recording thereon.
3 The original Assignment of Mortgage for each Mortgage Loan, in form
and substance acceptable for recording (except for the insertion of
the name of the assignee and recording information) except in the
case of such Mortgage Loan that has been originated in the name of
or assigned to MERS and registered on the MERS system. The
Assignment of Mortgage must be duly recorded only if recordation is
either necessary under applicable law or commonly required by
private institutional mortgage investors in the area where the
Mortgaged Property is located or on direction of the Purchaser as
provided in the Custodial Agreement. If the Assignment of Mortgage
is to be recorded, the Mortgage shall be assigned to the Purchaser.
If the Assignment of Mortgage is not to be recorded, the Assignment
of Mortgage shall be delivered in blank. If the Mortgage Loan was
acquired by the Company in a merger, the Assignment of Mortgage must
be made by "[Company], successor by merger to [name of
predecessor]." If the Mortgage Loan was acquired or originated by
the Company while doing business under another name, the Assignment
of Mortgage must be by "[Company], formerly know as [previous
name]."
4 The original of any guarantee executed in connection with the
Mortgage Note.
85
5 Original or copy of Power of Attorney, if applicable
With respect to each Retained Mortgage File:
6. The original Mortgage, with evidence of recording thereon or a
certified true and correct copy of the Mortgage sent for
recordation. If in connection with any Mortgage Loan, the Company
cannot deliver or cause to be delivered the original Mortgage with
evidence of recording thereon on or prior to the Closing Date
because of a delay caused by the public recording office where such
Mortgage has been delivered for recordation or because such Mortgage
has been lost or because such public recording office retains the
original recorded Mortgage, the Company shall deliver or cause to be
delivered to the Custodian, a photocopy of such Mortgage, together
with (i) in the case of a delay caused by the public recording
office, an Officer's Certificate of the Company stating that such
Mortgage has been dispatched to the appropriate public recording
office for recordation and that the original recorded Mortgage or a
copy of such Mortgage certified by such public recording office to
be a true and complete copy of the original recorded Mortgage will
be promptly delivered to the Custodian upon receipt thereof by the
Company; or (ii) in the case of a Mortgage where a public recording
office retains the original recorded Mortgage or in the case where a
Mortgage is lost after recordation in a public recording office, a
copy of such Mortgage certified by such public recording office or
by the title insurance company that issued the title policy to be a
true and complete copy of the original recorded Mortgage.
Further, with respect to MERS Mortgage Loans, (a) the Mortgage names
MERS as the Mortgagee and (b) the requirements set forth in the
Electronic Tracking Agreement have been satisfied, with a conformed
recorded copy to follow as soon as the same is received by the
Company.
7. Originals or certified true copies of documents sent for recordation
of all intervening assignments of the Mortgage with evidence of
recording thereon, or if any such intervening assignment has not
been returned from the applicable recording office or has been lost
or if such public recording office retains the original recorded
assignments of mortgage, the Company shall deliver or cause to be
delivered to the Custodian, a photocopy of such intervening
assignment, together with (i) in the case of a delay caused by the
public recording office, an Officer's Certificate of the Company
stating that such intervening assignment of mortgage has been
dispatched to the appropriate public recording office for
recordation and that such original recorded intervening assignment
of mortgage or a copy of such intervening assignment of mortgage
certified by the appropriate public recording office or by the title
insurance company that issued the title policy to be a true and
complete copy of the original recorded intervening assignment of
mortgage will be promptly delivered to the Custodian upon receipt
thereof by the Company; or (ii) in the case of an intervening
assignment where a public recording office retains the original
recorded intervening assignment or in
86
the case where an intervening assignment is lost after recordation
in a public recording office, a copy of such intervening assignment
certified by such public recording office to be a true and complete
copy of the original recorded intervening assignment.
8. The original mortgagee policy of title insurance or other evidence
of title such as a copy of the title commitment or copy of the
preliminary title commitment.
9. Any security agreement, chattel mortgage or equivalent executed in
connection with the Mortgage.
10. For each Cooperative Loan, the original or a seller certified true
copy of the following:
The original Pledge Agreement entered into by the Mortgagor with
respect to such Cooperative Loan;
UCC-3 assignment in blank (or equivalent instrument), sufficient
under the laws of the jurisdiction where the related Cooperative
Apartment is located to reflect of record the sale and assignment of
the Cooperative Loan to the Purchaser;
Original assignment of Pledge Agreement in blank showing a complete
chain of assignment from the originator of the related Cooperative
Loan to the Company;
Original Form UCC-1 and any continuation statements with evidence of
filing thereon with respect to such Cooperative Loan;
Cooperative Shares with a Stock Certificate in blank attached;
Original Proprietary Lease;
Original Assignment of Proprietary Lease, in blank, and all
intervening assignments thereof;
Original recognition agreement of the interests of the mortgagee
with respect to the Cooperative Loan by the Cooperative, the stock
of which was pledged by the related Mortgagor to the originator of
such Cooperative Loan; and
Originals of any assumption, consolidation or modification
agreements relating to any of the items specified above.
11. The electronic form of PMI Policy as identified by certificate
number.
12. For each Pledged Asset Mortgage Loan, an Assigned Letter of Credit.
With respect to each Mortgage Loan, the Servicing File shall include each of the
following items to the extent required by the Underwriting Guidelines:
13. The original hazard insurance policy and, if required by law, flood
insurance policy, in accordance with Section 4.10 of the Agreement.
87
14. Residential loan application.
15. Mortgage Loan closing statement.
16. Verification of employment and income, unless originated under the
Company's Limited Documentation program.
17. Verification of acceptable evidence of source and amount of down
payment.
18. Credit report on the Mortgagor.
19. Residential appraisal report.
20. Photograph of the Mortgaged Property.
21. Survey of the Mortgage property, if required by the title company or
applicable law.
22. Copy of each instrument necessary to complete identification of any
exception set forth in the exception schedule in the title policy,
i.e. map or plat, restrictions, easements, sewer agreements, home
association declarations, etc.
23. All required disclosure statements.
24. If available, termite report, structural engineer's report, water
potability and septic certification.
25. Sales contract, if applicable.
26. Evidence of payment of taxes and insurance premiums, insurance claim
files, correspondence, current and historical computerized data
files, and all other processing, underwriting and closing papers and
records which are customarily contained in a mortgage loan file and
which are required to document the Mortgage Loan or to service the
Mortgage Loan.
27. Amortization schedule, if available.
28. Payment history for any Mortgage Loan that has been closed for more
than 90 days.
In the event an Officer's Certificate of the Company is delivered to the
Custodian because of a delay caused by the public recording office in returning
any recorded document, the Company shall deliver to the Custodian, within 240
days of the Closing Date, an Officer's Certificate which shall (i) identify the
recorded document, (ii) state that the recorded document has not been delivered
to the Custodian due solely to a delay caused by the public recording office,
(iii) state the amount of time generally required by the applicable recording
office to
88
record and return a document submitted for recordation, and (iv) specify the
date the applicable recorded document will be delivered to the Custodian. The
Company shall be required to deliver to the Custodian the applicable recorded
document by the date specified in (iv) above. An extension of the date specified
in (iv) above may be requested from the Purchaser, which consent shall not be
unreasonably withheld.
89
EXHIBIT D
DATA FILE ELEMENTS
(1) the Mortgagor's first and last name;
(2) a code indicating whether the Mortgaged Property is owner-occupied;
(3) the original date of the Mortgage Loan and the remaining months to
maturity from the Cut-off Date, based on the original amortization
schedule;
(4) the date on which the first Monthly Payment was due on the Mortgage Loan;
(5) the current Monthly Payment;
(6) the amount of the Monthly Payment as of the Cut-off Date;
(7) the last Due Date on which a Monthly Payment was actually applied to the
Stated Principal Balance;
(8) the original principal amount of the Mortgage Loan;
(9) the first Adjustment Date;
(10) a code indicating the purpose of the loan (i.e., purchase, financing,
Rate/Term Refinancing, Cash- Out Refinancing);
(11) the maximum Mortgage Interest Rate under the terms of the Mortgage Note;
(12) the Mortgage Interest Rate at origination;
(13) the Periodic Interest Rate Cap;
(14) the Index;
(15) the date on which the first Monthly Payment was due on the Mortgage Loan
and, if such date is not consistent with the Due Date currently in effect,
such Due Date;
(16) a code indicating the documentation style (i.e., full (providing two years
employment verification-2 years W-2's and current paystub or 2 years
1040's for self employed borrowers), alternative or reduced),
(17) a code indicating if the Mortgage Loan is subject to a PMI Policy,
(18) the Appraised Value of the Mortgage Property,
(19) the sale price of the Mortgaged Property, if applicable,
(20) the Mortgagor's and Co-Mortgagor's (if applicable) social security
numbers;
(21) the Mortgagor's FICO score;
(22) the street address of the Mortgaged Property including the city, state,
county and zip code;
(23) term of prepayment penalty;
90
(24) a code indicating whether the Mortgaged Property is a single family
residence, a 2-4 family dwelling, a PUD, a townhouse, manufactured
housing, a unit in a condominium project, or a mobile home;
(25) a code indicating the product type;
(26) a code indicating the Credit Grade of the Mortgage Loan;
(27) the Loan to Value Ratio;
(28) the Mortgage Interest Rate as of the Cut-off Date;
(29) the stated maturity date;
(30) the original principal amount of the Mortgage Loan;
(31) the sale balance of the Mortgage Loan as of the close of business on the
Cut-off Date, after deduction of payments of principal due on or before
the Cut-off Date;
(32) the Mortgage Loan purpose type;
(33) the next Interest Rate Adjustment Date;
(34) the Gross Margin;
(35) the Note date of the Mortgage Loan;
(36) the Appraised value;
(37) the Mortgagor's and Co-Mortgagor's race;
(38) the Mortgagor's and Co-Mortgagor's gender;
(39) the qualifying monthly income of the Mortgagor;
(40) a code indicating whether the loan was originated through a correspondent,
retail or wholesale channel;
(41) the amount of the monthly principal and interest payment at the time of
origination;
(42) the Mortgage Insurance Certificate Number and percentage of coverage, if
applicable;
(43) borrower date of birth;
(44) a code indicating first time buyer;
(45) the monthly servicing fee;
(46) a code indicating the HMDA data;
(47) whether the Mortgage Loan is convertible,
(48) a code indicating whether the Mortgage Loan is a Time$aver(R) Mortgage
Loan,
(49) a code indicating whether the Mortgage Loan is a Cooperative Loan,
91
(50) the MIN Number for each MERS Mortgage Loan,
(51) LEX number,
(52) employer name,
(53) subsidy code,
(54) a code indicating whether the Mortgage Loan is a relocation loan;
(55) a code indicating whether the Mortgage Loan is a temporary buydown;
(56) the master service fee, if applicable,
(57) servicer name,
(58) total Loan-to-Value,
(59) the Mortgagor's electronic credit score;
(60) a code indicating whether the Mortgage Loan is a leasehold loan;
(61) a code indicating whether the Mortgage Loan is an Alt A loan,
(62) a code indicating whether the Mortgage Loan is a no ratio loan,
(63) citizenship type code,
(64) lien status,
(65) loan RSCA indicator,
(66) terminal didget
(67) servicer code,
(68) loan term number,
(69) a code indicating whether the Mortgage Loan is a pledged asset,
(70) effective LTV percentage for pledged asset mortgage loans,
(71) a code indicating whether the Mortgage Loan is an interest only loan,
(72) a code indicating whether the Mortgage Loan is a MERS Mortgage Loan,
(73) a code indicating amortization type (1 or 2),
(74) interest only note payment,
(75) first full amortization payment date,
(76) interest only term, number of months,
(77) remaining interest only term, number of months,
92
(78) a code indicating whether the Mortgage Loan is a 2nd lien (Y or N),
(79) a code indicating borrower verification of assets or lender verification
of assets (L or B), and
(80) combined current loan balance.
93
EXHIBIT E
UNDERWRITING GUIDELINES
EXHIBIT F
FORMS OF CUSTODIAL ACCOUNT CERTIFICATIONS
CUSTODIAL ACCOUNT CERTIFICATION
________________, 20_____
▇▇▇▇▇ Fargo Bank, N.A. hereby certifies that it has established the
account described below as a Custodial Account pursuant to Section 4.04 of the
Seller's Warranties and Servicing Agreement, dated as of ________________,
20_____,.
Title of Account: ▇▇▇▇▇ Fargo Bank, N.A. in trust for the Purchaser and/or
subsequent purchasers of Mortgage Loans - P & I
Address of office or branch
of the Company at which
Account is maintained: ____________________________________
____________________________________
____________________________________
____________________________________
▇▇▇▇▇ FARGO BANK, N.A.
Company
By:________________________________
Name:______________________________
Title:_____________________________
CUSTODIAL ACCOUNT LETTER AGREEMENT
________________, 20_____
To:_____________________________
_____________________________
_____________________________
(the "Depository")
As Company under the Seller's Warranties and Servicing Agreement, dated as
of __________________,20_____, (the "Agreement"), we hereby authorize and
request you to establish an account, a Custodial Account pursuant to Section
4.04 of the Agreement, to be designated as "▇▇▇▇▇ Fargo Bank, N.A., in trust for
the Purchaser and/or subsequent purchasers of Mortgage Loans, - P & I". All
deposits in the account shall be subject to withdrawal therefrom by order signed
by the Company.. This letter is submitted to you in duplicate. Please execute
and return one original to us.
▇▇▇▇▇ FARGO BANK, N.A.
Company
By:________________________________
Name:______________________________
Title:_____________________________
Date:______________________________
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..
___________________________________
Depository
By:________________________________
Name:______________________________
Title:_____________________________
Date:______________________________
EXHIBIT G
FORMS OF ESCROW ACCOUNT CERTIFICATIONS
ESCROW ACCOUNT CERTIFICATION
________________, 20_____
▇▇▇▇▇ Fargo Bank, N.A. hereby certifies that it has established the
account described below as an Escrow Account pursuant to Section 4.06 of the
Seller's Warranties and Servicing Agreement, dated as of ________________,
20_____,.
Title of Account: ▇▇▇▇▇ Fargo Bank, N.A. in trust for the Purchaser and/or
subsequent purchasers of Mortgage Loans, and various
Mortgagors - T & I
Address of office or branch
of the Company at which
Account is maintained: ____________________________________
____________________________________
____________________________________
____________________________________
▇▇▇▇▇ FARGO BANK, N.A.
Company
By:________________________________
Name:______________________________
Title:_____________________________
ESCROW ACCOUNT LETTER AGREEMENT
________________, 20_____
To:_____________________________
_____________________________
_____________________________
(the "Depository")
As Company under the Seller's Warranties and Servicing Agreement, dated as
of ______________,20_____, (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 "▇▇▇▇▇ Fargo Bank, N.A., in trust for the
Purchaser and/or subsequent purchasers of Mortgage Loans, and various Mortgagors
- T & I". All deposits in the account shall be subject to withdrawal therefrom
by order signed by the Company. This letter is submitted to you in duplicate.
Please execute and return one original to us.
▇▇▇▇▇ FARGO BANK, N.A.
Company
By:________________________________
Name:______________________________
Title:_____________________________
Date:______________________________
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..
___________________________________
Depository
By:________________________________
Name:______________________________
Title:_____________________________
Date:______________________________
EXHIBIT H
SERVICING CRITERIA TO BE ADDRESSED
IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by [the Company][Name of
Subservicer] shall address, as a minimum, the criteria identified below as
"Applicable Servicing Criteria"
-------------------------------------------------------------------------------------------------------------------------------
Reg AB Applicable Inapplicable
Reference Servicing Criteria Servicing Criteria Servicing Criteria
-------------------------------------------------------------------------------------------------------------------------------
General Servicing Considerations
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(l)(i) Policies and procedures are instituted to monitor any
performance or other triggers and events of default in
accordance with the transaction agreements.
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(l )(ii) If any material servicing activities are outsourced to
third parties, policies and procedures are instituted to
monitor the third party's performance and compliance with
such servicing activities.
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(l )(iii) Any requirements in the transaction agreements to maintain
a back-up servicer for the mortgage loans are maintained.
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(l)(iv) A fidelity bond and errors and omissions policy is in
effect on the party participating in the servicing function
throughout the reporting period in the amount of coverage
required by and otherwise in accordance with the terms of
the transaction agreements.
-------------------------------------------------------------------------------------------------------------------------------
Cash Collection and Administration
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(2)(i) Payments on mortgage loans are deposited into the
appropriate custodial bank accounts and related bank
clearing accounts no more than two business days following
receipt, or such other number of days specified in the
transaction agreements.
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(2)(ii) Disbursements made via wire transfer on behalf of an
obligor or to an investor are made only by authorized
personnel.
-------------------------------------------------------------------------------------------------------------------------------
1 122(d)(2)(iii) Advances of funds or guarantees regarding collections, cash
flows or distributions, and any interest or other fees
charged for such advances, are made, reviewed and approved
as specified in the transaction agreements.
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(2)(iv) The related accounts for the transaction, such as cash
reserve accounts or accounts established as a form of
overcollateralization, are separately maintained (e.g.,
with respect to commingling of cash) as set forth in the
transaction agreements.
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(2)(v) Each custodial account is maintained at a federally insured
depository institution as set forth in the transaction
agreements. For purposes of this criterion, "federally
insured depository institution" with respect to a foreign
financial institution means a foreign financial institution
that meets the requirements of Rule 13k-l(b)(l) of the
Securities Exchange Act.
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(2)(vi) Unissued checks are safeguarded so as to prevent
unauthorized access.
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(2)(vii) Reconciliations are prepared on a monthly basis for all
asset-backed securities related bank accounts, including
custodial accounts and related bank clearing accounts.
These reconciliations are (A) mathematically accurate; (B)
prepared within 30 calendar days after the bank statement
cutoff date, or such other number of days specified in the
transaction agreements; (C) reviewed and approved by
someone other than the person who prepared the
reconciliation; and @) contain explanations for reconciling
items. These reconciling items are resolved within 90
calendar days of their original identification, or such
other number of days specified in the transaction
agreements.
-------------------------------------------------------------------------------------------------------------------------------
Investor Remittances and Reporting
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(3)(i) Reports to investors, including those to be filed with the
Commission, are maintained in accordance with the
transaction agreements and applicable Commission
requirements. Specifically, such reports (A) are prepared
in accordance with timeframes and other terms set forth in
the transaction agreements; (B) provide information
calculated in accordance with the terms specified in the
transaction agreements; (C) are filed with the Commission
as required by its rules and regulations; and (D) agree
with investors' or the trustee's records as to the total
unpaid principal balance and number of mortgage loans
serviced by the Servicer.
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(3)(ii) Amounts due to investors are allocated and remitted in
accordance with timeframes, distribution priority and other
terms set forth in the transaction agreements.
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(3)(iii) Disbursements made to an investor are posted within two
business days to the Servicer's investor records, or such
other number of days specified in the transaction
agreements.
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(3)(iv) Amounts remitted to investors per the investor reports
agree with cancelled checks, or other form of payment, or
custodial bank statements.
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
Reg AB Applicable Inapplicable
Reference Servicing Criteria Servicing Criteria Servicing Criteria
-------------------------------------------------------------------------------------------------------------------------------
Pool Asset Administration
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(4)(i) Collateral or security on mortgage loans is maintained as
required by the transaction agreements or related mortgage
loan documents.
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(4)(ii) Mortgage loan and related documents are safeguarded as
required by the transaction agreements
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(4)(iii) Any additions, removals or substitutions to the asset pool
are made, reviewed and approved in accordance with any
conditions or requirements in the transaction agreements.
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(4)(iv) Payments on mortgage loans, including any payoffs, made in
accordance with the related mortgage loan documents are
posted to the Servicer's obligor records maintained no more
than two business days after receipt, or such other number
of days specified in the transaction agreements, and
allocated to principal, interest or other items (e.g.,
escrow) in accordance with the related mortgage loan
documents.
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(4)(v) The Servicer's records regarding the mortgage loans agree
with the Servicer's records with respect to an obligor's
unpaid principal balance.
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(4)(vi) Changes with respect to the terms or status of an obligor's
mortgage loans (e.g., loan modifications or re-agings) are
made, reviewed and approved by authorized personnel in
accordance with the transaction agreements and related pool
asset documents.
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(4)(vii) Loss mitigation or recovery actions (e.g., forbearance
plans, modifications and deeds in lieu of foreclosure,
foreclosures and repossessions, as applicable) are
initiated, conducted and concluded in accordance with the
timeframes or other requirements established by the
transaction agreements.
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(4)(viii) Records documenting collection efforts are maintained
during the period a mortgage loan is delinquent in
accordance with the transaction agreements. Such records
are maintained on at least a monthly basis, or such other
period specified in the transaction agreements, and
describe the entity's activities in monitoring delinquent
mortgage loans including, for example, phone calls, letters
and payment rescheduling plans in cases where delinquency
is deemed temporary (e.g., illness or unemployment).
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(4)(ix) Adjustments to interest rates or rates of return for
mortgage loans with variable rates are computed based on
the related mortgage loan documents.
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(4)(x) Regarding any funds held in trust for an obligor (such as
escrow accounts): (A) such funds are analyzed, in
accordance with the obligor's mortgage loan documents, on
at least an annual basis, or such other period specified in
the transaction agreements; (B) interest on such funds is
paid, or credited, to obligors in accordance with
applicable mortgage loan documents and state laws; and (C)
such funds are returned to the obligor within 30 calendar
days of full repayment of the related mortgage loans, or
such other number of days specified in the transaction
agreements.
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(4)(xi) Payments made on behalf of an obligor (such as tax or
insurance payments) are made on or before the related
penalty or expiration dates, as indicated on the
appropriate bills or notices for such payments, provided
that such support has been received by the servicer at
least 30 calendar days prior to these dates, or such other
number of days specified in the transaction agreements.
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(4)(xii) Any late payment penalties in connection with any payment
to be made on behalf of an obligor are paid from the
Servicer's funds and not charged to the obligor, unless the
late was due to the obligor's error or omission.
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(4)(xiii) Disbursements made on behalf of an obligor are posted
within two business days to the obligor's records
maintained by the servicer, or such other number of days
specified in the transaction agreements.
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(4)(xiv) Delinquencies, charge-offs and uncollectible accounts are
recognized and recorded in accordance with the transaction
agreements.
-------------------------------------------------------------------------------------------------------------------------------
1122(d)(4)(xv) Any external enhancement or other support, identified in
Item 11 14(a)(l) through (3) or Item 11 15 of Regulation
AB, is maintained as set forth in the transaction
agreements.
-------------------------------------------------------------------------------------------------------------------------------
EXHIBIT I
SARBANES CERTIFICATION
Re: The [ ] agreement dated as of [ ],200[ ] (the "Agreement"), among
[IDENTIFY PARTIES]
1, __________________, the __________________ of [Name of Servicer] (the
"Servicer"), certify to [the Purchaser], [the Depositor], and the [Master
Servicer] [Securities Administrator] [Trustee], and their officers, with the
knowledge and intent that they will rely upon this certification, that:
(1) I have reviewed the servicer compliance statement of the Servicer
provided in accordance with Item 1123 of Regulation AB (the "Compliance
Statement"), the report on assessment of the Servicer's compliance with
the servicing criteria set forth in Item 1122(d) of Regulation AB (the
"Servicing Criteria"), provided in accordance with Rules 13a-18 and 15d-18
under Securities Exchange Act of 1934, as amended (the "Exchange Act") and
Item 1122 of Regulation AB (the "Servicing Assessment"), the registered
public accounting firm's attestation report provided in accordance with
Rules 13a-18 and 15d-18 under the Exchange Act and Section 1122(b) of
Regulation AB (the "Attestation Report"), and all servicing reports,
officer's certificates and other information relating to the servicing of
the Mortgage Loans by the Servicer during 200[ ] that were delivered by
the Servicer to the [Depositor] [Master Servicer] [Securities
Administrator] [Trustee] pursuant to the Agreement (collectively, the
"Servicer Servicing Information");
(2) Based on my knowledge, the Servicer Servicing Information, taken as a
whole, does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in the light
of the circumstances under which such statements were made, not misleading
with respect to the period of time covered by the Servicer Servicing
Information;
(3) Based on my knowledge, all of the Servicer Servicing Information
required to be provided by the Servicer under the Agreement has been
provided to the [Depositor] [Master Servicer] [Securities Administrator]
[Trustee];
(4) I am responsible for reviewing the activities performed by the
Servicer under the Agreement, and based on my knowledge and the compliance
review conducted in preparing the Compliance Statement and except as
disclosed in the Compliance Statement, the Servicing Assessment or the
Attestation Report, the Servicer has fulfilled its obligations under the
Agreement; and
(5) The Compliance Statement required to be delivered by the Servicer
pursuant to the Agreement, and the Servicing Assessment and Attestation
Report required to be provided by the Servicer and by each Subservicer ad
Subcontractor pursuant to the Agreement have been provided to the
[Depositor] [Master Servicer]. Any material instances of noncompliance
described in such reports have been disclosed to the [Depositor] [Master
Servicer]. Any material instance of noncompliance with the Servicing
Criteria has been disclosed in such reports.
Date:
By:_______________________
Name:_____________________
Title:____________________
EXHIBIT J
FORM OF ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
ASSIGNMENT AND ASSUMPTION
ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT, dated ____________, 20__
between ____________, a ____________ corporation having an office at
____________ ("Assignor") and ____________, having an office at ____________
("Assignee"):
For and in consideration of the sum of one dollar ($1.00) and other
valuable consideration the receipt and sufficiency of which are hereby
acknowledge, 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 that
certain Seller's Warranties and Servicing Agreement, (the "Seller's Warranties
and Servicing Agreement"), dated as of ____________, by and between ____________
(the "Purchaser") ____________, and (the "Company"), and the Mortgage Loans
delivered thereunder by the Company to the Assignor, and that certain Custodial
Agreement, (the "Custodial Agreement"), dated as of ____________, by and among
the Company, the Purchaser and (the "Custodian").
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 Company with
respect to the Seller's 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 Seller's Warranties and
Servicing Agreement, the Custodial Agreement or the Mortgage Loans, including
without limitation the transfer of the servicing obligations under the Seller's
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, the Seller's Warranties and
Servicing Agreement or the Mortgage Loans; and
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 "33 Act") or which would render the disposition of the Mortgage Loans a
violation of Section 5 of the 33 Act or require registration pursuant thereto.
3. That Assignee warrants and represent to, and covenants with, the
Assignor and the Company pursuant to Section 12.10 of the Seller's Warranties
and Servicing Agreement that:
a. The Assignee agrees to be bound, as Purchaser, by all of the
terms, covenants and conditions of the Seller's Warranties and Servicing
Agreement, the Mortgage Loans and the Custodial Agreement, 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 thereunder;
b. The Assignee understands that the Mortgage Loans have not been
registered under the 33 Act or the securities laws of any state;
c. The purchase price being paid by the Assignee for the Mortgage
Loans are in excess of $250,000.00 and will be paid by cash remittance of the
full purchase price within 60 days of the sale;
d. The Assignee is acquiring the Mortgage Loans for investment for
its own account only and not for any other person. In this connection, neither
the Assignee nor any person authorized to act therefor has offered to Mortgage
Loans by means of any general advertising or general solicitation within the
meaning of Rule 502(c) of US Securities and Exchange Commission Regulation D,
promulgated under the 1933 Act;
e. The Assignee considers itself a substantial sophisticated
institutional investor having such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
investment in the Mortgage Loans;
f. The Assignee has been furnished with all information regarding
the Mortgage Loans that it has requested from the Assignor or the Company;
g. 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 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 which would constitute a distribution of the Mortgage
Loans under the 33 Act or which would render the disposition of the Mortgage
Loans a violation of Section 5 of the 33 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
h. 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)(l) 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.
I. The Assignee's address for purposes of all notices and
correspondence related to the Mortgage Loans and the Seller's Warranties and
Servicing Agreements is:
________________________
________________________
________________________
Attention:______________
The Assignee's wire transfer instructions for purposes of all remittances
and payments related to the Mortgage Loans and the Seller's Warranties and
Servicing Agreement is:
________________________
________________________
________________________
Attention:______________
4. From and after the date hereof, the Company shall note the transfer of
the Mortgage Loans to the Assignee in its books and records, the Company shall
recognize the Assignee as the owner of the Mortgage Loans and the Company shall
service the Mortgage Loans for the benefit of the Assignee pursuant to the
Seller's Warranties and Servicing Agreement, the terms of which are incorporated
herein by reference. It is the intention of the Assignor, the Company and the
Assignee that the Seller's 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.
[Signatures Follow]
IN WITNESS WHEREOF, the parties have caused this Assignment, Assumption
and Recognition Agreement to be executed by their duly authorized officers as of
the date first above written.
_______________________________ _______________________________
Assignor Assignee
By:____________________________ By:____________________________
Name:__________________________ Name:__________________________
Its:___________________________ Its:___________________________
Tax Payer Identification No.: Tax Payer Identification No.:
_______________________________ _______________________________