THIS ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
This is an Assignment, Assumption and Recognition Agreement (this "AAR
Agreement") made as of January 1, 2007, among HSBC Bank, National Association
(the "Assignor"), HSI Asset Securitization Corporation (the "Assignee"),
CitiMortgage Inc. as Master Servicer (the "Master Servicer"), Deutsche Bank
National Trust Company (the "Trustee") not individually but solely as trustee on
behalf of the holders of the HSI Asset Loan Obligation Trust, Series 2007-AR1,
Asset-Backed Certificates and Residential Funding Company, LLC (the "Company").
For and in consideration of the sum of TEN DOLLARS ($10.00) and other
valuable consideration the receipt and sufficiency of which hereby are
acknowledged, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
1. The Assignor hereby grants, transfers and assigns to Assignee all
of the right, title and interest of the Assignor, as Owner in, and to the
residential mortgage loans (the "Assigned Loans") listed on Attachment 1 annexed
hereto (the "Assigned Loan Schedule") purchased by the Assignor from the Company
pursuant to the certain Sale and Servicing Agreement, Adjustable Rate Mortgage
Loans, dated as of July 1, 2006 by and between the Company and the Assignor (the
"Servicing Agreement").
2. From and after the date hereof, the Company shall and does hereby
recognize that the Assignee will transfer the Assigned Loans and assign its
rights under the Servicing Agreement (solely to the extent set forth herein) and
this AAR Agreement to HSI Asset Loan Obligation Trust 2007-AR1 (the "Trust")
created pursuant to a Pooling and Servicing Agreement, dated as of January 1,
2007 (the "Pooling Agreement"), among the Assignee as Depositor, the Trustee,
the Master Servicer, Citibank, N.A. as Securities Administrator (the "Securities
Administrator") and ▇▇▇▇▇ Fargo Bank, N.A. as custodian (the "Custodian"). The
Company hereby acknowledges and agrees that from and after the date hereof (i)
the Trust will be the owner of the Assigned Loans, (ii) the Company shall look
solely to the Trust for performance of any obligations of the Assignor insofar
as they relate to the enforcement of the representations, warranties and
covenants with respect to the Assigned Loans, and the Trust hereby acknowledges
that it has assumed such representations, warranties and covenants and that any
claim by the Company with respect thereto shall be made by written notice to the
Trustee, (iii) the Trust shall have all the rights and remedies available to the
Assignor, insofar as they relate to the Assigned Loans, under the Servicing
Agreement, including, without limitation, the enforcement of the document
delivery requirements and remedies with respect to breaches of representations
and warranties set forth in the Servicing Agreement, and shall be entitled to
enforce all of the obligations of the Company thereunder insofar as they relate
to the Assigned Loans, and (iv) all references to the Purchaser (insofar as they
relate to the rights, title and interest and, with respect to obligations of the
Purchaser, only insofar as they relate to the enforcement of the
representations, warranties and covenants of the Company) under the Servicing
Agreement insofar as they relate to the Assigned Loans, shall be deemed to refer
to the Trust. Neither the Company nor the Assignor shall amend or agree to
amend, modify, waiver, or otherwise alter any of the terms or provisions of the
Servicing Agreement which amendment,
1
modification, waiver or other alteration would in any way affect the Assigned
Loans or the Company's performance under the Servicing Agreement with respect to
the Assigned Loans without the prior written consent of the Assignee, the Master
Servicer and the Trustee. Any party requesting such amendment shall provide to
the Assignee, the Master Servicer and the Trustee, at its own expense, an
opinion of counsel stating that (i) such amendment is permitted under the terms
of the Servicing Agreement and (ii) such amendment will not materially and
adversely affect the interests of the holders of any securities issued by the
Trust. The Company acknowledges that CitiMortgage, Inc. has been appointed as
the Master Servicer of the Assigned Loans pursuant to this AAR Agreement and
therefore has the right to enforce all obligations of the Company as they relate
to the Assigned Loans under the Servicing Agreement and this AAR Agreement.
3. The Assignor warrants and represents to, and covenants with, the
Assignee, the Trust, the Company and the Master Servicer that:
(a) Attached hereto as Attachment 2 is a true and accurate copy
of the Servicing Agreement, which agreement is in full force and effect as of
the date hereof and the provisions of which have not been waived, amended or
modified in any respect, nor has any notice of termination been given
thereunder;
(b) Assignor is the lawful owner of the Assigned Loans with full
right to transfer the Assigned Loans and any and all of its interests, rights
and obligations under the Servicing Agreement as they relate to the Assigned
Loans, free and clear of any and all liens, claims and encumbrances; and upon
the transfer of the Assigned Loans to Assignee as contemplated herein, Assignee
shall have good title to each and every Assigned Loan, as well as any and all of
Assignor's interests, rights and obligations under the Servicing Agreement as
they relate to the Assigned Loans, free and clear of any and all liens, claims
and encumbrances;
(c) 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 Assigned Loans or the Servicing Agreement;
(d) Neither the Assignor nor anyone acting on its behalf has
offered, transferred, pledged sold or otherwise disposed of the Mortgage Loans
or any interest in the Mortgage Loans to, or solicited any offer to buy or
accept a transfer, pledge or other disposition of the Mortgage Loans or any
interest in the Mortgage Loans from, or otherwise approached or negotiated with
respect to the Mortgage Loans, any interest in the Mortgage Loans 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 "Securities Act") or which would render the disposition of the Mortgage
Loans a violation of Section 5 of the Securities Act or require registration
pursuant thereto.
2
(e) Assignor is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its formation, and
has all requisite power and authority to acquire, own and sell the Assigned
Loans;
(f) Assignor has full power and authority to execute, deliver and
perform its obligations under this AAR Agreement, and to consummate the
transactions set forth herein. The consummation of the transactions contemplated
by this AAR Agreement is in the ordinary course of Assignor's business and will
not conflict with, or result in a breach of, any of the terms, conditions or
provisions of Assignor's charter or by-laws or any legal restriction, or any
material agreement or instrument to which Assignor is now a party or by which it
is bound, or result in the violation of any law, rule, regulation, order,
judgment or decree to which Assignor or its property is subject. The execution,
delivery and performance by Assignor of this AAR Agreement and the consummation
by it of the transactions contemplated hereby, have been duly authorized by all
necessary action on the part of Assignor. This AAR Agreement has been duly
executed and delivered by Assignor and, upon the due authorization, execution
and delivery by Assignee and Company, will constitute the valid and legally
binding obligation of Assignor enforceable against Assignor in accordance with
its terms except as enforceability may be limited by bankruptcy, reorganization,
insolvency, moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally, and by general principles of equity regardless
of whether enforceability is considered in a proceeding in equity or at law;
(g) No material consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental entity is required to
be obtained or made by Assignor in connection with the execution, delivery or
performance by Assignor of this AAR Agreement, or the consummation by it of the
transactions contemplated hereby; and
(h) There is no action, suit, proceeding, investigation or
litigation pending or, to Assignor's knowledge, threatened, which either in any
instance or in the aggregate, if determined adversely to Assignor, would
adversely affect Assignor's execution or delivery of, or the enforceability of,
this AAR Agreement, or the Assignor's ability to perform its obligations under
this AAR Agreement.
4. The Assignee warrants and represents to, and covenants with, the
Assignor, the Master Servicer, the Trustee and the Company pursuant to Section
2.03 of the Servicing Agreement that:
(a) The Assignee agrees to be bound, as Owner by all of the
terms, covenants and conditions of the Servicing Agreement and the Assigned
Loans and from and after the date hereof, the Assignee assumes for the benefit
of each of the Company and the Assignor all of the Assignor's obligations as
Owner thereunder;
(b) Assignee understands that the Assigned Loans have not been
registered under the Securities Act or the securities laws of any state.
Assignee is acquiring the Assigned Loans not with a view to or for sale or other
transfer in connection with any distribution of the Assigned Loans in any manner
that would violate the Securities Act or any applicable state securities law.
Assignee considers itself a substantial, sophisticated institutional
3
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
Assigned Loans. Assignee has been furnished with all information regarding the
Assigned Loans that it has requested from Assignor or the Company. Neither the
Assignee nor anyone acting on its behalf has offered, transferred, pledged, sold
or otherwise disposed of the Assigned Loans, any interest in the Assigned Loans
to, or solicited any offer to buy or accept a transfer, pledge or other
disposition of the Assigned Loans, any interest in the Assigned Loans from, or
otherwise approached or negotiated with respect to the Assigned Loans, any
interest in the Assigned Loans 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 Assigned
Loans under the Securities Act or which would render the disposition of the
Assigned Loans a violation of Section 5 of the Securities 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 Assigned Loans;
(c) The Assignee is either (i) not an employee benefit plan that
is subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or Section 4975 of the Internal Revenue Code of 1986 (the "Code")(a
"Plan") and not a Person acting, directly or indirectly, on behalf of or
investing with "plan assets" of any such Plan or (ii) an employee benefit plan
that is subject to ERISA and the assignment contemplated herein does not
constitute and will not result in a non-exempt prohibited transaction under
Section 406 of ERISA or Section 4975 of the Code;
(d) The Assignee shall indemnify the Company and hold it harmless
against any loss, liability or expense incurred in connection with any claim,
demand, defense or assertion based on or grounded upon or resulting from a
breach of the Assignee's representations, warranties and covenants set forth in
this AAR Agreement.
(e) Assignee is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has all
requisite power and authority to acquire and own the Assigned Loans;
(f) Assignee has full power and authority to execute, deliver and
perform its obligations under this AAR Agreement, and to consummate the
transactions set forth herein. The consummation of the transactions contemplated
by this AAR Agreement is in the ordinary course of Assignee's business and will
not conflict with, or result in a breach of, any of the terms, conditions or
provisions of Assignee's organizational documentation or any legal restriction,
or any material agreement or instrument to which Assignee is now a party or by
which it is bound, or result in the violation of any law, rule, regulation,
order, judgment or decree to which Assignee or its property is subject. The
execution, delivery and performance by Assignee of this AAR Agreement and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of Assignee. This AAR Agreement
has been duly executed and delivered by Assignee and, upon the due
authorization, execution and delivery by Assignor and Company, will constitute
the valid and legally binding obligation of Assignee enforceable against
Assignee in accordance with its terms except as enforceability may be limited by
bankruptcy, reorganization, insolvency, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and by general
4
principles of equity regardless of whether enforceability is considered in a
proceeding in equity or at law;
(g) No material consent, approval, order or authorization of, or
declaration, filing or registration with, any governmental entity is required to
be obtained or made by Assignee in connection with the execution, delivery or
performance by Assignee of this AAR Agreement, or the consummation by it of the
transactions contemplated hereby; and
(h) There is no action, suit, proceeding, investigation or
litigation pending or, to Assignee's knowledge, threatened, which either in any
instance or in the aggregate, if determined adversely to Assignee, would
adversely affect Assignee's execution or delivery of, or the enforceability of,
this AAR Agreement, or the Assignee's ability to perform its obligations under
this AAR Agreement.
5. The Company and the Assignor hereby agree to amend the terms of the
Servicing Agreement solely with respect to the Assigned Loans as follows:
(a) the following definition shall be added to Section 1.01
"Securities Administrator: Citibank, N.A.";
(b) the reference to "Owner" in the fourth paragraph of Section
3.02 shall be deleted and replaced with "Depositor, Master Servicer
and Securities Administrator", and the reference to "Owner" in the
fifth paragraph of Section 3.02 shall be replace with "Master
Servicer";
(c) the following shall be added as the last sentence of the
final paragraph of Section 3.03 "The Company shall provide written
notice to the Depositor, the Master Servicer and the Securities
Administrator of any waiver of a Prepayment Charge.";
(d) the second sentence of Section 3.06 shall be deleted in its
entirety;
(e) the reference to "Owner" in Section 3.07(i) shall be replaced
with "Master Servicer";
(f) the references to "Owner" in the tenth and thirteenth lines
of Section 3.12(b) shall be replaced with "Master Servicer";
(g) Section 3.12(c) shall be amended as follows:
(i) the phrase "Owner may, at the Owner's sole option" found
in the first and second lines thereof shall be replaced with
"Master Servicer or Depositor, each at its sole option, may";
(ii) the first reference to "Owner" found in the tenth line
thereof shall be replaced with "Master Servicer"; and
5
(iii) the reference to "Owner" found at the beginning of the
last sentence thereof shall be replaced with phrase "Depositor or
Master Servicer, as the case may be,";
(h) all references to "Owner" found in Section 3.13 shall be
replaced with "Master Servicer";
(i) the first paragraph of Section 4.01 shall be deleted in its
entirety and replaced with "On each Remittance Date, the Company shall
distribute to the Master Servicer in accordance with the wire transfer
instructions provided by the Master Servicer the Remittance Amount.";
(j) the second paragraph of Section 4.01 shall be amended so that
the reference to "Owner" found in the first, seventh and tenth line of
that paragraph are replaced with "Master Servicer" and so that the
reference to "Owner" in the third lines thereof shall be replaced with
"Depositor";
(k) Section 4.02 shall be amended so that all references to
"Owner" shall be replaced with "Master Servicer";
(l) Section 4.03 shall be amended so that all references to
"Owner" shall be replaced with "Master Servicer";
(m) the reference to "Owner" found in the first line of Section
5.01(b) shall be replaced with "Depositor, Master Servicer and
Securities Administrator" and the reference to "Owner" found in the
third line of Section 5.01(b) shall be replaced with "Depositor,
Master Servicer or Securities Administrator";
(n) all references to "Owner" in Sections 6.01(i) through (ix)
shall be replaced by "Master Servicer";
(o) the reference to "Owner" in the first and last line of
paragraph (i) of Section 6.01 shall be replaced with "Master Servicer
or the Depositor" and the reference to "Owner" in the third and last
line of paragraph (ii) of Section 6.01 shall be replaced with "Master
Servicer or the Depositor"; and
(p) the reference to "Owner" in Section 7.01 shall be replaced
with "Master Servicer or Depositor."
6. Capitalized words and phrases used but not otherwise defined in
this Assignment and Assumption Agreement shall have the respective meanings
assigned to them in the Servicing Agreement.
6
IN WITNESS WHEREOF, the parties have caused this Assignment and
Assumption Agreement to be executed by their duly authorized officers as of the
date first above written.
HSBC BANK USA, NATIONAL ASSOCIATION
Assignor
By:
---------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director #14311
HSI Asset Securitization Corporation
By:
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
Residential Funding Company, LLC
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Deutsche Bank National Trust Company,
as Trustee
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
CitiMortgage, Inc., as Master
Servicer
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
7
EXECUTION VERSION
RESIDENTIAL FUNDING CORPORATION,
THE COMPANY,
AND
HSBC BANK USA, NATIONAL ASSOCIATION,
THE INITIAL OWNER
STANDARD TERMS AND PROVISIONS OF
SALE AND SERVICING AGREEMENT
DATED AS OF JULY 1, 2006
RESIDENTIAL MORTGAGE LOANS
Series 2006-QWH20 (Initial Transaction)
TABLE OF CONTENTS
PAGE
----
ARTICLE I Definitions.................................................... 1
Section 1.01. Definitions............................................. 1
Section 1.02. Calculations Respecting Accrued Interest................ 13
ARTICLE II Conveyance of Mortgage Loans.................................. 14
Section 2.01. Conveyance of Mortgage Loans; Possession of Mortgage
Files................................................... 14
Section 2.02. Acceptance by the Initial Owner; Repurchase............. 18
Section 2.03. Assignment of Mortgage Loans............................ 18
Section 2.04. Representations and Warranties of the Company with
respect to the Mortgage Loans........................... 19
Section 2.05. Representations, Warranties and Covenants of the
Initial Owner........................................... 31
Section 2.06. Protection of Consumer Information...................... 32
Section 2.07. Repurchase of Certain Loans............................. 32
Section 2.08. Purchase Price Protection............................... 32
Section 2.09. Additional Representations and Warranties of the
Company................................................. 32
ARTICLE III Administration and Servicing of Mortgage Loans............... 35
Section 3.01. Company to Act as Servicer.............................. 35
Section 3.02. Agreements Between Company and Subservicer.............. 35
Section 3.03. Collection of Certain Mortgage Loan Payments and
Liquidation of Mortgage Loans........................... 36
Section 3.04. Principal and Interest Accounts......................... 37
Section 3.05. Escrow Accounts......................................... 37
Section 3.06. Custodial Account....................................... 37
Section 3.07. Permitted Withdrawals From the Custodial Account........ 38
Section 3.08. Permitted Instruments................................... 39
Section 3.09. Primary Insurance Policies.............................. 40
Section 3.10. Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage......................... 40
Section 3.11. Enforcement of Due-On-Sale Clauses...................... 41
Section 3.12. Realization Upon Defaulted Mortgage Loans............... 43
Section 3.13. Owner to Cooperate: Release of Mortgage Files........... 44
Section 3.14. Annual Reports to the Owner............................. 45
Section 3.15. REO Property............................................ 46
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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Section 3.16. Nonsolicitation......................................... 47
Section 3.17. Tax Service Contract.................................... 47
ARTICLE IV Payments to the Owner......................................... 49
Section 4.01. Distributions........................................... 49
Section 4.02. Statements to the Owner................................. 49
Section 4.03. Distribution Reports; Monthly Advances by the Company... 50
ARTICLE V The Company.................................................... 52
Section 5.01. Liability of the Company and Others..................... 52
Section 5.02. Merger or Consolidation of the Company.................. 53
Section 5.03. Company Resignation: Assignment of Agreement............ 53
ARTICLE VI Default....................................................... 53
Section 6.01. Events of Default of the Company........................ 53
Section 6.02. Waiver of Defaults...................................... 55
ARTICLE VII Termination.................................................. 55
Section 7.01. Termination............................................. 55
ARTICLE VIII Compliance With Regulation AB............................... 55
Section 8.01. Intent of the Parties; Reasonableness................... 55
Section 8.02. Additional Representations and Warranties of the
Company................................................. 56
Section 8.03. Information to Be Provided by the Company............... 57
Section 8.04. Use of Subservicers and Subcontractors.................. 62
Section 8.05. Indemnification; Remedies............................... 63
ARTICLE IX Miscellaneous Provisions...................................... 67
Section 9.01. Successor to the Company................................ 67
Section 9.02. Entire Agreement: Amendment............................. 67
Section 9.03. GOVERNING LAW........................................... 67
Section 9.04. Notices................................................. 67
Section 9.05. Severability of Provisions.............................. 68
Section 9.06. No Partnership.......................................... 68
Section 9.07. Exhibits................................................ 68
Section 9.08. Counterparts; Successors and Assigns.................... 68
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TABLE OF CONTENTS
(CONTINUED)
PAGE
----
EXHIBITS
EXHIBIT A - FORM OF REFERENCE AGREEMENT
EXHIBIT B - FORM OF SUBSERVICING AGREEMENT
EXHIBIT C - RESERVED
EXHIBIT D - FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT E - FORM OF CERTIFICATION
EXHIBIT F - FORM OF REQUEST FOR RELEASE
EXHIBIT G - SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
EXHIBIT H - FORM OF ANNUAL CERTIFICATION
-iii-
This is a STANDARD TERMS AND PROVISIONS OF SALE AND SERVICING
AGREEMENT, Residential Mortgage Loans, Series 2006-QWH20, dated and effective as
of July 1, 2006, by and between RESIDENTIAL FUNDING CORPORATION, as seller and
master servicer (the "Company"), and HSBC BANK USA, NATIONAL ASSOCIATION, as the
initial owner (the "Initial Owner"), together with all amendments hereof and
supplements hereto (as it pertains to the Mortgage Pool and as incorporated by
reference in and made a part of the Reference Agreement (as such terms defined
below), the "Agreement").
PRELIMINARY STATEMENT
The Initial Owner has agreed to purchase from time to time from the
Company and the Company has agreed to sell to the Initial Owner, on a servicing
retained basis and without recourse, pools of adjustable rate Mortgage Loans.
Each pool of Mortgage Loans will have the characteristics set forth herein and
in the Reference Agreement, a form of which is attached as Exhibit A hereto
(each, a "Reference Agreement"). The sale of the Mortgage Loans in each Mortgage
Pool will be governed by the Reference Agreement together with this Agreement,
which will be incorporated by reference into and made a part of the Reference
Agreement.
In consideration of the premises and the mutual agreements hereinafter
set forth, and intending to be legally bound, the Initial Owner and the Company
agree hereby as follows:
ARTICLE I
Definitions
Section 1.01 Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article.
AAR: An Assignment and Assumption Agreement in the form of Exhibit D
hereto.
Accepted Servicing Practices: With respect to any Mortgage Loan, those
mortgage servicing practices (including collection procedures) of prudent
mortgage lending institutions that service loans of the same type as such
Mortgage Loan in the jurisdiction where the related Mortgaged Property is
located and in accordance with applicable law, the terms of the Mortgage and
Mortgage Note and servicing practices acceptable to ▇▇▇▇▇▇ Mae for MBS pool
mortgages.
Accrued Interest: With respect to each Remittance Date, one month's
interest accrued at the then applicable Pass-Through Rate on the aggregate
Principal Balance of the Mortgage Loans in the Mortgage Pool as of the close of
business on the immediately preceding Remittance Date (or in the case of the
first Remittance Date, the Cut-off Date). Accrued Interest will be calculated on
the basis of a 360-day year consisting of twelve 30-day months. In each case
Accrued Interest will be adjusted in accordance with Section 1.02.
Acquisition Date: As defined in Section 3.15.
Adjustable Rate Mortgage Loan: A Mortgage Loan that provides for
adjustment to the Mortgage Interest Rate applicable thereto on each Adjustment
Date as set forth in the related Mortgage Note.
Adjustment Date: As to each Mortgage Loan, each date set forth in the
related Mortgage Note on which an adjustment to the interest rate on such
Mortgage Loan becomes effective.
Appraised Value: With respect to any Mortgaged Property, generally,
the lesser of (a) the appraised value of such Mortgaged Property based on an
appraisal made at the time of the origination or modification of the related
Mortgage Loan by an appraiser who met the minimum requirements of ▇▇▇▇▇▇ ▇▇▇ and
▇▇▇▇▇▇▇ Mac and the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 and (b) the sale price of the Mortgaged Property at such time of
origination; except in the case of a Mortgaged Property securing a refinanced or
modified Mortgage Loan as to which it is either the appraised value determined
above or the appraised value determined in an appraisal at the time of
refinancing or modification, as the case may be.
Assignment of Mortgage: With respect to each Mortgage Loan that is not
a MERS Loan, an individual 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 give record
notice of the sale of the Mortgage to the Owner.
Bankruptcy Code: The Bankruptcy Code of 1978, as amended.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in the State of Minnesota, the State of
California, the State of New York or the State of Illinois (or such other state
or states in which the Custodial Account is at the time located) are required or
authorized by law or executive order to be closed.
Cash-Out Refinancing: A Refinanced Mortgage Loan the proceeds of which
were in excess of the principal balance of any existing first mortgage on the
related Mortgaged Property and related closing costs, and were used to pay any
such existing first mortgage, related closing costs and subordinate mortgages on
the related Mortgaged Property.
Cash Receipts: As defined in Section 3.15.
Closing Date: As defined in the Reference Agreement.
Code: The Internal Revenue Code of 1986.
Combined Loan-to-Value Ratio or CLTV: With respect to any Mortgage
Loan as of any date of determination, the ratio on such date of the outstanding
principal amount of the Mortgage Loan and any other mortgage loan which is
secured by a lien on the related Mortgaged Property to the Appraised Value of
the Mortgaged Property.
Commission: The United States Securities and Exchange Commission.
2
Company: Residential Funding Corporation, a Delaware corporation, or
its successor in interest, or any successor as herein provided.
Company Information: As defined in Section 8.05(a).
Condemnation Proceeds: All awards, compensation and settlements in
respect of a taking of all or part of a Mortgaged Property by exercise of the
power of condemnation or the right of eminent domain.
Consumer Information: Information, including, but not limited to, all
personal information about the Mortgagors that is supplied to the Initial Owner
by or on behalf of the Company.
Convertible Mortgage Loan: Any Mortgage Loan which by its terms grants
to the related Mortgagor the option to convert the interest rate borne by such
Mortgage Loan from an adjustable interest rate to a fixed interest rate.
Custodial Account: The custodial account created and maintained
pursuant to Section 3.06.
Custodial Agreement: An agreement providing for the custody of certain
original documents relating to the Mortgage Loans.
Custodian: The custodian under the Custodial Agreement, or its
successor in interest or assigns, or any successor to the Custodian under the
Custodian Agreement, as therein provided.
Cut-off Date: As defined in the Reference Agreement.
Debt Service Reduction: With respect to any Mortgage Loan, a reduction
in the scheduled Monthly Payment for such Mortgage Loan by a court of competent
jurisdiction in a proceeding under the Bankruptcy Code, except such a reduction
constituting a Deficient Valuation or any reduction that results in a permanent
forgiveness of principal.
Deficient Valuation: With respect to any Mortgage Loan, a valuation by
a court of competent jurisdiction of the Mortgaged Property in an amount less
than the then outstanding indebtedness under the Mortgage Loan, or any reduction
in the amount of principal to be paid in connection with any scheduled Monthly
Payment that constitutes a permanent forgiveness of principal, which valuation
or reduction results from a proceeding under the Bankruptcy Code.
Depositor: The depositor, as such term is defined in Regulation AB,
with respect to any Securitization Transaction.
Determination Date: With respect to any Remittance Date, the 15th day
(or if such 15th day is not a Business Day, the Business Day immediately
succeeding such 15th day) of the month in which such Remittance Date occurs.
3
Due Date: With respect to any Remittance Date, the first day of the
calendar month in which such Remittance Date occurs, which is the day on which
the Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to any Remittance Date, the period commencing
on the second day of the month preceding the month of such Remittance Date and
ending on the related Due Date.
Eligible Account: Either (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the short-term unsecured debt obligations of such holding company) are
rated A-1 by Standard & Poor's or Prime-1 by ▇▇▇▇▇'▇ Investors Service (or a
comparable rating if another rating agency is specified by the Initial Owner by
written notice to the Company) at the time any amounts are held on deposit
therein, or (ii) a trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity. Eligible Accounts may bear interest.
Escrow Payments: The amounts constituting ground rents, taxes,
assessments, water charges, sewer rents, Primary Insurance Policy premiums, fire
and hazard insurance premiums and other payments required to be escrowed by the
Mortgagor with the Mortgagee pursuant to the terms of any Mortgage Note or
Mortgage.
Exchange Act: The Securities Exchange Act of 1934, as amended.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
Event of Default: As defined in Section 6.01.
▇▇▇▇▇▇ Mae: Federal National Mortgage Association, a federally
chartered and privately owned corporation organized and existing under the
Federal National Mortgage Association Charter Act, or any successor thereto.
▇▇▇▇▇▇ ▇▇▇ Guides: The ▇▇▇▇▇▇ Mae Selling Guide and the ▇▇▇▇▇▇ ▇▇▇
Servicing Guide and all amendments or additions thereto, including, but not
limited to, future updates thereof.
FIRREA: The Financial Institutions Reform, Recovery, and Enforcement
Act of 1989, as amended.
Fixed Rate Mortgage Loan: A Mortgage Loan with respect to which the
Mortgage Interest Rate set forth in the Mortgage Note is fixed for the term of
such Mortgage Loan.
Flood Zone Service Contract: A transferable contract maintained for
the Mortgaged Property with a nationally recognized flood zone service provider
for the purpose of obtaining the current flood zone status relating to such
Mortgaged Property.
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▇▇▇▇▇▇▇ Mac: Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.
Full Prepayment: Any payment of the entire principal balance of a
Mortgage Loan which is received in advance of its scheduled Due Date and is not
accompanied by an amount of interest representing scheduled interest due on any
date or dates in any month or months subsequent to the month of prepayment.
Gross Margin: As to each Mortgage Loan, the fixed percentage set forth
in the related Mortgage Note and indicated on the related Mortgage Loan Schedule
as the "NOTE MARGIN", which percentage is added to the Index on each Adjustment
Date to determine (subject to rounding in accordance with the related Mortgage
Note, Maximum Interest Rate and Minimum Interest Rate) the interest rate to be
borne by such Mortgage Loan until the next Adjustment Date thereof.
HUD: The United States Department of Housing and Urban Development or
any successor thereto.
Index: As defined in the Reference Agreement.
Insurance Proceeds: Proceeds paid in respect of any Mortgage Loan
pursuant to any insurance policy covering such Mortgage Loan to the extent such
proceeds are payable to the mortgagee under the Mortgage, any Subservicer or the
Company and are not applied to the restoration of the related Mortgaged Property
or released to the Mortgagor in accordance with the procedures set forth in the
Program Guide.
Insured Expenses: Expenses covered by any mortgage insurance policy,
any replacement insurance policy or policies or any other insurance policy.
Liquidated Mortgage Loan: A Mortgage Loan as to which payment has been
made to the Company of all Liquidation Proceeds and other payments or recoveries
which the Company deems to be finally recoverable.
Liquidation Expenses: Expenses which are incurred by the Company in
connection with the liquidation of any defaulted Mortgage Loan (to the extent
such amount is reimbursable under the terms of this Agreement or the Program
Guide) and not recovered by the Company under any insurance policy for reasons
other than the Company's failure to comply with Section 3.09 or 3.10.
Liquidation Proceeds: Cash (including Insurance Proceeds and
Condemnation Proceeds, received in connection with the liquidation of defaulted
Mortgage Loans, whether through trustee's sale, condemnation, foreclosure sale
or otherwise, net of Liquidation Expenses.
Loan-to-Value Ratio: As of any date, the fraction, expressed as a
percentage, the numerator of which is the principal balance of the related
Mortgage Loan at the date of determination and the denominator of which is the
Appraised Value of the related Mortgaged Property.
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Master Servicer: With respect to any Securitization Transaction, the
"master servicer," if any, identified in the related transaction documents.
Maximum Interest Rate: As to any Mortgage Loan, the maximum interest
rate that may be borne by such Mortgage Loan as set forth in the related
Mortgage Note and indicated in the related Mortgage Loan Schedule as the "NOTE
CEILING," which rate may be applicable to such Mortgage Loan at any time during
the life of such Mortgage Loan.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
MERS Loan: Any Loan registered with MERS on the MERS System.
MERS(R) System: The system of recording transfers of Mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number of Mortgage Loans registered
with MERS on the MERS(R) System.
Minimum Interest Rate: As to any Mortgage Loan, the greater of (i) the
Gross Margin and (ii) the rate indicated in the related Mortgage Loan Schedule
as the "NOTE FLOOR," which rate may be applicable to such Mortgage Loan at any
time during the life of such Mortgage Loan.
Monthly Advance: The aggregate of the advances made by the Company
with respect to any Remittance Date pursuant to Section 4.03, the amount of any
such Monthly Advance being equal to the aggregate of the principal portion of
such Monthly Payments on the Mortgage Loans which were due on the related Due
Date but extended pursuant to Section 3.03 or delinquent (in whole or in part)
as of the close of business on the Business Day immediately preceding the
related Remittance Date, plus the interest portion of such Monthly Payments
adjusted to the related Mortgage Loan Remittance Rates, and less the amount of
any advances which the Company has determined would constitute Nonrecoverable
Monthly Advances, if made.
Monthly Payment: With respect to any Mortgage Loan and any month, the
scheduled monthly payment of principal and interest on such Mortgage Loan which
is payable by a Mortgagor in such month under the related Mortgage Note.
Mortgage: The mortgage, deed of trust or other instrument creating a
first or second lien on a fee simple interest in real property securing a
Mortgage Note.
Mortgagee: The mortgagee or beneficiary named in the Mortgage and the
successors and assigns of such mortgagee or beneficiary.
Mortgage File: The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan which shall be delivered to the
Custodian, as the duly appointed agent of the Owner, or as otherwise agreed by
the parties to this Agreement and the Custodian, if any,
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in writing, and any additional documents required to be added to the Mortgage
File pursuant to this Agreement.
Mortgage Interest Rate: The annual rate at which interest accrues on
any Mortgage Loan. The Mortgage Interest Rate for each Mortgage Loan as of the
Cut-off Date will be the rate indicated as the "CURR RATE" on the Mortgage Loan
Schedule and will be adjusted on each Adjustment Date to a rate equal to the sum
of the Index applicable to such Adjustment Date and the Gross Margin, rounded to
the nearest multiple of 0.125%, subject to the application of the applicable
Maximum Interest Rate and Minimum Interest Rate.
Mortgage Loan: An individual mortgage loan which is the subject of
this Agreement and identified on the Mortgage Loan Schedule.
Mortgage Loan Documents: The documents contained in a Mortgage File.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan and
Due Date occurring prior to the first Adjustment Date for such Mortgage Loan
occurring after the Cut-off Date, the rate designated as the "NET MTG RT" for
such Mortgage Loan on the related Mortgage Loan Schedule. With respect to each
Mortgage Loan and each Due Date occurring on or after each Adjustment Date, a
rate equal to the then-applicable Mortgage Interest Rate minus the sum of the
then-applicable Servicing Fee Rate and Subservicing Fee Rate.
Mortgage Loan Schedule: With respect to each Mortgage Pool, the
schedule of Mortgage Loans annexed to each Reference Agreement in both hard copy
and in electronic format acceptable to the Company and the Initial Owner, such
schedule setting forth the following information with respect to each Mortgage
Loan in the Mortgage Pool: (1) the Seller's Mortgage Loan identifying number;
(2) the Mortgagor's first and last name; (3) the street address of the Mortgaged
Property including the state and zip code; (4) a code indicating whether the
Mortgaged Property is owner-occupied; (5) the type of Residential Dwelling
constituting the Mortgaged Property; (6) the original months to maturity; (7)
the original date of the Mortgage Loan; (8) the Loan-to-Value Ratio or Combined
Loan-to-Value Ratio at origination; (9) the Mortgage Interest Rate in effect
immediately following the Cut-off Date; (10) the date on which the first Monthly
Payment was due on the Mortgage Loan; (11) the stated maturity date; (12) the
amount of the Monthly Payment at origination; (13) the amount of the Monthly
Payment as of the Cut-off Date; (14) the last Due Date on which a Monthly
Payment was actually applied to the unpaid Stated Principal Balance; (15) the
original principal amount of the Mortgage Loan; (16) the Stated Principal
Balance of the Mortgage Loan; as of the close of business on the Cut-off Date;
(17) with respect to each Adjustable Rate Mortgage Loan, the first Adjustment
Date; (18) with respect to each Adjustable Rate Mortgage Loan, the Gross Margin;
(19) a code indicating the purpose of the loan (i.e., purchase financing,
Rate/Term Refinancing, Cash-Out Refinancing); (20) with respect to each
Adjustable Rate Mortgage Loan, the Maximum Mortgage Interest Rate under the
terms of the Mortgage Note; (21) with respect to each Adjustable Rate Mortgage
Loan, the Minimum Mortgage Interest Rate under the terms of the Mortgage Note;
(22) the Mortgage Interest Rate at origination; (23) with respect to each
Adjustable Rate Mortgage Loan, the Periodic Rate Cap; (24) with respect to each
Adjustable Rate Mortgage Loan, the first Adjustment Date immediately following
the Cut-off Date; (25) with respect to each Adjustable Rate Mortgage Loan, the
Index; (26) the date on which the
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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; (27) a code
indicating the documentation style (i.e., full (providing two years employment
verification - 2 years W-2's and current pay stub or 2 years 1040's for self
employed borrowers), alternative or reduced); (28) a code indicating whether the
Mortgage Loan is an Adjustable Rate Mortgage Loan or a Fixed Rate Mortgage Loan;
(29) the Appraised Value of the Mortgaged Property; (30) the sale price of the
Mortgaged Property, if applicable; (31) a code indicating whether the Mortgage
Loan is subject to a Prepayment Charge or penalty; (32) the term of any
Prepayment Charge or penalty; (33) with respect to each MERS Mortgage Loan, the
related MIN; (34) reserved; (35) a code indicating if the Mortgage Loan is an
interest-only Mortgage Loan and, if so, the term of the interest-only period of
such Mortgage Loan; (36) a code indicating whether the Mortgage Loan is a first
or second lien; (37) a code indicating whether the Mortgage Loan is a Balloon
Mortgage Loan and, if so, the term of the Balloon Mortgage Loan; and (38) a code
indicating if the Mortgage Loan is subject to a Primary Insurance Policy, and if
so, the insurer. With respect to the Mortgage Loan Pool in the aggregate, the
Mortgage Loan Schedule shall set forth the following information, as of the
related Cut-off Date: (1) the number of Mortgage Loans; (2) the current
principal balance of the Mortgage Loans; (3) the weighted average Mortgage
Interest Rate of the Mortgage Loans; and (4) the weighted average maturity of
the Mortgage Loans.
Mortgage Note: The originally executed note evidencing the
indebtedness of a Mortgagor under a Mortgage Loan and any modification thereto.
Mortgage Pool: Each pool of Mortgage Loans conveyed by the Company to
the Initial Owner from time to time pursuant to a Reference Agreement
referencing this Agreement.
Mortgaged Property: The underlying property securing a Mortgage Loan.
Mortgagor: The obligor on a Mortgage Note.
Net Mortgage Rate: With respect to any Mortgage Loan (or the related
REO Property), as of any date of determination, a per annum rate of interest
equal to the then applicable Mortgage Interest Rate for such Mortgage Loan minus
the Servicing Fee Rate.
Negative Amortization: With respect to each Negative Amortization
Mortgage Loan, that portion of interest accrued at the Mortgage Interest Rate in
any month that exceeds the Monthly Payment on the related Mortgage Loan for such
month and which, pursuant to the terms of the Mortgage Note, is added to the
principal balance of the Mortgage Loan.
Negative Amortization Cap: With respect to each Negative Amortization
Mortgage Loan, the provision of each Mortgage Note that provides for an absolute
maximum percentage of the original principal amount of such Mortgage Loan that
the outstanding principal amount of the Mortgage Loan may reach as a result of
Negative Amortization as specified on the Mortgage Loan Schedule.
Negative Amortization Mortgage Loan: Each Mortgage Loan that is
identified on the Mortgage Loan Schedule as a Mortgage Loan that may be subject
to Negative Amortization.
8
Nonrecoverable Monthly Advance: Any Monthly Advance previously made or
proposed to be made by the Company which, in the good faith judgment of the
Company, is not or, in the case of a proposed Monthly Advance, would not be
ultimately recoverable by the Company from Liquidation Proceeds or otherwise.
Opinion of Counsel: A written opinion of counsel, who may, unless
otherwise provided herein, be counsel for the Company and which opinion is
reasonably acceptable to each Person to whom such opinion is addressed.
Owner: Any Person from time to time having an Ownership Interest in
the Mortgage Loans.
Ownership Interest: The undivided ownership interest in a Mortgage
Pool.
Partial Prepayment: Any payment of principal on a Mortgage Loan, other
than a Full Prepayment, which is received in advance of its scheduled Due Date
and is not accompanied by an amount of interest representing scheduled interest
due on any date or dates in any month or months subsequent to the month of
prepayment.
Pass-Through Rate: As to any Remittance Date, a rate equal to the
weighted average, expressed as a percentage, of the Mortgage Loan Remittance
Rates of all Mortgage Loans in a Mortgage Pool as of the close of business on
the Due Date in the month preceding the month in which such Remittance Date
occurs, weighted on the basis of the respective Principal Balances of such
Mortgage Loans, which Principal Balances shall be the Principal Balances of such
Mortgage Loans immediately prior to such Remittance Date.
Periodic Rate Cap: With respect to each Adjustable Rate Mortgage Loan
and any Adjustment Date therefor, a number of percentage points per annum that
is set forth in the related Mortgage Loan Schedule and in the related Mortgage
Note, which is the maximum amount by which the Mortgage Interest Rate for such
Adjustable Rate Mortgage Loan may increase (without regard to the Maximum
Interest Rate) or decrease (without regard to the Minimum Interest Rate) on such
Adjustment Date from the Mortgage Interest Rate in effect immediately prior to
such Adjustment Date.
Permitted Instrument: As defined in Section 3.08.
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
Plan: As defined in Section 2.03.
Prepayment Charge: With respect to any Mortgage Loan, the charges or
premiums, if any, received or payable in connection with a full or partial
prepayment of such Mortgage Loan in accordance with the terms of the related
Mortgage Note or Mortgage.
Primary Mortgage Insurance Policy: Each policy of primary mortgage
insurance or any replacement policy therefor issued by a Qualified Insurer.
9
Principal Balance: As to each Mortgage Loan, as of the time of any
determination, (i) the principal balance remaining to be paid by the Mortgagor
at the close of business on the Cut-off Date, after deduction of all payments
allocable to principal due on or before the Cut-off Date whether or not
collected from the Mortgagor on or before such date, minus (ii) all amounts
distributed to the Owner with respect to such Mortgage Loan and reported to the
Owner as allocable to principal, including the principal component of any
Monthly Advances.
Principal Remittance Amount: With respect to any Remittance Date, the
sum of (a) the principal component of any Monthly Advance for such Remittance
Date; (b) any amount required to be deposited in the Custodial Account pursuant
to Section 3.10(a); and (c) the amount on deposit in the Custodial Account as of
the close of business on the Determination Date immediately preceding such
Remittance Date which is allocable to payments on account of principal of the
Mortgage Loans, which amount shall not include (i) Full Prepayments and Partial
Prepayments and the principal portion of any Liquidation Proceeds, Insurance
Proceeds or proceeds of the purchase of any Mortgage Loan pursuant to Sections
2.02 and 2.04 received in the month in which such Remittance Date occurs (other
than such Liquidation Proceeds, Insurance Proceeds or proceeds of the purchase
of any Mortgage Loan pursuant to Sections 2.02 and 2.04 that the Company has
deemed to have been received in the preceding month), (ii) payments which
represent receipt of scheduled payments of principal due on a date or dates
subsequent to the related Due Date and (iii) late payments of principal which
have been the subject of a previous Monthly Advance and which are eligible for
withdrawal pursuant to clauses (ii) or (vii) of Section 3.07.
Program Guide: Collectively, the Client Guide and the Servicer Guide
for Residential Funding Corporation's mortgage loan purchase and conduit
servicing program and all supplements and amendments thereto published by
Residential Funding Corporation from time to time. As of the date of this
Agreement the Program Guide is consistent with the ▇▇▇▇▇▇ ▇▇▇ Guides except as
previously reported in writing to the Initial Owner.
Purchase Price: As defined in the Reference Agreement.
Purchase Price Percentage: As defined in the Reference Agreement or
related commitment letter.
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
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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-purchase or post-purchase 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 Insurer: An insurance company duly qualified as such under
the laws of the states in which the Mortgaged Properties are located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided by the insurance policy issued by
it, approved as an insurer by ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac.
Reconstitution: Any Securitization Transaction or Whole Loan Transfer.
Reconstitution Agreement: An agreement entered into by the Company and
the Initial Owner and/or certain third parties in connection with a
Reconstitution with respect to any or all of the Mortgage Loans serviced under
this Agreement.
Record Date: With respect to each Remittance Date, the close of
business on the last Business Day of the month next preceding the month in which
the related Remittance Date occurs.
Refinanced Mortgage Loan: A Mortgage Loan the proceeds of which were
not used to purchase the related Mortgaged Property.
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation
AB), 17 C.F.R. Sections 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.
Remittance Amount: With respect to any Remittance Date, an amount
equal to, subject to Section 1.02, (i) the Principal Remittance Amount (if any)
for such Remittance Date, plus (ii) the Accrued Interest for such Remittance
Date, minus (iii) any amounts payable to the Company pursuant to Section 3.07
that are not taken into account in the adjustment of Accrued Interest pursuant
to Section 1.02.
Remittance Date: The 18th day of any month, beginning in the month
following the month in which the Cut-off Date occurs, or, if such 18th day is
not a Business Day, the first Business Day immediately following.
Repurchase Price: With respect to any Mortgage Loan, a price equal to
the sum of (i) the product of the Principal Balance of such Mortgage Loan,
multiplied by the greater of (x) the Purchase Price Percentage and (y) 100%,
plus (ii) interest on such Principal Balance at the Mortgage Interest Rate from
and including the last Due Date through which interest has been paid by or on
behalf of the Mortgagor to the last day of the month in which such repurchase
occurs, less amounts received in respect of such repurchased Mortgage Loan that
are being held
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in the Custodial Account for distribution in connection with such Mortgage Loan,
plus (iii) any unreimbursed Servicing Advances and Monthly Advances (including
Nonrecoverable Monthly Advances) and any unpaid servicing fees allocable to such
Mortgage Loan paid by any party other than the Company, plus (iv) any costs and
expenses incurred by the Owner, the servicer, master servicer or any trustee in
respect of the breach or defect giving rise to the repurchase obligation
including, without limitation, any costs and damages incurred by any such party
in connection with any violation by any such Mortgage Loan of any predatory or
abusive lending law.
REO Disposition: The final sale by the Company of any REO Property.
REO Property: A Mortgaged Property acquired by the Owner or the
Company on behalf of the Owner through foreclosure or deed in lieu of
foreclosure.
Request for Release: A request for release, the form of which is
attached as Exhibit F hereto, or an electronic request in a form acceptable to
the Custodian.
Securities Act: The Securities Act of 1933, as amended.
Securitization Transaction: Any transaction involving either (1) 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 (2)
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.
Seller: As to any Mortgage Loan, a Person that executed a Seller's
Agreement applicable to such Mortgage Loan.
Seller's Agreement: An agreement for the origination and sale of
Mortgage Loans in the form referred to in the Program Guide or in such other
form as has been approved by the Company.
Servicer: As defined in Section 8.03(c).
Servicing Advances: All customary, reasonable and necessary
"out-of-pocket" costs and expenses incurred by the Company in the performance of
its servicing obligations, including, but not limited to, the cost of (i)
preservation, restoration and repair of a Mortgaged Property, (ii) any
enforcement or judicial proceedings with respect to a Mortgage Loan, including
foreclosure actions and (iii) the management and liquidation of REO Property.
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: As to each Mortgage Loan, the annual fee, payable
monthly to the Company out of the interest portion of the Monthly Payment or
other collections received on each Mortgage Loan.
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Servicing Fee Rate: As defined in the Reference Agreement.
Servicing File: With respect to each Mortgage Loan, the file retained
by the Company consisting of originals of all documents in the Mortgage File
that are not delivered to the Initial Owner or the Custodian and copies of the
Mortgage Loan Documents.
Servicing Performance Test or Trigger: A percentage of delinquencies
and/or losses realized on mortgage loans included in a securitization
transaction that, if exceeded, permits a third party credit enhancer to replace
the Company or a Servicer as master servicer or servicer.
Static Pool Information: Static pool information as described in Item
1l05(a)(l)-(3) and 1105(c) of Regulation AB.
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 l122( 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.
Subservicing Agreement: The written contract between the Company and a
Subservicer as may be amended from time to time, a representative form of which
is attached hereto as Exhibit B.
Subservicing Fee: The annual fee, payable monthly to the Subservicer
out of the interest portion of the Monthly Payment received on each Mortgage
Loan.
Subservicing Fee Rate: As defined in the Reference Agreement.
Successor Servicer: Any successor master servicer appointed pursuant
to Section 9.01.
Whole Loan Transfer: Any sale or transfer of some or all of the
Mortgage Loans, other than a Securitization Transaction.
Section 1.02 Calculations Respecting Accrued Interest. (a) Except as
specifically provided in Section 3.06(viii), in the case of a Partial
Prepayment, the Accrued Interest on the Remittance Date in the next succeeding
month shall be reduced by one month's interest at the Mortgage Loan Remittance
Rate on the amount of such Partial Prepayment. Except as specifically provided
in Section 3.06(viii), in the case of a Full Prepayment, the Accrued Interest on
the Remittance Date in the next succeeding month shall be reduced by the excess,
if any, of (i) one month's interest at the applicable Mortgage Loan Remittance
Rate on
13
the Principal Balance of such Mortgage Loan, over (ii) the amount of any payment
of interest which accompanied such Full Prepayment (after adjustment for the
Servicing Fee and Subservicing Fee for the number of days covered by such
payment of interest).
(b) In the event that the Liquidation Proceeds with respect to any
Mortgage Loan (net of amounts payable or reimbursable therefrom pursuant to
Sections 3.07(iii) and 3.07(iv)) are less than the Principal Balance of such
Mortgage Loan, together with one month's interest thereon at the applicable
Mortgage Loan Remittance Rate, the Accrued Interest on the Remittance Date in
the next succeeding month shall be reduced by the amount of such insufficiency.
(c) In the event that any amount or amounts shall be withdrawn from
amounts attributable to the Mortgage Loans on deposit in the Custodial Account
pursuant to clauses (ii), (iii) (other than for servicing compensation), (iv),
(v), (vi), (vii), (viii) or (ix) of Section 3.07 and the related withdrawal or
withdrawals shall not be reflected in any adjustment required pursuant to
subsections (a) and (b) above, the Accrued Interest on the immediately
succeeding Remittance Date shall be reduced by the total of such amounts so
withdrawn to the extent such amounts would result in a shortfall of Accrued
Interest.
(d) In the event that as of the end of any Due Period, for any reason
(including, without limitation, acquisition of title to the underlying Mortgaged
Property through foreclosure or acceptance of a deed in lieu of foreclosure,
application of the Servicemembers' Civil Relief Act or similar legislation or
regulations as in effect from time to time, or a Debt Service Reduction or a
Deficient Valuation), less than the full amount of the interest portion of the
Monthly Payment at the Mortgage Loan Remittance Rate due on the Due Date in such
Due Period on any Mortgage Loan is deposited in the Custodial Account and no
Monthly Advance is made or required to be made in respect thereof, the Accrued
Interest on the immediately succeeding Remittance Date shall be reduced by the
amount of such insufficiency.
(e) In the event that on or in the month of any Due Date (after
adjustment for the Subservicing Fee and Servicing Fee) more than one month's
interest at the applicable Mortgage Loan Remittance Rate on the Principal
Balance of any Mortgage Loan is deposited in the Custodial Account as a result
of late recoveries of interest in respect of which no Monthly Advance was made
in respect of such amount, the Accrued Interest on the immediately succeeding
Remittance Date shall be increased by the amount of such excess.
(f) All references to the Principal Balance of any Mortgage Loan in
this Section 1.02 are to the Principal Balance of such Mortgage Loan as of the
close of business on the Remittance Date immediately preceding the Remittance
Date in respect of which the Accrued Interest thereon is being adjusted pursuant
to the applicable subsection of this Section 1.02 or, in the case of the first
Remittance Date, as of the Cut-off Date.
ARTICLE II
Conveyance of Mortgage Loans
Section 2.01 Conveyance of Mortgage Loans; Possession of Mortgage
Files.
14
(a) The Company, simultaneously with the execution and delivery of the
Reference Agreement and payment of the Purchase Price, shall hereby sell,
transfer and assign, without recourse, to the Initial Owner the Ownership
Interest comprising all the right, title and interest of the Company in and to
the Mortgage Loans, including all interest at the applicable Mortgage Loan
Remittance Rate and principal received on or with respect to the Mortgage Loans
after the Cut-off Date defined in the applicable Reference Agreement (other than
payments of principal and interest due on the Mortgage Loans on or before the
Cut-off Date) on a servicing retained basis.
(b) Record title to each Note and the related Mortgage as of the
Closing Date shall be in the name of the Company, the Initial Owner or one or
more designees of the Initial Owner, as the Initial Owner shall designate.
Notwithstanding the foregoing, beneficial ownership of each Note and the related
Mortgage shall be vested solely in the Initial Owner. All rights arising out of
the Mortgage Loans including, but not limited to, all funds received by the
Company after the Cut-off Date on or in connection with a Mortgage Loan shall be
vested in the Initial Owner or one or more designees of the Initial Owner;
provided, however, that all such funds received on or in connection with a
Mortgage Loan shall be received and held by the Company in trust for the benefit
of the Owner as the owner of the Mortgage Loans pursuant to the terms of this
Agreement.
It is the express intention of the parties that the transactions
contemplated by this Agreement be, and be construed as, a sale of the Mortgage
Loans by the Company and not a pledge of the Mortgage Loans by the Company to
the Initial Owner to secure a debt or other obligation of the Company.
Consequently, the sale of each Mortgage Loan shall be reflected as a sale on the
Company's business records, tax returns and financial statements.
(c) In connection with the Company's sale of the Mortgage Loans to the
Initial Owner pursuant to the Reference Agreement, the Company shall deliver to,
and deposit with, the Custodian, as the duly appointed agent of the Owner for
such purpose, the following original documents or instruments (or copies thereof
as permitted by this Section) with respect to each Mortgage Loan so assigned:
(i) The original Mortgage Note, endorsed in blank by the Company
without recourse, and showing an unbroken chain of endorsements from the
originator thereof to the Company or an original lost note affidavit from
the related Seller or the Company stating that the original Mortgage Note
was lost, misplaced or destroyed, together with a copy of the related
Mortgage Note;
(ii) The original Mortgage, noting the presence of the MIN of the
Mortgage Loan and language indicating that the Mortgage Loan is a MERS Loan
if the Mortgage Loan is a MERS Loan, with evidence of recording indicated
thereon or a copy of the Mortgage with evidence of recording indicated
thereon;
(iii) Unless the Mortgage Loan is registered on the MERS(R)
System, an unrecorded original Assignment of Mortgage, in recordable form,
from the Company in blank;
15
(iv) The original recorded assignment or assignments of the
Mortgage showing an unbroken chain of title from the originator thereof to
the Company (or to MERS, if the Mortgage Loan is registered on the MERS(R)
System and noting the presence of a MIN) with evidence of recordation noted
thereon or attached thereto, or a copy of such assignment or assignments of
the Mortgage with evidence of recording indicated thereon;
(v) The original of each modification, assumption agreement or
preferred loan agreement, if any, relating to such Mortgage Loan or a copy
of each modification, assumption agreement or preferred loan agreement;
(vi) The original of each guarantee executed in connection with
the Mortgage Note, if any; and
(vii) if the Mortgage Note, the Mortgage, any Assignment of
Mortgage or any other related document has been signed by a Person on
behalf of the Mortgagor, the original power of attorney or other instrument
that authorized and empowered such Person to sign.
The Company may, in lieu of delivery of the original of the documents
set forth in Section 2.01(c)(ii) through (vi) (or copies thereof as permitted by
Section 2.01(c)) to the Custodian, retain such documents and hold such documents
in trust for the use and benefit of all present and future Owners until 30 days
following the receipt of the original of all of the documents or instruments set
forth in Section 2.01(c)(ii) through (vi) (or copies thereof as permitted by
such Section) for any Mortgage Loan. At such time, the Company shall deliver a
complete set of such documents to the Custodian as the duly appointed agent of
the Owner.
In the event that the Company has been notified by the Custodian that
it has delivered to the Custodian any Mortgage Note endorsed in blank or
Assignment of Mortgage in blank by a party other than the Company, the Company
shall, or shall cause the Custodian to, complete the endorsement of the Mortgage
Note and Assignment of Mortgage into the name of the Company and deliver an
endorsement in blank by the Company and an Assignment of Mortgage from the
Company in blank.
(d) Notwithstanding the provisions of Section 2.01(c), in the event
that in connection with any Mortgage Loan the Company cannot deliver the
original of the Mortgage, any assignment, modification, assumption agreement or
preferred loan agreement (or a copy thereof as permitted by Section 2.01(c))
with evidence of recording thereon concurrently with the execution and delivery
of this Agreement because of (i) a delay caused by a public recording office
where such Mortgage, assignment, modification, assumption agreement or preferred
loan agreement as the case may be, has been delivered for recordation, or (ii) a
delay in the receipt of certain information necessary to prepare the related
assignments, the Company shall deliver to the Custodian a certified copy of such
Mortgage, assignment, modification, assumption agreement or preferred loan
agreement. The Company shall promptly deliver to the Custodian such Mortgage,
assignment, modification, assumption agreement or preferred loan agreement with
evidence of recording indicated thereon in accordance with Section 2.01(c).
16
(e) If the original or copy of any document submitted for recordation
to the appropriate recording office is not delivered to the Initial Owner or its
designee within 180 days following the related Closing Date due to a delay at
the applicable recording office, the Company shall deliver to the Initial Owner
an officer's written certification certifying that the delay in delivering the
original recorded document to the Initial Owner is due to delays at the
applicable recording office and that the Company shall deliver the original
recorded documents no later than 270 days after the related Closing Date.
The Company shall provide to each of the Initial Owner and the
Custodian a notice containing a list of authorized servicing personnel (each, an
"Authorized Representative") for the purpose of giving and receiving notices,
requests and instructions and delivering certificates and documents in
connection with this Agreement. Such notice shall contain the specimen signature
for each Authorized Representative. From time to time, the Company may, by
delivering to the others a revised notice, change the information previously
given pursuant to this Section, but each of the parties hereto shall be entitled
to rely conclusively on the then current notice until receipt of a superseding
notice.
The Custodian shall certify its receipt of all such Mortgage Loan
Documents required to be delivered pursuant to this Agreement for the related
Closing Date, as evidenced by the Trust Receipt and Initial Certification of the
Custodian in the form annexed to the Custodial Agreement.
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 this Agreement within two weeks 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
two weeks 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 one year of its submission for recordation.
In connection with the assignment of any Mortgage Loan registered on
the MERS(R) System, the Company further agrees that it will, at the Owner's
request and sole cost and expense, cause the MERS(R) System to indicate that
such Mortgage Loans have been assigned by the Company to the Owner by including
(or, if applicable, deleting, in the case of Mortgage Loans which are
repurchased in accordance with this Agreement) in such computer files the code
in the field "Pool Field" which identifies the series in which such loans were
sold. The Company further agrees that it will not alter the code referenced in
this paragraph with respect to any Mortgage Loan during the term of this
Agreement unless and until such Mortgage Loan is repurchased in accordance with
the terms of this Agreement.
(f) Any documents required to be delivered to the Custodian by the
Company pursuant to this Section 2.01 which are in the possession or control of
the Company or a Subservicer and which are not delivered to the Custodian or are
requested from the Custodian in connection with the servicing of the Mortgage
Loans are and shall be held by the Company, either directly or through the
related Subservicer, in trust for the benefit of the Owner.
17
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 records for
each Mortgage Loan which shall be clearly marked to reflect the ownership of
each Mortgage Loan by the Owner.
Section 2.02. Acceptance by the Initial Owner; Repurchase. The Initial
Owner hereby directs the Company to deliver the documents referred to in Section
2.01 above to ▇▇▇▇▇ Fargo Bank, National Association, as Custodian for the
Initial Owner, and acknowledges that the Custodian as its agent, holds and will
hold such documents and the other documents constituting a part of the Mortgage
Files in trust for the use and benefit of the Initial Owner and any other future
Owner.
If any document or documents constituting a part of the Mortgage File
are missing or defective, the Owner shall notify the Company of such omission or
defect which it finds in respect of any Mortgage Loan. If such omission or
defect materially and adversely affects the interests of the Owner, the Company
shall promptly correct or cure such omission or defect within 30 days from the
date the Company was notified of such omission or defect, and if such omission
or defect is not corrected or cured within such period, the Company shall
repurchase such Mortgage Loan at the Repurchase Price. If on the date that is
270 days after the Closing Date any Mortgage File does not contain any required
documents, the Company shall repurchase the related Mortgage Loan for the
Repurchase Price.
Section 2.03. Assignment of Mortgage Loans. The Initial Owner or Owner
shall have the right to assign its interest under this Agreement with respect to
the Mortgage Loans and designate any person to exercise any rights of the Owner
hereunder with respect to the Mortgage Loans, and the assignee or designee shall
accede to the rights and obligations hereunder of the Owner with respect to the
Mortgage Loans; provided, however, that the Mortgage Loans shall at all times be
subject to the terms of this Agreement. Prior to assigning its interests under
this Agreement, the Owner shall deliver a copy of this Agreement to such
assignee or designee. Each assignee or designee may assign its interest in the
Mortgage Loans owned by it. No sale or transfer of the Mortgage Loans or
assignment of this Agreement shall be binding upon the Company for any purpose
under this Agreement unless the Owner proposing to make such sale, transfer or
assignment and its prospective assignee have executed and delivered to the
Company an assignment and assumption agreement in the form of Exhibit D annexed
hereto and the Company has acknowledged such agreement. If required by any
nationally recognized rating agency rating securities backed by the Mortgage
Loans, the Company will amend this Agreement to provide that the Custodial
Account shall be a segregated account into which only funds relating to the
Mortgage Loan will be deposited. No sale of the Mortgage Loans shall be made to
any employee benefit plan or other plan that is subject to ERISA or Section 4975
of the Code (each, a "Plan") or to any person or entity that is investing on
behalf of or with "plan assets" of any Plan or to any insurance company, other
than an insurance company investing with funds held in its general account (if
such funds do not include "plan assets" of any Plan), unless the Owner's
prospective assignee provides the Company with a certification or Opinion of
Counsel or both, which establishes to the Company's satisfaction that such
disposition will not constitute or result in a non-exempt prohibited transaction
under Section 406 of ERISA and Section 4975 of the Code. The Company shall not
be required to pay any costs or expenses incurred in connection with obtaining
such Opinion of Counsel. The Company may require that
18
such prospective assignee certify to the Company in writing the facts
establishing that such disposition will not violate the prohibited transaction
provisions of Section 406 of ERISA and Section 4975 of the Code.
The sale of the Mortgage Loans has not been registered or qualified
under the Securities Act or any state securities law. No sale, transfer, pledge
or other disposition of the Mortgage Loans or any interest therein shall be made
unless such disposition is made pursuant to an effective registration statement
under the Securities Act and effective registration or qualification under
applicable state securities laws, or is made in a transaction which does not
require such registration or qualification. The Company is not obligated to
register or qualify the Mortgage Loans under the Securities Act or any other
securities law or to take any action not otherwise required under this Agreement
to permit the transfer of the Mortgage Loans without registration or
qualification.
Upon compliance with the foregoing conditions and receipt of an
assignment and assumption agreement executed by the Owner and its prospective
assignee and acknowledged by the Company, the Company shall make the appropriate
notations in its books to reflect the sale of the affected Mortgage Loans to
such assignee, such assignee shall accede to the rights and the obligations of
the Owner hereunder with respect to such Mortgage Loans, and the Owner shall be
released from its obligations hereunder with respect to such Mortgage Loans that
have been sold in accordance with this Agreement. 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 of
the Company show such Person as the Owner of such Mortgage Loans. The Company
shall not be responsible for expenses incurred by the Owner or any transferee in
connection with any sale or transfer pursuant to this Section 2.03.
Section 2.04. Representations and Warranties of the Company with
respect to the Mortgage Loans. The Company hereby represents and warrants to the
Owner that as of the Closing Date or such other date specifically provided for
herein, unless otherwise specified in the applicable Reference Agreement, with
respect to each Mortgage Loan:
(a) The information set forth in the related Mortgage Loan Schedule,
as of the dates set forth therein, is complete, true and correct;
(b) The Mortgage Note and the Mortgage are not subject to any right of
rescission, set off, counterclaim or defense, including, without limitation, the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render the
Mortgage Note or Mortgage unenforceable, in whole or in part, or subject to any
right of rescission, set off, counterclaim or defense, including the defense of
usury, and no such right of rescission, set off, counterclaim or defense has
been asserted with respect thereto; and the Mortgagor was not a debtor in any
state or federal bankruptcy or insolvency proceeding at the time the Mortgage
Loan was originated;
(c) All buildings upon the Mortgaged Property are insured by an
insurer acceptable under the ▇▇▇▇▇▇ Mae Guides, against loss by fire, hazards of
extended coverage and such other hazards as are provided for in the ▇▇▇▇▇▇ ▇▇▇
Guides or by the ▇▇▇▇▇▇▇ Mac Guides, in an amount representing coverage that is
at least equal to the lesser of (i) the amount necessary
19
to fully compensate for any damage or loss to the improvements that are a part
of such property on a replacement cost basis or (ii) the outstanding principal
balance of the Mortgage Loan plus with respect to any second lien Mortgage Loan,
the outstanding principal balance of the related first lien mortgage loan, in
each case in an amount not less than such amount as is necessary to prevent the
Mortgagor and/or the Mortgagee from becoming a co-insurer. If the Mortgaged
Property is a condominium unit, it is included under the coverage afforded by a
blanket policy for the project. All such standard hazard policies are in full
force and effect and on the date of origination contained a standard mortgagee
clause naming the Company and its successors in interest and assigns as loss
payee and such clause is still in effect and all premiums due thereon have been
paid. If required by the Flood Disaster Protection Act of 1973, as amended, the
Mortgage Loan is covered by a flood insurance policy meeting the requirements of
the current guidelines of the Federal Insurance Administration which policy
conforms to ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac requirements, in an amount not less than
the amount required by the Flood Disaster Protection Act of 1973, as amended.
Such policy was issued by an insurer acceptable under ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac
guidelines. The Mortgage obligates the Mortgagor thereunder to maintain all such
insurance at the Mortgagor's cost and expense, and upon the Mortgagor's failure
to do so, authorizes the holder of the Mortgage to maintain such insurance at
the Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor;
(d) At origination of the Mortgage Loan, 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, fair housing, predatory and abusive lending, fair lending or
disclosure laws applicable to the origination and servicing of the Mortgage Loan
have been complied with in all material respects;
(e) The Mortgage is a valid and existing (i) first lien with respect
to each Mortgage Loan that is indicated by the Company to be a first lien (as
reflected on the Mortgage Loan Schedule), or (ii) second lien with respect to
each Mortgage Loan that is indicated by the Company to be a second lien (as
reflected on the Mortgage Loan Schedule), in either case, on the Mortgaged
Property, including all improvements on the Mortgaged Property subject only to
(A) the lien of current real property taxes and assessments not yet due and
payable, (B) covenants, conditions and restrictions, rights of way, easements
and other matters of the public record as of the date of recording being
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 which do not adversely affect the Appraised Value of the
Mortgaged Property, (C) with respect to each Mortgage Loan which is indicated by
the Company to be a second lien Mortgage Loan (as reflected on the Mortgage Loan
Schedule), a first lien on the Mortgaged Property; and (D) 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,
existing and enforceable first or second lien and first or second priority
security interest (in each case, as indicated on the Mortgage Loan Schedule) on
the property described therein and the Company has full right to sell and assign
the same to the Owner;
20
(f) The Mortgage Note and the related Mortgage are original and
genuine and each is the legal, valid and binding obligation of the maker
thereof, enforceable in all respects in accordance with its terms subject to
bankruptcy, insolvency, moratorium, reorganization and other laws of general
application affecting the rights of creditors and by general equitable
principles and the Company has taken all action necessary to transfer such
rights of enforceability to the Initial Owner. All parties to the Mortgage Note
and the Mortgage had the legal capacity to enter into the Mortgage Loan and to
execute and deliver the Mortgage Note and the Mortgage. The Mortgage Note and
the Mortgage have been duly and properly executed by such parties or pursuant to
a valid power-of-attorney. No Mortgagor has been released from the Mortgage.
Without limiting the representations and warranties in paragraph (i) below,
neither the Mortgage Note nor the Mortgage have been modified, waived, forborne,
released or otherwise impaired except as shown on a writing included in the
related Mortgage File and no such modification, waiver, forbearance, release or
impairment impairs or reduces any title insurance, mortgage insurance or other
insurance coverage with respect to such Mortgage Loan, Mortgage Note, Mortgage
or Mortgaged Property and all consents from any such insurer necessary to
maintain such insurance coverage unimpaired have been obtained. 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
satisfaction, cancellation, subordination, rescission or release. No fraud,
negligence, misrepresentation or similar occurrence with respect to a Mortgage
Loan has taken place on the part of the Company or the Mortgagor, or, on the
part of any other party involved in the origination or servicing of the Mortgage
Loan. The proceeds of the Mortgage Loan have been fully disbursed to or for the
account of the Mortgagor, there is no requirement for future advances thereunder
and any and all requirements as to completion of any on site or off site
improvements and as to disbursements of any escrow funds therefor have been
complied with (except for escrow funds for exterior items which could not be
completed due to weather and escrow funds for the completion of swimming pools).
All costs, fees and expenses incurred in making or closing the Mortgage Loan and
the recording of the Mortgage were paid or are in the process of being paid, and
the Mortgagor is not entitled to any refund of any amounts paid or due under the
Mortgage Note or Mortgage;
(g) The Company is the sole legal, beneficial and equitable owner and
holder of the Mortgage Loan and the indebtedness evidenced by the Mortgage Note,
and upon recordation the Owner or its designee will be the sole owner of the
Mortgage and the indebtedness evidenced by the Mortgage Note. Immediately prior
to the transfer and assignment to the Initial Owner on the Closing Date, the
Mortgage Loan, including the Mortgage Note and the Mortgage, were not subject to
an assignment or pledge, and the Company had title to and was the sole owner
thereof and had full right to transfer and sell the Mortgage Loan to the Initial
Owner free and clear of any encumbrance, equity, lien, pledge, charge, claim or
security interest and has the full right and authority subject to no interest or
participation of, or agreement with, any other party, to sell and assign the
Mortgage Loan pursuant to this Agreement and following the sale of the Mortgage
Loan, the Initial Owner will own such Mortgage Loan free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest. The Company intends to relinquish all rights to possess,
control and monitor the Mortgage Loan. Either the Mortgagor is a natural person
or the Mortgagor is a revocable inter-vivos trust acceptable to ▇▇▇▇▇▇ Mae;
21
(h) Each Mortgage Loan is covered by an ALTA lender's title insurance
policy (including an adjustable rate mortgage endorsement in the form of ALTA
6.0 or 6.1) or other form of title policy or insurance acceptable to ▇▇▇▇▇▇ ▇▇▇,
in either case, issued by a title insurer acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇
Mac and qualified to do business in the jurisdiction where the Mortgaged
Property is located, insuring (subject to the exceptions contained in (e)(A) and
(B) and, with respect to any second lien Mortgage Loan, (C) above) the Company,
its successors and assigns, as to the first or second priority lien of the
Mortgage in the original principal amount of the Mortgage Loan and against any
loss by reason of the invalidity or unenforceability of the lien resulting from
the provisions of the Mortgage providing for adjustment in the Mortgage Interest
Rate and Monthly Payment. Additionally, such policy affirmatively insures
ingress and egress to and from the Mortgaged Property. The Company, its
successors and assigns, are the sole insureds of such lender's title insurance
policy, such title insurance policy has been duly and validly endorsed to the
Initial Owner or the assignment to the Initial Owner of the Company's interest
therein does not require the consent of or notification to the insurer and such
lender's title insurance policy is in full force and effect and will be in full
force and effect upon the consummation of the transactions contemplated by this
Agreement;
(i) Neither the Company nor any servicer has threatened or commenced
any foreclosure action with respect to the Mortgage Loan;
(j) There is no default, breach, violation or event of acceleration
existing under the Mortgage or the related Mortgage Note (other than a
delinquency by a mortgagor in making a Monthly Payment which delinquency did not
last more than thirty (30) days and did not occur more than once in the
preceding twelve (12) month period), no event exists which, with notice and
expiration of any grace or cure period, would constitute a default, breach,
violation or event of acceleration under the Mortgage or the related Mortgage
Note; and neither the Company nor any servicer or prior mortgagee has waived any
default, breach, violation or event permitting acceleration or granted any
forbearance with respect to any of the foregoing. With respect to each second
lien Mortgage Loan (i) the first lien mortgage loan is in full force and effect,
(ii) there is no default, breach, violation or event of acceleration existing
under such first lien mortgage or the related mortgage note, (iii) 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 thereunder, (iv) either (A) the first lien mortgage contains a
provision which allows or (B) applicable law requires, the mortgagee under the
second lien Mortgage Loan to receive notice of, and affords such mortgagee an
opportunity to cure any default by payment in full or otherwise under the first
lien mortgage, (v) the related first lien does not provide for or permit
Negative Amortization under such first lien Mortgage Loan, and (vi) either no
consent for the Mortgage Loan is required by the holder of the first lien or
such consent has been obtained and is contained in the Mortgage File;
(k) There are no mechanics' or similar liens or claims which have been
filed for work, labor or material (and no rights are outstanding that under law
could give rise to such liens) affecting the related Mortgaged Property which
are or may be liens prior to or equal to the lien of the related Mortgage;
(l) All improvements subject to the Mortgage which were considered in
determining the Appraised Value of the Mortgaged Property lie wholly within the
boundaries
22
and building restriction lines of the Mortgaged Property (and wholly within the
project with respect to a condominium unit) and no improvements on adjoining
properties encroach upon the Mortgaged Property except for de minimis
encroachments permitted by the ▇▇▇▇▇▇ ▇▇▇ Guides or the ▇▇▇▇▇▇▇ Mac Guides and
except those encroachments which are insured against by the title insurance
policy referred to in clause (h) above; and all improvements on the property
comply with all applicable zoning and subdivision laws and ordinances;
(m) Each Mortgage Loan was originated pursuant to the Program Guide
and such Mortgage Loan was originated by or for the Company. The Company has
delivered the Program Guide to the Initial Owner and the Mortgage Loan complies
with all the terms, conditions and requirements of such Program Guide. The
Mortgage Notes and Mortgages (exclusive of any riders) are on forms acceptable
to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac. The Mortgage Loan bears interest at the Mortgage
Interest Rate set forth in the related Mortgage Loan Schedule, and Monthly
Payments under the Mortgage Note are due and payable on the first day of each
month. The Mortgage contains the usual and enforceable provisions for the
acceleration of the payment of the unpaid principal amount of the Mortgage Loan
if the related Mortgaged Property is sold without the prior consent of the
mortgagee thereunder;
(n) The Mortgaged Property is not subject to any material damage by
waste, fire, earthquake, windstorm, flood or other casualty. At origination of
the Mortgage Loan there was, and there currently is, no proceeding pending for
the total or partial condemnation of the Mortgaged Property. There have not been
any condemnation proceedings with respect to the Mortgaged Property;
(o) The related Mortgage contains customary and enforceable provisions
such as to render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security
provided thereby, including realization by judicial foreclosure (subject to any
limitation arising from any bankruptcy, insolvency or other law for the relief
of debtors). The Mortgaged Property has not been subject to any bankruptcy
proceeding or foreclosure proceeding and the Mortgagor has not filed for
protection under applicable bankruptcy laws. Either (i) each person or entity
with an interest or a potential interest in the Mortgaged Property has signed
the Mortgage and any related security agreement (if permitted by applicable
law), or (ii) there is no homestead, dower, courtesy or other similar rights or
exemptions available to the Mortgagor or any other person or entity with an
interest or a potential interest in the Mortgaged Property which would interfere
with the right to sell the Mortgaged Property at a trustee's sale or the right
to foreclose the Mortgage;
(p) If the Mortgage constitutes a deed of trust, a trustee, authorized
and duly qualified if required under applicable law to act as such, has been
properly designated and currently so serves and is named in the Mortgage, and no
fees or expenses are or will become payable by the Owner to the trustee under
the deed of trust, except in connection with a trustee's sale or attempted sale
after default by the Mortgagor;
(q) The Mortgage File contains an appraisal of the related Mortgaged
Property which was signed prior to the final approval of the mortgage loan
application by a qualified appraiser, 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
23
the Mortgage Loan, and the appraiser and the appraisal satisfy the requirements
of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and Title XI of FIRREA and the regulations
promulgated thereunder, all as in effect on the date the Mortgage Loan was
originated. The appraisal is in a form acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac;
(r) All parties which have had any interest in the Mortgage, other
than the Initial Owner, whether as mortgagee, assignee, pledgee or otherwise,
are (or, during the period in which they held and disposed of such interest,
were) (A) in compliance with any and all applicable licensing requirements of
the laws of the state wherein the Mortgaged Property is located, and (B) (1)
organized under the laws of such state, or (2) qualified to do business in such
state, or (3) federal savings and loan associations or national banks or a
Federal Home Loan Bank or savings bank having principal offices in such state,
(4) not doing business in such state or (5) not required to be licensed in such
state;
(s) The related Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage and the security
interest of any applicable security agreement or chattel mortgage referred to in
(e) above;
(t) The Mortgage Loan does not contain "graduated payment" features
and does not have a shared appreciation or other contingent interest feature. No
Mortgage Loan contains provisions pursuant to which Monthly Payments are (i)
paid or partially paid with funds deposited in any separate account established
by the Seller, the Mortgagor, or anyone on behalf of the Mortgagor, (ii) paid by
any source other than the Mortgagor or (iii) contains any other similar
provisions that may constitute a "buydown" provision;
(u) As of the date of origination of the Mortgage Loan, the related
Mortgagor was not in bankruptcy;
(v) Principal payments on the Mortgage Loan commenced no more than
sixty (60) days after the proceeds of the Mortgage Loan were disbursed. The
Mortgage Loans are payment option adjustable rate loans having an original term
to maturity of not more than 30 years, with interest payable in arrears on the
first day of each month. The Due Date for each Monthly Payment is the first day
of each month. No Mortgage Loan is a Convertible Mortgage Loan. No Balloon
Mortgage Loan has an original stated maturity of less than seven (7) years.
(w) If a Mortgage Loan has an LTV greater than 80%, the Mortgage Loan
will have mortgage insurance in accordance with the terms of the ▇▇▇▇▇▇ Mae
Guides and will be insured as to payment defaults by a Primary Mortgage
Insurance Policy issued by a Qualified Insurer. All provisions of such Primary
Mortgage Insurance Policy have been and are being complied with, such policy is
in full force and effect, and all premiums due thereunder have been paid. Any
Mortgage Loan subject to a Primary Mortgage Insurance Policy obligates the
Mortgagor thereunder to maintain the Primary Mortgage Insurance Policy and to
pay all premiums and charges in connection therewith. The Mortgage Interest Rate
for the Mortgage Loan as set forth on the related Mortgage Loan Schedule is net
of any such insurance premium. No Mortgage Loan is subject to a lender-paid
mortgage insurance policy;
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(x) As to any Mortgage Loan which is not a MERS Mortgage Loan, the
Assignment of Mortgage is in recordable form and is acceptable for recording
under the laws of the jurisdiction in which the Mortgaged Property is located;
(y) The Mortgaged Property consists of a single parcel of real
property with a detached or attached one-to-four family residence erected
thereon, or a townhouse, 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 de minimis planned unit development, or a single parcel of
real property with a cooperative housing corporation erected thereon; provided,
however, that no residence or dwelling is a manufactured or mobile home. As of
the date of origination, no portion of the Mortgaged Property was used for
commercial purposes;
(z) No Mortgage Loan is subject to a Prepayment Charge unless such
Prepayment Charge (i) is permitted by and complies with all applicable federal,
state and local law, (ii) is enforceable only during the first five years
following origination of the Mortgage Loan and (iii) does not become due on
default.
(aa) As of the date of origination of each Mortgage Loan (and, to the
best of the Company's knowledge, as of the Closing Date), the related Mortgaged
Property was lawfully occupied under applicable law. All inspections, licenses
and certificates required to be made or issued with respect to all occupied
portions of each 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;
(bb) If the Mortgaged Property is a condominium unit or a planned unit
development (other than a de minimis planned unit development), or stock in a
cooperative housing corporation, such condominium, cooperative or planned unit
development project meets the eligibility requirements of ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇
Mac;
(cc) There is no violation of any environmental law, rule or
regulation pertaining to environmental hazards including, without limitation,
asbestos, with respect to the Mortgaged Property. Nothing further remains to be
done to satisfy in full all requirements of each such law, rule or regulation
constituting a prerequisite to use and enjoyment of said property and the
Company has not received any notice of any violation or potential violation of
such law;
(dd) The Mortgagor has not notified the Company requesting relief
under the Servicemembers Civil Relief Act, and the Company has no knowledge of
any relief requested by or allowed to the Mortgagor under the Servicemembers
Civil Relief Act or any similar state laws;
(ee) No Mortgage Loan was made in connection with (i) the construction
or rehabilitation of the Mortgaged Property or (ii) facilitating the trade-in or
exchange of a Mortgaged Property;
(ff) The Mortgage Loan is not secured by a leasehold interest;
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(gg) The Mortgage Loan was originated by a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to sections 203 and 211 of
the National Housing Act, a savings and loan association, a savings bank, a
commercial bank, credit union, insurance company or similar banking institution
which is supervised and examined by a federal or state authority;
(hh) Each Mortgage Loan constitutes a qualified mortgage under Section
860G(a)(3)(A) of the Code and Treasury Regulations Section 1.860G-2(a)(1);
(ii) Except as set forth in Section 2.01, the Mortgage Note, the
Mortgage, the Assignment of Mortgage and the other Mortgage Loan Documents and
required to be delivered on the Closing Date have been delivered to the Initial
Owner or its designee all in compliance with the specific requirements of this
Agreement;
(jj) No Mortgage Loan had a Loan-to-Value Ratio or CLTV at the time of
origination of more than 100%;
(kk) No Mortgage Loan is (i) subject to, covered by or in violation of
the Home Ownership and Equity Protection Act of 1994 ("HOEPA"), and no Mortgage
Loan has an "annual percentage rate" or "total points and fees" payable by the
borrower (as each such term is defined under HOEPA) that exceed the applicable
thresholds defined under HOEPA (Section 32 of Regulation Z, 12 C.F.R. Section
226.32(a)(1)(i) and (ii)), (ii) classified as a "high cost," "covered," "high
risk home", "high-rate, high-fee," "threshold," or "predatory" loan under HOEPA
or any other applicable state, federal or local law, including any predatory or
abusive lending laws (or a similarly classified loan using different terminology
under a law imposing heightened scrutiny or additional legal liability for a
residential mortgage loan having high interest rates, points and/or fees), (iii)
a High Cost Loan or Covered Loan, as applicable (as such terms are defined in
the Standard & Poor's LEVELS(R) Glossary Revised, Appendix E, as in effect on
the Cut-off Date) or (iv) in violation of any state law or ordinance comparable
to HOEPA;
(ll) No Mortgage Loan finances and no Mortgagor was required to
purchase any credit life, credit disability, credit unemployment, or any other
prepaid accident, life or health insurance product, or debt cancellation
agreement as a condition of obtaining the extension of credit. No Mortgagor
obtained a prepaid single-premium credit insurance policy (e.g., life,
disability, property, accident, unemployment, mortgage or health insurance) in
connection with the origination of the Mortgage Loan. No proceeds from any
Mortgage Loan were used to purchase single premium credit insurance policies as
part of the origination of, or as a condition to closing, such Mortgage Loan;
(mm) Any principal advances made to the Mortgagor prior to the Closing
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. The lien of the Mortgage securing the
consolidated principal amount is expressly insured as having first lien priority
by a title insurance policy complying with clause (h) above insuring the
mortgagee's consolidated interest;
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(nn) Interest on each Mortgage Loan is calculated on the basis of a
360-day year consisting of twelve 30-day months;
(oo) The Company and each originator have complied with all applicable
anti-money laundering laws and regulations, including without limitation the USA
Patriot Act of 2001 (collectively, the "Anti-Money Laundering Laws"); the
Company and each originator have established an anti-money laundering compliance
program as required by the Anti-Money Laundering Laws, has conducted the
requisite due diligence in connection with the origination of each Mortgage Loan
for purposes of the Anti-Money Laundering Laws, including with respect to the
legitimacy of the applicable Mortgagor and the origin of the assets used by the
said Mortgagor to purchase the Mortgaged Property, and maintains, and will
maintain, sufficient information to identify the applicable Mortgagor for
purposes of the Anti-Money Laundering Laws. No Mortgage Loan is subject to
nullification pursuant to Executive Order 13224 (the "Executive Order") or the
regulations promulgated by the Office of Foreign Assets Control of the United
States Department of the Treasury (the "OFAC Regulations") or in violation of
the Executive Order or the OFAC Regulations, and no Mortgagor is subject to the
provisions of such Executive Order or the OFAC Regulations nor listed as a
"blocked person" for purposes of the OFAC Regulations;
(pp) No Mortgage Loan is a "High Cost Home Loan" as defined in the
Georgia Fair Lending Act, as amended (the "Georgia Act"). No Mortgage Loan
secured by owner occupied real property or an owner occupied manufactured home
located in the State of Georgia was originated (or modified) on or after October
1, 2002 through and including March 7, 2003;
(qq) All fees and charges (including finance charges) and whether or
not financed, assessed, collected or to be collected in connection with the
origination and servicing of each Mortgage Loan have been disclosed in writing
to the Mortgagor in accordance with applicable state and federal law and
regulation;
(rr) If the Mortgage Loan has been held or serviced by the Company or
any servicer for 90 or more days, the Company or such servicer, as applicable,
has reported at least quarterly to Equifax, Experian and Trans Union Credit
Information Company, the favorable and unfavorable payment history information
of the related Mortgagor on payments due under such Mortgage Loan for the period
the Company owned or such servicer serviced the Mortgage Loan;
(ss) None of the Company, any servicer or any originator has solicited
or provided information to another party for the purpose of soliciting the
refinance of any Mortgage Loan. The term "solicit" as used in this paragraph
means a direct request or offer to refinance a Mortgage Loan and does not
include general solicitations, advertisements or promotions directed to the
public at large;
(tt) No taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents relating to the
Mortgage Loan are delinquent, and none of the Company, any servicer nor any
originator has advanced funds, or received any advance of funds by a party other
than the Mortgagor, directly or indirectly for the payment of any amount
required by the Mortgage, except for interest accruing from the date of
27
the Mortgage Note or date of disbursement of the Mortgage Loan proceeds,
whichever is later, to the day which precedes by thirty days the first due date
under the related Mortgage Note;
(uu) The representations and warranties of the Company contained in
the related AAR are true and correct in all material respects;
(vv) In the event that the Mortgagor is an inter vivos "living" trust,
(i) such trust is in compliance with ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac standards for
inter vivos trusts and (ii) holding title to the Mortgaged Property in such
trust will not diminish any rights as a creditor including the right to full
title to the Mortgaged Property in the event foreclosure proceedings are
initiated;
(ww) No subprime Mortgage Loan originated on or after October 1, 2002
will impose a prepayment premium for a term in excess of three years;
(xx) No Mortgage Loan originated on or after August 1, 2004 requires
the Mortgagor to submit to arbitration to resolve any dispute arising out of or
relating in any way to the Mortgage Loan transaction; and
(yy) The origination, servicing and collection practices used with
respect to each Mortgage Note and Mortgage including, without limitation, the
establishment, maintenance and servicing of the escrow accounts and Escrow
Payments, if any, since origination, have been in all respects legal and
consistent with Accepted Servicing Practices. The Mortgage Loan has been
serviced by the Company and any predecessor servicer in accordance with the
terms of the Mortgage Note and Accepted Servicing Practices. With respect to
escrow deposits and Escrow Payments, if any, all such payments are in the
possession of, or under the control of, the Company and there exist no
deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. No escrow deposits or Escrow Payments or
other charges or payments due the Company have been capitalized under any
Mortgage or the related Mortgage Note and no such escrow deposits or Escrow
Payments are being held by the Company for any work on a Mortgaged Property
which has not been completed;
(zz) The Mortgagor has executed a statement to the effect that the
Mortgagor has received all disclosure materials required by applicable law with
respect to the making of fixed rate mortgage loans in the case of Fixed Rate
Mortgage Loans, and adjustable rate mortgage loans in the case of Adjustable
Rate Mortgage Loans and rescission materials with respect to Refinanced Mortgage
Loans, and such statement is and will remain in the Mortgage File;
(aaa) Any principal advances made to the Mortgagor 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. The lien of the Mortgage
securing the consolidated principal amount is expressly insured as having first
or second (as indicated on the Mortgage Loan Schedule) lien priority by a title
insurance policy, an endorsement to the policy insuring the mortgagee's
consolidated interest or
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by other title evidence acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac. The
consolidated principal amount does not exceed the original principal amount of
the Mortgage Loan;
(bbb) The source of the down payment with respect to each Mortgage
Loan has been fully verified by the Company;
(ccc) No predatory, abusive, or deceptive lending practices, including
but not limited to, the extension of credit to a Mortgagor without regard for
the Mortgagor's ability to repay the Mortgage Loan and the extension of credit
to a Mortgagor which has no apparent benefit to the Mortgagor, were employed in
connection with the origination of the Mortgage Loan. Each Mortgage Loan is in
compliance with the anti-predatory lending eligibility for purchase requirements
of the ▇▇▇▇▇▇ Mae Guide;
(ddd) The debt-to-income ratio of the related Mortgagor was not
greater than 60% at the origination of the related Mortgage Loan;
(eee) Each Mortgage Loan is covered by a Flood Zone Service Contract
which is assignable to the Initial Owner or its designee or, for each Mortgage
Loan not covered by such Flood Zone Service Contract, the Seller agrees to
purchase such Flood Zone Service Contract;
(fff) The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the Mortgage Loan
in the event that the Mortgaged Property is sold or transferred without the
prior written consent of the mortgagee thereunder, subject to bankruptcy,
insolvency, moratorium, reorganization and other laws of general application
affecting the rights of creditors and by general equitable principles;
(ggg) The Mortgage Loan was not prepaid in full prior to the Closing
Date;
(hhh) No Mortgage Loan is secured by cooperative housing or commercial
property;
(iii) The Company will transmit full-file credit reporting data for
each Mortgage Loan pursuant to ▇▇▇▇▇▇ ▇▇▇ Guide Announcement 95-19 and for each
Mortgage Loan, the Company agrees that it shall report one of the following
statuses each month as follows: new origination, current, delinquent (30-, 60-,
90-days, etc.), foreclosed, or charged-off;
(jjj) The Mortgagor has not made or caused to be made any payment in
the nature of an "overage" or "yield spread premium" to a mortgage broker or a
like Person which has not been fully disclosed to the Mortgagor;
(kkk) With respect to each MERS Loan, Seller has not received any
notice of liens or legal actions with respect to such Mortgage Loan and no such
notices have been electronically posted by MERS;
(lll) All points and fees related to each Mortgage Loan were disclosed
in writing to the Mortgagor in accordance with applicable state and federal law
and regulation. No Mortgagor was charged "points and fees" (whether or not
financed) in an amount that exceeds the greater of (1) 5% of the principal
amount of such loan (such 5% limitation is calculated in
29
accordance with ▇▇▇▇▇▇ Mae's requirements as set forth in the ▇▇▇▇▇▇ ▇▇▇ Selling
Guide) or (2) $1,000;
(mmm) No Mortgage Loan is a "High-Cost Home Loan" as defined in the
New Jersey Home Ownership Security Act of 2002 (the "NJ Act"); and each Mortgage
Loan subject to the NJ Act is considered under the NJ Act as, either, a (1)
purchase money Home Loan, (2) purchase money Covered Loan (with respect to
Mortgage Loans which were originated between November 26, 2003 and July 7,
2004), or (3) a rate/term refinance Home Loan; and
(nnn) No Mortgagor was charged "points and fees" in an amount greater
than (a) $1,000 or (b) 5% of the principal amount of the related Mortgage Loan,
whichever is greater. For purposes of this representation, "points and fees" (x)
include origination, underwriting, broker and finder's fees and charges that the
lender imposed as a condition of making the Mortgage Loan, whether they are paid
to the lender or a third party; and (y) exclude bona fide discount points, fees
paid for actual services rendered in connection with the origination of the
Mortgage (such as attorneys' fees, notaries fees and fees paid for property
appraisals, credit reports, surveys, title examinations and extracts, flood and
tax certifications, and home inspections); the cost of mortgage insurance or
credit-risk price adjustments; the costs of title, hazard, and flood insurance
policies; state and local transfer taxes or fees; escrow deposits for the future
payment of taxes and insurance premiums; and other miscellaneous fees and
charges that, in total, do not exceed 0.25 percent of the loan amount.
It is understood and agreed that the representations and warranties
set forth in this Sections 2.04 and 2.09 of this Agreement and Section 4 of the
Reference Agreement shall survive the sale of the Mortgage Loans to the Owner
and shall inure to the benefit of the Owner, notwithstanding any restrictive or
qualified endorsement on any Note or Assignment of Mortgage or the examination
or lack of examination of any Mortgage File. Upon discovery by either the
Company or the Owner of a breach of any of the foregoing representations and
warranties which materially and adversely affects the value of the Mortgage Loan
or the interest of the Owner in the related Mortgage Loan, the party discovering
such breach shall give prompt written notice to the other. Within sixty (60)
days of its discovery or its receipt of notice of any such breach, the Company
shall (i) cure such breach in all material respects or (ii) at the Owner's
option, repurchase such Mortgage Loan at the Repurchase Price. Upon receipt by
the Owner of the Repurchase Price, the Owner shall cause the Custodian to
promptly deliver the related Mortgage File to the Company. The Company shall
prepare the Assignment of Mortgage for execution by or at the direction of the
Owner, as applicable, and shall pay all costs and expenses reasonably incurred
by the Owner in effecting the reconveyance of a repurchased Mortgage Loan
including, without limitation, the cost of recording the Assignment of Mortgage
for any Mortgage Loan that is not registered with MERS. Notwithstanding anything
to the contrary contained herein, it is understood by the parties hereto that a
breach of the representations and warranties made in Section 2.04(d), (kk),
(ll), (pp), (rr) or (xx) will be deemed to materially and adversely affect the
value of the related Mortgage Loan or the interest of the Owner therein.
Any repurchase of a Mortgage Loan(s) pursuant to the foregoing
provisions of this Section shall occur on the Distribution Date following the
expiration of any applicable cure period, and shall be accomplished by wire
transfer of immediately available funds on the repurchase date to an account
designated by the Owner.
30
It is understood and agreed that the obligations of the Company set
forth in this Section 2.04 to cure or repurchase a defective Mortgage Loan and
to indemnify the Owner as provided in Section 5.01 constitute the sole remedies
of the Owner respecting a breach of the foregoing representations and
warranties.
The obligation to repurchase Mortgage Loans pursuant to this Section
2.04 shall survive any sale or assignment of the Mortgage Loans by the Owner to
any third party and shall be independently enforceable by the Owner.
Section 2.05. Representations, Warranties and Covenants of the Initial
Owner. The Initial Owner hereby represents and warrants to and covenants with,
the Company that as of the Closing Date:
(i) The Initial Owner understands that the Mortgage Loans have
not been registered under the Securities Act or the securities laws of any
state. The Initial Owner is acquiring the Mortgage Loans for investment for
its own account only and not with a view to or for sale or other transfer
in connection with any distribution of the Mortgage Loans in any manner
that would violate the Securities Act or any applicable state securities
law. The Initial Owner 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. The Initial Owner has been furnished
with all information regarding the Mortgage Loans that it has requested
from the Company. Neither the Initial Owner nor anyone acting on its behalf
has offered, transferred, pledged, sold or otherwise disposed of the
Mortgage Loans or any interest in the Mortgage Loans to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Mortgage Loans or any interest in the Mortgage Loans from, or otherwise
approached or negotiated with respect to the Mortgage Loans, any interest
in the Mortgage Loans 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 or which would render the
disposition of the Mortgage Loans a violation of Section 5 of the
Securities 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;
(ii) The Initial Owner is either (a) not a Plan that is subject
to ERISA or Section 4975 of the Code and not a Person acting, directly or
indirectly, on behalf of or investing with "plan assets" of any such Plan
or (b) an employee benefit plan that is subject to ERISA or Section 4975 of
the Code and the transaction contemplated herein does not constitute and
will not result in a non-exempt prohibited transaction under Section 406 of
ERISA or Section 4975 of the Code;
(iii) The Company and Initial Owner have executed this Agreement
and the related Reference Agreement contemporaneously with the sale of the
Mortgage Loans by the Company to the Initial Owner and the transfer of the
purchase price by the Initial Owner to the Company;
31
(iv) The Initial Owner has the full corporate power and authority
to purchase the Mortgage Loans and to execute, deliver and perform and to
enter into and consummate all transactions contemplated by this Agreement
and the related Reference Agreement, has duly authorized the execution and
delivery of this Agreement and the Reference Agreement, and this Agreement
and the Reference Agreement constitute the legal, valid and binding
obligations of the Initial Owner, enforceable against it in accordance with
their terms.
The Initial Owner shall indemnify the Company and hold it harmless
against any loss, liability or expense incurred in connection with any claim,
demand, defense or assertion based on or grounded upon, or resulting from, a
breach of the Initial Owner's representations, warranties and covenants
contained in this Section 2.05 and Section 2.06.
Section 2.06. Protection of Consumer Information.
Both the Owner and the Company (i) shall comply with any applicable
laws and regulations regarding the privacy and security of Consumer Information,
(ii) shall not use Consumer Information in any manner inconsistent with any
applicable laws and regulations regarding the privacy and security of Consumer
Information, (iii) shall not disclose Consumer Information to third parties
except at the specific written direction of the Company, (iv) shall maintain
adequate physical, technical and administrative safeguards to protect Consumer
Information from unauthorized access, and (v) shall immediately notify the
Company of any actual or suspected breach of the confidentiality of Consumer
Information.
Section 2.07. Repurchase of Certain Loans.
If a Mortgage Loan becomes delinquent by the number of scheduled
Monthly Payments, if any, specified in the Reference Agreement, at any time on
or prior to the first day of the first calendar month following the Closing
Date, then the Company, at the Owner's option, shall promptly repurchase the
related Mortgage Loan from the Owner in accordance with the procedures set forth
in Section 2.04 hereof and any such repurchase shall be made at the Repurchase
Price.
Section 2.08. Purchase Price Protection.
With respect to any Mortgage Loan that prepays in full on or prior to
the day, if any, specified in the Reference Agreement, the Company shall
reimburse the Initial Owner an amount equal to the product of (x) the amount by
which the Purchase Price Percentage exceeds 100%, if any, and (y) the
outstanding principal balance of such prepaid loan as of the date of payoff.
Such payment shall be made within thirty (30) days of such payoff. Upon any
assignment of a Mortgage Loan and/or this Agreement, the Initial Owner may at
its option retain its rights under this Section 2.08 notwithstanding such
assignment.
Section 2.09. Additional Representations and Warranties of the
Company.. The Company hereby represents and warrants to the Owner that as of the
Closing Date or such other date specifically provided for herein:
32
(a) The Company is a Delaware corporation duly organized, validly
existing and in good standing under the laws of Delaware. The Company has all
licenses necessary to carry out its business as now being conducted, and is
licensed and qualified to transact business in and is in good standing under the
laws of each state in which any Mortgaged Property is located or is otherwise
exempt under applicable law from such licensing or qualification or is otherwise
not required under applicable law to effect such licensing or qualification and
no demand for such licensing or qualification has been made upon the Company by
any such state, 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 each
Mortgage Loan and the servicing of the Mortgage Loans in accordance with the
terms of this Agreement. No licenses or approvals obtained by the Company have
been suspended or revoked by any court, administrative agency, arbitrator or
governmental body and no proceedings are pending which might result in such
suspension or revocation;
(b) The Company has the full power and authority to hold each Mortgage
Loan, to sell each Mortgage Loan, and to execute, deliver and perform, and to
enter into and consummate, all transactions contemplated by this Agreement. The
Company has duly authorized the execution, delivery and performance of this
Agreement, has duly executed and delivered this Agreement, and this Agreement,
assuming due authorization, execution and delivery by the Owner, constitutes a
legal, valid and binding obligation of the Company, enforceable against it in
accordance with its terms except as the enforceability thereof may be limited by
bankruptcy, insolvency or reorganization;
(c) The execution and delivery of this Agreement by the Company and
the performance of and compliance with the terms of this Agreement will not
violate the Company's certificate of incorporation or by-laws or constitute a
default under or result in a breach or acceleration of, any material contract,
agreement or other instrument to which the Company is a party or which may be
applicable to the Company or its assets;
(d) The Company is not in violation of, and the execution and delivery
of this Agreement by the Company and its performance and compliance with the
terms of this Agreement will not constitute a violation with respect to, any
order or decree of any court or any order or regulation of any federal, state,
municipal or governmental agency having jurisdiction over the Company or its
assets, which violation might have consequences that would materially and
adversely affect the condition (financial or otherwise) or the operation of the
Company or its assets or might have consequences that would materially and
adversely affect the performance of its obligations and duties hereunder;
(e) The Company is an approved seller/servicer for ▇▇▇▇▇▇ ▇▇▇ and
▇▇▇▇▇▇▇ Mac in good standing and is a HUD approved mortgagee pursuant to Section
203 of the National Housing Act. No event has occurred, including but not
limited to a change in insurance coverage, which would make the Company unable
to comply with ▇▇▇▇▇▇ Mae, ▇▇▇▇▇▇▇ Mac or HUD eligibility requirements or which
would require notification to ▇▇▇▇▇▇ Mae, ▇▇▇▇▇▇▇ Mac or HUD;
(f) Immediately prior to the payment of the Purchase Price for each
Mortgage Loan, the Company was the owner of record of the related Mortgage and
the indebtedness
33
evidenced by the related Mortgage Note and upon the payment of the Purchase
Price by the Initial Owner, in the event that the Company retains record title,
the Company shall retain such record title to each Mortgage, each related
Mortgage Note and the related Mortgage Files with respect thereto in trust for
the Initial Owner as the owner thereof and only for the purpose of servicing and
supervising the servicing of each Mortgage Loan;
(g) There are no actions or proceedings against, or investigations of,
the Company before any court, administrative agency or other tribunal (A) that
might prohibit its entering into this Agreement, (B) seeking to prevent the sale
of the Mortgage Loans or the consummation of the transactions contemplated by
this Agreement or (C) that might prohibit or materially and adversely affect the
performance by the Company of its obligations under, or the validity or
enforceability of, this Agreement;
(h) 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 consummation of the transactions contemplated by this Agreement, except
for such consents, approvals, authorizations or orders, if any, that have been
obtained prior to the Closing Date;
(i) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Company, 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;
(j) The transfer of the Mortgage Loans shall be treated as a sale on
the books and records of the Company, and the Company has determined that, and
will treat, the disposition of the Mortgage Loans pursuant to this Agreement for
tax and accounting purposes as a sale. The Company shall maintain a complete set
of books and records for each Mortgage Loan which shall be clearly marked to
reflect the ownership of each Mortgage Loan by the Initial Owner;
(k) The information delivered by the Company to the Initial Owner with
respect to the Company's loan loss, foreclosure and delinquency experience for
the twelve (12) months immediately preceding the Initial Closing Date on
mortgage loans underwritten to the same standards as the Mortgage Loans and
covering mortgaged properties similar to the Mortgaged Properties, is true and
correct in all material respects;
(l) Neither this Agreement nor any written statement, report or other
document prepared and furnished or to be prepared and furnished by the Company
pursuant to this Agreement or in connection with the transactions contemplated
hereby contains any untrue statement of material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading;
(m) The Company has not dealt with any broker, investment banker,
agent or other person that may be entitled to any commission or compensation in
connection with the sale of the Mortgage Loans;
34
(n) The Company is a member of MERS in good standing, will comply in
all material respects with the rules and procedures of MERS in connection with
the servicing of the Mortgage Loans that are registered with MERS and is current
in payment of all fees and assessments imposed by MERS; and
(o) The Company is solvent and will not be rendered insolvent by the
consummation of the transactions contemplated hereby. The Company is not
transferring any Mortgage Loan with any intent to hinder, delay or defraud any
of its creditors.
ARTICLE III
Administration and Servicing
of Mortgage Loans
Section 3.01. Company to Act as Servicer. The Company, as an
independent contractor servicer, shall act as master servicer, and in such
capacity shall service and administer the Mortgage Loans in accordance with this
Agreement and the Program Guide, and in connection therewith shall follow such
procedures as it would employ in its good faith business judgment and which are
normal and usual in its general mortgage servicing activities for mortgage loans
similar to the Mortgage Loans, giving due consideration to Accepted Servicing
Practices where such practices do not conflict with the requirements of this
Agreement. The Company shall have full power and authority to the extent
provided herein, acting alone and/or through the Subservicer as provided in
Section 3.02, to do or cause to be done any and all things which it may deem
necessary or desirable in connection with such servicing and administration. The
Owner shall furnish the Company and any Subservicer with any powers of attorney
and other documents necessary or appropriate to enable the Company to service
and administer the Mortgage Loans.
Unless otherwise specified in the Reference Agreement, the Company
shall retain all Prepayment Charges collected on the Mortgage Loans. Except as
specifically provided herein, the Company shall pay all expenses incurred by it
in connection with its servicing activities hereunder and shall not be entitled
to reimbursement therefor.
Section 3.02. Agreements Between Company and Subservicer. The Company
may enter into one or more Subservicing Agreements with one or more Subservicers
for the servicing and administration of the Mortgage Loans. Each Subservicer
shall be approved by the Company as a servicer in accordance with the terms and
conditions of the Program Guide and shall be entitled to receive and retain the
Subservicing Fee in respect of the related Mortgage Loans. In addition, with
respect to any Mortgage Loan that is not subject to an assignable life of loan
Flood Zone Service Contract or Tax Service Contract as of the related Closing
Date, the Company agrees to purchase such Flood Zone Service Contract or Tax
Service Contract. References in this Agreement to actions taken or to be taken
by the Company in servicing the Mortgage Loans include actions taken or to be
taken by a Subservicer on behalf of the Company. Each Subservicing Agreement
will be upon such terms and conditions as are required or permitted by the
Program Guide and are not inconsistent with this Agreement. Any
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Subservicing Agreement shall be deemed to be between the Subservicer and the
Company alone and the Owner shall not be deemed a party thereto and shall have
no claims, rights, obligations, duties or liabilities with respect to the
Subservicer in its capacity as such except as hereinafter set forth in this
Section 3.02.
The Company further is authorized and empowered by the Owner, in its
own name or in the name of the Subservicer, when the Company believes it
appropriate, in accordance with Accepted Servicing Practices, to cause the
removal from the registration of any Mortgage Loan on the MERS(R) System, to
execute and deliver, on behalf of the Owner 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 Owner
and its successors and assigns. The Company shall notify MERS of the ownership
interest of the Initial Owner in each MERS Loan through the MORNET system or
MIDANET system, as applicable, or any other comparable system acceptable to
MERS. At any time during the term of this Agreement, the Owner may direct the
Company to cause any MERS Loan to be deactivated from the MERS System.
The Company shall be entitled to terminate any Subservicing Agreement
that may exist and the rights and obligations of any Subservicer pursuant to any
Subservicing Agreement in accordance with the terms and conditions of such
Subservicing Agreement and without any limitation by virtue of this Agreement;
provided, however, that in the event of termination of any Subservicing
Agreement by the Company or the Subservicer, all servicing obligations of such
Subservicer shall be assumed simultaneously by the Company, and the Company
shall either act as servicer of the related Mortgage Loan or enter into a
Subservicing Agreement with a successor Subservicer which will be bound by the
terms of the related Subservicing Agreement.
The Company shall remain obligated and primarily liable to the Owner
for the servicing and administering of the Mortgage Loans in accordance with the
provisions of Section 3.01 without diminution of such obligation or liability by
virtue of such Subservicing Agreements or arrangements or by virtue of
indemnification from the Subservicer and to the same extent and under the same
terms and conditions as if the Company alone were servicing and administering
the Mortgage Loans.
In the event the Company shall for any reason no longer be the master
servicer of the Mortgage Loans hereunder, the Successor Servicer appointed
pursuant to Section 9.01, if any, or the Owner, as the case may be, shall
thereupon assume all of the rights and obligations of the Company under each
Subservicing Agreement that may have been entered into, unless the Subservicer
or Owner is then permitted and elects to terminate any Subservicing Agreement in
accordance with its terms.
Section 3.03. Collection of Certain Mortgage Loan Payments and
Liquidation of Mortgage Loans. The Company shall make reasonable efforts to
collect all payments called for under the terms and provisions of the Mortgage
Loans. Consistent with the foregoing, the Company may in its discretion (i)
waive any late payment charge or penalty interest in connection with the
prepayment of a Mortgage Loan and (ii) only upon determining that the coverage
of such Mortgage Loan by the related mortgage insurance policy if any, will not
be
36
affected, extend the Due Dates for the Monthly Payments due on a Mortgage Note
in accordance with the Program Guide.
If the Reference Agreement specifies that Prepayment Charges are to be
paid to the Owner, the Company shall not waive any Prepayment Charge unless: (i)
the enforceability thereof shall have been limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors' rights
generally, (ii) the enforcement thereof is illegal, or any local, state or
federal agency has threatened legal action if the prepayment penalty is
enforced, (iii) the collectability thereof shall have been limited due to
acceleration in connection with a foreclosure or other involuntary payment or
(iv) such waiver is standard and customary in servicing similar Mortgage Loans
and relates to a default or a reasonably foreseeable default and would, in the
reasonable judgment of the Company, maximize recovery of total proceeds taking
into account the value of such Prepayment Charge and the related Mortgage Loan.
In no event will the Company waive a Prepayment Charge in connection with a
refinancing of a Mortgage Loan that is not related to a default or a reasonably
foreseeable default. If a Prepayment Charge is waived, but does not meet the
standards described above and is otherwise payable to the Owner under the terms
of the Reference Agreement, then the Company is required to deposit into the
Custodial Account the amount of such waived Prepayment Charge at the time that
the amount prepaid on the related Mortgage Loan is required to be deposited into
the Custodial Account.
Section 3.04. Principal and Interest Accounts. In those cases where a
Subservicer is servicing a Mortgage Loan, the Subservicer will be required to
establish and maintain one or more principal and interest accounts in accordance
with the Program Guide. The Subservicer will generally be required to deposit
into such accounts all proceeds of Mortgage Loans received by the Subservicer,
less its servicing compensation, and remit such amounts to the Company as
described in the Subservicing Agreement.
Section 3.05. Escrow Accounts. In addition to the principal and
interest account described in Section 3.04, the Company shall cause each
Subservicer pursuant to the related Subservicing Agreement to establish and
maintain one or more escrow accounts for the benefit of the Company and deposit
and retain therein all collections from the Mortgagors for the payment of taxes,
assessments, hazard insurance premiums, mortgage insurance policy premiums, if
applicable, and comparable items for the account of the Mortgagors.
Section 3.06. Custodial Account. The Company shall establish and
maintain one or more Custodial Accounts, which shall be Eligible Accounts and be
may be interest bearing accounts. A Custodial Account may contain funds that do
not belong to the Owner. Except as otherwise set forth below, the following
payments and collections shall be deposited therein (other than in respect of
principal and interest on the Mortgage Loans due on or before the Cut-off Date):
(i) all payments on account of principal on the Mortgage Loans; (ii) all
payments on account of interest on the Mortgage Loans, net of the Subservicing
Fee or any portion of the Servicing Fee payable to the Subservicer; (iii) all
Insurance Proceeds and Liquidation Proceeds; (iv) any Monthly Advances; (v) all
proceeds of any Mortgage Loan repurchased pursuant to Sections 2.02 and 2.04;
(vi) any amounts required to be deposited pursuant to the first paragraph of
Section 3.08; (vii) all Condemnation Proceeds received with respect to any
Mortgaged Property that are not released to the mortgagor in accordance with the
Company's normal
37
servicing procedures, the Mortgage Loan Documents or applicable law; and (viii)
with respect to each Principal Prepayment, an amount (to be paid by the Company
out of its own funds without reimbursement therefor) that, when added to all
amounts allocable to interest received in connection with such Principal
Prepayment, equals one month's interest on the amount of principal so prepaid at
the Mortgage Interest Rate, provided, however, that in no event shall the
aggregate of deposits made by the Company pursuant to this clause (viii) exceed
the aggregate amount of the Company's servicing compensation in the calendar
month in which such deposits are required.
With respect to Liquidation Proceeds, Insurance Proceeds and the
proceeds of the purchase of any Mortgage Loan pursuant to Sections 2.02 and 2.04
received in any calendar month, the Company may elect to treat such amounts as
included in the Principal Remittance Amount for the Remittance Date in the month
of receipt, but is not obligated to do so. If the Company so elects, such
amounts will be deemed to have been received on the last day of the month prior
to the receipt thereof.
Section 3.07. Permitted Withdrawals From the Custodial Account. The
Company may, from time to time as provided herein, make withdrawals from the
Custodial Account for the following purposes:
(i) to make payments to the Owner in the amounts and in the
manner provided for in Section 4.01;
(ii) to reimburse itself for Monthly Advances, 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;
(iii) to reimburse itself as to any Liquidated Mortgage Loan from
related Liquidation Proceeds for related Monthly Advances, Insured Expenses
and Liquidation Expenses, and to reimburse itself for any unpaid servicing
compensation on such Liquidated Mortgage Loan;
(iv) to reimburse itself as to any Mortgage Loan which became an
REO Property, from related Liquidation Proceeds for related Insured
Expenses and Liquidation Expenses;
(v) (a) to pay to itself as servicing compensation any interest
in respect of Partial Prepayments and any interest earned on or investment
income with respect to funds in the Custodial Account and (b) to pay to
itself as to each Mortgage Loan the Servicing Fee, and to the related
Subservicer the Subservicing Fee;
(vi) to pay to itself with respect to each Mortgage Loan that has
been repurchased pursuant to Sections 2.02 and 2.04 all amounts received
thereon and not required to be distributed to the Owner;
38
(vii) to reimburse itself for any Nonrecoverable Monthly Advance
or to reimburse itself for any Liquidation Expenses not previously
recovered pursuant to subclauses (iii) and (iv) above;
(viii) to reimburse itself for expenses incurred by and
reimbursable to it pursuant to Section 5.01;
(ix) to reimburse itself for any other expenses incurred and
reimbursable to it pursuant to Section 3.12 or otherwise; and
(x) to clear the Custodial Account of all amounts on deposit
therein attributable to the Mortgage Loans upon the termination of this
Agreement.
The Company shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the Custodial Account pursuant to such subclauses (ii) - (ix) above. The Company
shall provide written notification to the Owner, on or prior to the next
succeeding Remittance Date, upon making any withdrawals from the Custodial
Account pursuant to subclause (vii) above.
Section 3.08. Permitted Instruments. The depository institution at
which the Custodial Account has been established may at the direction of the
Company, invest the funds in the Custodial Account in Permitted Instruments,
which shall mature not later than the Remittance Date next following the date of
such investment. All income and gain realized from any such investment shall be
for the benefit of the Company and shall be subject to its withdrawal or order
from time to time. The amount of any losses incurred in respect of any such
investments shall be deposited in the Custodial Account by the Company out of
its own funds immediately as such losses are realized. As used herein, Permitted
Instruments shall include the following:
(i) obligations of, or obligations fully guaranteed as to
principal and interest by, the United States or any agency or
instrumentality thereof, provided such obligations are backed by the full
faith and credit of the United States;
(ii) repurchase obligations with respect to any security
described in clause (i) above maturing not more than one month from the
date of acquisition thereof provided that the unsecured obligations of the
party agreeing to repurchase such obligations are at the time rated by any
nationally recognized rating agency as investment grade;
(iii) federal funds, certificates of deposit, demand deposits,
time deposits and bankers' acceptances (which shall each have an original
maturity of not more than 90 days and, in the case of bankers' acceptances,
shall in no event have an original maturity of more than 365 days or a
remaining maturity of more than 30 days) denominated in United States
dollars of any U.S. depository institution or trust company incorporated
under the laws of the United States or any state thereof or of any domestic
branch of a foreign depository institution or trust company incorporated
under the laws of the United States or any state, provided that the debt
obligations of such depository institution or trust company (or, in the
case of the principal depository institution in a depository institution
holding company system, debt obligations of the depository
39
institution holding company) at the date of acquisition thereof have been
rated by any nationally recognized rating agency as investment grade; and
provided further that, if the depository or trust company is a principal
subsidiary of a depository institution holding company and the debt
obligations of such subsidiary are not separately rated, the applicable
rating shall be that of the depository institution holding company; and,
provided further that, if the original maturity of such short-term
obligations of a domestic branch of a foreign depository institution or
trust company shall exceed 30 days, the short-term rating of such
institution shall be rated by any nationally recognized rating agency as
investment grade;
(iv) commercial paper (having original maturities of not more
than 365 days) of any corporation incorporated under the laws of the United
States or any state thereof which on the date of acquisition has a maturity
of not more than 30 days and has been rated by any nationally recognized
rating agency as investment grade;
(v) a money market fund or a qualified investment fund rated by
any nationally recognized rating agency as investment grade; and
(vi) other obligations or securities that are acceptable to any
nationally recognized rating agency as a Permitted Instrument for a
security rated as investment grade, as evidenced in writing.
Section 3.09. Primary Insurance Policies. The Company shall not take
any action which would result in non-coverage under any applicable Primary
Mortgage Insurance Policy or any loss which, but for the actions of the Company,
would have been covered thereunder. To the extent coverage is in full force and
effect on the Mortgage Loans as of the Cut-off Date, the Company shall keep or
cause to be kept in full force and effect each such Primary Mortgage Insurance
Policy until the principal balance of the related Mortgage Loan is reduced to
80% or less of the Appraised Value in the case of such a Mortgage Loan having a
Loan-to-Value Ratio at origination in excess of 80%. The Company shall pay or
cause the premium for each Primary Mortgage Insurance Policy to be paid on a
timely basis.
Section 3.10. Maintenance of Hazard Insurance and Errors and Omissions
and Fidelity Coverage. (a) The Company shall use reasonable efforts to cause to
be maintained for each Mortgage Loan and on property acquired upon foreclosure,
or deed in lieu of foreclosure, of any Mortgage Loan, fire insurance with
extended coverage and flood insurance in accordance with the Program Guide. Any
amounts applied to the Company under any such policies (other than amounts
applied to the restoration or repair of the related Mortgaged Property or
property thus acquired or amounts released to the Mortgagor in accordance with
the Company's normal servicing procedures) shall be deposited in the Custodial
Account, subject to withdrawal pursuant to Section 3.07. In the event that the
Company shall obtain and maintain a blanket policy insuring against hazard
losses on all of the Mortgage Loans, it shall conclusively be deemed to have
satisfied its obligations as set forth in the first sentence of this Section
3.10(a), it being understood and agreed that such policy may contain a
deductible clause, in which case the Company shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with the first sentence of this Section 3.10(a) and there shall have
been a loss which would have been covered by such policy, deposit in the
Custodial Account the
40
amount not otherwise payable under the blanket policy because of such deductible
clause. In connection with its activities as administrator and servicer of the
Mortgage Loans, the Company agrees to present, on behalf of itself and the
Owner, claims under any such blanket policy in a timely fashion in accordance
with the terms of such policy.
(b) The Company shall obtain and maintain at its own expense and keep
in full force and effect throughout the term of this Agreement a blanket
fidelity bond and an errors and omissions insurance policy covering the
Company's officers and employees and other persons acting on behalf of the
Company in connection with its activities under this Agreement. The amount of
coverage shall be at least equal to the coverage that would be required by
▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac with respect to the Company if the Company were
servicing and administrating the Mortgage Loans for ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac in
addition to other mortgage loans being serviced and administered by the Company.
Section 3.11. Enforcement of Due-On-Sale Clauses. (a) When any
Mortgaged Property is conveyed, the Company shall declare such Mortgage Loan due
and payable and shall enforce any due-on-sale clause contained in any Mortgage
Note or Mortgage in accordance with the Program Guide, to the extent permitted
under applicable law and governmental regulations, but only to the extent that
such enforcement will not adversely affect or jeopardize coverage under any
insurance policy. Notwithstanding the foregoing:
(i) the Company shall not be deemed to be in default under this
Section 3.11(a) by reason of any transfer or assumption which the Company
is restricted by law from preventing; and
(ii) if the Company determines that it is reasonably likely that
any Mortgagor will bring, or if any Mortgagor does bring, legal action to
declare invalid or otherwise avoid enforcement of a due-on-sale clause
contained in any Mortgage Note or Mortgage, the Company shall not be
required to enforce the due-on-sale clause or to contest such action.
(b) Subject to the Company's duty to enforce any due-on-sale clause to
the extent set forth in Section 3.11(a), in any case in which a Mortgaged
Property is to be conveyed to a Person by a Mortgagor, and such Person is to
enter into an assumption or modification agreement or supplement to the Mortgage
Note or Mortgage which requires the signature of the Owner, or if an instrument
of release signed by the Owner is required releasing the Mortgagor from
liability on the Mortgage Loan, the Company is authorized, subject to the
requirements of the sentence next following, to execute and deliver, on behalf
of the Owner, the assumption agreement with the Person to whom the Mortgaged
Property is to be conveyed and such modification agreement or supplement to the
Mortgage Note or Mortgage or other instruments as are reasonable or necessary to
carry out the terms of the Mortgage Note or Mortgage or otherwise to comply with
any applicable laws regarding assumptions or the transfer of the Mortgaged
Property to such Person. The Company shall execute and deliver such documents
only if it reasonably determines that (i) its execution and delivery thereof
will not conflict with or violate any terms of this Agreement or cause the
unpaid balance and interest on the Mortgage Loan to be uncollectible in whole or
in part, (ii) any required consents of insurers under any related insurance
policies have been obtained and (iii) subsequent to the closing of the
41
transaction involving the assumption or transfer (A) the Mortgage Loan will
continue to be secured by a first mortgage lien pursuant to the terms of the
Mortgage, (B) such transaction will not adversely affect the coverage under any
related Insurance Policies, (C) the Mortgage Loan will fully amortize over the
remaining term thereof, (D) no material term of the Mortgage Loan (including the
interest rate on the Mortgage Loan) will be altered nor will the term of the
Mortgage Loan be changed and (E) if the seller/transferor of the Mortgaged
Property is to be released from liability on the Mortgage Loan, such release
will not (based on the Company's or the Subservicer's good faith determination)
adversely affect the collectability of the Mortgage Loan. Upon receipt of
appropriate instructions from the Company in accordance with the foregoing, the
Custodian shall execute any necessary instruments for such assumption or
substitution of liability as directed by the Company. Upon the closing of the
transactions contemplated by such documents, the Company shall cause the
originals or true and correct copies of the assumption agreement, the release
(if any), or the modification or supplement to the Mortgage Note or Mortgage to
be delivered to the Custodian and deposited with the Mortgage File for such
Mortgage Loan. Any fees collected by the Company or the related Subservicer for
entering into an assumption or substitution of liability agreement will be
retained by the Company or such Subservicer as additional servicing
compensation.
(c) The Company or the related Subservicer, as the case may be, shall
be entitled to approve a request from a Mortgagor for a partial release of the
related Mortgaged Property, the granting of an easement thereon in favor of
another Person, any alteration or demolition of the related Mortgaged Property
or other similar matters if it has determined, exercising its good faith
business judgment in the same manner as it would if it were the owner of the
related Mortgage Loan, that the security for, and the timely and full
collectability of, such Mortgage Loan would not be adversely affected thereby.
Any fee collected by the Company or the related Subservicer for processing such
a request will be retained by the Company or such Subservicer as additional
servicing compensation.
(d) Subject to any other applicable terms and conditions of this
Agreement, the Custodian and Company shall be entitled to approve an assignment
in lieu of satisfaction with respect to any Mortgage Loan, provided the obligee
with respect to such Mortgage Loan following such proposed assignment provides
the Custodian and Company with a "Certification" in the form attached hereto as
Exhibit E, in form and substance satisfactory to the Custodian and Company,
providing the following: (i) that the Mortgage Loan is secured by Mortgaged
Property located in a jurisdiction in which an assignment in lieu of
satisfaction is required to preserve lien priority, minimize or avoid mortgage
recording taxes or otherwise comply with, or facilitate a refinancing under, the
laws of such jurisdiction; (ii) that the substance of the assignment is, and is
intended to be, a refinancing of such Mortgage Loan and that the form of the
transaction is solely to comply with, or facilitate the transaction under, such
local laws; (iii) that the Mortgage Loan following the proposed assignment will
have a rate of interest at least 0.25 percent below or above the rate of
interest on such Mortgage Loan prior to such proposed assignment and (iv) that
such assignment is at the request of the borrower under the related Mortgage
Loan, upon approval of such assignment in lieu of satisfaction with respect to
any Mortgage Loan, the Company shall receive cash in an amount equal to the
unpaid principal balance of and accrued interest on such Mortgage Loan and the
Company shall treat such amount as a Full Prepayment with respect to such
Mortgage Loan for all purposes hereof.
42
Section 3.12. Realization Upon Defaulted Mortgage Loans. (a) The
Company shall foreclose upon or otherwise comparably convert the ownership of
properties securing such of the Mortgage Loans as come into and continue in
default and as to which no satisfactory arrangements can be made for collection
of delinquent payments. The Company shall use its best efforts to realize upon
defaulted Mortgage Loans in such a manner as will maximize the receipt of
principal and interest by the Owner, taking into account, among other things,
the timing of foreclosure proceedings. The foregoing is subject to the proviso
that the Company shall not be required to expend its own funds in connection
with any foreclosure or towards the restoration of any property unless it shall
determine (i) that such restoration and/or foreclosure will increase the
proceeds of liquidation of the Mortgage Loan to the Owner after reimbursement to
itself for such expenses and (ii) that such expenses will be recoverable to it
through Liquidation Proceeds from the related Mortgaged Property, as
contemplated in Section 3.07. In the event of a determination by the Company
pursuant to this Section 3.12(a), the Company shall be entitled to reimbursement
of its funds so expended pursuant to Section 3.07. The Company shall be
responsible for all other costs and expenses incurred by it in any such
proceeding; provided, however, that it shall be entitled to reimbursement
thereof from the related Mortgaged Property, as contemplated in Section 3.07.
(b) proceeds collected by the Subservicer and received by the Company
with respect to any Mortgage Loan, including without limitation, Insurance
Proceeds, Liquidation Proceeds or any other proceeds realized with respect to
the sale of the Mortgage Loan (other than any such amounts relating to REO
Property) shall be applied as follows: first, to reimburse the Subservicer and
the Company for all unreimbursed Monthly Advances with respect to such Mortgage
Loan and servicing advances and expenses incurred by the Subservicer and the
Company with respect to such Mortgage Loan in accordance with the Program Guide
and this Agreement, including without limitation, taxes, assessments and hazard
insurance premiums; second, to pay to the Company any unpaid Servicing Fees and,
without duplication, Subservicing Fees owed with respect to the related Mortgage
Loan; third, to pay to the Owner an amount equal to accrued and unpaid interest
on the Principal Balance of such Mortgage Loan at the Mortgage Loan Remittance
Rate to the Due Date prior to the Remittance Date on which such amounts are to
be distributed; and fourth, to pay to the Owner an amount equal to the Principal
Balance of such Mortgage Loan.
(c) Notwithstanding anything to the contrary contained herein, the
Owner may, at the Owner's sole option, terminate the Company as servicer of any
Mortgage Loan that becomes ninety (90) days or greater delinquent in payment of
a scheduled Monthly Payment, without payment of any termination fee with respect
thereto, provided that the Company shall on the date said termination takes
effect be reimbursed for any unreimbursed Monthly Advances of the Company's
funds and any unreimbursed Servicing Advances and Servicing Fees relating to
such delinquent Mortgage Loan notwithstanding anything to the contrary set forth
in Section 3.07. In the event of any such termination, the provisions of Section
9.01 hereof shall apply to said termination and the transfer of servicing
responsibilities with respect to such delinquent Mortgage Loan to the Owner or
its designee. The Owner shall provide written notice of its intent to terminate
the servicing of any such Mortgage Loan not less than thirty (30) days prior to
the applicable termination date.
43
(d) Notwithstanding the foregoing provisions of this Section 3.12,
with respect to any Mortgage Loan as to which the Company has received actual
notice of, or has actual knowledge of, the presence of any toxic or hazardous
substance on the related Mortgaged Property, the Company shall not either (i)
obtain title to such Mortgaged Property as a result of or in lieu of foreclosure
or otherwise, or (ii) otherwise acquire possession of, or take any other action,
with respect to, such Mortgaged Property if, as a result of any such action, the
Owner would be considered to hold title to, to be a mortgagee in possession of,
or to be an owner or operator of such Mortgaged Property within the meaning of
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended from time to time, or any comparable law, unless the Company
has also previously determined, based on its reasonable judgment and a prudent
report prepared by a Person who regularly conducts environmental audits using
customary industry standards, that:
(1) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic
interest of the Owner to take such actions as are necessary to bring the
Mortgaged Property into compliance therewith; and
(2) there are no circumstances present at such Mortgaged Property
relating to the use, management or disposal of any hazardous substances,
hazardous materials, hazardous wastes, or petroleum based materials for
which investigation, testing, monitoring, containment, clean up or
remediation could be required under any federal, state or local law or
regulation, or that if any such materials are present for which such action
could be required, that it would be in the best economic interest of the
Owner to take such actions with respect to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by this
Section 3.12 shall be advanced by the Company, subject to the Company's right to
be reimbursed therefor from the Custodial Account as provided in Section 3.07.
If the Company determines, as described above, that it is in the best
economic interest of the Owner to take such actions as are necessary to bring
any such Mortgaged Property into compliance with applicable environmental laws,
or to take such action with respect to the containment, clean up or remediation
of hazardous substances, hazardous materials, hazardous wastes, or petroleum
based materials affecting any such Mortgaged Property, then the Company shall
take such action as it deems to be in the best economic interest of the Owner.
The cost of any such compliance, containment, cleanup or remediation shall be
advanced by the Company, subject to the Company's right to be reimbursed
therefor from the Custodial Account as provided in Section 3.07.
Section 3.13. Owner to Cooperate: Release of Mortgage Files. (a) Upon
becoming aware of the payment in full of any Mortgage Loan or upon the receipt
by the Company of a notification that payment in full will be escrowed in a
manner customary for such purposes, the Company will immediately notify the
Owner and the Custodian by delivering to the Owner and the Custodian a Request
for Release. Upon receipt of such Request for Release, the Owner shall, within
five Business Days, release or cause the Custodian to release the related
44
Mortgage File to the Company. No expenses incurred in connection with any
instrument of satisfaction or deed of reconveyance shall be chargeable to funds
attributable to the Mortgage Loans on deposit in the Custodial Account.
(b) From time to time as is appropriate for the servicing or
foreclosure of any Mortgage Loan, the Company will deliver to the Owner and the
Custodian a Request for Release. Upon receipt of such Request for Release, the
Owner shall promptly cause the Custodian to deliver the related Mortgage File,
as requested, to the Company. The Company shall cause each Mortgage File so
released to be returned to the Custodian when the need therefor by the Company
no longer exists, unless (i) the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Custodial Account or (ii) the Mortgage File or such document has been delivered
directly or through a Subservicer to an attorney, or to a public trustee or
other public official as required by law, for purposes of initiating or pursuing
legal action or other proceedings for the foreclosure of the Mortgaged Property
either judicially or non-judicially.
(c) If the Company releases a Mortgage in error and is unable to cure
such error within sixty (60) days of its discovery of such error, the Company,
upon written demand, shall remit to the Owner the then outstanding principal
balance of the related Mortgage Loan by deposit thereof in the Custodial
Account.
Section 3.14. Annual Reports to the Owner. (a) Servicer Compliance
Statement. On or before March 15 of each calendar year, commencing in 2007, the
Company shall deliver to the Owner, any Master Servicer and any Depositor a
statement of compliance addressed to the Owner, such Master Servicer and such
Depositor and signed by an authorized officer of the Company, to the effect that
(i) a review of the Company's activities during the immediately preceding
calendar year (or applicable portion thereof) and of its performance under the
Agreement and any applicable Reconstitution Agreement during such period has
been made under such officer's supervision, and (ii) to the best of such
officers' knowledge, based on such review, the Company has fulfilled all of its
obligations under the 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.
(b) Report on Assessment of Compliance and Attestation.
On or before March 15 of each calendar year, commencing in 2007, the
Company shall:
(i) deliver to the Owner, any Master Servicer and any Depositor a
report (in form and substance reasonably satisfactory to the Owner, such
Master Servicer and such Depositor) regarding the Company's assessment of
compliance with the Servicing Criteria applicable to it, as specified on
Exhibit G, 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;
45
(ii) deliver to the Owner, any Master Servicer and any Depositor
a report of a registered public accounting firm reasonably acceptable to
the Owner, such Master Servicer 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 to be "participating in the servicing function" within the
meaning of Item 1122 of Regulation AB to deliver to the Owner, any Master
Servicer and any Depositor an assessment of compliance and accountants'
attestation as and when provided in this Section 3.14; and
(iv) deliver, and cause each Subservicer and Subcontractor
described in clause (iii) to provide, to the Owner, any Depositor, any
Master Servicer 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 of
Exhibit H, signed by the appropriate officer of the Company.
The Company acknowledges that the parties identified in clause (b)(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 Owner nor any Depositor will request delivery of a certification under
clause (b)(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.
Section 3.15. REO Property. In the event that title to a Mortgaged
Property is acquired in foreclosure or by deed in lieu of foreclosure, the deed
or certificate of sale to the REO Property shall be taken in the name of the
designee of the Owner of the related Mortgage Loan on the date (the "Acquisition
Date") on which such Mortgaged Property becomes an REO Property, or in the name
of such other Person or Persons as requested by the Owner, provided, however,
that title to the REO Property shall not be taken in the name of the Company
unless the Company has obtained an Opinion of Counsel satisfactory to it from an
attorney duly licensed to practice law in the State where the REO Property is
located to the effect that the Company shall not suffer any adverse tax,
financial, regulatory or licensing consequences as a result of obtaining record
title to the REO property. The Person or Persons other than the Owner holding
record title to an REO Property shall acknowledge in writing that such title is
being held as nominee for the Owner.
The Company by itself or through an affiliate shall manage or cause
the Subservicer to manage the REO Property in accordance with the terms and
provisions of the Program Guide and in a manner that is consistent with the
manner in which it would manage its own property, and in a manner that is in the
best interests of the Owner. Any proceeds collected by the Subservicer after the
Acquisition Date with respect to the REO Property, including without limitation,
insurance, liquidation or any proceeds realized with respect to the sale or
46
rental of the REO Property (collectively, the "Cash Receipts") shall be promptly
applied as follows: First, to pay the commission of the broker, if any, who
introduced the purchaser of the REO Property to the Subservicer; and Second, to
reimburse the Subservicer and the Company for all unreimbursed Monthly Advances
and pre and post Acquisition Date cash outlays made by the Subservicer and the
Company (or such affiliate) with respect to such REO Property in accordance with
the Program Guide, including without limitation, taxes, assessments and hazard
insurance premiums. All Cash Receipts remaining thereafter shall be distributed
to the Owner on the first Remittance Date which occurs two calendar months after
the sale of the REO Property.
The Company and the Owner hereby agree that the Subservicer shall be
relieved of its obligation, as set forth in the Program Guide, to advance to the
Company on the 18th day of the month following the Acquisition Date uncollected
principal and net interest with respect to the Mortgage Loan relating to the REO
Property.
If a REMIC election has been made with respect to the arrangement
under which the Mortgage Loans and any REO Property are held, the Company shall
manage, conserve, protect and operate each REO Property in a manner which does
not cause such REO Property to fail to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code or result in the receipt by such
REMIC of any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code or any "net income from foreclosure property" within
the meaning of Section 860G(c)(2) of the Code.
The Company shall cause each REO Property to be inspected promptly
upon the acquisition of title thereto and shall cause each REO Property to be
inspected at least annually thereafter. Upon the request of the Owner, the
Company shall make or cause to be made a written report of each such inspection.
Such reports shall be retained in the Servicing File and copies thereof shall be
forwarded by the Company to the Purchaser upon the request of the Purchaser.
Notwithstanding the foregoing, if a REMIC election is made with respect to the
arrangement under which the Mortgage Loans and the REO Property are held, such
REO Property shall be disposed of within three years or such other period as may
be permitted under Section 860G(a)(8) of the Code.
Section 3.16. Nonsolicitation. The Company agrees that it will not
take any action or permit or cause any action to be taken by any of its
Subservicers, agents or affiliates, to personally, by telephone, mail e-mail or
otherwise, solicit the Mortgagor under any Mortgage Loan to refinance the
Mortgage Loan, in whole or in part, or provide information to any other entity
to solicit the refinancing of any Mortgage Loan in whole or in part; provided
that, the foregoing shall not preclude the Company from engaging in
solicitations to the general public by newspaper, radio, television or other
media that are not directed toward the Mortgagors or from refinancing the
Mortgage Loan of any Mortgagor who, without solicitation, contacts the Company
to request the refinancing of the related Mortgage Loan.
Section 3.17. Tax Service Contract. The Company shall, at its own
expense, cause each Mortgage Loan to be covered by a Tax Service Contract that
is assignable to the Initial Owner or its designee; provided however, that if
the Company fails to purchase such Tax Service Contract, the Company shall be
required to reimburse the Initial Owner for all costs and
47
expenses incurred by the Initial Owner in connection with the purchase of any
such Tax Service Contract.
Section 3.18. Notification of Adjustments. With respect to each
Adjustable Rate Mortgage Loan, the Company shall adjust the Mortgage Interest
Rate on the related Adjustment Date and shall adjust the Monthly Payment on the
related payment adjustment date in compliance with the requirements of
applicable law and the related Mortgage and Mortgage Note. If, pursuant to the
terms of the Mortgage Note, another index is selected for determining the
Mortgage Interest Rate because the original index is no longer available, the
same index will be used with respect to each Mortgage Note that requires a new
index to be selected, provided that such selection does not conflict with the
terms of the related 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 and the
Monthly Payment adjustments. The Company shall promptly upon written request
thereof, deliver to the Owner such notifications and any additional applicable
data regarding such adjustments and the methods used to calculate and implement
such adjustments.
Section 3.19. Whole Loan Transfers; Securitizations.
(a) The Company and the Initial Owner agree that with respect to some
or all of the Mortgage Loans, the Initial Owner may effect either one or more
Whole Loan Transfers or Securitization Transactions. The Initial Owner and the
Company agree that in connection with the completion of a Whole Loan Transfer or
Securitization Transaction, the Company shall:
(i) provide the Initial Owner with an Officer's Certificate on
behalf of the Company that restates as of the Reconstitution Date all
representations and warranties made by the Company pursuant to Section 2.09
of this Agreement and to restate the representations and warranties made by
the Company in Section 2.04 as of the Closing Date on which such Mortgage
Loans were purchased by the Initial Owner pursuant to this Agreement,
together with any additional reasonable representations and warranties that
may be required by the rating agencies in connection with the
Securitization Transaction, which shall be mutually agreed upon by the
Company and the Initial Owner and shall be standard representations and
warranties for Securitization Transactions involving mortgage loans similar
to the Mortgage Loans and shall not impose any additional obligations or
liabilities on the Company than are set forth in this Agreement unless
mutually agreed upon by the Company and the Initial Owner;
(ii) if the Company is required to be a party to any of the
Reconstitution Agreements, execute any Reconstitution Agreement, subject to
the provisions of this Section 3.19, within a reasonable period of time,
but in no event shall such time exceed five (5) Business Days after mutual
agreement between the Initial Owner and the Company as to the terms
thereof; and
(iii) agree to service the Mortgage Loans in accordance with the
requirements of the Securitization Transaction, including, without
limitation, servicing the Mortgage Loans in accordance with the
requirements of the applicable Agency if the Securitization Transaction is
to an Agency, or servicing the Mortgage Loans in
48
accordance with the requirements of the private label securitization if the
Securitization Transaction is to a private label securitization; provided
that no such servicing requirements shall impose any additional obligations
or liabilities on the Company than are set forth in this Agreement unless
mutually agreed upon by the Company and the Initial Owner.
(b) The Initial Owner shall reimburse the Company for all reasonable
out-of-pocket costs and expenses incurred in connection with any Securitization
Transaction, excluding any cost incurred by the Company in the ordinary course
of business; provided, however, that all amounts required to be paid by the
Initial Owner pursuant to this clause (b) shall be subject to the prior notice
and approval of the Initial Owner, such approval not to be unreasonably
withheld.
ARTICLE IV
Payments to the Owner
Section 4.01. Distributions. On each Remittance Date the Company shall
distribute to the Owner of record on the next preceding Record Date either in
immediately available funds (by wire transfer or otherwise), if such amount is
in excess of $5,000, to the account of such Owner in accordance with the wire
instructions set forth in, or provided to the Company in accordance with,
Section 9.04, or otherwise by check mailed to such Owner, the Remittance Amount
payable to such Owner.
With respect to any remittance received by the Owner on or after the
first Business Day following the Business Day on which such payment was due, the
Company shall pay to the Owner interest on any such late payment at an annual
rate equal to "Prime Rate" as published in the money rates section of The Wall
Street Journal, adjusted as of the date of each change, plus two percentage
points (2.0%), in such published rate, but in no event greater than the maximum
amount permitted by applicable law. Such interest shall be paid by the Company
to the Owner on the date such late payment is made and shall cover the period
commencing with the day following such first Business Day and ending with the
Business Day on which such payment is made, both inclusive. The payment by the
Company of any such interest shall not be deemed an extension of time for
payment or a waiver by the Owner of any Event of Default by the Company.
Section 4.02. Statements to the Owner. Concurrently with each
distribution charged to the Custodial Account, the Company shall forward by mail
to the Owner a statement setting forth certain information in respect of the
Mortgage Loans including:
(i) the amount, if any, of such distribution allocable to
principal and/or interest;
(ii) the amount of related servicing compensation received by the
Company and the Subservicer and such other customary information as the
Company deems necessary or desirable to enable the Owner to prepare its tax
returns;
(iii) the number and aggregate Principal Balance of the Mortgage
Loans at the close of business on such Remittance Date after giving effect
to all
49
distributions allocable to principal made on such Remittance Date,
including, for this purpose, the Principal Balances of all Mortgage Loans
purchased pursuant to Section 2.02 or 2.04 the proceeds of which are being
distributed on such Remittance Date;
(iv) on the basis of the most recent reports furnished to it by
the Subservicer, the number and aggregate principal balances of Mortgage
Loans in each Mortgage Pool delinquent (a) one month, (b) two or more
months, and (c) the number and aggregate balance of Mortgage Loans that are
in foreclosure;
(v) the number and aggregate balance of REO Properties; and
(vi) the Pass-Through Rate for such Remittance Date.
Within a reasonable period of time after the end of each calendar
year, the Company shall furnish to the Owner a statement containing the
information set forth in clauses (i) and (iii) above aggregated for such
calendar year. Such obligation of the Company shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Company pursuant to any requirements of the Code as from time to
time in force.
Section 4.03. Distribution Reports; Monthly Advances by the Company.
(a) Prior to the close of business on the Business Day next succeeding
each Determination Date, the Company shall furnish a statement to the Owner
setting forth the amount to be distributed on the next succeeding Remittance
Date on account of principal of and interest on the Mortgage Loans. At such
time, the Company shall also furnish to the Owner or its designee a computer
tape containing, and a hard copy of, performance data with respect to the
Mortgage Loans relating to such Remittance Date, together with such other
information with respect to the Mortgage Loans as the Owner may reasonably
require to allocate distributions made pursuant to this Agreement and provide
appropriate statements with respect to such distributions. To the extent that
the Mortgage Loans are the subject of a Securitization Transaction, the computer
tape must include all information known or available to the Company that is
necessary in order to provide the distribution and pool performance information
required under Item 1121 of Regulation AB. The Company shall modify the computer
tape format as requested by the Owner from time to time in order to comply with
the preceding sentence, provided that if such format is not consistent with the
format used by the Company for any other entity for which it services mortgage
loans the Owner shall pay the expense relating to such alternate format.
(b) Prior to such time as title to a Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, on or before each Remittance
Date, the Company shall either (i) deposit in the Custodial Account an amount
equal to the Monthly Advance, if any, or (ii) cause to be made an appropriate
entry in the records of the Custodial Account that funds in such account that
are being held for future distribution or withdrawal or which do not belong to
the Owner have been used by the Company in discharge of any such Monthly Advance
or (iii) make advances in the form of any combination of (i) and (ii)
aggregating the amount of such Monthly Advance. Any funds being held for future
distribution to the Owner and so used shall
50
be replaced by the Company by deposit in the Custodial Account on any future
Remittance Date to the extent that funds in the Custodial Account relating to
the Mortgage Loans on such Remittance Date shall be less than payments to the
Owner required to be made on such date.
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ARTICLE V
The Company
Section 5.01. Liability of the Company and Others.
(a) The Company shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by the
Company herein.
(b) The Company shall indemnify and hold harmless the Owner 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 Owner may sustain in any way arising from (i) any breach
of warranty or representation of the Company made herein that materially and
adversely affects the value of a Mortgage Loan or the interests of the Owner and
the related Mortgage Loan or (ii) the failure by the Company to perform its
obligations under this Agreement including but not limited to the Company's
obligation to service and administer the Mortgage Loans in compliance with the
terms of this Agreement and any Reconstitution Agreement.
(c) Neither the Company, nor any of the directors, officers, employees
or agents of the Company shall be under any liability to any Owner 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 any liability which would
otherwise be imposed by reason of a breach in the performance of duties
hereunder. 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.
(d) The Company and any of its directors, officers, employees or
agents shall be indemnified by the Initial Owner and each Owner that purchased
Mortgage Loans in a Securitization Transaction and held harmless against any
loss, liability or expense incurred in connection with any legal action relating
to this Agreement arising or based upon facts occurring while such Initial Owner
or Owner owned any Mortgage Loans, other than any loss, liability or expense
related to any specific Mortgage Loan or Mortgage Loans (except as any such
loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement) and any loss, liability or expense incurred by reason of (i) a breach
by the Company of any representation, warranty or covenant made by it herein,
(ii) the Company's wilful misfeasance, bad faith or negligence in the
performance of its duties hereunder or (iii) the Company's reckless disregard of
its obligations and duties hereunder.
(e) The Company shall not be under any obligation to appear in,
prosecute or defend any legal action which is not incidental to its duties under
this Agreement and which in its opinion may involve it in any expense or
liability; provided, however, that the Company may in its discretion undertake
any such legal 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 legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs
52
and liabilities payable or reimbursable out of the Custodial Account as provided
by Section 3.07 and, notwithstanding any other provision hereof, distributions
pursuant to Section 4.01 shall be reduced accordingly.
(f) If the Company is involved in legal proceedings where it is
required to indemnify the Owner pursuant to Section 5.01(c) above, it shall not
have any right to payment of its legal expenses and costs of such action out of
the Custodial Account.
(g) The indemnification obligations in this Section 5.01 shall survive
the termination of this Agreement or the termination of any party to this
Agreement.
Section 5.02. Merger or Consolidation of the Company. The Company will
keep in full effect its existence, rights and franchises as a corporation under
the laws of the State of Delaware, and will obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to perform its
duties under this Agreement.
Any Person into which the Company may be merged or consolidated, or
any corporation resulting from any merger 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 having a GAAP net worth of not less
than $25,000,000 and whose deposits are insured by FDIC or a company whose
primary business is the origination and servicing of loans, shall be a ▇▇▇▇▇▇
▇▇▇ or ▇▇▇▇▇▇▇ Mac approved seller/servicer in good standing and shall satisfy
any requirements of Section 9.01 with respect to the qualifications of a
successor to the Company.
Section 5.03. Company Resignation: Assignment of Agreement. The
Company may not assign this Agreement or resign from the obligations and duties
hereby imposed on it unless (a) the Owner has provided prior written consent to
such assignment or (b) upon the determination that the Company's servicing
duties hereunder are no longer permissible by applicable law and such incapacity
cannot be cured by the Company. Upon the Company's resignation, the Owner shall
either assume the responsibilities, duties, rights and obligations of the
Company or appoint a Successor Servicer in accordance with Section 9.01. No such
resignation shall become effective until a successor which satisfies the
requirements of Section 9.01 and is mutually acceptable to the Company and the
Owner has assumed the Company's duties hereunder.
ARTICLE VI
Default
Section 6.01. Events of Default of the Company. Event of Default,
wherever used herein, means any one of the following events:
53
(i) the Company shall fail to remit to the Owner any payment
required to be made under the terms of this Agreement and such failure
shall continue unremedied for a period of one (1) Business Day after the
date upon which written notice or oral notice (promptly confirmed in
writing) of such failure, requiring such failure to be remedied, shall have
been given to the Company by the Owner; or
(ii) the Company shall fail to observe or perform in any material
respect any other of the covenants or agreements on the part of the Company
contained in this Agreement as it relates to the Owner and such failure
shall continue unremedied for a period of 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 Owner; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, bankruptcy, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against
the Company and such decree or order shall have remained in force
undischarged or unstayed for a period of sixty (60) days; or
(iv) the Company shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings of, or
relating to, the Company or of, or relating to, all or substantially all of
the property of the Company; or
(v) the Company ceases to be approved by either ▇▇▇▇▇▇ Mae or
▇▇▇▇▇▇▇ Mac (to the extent such entities are then operating in a capacity
similar to that in which they operate on the date of this Agreement) as a
mortgage loan servicer;
(vi) Standard & Poor's lowers the Company's servicing rating
anytime after the date of this Agreement to "below average" or worse;
(vii) failure by the Company to duly perform, within the required
time period, its obligations under Sections 3.14;
(viii) the Company shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage
of, or commence a voluntary case under, any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations, or
(ix) failure by the Company to be in compliance with the "doing
business" or licensing laws of any jurisdiction where a Mortgaged Property
is located but only to the extent such failure materially and adversely
affects the enforceability of the Mortgage Loans or the Company's ability
to perform its obligations hereunder.
If an Event of Default described in this Section shall occur, then,
and in each and every such case, so long as such Event of Default shall not have
been remedied, the Owner by notice in writing to the Company, may terminate all
of the rights and obligations of the Company
54
under this Agreement other than its right to receive servicing compensation for
servicing the Mortgage Loans hereunder during any period prior to the date of
such termination and may exercise any and all other remedies available at law or
equity; provided, however, that any liability of the Company under this
Agreement arising prior to such termination shall survive. On or after the
receipt by the Company of such written notice, all authority and power of the
Company under this Agreement shall, in accordance with Section 9.01, pass to and
be vested in the Owner or the Successor Servicer appointed pursuant to Section
9.01.
Upon the termination of the Company as servicer hereunder following an
Event of Default by the Company, if the Owner terminates any Subservicing
Agreement the Company shall pay any termination fee payable to the related
Subservicer.
Section 6.02. Waiver of Defaults. The Owner may waive such default by
the Company in the performance of its obligations hereunder and its
consequences. Upon any such waiver of a past default, such default shall cease
to exist, and any Event of Default, as defined in Section 6.01, 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 VII
Termination
Section 7.01. Termination. The obligations and responsibilities of the
Company hereunder shall terminate upon the occurrence of the earliest of: (i)
the later of the final payment or other liquidation (or any advance with respect
thereto) of the last Mortgage Loan in the Mortgage Pool and the remittance of
all funds due hereunder, (ii) the mutual consent of the Company and the Owner in
writing, or (iii) a termination by the Owner following an Event of Default
pursuant to Article VI.
ARTICLE VIII
Compliance With Regulation AB
Section 8.01. Intent of the Parties; Reasonableness.
The Owner and the Company acknowledge and agree that the purpose of
this Article VIII is to facilitate compliance by the Owner 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 Owner 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 Owner 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, in each case, and the rules and
55
regulations of the Commission thereunder (or the 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 Owner, any Master Servicer 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 with the Owner and any Master Servicer
to deliver to the Owner (including any of its assignees or designees), any
Master Servicer and any Depositor, any and all statements, reports,
certifications, records and any other information necessary in the good faith
determination of the Owner, the Master Servicer or any Depositor to permit the
Owner, such Master Servicer or such Depositor to comply with the provisions of
Regulation AB, together with such disclosures relating to the Company, any
Subservicer and the Mortgage Loans, or the servicing of the Mortgage Loans,
reasonably believed by the Owner or any Depositor to be necessary in order to
effect such compliance.
The Owner (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 Owner's reasonable judgment, to comply with
Regulation AB.
Section 8.02. Additional Representations and Warranties of the
Company.
(a) The Company hereby represents to the Owner, to any Master Servicer
and to any Depositor, as of the date on which information is first provided to
the Owner, any Master Servicer or any Depositor under Section 8.03 that, except
as disclosed in writing to the Owner in accordance with Item 1117 or Item 1119
of Regulation AB, any Master Servicer, or such Depositor prior to such date: (i)
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 Transaction due to any default by the Company as a Servicer; (ii)
the Company has not been terminated as servicer in a residential mortgage loan
securitization due to a servicing default or the application of a Servicing
Performance Test or Trigger; (iii) 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; (iv) 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; (v) there are no changes to 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; (vi) there are no legal or governmental proceedings
pending (or governmental proceedings known to be contemplated) against the
Company or any Subservicer that are material to investors in the related
Securitization Transaction; (vii) there are no affiliations, relationships or
transactions relating to the Company or any Subservicer with respect to any
Securitization Transaction and any party thereto identified by the related
Depositor of a type
56
described in Item 1119 of Regulation AB; and (viii) each Mortgage Loan was
originated by a Qualified Correspondent.
(b) If so requested by the Owner, any Master Servicer or any Depositor
on any date following the date on which information is first provided to the
Owner, any Master Servicer or any Depositor under Section 8.03, the Company
shall, within five Business Days following such request, confirm in writing the
accuracy of the representations and warranties set forth in paragraph (a) of
this Section 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.
Section 8.03. Information to Be Provided by the Company.
In connection with any Securitization Transaction, the Company shall
(i) within five Business Days following a request by the Owner or any Depositor,
provide to the Owner and such Depositor (or, as applicable, cause each
Subservicer to provide), in writing and in form and substance reasonably
satisfactory to the Owner and such Depositor, the information and materials
specified in paragraphs (a), (b), (c), (f) and (g) of this Section, provided,
that the Company shall not be required to provide such information and materials
with respect to a Subservicer if Regulation AB does not require disclosure of
such information and materials and (ii) as promptly as practicable following
notice to or discovery by the Company, provide to the Owner and any Depositor
(in writing and in form and substance reasonably satisfactory to the Owner and
such Depositor) the information specified in paragraph (d) of this Section.
(a) If so requested by the Owner or any Depositor, the Company shall
provide such information regarding (i) the Company, as originator of the
Mortgage Loans (including as an acquirer of Mortgage Loans from a Qualified
Correspondent) and (ii) 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 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 Owner or any Depositor may reasonably request for the
purpose of compliance with Item 1110(b)(2) of Regulation AB;
(C) a description of any legal or governmental proceedings
pending (or governmental proceedings known to be contemplated) against the
Company, in its capacity as an originator or servicer, and each Subservicer that
would be material to investors in the related Securitization Transaction; and
57
(D) a description of any affiliation or relationship, as
described in Item 1119 of Regulation AB, between the Company, each Subservicer
and any of the following parties to a Securitization Transaction, as such
parties are identified to the Company by the Owner or any Depositor in writing
in advance of such 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.
(b) If so requested by the Owner or any Depositor, the Company shall
provide Static Pool Information with respect to mortgage loans of a similar type
as the Mortgage Loans originated by the Company, if the Company is an originator
of Mortgage Loans (including as an acquirer of Mortgage Loans from a Qualified
Correspondent). Such Static Pool Information shall be prepared by the Company on
the basis of its reasonable, good faith interpretation of the requirements of
Item 1105(a)(1)-(3) of Regulation AB. The content of such Static Pool
Information may be in the form customarily provided by the Company, and need not
be customized for the Owner 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 permanent record of the information provided, such as a portable document
format (pdf) file, or other such electronic format reasonably required by the
Owner 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 Owner or any Depositor, as applicable, in the same format in
which Static Pool Information was previously provided to such party by the
Company.
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If so requested by the Owner or any Depositor, the Company shall
provide at the expense of the requesting party (to the extent of any additional
incremental expense associated with delivery pursuant to this Agreement), such
statements and agreed-upon procedures letters of certified public accountants
reasonably acceptable to the Owner 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 originations or purchases, to calendar months
commencing January 1, 2006, as the Owner or such Depositor shall reasonably
request. Such statements and letters shall be addressed to and be for the
benefit of such parties as the Owner 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 Owner or such
Depositor.
(c) If so requested by the Owner 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, 1117 and 1119 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 the Agreement 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 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 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 due to a servicing default or the
application of a Servicing Performance Test or Trigger; and
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(5) such other information as the Owner 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 the 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 obligations under the Agreement or
any Reconstitution Agreement;
(E) 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 the three-year period
immediately preceding the related Securitization Transaction, 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.
(d) For the purpose of satisfying the reporting obligation under the
Exchange Act with respect to any class of asset-backed securities, for so long
as the Depositor is required to file reports under the Exchange Act with respect
to a Securitization Transaction, the Company shall (or shall cause each
Subservicer to) (i) provide prompt notice to the Owner, any Master Servicer and
any Depositor in writing of (A) any litigation or governmental proceedings
involving the Company or any Subservicer that would be material to investors in
the related Securitization Transaction, (B) any affiliations or relationships of
the type described in Item 1119 of Regulation AB that develop following the
closing date of a Securitization Transaction between the Company or any
Subservicer and any of the parties specified in clause (D) of paragraph (a) of
this Section (and any other parties identified in writing by the requesting
party) with respect to such Securitization Transaction, (C) any Event of Default
under the terms of this Agreement or any Reconstitution Agreement, (D) any
merger, consolidation or sale of substantially all of the assets of the Company,
and (E) the Company's entry into a material agreement after the applicable
closing date with a Subservicer to perform or assist in the performance of any
of the Company's obligations under this Agreement or any Reconstitution
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Agreement and (ii) provide to the Owner and any Depositor a description of such
proceedings, affiliations or relationships.
(e) As a condition to the succession to the Company or any Subservicer
as a servicer or subservicer 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 successor to the Company or
any Subservicer, the Company shall provide to the Owner, any Master Servicer,
and any Depositor, if disclosure of such succession is required under Regulation
AB, at least 15 calendar days prior to the effective date of such succession or
appointment, (x) written notice to the Owner and any Depositor of such
succession or appointment and (y) in writing and in form and substance
reasonably satisfactory to the Owner and such Depositor, all information
reasonably requested by the Owner or any Depositor in order to comply with its
reporting obligation under Item 6.02 of Form 8-K with respect to any class of
asset-backed securities.
(f) In addition to such information as the Company, as servicer, is
obligated to provide pursuant to other provisions of the Agreement, not later
than ten days prior to the deadline for the filing of any distribution report on
Form 10-D in respect of any Securitization Transaction that includes any of the
Mortgage Loans serviced by the Company or any Subservicer, the Company or such
Subservicer, as applicable, shall, to the extent the Company or such Subservicer
has knowledge, provide to the party responsible for filing such report
(including, if applicable, the Master Servicer) notice of the occurrence of any
of the following events along with all information, data, and materials related
thereto as may be required to be included in the related distribution report on
Form 10-D (as specified in the provisions of Regulation AB referenced below):
(i) any material modifications, extensions or waivers of pool
asset terms, fees, penalties or payments during the distribution period or
that have cumulatively become material over time (Item 1121(a)(11) of
Regulation AB);
(ii) material breaches of pool asset representations or
warranties or transaction covenants (Item 1121(a)(12) of Regulation AB);
and
(iii) information regarding any material pool asset changes (such
as additions, substitutions or repurchases) (Item 1121(a)(14) of Regulation
AB).
(g) The Company shall provide to the Owner, any Master Servicer and
any Depositor, upon request evidence of the authorization of the person signing
any certification or statement, copies or other evidence of Fidelity Bond
Insurance and Errors and Omissions Insurance policy, publicly available
financial information and reports, and such other information reasonably related
to the Company's or such Subservicer's performance hereunder.
(h) In the event that (i) the Company does not reasonably believe that
certain information requested under Section 8.03 is required to be disclosed
pursuant to Regulation AB and (ii) the Company has not provided such information
for any of its own securitizations, the Owner shall pay all reasonable
documented costs incurred by the Company in connection with the preparation and
delivery of such information, and the Company shall promptly deliver such
61
information after expiration of a reasonable period of time for establishing the
necessary systems and procedures to produce such information. Further,
notwithstanding anything to the contrary herein, when determining if information
is required to be delivered by the Company under this Article VIII, all
threshold and other requirements shall be determined solely by looking at the
Company's mortgage loans and those of its third-party originators. The Company
shall have no obligation with respect to disclosure or reporting under
Regulation AB in the event that the aggregation of its third-party originated
Mortgage Loans with those of the Owner's other sellers require additional
disclosure; provided, however, that (A) the Company shall otherwise cooperate
with the Owner to provide disclosure or reporting under Regulation AB in the
event that such disclosure or reporting is required under Regulation AB and not
otherwise available to the Owner; or (B) if (1) the Mortgage Loans are
aggregated with other mortgage loans in a manner that triggers disclosure or
reporting under Regulation AB, (2) the Mortgage Loans constitute the highest
percentage of such aggregated mortgage loans when compared to mortgage loans
purchased from other sellers and (3) the Owner provides at least 15 days advance
notice of the requirement to provide disclosure or reporting under Regulation
AB, then the Company shall provide the required disclosure or reporting pursuant
to the terms of this Article VIII.
Section 8.04. Use of Subservicers and Subcontractors.
The Company shall not hire or otherwise utilize the services of any
Subservicer "participating in the Servicing function" within the meaning of Item
1122 of Regulation AB, to fulfill any of the obligations of the Company as
servicer under the Agreement or any Reconstitution Agreement unless the Company
complies with the provisions of paragraph (a) of this Section. The Company shall
not hire or otherwise utilize the services of any Subcontractor "participating
in the Servicing function" within the meaning of Item 1122 of Regulation AB, and
shall not permit any Subservicer to hire or otherwise utilize the services of
any such Subcontractor to fulfill any of the obligations of the Company as
servicer under the Agreement or any Reconstitution Agreement unless the Company
complies with the provisions of paragraph (b) of this Section.
(a) It shall not be necessary for the Company to seek the consent of
the Owner, any Master Servicer 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 Owner and any Depositor to comply with
the provisions of this Section and with Sections 8.02, 8.03(c), (e), (f) and (g)
and 3.14 of this Agreement to the same extent as if such Subservicer were the
Company, to the extent required under Regulation AB, and to provide the
information required with respect to such Subservicer under Section 8.03(d) of
this Agreement The Company shall be responsible for obtaining from each
Subservicer and delivering to the Owner and any Depositor any servicer
compliance statement required to be delivered by such Subservicer under Section
3.14 and Regulation AB, any assessment of compliance and attestation required to
be delivered by such Subservicer under Section 3.14 and Regulation AB and any
certification required to be delivered to the Person that will be responsible
for signing the Sarbanes Certification under Section 3.14 as and when required
to be delivered under Regulation AB.
(b) It shall not be necessary for the Company to seek the consent of
the Owner, any Master Servicer or any Depositor to the utilization of any
Subcontractor. If required
62
under Regulation AB, the Company shall promptly upon request provide to the
Owner, any Master Servicer and any Depositor (or any designee of the Depositor,
such as an administrator) a written description (in form and substance
reasonably satisfactory to the Owner, such Depositor and such Master Servicer)
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.
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 Owner and any Depositor
to comply with the applicable provisions of Sections 8.03 and 8.05 of this
Agreement. The Company shall be responsible for obtaining from each
Subcontractor and delivering to the Owner and any Depositor any assessment of
compliance and attestation and the other certifications required to be delivered
by such Subservicer and such Subcontractor under Section 3.14, in each case as
and when required to be delivered under Regulation AB.
Section 8.05. Indemnification; Remedies.
(a) The Company shall indemnify the Owner, each affiliate of the
Owner, and each of the following parties participating in a Securitization
Transaction: each sponsor and issuing entity; each Person (including, but not
limited to, any Master Servicer if applicable) 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, agents and affiliates of each of the foregoing
and of the Depositor (each, an "Owner Indemnified Party"), and shall hold each
of them harmless from and against any losses, damages, penalties, fines,
forfeitures, reasonable 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,
accountant's attestation, data or other material provided in written or
electronic form under Section 3.14 or this Article VIII by or on behalf of
the Company, or provided under this Article VIII by or on behalf of any
Subservicer or Subcontractor (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
63
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;
(ii) any breach by the Company of its obligations under Section
3.14 or this Article VIII, including particularly any failure by the
Company, any Subservicer or any Subcontractor to deliver any information,
report, certification, accountants' attestation or other material when and
as required under Section 3.14 or this Article VIII, including any failure
by the Company to identify pursuant to Section 8.04(b) any Subcontractor
"participating in the servicing function" within the meaning of Item 1122
of Regulation AB;
(iii) any breach by the Company of a representation or warranty
set forth in Section 8.02(a) or in a writing furnished pursuant to Section
8.02(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 8.02(b) to the extent
made as of a date subsequent to such closing date; or
(iv) the negligence, bad faith or wilful misconduct of the
Company in connection with its performance under this Article VIII;
provided, however, that the Company shall not be liable for any consequential or
punitive damages whatsoever, whether in contract, tort (including negligence and
strict liability), or any other legal or equitable principle unless (A) such
damages are payable with respect to third party claims made against the Owner or
(B) such damages arise due to a failure by the Company to deliver a
certification required under Item 1123 of Regulation AB and the Owner has used
its best efforts to mitigate such damages, including seeking any necessary
waivers from the Commission on a timely basis.
(b) Only in connection with a Securitization Transaction involving the
Mortgage Loans purchased pursuant to this Agreement, the Owner shall indemnify
the Company, each Person who controls 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, agents and affiliates of each
of the foregoing (each, a "Company Indemnified Party;" together with the Owner
Indemnified Parties, the "Indemnified Parties"), and shall hold each of them
harmless from and against any losses, damages, penalties, fines, forfeitures,
reasonable 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 any untrue statement contained or alleged to be contained in any filing
with the Commission or the omission or alleged omission to state in any filing
with the Commission a material fact required to be stated or necessary to be
stated in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement, alleged untrue
statement, omission, or alleged omission arose out of or was based upon any
information or statement, other than the Company Information, in a filing with
the Commission.
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(c) If the indemnification provided for herein is unavailable or
insufficient to hold harmless an Indemnified Party, then each indemnifying party
agrees that it shall contribute to the amount paid or payable by such
Indemnified Party as a result of any claims, losses, damages or liabilities
incurred by such Indemnified Party in such proportion as is appropriate to
reflect the relative fault of such Indemnified Party on the one hand and the
indemnifying party on the other.
In the case of any failure of performance described in clause (a)(ii)
of this Section, the Company shall promptly reimburse the Owner, 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'
attestation or other material not delivered as required under Regulation AB by
the Company, any Subservicer or any Subcontractor.
(d) This indemnification shall survive the termination of this
Agreement or the termination of any party to this Agreement.
(e) (i) Any failure by the Company, any Subservicer or any
Subcontractor to deliver any information, report, certification, accountants'
attestation or other material when and as required under Section 3.14 or this
Article VIII, or any breach by the Company of a representation or warranty set
forth in Section 8.02(a) or in a writing furnished pursuant to Section 8.02(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 8.02(b) to the extent made as of a date subsequent
to such closing date, shall immediately and automatically, without notice or
grace period, constitute an Event of Default with respect to the Company under
the Agreement and any applicable Reconstitution Agreement, and shall entitle the
Owner, any Master Servicer or any Depositor, as applicable, in its sole
discretion to terminate the rights and obligations of the Company as servicer
under the 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
(and if the Company is servicing any of the Mortgage Loans in a Securitization
Transaction, appoint a successor servicer reasonably acceptable to any Master
Servicer for such Securitization Transaction); provided that to the extent that
any provision of the 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 Owner, any Master Servicer nor any Depositor shall be entitled to
terminate the rights and obligations of the Company pursuant to this
subparagraph (b)(i) 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.
(ii) The Company shall promptly reimburse the Owner (or any
designee of the Owner, such as a master servicer) and any Depositor, as
applicable, for all
65
reasonable expenses incurred by the Owner (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 Mortgage Loans to
a successor servicer. The provisions of this paragraph shall not limit
whatever rights the Owner or any Depositor may have under other provisions
of the 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 8.06. Third Party Beneficiary.
For purposes of this Article VIII and any related provisions thereto,
each Master Servicer shall be considered a third-party beneficiary of this
Agreement, entitled to all the rights and benefits hereof as if it were a direct
party to this Agreement.
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ARTICLE IX
Miscellaneous Provisions
Section 9.01. Successor to the Company. Any successor servicer
appointed as provided herein (the "Successor Servicer") shall have a net worth
of not less than $25,000,000 and shall execute, acknowledge and deliver to the
Company and the Owner an instrument accepting such appointment, whereupon such
Successor Servicer shall succeed to the rights and obligations of the Company
under the Subservicing Agreements and 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.
The Successor Servicer shall promptly deliver a copy of any such instrument to
the Custodian. In connection with the termination or resignation of the Company
as servicer hereunder, either (i) the Successor Servicer shall represent and
warrant that it is a member of MERS in good standing and shall agree to comply
in all material respects with the rules and procedures of MERS in connection
with the servicing of the Mortgage Loans that are registered with MERS, or (ii)
the Company shall cooperate with the Successor Servicer in causing MERS to
execute and deliver an Assignment of Mortgage in recordable form to transfer the
Mortgage from MERS to the Owner and to execute and deliver such other notices,
documents and other instruments as may be necessary or desirable to effect a
transfer of such Mortgage Loan or servicing of such Mortgage Loan on the MERS(R)
System to the Successor Servicer. The Company shall file or cause to be filed
any such assignment in the appropriate recording office. The Successor Servicer
shall cause such assignment to be delivered to the Custodian promptly upon
receipt of the original with evidence of recording thereon or a copy certified
by the public recording office in which such assignment was recorded.
Section 9.02. Entire Agreement: Amendment. This Agreement may be
amended from time to time by the Company and the Owner by written agreement
signed by the Company and the Owner. This Agreement and any applicable Reference
Agreement shall constitute the entire agreement between the parties.
Section 9.03. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY
CONFLICTS OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW WHICH SHALL GOVERN) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT PREEMPTED BY FEDERAL LAW.
Section 9.04. Notices. All demands and notices 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, or sent by overnight courier to
(a) in the case of the Company, Residential Funding Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Office of
the President, and Residential Funding Corporation, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Servicing Manager and/or such
other address as may hereafter be furnished to the Owner in writing by the
Company, (b) in the case of the Initial Owner, HSBC Bank USA, National
Association, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇, or such other address or
addresses as may hereafter be furnished to the Company in writing by the Owner,
(c) in the case of any Owner other than the Initial Owner, to such address as
may be furnished to the Company in writing by such Owner, and (d) in the case of
the Custodian, ▇▇▇▇▇ Fargo Bank Minnesota, N.A., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Mortgage Document Custody, or such
other address or addresses as may hereafter be furnished to the Company in
writing by the Custodian.
Distributions that may be made by wire transfer pursuant to Section
4.01 shall be made in accordance with the wire instructions provided in the
Reference Agreement.
Section 9.05. Severability of Provisions. If any provision of this
Agreement or the Reference Agreement shall be for any reason whatsoever held
invalid, then such provision shall be deemed severable from the remaining
provisions of this Agreement and the Reference Agreement and shall in no way
affect the validity or enforceability of the other provisions of this Agreement
or the Reference Agreement.
Section 9.06. No Partnership. Nothing herein contained shall be deemed
or construed to create a co-partnership or joint venture between the parties
hereto and the services of the Company shall be rendered as an independent
contractor and not as agent for the Owner.
Section 9.07. Exhibits. The exhibits to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this Agreement.
Section 9.08. Counterparts; 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 5.03, this Agreement shall inure to the benefit of
and be binding upon the Company and the Owner and their respective successors
and assigns.
68
IN WITNESS WHEREOF, the Company and the Initial Owner have caused
their names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
RESIDENTIAL FUNDING CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
HSBC BANK USA, NATIONAL ASSOCIATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
69
EXHIBIT A
FORM OF REFERENCE AGREEMENT
RESIDENTIAL FUNDING CORPORATION,
THE COMPANY,
AND
[___________],
THE INITIAL OWNER
REFERENCE AGREEMENT
DATED AS OF [__________ __, 20__]
ADJUSTABLE RATE MORTGAGE LOANS
SERIES 20__-WH__
A-1
REFERENCE AGREEMENT
THIS REFERENCE AGREEMENT, dated as of [______ __, 20__] (this
"Reference Agreement"), is hereby executed by and between RESIDENTIAL FUNDING
CORPORATION, as seller and master servicer (the "Company") and [______], as
initial owner (the "Initial Owner") under this Reference Agreement and the
Standard Terms and Provisions of Sale and Servicing Agreement, dated as of
[______ __, 20__] (as further amended or restated from time to time, the
"Standard Terms"), all the provisions of which are incorporated herein and shall
be a part of this Reference Agreement as if set forth herein in full (this
Reference Agreement together with the Standard Terms so incorporated, the
"Agreement").
PRELIMINARY STATEMENT
The Initial Owner has agreed to purchase from the Company and the
Company has agreed to sell to the Initial Owner, on a servicing retained basis
and without recourse, a 100% undivided Ownership Interest in [a pool] [two
pools] of Mortgage Loans having an aggregate outstanding principal balance as of
the Cut-off Date of $[_______________] as described in the Mortgage Loan
Schedule attached hereto as Exhibit A. [The Mortgage Loans in Pool A have an
aggregate outstanding principal balance as of the Cut-off Date of
$[_______________].] [The Mortgage Loans in Pool B have an aggregate outstanding
principal balance as of the Cut-off Date of $[_______________].
The Mortgage Loans are adjustable rate, fully-amortizing mortgage
loans with terms to maturity from the date of origination or modification of not
more than [15] [30] years. [The interest rate on each Mortgage Loan will adjust
annually to equal the sum of (i) the Index plus (ii) the Gross Margin for such
Mortgage Loan, rounded to the nearest multiple of 0.125%, subject to the
Periodic Cap, Minimum Mortgage Rate and Maximum Mortgage Rate applicable to such
Mortgage Loan.] [With respect to [____]% of the Pool A Loans, the related
Mortgage Notes require that interest only be paid for not more than five years.]
[The interest rate on each Mortgage Loan will adjust annually after a fixed
initial period of five years with respect to each Pool A Loan, and a fixed
initial period of seven years with respect to each Pool B Loan, to equal the sum
of (i) the Index, as most recently available as of the applicable Adjustment
Date specified in the related Mortgage Note, plus (ii) the Gross Margin for such
Mortgage Loan, rounded to the nearest multiple of 0.125%, subject to the
Periodic Cap, Minimum Mortgage Rate and Maximum Mortgage Rate applicable to such
Mortgage Loan.]
In consideration of the premises and the mutual agreements hereinafter
set forth, and intending to be legally bound, the Initial Owner and the Company
agree hereby as follows:
1. Standard Terms; Designation.
The Company and the Owner acknowledge that the Standard Terms
prescribe certain obligations of the Company and the Owner with respect to the
Mortgage Loans. The Company and the Owner each agree to observe and perform such
prescribed duties, responsibilities and obligations, and acknowledge that the
Standard Terms are and shall be a part of this Agreement to the same extent as
if set forth herein in full.
A-2
The Mortgage Loans are designated generally as the Adjustable Rate
Mortgage Loans, Series [20__-WH__].
2. Defined Terms.
In addition to the definitions set forth in Section 1.01 of the
Standard Terms, the following words and phrases, unless the context otherwise
requires, shall have the meanings specified in this Article.
Closing Date: [______ __, 20__].
Cut-off Date: [______ __, 20__].
Index: With respect to any Mortgage Loan and as to any Adjustment Date
therefor, a rate per annum equal to either (a) the average of interbank offered
rates for one-year U.S. dollar-denominated deposits in the London market based
on quotations of major banks as published in The Wall Street Journal, (b) the
average of interbank offered rates for six-month U.S. dollar-denominated
deposits in the London market based on quotations of major banks as published in
The Wall Street Journal, (c) the weekly average yield on U.S. Treasury
securities adjusted to a constant maturity of one year, as reported by the
Federal Reserve Board in Statistical Release No. H.15(519), as most recently
available as of the applicable Adjustment Date specified in the related Mortgage
Note, or (d) in the event that the related index is no longer available, an
index selected by the Company that is based on comparable information.
[Pool A: The group of Mortgage Loans comprised of the Pool A Loans.]
[Pool B: The group of Mortgage Loans comprised of the Pool B Loans.]
[Pool A Loan: Any of the Mortgage Loans designated on Exhibit A-1.]
[Pool B Loan: Any of the Mortgage Loans designated on Exhibit A-2.]
Purchase Price: As to any Mortgage Loan to be purchased on any date
pursuant to Section 2.02 or 2.05 an amount equal to the sum of (i) the Principal
Balance of the Mortgage Loan and (ii) interest on such Principal Balance at the
applicable Mortgage Loan Remittance Rate (or at (a) the applicable Mortgage
Interest Rate less the related Subservicing Fee Rate in the case of a purchase
made by a Subservicer; or (b) the applicable Mortgage Interest Rate in the case
of a purchase by a Seller) from the Due Date to which interest has last been
paid or advanced to the first day of the month following the month of purchase.
Purchase Price Percentage: As specified in the commitment letter dated
[_____] between the Initial Owner and the Company.
Servicing Fee Rate: [As to each Mortgage Loan, an amount equal to
0.05% per annum plus, if such Mortgage Loan is not serviced by a Subservicer at
the time of determination, an amount equal to the Subservicing Fee Rate for such
Mortgage Loan.] [As to each Pool A Loan, an amount equal to 0.05% per annum
plus, if such Pool A Loan is not serviced by a Subservicer at the time of
determination, an amount equal to the Subservicing Fee Rate for such
A-3
Pool A Loan.] [As to each Pool B Loan, an amount equal to 0.05% per annum plus,
if such Pool B Loan is not serviced by a Subservicer at the time of
determination, an amount equal to the Subservicing Fee Rate for such Pool B
Loan.]
Subservicing Fee Rate: [___]% per annum.
3. Conveyance of Mortgage Loans; Possession of Mortgage Files.
The Company, simultaneously with the execution and delivery of this
Reference Agreement, does hereby sell, transfer and assign, without recourse, to
the Initial Owner the Ownership Interest comprising all of the right, title and
interest of the Company in and to the Mortgage Loans, including all interest at
the applicable Mortgage Loan Remittance Rate and principal received on or with
respect to the Mortgage Loans after the Cut-off Date (other than payments of
principal and interest due on the Mortgage Loans on or before the Cut-off Date)
on a servicing retained basis. Additionally, in connection with the Company's
assignment to the Initial Owner, and subject to Section 2.01 of the Standard
Terms, the Company has delivered to, and deposited with, the Custodian, as the
duly appointed agent of the Owner for such purpose, the documents or instruments
or copies thereof set forth in Section 2.01(b) of the Standard Terms.
4. Additional Representations and Warranties of the Company.
The Company hereby represents and warrants to the Initial Owner that
as of the Closing Date or such other date specifically provided for herein:
(a) The Mortgage Loans are conventional, adjustable rate,
fully-amortizing mortgage loans having terms to maturity of not more than
[15] [30] years from the date of origination or modification with monthly
payments due on the first day of each month, with interest payable in
arrears;
(b) Each Mortgage Loan with a Loan-to-Value Ratio at origination in
excess of 80% is the subject of a primary insurance policy that insures at
least 30% of the principal balance of the Mortgage Loan at origination if
the Loan-to-Value Ratio is between 95.00% and 90.01%, at least 25% of the
principal balance of the Mortgage Loan at origination if the Loan-to-Value
Ratio is between 90.00% and 85.01%, and at least 12% of the principal
balance of the Mortgage Loan at origination if the Loan-to-Value Ratio is
between 85.00% and 80.01%;
(c) No Mortgage Loan provides for deferred interest or negative
amortization;
(d) None of the Mortgage Loans are buydown Mortgage Loans;
(e) The Mortgage Loan is not a graduated payment loan nor does it have
a shared appreciation feature, or other contingent interest feature;
A-4
(f) No Mortgage Loan has a Principal Balance as of the Cut-off Date of
more than $ ; as of the Cut-off Date, the average Principal Balance of the
Mortgage Loans is not more than $___________;
(g) No Mortgage Loan had an original principal balance of greater than
$_________;
(h) The weighted average Loan-to-Value Ratio of the Mortgage Loans, by
aggregate Principal Balance as of the Cut-off Date, is not more than %;
(i) Not less than % of the Mortgage Loans are secured by single family
detached properties or detached PUDs, and no more than % of the Mortgage
Loans are secured by condominiums, townhomes, or attached PUDs, in each
case by aggregate Principal Balance as of the Cut-off Date;
(j) The Mortgage Interest Rates on the Mortgage Loans as of the
Cut-off Date range between % and %, and the weighted average Mortgage
Interest Rate as of the Cut-off Date is %; and
(k) [[____] of the Mortgage Loans, representing [___]% of the Mortgage
Loans as of the Cut-off Date, are [Additional Collateral] [Pledged Asset
Mortgage] [Cooperative] Loans [if representation applies, additional
provisions required]].
(k) [All of the Mortgage Loans were originated by the Company or a
Qualified Correspondent.]
(l) [additional Fannie/▇▇▇▇▇▇▇ reps as negotiated]
5. Wire Instructions
Distributions that may be made by wire transfer pursuant to Section
4.01 of the Standard Terms shall be made in accordance with the following wire
instructions:
Bank:
ABA Number:
Account Name:
Account Number:
Reference:
or in accordance with such other instructions as may hereafter be furnished to
the Company in writing by the Owner, provided that such instructions have been
received by the Company prior to the Record Date.
6. Counterparts.
This Reference Agreement may be executed simultaneously in any number
of counterparts, each of which counterparts shall be deemed to be an original,
and such counterparts shall constitute but one and the same instrument.
A-5
7. Governing Law.
This Reference Agreement shall be governed by and 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.
8. Amendment.
This Reference Agreement may be amended from time to time by the
Company and the Owner by written agreement signed by the Company and the Owner.
[Signature Page Follows]
A-6
IN WITNESS WHEREOF, the Company and the Initial Owner have caused
their names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
RESIDENTIAL FUNDING CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
HSBC BANK USA, NATIONAL ASSOCIATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT [A] [A-1] [A-2]
TO THE REFERENCE AGREEMENT
MORTGAGE LOAN SCHEDULE
A-1
EXHIBIT B
FORM OF SUBSERVICING AGREEMENT
This Seller/Servicer Contract (as may be amended, supplemented or
otherwise modified from time to time, this "Contract") is made this ________ day
of __________, ________, by and between Residential Funding Corporation, its
successors and assigns ("Residential Funding") and ________________________ (the
"Seller/Servicer," and, together with Residential Funding, the "parties" and
each, individually, a "party").
WHEREAS, the Seller/Servicer desires to sell Loans to, and/or service
Loans for, Residential Funding, and Residential Funding desires to purchase
Loans from the Seller/Servicer and/or have the Seller/Servicer service various
of its Loans, pursuant to the terms of this Contract and the Residential Funding
Seller and Servicer Guides incorporated herein by reference, as amended,
supplemented or otherwise modified, from time to time (together, the "Guides").
NOW, THEREFORE, in consideration of the premises, and the terms,
conditions and agreements set forth below, the parties agree as follows:
1. INCORPORATION OF GUIDES BY REFERENCE.
The Seller/Servicer acknowledges that it has received and read the
Guides. All provisions of the Guides are incorporated by reference into and made
a part of this Contract, and shall be binding upon the parties; provided,
however, that the Seller/Servicer shall be entitled to sell Loans to and/or
service Loans for Residential Funding only if and for so long as it shall have
been authorized to do so by Residential Funding in writing. Specific reference
in this Contract to particular provisions of the Guides and not to other
provisions does not mean that those provisions of the Guides not specifically
cited in this Contract are not applicable. All terms used herein shall have the
same meanings as such terms have in the Guides, unless the context clearly
requires otherwise.
2. AMENDMENTS.
This Contract may not be amended or modified orally, and no provision
of this Contract may be waived or amended except in writing signed by the party
against whom enforcement is sought. Such a written waiver or amendment must
expressly reference this Contract. However, by their terms, the Guides may be
amended or supplemented by Residential Funding from time to time. Any such
amendment(s) to the Guides shall be binding upon the parties hereto.
3. REPRESENTATIONS AND WARRANTIES.
(a) Reciprocal Representations and Warranties.
The Seller/Servicer and Residential Funding each represents and
warrants to the other that as of the date of this Contract:
B-1
(1) Each party is duly organized, validly existing, and in good
standing under the laws of its jurisdiction of organization,
is qualified, if necessary, to do business and in good
standing in each jurisdiction in which it is required to be
so qualified, and has the requisite power and authority to
enter into this Contract and all other agreements which are
contemplated by this Contract and to carry out its
obligations hereunder and under the Guides and under such
other agreements.
(2) This Contract has been duly authorized, executed and
delivered by each party and constitutes a valid and legally
binding agreement of each party enforceable in accordance
with its terms.
(3) There is no action, proceeding or investigation pending or
threatened, and no basis therefor is known to either party,
that could affect the validity or prospective validity of
this Contract.
(4) Insofar as its capacity to carry out any obligation under
this Contract is concerned, neither party is in violation of
any charter, articles of incorporation, bylaws, mortgage,
indenture, indebtedness, agreement, instrument, judgment,
decree, order, statute, rule or regulation and none of the
foregoing adversely affects its capacity to fulfill any of
its obligations under this Contract. Its execution of, and
performance pursuant to, this Contract will not result in a
violation of any of the foregoing.
(b) Seller/Servicer's Representations, Warranties and Covenants.
In addition to the representations, warranties and covenants made by
the Seller/Servicer pursuant to subparagraph (a) of this paragraph 3, the
Seller/Servicer makes the representations, warranties and covenants set forth in
the Guides and, upon request, agrees to deliver to Residential Funding the
certified Resolution of Board of Directors which authorizes the execution and
delivery of this Contract.
4. REMEDIES OF RESIDENTIAL FUNDING.
If an Event of Seller Default or an Event of Servicer Default shall
occur, Residential Funding may, at its option, exercise one or more of those
remedies set forth in the Guides.
5. SELLER/SERVICER'S STATUS AS INDEPENDENT CONTRACTOR.
At no time shall the Seller/Servicer represent that it is acting as an
agent of Residential Funding. The Seller/Servicer shall, at all times, act as an
independent contractor.
6. PRIOR AGREEMENTS SUPERSEDED.
B-2
This Contract restates, amends and supersedes any and all prior Seller
Contracts or Servicer Contracts between the parties except that any subservicing
agreement executed by the Seller/Servicer in connection with any loan-security
exchange transaction shall not be affected.
7. ASSIGNMENT.
This Contract may not be assigned or transferred, in whole or in part,
by the Seller/Servicer without the prior written consent of Residential Funding.
Residential Funding may sell, assign, convey, hypothecate, pledge or in any
other way transfer, in whole or in part, without restriction, its rights under
this Contract and the Guides with respect to any Commitment or Loan.
8. NOTICES.
All notices, requests, demands or other communications that are to be
given under this Contract shall be in writing, addressed to the appropriate
parties and sent by telefacsimile or by overnight courier or by United States
mail, postage prepaid, to the addresses and telefacsimile numbers specified
below. However, another name, address and/or telefacsimile number may be
substituted by the Seller/Servicer pursuant to the requirements of this
paragraph 8, or Residential Funding pursuant to an amendment to the Guides.
If to Residential Funding, notices must be sent to the appropriate address or
telefacsimile number specified in the Guides.
If to the Seller/Servicer, notice must be sent to:
Attention:
Telefacsimile Number: (_______) ________-
9. JURISDICTION AND VENUE.
Each of the parties irrevocably submits to the jurisdiction of any
state or federal court located in Hennepin County, Minnesota, over any action,
suit or proceeding to enforce or defend any right under this Contract or
otherwise arising from any loan sale or servicing relationship existing in
connection with this Contract, and each of the parties irrevocably agrees that
all claims in respect of any such action or proceeding may be heard or
determined in such state or federal court. Each of the parties irrevocably
waives the defense of an inconvenient forum to the maintenance of any such
action or proceeding and any other substantive or procedural rights or remedies
it may have with respect to the maintenance of any such action or proceeding in
any such forum. Each of the parties agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in any other
jurisdiction by suit on
B-3
the judgment or in any other manner provided by law. Each of the parties further
agrees not to institute any legal actions or proceedings against the other party
or any director, officer, employee, attorney, agent or property of the other
party, arising out of or relating to this Contract in any court other than as
hereinabove specified in this paragraph 9.
10. MISCELLANEOUS.
This Contract, including all documents incorporated by reference
herein, constitutes the entire understanding between the parties hereto and
supersedes all other agreements, covenants, representations, warranties,
understandings and communications between the parties, whether written or oral,
with respect to the transactions contemplated by this Contract. All paragraph
headings contained herein are for convenience only and shall not be construed as
part of this Contract. Any provision of this Contract that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction, and, to this end, the provisions hereof are
severable. This Contract shall be governed by, and construed and enforced in
accordance with, applicable federal laws and the laws of the State of Minnesota.
B-4
IN WITNESS WHEREOF, the duly authorized officers of the
Seller/Servicer and Residential Funding have executed this Seller/Servicer
Contract as of the date first above written.
ATTEST: SELLER/SERVICER
[Corporate Seal]
(If none, so state.)
----------------------------------------
(Name of Seller/Servicer)
By:
------------------------------------
(Signature)
By:
------------------------------------- ------------------------------------
(Typed Name) (Typed Name)
------------------------ ---------------------------
Title: Title:
------------------------------ ---------------------------------
ATTEST: RESIDENTIAL FUNDING CORPORATION
By:
------------------------------------
(Signature)
----------------------------
By:
------------------------------------- ------------------------------------
(Typed Name) (Typed Name)
------------------------ ---------------------------
Title: Title:
------------------------------ ---------------------------------
▇-▇
▇▇▇▇▇▇▇ ▇
[▇▇▇▇▇▇▇▇]
▇-▇
▇▇▇▇▇▇▇ ▇
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is dated ___________________,
between ___________________ ("Assignor"), and _______________________________
("Assignee").
For and in consideration of the sum of TEN DOLLARS ($10.00) and other
valuable consideration the receipt and sufficiency of which hereby are
acknowledged, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
1. The Assignor hereby grants, transfers and assigns to Assignee all
of the right, title and interest of the Assignor, as Owner in, to and under that
certain Sale and Servicing Agreement, Adjustable Rate Mortgage Loans, Series
[____]- (the "Servicing Agreement"), dated as of ____________, [____] by and
between Residential Funding Corporation (the "Company") and ___________________.
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 such Mortgage Loans, which transfer is made subject
to the terms and provisions of the Servicing Agreement but free from any other
claims and encumbrances;
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 Servicing Agreement or the Mortgage Loans;
c. Unless noted below, the Assignor has not waived or agreed to
any waiver under, or agreed to any amendment or other modification of, the
Servicing Agreement or the Mortgage Loans, including without limitation the
transfer of the servicing obligations under the 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 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
or any interest in the Mortgage Loans to, or solicited any offer to buy or
accept a transfer, pledge or other disposition of the Mortgage Loans or any
interest in the Mortgage Loans from, or otherwise approached or negotiated with
respect to the Mortgage Loans, any interest in the Mortgage Loans 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 "Securities Act") or which would render the disposition of the Mortgage
Loans a violation of Section 5 of the Securities Act or require registration
pursuant thereto.
D-1
3. The Assignee warrants and represents to, and covenants with, the
Assignor and the Company pursuant to Section 2.03 of the Servicing Agreement
that:
a. The Assignee agrees to be bound, as Owner by all of the terms,
covenants and conditions of the Servicing Agreement, the Mortgage Loans and from
and after the date hereof, the Assignee assumes for the benefit of each of the
Company and the Assignor all of the Assignor's obligations as Owner thereunder;
b. Assignee understands that the Mortgage Loans have not been
registered under the Securities Act or the securities laws of any state.
Assignee is acquiring the Mortgage Loans for investment for its own account only
and not with a view to or for sale or other transfer in connection with any
distribution of the Mortgage Loans in any manner that would violate the
Securities Act or any applicable state securities law. 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. Assignee has been
furnished with all information regarding the Mortgage Loans that it has
requested from Assignor or the Company. 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 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 from, or otherwise approached or
negotiated with respect to the Mortgage Loans, any interest in the Mortgage
Loans 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
or which would render the disposition of the Mortgage Loans a violation of
Section 5 of the Securities 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;
c. The Assignee is either (i) not an employee benefit plan that
is subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or Section 4975 of the Internal Revenue Code of 1986 (the "Code")(a
"Plan") and not a Person acting, directly or indirectly, on behalf of or
investing with "plan assets" of any such Plan or (ii) an employee benefit plan
that is subject to ERISA and the assignment contemplated herein does not
constitute and will not result in a non-exempt prohibited transaction under
Section 406 of ERISA or Section 4975 of the Code; and
d. The Assignee shall indemnify the Company and hold it harmless
against any loss, liability or expense incurred in connection with any claim,
demand, defense or assertion based on or grounded upon or resulting from, a
breach of the Assignee's representations, warranties and covenants set forth in
this Assignment and Assumption Agreement.
4. Capitalized words and phrases used but not otherwise defined in
this Assignment and Assumption Agreement shall have the respective meanings
assigned to them in the Servicing Agreement.
D-2
IN WITNESS WHEREOF, the parties have caused this Assignment and
Assumption Agreement to be executed by their duly authorized officers as of the
date first above written.
------------------------------------- ----------------------------------------
Assignor Assignee
By: By:
--------------------------------- ------------------------------------
Name: Name:
------------------------------- ----------------------------------
Title: Title:
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Taxpayer
Identification No.
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D-3
EXHIBIT E
FORM OF CERTIFICATION
Residential Funding Corporation
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[Address of Custodian]
Re: Adjustable Rate Mortgage Loans,
Series [____]- - Assignment of Mortgage Loan
Ladies and Gentlemen:
This letter is delivered to you in connection with the assignment by
______________ (the "Owner") to _______________________ (the "Lender") of
____________________ (the "Mortgage Loan") pursuant to Section 3.11(d) of the
Sale and Servicing Agreement (the "Sale and Servicing Agreement"), dated as of
________________, [____] among Residential Funding Corporation, as company (the
"Company") and _________________________________, as Initial Owner. All terms
used herein and not otherwise defined shall have the meanings set forth in the
Sale and Servicing Agreement. The Lender hereby certifies, represents and
warrants to, and covenants with, the Company and the Custodian that:
(i) the Mortgage Loan is secured by Mortgaged Property located in
a jurisdiction in which an assignment in lieu of satisfaction is required
to preserve lien priority, minimize or avoid mortgage recording taxes or
otherwise comply with, or facilitate a refinancing under, the laws of such
jurisdiction;
(ii) the substance of the assignment is, and is intended to be, a
refinancing of such Mortgage Loan and the form of the transaction is solely
to comply with, or facilitate the transaction under, such local laws;
(iii) the Mortgage Loan following the proposed assignment will be
modified to have a rate of interest at least 0.25 percent below or above
the rate of interest on such Mortgage Loan prior to such proposed
assignment; and
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(iv) such assignment is at the request of the borrower under the
related Mortgage Loan.
Very truly yours,
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(Lender)
By:
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Name:
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Title:
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EXHIBIT F
FORM OF REQUEST FOR RELEASE
DATE:
----------------
TO:
RE: REQUEST FOR RELEASE OF DOCUMENTS
In connection with the administration of the pool of Mortgage Loans
held by you for the referenced pool, we request the release of the Mortgage File
described below.
Sale and Servicing Agreement Dated:
Series#:
Account#:
Pool#:
Loan#:
MIN#:
Mortgagor Name(s):
Reason for Document Request: (circle one) Mortgage Loan Prepaid in Full
Mortgage Loan Repurchased
Mortgage Loan in Foreclosure
"We hereby certify that all amounts received or to be received in
connection with such payments which are required to be deposited have been or
will be so deposited as provided in the Sale and Servicing Agreement."
Residential Funding Corporation
Authorized Signature
*************************************************************
TO CUSTODIAN: Please acknowledge this request, and check off documents being
enclosed with a copy of this form. You should retain this form for your files in
accordance with the terms of the Sale and Servicing Agreement.
F-1
Enclosed Documents: [ ] Promissory Note
[ ] Primary Insurance Policy
[ ] Mortgage or Deed of Trust
[ ] Assignment(s) of Mortgage or Deed of Trust
[ ] Title Insurance Policy
[ ] Other:
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Name Date
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Title
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EXHIBIT G
SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE
The assessment of compliance to be delivered by the Servicer shall address,
at a minimum, the criteria identified as below as "Applicable Servicing
Criteria":
SERVICING CRITERIA
-------------------------------------------------------------------------------------- APPLICABLE SERVICING
REFERENCE CRITERIA CRITERIA
--------- -------- --------------------
GENERAL SERVICING CONSIDERATIONS
1122(d)(1)(i) Policies and procedures are instituted to monitor any performance [X]
or other triggers and events of default in accordance with the
transaction agreements.
1122(d)(1)(ii) If any material servicing activities are outsourced to third [X]
parties, policies and procedures are instituted to monitor the
third party's performance and compliance with such servicing
activities.
1122(d)(1)(iii) Any requirements in the transaction agreements to maintain a
back-up servicer for the pool assets are maintained.
1122(d)(1)(iv) A fidelity bond and errors and omissions policy is in effect on the [X]
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 pool assets are deposited into the appropriate [X]
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 [X]
an investor are made only by authorized personnel.
1122(d)(2)(iii) Advances of funds or guarantees regarding collections, cash flows [X]
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 [X]
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 [X]
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-1(b)(1) 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 [X]
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 (D) 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.
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SERVICING CRITERIA
-------------------------------------------------------------------------------------- APPLICABLE SERVICING
REFERENCE CRITERIA CRITERIA
--------- -------- --------------------
INVESTOR REMITTANCES AND REPORTING
1122(d)(3)(i) Reports to investors, including those to be filed with the [X]
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 pool assets serviced by the
servicer.
1122(d)(3)(ii) Amounts due to investors are allocated and remitted in accordance [X]
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 [X]
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 [X]
cancelled checks, or other form of payment, or custodial bank
statements.
POOL ASSET ADMINISTRATION
1122(d)(4)(i) Collateral or security on pool assets is maintained as required by [X]
the transaction agreements or related asset pool documents.
1122(d)(4)(ii) Pool assets and related documents are safeguarded as required by [X]
the transaction agreements
1122(d)(4)(iii) Any additions, removals or substitutions to the asset pool are [X]
made, reviewed and approved in accordance with any conditions or
requirements in the transaction agreements.
1122(d)(4)(iv) Payments on pool assets, including any payoffs, made in accordance [X]
with the related pool asset 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 pool asset documents.
1122(d)(4)(v) The servicer's records regarding the pool assets agree with the [X]
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 pool [X]
asset (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, [X]
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 [X]
period a pool asset 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 pool assets 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 pool assets [X]
with variable rates are computed based on the related pool asset
documents.
G-2
SERVICING CRITERIA
-------------------------------------------------------------------------------------- APPLICABLE SERVICING
REFERENCE CRITERIA CRITERIA
--------- -------- --------------------
1122(d)(4)(x) Regarding any funds held in trust for an obligor (such as escrow [X]
accounts): (A) such funds are analyzed, in accordance with the
obligor's pool asset 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 pool asset documents and state laws; and
(C) such funds are returned to the obligor within 30 calendar days
of full repayment of the related pool asset, 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 [X]
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 [X]
made on behalf of an obligor are paid from the servicer's funds and
not charged to the obligor, unless the late payment was due to the
obligor's error or omission.
1122(d)(4)(xiii) Disbursements made on behalf of an obligor are posted within two [X]
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 [X]
recognized and recorded in accordance with the transaction
agreements.
1122(d)(4)(xv) Any external enhancement or other support, identified in Item
1114(a)(1) through (3) or Item 1115 of Regulation AB, is maintained
as set forth in the transaction agreements.
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EXHIBIT H
FORM OF ANNUAL CERTIFICATION
Re: The Sale and Servicing Agreement, dated as of [Date] (the
"Agreement"), between [name] (the "Purchaser") and [Servicer] (the
"Servicer")
I, [INSERT NAME AND TITLE] of Residential Funding Corporation, hereby
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 Section 3.14 of the Agreement (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 other data, servicing reports, officer's certificates and
information relating to the performance of the Servicer under the terms of the
Agreement during 200[ ] that were delivered to the [Depositor] [Master Servicer]
[Securities Administrator] [Trustee] pursuant to the Agreement (collectively,
the "RFC Servicing Information");
2. Based on my knowledge, the RFC 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 therein, in light of the
circumstances under which such statements were made, not misleading with respect
to the period of time covered by the RFC Servicing Information;
3. Based on my knowledge, all of the RFC 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 in all material
respects; 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 any Subservicer or 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
H-1
[Depositor] [Master Servicer]. Any material instance of noncompliance with the
Servicing Criteria has been disclosed in such reports.
Date:
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By:
---------------------------------
Name:
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Title:
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H-2