EMC MORTGAGE CORPORATION Purchaser, FIRST TENNESSEE MORTGAGE SERVICES, INC. Servicer, FIRST HORIZON HOME LOAN CORPORATION
EMC
MORTGAGE CORPORATION
Purchaser,
FIRST
TENNESSEE MORTGAGE SERVICES, INC.
Servicer,
FIRST
HORIZON HOME LOAN CORPORATION
Seller,
Dated
as
of September 1, 2003
(Fixed
and Adjustable Rate Mortgage Loans)
TABLE
OF CONTENTS
|
ARTICLE
I
|
|
|
Section
1.01
|
Defined
Terms
|
|
ARTICLE
II
|
|
|
Section
2.01
|
Agreement
to Purchase
|
|
Section
2.02
|
Purchase
Price
|
|
Section
2.03
|
Servicing
of Mortgage Loans
|
|
Section
2.04
|
Record
Title and Possession of Mortgage Files; Maintenance of Servicing
Files
|
|
Section
2.05
|
Books
and Records
|
|
Section
2.06
|
Transfer
of Mortgage Loans
|
|
Section
2.07
|
Delivery
of Mortgage Loan Documents
|
|
Section
2.08
|
Quality
Control Procedures
|
|
Section
2.09
|
Near-term
Principal Prepayments; Near Term Payment Defaults
|
|
Section
2.10
|
Modification
of Obligations
|
|
ARTICLE
III
|
|
|
Section
3.01
|
Representations
and Warranties of the Company
|
|
Section
3.02
|
Representations
and Warranties as to Individual Mortgage Loans
|
|
Section
3.03
|
Repurchase;
Substitution
|
|
Section
3.04
|
Representations
and Warranties of the Purchaser
|
|
ARTICLE
IV
|
|
|
Section
4.01
|
Company
to Act as Servicer
|
|
Section
4.02
|
Collection
of Mortgage Loan Payments
|
|
Section
4.03
|
Realization
Upon Defaulted Mortgage Loans
|
|
Section
4.04
|
Establishment
of Custodial Accounts; Deposits in Custodial Accounts
|
|
Section
4.05
|
Permitted
Withdrawals from the Custodial Account
|
|
Section
4.06
|
Establishment
of Escrow Accounts; Deposits in Escrow Accounts
|
|
Section
4.07
|
Permitted
Withdrawals From Escrow Account
|
|
Section
4.08
|
Payment
of Taxes, Insurance and Other Charges; Maintenance of Primary Mortgage
Insurance Policies; Collections Thereunder
|
|
Section
4.09
|
Transfer
of Accounts
|
|
Section
4.10
|
Maintenance
of Hazard Insurance
|
|
Section
4.11
|
Maintenance
of Mortgage Impairment Insurance Policy
|
|
Section
4.12
|
Fidelity
Bond, Errors and Omissions Insurance
|
|
Section
4.13
|
Title,
Management and Disposition of REO Property
|
|
Section
4.14
|
Notification
of Maturity Date
|
|
ARTICLE
V
|
|
|
Section
5.01
|
Distributions
|
|
Section
5.02
|
Statements
to the Purchaser
|
|
Section
5.03
|
Monthly
Advances by the Company
|
|
Section
5.04
|
Liquidation
Reports
|
|
ARTICLE
VI
|
|
|
Section
6.01
|
Assumption
Agreements
|
|
Section
6.02
|
Satisfaction
of Mortgages and Release of Mortgage Files
|
|
Section
6.03
|
Servicing
Compensation
|
|
Section
6.04
|
Annual
Statement as to Compliance
|
|
Section
6.05
|
Annual
Independent Certified Public Accountants’ Servicing
Report
|
|
Section
6.06
|
Purchaser’s
Right to Examine Company Records
|
|
ARTICLE
VII
|
|
|
Section
7.01
|
Company
Shall Provide Information as Reasonably Required
|
|
ARTICLE
VIII
|
|
|
Section
8.01
|
Indemnification;
Third Party Claims
|
|
Section
8.02
|
Merger
or Consolidation of the Company
|
|
Section
8.03
|
Limitation
on Liability of the Company and Others
|
|
Section
8.04
|
Company
Not to Assign or Resign
|
|
Section
8.05
|
No
Transfer of Servicing
|
|
ARTICLE
IX
|
|
|
Section
9.01
|
Events
of Default
|
|
Section
9.02
|
Waiver
of Defaults
|
|
ARTICLE
X
|
|
|
Section
10.01
|
Termination
|
|
Section
10.02
|
Termination
without cause
|
|
ARTICLE
XI
|
|
|
Section
11.01
|
Successor
to the Company
|
|
Section
11.02
|
Amendment
|
|
Section
11.03
|
Recordation
of Agreement
|
|
Section
11.04
|
Governing
Law
|
|
Section
11.05
|
Notices
|
|
Section
11.06
|
Severability
of Provisions
|
|
Section
11.07
|
Exhibits
|
|
Section
11.08
|
General
Interpretive Principles
|
|
Section
11.09
|
Reproduction
of Documents
|
|
Section
11.10
|
Confidentiality
of Information
|
|
Section
11.11
|
Recordation
of Assignment of Mortgage
|
|
Section
11.12
|
Assignment
by Purchaser
|
|
Section
11.13
|
No
Partnership
|
|
Section
11.14
|
Execution:
Successors and Assigns
|
|
Section
11.15
|
Entire
Agreement
|
|
Section
11.16
|
No
Solicitation
|
|
Section
11.17
|
Closing
|
|
Section
11.18
|
Cooperation
of Company with Reconstitution
|
|
EXHIBITS
|
|
|
A
|
Contents
of Mortgage File
|
|
B
|
Custodial
Account Letter Agreement
|
|
C
|
Escrow
Account Letter Agreement
|
|
D
|
Form
of Assignment, Assumption and Recognition Agreement
|
|
E
|
Form
of Trial Balance
|
|
F
|
[reserved]
|
|
G
|
Request
for Release of Documents and Receipt
|
|
H
|
Company’s
Underwriting Guidelines
|
|
I
|
Form
of Term Sheet
|
This
is a
Purchase, Warranties and Servicing Agreement, dated as of September 1, 2003
and
is executed among EMC MORTGAGE CORPORATION, as Purchaser, with offices located
at Mac ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(the "Purchaser"), FIRST TENNESSEE MORTGAGE SERVICES, INC., as servicer (the
“Servicer”) with offices located at ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and FIRST HORIZON HOME LOAN CORPORATION, as
seller (the “Seller”) with offices located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇ (the Servicer and the Seller together referred to as the
"Company").
W I T N E S S E T H
:
WHEREAS,
the Purchaser has heretofore agreed to purchase from the Company and the Company
has heretofore agreed to sell to the Purchaser, from time to time, certain
Mortgage Loans on a servicing retained basis;
WHEREAS,
each of the Mortgage Loans is secured by a mortgage, deed of trust or other
security instrument creating a first lien on a residential dwelling located
in
the jurisdiction indicated on the Mortgage Loan Schedule, which is annexed
to
the related Term Sheet; and
WHEREAS,
the Purchaser and the Company wish to prescribe the representations and
warranties of the Company with respect to itself and the Mortgage Loans and
the
management, servicing and control of the Mortgage Loans;
NOW,
THEREFORE, in consideration of the mutual agreements hereinafter set forth,
and
for other good and valuable consideration, the receipt and adequacy of which
is
hereby acknowledged, the Purchaser and the Company agree as
follows:
ARTICLE
I
DEFINITIONS
Section
1.01 Defined
Terms.
Whenever
used in this Agreement, the following words and phrases, unless the context
otherwise requires, shall have the following meaning specified in this
Article:
Accepted
Servicing Practices:
With
respect to any Mortgage Loan, those mortgage servicing practices (including
collection procedures) of prudent mortgage banking institutions which service
mortgage loans of the same type as such Mortgage Loan in the jurisdiction where
the related Mortgaged Property is located, and which are in accordance with
▇▇▇▇▇▇ Mae servicing practices and procedures, for MBS pool mortgages, as
defined in the ▇▇▇▇▇▇ ▇▇▇ Guides including future updates.
Adjustment
Date:
As to
each adjustable rate Mortgage Loan, the date on which the Mortgage Interest
Rate
is adjusted in accordance with the terms of the related Mortgage
Note.
Agreement:
This
Purchase, Warranties and Servicing Agreement including all exhibits hereto,
amendments hereof and supplements hereto.
Appraised
Value:
With
respect to any Mortgaged Property, the value thereof as determined by an
appraisal made for the originator of the Mortgage Loan at the time of
origination of the Mortgage Loan by an appraiser who met the requirements of
the
Company and ▇▇▇▇▇▇ Mae.
Assignment:
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 reflect of record the
sale
or transfer of the Mortgage Loan.
BIF:
The
Bank Insurance Fund, or any successor thereto.
Business
Day:
Any day
other than: (i) a Saturday or Sunday, or (ii) a legal holiday in the State
of
New York or State of Texas, or (iii) a day on which banks in the State of New
York or State of Texas are authorized or obligated by law or executive order
to
be closed.
Closing
Date:
With
respect to any Mortgage Loan, the date stated on the related Term Sheet.
Code: The
Internal Revenue Code of 1986, or any successor statute thereto.
Company:
Reference
to the Seller and Servicer.
Company's
Officer's Certificate:
A
certificate signed by the Chairman of the Board, President, any Vice President
or Treasurer of Company stating the date by which Company expects to receive
any
missing documents sent for recording from the applicable recording
office.
Condemnation
Proceeds:
All
awards or settlements in respect of a Mortgaged Property, whether permanent
or
temporary, partial or entire, by exercise of the power of eminent domain or
condemnation, to the extent not required to be released to a Mortgagor in
accordance with the terms of the related Mortgage Loan Documents.
Confirmation:
The
trade confirmation letter between the Purchaser and the Company which relates
to
the Mortgage Loans.
Co-op
Lease:
With
respect to a Co-op Loan, the lease with respect to a dwelling unit occupied
by
the Mortgagor and relating to the stock allocated to the related dwelling
unit.
Co-op
Loan:
A
Mortgage Loan secured by the pledge of stock allocated to a dwelling unit in
a
residential cooperative housing corporation and a collateral assignment of
the
related Co-op Lease.
Current
Appraised Value: With
respect to any Mortgaged Property, the value thereof as determined by an
appraisal made for the Company (by an appraiser who met the requirements of
the
Company and ▇▇▇▇▇▇ ▇▇▇) at the request of a Mortgagor for the purpose of
canceling a Primary Mortgage Insurance Policy in accordance with federal, state
and local laws and regulations or otherwise made at the request of the Company
or Mortgagor.
Current
LTV: The
ratio
of the Stated Principal Balance of a Mortgage Loan to the Current Appraised
Value of the Mortgaged Property.
Custodial
Account:
Each
separate demand account or accounts created and maintained pursuant to Section
4.04 which shall be entitled "[_____________________], in trust for the
[Purchaser], Owner of Adjustable Rate Mortgage Loans" and shall be established
in an Eligible Account, in the name of the Person that is the "Purchaser" with
respect to the related Mortgage Loans.
Custodian:
With
respect to any Mortgage Loan, the entity stated on the related Term Sheet,
and
its successors and assigns, as custodian for the Purchaser.
Cut-off
Date:
With
respect to any Mortgage Loan, the date stated on the related Term Sheet.
Determination
Date:
The
15th day (or if such 15th day is not a Business Day, the Business Day
immediately preceding such 15th day) of the month of the related Remittance
Date.
Due
Date:
The day
of the month on which the Monthly Payment is due on a Mortgage Loan, exclusive
of any days of grace, which is the first day of the month.
Due
Period:
With
respect to any Remittance Date, the period commencing on the second day of
the
month preceding the month of such Remittance Date and ending on the first day
of
the month of the Remittance Date.
Eligible
Account:
An
account established and maintained: (i) within FDIC insured accounts created,
maintained and monitored by the Company so that all funds deposited therein
are
fully insured, or (ii) as a trust account with the corporate trust department
of
a depository institution or trust company organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
which is not affiliated with the Company (or any sub-servicer) or (iii) with
an
entity which is an institution whose deposits are insured by the FDIC, the
unsecured and uncollateralized long-term debt obligations of which shall be
rated “A2” or higher by Standard & Poor’s and “A” or higher by Fitch, Inc.
or one of the two highest short-term ratings by any applicable Rating Agency,
and which is either (a) a federal savings association duly organized, validly
existing and in good standing under the federal banking laws, (b) an institution
duly organized, validly existing and in good standing under the applicable
banking laws of any state, (c) a national banking association under the federal
banking laws, or (d) a principal subsidiary of a bank holding company, or (iv)
if ownership of the Mortgage Loans is evidenced by mortgaged-backed securities,
the equivalent required ratings of each Rating Agency, and held such that the
rights of the Purchaser and the owner of the Mortgage Loans shall be fully
protected against the claims of any creditors of the Company (or any
sub-servicer) and of any creditors or depositors of the institution in which
such account is maintained or (v) in a separate non-trust account without FDIC
or other insurance in an Eligible Institution. In the event that a Custodial
Account is established pursuant to clause (iii), (iv) or (v) of the preceding
sentence, the Company shall provide the Purchaser with written notice on the
Business Day following the date on which the applicable institution fails to
meet the applicable ratings requirements.
Eligible
Institution:
An
institution having (i) the highest short-term debt rating, and one of the two
highest long-term debt ratings of each Rating Agency; or (ii) with respect
to
any Custodial Account, an unsecured long-term debt rating of at least one of
the
two highest unsecured long-term debt ratings of each Rating Agency.
Equity
Take-Out Refinanced Mortgage Loan:
A
Refinanced Mortgage Loan the proceeds of which were in excess of the outstanding
principal balance of the existing mortgage loan as defined in the ▇▇▇▇▇▇ ▇▇▇
Guide(s).
Escrow
Account:
Each
separate trust account or accounts created and maintained pursuant to Section
4.06 which shall be entitled "[__________________], in trust for the
[Purchaser], Owner of Adjustable Rate Mortgage Loans, and various Mortgagors"
and shall be established in an Eligible Account, in the name of the Person
that
is the "Purchaser" with respect to the related Mortgage Loans.
Escrow
Payments:
With
respect to any Mortgage Loan, the amounts constituting ground rents, taxes,
assessments, water rates, sewer rents, municipal charges, mortgage insurance
premiums, fire and hazard insurance premiums, condominium charges, and any
other
payments required to be escrowed by the Mortgagor with the mortgagee pursuant
to
the Mortgage or any other document.
Event
of Default:
Any one
of the conditions or circumstances enumerated in Section 9.01.
▇▇▇▇▇▇
Mae: The
Federal National Mortgage Association, or any successor thereto.
▇▇▇▇▇▇
▇▇▇ Guide(s):
The
▇▇▇▇▇▇ Mae Selling Guide and the ▇▇▇▇▇▇ ▇▇▇ Servicing Guide and all amendments
or additions thereto.
FDIC:
The
Federal Deposit Insurance Corporation, or any successor thereto.
FHLMC:
The
Federal Home Loan Mortgage Corporation, or any successor thereto.
FHLMC
Guide:
The
FHLMC Single Family Seller/Servicer Guide and all amendments or additions
thereto.
Fidelity
Bond:
A
fidelity bond to be maintained by the Company pursuant to Section
4.12.
FIRREA:
The
Financial Institutions Reform, Recovery, and Enforcement Act of
1989.
First
Remittance Date:
With
respect to any Mortgage Loan, the Remittance Date occurring in the month
following the month in which the related Closing Date occurs.
GAAP:
Generally accepted accounting principles, consistently applied.
HUD:
The
United States Department of Housing and Urban Development or any successor
thereto.
Index:
With
respect to any adjustable rate Mortgage Loan, the index identified on the
Mortgage Loan Schedule and set forth in the related Mortgage Note for the
purpose of calculating the interest rate thereon.
Initial
Rate Cap: As
to
each adjustable rate Mortgage Loan, where applicable, the maximum increase
or
decrease in the Mortgage Interest Rate on the first Adjustment
Date.
Insurance
Proceeds:
With
respect to each Mortgage Loan, proceeds of insurance policies insuring the
Mortgage Loan or the related Mortgaged Property.
Lifetime
Rate Cap:
As to
each adjustable rate Mortgage Loan, the maximum Mortgage Interest Rate over
the
term of such Mortgage Loan.
Liquidation
Proceeds:
Cash
received in connection with the liquidation of a defaulted Mortgage Loan,
whether through the sale or assignment of such Mortgage Loan, trustee's sale,
foreclosure sale or otherwise.
Loan-to-Value
Ratio or LTV:
With
respect to any Mortgage Loan, the ratio of the original outstanding principal
amount of the Mortgage Loan, to (i) the Appraised Value of the Mortgaged
Property as of the Origination Date with respect to a Refinanced Mortgage Loan,
and (ii) the lesser of the Appraised Value of the Mortgaged Property as of
the
Origination Date or the purchase price of the Mortgaged Property with respect
to
all other Mortgage Loans.
Margin:
With
respect to each adjustable rate Mortgage Loan, the fixed percentage amount
set
forth in each related Mortgage Note which is added to the Index in order to
determine the related Mortgage Interest Rate, as set forth in the Mortgage
Loan
Schedule.
Monthly
Advance:
The
aggregate of the advances made by the Company on any Remittance Date pursuant
to
Section 5.03.
Monthly
Payment:
The
scheduled monthly payment of principal and interest on a Mortgage Loan which
is
payable by a Mortgagor under the related Mortgage Note.
Mortgage:
The
mortgage, deed of trust or other instrument securing a Mortgage Note which
creates a first lien on an unsubordinated estate in fee simple in real property
securing the Mortgage Note.
Mortgage
File:
The
mortgage documents pertaining to a particular Mortgage Loan which are specified
in Exhibit A hereto and any additional documents required to be added to the
Mortgage File pursuant to this Agreement.
Mortgage
Impairment Insurance Policy:
A
mortgage impairment or blanket hazard insurance policy as described in Section
4.11.
Mortgage
Interest Rate:
The
annual rate at which interest accrues on any Mortgage Loan, which may be
adjusted from time to time for an adjustable rate Mortgage Loan, in accordance
with the provisions of the related Mortgage Note.
Mortgage
Loan:
An
individual mortgage loan which is the subject of this Agreement, each Mortgage
Loan originally sold and subject to this Agreement being identified on the
Mortgage Loan Schedule attached to the related Term Sheet, which Mortgage Loan
includes without limitation the Mortgage File, the Monthly Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
REO Disposition Proceeds, and all other rights, benefits, proceeds and
obligations arising from or in connection with such Mortgage Loan, excluding
replaced or repurchased mortgage loans.
Mortgage
Loan Documents:
The
documents listed in
Exhibit A.
Mortgage
Loan Remittance Rate:
With
respect to each Mortgage Loan, the annual rate of interest remitted to the
Purchaser, which shall be equal to the Mortgage Interest Rate minus the
Servicing Fee Rate.
Mortgage
Loan Schedule:
The
schedule of Mortgage Loans annexed to the related Term Sheet, such schedule
setting forth the following information with respect to each Mortgage Loan
in
the related Mortgage Loan Package:
(1) the
Company's Mortgage Loan identifying number;
(2) the
Mortgagor's first and last name;
(3)
the
street address of the Mortgaged Property including the city, state and zip
code;
(4) a
code
indicating whether the Mortgaged Property is owner-occupied, a second home
or an
investor property;
(5) the
type
of residential property constituting the Mortgaged Property;
(6) the
original months to maturity of the Mortgage Loan;
(7) the
remaining months to maturity from the related Cut-off Date, based on the
original amortization schedule and, if different, the maturity expressed in
the
same manner but based on the actual amortization schedule;
(8) the
Sales
Price, if applicable, Appraised Value and Loan-to-Value Ratio, at
origination;
(9) the
Mortgage Interest Rate as of origination and as of the related Cut-off Date;
with respect to each adjustable rate Mortgage Loan, the initial Adjustment
Date,
the next Adjustment Date immediately following the related Cut-off Date, the
Index, the Margin, the Initial Rate Cap, if any, Periodic Rate Cap, if any,
minimum Mortgage Interest Rate under the terms of the Mortgage Note and the
Lifetime Rate Cap;
(10) the
Origination Date of 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 related Cut-off Date;
(14) the
original principal amount of the Mortgage Loan;
(15) the
scheduled Stated Principal Balance of the Mortgage Loan as of the close of
business on the related Cut-off Date, after deduction of payments of principal
due on or before the related Cut-off Date whether or not collected;
(16)
a
code
indicating the purpose of the Mortgage Loan (i.e., purchase, rate and term
refinance, equity take-out refinance);
(17)
a
code
indicating the documentation style (i.e. full, alternative, etc.);
(18) the
number of times during the twelve (12) month period preceding the related
Closing Date that any Monthly Payment has been received after the month of
its
scheduled due date;
(19) the
date
on which the first payment is or was due;
(20) a
code indicating whether or not the Mortgage Loan is the subject of a Primary
Mortgage Insurance Policy and the name of the related insurance carrier;
(21)
a
code
indicating whether or not the Mortgage Loan is currently convertible and the
conversion spread;
(22)
the
last
Due Date on which a Monthly Payment was actually applied to the unpaid principal
balance of the Mortgage Loan.
(23)
product
type (i.e. fixed, adjustable, 3/1, 5/1, etc.);
(24) credit
score and/or mortgage score, if applicable;
(25) a
code
indicating whether or not the Mortgage Loan is the subject of a Lender Primary
Mortgage Insurance Policy and the name of the related insurance carrier and
the
Lender Paid Mortgage Insurance Rate;
(26) a
code
indicating whether or not the Mortgage Loan has a prepayment penalty and if
so,
the amount and term thereof; and
(27) the
Current Appraised Value of the Mortgage Loan and Current LTV, if
applicable.
With
respect to the Mortgage Loans in the aggregate, the Mortgage Loan Schedule
attached to the related Term Sheet shall set forth the following information,
as
of the related Cut-off Date:
(1) the
number of Mortgage Loans;
(2) the
current aggregate outstanding principal balance of the Mortgage
Loans;
(3) the
weighted average Mortgage Interest Rate of the Mortgage Loans;
(4) the
weighted average maturity of the Mortgage Loans; and
(5)
the
weighted average months to next Adjustment Date;
Mortgage
Note:
The
note or other evidence of the indebtedness of a Mortgagor secured by a
Mortgage.
Mortgaged
Property:
The
underlying real property securing repayment of a Mortgage Note, consisting
of a
single parcel of real estate considered to be real estate under the laws of
the
state in which such real property is located which may include condominium
units
and planned unit developments, improved by a residential dwelling; except that
with respect to real property located in jurisdictions in which the use of
leasehold estates for residential properties is a widely-accepted practice,
a
leasehold estate of the Mortgage, the term of which is equal to or longer than
the term of the Mortgage.
Mortgagor:
The
obligor on a Mortgage Note.
Nonrecoverable
Advance:
Any
portion of a Monthly Advance or Servicing Advance previously made or proposed
to
be made by the Company pursuant to this Agreement, that, in the good faith
judgment of the Company, will not or, in the case of a proposed advance, would
not, be ultimately recoverable by it from the related Mortgagor or the related
Liquidation Proceeds, Insurance Proceeds, Condemnation Proceeds or otherwise
with respect to the related Mortgage Loan.
OCC:
Office
of the Comptroller of the Currency, or any successor thereto.
Officers'
Certificate:
A
certificate signed by the Chairman of the Board, the Vice Chairman of the Board,
the President, a Senior Vice President or a Vice President or by the Treasurer
or the Secretary or one of the Assistant Treasurers or Assistant Secretaries
of
the Company, and delivered to the Purchaser as required by this
Agreement.
Opinion
of Counsel:
A
written opinion of counsel, who may be an employee of the party on behalf of
whom the opinion is being given, reasonably acceptable to the
Purchaser.
Origination
Date:
The
date on which a Mortgage Loan funded, which date shall not, in connection with
a
Refinanced Mortgage Loan, be the date of the funding of the debt being
refinanced, but rather the closing of the debt currently outstanding under
the
terms of the Mortgage Loan Documents.
OTS:
Office
of Thrift Supervision, or any successor thereto.
Periodic
Rate Cap:
As to
each adjustable rate Mortgage Loan, the maximum increase or decrease in the
Mortgage Interest Rate on any Adjustment Date, as set forth in the related
Mortgage Note and the related Mortgage Loan Schedule.
Permitted
Investments:
Any one
or more of the following obligations or securities:
(i) direct
obligations of, and obligations fully guaranteed by the United States of America
or any agency or instrumentality of the United States of America the obligations
of which are backed by the full faith and credit of the United States of
America;
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(ii)
(a) demand or time deposits, federal funds or bankers' acceptances
issued
by any depository institu-tion or trust company incorporated under
the
laws of the United States of America or any state thereof and subject
to
supervision and examination by federal and/or state banking authorities,
provided that the commercial paper and/or the short-term deposit
rating
and/or the long-term unsecured debt obligations or deposits of such
depository institution or trust company at the time of such investment
or
contractual commitment providing for such investment are rated in
one of
the two highest rating categories by each Rating Agency and (b) any
other
demand or time deposit or certificate of deposit that is fully insured
by
the FDIC;
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(iii)
repurchase obligations with a term not to exceed thirty (30) days
and with
respect to (a) any security described in clause (i) above and entered
into
with a depository institution or trust company (acting as principal)
described in clause (ii)(a) above;
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(iv)
securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America
or
any state thereof that are rated in one of the two highest rating
categories by each Rating Agency at the time of such in-vestment
or
contractual commitment providing for such investment; provided,
however,
that securities issued by any particular corporation will not be
Permitted
Investments to the extent that investments therein will cause the
then
outstanding principal amount of secur-ities issued by such corporation
and
held as Permitted Investments to exceed 10% of the aggregate outstand-ing
principal balances of all of the Mortgage Loans and Permitted
Investments;
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(v)
commercial paper (including both non-interest-bearing discount obligations
and interest-bearing obliga-tions payable on demand or on a specified
date
not more than one year after the date of issuance there-of) which
are
rated in one of the two highest rating categories by each Rating
Agency at
the time of such investment;
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(vi)
any other demand, money market or time deposit, obligation, security
or
investment as may be acceptable to each Rating Agency as evidenced
in
writing by each Rating Agency; and
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(vii)
any money market funds the collateral of which consists of obligations
fully guaranteed by the United States of America or any agency or
instru-ment-al-ity of the United States of America the obligations
of
which are backed by the full faith and credit of the United States
of
America (which may include repurchase obligations secured by collateral
described in clause (i)) and other securities and which money market
funds
are rated in one of the two highest rating categories by each Rating
Agency.
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provided,
however,
that no
instrument or security shall be a Permitted Investment if such instrument or
security evidences a right to receive only interest payments with respect to
the
ob-li-ga-tions underlying such instrument or if such security provides for
payment of both principal and interest with a yield to matur-ity in excess
of
120% of the yield to maturity at par or if such investment or security is
purchased at a price greater than par.
Person:
Any
individual, corporation, partnership, joint venture, association, joint-stock
company, limited liability company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Prepayment
Interest Shortfall:
With
respect to any Remittance Date, for each Mortgage Loan that was the subject
of a
Principal Prepayment during the related Prepayment Period, an amount equal
to
the excess of one month’s interest at the applicable Mortgage Loan Remittance
Rate on the amount of such Principal Prepayment over the amount of interest
(adjusted to the Mortgage Loan Remittance Rate) actually paid by the related
Mortgagor with respect to such Prepayment Period.
Prepayment
Period: With
respect to any Remittance Date, the calendar month preceding the month in which
such Remittance Date occurs.
Primary
Mortgage Insurance Policy:
Each
primary policy of mortgage insurance represented to be in effect pursuant to
Section 3.02(hh), or any replacement policy therefor obtained by the Company
pursuant to Section 4.08.
Prime
Rate:
The
prime rate announced to be in effect from time to time as published as the
average rate in the Wall Street Journal (Northeast Edition).
Principal
Prepayment:
Any
payment or other recovery of principal on a Mortgage Loan full or partial which
is received in advance of its scheduled Due Date, including any prepayment
penalty or premium thereon and which is not accompanied by an amount of interest
representing scheduled interest due on any date or dates in any month or months
subsequent to the month of prepayment.
Purchase
Price:
As
defined in Section 2.02.
Purchaser:
EMC
Mortgage Corporation, its successors in interest and assigns.
Qualified
Appraiser:
An
appraiser, duly appointed by the Company, who had no interest, direct or
indirect in the related Mortgaged Property or in any loan made on the security
thereof, and whose compensation is not affected by the approval or disapproval
of the Mortgage Loan, and such appraiser and the appraisal made by such
appraiser both satisfy the requirements of Title XI of FIRREA and the
regulations promulgated thereunder and the requirements of ▇▇▇▇▇▇ Mae, all
as in
effect on the date the Mortgage Loan was originated.
Qualified
Insurer:
An
insurance company duly qualified as such under the laws of the states in which
the related Mortgaged Property is located, duly authorized and licensed in
such
states to transact the applicable insurance business and to write the insurance
provided, approved as an insurer by ▇▇▇▇▇▇ ▇▇▇ or FHLMC.
Rating
Agency:
Standard & Poor's, Fitch, Inc. or, in the event that some or all of the
ownership of the Mortgage Loans is evidenced by mortgage-backed securities,
the
nationally recognized rating agencies issuing ratings with respect to such
securities, if any.
Refinanced
Mortgage Loan:
A
Mortgage Loan which was made to a Mortgagor who owned the Mortgaged Property
prior to the origination of such Mortgage Loan and the proceeds of which were
used in whole or part to satisfy an existing mortgage.
REMIC:
A "real
estate mortgage investment conduit," as such term is defined in Section 860D
of
the Code.
REMIC
Provisions:
The
provisions of the federal income tax law relating to REMICs, which appear at
Sections 860A through 860G of the Code, and the related provisions and
regulations promulgated thereunder, as the foregoing may be in effect from
time
to time.
Remittance
Date:
The
18th day of any month, beginning with the First Remittance Date, or if such
18th
day is not a Business Day, the first Business Day immediately preceding such
18th day.
REO
Disposition:
The
final sale by the Company of any REO Property.
REO
Disposition Proceeds:
Amounts
received by the Company in connection with a related REO
Disposition.
REO
Property:
A
Mortgaged Property acquired by the Company on behalf of the Purchaser as
described in Section 4.13.
Repurchase
Price:
With
respect to any Mortgage Loan, a price equal to (i) the product of the greater
of
100% or the percentage of par as stated in the Confirmation multiplied by the
Stated Principal
Balance
of such Mortgage Loan on the repurchase date, plus
(ii)
interest on such outstanding principal balance at the Mortgage Loan Remittance
Rate from the last date through which interest has been paid and distributed
to
the Purchaser to the end of the month of repurchase, plus, (iii) third party
expenses incurred in connection with the transfer of the Mortgage Loan being
repurchased; less amounts received or advanced in respect of such repurchased
Mortgage Loan which are being held in the Custodial Account for distribution
in
the month of repurchase.
SAIF:
The
Savings Association Insurance Fund, or any successor thereto.
Sales
Price: With
respect to any Mortgage Loan the proceeds of which were used by the Mortgagor
to
acquire the related Mortgaged Property, the amount paid by the related Mortgagor
for such Mortgaged Property.
Seller:
First
Horizon Home Loan Corporation, its successors in interest and assigns, as
permitted by this Agreement.
Servicer:
First
Tennessee Mortgage Services, Inc., its successors in interest and assigns,
as
permitted by this Agreement.
Servicing
Advances:
All
customary, reasonable and necessary "out of pocket" costs and expenses
(including reasonable attorneys' fees and disbursements) incurred in the
performance by the Company of its servicing obligations, including, but not
limited to, the cost of (a) the preservation, restoration and protection of
the
Mortgaged Property, (b) any enforcement, administrative or judicial proceedings,
or any legal work or advice specifically related to servicing the Mortgage
Loans, including but not limited to, foreclosures, bankruptcies, condemnations,
drug seizures, elections, foreclosures by subordinate or superior lienholders,
and other legal actions incidental to the servicing of the Mortgage Loans
(provided that such expenses are reasonable and that the Company specifies
the
Mortgage Loan(s) to which such expenses relate and, upon Purchaser’s request,
provides documentation supporting such expense (which documentation would be
acceptable to ▇▇▇▇▇▇ ▇▇▇), and provided further that any such enforcement,
administrative or judicial proceeding does not arise out of a breach of any
representation, warranty or covenant of the Company hereunder), (c) the
management and liquidation of the Mortgaged Property if the Mortgaged Property
is acquired in full or partial satisfaction of the Mortgage, (d) taxes,
assessments, water rates, sewer rates and other charges which are or may become
a lien upon the Mortgaged Property, and Primary Mortgage Insurance Policy
premiums and fire and hazard insurance coverage, (e) any expenses reasonably
sustained by the Company with respect to the liquidation of the Mortgaged
Property in accordance with the terms of this Agreement and (f) compliance
with
the obligations under Section 4.08.
Servicing
Fee:
With
respect to each Mortgage Loan, the amount of the annual fee the Purchaser shall
pay to the Company, which shall, for a period of one full month, be equal to
one-twelfth of the product of (a) the Servicing Fee Rate and (b) the outstanding
principal balance of such Mortgage Loan. Such fee shall be payable monthly,
computed on the basis of the same principal amount and period respecting which
any related interest payment on a Mortgage Loan is computed. The obligation
of
the Purchaser to pay the Servicing Fee is limited to, and the Servicing Fee
is
payable solely from, the interest portion of such Monthly Payment collected
by
the Company, or as otherwise provided under Section 4.05 and in accordance
with
the ▇▇▇▇▇▇ Mae Guide(s). Any fee payable to the Company for administrative
services related to any REO Property as described in Section 4.13 shall be
payable from Liquidation Proceeds of the related REO Property.
Servicing
Fee Rate:
As set
forth in the Term Sheet.
Servicing
File:
With
respect to each Mortgage Loan, the file retained by the Company consisting
of
originals of all documents in the Mortgage File which are not delivered to
the
Purchaser and copies of the Mortgage Loan Documents listed in Exhibit A, the
originals of which are delivered to the Purchaser or its designee pursuant
to
Section 2.04.
Servicing
Officer:
Any
officer of the Company involved in, or responsible for, the administration
and
servicing of the Mortgage Loans whose name appears on a list of servicing
officers furnished by the Company to the Purchaser upon request, as such list
may from time to time be amended.
Stated
Principal Balance:
As to
each Mortgage Loan as of any date of determination, (i) the principal balance
of
such Mortgage Loan at the Cut-off Date after giving effect to payments of
principal due on or before such date, whether or not received, minus (ii) all
amounts previously distributed to the Purchaser with respect to the Mortgage
Loan representing payments or recoveries of principal or advances in lieu
thereof.
Subservicer:
Any
subservicer which is subservicing the Mortgage Loans pursuant to a Subservicing
Agreement. Any subservicer shall meet the qualifications set forth in Section
4.01.
Subservicing
Agreement:
An
agreement between the Company and a Subservicer, if any, for the servicing
of
the Mortgage Loans.
Term
Sheet:
A
supplemental agreement in the form attached hereto as Exhibit I which shall
be
executed and delivered by the Company and the Purchaser to provide for the
sale
and servicing pursuant to the terms of this Agreement of the Mortgage Loans
listed on Schedule I attached thereto, which supplemental agreement shall
contain certain specific information relating to such sale of such Mortgage
Loans and may contain additional covenants relating to such sale of such
Mortgage Loans.
ARTICLE
II
PURCHASE
OF MORTGAGE LOANS; SERVICING OF MORTGAGE LOANS;
RECORD
TITLE AND POSSESSION OF MORTGAGE FILES;
BOOKS
AND RECORDS; CUSTODIAL AGREEMENT;
DELIVERY
OF MORTGAGE LOAN DOCUMENTS
Section
2.01 Agreement
to Purchase.
The
Company agrees to sell and the Purchaser agrees to purchase the Mortgage Loans
having an aggregate Stated Principal Balance on the related Cut-off Date set
forth in the related Term Sheet in an amount as set forth in the Confirmation,
or in such other amount as agreed by the Purchaser and the Company as evidenced
by the actual aggregate Stated Principal Balance of the Mortgage Loans accepted
by the Purchaser on the related Closing Date, with servicing retained by the
Company. The Company shall deliver the related Mortgage Loan Schedule attached
to the related Term Sheet for the Mortgage Loans to be purchased on the related
Closing Date to the Purchaser at least two (2) Business Days prior to the
related Closing Date. The Mortgage Loans shall be sold pursuant to this
Agreement, and the related Term Sheet shall be executed and delivered on the
related Closing Date.
Section
2.02 Purchase
Price.
The
Purchase Price for each Mortgage Loan shall be the percentage of par as stated
in the Confirmation (subject to adjustment as provided therein), multiplied
by
the Stated Principal Balance, as of the related Cut-off Date, of the Mortgage
Loan listed on the related Mortgage Loan Schedule attached to the related Term
Sheet, after application of scheduled payments of principal due on or before
the
related Cut-off Date whether or not collected.
In
addition to the Purchase Price as described above, the Purchaser shall pay
to
the Company, at closing, accrued interest on the Stated Principal Balance of
each Mortgage Loan as of the related Cut-off Date at the Mortgage Loan
Remittance Rate of each Mortgage Loan from the related Cut-off Date through
the
day prior to the related Closing Date, inclusive.
The
Purchase Price plus accrued interest as set forth in the preceding paragraph
shall be paid on the related Closing Date by wire transfer of immediately
available funds.
Purchaser
shall be entitled to (1) all scheduled principal due after the related Cut-off
Date, (2) all other recoveries of principal collected on or after the related
Cut-off Date (provided, however, that all scheduled payments of principal due
on
or before the related Cut-off Date and collected by the Company or any successor
servicer after the related Cut-off Date shall belong to the Company), and (3)
all payments of interest on the Mortgage Loans net of applicable Servicing
Fees
(minus that portion of any such payment which is allocable to the period prior
to the related Cut-off Date). The outstanding principal balance of each Mortgage
Loan as of the related Cut-off Date is determined after application of payments
of principal due on or before the related Cut-off Date whether or not collected,
together with any unscheduled principal prepayments collected prior to the
related Cut-off Date; provided, however, that payments of scheduled principal
and interest prepaid for a Due Date beyond the related Cut-off Date shall not
be
applied to the principal balance as of the related Cut-off Date. Such prepaid
amounts shall be the property of the Purchaser. The Company shall deposit any
such prepaid amounts into the Custodial Account, which account is established
for the benefit of the Purchaser for subsequent remittance by the Company to
the
Purchaser.
Section
2.03 Servicing
of Mortgage Loans.
Simultaneously
with the execution and delivery of each Term Sheet, the Company does hereby
agree to directly service the Mortgage Loans listed on the related Mortgage
Loan
Schedule attached to the related Term Sheet subject to the terms of this
Agreement and the related Term Sheet. The rights of the Purchaser to receive
payments with respect to the related Mortgage Loans shall be as set forth in
this Agreement.
Section
2.04 Record
Title and Possession of Mortgage Files; Maintenance of Servicing
Files.
As
of the
related Closing Date, the Company sold, transferred, assigned, set over and
conveyed to the Purchaser, without recourse, on a servicing retained basis,
and
the Company hereby acknowledges that the Purchaser has, but subject to the
terms
of this Agreement and the related Term Sheet, all the right, title and interest
of the Company in and to the Mortgage Loans. Company will deliver the Mortgage
Files to the Custodian designated by Purchaser, on or before the related Closing
Date, at the expense of the Company. The Company shall maintain a Servicing
File
consisting of a copy of the contents of each Mortgage File and the originals
of
the documents in each Mortgage File not delivered to the Purchaser. The
Servicing File shall contain all documents necessary to service the Mortgage
Loans. The possession of each Servicing File by the Company is at the will
of
the Purchaser, for the sole purpose of servicing the related Mortgage Loan,
and
such retention and possession by the Company is in a custodial capacity only.
From the related Closing Date, the ownership of each Mortgage Loan, including
the Mortgage Note, the Mortgage, the contents of the related Mortgage File
and
all rights, benefits, proceeds and obligations arising therefrom or in
connection therewith, has been vested in the Purchaser. All rights arising
out
of the Mortgage Loans including, but not limited to, all funds received on
or in
connection with the Mortgage Loans and all records or documents with respect
to
the Mortgage Loans prepared by or which come into the possession of the Company
shall be received and held by the Company in trust for the benefit of the
Purchaser as the owner of the Mortgage Loans. Any portion of the Mortgage Files
retained by the Company shall be appropriately identified in the Company's
computer system to clearly reflect the ownership of the Mortgage Loans by the
Purchaser. The Company shall release its custody of the contents of the Mortgage
Files only in accordance with written instructions of the Purchaser, except
when
such release is required as incidental to the Company's servicing of the
Mortgage Loans or is in connection with a repurchase of any Mortgage Loan or
Loans with respect thereto pursuant to this Agreement and the related Term
Sheet, such written instructions shall not be required.
Section
2.05 Books
and Records.
The
sale
of each Mortgage Loan shall be reflected on the Company's balance sheet and
other financial statements as a sale of assets by the Company. The Company
shall
be responsible for maintaining, and shall maintain, a complete set of books
and
records for the Mortgage Loans that shall be appropriately identified in the
Company's computer system to clearly reflect the ownership of the Mortgage
Loan
by the Purchaser. In particular, the Company shall maintain in its possession,
available for inspection by the Purchaser, or its designee and shall deliver
to
the Purchaser upon demand, evidence of compliance with all federal, state and
local laws, rules and regulations, and requirements of ▇▇▇▇▇▇ ▇▇▇ or FHLMC,
as
applicable, including but not limited to documentation as to the method used
in
determining the applicability of the provisions of the Flood Disaster Protection
Act of 1973, as amended, to the Mortgaged Property, documentation evidencing
insurance coverage of any condominium project as required by ▇▇▇▇▇▇ Mae or
FHLMC, and periodic inspection reports as required by Section 4.13. To the
extent that original documents are not required for purposes of realization
of
Liquidation Proceeds or Insurance Proceeds, documents maintained by the Company
may be in the form of microfilm or microfiche.
The
Company shall maintain with respect to each Mortgage Loan and shall make
available for inspection by any Purchaser or its designee the related Servicing
File during the time the Purchaser retains ownership of a Mortgage Loan and
thereafter in accordance with applicable laws and regulations.
In
addition to the foregoing, Company shall provide to any supervisory agents
or
examiners that regulate Purchaser, including but not limited to, the OTS, the
FDIC and other similar entities, access, during normal business hours, upon
reasonable advance notice to Company and without cost to Company or such
supervisory agents or examiners, to any documentation regarding the Mortgage
Loans that may be required by any applicable regulator.
Section
2.06. Transfer
of Mortgage Loans.
The
Company shall keep at its servicing office books and records in which, subject
to such reasonable regulations as it may prescribe, the Company shall note
transfers of Mortgage Loans. No transfer of a Mortgage Loan may be made unless
such transfer is in compliance with the terms hereof. For the purposes of this
Agreement, the Company shall be under no obligation to deal with any person
with
respect to this Agreement or any Mortgage Loan unless a notice of the transfer
of such Mortgage Loan has been delivered to the Company in accordance with
this
Section 2.06 and the books and records of the Company show such person as the
owner of the Mortgage Loan. The Purchaser may, subject to the terms of this
Agreement, sell and transfer one or more of the Mortgage Loans, provided,
however, that the transferee will not be deemed to be a Purchaser hereunder
binding upon the Company unless such transferee shall agree in writing to be
bound by the terms of this Agreement and an original counterpart of the
instrument of transfer in an Assignment and Assumption of this Agreement
substantially in the form of Exhibit D hereto executed by the transferee shall
have been delivered to the Company. The Purchaser also shall advise the Company
of the transfer. Upon receipt of notice of the transfer, the Company shall
▇▇▇▇
its books and records to reflect the ownership of the Mortgage Loans of such
assignee, and the previous Purchaser shall be released from its obligations
hereunder with respect to the Mortgage Loans sold or transferred.
Section
2.07 Delivery
of Mortgage Loan Documents.
The
Company shall deliver and release to the Purchaser or its designee the Mortgage
Loan Documents in accordance with the terms of this Agreement and the related
Term Sheet. The documents enumerated as items (1), (2), (3), (4), (5), (6),
(7),
(8), (9) and (16) in Exhibit A hereto shall be delivered by the Company to
the
Purchaser or its designee no later than three (3) Business Days prior to the
related Closing Date pursuant to a bailee letter agreement. All other documents
in Exhibit A hereto, together with all other documents executed in connection
with the Mortgage Loan that Company may have in its possession, shall be
retained by the Company in trust for the Purchaser. If the Company cannot
deliver the original recorded Mortgage Loan Documents or the original policy
of
title insurance, including riders and endorsements thereto, on the related
Closing Date, the Company shall, promptly upon receipt thereof and in any case
not later than 120 days from the related Closing Date, deliver such original
documents, including original recorded documents, to the Purchaser or its
designee (unless the Company is delayed in making such delivery by reason of
the
fact that such documents shall not have been returned by the appropriate
recording office). If delivery is not completed within 120 days solely due
to
delays in making such delivery by reason of the fact that such documents shall
not have been returned by the appropriate recording office, Company shall
deliver such document to Purchaser, or its designee, within such time period
as
specified in a Company's Officer's Certificate. In the event that documents
have
not been received by the date specified in the Company's Officer's Certificate,
a subsequent Company's Officer's Certificate shall be delivered by such date
specified in the prior Company's Officer's Certificate, stating a revised date
for receipt of documentation. The procedure shall be repeated until the
documents have been received and delivered. If delivery is not completed within
180 days solely due to delays in making such delivery by reason of the fact
that
such documents shall not have been returned by the appropriate recording office,
the Company shall continue to use its best efforts to effect delivery as soon
as
possible thereafter, provided that if such documents are not delivered by the
270th day from the date of the related Closing Date, the Company shall
repurchase the related Mortgage Loans at the Repurchase Price in accordance
with
Section 3.03 hereof.
The
Company shall pay all initial recording fees, if any, for the assignments of
mortgage and any other fees in connection with the transfer of all original
documents to the Purchaser or its designee. Company shall prepare, in recordable
form, all assignments of mortgage necessary to assign the Mortgage Loans to
Purchaser, or its designee. Company shall be responsible for recording the
assignments of mortgage.
Company
shall provide an original or duplicate original of the title insurance policy
to
Purchaser or its designee within ninety (90) days of the receipt of the recorded
documents (required for issuance of such policy) from the applicable recording
office.
Any
review by the Purchaser, or its designee, of the Mortgage Files shall in no
way
alter or reduce the Company's obligations hereunder.
If
the
Purchaser or its designee discovers any defect with respect to a Mortgage File,
the Purchaser shall, or shall cause its designee to, give written specification
of such defect to the Company which may be given in the exception report or
the
certification delivered pursuant to this Section 2.07, or otherwise in writing
and the Company shall cure or repurchase such Mortgage Loan in accordance with
Section 3.03.
The
Company shall forward to the Purchaser, or its designee, original documents
evidencing an assumption, modification, consolidation or extension of any
Mortgage Loan entered into in accordance with Section 4.01 or 6.01 within one
week of their execution; provided, however, that the Company shall provide
the
Purchaser, or its designee, with a certified true copy of any such document
submitted for recordation within one week of its execution, and shall provide
the original of any document submitted for recordation or a copy of such
document certified by the appropriate public recording office to be a true
and
complete copy of the original within sixty (60) days of its submission for
recordation.
From
time
to time the Company may have a need for Mortgage Loan Documents to be released
from Purchaser, or its designee. Purchaser shall, or shall cause its designee,
upon the written request of the Company, within ten (10) Business Days, deliver
to the Company, any requested documentation previously delivered to Purchaser
as
part of the Mortgage File, provided that such documentation is promptly returned
to Purchaser, or its designee, when the Company no longer requires possession
of
the document, and provided that during the time that any such documentation
is
held by the Company, such possession is in trust for the benefit of Purchaser.
Company shall indemnify Purchaser, and its designee, from and against any and
all losses, claims, damages, penalties, fines, forfeitures, costs and expenses
(including court costs and reasonable attorney's fees) resulting from or related
to the loss, damage, or misplacement of any documentation delivered to Company
pursuant to this paragraph.
Section
2.08 Quality
Control Procedures.
The
Company must have an internal quality control program that verifies, on a
regular basis, the existence and accuracy of the legal documents, credit
documents, property appraisals, and underwriting decisions. The program must
be
capable of evaluating and monitoring the overall quality of its loan production
and servicing activities. The program is to ensure that the Mortgage Loans
are
originated and serviced in accordance with prudent mortgage banking practices
and accounting principles; guard against dishonest, fraudulent, or negligent
acts; and guard against errors and omissions by officers, employees, or other
authorized persons.
Section
2.09 Near-term
Principal Prepayments in Full; Near Term Payment Defaults
In
the
event any Principal Prepayment in full is made by a Mortgagor on or prior to
three months after the related Closing Date, the Company shall remit to the
Purchaser an amount equal to the excess, if any, of the Purchase Price
Percentage over par multiplied by the amount of such Principal Prepayment in
full. Such remittance shall be made by the Company to Purchaser not later than
five (5) Business Days after notice to the Company.
In
the
event either of the first three (3) scheduled Monthly Payments which are due
under any Mortgage Loan after the related Cut-off Date are not made during
the
month in which such Monthly Payments are due, then not later than five (5)
Business Days after notice to the Company by Purchaser (and at Purchaser’s sole
option), the Company, shall repurchase such Mortgage Loan from the Purchaser
pursuant to the repurchase provisions contained in this Subsection
3.03.
Section
2.10 Modification
of Obligations.
Purchaser
may, without any notice to Company, extend, compromise, renew, release, change,
modify, adjust or alter, by operation of law or otherwise, any of the
obligations of the Mortgagors or other persons obligated under a Mortgage Loan
without releasing or otherwise affecting the obligations of Company under this
Agreement, or with respect to such Mortgage Loan, except to the extent
Purchaser’s extension, compromise, release, change, modification, adjustment, or
alteration affects Company’s ability to collect the Mortgage Loan or realize on
the security of the Mortgage, but then only to the extent such action has such
effect.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF
THE
COMPANY; REPURCHASE; REVIEW OF MORTGAGE LOANS
Section
3.01 Representations
and Warranties of the Company.
Each
the
Seller and Servicer represents, warrants and covenants to the Purchaser that,
as
of the related Closing Date or as of such date specifically provided
herein:
(a) The
Company is a corporation, duly organized, validly existing and in good standing
under the laws of the State of Kansas and has all licenses necessary to carry
out its business as now being conducted, and is licensed and qualified to
transact business in and is in good standing under the laws of each state in
which any Mortgaged Property is located or is otherwise exempt under applicable
law from such licensing or qualification or is otherwise not required under
applicable law to effect such licensing or qualification and no demand for
such
licensing or qualification has been made upon such Company by any such state,
and in any event such 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. The Servicer is a wholly owned subsidiary of the Seller;
(b)
The
Company has the full power and authority and legal right to hold, transfer
and
convey each Mortgage Loan, to sell each Mortgage Loan and to execute, deliver
and perform, and to enter into and consummate all transactions contemplated
by
this Agreement and the related Term Sheet and to conduct its business as
presently conducted, has duly authorized the execution, delivery and performance
of this Agreement and the related Term Sheet and any agreements contemplated
hereby, has duly executed and delivered this Agreement and the related Term
Sheet, and any agreements contemplated hereby, and this Agreement and the
related Term Sheet and each Assignment to the Purchaser and any agreements
contemplated hereby, constitutes a legal, valid and binding obligation of the
Company, enforceable against it in accordance with its terms, and all requisite
corporate action has been taken by the Company to make this Agreement and the
related Term Sheet and all agreements contemplated hereby valid and binding
upon
the Company in accordance with their terms;
(c)
Neither the execution and delivery of this Agreement and the related Term Sheet,
nor the origination or purchase of the Mortgage Loans by the Company, the sale
of the Mortgage Loans to the Purchaser, the consummation of the transactions
contemplated hereby, or the fulfillment of or compliance with the terms and
conditions of this Agreement and the related Term Sheet will conflict with
any
of the terms, conditions or provisions of the Company's charter or by-laws
or
materially conflict with or result in a material breach of any of the terms,
conditions or provisions of any legal restriction or any agreement or instrument
to which the Company is now a party or by which it is bound, or constitute
a
default or result in an acceleration under any of the foregoing, or result
in
the material violation of any law, rule, regulation, order, judgment or decree
to which the Company or its properties are subject, or impair the ability of
the
Purchaser to realize on the Mortgage Loans.
(d)
There
is no litigation, suit, proceeding or investigation pending or, to the best
of
Company’s knowledge, threatened, or any order or decree outstanding, with
respect to the Company which, either in any one instance or in the aggregate,
is
reasonably likely to have a material adverse effect on the sale of the Mortgage
Loans, the execution, delivery, performance or enforceability of this Agreement
and the related Term Sheet, or which is reasonably likely to have a material
adverse effect on the financial condition of the Company.
(e)
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 related Term Sheet,
or
the sale of the Mortgage Loans and delivery of the Mortgage Files to the
Purchaser or the consummation of the transactions contemplated by this Agreement
or the related Term Sheet, except for consents, approvals, authorizations and
orders which have been obtained;
(f)
The
consummation of the transactions contemplated by this Agreement or the related
Term Sheet is in the ordinary course of business of the Company and Company,
and
the transfer, assignment and conveyance of the Mortgage Notes and the Mortgages
by the Company pursuant to this Agreement or the related Term Sheet are not
subject to bulk transfer or any similar statutory provisions in effect in any
applicable jurisdiction;
(g)
The
origination and servicing practices used by the Company and any prior originator
or servicer with respect to each Mortgage Note and Mortgage have been legal
and
in accordance with applicable laws and regulations and the Mortgage Loan
Documents, and in all material respects proper and prudent in the mortgage
origination and servicing business. Each Mortgage Loan has been serviced in
all
material respects with Accepted Servicing Practices. With respect to escrow
deposits and payments that the Company, on behalf of an investor, is entitled
to
collect, 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. All escrow
payments have been collected in full compliance with state and federal law
and
the provisions of the related Mortgage Note and Mortgage. As to any Mortgage
Loan that is the subject of an escrow, escrow of funds is not prohibited by
applicable law and has been established in an amount sufficient to pay for
every
escrowed item that remains unpaid and has been assessed but is not yet due
and
payable. No escrow deposits or other charges or payments due under the Mortgage
Note have been capitalized under any Mortgage or the related Mortgage
Note;
(h)
The
Company used no selection procedures that identified the Mortgage Loans as
being
less desirable or valuable than other comparable mortgage loans in the Company's
portfolio at the related Cut-off Date;
(i) The
Company will treat the sale of the Mortgage Loans to the Purchaser as a sale
for
reporting and accounting purposes and, to the extent appropriate, for federal
income tax purposes;
(j) Company
is an approved seller/servicer of residential mortgage loans for ▇▇▇▇▇▇ Mae,
FHLMC and HUD, with such facilities, procedures and personnel necessary for
the
sound servicing of such mortgage loans. The Company is duly qualified, licensed,
registered and otherwise authorized under all applicable federal, state and
local laws, and regulations, if applicable, meets the minimum capital
requirements set forth by the OCC, and is in good standing to sell mortgage
loans to and service mortgage loans for ▇▇▇▇▇▇ ▇▇▇ and FHLMC and no event has
occurred which would make Company unable to comply with eligibility requirements
or which would require notification to either ▇▇▇▇▇▇ Mae or FHLMC;
(k) The
Company does not believe, nor does it have any cause or reason to believe,
that
it cannot perform each and every covenant contained in this Agreement or the
related Term Sheet. The Company is solvent and the sale of the Mortgage Loans
will not cause the Company to become insolvent. The sale of the Mortgage Loans
is not undertaken with the intent to hinder, delay or defraud any of the
Company's creditors;
(l) No
statement, tape, diskette, form, report or other document prepared by, or on
behalf of, Company pursuant to this Agreement or the related Term Sheet or
in
connection with the transactions contemplated hereby, contains or will contain
any statement that is or will be inaccurate or misleading in any material
respect;
(m)
The
Company acknowledges and agrees that the Servicing Fee represents reasonable
compensation for performing such services and that the entire Servicing Fee
shall be treated by the Company, for accounting and tax purposes, as
compensation for the servicing and administration of the Mortgage Loans pursuant
to this Agreement. In the opinion of Company, the consideration received by
Company upon the sale of the Mortgage Loans to Purchaser under this Agreement
and the related Term Sheet constitutes fair consideration for the Mortgage
Loans
under current market conditions.
(n)
Company
has delivered to the Purchaser financial statements of its parent, for its
last
two complete fiscal years. All such financial information fairly presents the
pertinent results of operations and financial position for the period identified
and has been prepared in accordance with GAAP consistently applied throughout
the periods involved, except as set forth in the notes thereto. There has been
no change in the business, operations, financial condition, properties or assets
of the Company since the date of the Company’s financial information that would
have a material adverse effect on its ability to perform its obligations under
this Agreement;
(o)
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;
Section
3.02 Representations
and Warranties as to Individual Mortgage Loans.
References
in this Section to percentages of Mortgage Loans refer in each case to the
percentage of the aggregate Stated Principal Balance of the Mortgage Loans
as of
the related Cut-off Date, based on the outstanding Stated Principal Balances
of
the Mortgage Loans as of the related Cut-off Date, and giving effect to
scheduled Monthly Payments due on or prior to the related Cut-off Date, whether
or not received. References to percentages of Mortgaged Properties refer, in
each case, to the percentages of expected aggregate Stated Principal Balances
of
the related Mortgage Loans (determined as described in the preceding sentence).
The Company hereby represents and warrants to the Purchaser, as to each Mortgage
Loan, as of the related Closing Date as follows:
(a)
The
information set forth in the Mortgage Loan Schedule attached to the related
Term
Sheet is true, complete and correct in all material respects as of the related
Cut-Off Date;
(b) The
Mortgage creates a valid, subsisting and enforceable first lien or a first
priority ownership interest in an estate in fee simple in real property securing
the related Mortgage Note subject to principles of equity, bankruptcy,
insolvency and other laws of general application affecting the rights of
creditors;
(c)
All
payments due prior to the related Cut-off Date for such Mortgage Loan have
been
made as of the related Closing Date; the Mortgage Loan has not been dishonored;
there are no material defaults under the terms of the Mortgage Loan; the Company
has not advanced its own funds, or induced, solicited or knowingly received
any
advance of funds from a party other than the owner of the Mortgaged Property
subject to the Mortgage, directly or indirectly, for the payment of any amount
required by the Mortgage Loan. As of the related Closing Date, all of the
Mortgage Loans will have an actual interest paid to date of their related
Cut-off Date(or later) and will be due for the scheduled monthly payment next
succeeding the Cut-off Date (or later), as evidenced by a posting to Company's
servicing collection system. No payment under any Mortgage Loan is delinquent
as
of the related Closing Date nor has any scheduled payment been delinquent at
any
time during the twelve (12) months prior to the month of the related Closing
Date. For purposes of this paragraph, a Mortgage Loan will be deemed delinquent
if any payment due thereunder was not paid by the Mortgagor in the month such
payment was due;
(d)
There
are no defaults by Company in complying with the terms of the Mortgage, and
all
taxes, governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and
owing have been paid, or escrow funds have been established in an amount
sufficient to pay for every such escrowed item which remains unpaid and which
has been assessed but is not yet due and payable;
(e)
The
terms of the Mortgage Note and the Mortgage have not been impaired, waived,
altered or modified in any respect, except by written instruments which have
been recorded to the extent any such recordation is required by law, or,
necessary to protect the interest of the Purchaser. No instrument of waiver,
alteration or modification has been executed except in connection with a
modification agreement and which modification agreement is part of the Mortgage
File and the terms of which are reflected in the related Mortgage Loan Schedule,
and no Mortgagor has been released, in whole or in part, from the terms thereof
except in connection with an assumption agreement and which assumption agreement
is part of the Mortgage File and the terms of which are reflected in the related
Mortgage Loan Schedule; the substance of any such waiver, alteration or
modification has been approved by the issuer of any related Primary Mortgage
Insurance Policy and title insurance policy, to the extent required by the
related policies;
(f)
The
Mortgage Note and the Mortgage are not subject to any right of rescission,
set-off, counterclaim or defense, including, without limitation, the defense
of
usury, nor will the operation of any of the terms of the Mortgage Note or the
Mortgage, or the exercise of any right thereunder, render the Mortgage Note
or
Mortgage unenforceable, in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury,
and no such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto; and as of the related Closing Date the Mortgagor
was not a debtor in any state or federal bankruptcy or insolvency
proceeding;
(g)
All
buildings or other customarily insured improvements upon the Mortgaged Property
are insured by a Qualified Insurer, against loss by fire, hazards of extended
coverage and such other hazards as are provided for in the ▇▇▇▇▇▇ ▇▇▇ or FHLMC
Guide, as well as all additional requirements set forth in Section 4.10 of
this
Agreement. All such standard hazard policies are in full force and effect and
contain 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 ▇▇▇▇▇▇ Mae or FHLMC
requirements, as well as all additional requirements set forth in Section 4.10
of this Agreement. Such policy was issued by a Qualified Insurer. The Mortgage
obligates the Mortgagor thereunder to maintain all such insurance at the
Mortgagor's cost and expense, and on the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor. Neither the Company (nor any prior originator or servicer of any
of
the Mortgage Loans) nor any Mortgagor has engaged in any act or omission which
has impaired or would impair the coverage of any such policy, the benefits
of
the endorsement provided for herein, or the validity and binding effect of
either;
(h)
Any
and all requirements of any federal, state or local law including, without
limitation, usury, truth-in-lending, real estate settlement procedures, consumer
credit protection, equal credit opportunity or disclosure laws applicable to
the
Mortgage Loan have been complied with in all material respects. None
of
the Mortgage Loans are (a) loans subject to 12 CFR Part 226.31, 12 CFR Part
226.32 or 12 CFR Part 226.34 of Regulation Z, the regulation implementing TILA,
which implements the Home Ownership and Equity Protection Act of 1994, as
amended or (b) classified and/or defined as a “high cost”, "covered", or
“predatory” loan under any other state, federal or local law or regulation or
ordinance, including, but not limited to, the States of Georgia and North
Carolina and the City of New York. The
Company maintains, and shall maintain, evidence of such compliance as required
by applicable law or regulation and shall make such evidence available for
inspection at the Company's office during normal business hours upon reasonable
advance notice;
(i)
The
Mortgage has not been satisfied, canceled or subordinated, in whole or in part,
or rescinded, and the Mortgaged Property has not been released from the lien
of
the Mortgage, in whole or in part nor has any instrument been executed that
would effect any such release, cancellation, subordination or rescission. The
Company has not waived the performance by the Mortgagor of any action, if the
Mortgagor’s failure to perform such action would cause the Mortgage Loan to be
in default, nor has the Company waived any default resulting from any action
or
inaction by the Mortgagor;
(j) The
Mortgage is a valid, subsisting, enforceable and perfected first lien on the
Mortgaged Property, including all buildings on the Mortgaged Property and all
installations and mechanical, electrical, plumbing, heating and air conditioning
systems affixed to such buildings, and all additions, alterations and
replacements made at any time with respect to the foregoing securing the
Mortgage Note's original principal balance subject to principles of equity,
bankruptcy, insolvency and other laws of general application affecting the
rights of creditors. The Mortgage and the Mortgage Note do not contain any
evidence of any security interest or other interest or right thereto. Such
lien
is free and clear of all adverse claims, liens and encumbrances having priority
over the first lien of the Mortgage subject only to (1) the lien of
non-delinquent current real property taxes and assessments not yet due and
payable, (2) covenants, conditions and restrictions, rights of way, easements
and other matters of the public record as of the date of recording which are
acceptable to mortgage lending institutions generally and either (A) which
are
referred to in the lender’s title insurance policy delivered to the originator
or otherwise considered in the appraisal made for the originator of the Mortgage
Loan, or (B) which do not adversely affect the residential use or Appraised
Value of the Mortgaged Property as set forth in such appraisal, and (3) other
matters to which like properties are commonly subject which do not individually
or in the aggregate materially interfere with the benefits of the security
intended to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property. Any security agreement, chattel
mortgage or equivalent document related to and delivered in connection with
the
Mortgage Loan establishes and creates a valid, subsisting, enforceable and
perfected first lien and first priority security interest on the property
described therein, and the Company has the full right to sell and assign the
same to the Purchaser;
(k)
The
Mortgage Note and the related Mortgage are original and genuine and each is
the
legal, valid and binding obligation of the maker thereof, enforceable in all
respects in accordance with its terms subject to principles of equity,
bankruptcy, insolvency and other laws of general application affecting the
rights of creditors, and the Company has taken all action necessary to transfer
such rights of enforceability to the Purchaser. All parties to the Mortgage
Note
and the Mortgage had the legal capacity to enter into the Mortgage Loan and
to
execute and deliver the Mortgage Note and the Mortgage. The Mortgage Loan
Documents are on forms acceptable to ▇▇▇▇▇▇ ▇▇▇ and FHLMC. The Mortgage Note
and
the Mortgage have been duly and properly executed by such parties. No fraud,
error, omission, misrepresentation, negligence or similar occurrence with
respect to a Mortgage Loan has taken place on the part of 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 and there is no requirement for future advances thereunder,
and
any and all requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds therefor have been
complied with. All costs, fees and expenses incurred in making or closing the
Mortgage Loan and the recording of the Mortgage were paid, and the Mortgagor
is
not entitled to any refund of any amounts paid or due under the Mortgage Note
or
Mortgage;
(l)
The
Company is the sole owner and holder of the Mortgage Loan and the indebtedness
evidenced by the Mortgage Note. Upon the sale of the Mortgage Loan to the
Purchaser, the Company will retain the Mortgage File or any part thereof with
respect thereto not delivered to the Purchaser or the Purchaser’s designee in
trust only for the purpose of servicing and supervising the servicing of the
Mortgage Loan. Immediately prior to the transfer and assignment to the
Purchaser, the Mortgage Loan, including the Mortgage Note and the Mortgage,
were
not subject to an assignment, sale or pledge to any person other than Purchaser,
and the Company had good and marketable title to and was the sole owner thereof
and had full right to transfer and sell the Mortgage Loan to the Purchaser
free
and clear of any encumbrance, equity, lien, pledge, charge, claim or security
interest and has the full right and authority subject to no interest or
participation of, or agreement with, any other party, to sell and assign the
Mortgage Loan pursuant to this Agreement and following the sale of the Mortgage
Loan, the Purchaser will own such Mortgage Loan free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest. The Company intends to relinquish all rights to possess,
control and monitor the Mortgage Loan, except for the purposes of servicing
the
Mortgage Loan as set forth in this Agreement. After the related Closing Date,
the Company will not have any right to modify or alter the terms of the sale
of
the Mortgage Loan and the Company will not have any obligation or right to
repurchase the Mortgage Loan or substitute another Mortgage Loan, except as
provided in this Agreement, or as otherwise agreed to by the Company and the
Purchaser;
(m)
Each
Mortgage Loan is covered by an ALTA lender's title insurance policy or other
generally acceptable form of policy or insurance acceptable to ▇▇▇▇▇▇ ▇▇▇ or
FHLMC (including adjustable rate endorsements), issued by a title insurer
acceptable to ▇▇▇▇▇▇ Mae or FHLMC and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring (subject to
the
exceptions contained in (j)(1), (2) and (3) above) the Company, its successors
and assigns, as to the first 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. Where required by state law or regulation, the Mortgagor has been
given
the opportunity to choose the carrier of the required mortgage title insurance.
The Company, its successors and assigns, is the sole insured of such lender's
title insurance policy, such title insurance policy has been duly and validly
endorsed to the Purchaser or the assignment to the Purchaser of the 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. No claims have been made under such lender's title insurance
policy, and no prior holder or servicer of the related Mortgage, including
the
Company, nor any Mortgagor, has done, by act or omission, anything which would
impair the coverage of such lender's title insurance policy;
(n)
There
is no default, breach, violation or event of acceleration existing under the
Mortgage or the related Mortgage Note and no event which, with the passage
of
time or with notice and the expiration of any grace or cure period, would
constitute a default, breach, violation or event permitting acceleration; and
neither the Company, nor any prior mortgagee has waived any default, breach,
violation or event permitting acceleration;
(o)
There
are no mechanics' or similar liens or claims which have been filed for work,
labor or material (and no rights are outstanding that under law could give
rise
to such liens) affecting the related Mortgaged Property which are or may be
liens prior to or equal to the lien of the related Mortgage;
(p)
All
improvements subject to the Mortgage which were considered in determining the
appraised value of the Mortgaged Property lie wholly within the boundaries
and
building restriction lines of the Mortgaged Property (and wholly within the
project with respect to a condominium unit) and no improvements on adjoining
properties encroach upon the Mortgaged Property except those which are insured
against by the title insurance policy referred to in clause (m) above and all
improvements on the property comply with all applicable zoning and subdivision
laws and ordinances;
(q)
Each
Mortgage Loan was originated by or for the Company pursuant to, and conforms
with, the Company’s underwriting guidelines attached as Exhibit H hereto. The
Mortgage Loan bears interest at an adjustable rate (if applicable) as 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 of the Company at the time of origination
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;
(r)
The
Mortgaged Property is not subject to any material damage. At origination of
the
Mortgage Loan there was not, since origination of the Mortgage Loan there has
not been, and there currently is no proceeding pending for the total or partial
condemnation of the Mortgaged Property. The Company has not received
notification that any such proceedings are scheduled to commence at a future
date;
(s)
The
related Mortgage contains customary and enforceable provisions such as to render
the rights and remedies of the holder thereof adequate for the realization
against the Mortgaged Property of the benefits of the security provided thereby,
including, (1) in the case of a Mortgage designated as a deed of trust, by
trustee's sale, and (2) otherwise by judicial foreclosure. There is no homestead
or other exemption available to the Mortgagor which would interfere with the
right to sell the Mortgaged Property at a trustee's sale or the right to
foreclose the Mortgage;
(t)
If
the Mortgage constitutes a deed of trust, a trustee, authorized and duly
qualified if required under applicable law to act as such, has been properly
designated and currently so serves and is named in the Mortgage, and no fees
or
expenses, except as may be required by local law, are or will become payable
by
the Purchaser to the trustee under the deed of trust, except in connection
with
a trustee's sale or attempted sale after default by the Mortgagor;
(u)
The
Mortgage File contains an appraisal of the related Mortgaged Property signed
prior to the final approval of the mortgage loan application by a Qualified
Appraiser, approved by the Company, who had no interest, direct or indirect,
in
the Mortgaged Property or in any loan made on the security thereof, and whose
compensation is not affected by the approval or disapproval of the Mortgage
Loan, and the appraisal and appraiser both satisfy the requirements of ▇▇▇▇▇▇
▇▇▇ or FHLMC and Title XI of the Federal Institutions Reform, Recovery, and
Enforcement Act of 1989 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 FHLMC;
(v)
All
parties which have had any interest in the Mortgage, whether as mortgagee,
assignee, pledgee or otherwise, are (or, during the period in which they held
and disposed of such interest, were) (A) in compliance with any and all
applicable licensing requirements of the laws of the state wherein the Mortgaged
Property is located, and (B) (1) organized under the laws of such state, or
(2)
qualified to do business in such state, or (3) federal savings and loan
associations or national banks or a Federal Home Loan Bank or savings bank
having principal offices in such state, or (4) not doing business in such
state;
(w)
The
related Mortgage Note is not and has not been secured by any collateral except
the lien of the corresponding Mortgage and the security interest of any
applicable security agreement or chattel mortgage referred to above and such
collateral does not serve as security for any other obligation;
(x)
The
Mortgagor has received and has executed, where applicable, all disclosure
materials required by applicable law with respect to the making of such mortgage
loans;
(y)
The
Mortgage Loan does not contain balloon or "graduated payment" features. Unless
otherwise indicated on the related Mortgage Loan Schedule, no Mortgage Loan
is
subject to a buydown agreement or contains any buydown provision;
(z)
The
Mortgagor is not in bankruptcy and, the Mortgagor is not insolvent and the
Company has no knowledge of any circumstances or conditions with respect to
the
Mortgage, the Mortgaged Property, the Mortgagor or the Mortgagor's credit
standing that could reasonably be expected to cause investors to regard the
Mortgage Loan as an unacceptable investment, cause the Mortgage Loan to become
delinquent, or materially adversely affect the value or marketability of the
Mortgage Loan;
(aa)
Each
Mortgage Loan bears interest based upon a thirty (30) day month and a three
hundred and sixty (360) day year. The Mortgage Loans have an original term
to
maturity of not more than thirty (30) years, with interest payable in arrears
on
the first day of each month. As to each adjustable rate Mortgage Loan, on each
applicable Adjustment Date, the Mortgage Interest Rate will be adjusted to
equal
the sum of the Index, plus the applicable Margin; provided, that the Mortgage
Interest Rate, on each applicable Adjustment Date, will not increase by more
than the Initial Rate Cap or Periodic Rate Cap, as applicable. Over the term
of
each adjustable rate Mortgage Loan, the Mortgage Interest Rate will not exceed
such Mortgage Loan's Lifetime Rate Cap. None of the Mortgage Loans are
“interest-only” Mortgage Loans or “negative amortization” Mortgage Loans. With
respect to each adjustable rate Mortgage Loan, each ▇▇▇▇-▇▇▇▇ Note requires
a
monthly payment which is suffi-cient (a) during the period prior to the first
adjust-ment to the Mortgage Interest Rate, to fully amortize the original
principal balance over the original term thereof and to pay interest at the
related Mortgage Interest Rate, and (b) during the period following each
Adjust-ment Date, to fully amortize the outstanding principal balance as of
the
first day of such period over the then remaining term of such Mortgage Note
and
to pay interest at the related Mortgage Interest Rate. With respect to each
adjustable rate Mortgage Loan, the Mortgage Note provides that when the Mortgage
Interest Rate changes on an Adjustment Date, the then outstanding principal
balance will be reamortized over the remaining life of the Mortgage Loan. No
Mortgage Loan contains terms or provi-sions which would result in negative
amortization. None of the Mortgage Loans contain a conversion feature which
would cause the Mortgage Loan interest rate to convert to a fixed interest
rate.
None of the Mortgage Loans are considered agricultural loans;
(bb)
(INTENTIONALLY LEFT BLANK)
(cc)
(INTENTIONALLY LEFT BLANK)
(dd)
(INTENTIONALLY LEFT BLANK)
(ee)
(INTENTIONALLY LEFT BLANK)
(ff)
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(gg)
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(hh) In
the
event the Mortgage Loan had an LTV at origination greater than 80.00%, the
excess of the principal balance of the Mortgage Loan over 75.0% of the Appraised
Value of the Mortgaged Property with respect to a Refinanced Mortgage Loan,
or
the lesser of the Appraised Value or the purchase price of the Mortgaged
Property with respect to a purchase money Mortgage Loan was insured as to
payment defaults by a Primary Mortgage Insurance Policy issued by a Qualified
Insurer. No Mortgage Loan has an LTV over 95%. 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. No
Mortgage Loan requires payment of such premiums, in whole or in part, by the
Purchaser. No action, inaction, or event has occurred and no state of facts
exists that has, or will result in the exclusion from, denial of, or defense
to
coverage. Any Mortgage Loan subject to a Primary Mortgage Insurance Policy
obligates the Mortgagor thereunder to maintain the Primary Mortgage Insurance
Policy, subject to state and federal law, and to pay all premiums and charges
in
connection therewith. No action has been taken or failed to be taken, on or
prior to the Closing Date which has resulted or will result in an exclusion
from, denial of, or defense to coverage under any Primary Mortgage Insurance
Policy (including, without limitation, any exclusions, denials or defenses
which
would limit or reduce the availability of the timely payment of the full amount
of the loss otherwise due thereunder to the insured) whether arising out of
actions, representations, errors, omissions, negligence, or fraud of the Company
or the Mortgagor, or for any other reason under such coverage; The mortgage
interest rate for the Mortgage Loan as set forth on the related Mortgage Loan
Schedule is net of any such insurance premium. None of the Mortgage Loans are
subject to “lender-paid” mortgage insurance;
(ii) The
Assignment is in recordable form and is acceptable for recording under the
laws
of the jurisdiction in which the Mortgaged Property is located;
(jj) Unless
otherwise indicated on the related Mortgage Loan Schedule, none of the Mortgage
Loans are secured by an interest in a leasehold estate. The Mortgaged Property
is located in the state identified in the related Mortgage Loan Schedule and
consists of a single parcel of real property with a detached single 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,
provided, however, that no residence or dwelling is a single parcel of real
property with a manufactured home not affixed to a permanent foundation, or
a
mobile home. Any
non-warrantable condominium unit, condominium unit or planned unit development
conforms with the Company’s underwriting guidelines. As
of the
date of origination, no portion of any Mortgaged Property was used for
commercial purposes, and since the Origination Date, no portion of any Mortgaged
Property has been, or currently is, used for commercial purposes;
(kk) Payments
on the Mortgage Loan commenced no more than sixty (60) days after the funds
were
disbursed in connection with the Mortgage Loan. The Mortgage Note is payable
on
the first day of each month in monthly installments of principal and interest,
which installments are subject to change due to the adjustments to the Mortgage
Interest Rate on each Adjustment Date, with interest calculated and payable
in
arrears. Each of the Mortgage Loans will amortize fully by the stated maturity
date, over an original term of not more than thirty years from commencement
of
amortization;
(ll) As
of the
Closing Date of the Mortgage Loan, the Mortgage Property was lawfully occupied
under applicable law, and all inspections, licenses and certificates required
to
be made or issued with respect to all occupied portions of the Mortgaged
Property and, with respect to 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;
(mm) There
is
no pending action or proceeding directly involving the Mortgaged Property in
which compliance with any environmental law, rule or regulation is an issue;
there is no violation of any environmental law, rule or regulation with respect
to the Mortgaged Property; and the Company has not received any notice of any
environmental hazard on the Mortgaged Property and nothing further remains
to be
done to satisfy in full all requirements of each such law, rule or regulation
constituting a prerequisite to use and enjoyment of said property;
(nn) The
Mortgagor has not notified the Company, and the Company has no knowledge of
any
relief requested or allowed to the Mortgagor under the Soldiers' and Sailors'
Civil Relief Act of 1940;
(oo)
No
Mortgage Loan is a construction or rehabilitation Mortgage Loan or was made
to
facilitate the trade-in or exchange of a Mortgaged Property;
(pp) The
Mortgagor for each Mortgage Loan is a natural person;
(qq) None
of
the Mortgage Loans are Co-op Loans;
(rr)
With
respect to each Mortgage Loan that has a prepayment penalty feature, each such
prepayment penalty is enforceable and will be enforced by the Company and each
prepayment penalty is permitted pursuant to federal, state and local law. No
Mortgage Loan will impose a prepayment penalty for a term in excess of five
years from the date such Mortgage Loan was originated. Except as otherwise
set
forth on the Mortgage Loan Schedule, with respect to each Mortgage Loan that
contains a prepayment penalty, such prepayment penalty is at least equal to
the
lesser of (A) the maximum amount permitted under applicable law and (B) six
months interest at the related Mortgage Interest Rate on the amount prepaid
in
excess of 20% of the original principal balance of such Mortgage
Loan;
(ss)
With
respect to each Mortgage Loan either (i) the fair market value of the Mortgaged
Property securing such Mortgage Loan was at least equal to 80 percent of the
original principal balance of such Mortgage Loan at the time such Mortgage
Loan
was originated or (ii) (a) the Mortgage Loan is only secured by the Mortgage
Property and (b) substantially all of the proceeds of such Mortgage Loan were
used to acquire or to improve or protect the Mortgage Property. For the purposes
of the preceding sentence, if the Mortgage Loan has been significantly modified
other than as a result of a default or a reasonable foreseeable default, the
modified Mortgage Loan will be viewed as having been originated on the date
of
the modification;
(tt)
The
Mortgage Loan was originated by a mortgagee approved by the Secretary of Housing
and Urban Development pursuant to sections 203 and 211 of the National Housing
Act, a savings and loan association, a savings bank, a commercial bank, credit
union, insurance company or similar institution which is supervised and examined
by a federal or state authority;
(uu)
None
of the Mortgage Loans are simple interest Mortgage Loans and none of the
Mortgaged Properties are timeshares;
(vv)
All
of the terms of the Mortgage pertaining to interest rate adjustments, payment
adjustments and adjustments of the outstanding principal balance are
enforceable, all such adjustments have been properly made, including the mailing
of required notices, and such adjustments do not and will not affect the
priority of the Mortgage lien. With respect to each Mortgage Loan which has
passed its initial Adjustment Date, Company has performed an audit of the
Mortgage Loan to determine whether all interest rate adjustments have been
made
in accordance with the terms of the Mortgage Note and Mortgage; and
(ww)
Each
Mortgage Note, each Mortgage, each Assignment and any other documents required
pursuant to this Agreement to be delivered to the Purchaser or its designee,
or
its assignee for each Mortgage Loan, have been, on or before the related Closing
Date, delivered to the Purchaser or its designee, or its assignee.
Section
3.03 Repurchase;
Substitution.
It
is
understood and agreed that the representations and warranties set forth in
Sections 3.01 and 3.02 shall survive the sale of the Mortgage Loans and delivery
of the Mortgage Loan Documents to the Purchaser, or its designee, and shall
inure to the benefit of the Purchaser, notwithstanding any restrictive or
qualified endorsement on any Mortgage Note or Assignment or the examination,
or
lack of examination, of any Mortgage File. Upon discovery by either the Company
or the Purchaser of a breach of any of the foregoing representations and
warranties which materially and adversely affects the value of the Mortgage
Loans or the interest of the Purchaser in any Mortgage Loan, the party
discovering such breach shall give prompt written notice to the other. The
Company shall have a period of sixty (60) days from the earlier of its discovery
or its receipt of notice of any such breach within which to correct or cure
such
breach. The Company hereby covenants and agrees that if any such breach is
not
corrected or cured within such sixty day period, the Company shall, at the
Purchaser's option and not later than ninety (90) days of its discovery or
its
receipt of notice of such breach, repurchase such Mortgage Loan at the
Repurchase Price or, with the Purchaser's prior consent and at Purchaser’s sole
option, substitute a Mortgage Loan as provided below. In the event that any
such
breach shall involve any representation or warranty set forth in Section 3.01,
and such breach is not cured within sixty (60) days of the earlier of either
discovery by or notice to the Company of such breach, all Mortgage Loans shall,
at the option of the Purchaser, be repurchased by the Company at the Repurchase
Price. Any such repurchase shall be accomplished by wire transfer of immediately
available funds to Purchaser in the amount of the Repurchase Price.
If
the
Company is required to repurchase any Mortgage Loan pursuant to this Section
3.03, the Company may, with the Purchaser's prior consent and at Purchaser’s
sole option, within ninety (90) days from the related Closing Date, remove
such
defective Mortgage Loan from the terms of this Agreement and substitute another
mortgage loan for such defective Mortgage Loan, in lieu of repurchasing such
defective Mortgage Loan. Any substitute Mortgage Loan is subject to Purchaser
acceptability. Any substituted Loans will comply with the representations and
warranties set forth in this Agreement as of the substitution date
The
Company shall amend the related Mortgage Loan Schedule to reflect the withdrawal
of the removed Mortgage Loan from this Agreement and the substitution of such
substitute Mortgage Loan therefor. Upon such amendment, the Purchaser shall
review the Mortgage File delivered to it relating to the substitute Mortgage
Loan. In the event of such a substitution, accrued interest on the substitute
Mortgage Loan for the month in which the substitution occurs and any Principal
Prepayments made thereon during such month shall be the property of the
Purchaser and accrued interest for such month on the Mortgage Loan for which
the
substitution is made and any Principal Prepayments made thereon during such
month shall be the property of the Company. The principal payment on a
substitute Mortgage Loan due on the Due Date in the month of substitution shall
be the property of the Company and the principal payment on the Mortgage Loan
for which the substitution is made due on such date shall be the property of
the
Purchaser.
For
any
month in which the Company is permitted to substitute one or more substitute
Mortgage Loans, the Company will determine the amount (if any) by which the
aggregate Stated Principal Balance (after application of the principal portion
of all scheduled payments due in the month of substitution) of all the
substitute Mortgage Loans in the month of substitution is less then the
aggregate Stated Principal Balance (after application of the principal portion
of the scheduled payment due in the month of substitution) of the such replaced
Mortgage Loan. An amount equal to the aggregate of such deficiencies described
in the preceding sentence for any Remittance Date shall be deposited into the
Custodial Account by the Company on the related Determination Date in the month
following the calendar month during which the substitution occurred.
It
is
understood and agreed that the obligation of the Company set forth in this
Section 3.03 to cure, repurchase or substitute for a defective Mortgage Loan,
and to indemnify Purchaser pursuant to Section 8.01, constitute the sole
remedies of the Purchaser respecting a breach of the foregoing representations
and warranties. If the Company fails to repurchase or substitute for a defective
Mortgage Loan in accordance with this Section 3.03, or fails to cure a defective
Mortgage Loan to Purchaser's reasonable satisfaction in accordance with this
Section 3.03, or to indemnify Purchaser pursuant to Section 8.01, that failure
shall be an Event of Default and the Purchaser shall be entitled to pursue
all
remedies available in this Agreement as a result thereof. No provision of this
paragraph shall affect the rights of the Purchaser to terminate this Agreement
for cause, as set forth in Sections 10.01 and 11.01.
Any
cause
of action against the Company relating to or arising out of the breach of any
representations and warranties made in Sections 3.01 and 3.02 shall accrue
as to
any Mortgage Loan upon (i) the earlier of discovery of such breach by the
Company or notice thereof by the Purchaser to the Company, (ii) failure by
the
Company to cure such breach or repurchase such Mortgage Loan as specified above,
and (iii) demand upon the Company by the Purchaser for compliance with this
Agreement.
In
the
event that any Mortgage Loan is held by a REMIC, notwithstanding any contrary
provision of this Agreement, with respect to any Mortgage Loan that is not
in
default or as to which no default is imminent, no substitution pursuant to
Subsection 3.03 shall be made after the applicable REMIC's "start up day" (as
defined in Section 860G(a) (9) of the Code), unless the Company has obtained
an
Opinion of Counsel to the effect that such substitution will not (i) result
in
the imposition of taxes on "prohibited transactions" of such REMIC (as defined
in Section 860F of the Code) or otherwise subject the REMIC to tax, or (ii)
cause the REMIC to fail to qualify as a REMIC at any time.
Section
3.04 Representations
and Warranties of the Purchaser.
The
Purchaser represents, warrants and convenants to the Company that, as of the
related Closing Date or as of such date specifically provided
herein:
(a) The
Purchaser is a corporation, dully organized validly existing and in good
standing under the laws of the State of Delaware and is qualified to transact
business in, is in good standing under the laws of, and possesses all licenses
necessary for the conduct of its business in, each state in which any Mortgaged
Property is located or is otherwise except or not required under applicable
law
to effect such qualification or license;
(b) The
Purchaser has full power and authority to hold each Mortgage Loan, to purchase
each Mortgage Loan pursuant to this Agreement and the related Term Sheet and
to
execute, deliver and perform, and to enter into and consummate all transactions
contemplated by this Agreement and the related Term Sheet and to conduct its
business as presently conducted, has duly authorized the execution, delivery
and
performance of this Agreement and the related Term Sheet, has duly executed
and
delivered this Agreement and the related Term Sheet;
(c) None
of
the execution and delivery of this Agreement and the related Term Sheet, the
purchase of the Mortgage Loans, the consummation of the transactions
contemplated hereby, or the fulfillment of or compliance with the terms and
conditions of this Agreement and the related Term Sheet will conflict with
any
of the terms, conditions or provisions of the Purchaser’s charter or by-laws or
materially conflict with or result in a material breach of any of the terms,
conditions or provisions
of any legal restriction or any agreement or instrument to which the Purchaser
is now a party or by which it is bound, or constitute a default or result in
an
acceleration under any of the foregoing, or result in the material violation
of
any law, rule, regulation, order, judgment or decree to which the Purchaser
or
its property is subject;
(d) There
is
no litigation pending or to the best of the Purchaser’s knowledge, threatened
with respect to the Purchaser which is reasonably likely to have a material
adverse effect on the purchase of the related Mortgage Loans, the execution,
delivery or enforceability of this Agreement and the related Term Sheet, or
which is reasonably likely to have a material adverse effect on the financial
condition of the Purchaser;
(e) No
consent, approval, authorization or order of any court or governmental agency
or
body is required for the execution, delivery and performance by the Purchaser
of
or compliance by the Purchaser with this Agreement and the related Term Sheet,
the purchase of the Mortgage Loans or the consummation of the transactions
contemplated by this Agreement and the related Term Sheet except for consents,
approvals, authorizations and orders which have been obtained;
(f) The
consummation of the transactions contemplated by this Agreement and the related
Term Sheet is in the ordinary course of business of the Purchaser;
(h) The
Purchaser will treat the purchase of the Mortgage Loans from the Company as
a
purchase for reporting, tax and accounting purposes; and
(i) The
Purchaser does not believe, nor does it have any cause or reason to believe,
that it cannot perform each and every of its covenants contained in this
Agreement and the related Term Sheet.
The
Purchaser shall indemnify the Company and hold it harmless against any claims,
proceedings, losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments, and other costs and expenses
resulting from a breach by the Purchaser of the representations and warranties
contained in this Section 3.04. It is understood and agreed that the obligations
of the Purchaser set forth in this Section 3.04 to indemnify the Seller as
provided herein constitute the sole remedies of the Seller respecting a breach
of the foregoing representations and warranties.
ARTICLE
IV
ADMINISTRATION
AND SERVICING OF MORTGAGE LOANS
Section
4.01 Company
to Act as Servicer.
The
Company, as independent contract servicer, shall service and administer the
Mortgage Loans in accordance with this Agreement and the related Term Sheet
and
with Accepted Servicing Practices, and shall have full power and authority,
acting alone, to do or cause to be done any and all things in connection with
such servicing and administration which the Company may deem necessary or
desirable and consistent with the terms of this Agreement and the related Term
Sheet and with Accepted Servicing Practices and exercise the same care that
it
customarily employs for its own account. Except as set forth in this Agreement
and the related Term Sheet, the Company shall service the Mortgage Loans in
strict compliance with the servicing provisions of the ▇▇▇▇▇▇ ▇▇▇ Guides
(special servicing option), which include, but are not limited to, provisions
regarding the liquidation of Mortgage Loans, the collection of Mortgage Loan
payments, the payment of taxes, insurance and other charges, the maintenance
of
hazard insurance with a Qualified Insurer, the maintenance of mortgage
impairment insurance, the maintenance of fidelity bond and errors and omissions
insurance, inspections, the restoration of Mortgaged Property, the maintenance
of Primary Mortgage Insurance Policies, insurance claims, the title, management
and disposition of REO Property, permitted withdrawals with respect to REO
Property, liquidation reports, and reports of foreclosures and abandonments
of
Mortgaged Property, the transfer of Mortgaged Property, the release of Mortgage
Files, annual statements, and examination of records and facilities. In the
event of any conflict, inconsistency or discrepancy between any of the servicing
provisions of this Agreement and the related Term Sheet and any of the servicing
provisions of the ▇▇▇▇▇▇ Mae Guides, the provisions of this Agreement and the
related Term Sheet shall control and be binding upon the Purchaser and the
Company.
Consistent
with the terms of this Agreement and the related Term Sheet, the Company may
waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of any such term or in any manner grant indulgence to any Mortgagor
if in the Company's reasonable and prudent determination such waiver,
modification, postponement or indulgence is not materially adverse to the
Purchaser, provided, however, that unless the Company has obtained the prior
written consent of the Purchaser, the Company shall not permit any modification
with respect to any Mortgage Loan that would change the Mortgage Interest Rate,
defer for more than ninety days or forgive any payment of principal or interest,
reduce or increase the outstanding principal balance (except for actual payments
of principal) or change the final maturity date on such Mortgage Loan. In the
event of any such modification which has been agreed to in writing by the
Purchaser and which permits the deferral of interest or principal payments
on
any Mortgage Loan, the Company shall, on the Business Day immediately preceding
the Remittance Date in any month in which any such principal or interest payment
has been deferred, deposit in the Custodial Account from its own funds, in
accordance with Section 4.04, the difference between (a) such month's principal
and one month's interest at the Mortgage Loan Remittance Rate on the unpaid
principal balance of such Mortgage Loan and (b) the amount paid by the
Mortgagor. The Company shall be entitled to reimbursement for such advances
to
the same extent as for all other advances pursuant to Section 4.05. Without
limiting the generality of the foregoing, the Company shall continue, and is
hereby authorized and empowered, to prepare, execute and deliver, all
instruments of satisfaction or cancellation, or of partial or full release,
discharge and all other comparable instruments, with respect to the Mortgage
Loans and with respect to the Mortgaged Properties. Notwithstanding anything
herein to the contrary, the Company may not enter into a forbearance agreement
or similar arrangement with respect to any Mortgage Loan which runs more than
180 days after the first delinquent Due Date. Any such agreement shall be
approved by Purchaser and, if required, by the Primary Mortgage Insurance Policy
insurer, if required.
Notwithstanding
anything to the contrary contained in this Agreement, the Company shall not
make
or permit any modification, waiver or amendment of any term of any Mortgage
Loan
that would cause any REMIC created under the trust agreement pursuant to any
Reconstitution to fail to qualify as a REMIC or result in the imposition of
any
tax under Section 860F(a) or Section 860G(d) of the Code.
The
Company shall not permit the creation of any “interests” (within the meaning of
Section 860G of the Code) in any REMIC. The Company shall not enter into any
arrangement by which a REMIC will receive a fee or other compensation for
services nor permit a REMIC to receive any income from assets other than
“qualified mortgages” as defined in Section 860G(a)(3) of the Code or “permitted
investments” as defined in Section 860G(a)(5) of the Code.
In
servicing and administering the Mortgage Loans, the Company shall employ
Accepted Servicing Practices, giving due consideration to the Purchaser's
reliance on the Company. Unless a different time period is stated in this
Agreement or the related Term Sheet, Purchaser shall be deemed to have given
consent in connection with a particular matter if Purchaser does not
affirmatively grant or deny consent within five (5) Business Days from the
date
Purchaser receives a second written request for consent for such matter from
Company as servicer.
The
Mortgage Loans may be subserviced by a Subservicer on behalf of the Company
provided that the Subservicer is an entity that engages in the business of
servicing loans, and in either case shall be authorized to transact business,
and licensed to service mortgage loans, in the state or states where the related
Mortgaged Properties it is to service are situated, if and to the extent
required by applicable law to enable the Subservicer to perform its obligations
hereunder and under the Subservicing Agreement, and in either case shall be
a
FHLMC or ▇▇▇▇▇▇ ▇▇▇ approved mortgage servicer in good standing, and no event
has occurred, including but not limited to a change in insurance coverage,
which
would make it unable to comply with the eligibility requirements for lenders
imposed by ▇▇▇▇▇▇ Mae or for seller/servicers imposed by ▇▇▇▇▇▇ ▇▇▇ or FHLMC,
or
which would require notification to ▇▇▇▇▇▇ Mae or FHLMC. In addition, each
Subservicer will obtain and preserve its qualifications to do business as a
foreign corporation and its licenses to service mortgage loans, in each
jurisdiction in which such qualifications and/or licenses are or shall be
necessary to protect the validity and enforceability of this Agreement, or
any
of the Mortgage Loans and to perform or cause to be performed its duties under
the related Subservicing Agreement. The Company may perform any of its servicing
responsibilities hereunder or may cause the Subservicer to perform any such
servicing responsibilities on its behalf, but the use by the Company of the
Subservicer shall not release the Company from any of its obligations hereunder
and the Company shall remain responsible hereunder for all acts and omissions
of
the Subservicer as fully as if such acts and omissions were those of the
Company. The Company shall pay all fees and expenses of the Subservicer from
its
own funds, and the Subservicer's fee shall not exceed the Servicing Fee. Company
shall notify Purchaser promptly in writing upon the appointment of any
Subservicer.
At
the
cost and expense of the Company, without any right of reimbursement from the
Custodial Account, the Company shall be entitled to terminate the rights and
responsibilities of the Subservicer and arrange for any servicing
responsibilities to be performed by a successor subservicer meeting the
requirements in the preceding paragraph, provided, however, that nothing
contained herein shall be deemed to prevent or prohibit the Company, at the
Company's option, from electing to service the related Mortgage Loans itself.
In
the event that the Company's responsibilities and duties under this Agreement
are terminated pursuant to Section 4.13, 8.04, 9.01 or 10.01 and if requested
to
do so by the Purchaser, the Company shall at its own cost and expense terminate
the rights and responsibilities of the Subservicer effective as of the date
of
termination of the Company. The Company shall pay all fees, expenses or
penalties necessary in order to terminate the rights and responsibilities of
the
Subservicer from the Company's own funds without reimbursement from the
Purchaser.
Notwithstanding
any of the provisions of this Agreement relating to agreements or arrangements
between the Company and the Subservicer or any reference herein to actions
taken
through the Subservicer or otherwise, the Company shall not be relieved of
its
obligations to the Purchaser and shall be obligated to the same extent and
under
the same terms and conditions as if it alone were servicing and administering
the Mortgage Loans. The Company shall be entitled to enter into an agreement
with the Subservicer for indemnification of the Company by the Subservicer
and
nothing contained in this Agreement shall be deemed to limit or modify such
indemnification. The Company will indemnify and hold Purchaser harmless from
any
loss, liability or expense arising out of its use of a Subservicer to perform
any of its servicing duties, responsibilities and obligations
hereunder.
Any
Subservicing Agreement and any other transactions or services relating to the
Mortgage Loans involving the Subservicer shall be deemed to be between the
Subservicer and Company alone, and the Purchaser shall have no obligations,
duties or liabilities with respect to the Subservicer including no obligation,
duty or liability of Purchaser to pay the Subservicer's fees and expenses.
For
purposes of distributions and advances by the Company pursuant to this
Agreement, the Company shall be deemed to have received a payment on a Mortgage
Loan when the Subservicer has received such payment.
Section
4.02 Collection
of Mortgage Loan Payments.
Continuously
from the date hereof until the date each Mortgage Loan ceases to be subject
to
this Agreement, the Company will proceed diligently to collect all payments
due
under each Mortgage Loan when the same shall become due and payable and shall,
to the extent such procedures shall be consistent with this Agreement, Accepted
Servicing Practices, and the terms and provisions of any related Primary
Mortgage Insurance Policy, follow such collection procedures as it follows
with
respect to mortgage loans comparable to the Mortgage Loans and held for its
own
account. Further, the Company will take special care in ascertaining and
estimating annual escrow payments, and all other charges that, as provided
in
the Mortgage, will become due and payable, so that the installments payable
by
the Mortgagors will be sufficient to pay such charges as and when they become
due and payable.
In
no
event will the Company waive its right to any prepayment penalty or premium
without the prior written consent of Purchaser and Company will use diligent
efforts to collect same when due except as otherwise provided in the prepayment
penalty provisions provided in the Mortgage Loan Documents.
Section
4.03 Realization
Upon Defaulted Mortgage
The
Company shall use its best efforts, consistent with the procedures that the
Company would use in servicing loans for its own account, consistent with
Accepted Servicing Practices, any Primary Mortgage Insurance Policies and the
best interest of Purchaser, to foreclose upon or otherwise comparably convert
the ownership of properties securing such of the Mortgage Loans as come into
and
continue in default and as to which no satisfactory arrangements can be made
for
collection of delinquent payments pursuant to Section 4.01. Foreclosure or
comparable proceedings shall be initiated within ninety (90) days of default
for
Mortgaged Properties for which no satisfactory arrangements can be made for
collection of delinquent payments, subject to state and federal law and
regulation. The Company shall use its best efforts to realize upon defaulted
Mortgage Loans in such manner as will maximize the receipt of principal and
interest by the Purchaser, taking into account, among other things, the timing
of foreclosure proceedings. The foregoing is subject to the provisions that,
in
any case in which a Mortgaged Property shall have suffered damage, the Company
shall not be required to expend its own funds toward the restoration of such
property unless it shall determine in its discretion (i) that such restoration
will increase the proceeds of liquidation of the related Mortgage Loan to the
Purchaser after reimbursement to itself for such expenses, and (ii) that such
expenses will be recoverable by the Company through Insurance Proceeds or
Liquidation Proceeds from the related Mortgaged Property, as contemplated in
Section 4.05. Company shall obtain prior approval of Purchaser as to repair
or
restoration expenses in excess of ten thousand dollars ($10,000). The Company
shall notify the Purchaser in writing of the commencement of foreclosure
proceedings and not less than 5 days prior to the acceptance or rejection of
any
offer of reinstatement. The Company shall be responsible for all costs and
expenses incurred by it in any such proceedings or functions; provided, however,
that it shall be entitled to reimbursement thereof from the related property,
as
contemplated in Section 4.05. Notwithstanding anything to the contrary contained
herein, in connection with a foreclosure or acceptance of a deed in lieu of
foreclosure, in the event the Company has reasonable cause to believe that
a
Mortgaged Property is contaminated by hazardous or toxic substances or wastes,
or if the Purchaser otherwise requests an environmental inspection or review
of
such Mortgaged Property, such an inspection or review is to be conducted by
a
qualified inspector at the Purchaser's expense. Upon completion of the
inspection, the Company shall promptly provide the Purchaser with a written
report of the environmental inspection. After reviewing the environmental
inspection report, the Purchaser shall determine how the Company shall proceed
with respect to the Mortgaged Property.
Notwithstanding
anything to the contrary contained herein, the Purchaser may, at the Purchaser's
sole option, terminate the Company as servicer of any Mortgage Loan which
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 made pursuant
to
Section 5.03 and any unreimbursed Servicing Advances and Servicing Fees in
each
case relating to the Mortgage Loan underlying such delinquent Mortgage Loan
notwithstanding anything to the contrary set forth in Section 4.05. In the
event
of any such termination, the provisions of Section 11.01 hereof shall apply
to
said termination and the transfer of servicing responsibilities with respect
to
such delinquent Mortgage Loan to the Purchaser or its designee.
If
a
REMIC election has been made with respect to the arrangement under which the
Mortgage Loans and REO Property are held, the Company shall not take any action,
cause the REMIC to take any action or fail to take (or fail to cause to be
taken) any action that, under the REMIC Provisions, if taken or not taken,
as
the case may be, could (i) endanger the status of the REMIC as a REMIC or (ii)
result in the imposition of a tax upon the REMIC (including but not limited
to
the tax on “prohibited transactions” as defined Section 860G(a)(2) of the Code
and the tax on “contributions” to a REMIC set forth in Section 860(D) of the
Code) unless the Company has received an Opinion of Counsel (at the expense
of
the party seeking to take such action) to the effect that the contemplated
action will not endanger such REMIC status or result in the imposition of any
such tax.
Section
4.04 Establishment
of Custodial Accounts; Deposits in Custodial Accounts.
The
Company shall segregate and hold all funds collected and received pursuant
to
each Mortgage Loan separate and apart from any of its own funds and general
assets and shall establish and maintain one or more Custodial Accounts. The
Custodial Account shall be an Eligible Account. Funds shall be deposited in
the
Custodial Account within 48 hours of receipt, and shall at all times be insured
by the FDIC up to the FDIC insurance limits, or must be invested in Permitted
Investments for the benefit of the Purchaser. Funds deposited in the Custodial
Account may be drawn on by the Company in accordance with Section 4.05. The
creation of any Custodial Account shall be evidenced by a letter agreement
in
the form shown in Exhibit B hereto. The original of such letter agreement shall
be furnished to the Purchaser on the Closing Date, and upon the request of any
subsequent Purchaser.
The
Company shall deposit in the Custodial Account on a daily basis, and retain
therein the following payments and collections received or made by it subsequent
to the Cut-off Date, or received by it prior to the Cut-off Date but allocable
to a period subsequent thereto, other than in respect of principal and interest
on the Mortgage Loans due on or before the Cut-off Date:
(i) all
payments on account of principal, including Principal Prepayments, on the
Mortgage Loans;
(ii)
all
payments on account of interest on the Mortgage Loans adjusted to the Mortgage
Loan Remittance Rate;
(iii)
all
Liquidation Proceeds;
(iv)
any
amounts required to be deposited by the Company in connection with any REO
Property pursuant to Section 4.13 and in connection therewith, the Company
shall
provide the Purchaser with written detail itemizing all of such
amounts;
(v)
all
Insurance Proceeds including amounts required to be deposited pursuant to
Sections 4.08, 4.10 and 4.11, other than proceeds to be held in the Escrow
Account and applied to the restoration or repair of the Mortgaged Property
or
released to the Mortgagor in accordance with Accepted Servicing Practices,
the
Mortgage Loan Documents or applicable law;
(vi)
all
Condemnation Proceeds affecting any Mortgaged Property which are not released
to
the Mortgagor in accordance with Accepted Servicing Practices, the loan
documents or applicable law;
(vii)
any
Monthly Advances;
(viii)
with
respect to each full or partial Principal Prepayment, any Prepayment Interest
Shortfalls, to the extent of the Company’s aggregate Servicing Fee received with
respect to the related Prepayment Period;
(ix)
any
amounts required to be deposited by the Company pursuant to Section 4.10 in
connection with the deductible clause in any blanket hazard insurance policy,
such deposit shall be made from the Company's own funds, without reimbursement
therefor; and
(x)
any
amounts required to be deposited in the Custodial Account pursuant to Section
4.01, 4.13 or 6.02.
The
foregoing requirements for deposit in the Custodial Account shall be exclusive,
it being understood and agreed that, without limiting the generality of the
foregoing, payments in the nature of late payment charges and assumption fees,
to the extent permitted by Section 6.01, need not be deposited by the Company
in
the Custodial Account. Any interest paid on funds deposited in the Custodial
Account by the depository institution shall accrue to the benefit of the Company
and the Company shall be entitled to retain and withdraw such interest from
the
Custodial Account pursuant to Section 4.05 (iv). The Purchaser shall not be
responsible for any losses suffered with respect to investment of funds in
the
Custodial Account.
Section
4.05 Permitted
Withdrawals From the Custodial Account.
The
Company may, from time to time, withdraw from the Custodial Account for the
following purposes:
(i) to
make
payments to the Purchaser in the amounts and in the manner provided for in
Section 5.01;
(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 collections (net of the related Servicing
Fees) of principal and/or interest respecting (or
to amounts received on the related Mortgage Loan as a whole if the Monthly
Advance is made due to a shortfall in a Monthly Payment made by a Mortgagor
entitled to relief under the Soldiers and Sailors Civil Relief Act of 1940)
respecting which
any
such advance was made, it being understood that, in the case of such
reimbursement, the Company's right thereto shall be prior to the rights of
the
Purchaser, except that, where the Company is required to repurchase a Mortgage
Loan, pursuant to Section 3.03, the Company's right to such reimbursement shall
be subsequent to the payment to the Purchaser of the Repurchase Price pursuant
to such Section and all other amounts required to be paid to the Purchaser
with
respect to such Mortgage Loan;
(iii)
to
reimburse itself for unreimbursed Servicing Advances and any unpaid Servicing
Fees(or REO administration fees described in Section 4.13), the Company's right
to reimburse itself pursuant to this subclause (iii) with respect to any
Mortgage Loan being limited to related proceeds from Liquidation Proceeds,
Condemnation Proceeds and Insurance Proceeds in accordance with the relevant
provisions of the ▇▇▇▇▇▇ Mae Guides or as otherwise set forth in this Agreement;
any recovery shall be made upon liquidation of the REO Property;
(iv) to
pay to
itself as part of its servicing compensation (a) any interest earned on funds
in
the Custodial Account (all such interest to be withdrawn monthly not later
than
each Remittance Date), and (b) the Servicing Fee from that portion of any
payment or recovery as to interest with respect to a particular Mortgage
Loan;
(v) to
pay to
itself with respect to each Mortgage Loan that has been repurchased pursuant
to
Section 3.03 all amounts received thereon and not distributed as of the date
on
which the related repurchase price is determined,
(vi) to
transfer funds to another Eligible Account in accordance with Section 4.09
hereof;
(vii) to
remove
funds inadvertently placed in the Custodial Account by the Company;
(vi) to
clear
and terminate the Custodial Account upon the termination of this Agreement;
and
(vii) to
reimburse itself for Nonrecoverable Advances to the extent not reimbursed
pursuant to clause (ii) or clause (iii).
Section
4.06 Establishment
of Escrow Accounts; Deposits
in Escrow Accounts.
The
Company shall segregate and hold all funds collected and received pursuant
to
each Mortgage Loan which constitute Escrow Payments separate and apart from
any
of its own funds and general assets and shall establish and maintain one or
more
Escrow Accounts. The Escrow Account shall be an Eligible Account. Funds
deposited in each Escrow Account shall at all times be insured in a manner
to
provide maximum insurance under the insurance limitations of the FDIC, or must
be invested in Permitted Investments. Funds
deposited in the Escrow Account may be drawn on by the Company in accordance
with Section 4.07. The creation of any Escrow Account shall be evidenced by
a
letter agreement in the form shown in Exhibit C. The original of such letter
agreement shall be furnished to the Purchaser on the Closing Date, and upon
request to any subsequent purchaser.
The
Company shall deposit in the Escrow Account or Accounts on a daily basis, and
retain therein:
(i) all
Escrow Payments collected on account of the Mortgage Loans, for the purpose
of
effecting timely payment of any such items as required under the terms of this
Agreement;
(ii) all
Insurance Proceeds which are to be applied to the restoration or repair of
any
Mortgaged Property; and
(iii) all
Servicing Advances for Mortgagors whose Escrow Payments are insufficient to
cover escrow disbursements.
The
Company shall make withdrawals from the Escrow Account only to effect such
payments as are required under this Agreement, and for such other purposes
as
shall be as set forth or in accordance with Section 4.07. The Company shall
be
entitled to retain any interest paid on funds deposited in the Escrow Account
by
the depository institution other than interest on escrowed funds required by
law
to be paid to the Mortgagor and, to the extent required by law, the Company
shall pay interest on escrowed funds to the Mortgagor notwithstanding that
the
Escrow Account is non-interest bearing or that interest paid thereon is
insufficient for such purposes. The
Purchaser shall not be responsible for any losses suffered with respect to
investment of funds in the Escrow Account.
Section
4.07 Permitted
Withdrawals From Escrow Account.
Withdrawals
from the Escrow Account may be made by Company only:
(i) to
effect
timely payments of ground rents, taxes, assessments, water rates, Primary
Mortgage Insurance Policy premiums, if applicable, fire and hazard insurance
premiums, condominium assessments and comparable items;
(ii) to
reimburse Company for any Servicing Advance made by Company with respect to
a
related Mortgage Loan but only from amounts received on the related Mortgage
Loan which represent late payments or collections of Escrow Payments
thereunder;
(iii) to
refund
to the Mortgagor any funds as may be determined to be overages;
(iv) for
transfer to the Custodial Account in accordance with the terms of this
Agreement;
(v) for
application to restoration or repair of the Mortgaged Property;
(vi) to
pay to
the Company, or to the Mortgagor to the extent required by law, any interest
paid on the funds deposited in the Escrow Account;
(vii)
to
clear
and terminate the Escrow Account on the termination of this Agreement. As part
of its servicing duties, the Company shall pay to the Mortgagors interest on
funds in Escrow Account, to the extent required by law, and to the extent that
interest earned on funds in the Escrow Account is insufficient, shall pay such
interest from its own funds, without any reimbursement therefor;
and
(viii)
to
pay to
the Mortgagors or other parties Insurance Proceeds deposited in accordance
with
Section 4.06.
Section
4.08 Payment
of Taxes, Insurance and Other Charges;
Maintenance of Primary Mortgage Insurance
Policies; Collections Thereunder.
With
respect to each Mortgage Loan, the Company shall maintain accurate records
reflecting the status of ground rents, taxes, assessments, water rates and
other
charges which are or may become a lien upon the Mortgaged Property and the
status of primary mortgage insurance premiums and fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of
such
charges, including renewal premiums and shall effect payment thereof prior
to
the applicable penalty or termination date and at a time appropriate for
securing maximum discounts allowable, employing for such purpose deposits of
the
Mortgagor in the Escrow Account which shall have been estimated and accumulated
by the Company in amounts sufficient for such purposes, as allowed under the
terms of the Mortgage or applicable law. To the extent that the Mortgage does
not provide for Escrow Payments, the Company shall determine that any such
payments are made by the Mortgagor at the time they first become due. The
Company assumes full responsibility for the timely payment of all such bills
and
shall effect timely payments of all such bills irrespective of the Mortgagor's
faithful performance in the payment of same or the making of the Escrow Payments
and shall make advances from its own funds to effect such payments.
The
Company will maintain in full force and effect Primary Mortgage Insurance
Policies issued by a Qualified Insurer with respect to each Mortgage Loan for
which such coverage is herein required. Such coverage will be terminated only
with the approval of Purchaser, or as required by applicable law or regulation.
The Company will not cancel or refuse to renew any Primary Mortgage Insurance
Policy in effect on the Closing Date that is required to be kept in force under
this Agreement unless a replacement Primary Mortgage Insurance Policy for such
canceled or nonrenewed policy is obtained from and maintained with a Qualified
Insurer. The Company shall not take any action which would result in
non-coverage under any applicable Primary Mortgage Insurance Policy of any
loss
which, but for the actions of the Company would have been covered thereunder.
In
connection with any assumption or substitution agreement entered into or to
be
entered into pursuant to Section 6.01, the Company shall promptly notify the
insurer under the related Primary Mortgage Insurance Policy, if any, of such
assumption or substitution of liability in accordance with the terms of such
policy and shall take all actions which may be required by such insurer as
a
condition to the continuation of coverage under the Primary Mortgage Insurance
Policy. If such Primary Mortgage Insurance Policy is terminated as a result
of
such assumption or substitution of liability, the Company shall obtain a
replacement Primary Mortgage Insurance Policy as provided above.
In
connection with its activities as servicer, the Company agrees to prepare and
present, on behalf of itself and the Purchaser, claims to the insurer under
any
Private Mortgage Insurance Policy in a timely fashion in accordance with the
terms of such Primary Mortgage Insurance Policy and, in this regard, to take
such action as shall be necessary to permit recovery under any Primary Mortgage
Insurance Policy respecting a defaulted Mortgage Loan. Pursuant to Section
4.04,
any amounts collected by the Company under any Primary Mortgage Insurance Policy
shall be deposited in the Custodial Account, subject to withdrawal pursuant
to
Section 4.05.
Section
4.09 Transfer
of Accounts.
The
Company may transfer the Custodial Account or the Escrow Account to a different
Eligible Account from time to time. Such transfer shall be made only upon
obtaining the prior written consent of the Purchaser, which consent will not
be
unreasonably withheld.
Section
4.10 Maintenance
of Hazard Insurance.
The
Company shall cause to be maintained for each Mortgage Loan fire and hazard
insurance with extended coverage as is acceptable to ▇▇▇▇▇▇ ▇▇▇ or FHLMC and
customary in the area where the Mortgaged Property is located in an amount
which
is equal to the lesser of (i) the maximum insurable value of the improvements
securing such Mortgage Loan or (ii) the greater of (a) the outstanding principal
balance of the Mortgage Loan, and (b) an amount such that the proceeds thereof
shall be sufficient to prevent the Mortgagor and/or the mortgagee from becoming
a co-insurer. If required by the Flood Disaster Protection Act of 1973, as
amended, each Mortgage Loan shall be covered by a flood insurance policy meeting
the requirements of the current guidelines of the Federal Insurance
Administration in effect with an insurance carrier acceptable to ▇▇▇▇▇▇ Mae
or
FHLMC, in an amount representing coverage not less than the least of (i) the
outstanding principal balance of the Mortgage Loan, (ii) the maximum insurable
value of the improvements securing such Mortgage Loan or (iii) the maximum
amount of insurance which is available under the Flood Disaster Protection
Act
of 1973, as amended. If at any time during the term of the Mortgage Loan, the
Company determines in accordance with applicable law and pursuant to the ▇▇▇▇▇▇
▇▇▇ Guides that a Mortgaged Property is located in a special flood hazard area
and is not covered by flood insurance or is covered in an amount less than
the
amount required by the Flood Disaster Protection Act of 1973, as amended, the
Company shall notify the related Mortgagor that the Mortgagor must obtain such
flood insurance coverage, and if said Mortgagor fails to obtain the required
flood insurance coverage within forty-five (45) days after such notification,
the Company shall immediately force place the required flood insurance on the
Mortgagor’s behalf. The Company shall also maintain on each REO Property, fire
and hazard insurance with extended coverage in an amount which is at least
equal
to the maximum insurable value of the improvements which are a part of such
property, and, to the extent required and available under the Flood Disaster
Protection Act of 1973, as amended, flood insurance in an amount as provided
above. Any amounts collected by the Company under any such policies other than
amounts to be deposited in the Escrow Account and applied to the restoration
or
repair of the Mortgaged Property or REO Property, or released to the Mortgagor
in accordance with Accepted Servicing Practices, shall be deposited in the
Custodial Account, subject to withdrawal pursuant to Section 4.05. It is
understood and agreed that no other additional insurance need be required by
the
Company of the Mortgagor or maintained on property acquired in respect of the
Mortgage Loan, other than pursuant to this Agreement, the ▇▇▇▇▇▇ Mae Guides
or
such applicable state or federal laws and regulations as shall at any time
be in
force and as shall require such additional insurance. All such policies shall
be
endorsed with standard mortgagee clauses with loss payable to the Company and
its successors and/or assigns and shall provide for at least thirty days prior
written notice of any cancellation, reduction in the amount or material change
in coverage to the Company. The Company shall not interfere with the Mortgagor's
freedom of choice in selecting either his insurance carrier or agent, provided,
however, that the Company shall not accept any such insurance policies from
insurance companies unless such companies are Qualified Insurers.
Section
4.11 Maintenance
of Mortgage Impairment Insurance Policy.
In
the
event that the Company shall obtain and maintain a blanket policy issued by
a
Qualified Insurer insuring against hazard losses on all of the Mortgage Loans,
then, to the extent such policy provides coverage in an amount equal to the
amount required pursuant to Section 4.10 and otherwise complies with all other
requirements of Section 4.10, it shall conclusively be deemed to have satisfied
its obligations as set forth in Section 4.10, 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 or REO Property a policy complying with Section 4.10, and
there shall have been a loss which would have been covered by such policy,
deposit in the Custodial Account the amount not otherwise payable under the
blanket policy because of such deductible clause. In connection with its
activities as servicer of the Mortgage Loans, the Company agrees to prepare
and
present, on behalf of the Purchaser, claims under any such blanket policy in
a
timely fashion in accordance with the terms of such policy. Upon request of
the
Purchaser, the Company shall cause to be delivered to the Purchaser a certified
true copy of such policy and shall use its best efforts to obtain a statement
from the insurer thereunder that such policy shall in no event be terminated
or
materially modified without thirty (30) days' prior written notice to the
Purchaser.
Section
4.12 Fidelity
Bond, Errors and Omissions Insurance.
The
Company shall maintain, at its own expense, a blanket fidelity bond and an
errors and omissions insurance policy, with broad coverage with responsible
companies on all officers, employees or other persons acting in any capacity
with regard to the Mortgage Loan to handle funds, money, documents and papers
relating to the Mortgage Loan. The Fidelity Bond shall be in the form of the
Mortgage Banker's Blanket Bond and shall protect and insure the Company against
losses, including forgery, theft, embezzlement and fraud of such persons. The
errors and omissions insurance shall protect and insure the Company against
losses arising out of errors and omissions and negligent acts of such persons.
Such errors and omissions insurance shall also protect and insure the Company
against losses in connection with the failure to maintain any insurance policies
required pursuant to this Agreement and the release or satisfaction of a
Mortgage Loan without having obtained payment in full of the indebtedness
secured thereby. No provision of this Section 4.12 requiring the Fidelity Bond
or errors and omissions insurance shall diminish or relieve the Company from
its
duties and obligations as set forth in this Agreement. The minimum coverage
under any such bond and insurance policy shall be at least equal to the
corresponding amounts required by ▇▇▇▇▇▇ ▇▇▇ in the ▇▇▇▇▇▇ Mae Guides. Upon
request by the Purchaser, the Company shall deliver to the Purchaser a
certificate from the surety and the insurer as to the existence of the Fidelity
Bond and errors and omissions insurance policy and shall obtain a statement
from
the surety and the insurer that such Fidelity Bond or insurance policy shall
in
no event be terminated or materially modified without thirty (30) days' prior
written notice to the Purchaser. The Company shall notify the Purchaser within
five (5) business days of receipt of notice that such Fidelity Bond or insurance
policy will be, or has been, materially modified or terminated. The Purchaser
(or any party having the status of Purchaser hereunder) and any subsidiary
thereof and their successors or assigns as their interests may appear must
be
named as loss payees on the Fidelity Bond and as additional insured on the
errors and omissions policy. Upon request by Purchaser, Company shall provide
Purchaser with an insurance certificate certifying coverage under this Section
4.12, and will provide an update to such certificate upon request, or upon
renewal or material modification of coverage.
Section
4.13 Title,
Management and Disposition of REO Property.
In
the
event that title to the Mortgaged Property is acquired in foreclosure or by
deed
in lieu of foreclosure, the deed or certificate of sale shall be taken in the
name of the Purchaser or its designee, or in the event the Purchaser or its
designee is not authorized or permitted to hold title to real property in the
state where the REO Property is located, or would be adversely affected under
the "doing business" or tax laws of such state by so holding title, the deed
or
certificate of sale shall be taken in the name of such Person or Persons as
shall be consistent with an opinion of counsel obtained by the Company from
an
attorney duly licensed to practice law in the state where the REO Property
is
located. Any Person or Persons holding such title other than the Purchaser
shall
acknowledge in writing that such title is being held as nominee for the benefit
of the Purchaser.
The
Company shall notify the Purchaser in accordance with the ▇▇▇▇▇▇ ▇▇▇ Guides
of
each acquisition of REO Property upon such acquisition (and, in any event,
shall
provide notice of the consummation of any foreclosure sale within three (3)
Business Days of the date Company receives notice of such consummation),
together with a copy of the drive by appraisal or brokers price opinion of
the
Mortgaged Property obtained in connection with such acquisition. The Purchaser
shall thereafter assume the responsibility for marketing such REO property
and
shall be disposed of by the Purchaser. No Servicing Fee shall be assessed or
otherwise accrue on any REO Property from and after the date on which it becomes
an REO Property.
The
Company shall, either itself or through an agent selected by the Company, and
in
accordance with the ▇▇▇▇▇▇ Mae Guides manage, conserve, protect and operate
each
REO Property in the same manner that it manages, conserves, protects and
operates other foreclosed property for its own account, and in the same manner
that similar property in the same locality as the REO Property is managed,
until
such time the REO Property is conveyed to the Purchaser for final disposition.
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 monthly thereafter or more frequently as required by the circumstances.
The Company shall make or cause to be made a written report of each such
inspection and such reports shall be retained in the Mortgage File. The Company
shall file
all
necessary mortgage insurance claims.
Section
4.14 Notification
of Maturity Date.
With
respect to each Mortgage Loan, the Company shall execute and deliver to the
Mortgagor any and all necessary notices required under applicable law and the
terms of the related Mortgage Note and Mortgage regarding the maturity date
if
required under applicable law.
ARTICLE
V
PAYMENTS
TO THE PURCHASER
Section
5.01 Distributions.
On
each
Remittance Date, the Company shall distribute by wire transfer of immediately
available funds to the Purchaser (i) all amounts credited to the Custodial
Account as of the close of business on the preceding Determination Date, net
of
charges against or withdrawals from the Custodial Account pursuant to Section
4.05, plus (ii) all Monthly Advances, if any, which the Company is obligated
to
distribute pursuant to Section 5.03, plus, (iii) interest at the Mortgage Loan
Remittance Rate on any Principal Prepayment from the date of such Principal
Prepayment through the end of the month for which disbursement is made provided
that the Company’s obligation as to payment of such interest shall be limited to
the Servicing Fee earned during the month of the distribution, minus (iv) any
amounts attributable to Monthly Payments collected but due on a Due Date or
Dates subsequent to the preceding Determination Date, which amounts shall be
remitted on the Remittance Date next succeeding the Due Period for such amounts.
It is understood that, by operation of Section 4.04, the remittance on the
first
Remittance Date with respect to Mortgage Loans purchased pursuant to the related
Term Sheet is to include principal collected after the Cut-off Date through
the
preceding Determination Date plus interest, adjusted to the Mortgage Loan
Remittance Rate collected through such Determination Date exclusive of any
portion thereof allocable to the period prior to the Cut-off Date, with the
adjustments specified in clauses (ii), (iii) and (iv) above.
With
respect to any remittance received by the Purchaser after the Remittance Date,
the Company shall pay to the Purchaser interest on any such late payment at
an
annual rate equal to the Prime Rate, adjusted as of the date of each change,
plus three (3) percentage points, but in no event greater than the maximum
amount permitted by applicable law. Such interest shall cover the period
commencing with the day following the Business Day such payment was due and
ending with the Business Day on which such payment is made to the Purchaser,
both inclusive. The payment by the Company of any such interest shall not be
deemed an extension of time for payment or a waiver of any Event of Default
by
the Company. On each Remittance Date, the Company shall provide a remittance
report detailing all amounts being remitted pursuant to this Section
5.01.
Section
5.02 Statements
to the Purchaser.
The
Company shall furnish to Purchaser an individual loan accounting report, as
of
the last Business Day of each month, in the Company's assigned loan number
order
to document Mortgage Loan payment activity on an individual Mortgage Loan basis.
With respect to each month, the corresponding individual loan accounting report
shall be received by the Purchaser no later than the fifth Business Day of
the
following month on a disk or tape or other computer-readable format in such
format as may be mutually agreed upon by both Purchaser and Company, and no
later than the fifth Business Day of the following month in hard copy, and
shall
contain the following:
(i)
With
respect to each Monthly Payment, the amount of such remittance allocable to
principal (including a separate breakdown of any Principal Prepayment, including
the date of such prepayment, and any prepayment penalties or premiums, along
with a detailed report of interest on principal prepayment amounts remitted
in
accordance with Section 4.04);
(ii)
with
respect to each Monthly Payment, the amount of such remittance allocable to
interest;
(iii)
the
amount of servicing compensation received by the Company during the prior
distribution period;
(iv)
the
aggregate Stated Principal Balance of the Mortgage Loans;
(v)
the
aggregate of any expenses reimbursed to the Company during the prior
distribution period pursuant to Section 4.05;
(vi)
The
number and aggregate outstanding principal balances of Mortgage Loans (a)
delinquent (1) 30 to 59 days, (2) 60 to 89 days, (3) 90 days or more; (b) as
to
which foreclosure has commenced; and (c) as to which REO Property has been
acquired; and
The
Company shall also provide a trial balance, sorted in Purchaser's assigned
loan
number order, in the form of Exhibit E hereto, with each such
Report.
The
Company shall prepare and file any and all information statements or other
filings required to be delivered to any governmental taxing authority or to
Purchaser pursuant to any applicable law with respect to the Mortgage Loans
and
the transactions contemplated hereby. In addition, the Company shall provide
Purchaser with such information concerning the Mortgage Loans as is necessary
for Purchaser to prepare its federal income tax return as Purchaser may
reasonably request from time to time.
In
addition, not more than sixty (60) days after the end of each calendar year,
the
Company shall furnish to each Person who was a Purchaser at any time during
such
calendar year an annual statement in accordance with the requirements of
applicable federal income tax law as to the aggregate of remittances for the
applicable portion of such year.
Section
5.03 Monthly
Advances by the Company.
Not
later
than the close of business on the Business Day preceding each Remittance Date,
the Company shall deposit in the Custodial Account an amount equal to all
payments not previously advanced by the Company, whether or not deferred
pursuant to Section 4.01, of principal (due after the Cut-off Date) and interest
not allocable to the period prior to the Cut-off Date, adjusted to the Mortgage
Loan Remittance Rate, which were due on a Mortgage Loan and delinquent at the
close of business on the related Determination Date;
provided, however that the Company shall not be obligated to advance any
shortfall arising as a result of application of the Soldiers’ and Sailors’ Civil
Relief Act of 1940 to any Mortgage Loan. .
The
Company's obligation to make such Monthly Advances as to any Mortgage Loan
will
continue through the last Monthly Payment due prior to the payment in full
of
the Mortgage Loan, or through the Remittance Date prior to the date on which
the
Mortgaged Property liquidates (including Insurance Proceeds, proceeds from
the
sale of REO Property or Condemnation Proceeds) with respect to the Mortgage
Loan
unless the Company deems such advance to be a Nonrecoverable Advance. In such
event, the Company shall deliver to the Purchaser an Officer's Certificate
of
the Company to the effect that an officer of the Company has reviewed the
related Mortgage File and has made the reasonable determination that any
additional advances are nonrecoverable.
Section
5.04 Liquidation
Reports.
Upon
the
foreclosure sale of any Mortgaged Property or the acquisition thereof by the
Purchaser pursuant to a deed-in-lieu of foreclosure, the Company shall submit
to
the Purchaser a liquidation report with respect to such Mortgaged Property
in a
form mutually acceptable to Company and Purchaser. The Company shall also
provide reports on the status of REO Property containing such information as
Purchaser may reasonably require.
Section
5.05 Prepayment
Interest Shortfalls.
Not
later
than the close of business on the Business Day preceding each Remittance Date
in
the month following the related Prepayment Period, the Company shall deposit
in
the Custodial Account an amount equal to any Prepayment Interest Shortfalls
with
respect to such Prepayment Period, which in the aggregate shall not exceed
the
Company’s aggregate Servicing Fee received with respect to the related Due
Period.
ARTICLE
VI
GENERAL
SERVICING PROCEDURES
Section
6.01 Assumption
Agreements.
The
Company will, to the extent it has knowledge of any conveyance or prospective
conveyance by any Mortgagor of the Mortgaged Property (whether by absolute
conveyance or by contract of sale, and whether or not the Mortgagor remains
or
is to remain liable under the Mortgage Note and/or the Mortgage), exercise
its
rights to accelerate the maturity of such Mortgage Loan under any "due-on-sale"
clause to the extent permitted by law; provided, however, that the Company
shall
not exercise any such rights if prohibited by law or the terms of the Mortgage
Note from doing so or if the exercise of such rights would impair or threaten
to
impair any recovery under the related Primary Mortgage Insurance Policy, if
any.
If the Company reasonably believes it is unable under applicable law to enforce
such "due-on-sale" clause, the Company, with the approval of the Purchaser,
will
enter into an assumption agreement with the person to whom the Mortgaged
Property has been conveyed or is proposed to be conveyed, pursuant to which
such
person becomes liable under the Mortgage Note and, to the extent permitted
by
applicable state law, the Mortgagor remains liable thereon. Where an assumption
is allowed pursuant to this Section 6.01, the Company, with the prior consent
of
the Purchaser and the primary mortgage insurer, if any, is authorized to enter
into a substitution of liability agreement with the person to whom the Mortgaged
Property has been conveyed or is proposed to be conveyed pursuant to which
the
original mortgagor is released from liability and such Person is substituted
as
mortgagor and becomes liable under the related Mortgage Note. Any such
substitution of liability agreement shall be in lieu of an assumption agreement.
In
connection with any such assumption or substitution of liability, the Company
shall follow the underwriting practices and procedures of the Company. With
respect to an assumption or substitution of liability, the Mortgage Interest
Rate borne by the related Mortgage Note, the amount of the Monthly Payment
and
the maturity date may not be changed (except pursuant to the terms of the
Mortgage Note). If the credit of the proposed transferee does not meet such
underwriting criteria, the Company diligently shall, to the extent permitted
by
the Mortgage or the Mortgage Note and by applicable law, accelerate the maturity
of the Mortgage Loan. The Company shall notify the Purchaser that any such
substitution of liability or assumption agreement has been completed by
forwarding to the Purchaser the original of any such substitution of liability
or assumption agreement, which document shall be added to the related Mortgage
File and shall, for all purposes, be considered a part of such Mortgage File
to
the same extent as all other documents and instruments constituting a part
thereof. All fees collected by the Company for entering into an assumption
or
substitution of liability agreement shall belong to the Company.
Notwithstanding
the foregoing paragraphs of this Section or any other provision of this
Agreement, the Company shall not be deemed to be in default, breach or any
other
violation of its obligations hereunder by reason of any assumption of a Mortgage
Loan by operation of law or any assumption which the Company may be restricted
by law from preventing, for any reason whatsoever. For purposes of this Section
6.01, the term "assumption" is deemed to also include a sale of the Mortgaged
Property subject to the Mortgage that is not accompanied by an assumption or
substitution of liability agreement.
Section
6.02 Satisfaction
of Mortgages and Release of Mortgage Files.
Upon
the
payment in full of any Mortgage Loan, or the receipt by the Company of a
notification that payment in full will be escrowed in a manner customary for
such purposes, the Company will immediately notify the Purchaser by a
certification, which certification shall include a statement to the effect
that
all amounts received or to be received in connection with such payment which
are
required to be deposited in the Custodial Account pursuant to Section 4.04
have
been or will be so deposited, of a Servicing Officer and shall request delivery
to it of the portion of the Mortgage File held by the Purchaser. The Purchaser
shall no later than five Business Days after receipt of such certification
and
request, release or cause to be released to the Company, the related Mortgage
Loan Documents and, upon its receipt of such documents, the Company shall
promptly prepare and deliver to the Purchaser the requisite satisfaction or
release. No later than five (5) Business Days following its receipt of such
satisfaction or release, the Purchaser shall deliver, or cause to be delivered,
to the Company the release or satisfaction properly executed by the owner of
record of the applicable mortgage or its duly appointed attorney in fact. No
expense incurred in connection with any instrument of satisfaction or deed
of
reconveyance shall be chargeable to the Custodial Account.
In
the
event the Company satisfies or releases a Mortgage without having obtained
payment in full of the indebtedness secured by the Mortgage or should it
otherwise prejudice any right the Purchaser may have under the mortgage
instruments, the Company, upon written demand, shall remit within two (2)
Business Days to the Purchaser the then outstanding principal balance of the
related Mortgage Loan by deposit thereof in the Custodial Account. The Company
shall maintain the Fidelity Bond and errors and omissions insurance insuring
the
Company against any loss it may sustain with respect to any Mortgage Loan not
satisfied in accordance with the procedures set forth herein.
From
time
to time and as appropriate for the servicing or foreclosure of the Mortgage
Loan, including for the purpose of collection under any Primary Mortgage
Insurance Policy, the Purchaser shall, upon request of the Company and delivery
to the Purchaser of a servicing receipt signed by a Servicing Officer, release
the portion of the Mortgage File held by the Purchaser to the Company. Such
servicing receipt shall obligate the Company to return the related Mortgage
documents to the Purchaser when the need therefor by the Company no longer
exists, unless the Mortgage Loan has been liquidated and the Liquidation
Proceeds relating to the Mortgage Loan have been deposited in the Custodial
Account or the Mortgage File or such document has been delivered to an attorney,
or to a public trustee or other public official as required by law, for purposes
of initiating or pursuing legal action or other proceedings for the foreclosure
of the Mortgaged Property either judicially or non-judicially, and the Company
has delivered to the Purchaser a certificate of a Servicing Officer certifying
as to the name and address of the Person to which such Mortgage File or such
document was delivered and the purpose or purposes of such delivery. Upon
receipt of a certificate of a Servicing Officer stating that such Mortgage
Loan
was liquidated, the servicing receipt shall be released by the Purchaser to
the
Company.
Section
6.03 Servicing
Compensation.
As
compensation for its services hereunder, the Company shall be entitled to
withdraw from the Custodial Account (to the extent of interest payments
collected on the Mortgage Loans) or to retain from interest payments collected
on the Mortgage Loans, the amounts provided for as the Company's Servicing
Fee,
subject to payment of compensating interest on Principal Prepayments as capped
by the Servicing Fee pursuant to Section 5.01 (iii). Additional servicing
compensation in the form of assumption fees, as provided in Section 6.01, and
late payment charges or otherwise shall be retained by the Company to the extent
not required to be deposited in the Custodial Account. No Servicing Fee shall
be
payable in connection with partial Monthly Payments. The Company shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder and shall not be entitled to reimbursement therefor except
as specifically provided for.
Section
6.04 Annual
Statement as to Compliance.
The
Company will deliver to the Purchaser not later than 90 days following the
end
of each fiscal year of the Company beginning in March 2004, an Officers'
Certificate stating, as to each signatory thereof, that (i) a review of the
activities of the Company during the preceding calendar year and of performance
under this Agreement has been made under such officers' supervision, and (ii)
to
the best of such officers' knowledge, based on such review, the Company has
fulfilled all of its obligations under this Agreement throughout such year,
or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officers and the nature and status
of
cure provisions thereof. Copies of such statement shall be provided by the
Company to the Purchaser upon request.
Section
6.05 Annual
Independent Certified Public Accountants' Servicing Report.
Within
ninety (90) days of Company's fiscal year end beginning in March 2004, the
Company at its expense shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants
to
furnish a statement to the Purchaser to the effect that such firm has examined
certain documents and records relating to the Company's servicing of mortgage
loans of the same type as the Mortgage Loans pursuant to servicing agreements
substantially similar to this Agreement, which agreements may include this
Agreement, and that, on the basis of such an examination, conducted
substantially in the uniform single audit program for mortgage bankers, such
firm is of the opinion that the Company's servicing has been conducted in
compliance with the agreements examined pursuant to this Section 6.05, except
for (i) such exceptions as such firm shall believe to be immaterial, and (ii)
such other exceptions as shall be set forth in such statement. Copies of such
statement shall be provided by the Company to the Purchaser. In addition, on
an
annual basis, Company shall provided Purchaser with copies of its audited
financial statements.
Section
6.06 Purchaser's
Right to Examine Company Records.
The
Purchaser shall have the right to examine and audit upon reasonable notice
to
the Company, during business hours or at such other times as might be reasonable
under applicable circumstances, any and all of the books, records, documentation
or other information of the Company, or held by another for the Company or
on
its behalf or otherwise, which relates to the performance or observance by
the
Company of the terms, covenants or conditions of this Agreement.
The
Company shall provide to the Purchaser and any supervisory agents or examiners
representing a state or federal governmental agency having jurisdiction over
the
Purchaser, including but not limited to OTS, FDIC and other similar entities,
access to any documentation regarding the Mortgage Loans in the possession
of
the Company which may be required by any applicable regulations. Such access
shall be afforded without charge, upon reasonable request, during normal
business hours and at the offices of the Company, and in accordance with the
FDIC, OTS, or any other similar federal or state regulations, as
applicable.
ARTICLE
VII
REPORTS
TO BE PREPARED BY SERVICER
Section
7.01 Company
Shall Provide Information as Reasonably Required.
The
Company shall furnish to the Purchaser during the term of this Agreement, such
periodic, special or other reports, information or documentation, whether or
not
provided for herein, as shall be necessary, reasonable or appropriate in respect
to the Purchaser, or otherwise in respect to the Mortgage Loans and the
performance of the Company under this Agreement, including any reports,
information or documentation reasonably required to comply with any regulations
regarding any supervisory agents or examiners of the Purchaser all such reports
or information to be as provided by and in accordance with such applicable
instructions and directions as the Purchaser may reasonably request in relation
to this Agreement or the performance of the Company under this Agreement. The
Company agrees to execute and deliver all such instruments and take all such
action as the Purchaser, from time to time, may reasonably request in order
to
effectuate the purpose and to carry out the terms of this
Agreement.
In
connection with marketing the Mortgage Loans, the Purchaser may make available
to a prospective purchaser audited financial statements of the Company for
the
most recently completed two (2) fiscal years for which such statements are
available, as well as a Consolidated Statement of Condition at the end of the
last two (2) fiscal years covered by any Consolidated Statement of Operations.
If it has not already done so, the Company shall furnish promptly to the
Purchaser or a prospective purchaser copies of the statements specified
above.
The
Company shall make reasonably available to the Purchaser or any prospective
Purchaser a knowledgeable financial or accounting officer for the purpose of
answering questions and to permit any prospective purchaser to inspect the
Company’s servicing facilities for the purpose of satisfying such prospective
purchaser that the Company has the ability to service the Mortgage Loans as
provided in this Agreement.
ARTICLE
VIII
THE
SERVICER
Section
8.01 Indemnification;
Third Party Claims.
The
Company agrees to indemnify the Purchaser and hold it harmless against any
and
all claims, losses, damages, penalties, fines, forfeitures, legal fees and
related costs, judgments, and any other costs, fees and expenses that the
Purchaser may sustain in any way related to the failure of the Company to
observe and perform its duties, obligations, covenants, and agreements to
service the Mortgage Loans in strict compliance with the terms of this
Agreement. The Company agrees to indemnify the Purchaser and hold it harmless
against any and all claims, losses, damages, penalties, fines, forfeitures,
legal fees and related costs, judgments, and any other costs, fees and expenses
that the Purchaser may sustain in any way from any claim, demand, defense or
assertion based on or grounded upon, or resulting from any assertion based
on,
grounded upon or resulting from a breach or alleged breach of any of the
representation or warranty set forth in Sections 3.01 or 3.02 of this Agreement.
The Company shall immediately notify the Purchaser if a claim is made by a
third
party against Company with respect to this Agreement or the Mortgage Loans,
assume (with the consent of the Purchaser) the defense of any such claim and
pay
all expenses in connection therewith, including counsel fees, whether or not
such claim is settled prior to judgment, and promptly pay, discharge and satisfy
any judgment or decree which may be entered against it or the Purchaser in
respect of such claim. The Company shall follow any written instructions
received from the Purchaser in connection with such claim. The Purchaser shall
promptly reimburse the Company for all amounts advanced by it pursuant to the
two preceding sentences except when the claim relates to the failure of the
Company to service and administer the Mortgages in strict compliance with the
terms of this Agreement, the breach of representation or warranty set forth
in
Sections 3.01 or 3.02, or the negligence, bad faith or willful misconduct of
Company. The provisions of this Section 8.01 shall survive termination of this
Agreement.
Section
8.02 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 its incorporation except as permitted
herein, and will obtain and preserve its qualification to do business as a
foreign corporation in each jurisdiction in which such qualification is or
shall
be necessary to protect the validity and enforceability of this Agreement,
or
any of the Mortgage Loans and to perform its duties under this
Agreement.
Any
Person into which the Company may be merged or consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Company
shall be a party, or any Person succeeding to the business of the Company
whether or not related to loan servicing, shall be the successor of the Company
hereunder, without the execution or filing of any paper or any further act
on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person
shall
be an institution (i) having a GAAP net worth of not less than $25,000,000,
(ii)
the deposits of which are insured by the FDIC, SAIF and/or BIF, and which is
a
HUD-approved mortgagee whose primary business is in origination and servicing
of
first lien mortgage loans, and (iii) who is a ▇▇▇▇▇▇ ▇▇▇ or FHLMC approved
seller/servicer in good standing.
Section
8.03 Limitation
on Liability of the Company and Others.
Neither
the Company nor any of the officers, employees or agents of the Company shall
be
under any liability to the Purchaser for any action taken or for refraining
from
the taking of any action in good faith pursuant to this Agreement, or for errors
in judgment made in good faith; provided, however, that this provision shall
not
protect the Company or any such person against any breach of warranties or
representations made herein, or failure to perform its obligations in strict
compliance with any standard of care set forth in this Agreement, or any
liability which would otherwise be imposed by reason of negligence, bad faith
or
willful misconduct, or any breach of the terms and conditions of this Agreement.
The Company and any 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
the Purchaser respecting any matters arising hereunder. The Company shall not
be
under any obligation to appear in, prosecute or defend any legal action which
is
not incidental to its duties to service the Mortgage Loans in accordance with
this Agreement and which in its reasonable opinion may involve it in any
expenses or liability; provided, however, that the Company may, with the consent
of the Purchaser, undertake any such action which it may deem necessary or
desirable in respect to this Agreement and the rights and duties of the parties
hereto. In such event, the reasonable legal expenses and costs of such action
and any liability resulting therefrom shall be expenses, costs and liabilities
for which the Purchaser will be liable, and the Company shall be entitled to
be
reimbursed therefor from the Purchaser upon written demand.
Section
8.04 Company
Not to Assign or Resign.
The
Company shall not assign this Agreement or resign from the obligations and
duties hereby imposed on it except by mutual consent of the Company and the
Purchaser or upon the determination that its duties hereunder are no longer
permissible under applicable law and such incapacity cannot be cured by the
Company. Any such determination permitting the resignation of the Company shall
be evidenced by an Opinion of Counsel to such effect delivered to the Purchaser
which Opinion of Counsel shall be in form and substance acceptable to the
Purchaser. No such resignation shall become effective until a successor shall
have assumed the Company's responsibilities and obligations hereunder in the
manner provided in Section 11.01.
Section
8.05 No
Transfer of Servicing.
With
respect to the retention of the Company to service the Mortgage Loans hereunder,
the Company acknowledges that the Purchaser has acted in reliance upon the
Company's independent status, the adequacy of its servicing facilities, plan,
personnel, records and procedures, its integrity, reputation and financial
standing and the continuance thereof. Without in any way limiting the generality
of this Section, the Company shall not either assign this Agreement or the
servicing hereunder or delegate its rights or duties hereunder or any portion
thereof, or sell or otherwise dispose of all or substantially all of its
property or assets, without the prior written approval of the Purchaser, which
consent shall be granted or withheld in the Purchaser's sole
discretion.
Without
in any way limiting the generality of this Section 8.05, in the event that
the
Company either shall assign this Agreement or the servicing responsibilities
hereunder or delegate its duties hereunder or any portion thereof without (i)
satisfying the requirements set forth herein or (ii) the prior written consent
of the Purchaser, then the Purchaser shall have the right to terminate this
Agreement, without any payment of any penalty or damages and without any
liability whatsoever to the Company (other than with respect to accrued but
unpaid Servicing Fees and Servicing Advances remaining unpaid) or any third
party.
ARTICLE
IX
DEFAULT
Section
9.01 Events
of Default.
In
case
one or more of the following Events of Default by the Company shall occur and
be
continuing, that is to say:
(i)
any
failure by the Company to remit to the Purchaser any payment required to be
made
under the terms of this Agreement which continues unremedied for a period of
one
(1) Business Day; or
(ii)
failure on the part of the Company duly to observe or perform in any material
respect any other of the covenants or agreements on the part of the Company
set
forth in this Agreement which continues unremedied for a period of thirty (30)
days after the date on which written notice of such failure, requiring the
same
to be remedied, shall have been given to the Company by the Purchaser;
or
(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
days; or
(iv)
the
Company shall consent to the appointment of a conservator or receiver or
liquidator in any insolvency, bankruptcy, 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 its property; or
(v)
the
Company shall admit in writing its inability to pay its debts generally as
they
become due, file a petition to take advantage of any applicable insolvency
or
reorganization statute, make an assignment for the benefit of its creditors,
or
voluntarily suspend payment of its obligations; or
(vi)
Company ceases to be approved by either ▇▇▇▇▇▇ ▇▇▇ or FHLMC as a mortgage loan
seller or servicer for more than thirty days; or
(vii)
the
Company attempts to assign its right to servicing compensation hereunder or
the
Company attempts, without the consent of the Purchaser, to sell or otherwise
dispose of all or substantially all of its property or assets or to assign
this
Agreement or the servicing responsibilities hereunder or to delegate its duties
hereunder or any portion thereof; or
(viii)
the Company ceases to be (a) licensed to service first lien residential mortgage
loans in any jurisdiction in which a Mortgaged Property is located and such
licensing is required, and (b) qualified to transact business in any
jurisdiction where it is currently so qualified, but only to the extent such
non-qualification materially and adversely affects the Company's ability to
perform its obligations hereunder; or
(ix)
the
Company fails to meet the eligibility criteria set forth in the last sentence
of
Section 8.02.
Then,
and
in each and every such case, so long as an Event of Default shall not have
been
remedied, the Purchaser, by notice in writing to the Company (except in the
case
of an Event of Default under clauses (iii), (iv) or (v) above, in which case,
automatically and without notice) Company may, in addition to whatever rights
the Purchaser may have under Sections 3.03 and 8.01 and at law or equity or
to
damages, including injunctive relief and specific performance, terminate all
the
rights and obligations of the Company under this Agreement and in and to the
Mortgage Loans and the proceeds thereof without compensating the Company for
the
same. On or after the receipt by the Company of such written notice (or, in
the
case of an Event of Default under clauses (iii), (iv) or (v) above, in which
case, automatically and without notice), all authority and power of the Company
under this Agreement, whether with respect to the Mortgage Loans or otherwise,
shall pass to and be vested in the successor appointed pursuant to Section
11.01. Upon written request from the Purchaser, the Company shall prepare,
execute and deliver, any and all documents and other instruments, place in
such
successor's possession all Mortgage Files, and do or accomplish all other acts
or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment
of
the Mortgage Loans and related documents, or otherwise, at the Company's sole
expense. The Company agrees to cooperate with the Purchaser and such successor
in effecting the termination of the Company's responsibilities and rights
hereunder, including, without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited
by
the Company to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans or any REO Property.
Section
9.02 Waiver
of Defaults.
The
Purchaser may waive only by written notice any default by the 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 arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived in writing.
ARTICLE
X
TERMINATION
Section
10.01 Termination.
The
respective obligations and responsibilities of the Company shall terminate
upon:
(i) the later of the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan and the disposition of all remaining
REO Property and the remittance of all funds due hereunder; or (ii) by mutual
consent of the Company and the Purchaser in writing; or (iii) termination with
cause under the terms of this Agreement.
ARTICLE
XI
MISCELLANEOUS
PROVISIONS
Section
11.01 Successor
to the Company.
Prior
to
termination of Company's responsibilities and duties under this Agreement
pursuant to Sections 4.13, 8.04, 9.01, 10.01 (ii) or (iii), the Purchaser shall
(i) succeed to and assume all of the Company's responsibilities, rights, duties
and obligations under this Agreement, or (ii) appoint a successor having the
characteristics set forth in Section 8.02 hereof and which shall succeed to
all
rights and assume all of the responsibilities, duties and liabilities of the
Company under this Agreement prior to the termination of Company's
responsibilities, duties and liabilities under this Agreement. In connection
with such appointment and assumption, the Purchaser may make such arrangements
for the compensation of such successor out of payments on Mortgage Loans as
the
Purchaser and such successor shall agree. In the event that the Company's
duties, responsibilities and liabilities under this Agreement should be
terminated pursuant to the aforementioned Sections, the Company shall discharge
such duties and responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof with the same
degree of diligence and prudence which it is obligated to exercise under this
Agreement, and shall take no action whatsoever that might impair or prejudice
the rights or financial condition of its successor. The resignation or removal
of Company pursuant to the aforementioned Sections shall not become effective
until a successor shall be appointed pursuant to this Section and shall in
no
event relieve the Company of the representations and warranties made pursuant
to
Sections 3.01, 3.02 and 3.03 and the remedies available to the Purchaser
thereunder and under Section 8.01, it being understood and agreed that the
provisions of such Sections 3.01, 3.02, 3.03 and 8.01 shall be applicable to
the
Company notwithstanding any such resignation or termination of the Company,
or
the termination of this Agreement.
Any
successor appointed as provided herein shall execute, acknowledge and deliver
to
the Company and to the Purchaser an instrument accepting such appointment,
whereupon such successor shall become fully vested with all the rights, powers,
duties, responsibilities, obligations and liabilities of the Company, with
like
effect as if originally named as a party to this Agreement. Any termination
or
resignation of the Company or this Agreement pursuant to Section 4.13, 8.04,
9.01 or 10.01 shall not affect any claims that the Purchaser may have against
the Company arising prior to any such termination or resignation.
The
Company shall promptly deliver to the successor the funds in the Custodial
Account and the Escrow Account and the Mortgage Files and related documents
and
statements held by it hereunder and the Company shall account for all funds.
The
Company shall execute and deliver such instruments and do such other things
all
as may reasonably be required to more fully and definitely vest and confirm
in
the successor all such rights, powers, duties, responsibilities, obligations
and
liabilities of the Company. The successor shall make arrangements as it may
deem
appropriate to reimburse the Company for unrecovered Servicing Advances which
the successor retains hereunder and which would otherwise have been recovered
by
the Company pursuant to this Agreement but for the appointment of the successor
servicer.
Upon
a
successor's acceptance of appointment as such, the Company shall notify by
mail
the Purchaser of such appointment.
Section
11.02 Amendment.
This
Agreement may be amended from time to time by the Company and the Purchaser
by
written agreement signed by the Company and the Purchaser.
Section
11.03 Recordation
of Agreement.
To
the
extent permitted by applicable law, this Agreement is subject to recordation
in
all appropriate public offices for real property records in all the counties
or
other comparable jurisdictions in which any of the properties subject to the
Mortgages are situated, and in any other appropriate public recording office
or
elsewhere, such recordation to be effected by the Company at the Company's
expense on direction of the Purchaser accompanied by an opinion of counsel
to
the effect that such recordation materially and beneficially affects the
interest of the Purchaser or is necessary for the administration or servicing
of
the Mortgage Loans.
Section
11.04 Governing
Law.
This
Agreement and the related Term Sheet shall be governed by and construed in
accordance with the laws of the State of New York except to the extent preempted
by Federal law. The obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.
Section
11.05 Notices.
Any
demands, notices or other communications permitted or required hereunder shall
be in writing and shall be deemed conclusively to have been given if personally
delivered at or mailed by registered mail, postage prepaid, and return receipt
requested or certified mail, return receipt requested, or transmitted by telex,
telegraph or telecopier and confirmed by a similar mailed writing, as
follows:
(i) if
to the
Company:
First
Horizon Home Loan Corporation
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention:
Capital Markets Department
Telecopier
No.: [___________]
First
Tennessee Mortgage Services, Inc.
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention:
Capital Markets Department
Telecopier
No.: [___________]
(ii)
if
to the
Purchaser:
EMC
Mortgage Corporation
Mac
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇,
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier
No.: (▇▇▇) ▇▇▇-▇▇▇▇
With
a
copy to:
Bear
▇▇▇▇▇▇▇ Mortgage Capital Corporation
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇ ▇▇▇▇▇▇▇▇
or
such
other address as may hereafter be furnished to the other party by like notice.
Any such demand, notice or communication hereunder shall be deemed to have
been
received on the date delivered to or received at the premises of the addressee
(as evidenced, in the case of registered or certified mail, by the date noted
on
the return receipt).
Section
11.06 Severability
of Provisions.
Any
part,
provision, representation or warranty of this Agreement and the related Term
Sheet which is prohibited or which is held to be void or unenforceable shall
be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any part, provision,
representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall
be ineffective, as to such jurisdiction, to the extent of such prohibition
or
unenforceability without invalidating the remaining provisions hereof, and
any
such prohibition or unenforceability in any jurisdiction as to any Mortgage
Loan
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law that prohibits or renders void or unenforceable
any
provision hereof. If the invalidity of any part, provision, representation
or
warranty of this Agreement shall deprive any party of the economic benefit
intended to be conferred by this Agreement, the parties shall negotiate, in
good
faith, to develop a structure the economic effect of which is nearly as possible
the same as the economic effect of this Agreement without regard to such
invalidity.
Section
11.07 Exhibits.
The
exhibits to this Agreement are hereby incorporated and made a part hereof and
are an integral part of this Agreement.
Section
11.08 General
Interpretive Principles.
For
purposes of this Agreement, except as otherwise expressly provided or unless
the
context otherwise requires:
(i)
the
terms
defined in this Agreement have the meanings assigned to them in this Agreement
and include the plural as well as the singular, and the use of any gender herein
shall be deemed to include the other gender;
(ii)
accounting
terms not otherwise defined herein have the meanings assigned to them in
accordance with generally accepted accounting principles;
(iii)
references
herein to "Articles", "Sections", Subsections", "Paragraphs", and other
subdivisions without reference to a document are to designated Articles,
Sections, Subsections, Paragraphs and other subdivisions of this
Agreement;
(iv)
a
reference to a Subsection without further reference to a Section is a reference
to such Subsection as contained in the same Section in which the reference
appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(v)
the
words
"herein", "hereof ", "hereunder" and other words of similar import refer to
this
Agreement as a whole and not to any particular provision;
(vi)
the
term
"include" or "including" shall mean without limitation by reason of enumeration;
and
(viii)
headings
of the Articles and Sections in this Agreement are for reference purposes only
and shall not be deemed to have any substantive effect.
Section
11.09 Reproduction
of Documents.
This
Agreement and all documents relating thereto, including, without limitation,
(i)
consents, waivers and modifications which may hereafter be executed, (ii)
documents received by any party at the closing, and (iii) financial statements,
certificates and other information previously or hereafter furnished, may be
reproduced by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process. The parties agree that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in
evidence.
Section
11.10 Confidentiality
of Information.
Each
party recognizes that, in connection with this Agreement, it may become privy
to
non-public information regarding the financial condition, operations and
prospects of the other party. Each party agrees to keep all non-public
information regarding the other party strictly confidential, and to use all
such
information solely in order to effectuate the purpose of the Agreement, provided
that each party may provide confidential information to its employees, agents
and affiliates who have a need to know such information in order to effectuate
the transaction, provided further that such information is identified as
confidential non-public information. In addition, confidential information
may
be provided to a regulatory authority with supervisory power over Purchaser,
provided such information is identified as confidential non-public
information.
Notwithstanding
other provisions of this Section 16.14 or any other express or implied
agreement, arrangement, or understanding to the contrary, the Company and
Purchaser (the “Parties”) agree that the Parties (and their employees,
representatives and other agents) may disclose to any and all persons, without
limitation of any kind from the commencement of discussions, the purported
or
claimed U.S. federal income tax treatment of the purchase of the Mortgage Loans
and related transactions covered by this letter agreement (“tax treatment”) and
any fact that may be relevant to understanding the tax treatment (“tax
structure”) and all materials of any kind (including opinions or other tax
analyses) that are provided to the Parties relating to such tax treatment and
tax structure, except where confidentiality is reasonably necessary to comply
with securities laws.
Section
11.11 Recordation
of Assignments of Mortgage.
To
the
extent permitted by applicable law, each of the Assignments is subject to
recordation in all appropriate public offices for real property records in
all
the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public recording
office or elsewhere, such recordation to be effected by and at the Company’s
expense in the event recordation is either necessary under applicable law or
requested by the Purchaser at its sole option.
Section
11.12 Assignment.
The
Purchaser shall have the right, without the consent of the Company, to assign,
in whole or in part, its interest under this Agreement with respect to some
or
all of the Mortgage Loans, and designate any person to exercise any rights
of
the Purchaser hereunder, by executing an Assignment and Assumption Agreement
substantially in the form of Exhibit D hereto and the assignee or designee
shall
accede to the rights and obligations hereunder of the Purchaser with respect
to
such Mortgage Loans. In no event shall Purchaser sell a partial interest in
any
Mortgage Loan without the written consent of Company, which consent shall not
be
unreasonably denied. All references to the Purchaser in this Agreement shall
be
deemed to include its assignee or designee. The Company shall have the right,
only with the consent of the Purchaser or otherwise in accordance with this
Agreement, to assign, in whole or in part, its interest under this Agreement
with respect to some or all of the Mortgage Loans.
Section
11.13 No
Partnership.
Nothing
herein contained shall be deemed or construed to create a co-partnership or
joint venture between the parties hereto and the services of the Company shall
be rendered as an independent contractor and not as agent for
Purchaser.
Section
11.14 Execution:
Successors and Assigns.
This
Agreement may be executed in one or more counterparts and by the different
parties hereto on separate counterparts, each of which, when so executed, shall
be deemed to be an original; such counterparts, together, shall constitute
one
and the same agreement. Subject to this Agreement shall inure to the benefit
of
and be binding upon the Company and the Purchaser and their respective
successors and assigns.
Section
11.15 Entire
Agreement.
The
Company acknowledges that no representations, agreements or promises were made
to the Company by the Purchaser or any of its employees other than those
representations, agreements or promises specifically contained herein and in
the
Confirmation. The Confirmation and this Agreement and the related Term Sheet
sets forth the entire understanding between the parties hereto; provided,
however, only this Agreement and the related Term Sheet shall be binding upon
all successors of both parties. In the event of any inconsistency between the
Confirmation and this Agreement, this Agreement and the related Term Sheet
shall
control.
Section
11.16. No
Solicitation.
From
and
after the Closing Date, the Company agrees that it will not take any action
or
permit or cause any action to be taken by any of its agents or affiliates,
to
personally, by telephone or mail, solicit the borrower or obligor under any
Mortgage Loan to refinance the Mortgage Loan, in whole or in part, without
the
prior written consent of the Purchaser. Notwithstanding the foregoing, it is
understood and agreed that (i) promotions undertaken by the Company or any
affiliate of the Company which are directed to the general public at large,
or
segments thereof, provided that no segment shall consist primarily of the
Mortgage Loans, including, without limitation, mass mailing based on
commercially acquired mailing lists, newspaper, radio and television
advertisements and (ii) responses to unsolicited requests or inquiries made
by a
Mortgagor or an agent of a Mortgagor, shall not constitute solicitation under
this Section 11.16. This Section 11.16 shall not be deemed to preclude the
Company or any of its affiliates from soliciting any Mortgagor for any other
financial products or services. The Company shall use its best efforts to
prevent the sale of the name of any Mortgagor to any Person who is not affiliate
of the Company.
Section
11.17. Closing.
The
closing for the purchase and sale of the Mortgage Loans shall take place on
the
related Closing Date. The closing shall be either: by telephone, confirmed
by
letter or wire as the parties shall agree, or conducted in person, at such
place
as the parties shall agree.
The
closing for the Mortgage Loans to be purchased on the related Closing Date
shall
be subject to each of the following conditions:
(a) at
least
one (1) Business Day prior to the related Closing Date, the Company shall
deliver to the Purchaser a magnetic diskette, or transmit by modem, a listing
on
a loan-level basis of the information contained in the related Mortgage Loan
Schedule attached to the related Term Sheet;
(b) all
of
the representations and warranties of the Company under this Agreement shall
be
materially true and correct as of the related Closing Date and no event shall
have occurred which, with notice or the passage of time, would constitute a
material default under this Agreement;
(c) the
Purchaser shall have received, or the Purchaser's attorneys shall have received
in escrow, all documents required pursuant to this Agreement, the related Term
Sheet, an opinion of counsel and an officer's certificate, all in such forms
as
are agreed upon and acceptable to the Purchaser, duly executed by all
signatories other than the Purchaser as required pursuant to the terms
hereof;
(d) the
Company shall have delivered and released to the Purchaser (or its designee)
on
or prior to the related Closing Date all documents required pursuant to the
terms of this Agreement and the related Term Sheet; and
(e) all
other
terms and conditions of this Agreement, the related Term Sheet and the
Confirmation shall have been materially complied with.
Subject
to the foregoing conditions, the Purchaser shall pay to the Company on the
related Closing Date the Purchase Price, plus accrued interest pursuant to
Section 2.02 of this Agreement, by wire transfer of immediately available funds
to the account designated by the Company.
Section
11.18. Cooperation
of Company with a Reconstitution.
The
Company and the Purchaser agree that with respect to some or all of the Mortgage
Loans, on or after the related Closing Date, on one or more dates (each a
"Reconstitution Date") at the Purchaser's sole option and with Purchaser’s best
efforts to provide notice to the Company fifteen (15) days prior to the
Reconstitution Date, the Purchaser may effect one or more sales, but in no
event
greater than three (3) per pool of Mortgage Loan sold under the related Term
Sheet (each, a "Reconstitution") of some or all of the Mortgage Loans then
subject to this Agreement, without recourse, to:
(a)
one or
more third party purchasers in one or more in whole loan transfers (each, a
"Whole Loan Transfer"); or
(b) one
or
more trusts or other entities to be formed as part of one or more pass-through
transfers (each, a "Pass-Through Transfer").
The
Company agrees to execute in connection with any agreements among the Purchaser,
the Company, and any servicer in connection with a Whole Loan Transfer, an
Assignment, Assumption and Recognition Agreement substantially in the form
of
Exhibit D hereto, or, at Purchaser’s request, a seller's warranties and
servicing agreement or a participation and servicing agreement or similar
agreement in form and substance reasonably acceptable to the parties, and in
connection with a Pass-Through Transfer, a pooling and servicing agreement
in
form and substance reasonably acceptable to the parties, (collectively the
agreements referred to herein are designated, the "Reconstitution Agreements").
It is understood that any such Reconstitution Agreements will not contain any
greater obligations on the part of Company than are contained in this
Agreement.
With
respect to each Whole Loan Transfer and each Pass-Through Transfer entered
into
by the Purchaser, the Company agrees (1) to cooperate fully with the Purchaser
and any prospective purchaser with respect to all reasonable requests and due
diligence procedures; (2) to execute, deliver and perform all Reconstitution
Agreements required by the Purchaser; (3) to restate the representations and
warranties set forth in this Agreement as of the settlement or closing date
in
connection with such Reconstitution (each, a "Reconstitution Date"). In that
connection, the Company shall provide to such servicer or issuer, as the case
may be, and any other participants in such Reconstitution: (i) any and all
information (including servicing portfolio information) and appropriate
verification of information (including servicing portfolio information) which
may be reasonably available to the Company, whether through letters of its
auditors and counsel or otherwise, as the Purchaser or any such other
participant shall request upon reasonable demand; and (ii) such additional
representations, warranties, covenants, opinions of counsel, letters from
auditors, and certificates of public officials or officers of the Company as
are
reasonably agreed upon by the Company and the Purchaser or any such other
participant. In connection with each Pass-Through Transfer, the Company agrees
to provide reasonable and customary indemnification to the Purchaser and its
affilates for disclosure contained in any offering document relating to the
Company or its affilates, the Mortgage Loans and the underwriting standards
of
the Mortgage Loans. The Purchaser shall be responsible for the costs relating
to
the delivery of such information.
The
Purchaser agrees that in no event shall the related Servicing Fee Rate be
reduced for any Mortgage Loan that is subject to a Reconstitution without the
written consent of the Servicer.
All
Mortgage Loans not sold or transferred pursuant to a Reconstitution shall remain
subject to, and serviced in accordance with the terms of, this Agreement and
the
related Term Sheet, and with respect thereto this Agreement and the related
Term
Sheet shall remain in full force and effect.
Section
11.19. Reporting
with Respect to a Reconstitution.
The
Company agrees that with respect to any Mortgage Loan sold or transferred
pursuant to a Reconstitution as described in Section 11.18 of this Agreement
(a
“Reconstituted Mortgage Loan”), the Company, at its expense, shall provide the
Purchaser with the information set forth in Exhibit J attached hereto for each
Reconstituted Mortgage Loan in such electronic format as may be mutually agreed
upon by both Purchaser and Company.
Section
11.20 Obligations
of the Sellers
The
obligations, liability and indemnification of each of the Seller and the
Servicer under this Agreement are joint and several.
IN
WITNESS WHEREOF, the Company and the Purchaser have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of
the
day and year first above written.
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EMC
MORTGAGE CORPORATION
Purchaser
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By:
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Name:
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Title:
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FIRST
HORIZON HOME LOAN
CORPORATION
Seller
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By:
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Name:
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Title:
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FIRST
TENNESSEE MORTGAGE
SERVICES,
INC.
Servicer
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By:
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Name:
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Title:
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EXHIBIT
A
CONTENTS
OF MORTGAGE FILE
With
respect to each Mortgage Loan, the Mortgage File shall include each of the
following items, which shall be available for inspection by the Purchaser,
and
which shall be retained by the Company in the Servicing File or delivered to
the
Purchaser or its designee pursuant to Sections 2.04 and 2.05 of the Purchase,
Warranties and Servicing Agreement.
1.
The
original Mortgage Note endorsed "Pay to the order of
____________________________________________________, without recourse," and
signed via original signature in the name of the Company by an authorized
officer, with all intervening endorsements showing a complete chain of title
from the originator to the Company, together with any applicable riders. In
no
event may an endorsement be a facsimile endorsement. If the Mortgage Loan was
acquired by the Company in a merger, the endorsement must be by "[Company],
successor by merger to the [name of predecessor]". If the Mortgage Loan was
acquired or originated by the Company while doing business under another name,
the endorsement must be by "[Company] formerly known as [previous name]".
Mortgage Notes may be in the form of a lost note affidavit subject to Purchaser
acceptability.
2.
The
original Mortgage (together with a standard adjustable rate mortgage rider)
with
evidence of recording thereon, or a copy thereof certified by the public
recording office in which such mortgage has been recorded or, if the original
Mortgage has not been returned from the applicable public recording office,
a
true certified copy, certified by the Company.
3.
The
original or certified copy, certified by the Company, of the Primary Mortgage
Insurance Policy, if required.
4. The
original Assignment, from the Company to _____________________________________,
or in accordance with Purchaser's instructions, which assignment shall, but
for
any blanks requested by Purchaser, be in form and substance acceptable for
recording. If the Mortgage Loan was acquired or originated by the Company while
doing business under another name, the Assignment must be by "[Company] formerly
known as [previous name]". If the Mortgage Loan was acquired by the Company
in a
merger, the endorsement must be by "[Company], successor by merger to the [name
of predecessor]". None of the Assignments are blanket assignments of
mortgage.
5. The
original policy of title insurance, including riders and endorsements thereto,
or if the policy has not yet been issued, a written commitment or interim binder
or preliminary report of title issued by the title insurance or escrow
company.
6. Originals
of all recorded intervening Assignments, or copies thereof, certified by the
public recording office in which such Assignments have been recorded showing
a
complete chain of title from the originator to the Company, with evidence of
recording thereon, or a copy thereof certified by the public recording office
in
which such Assignment has been recorded or, if the original Assignment has
not
been returned from the applicable public recording office, a true certified
copy, certified by the Company.
7. Originals,
or copies thereof certified by the public recording office in which such
documents have been recorded, of each assumption, extension, modification,
written assurance or substitution agreements, if applicable, or if the original
of such document has not been returned from the applicable public recording
office, a true certified copy, certified by the Company.
8. If
the
Mortgage Note or Mortgage or any other material document or instrument relating
to the Mortgage Loan has been signed by a person on behalf of the Mortgagor,
the
original or copy of power of attorney or other instrument that authorized and
empowered such person to sign bearing evidence that such instrument has been
recorded, if so required in the appropriate jurisdiction where the Mortgaged
Property is located, or a copy thereof certified by the public recording office
in which such instrument has been recorded or, if the original instrument has
not been returned from the applicable public recording office, a true certified
copy, certified by the Company.
9. reserved.
10. Mortgage
Loan closing statement (Form HUD-1) and any other truth-in-lending or real
estate settlement procedure forms required by law.
11.
Residential loan application.
12. Uniform
underwriter and transmittal summary (▇▇▇▇▇▇ ▇▇▇ Form 1008) or reasonable
equivalent.
13. Credit
report on the mortgagor.
14. Business
credit report, if applicable.
15. Residential
appraisal report and attachments thereto.
16. The
original of any guarantee executed in connection with the Mortgage
Note.
17. Verification
of employment and income except for Mortgage Loans originated under a limited
documentation program, all in accordance with Company's underwriting
guidelines.
18. Verification
of acceptable evidence of source and amount of down payment, in accordance
with
Company's underwriting guidelines.
19. Photograph
of the Mortgaged Property (may be part of appraisal).
20. Survey
of
the Mortgaged Property, if any.
21. Sales
contract, if applicable.
22. If
available, termite report, structural engineer’s report, water portability and
septic certification.
23. Any
original security agreement, chattel mortgage or equivalent executed in
connection with the Mortgage.
24. Name
affidavit, if applicable.
Notwithstanding
anything to the contrary herein, Company may provide one certificate for all
of
the Mortgage Loans indicating that the documents were delivered for
recording.
EXHIBIT
B
CUSTODIAL
ACCOUNT LETTER AGREEMENT
______________,
2003
To: [_______________________]
(the
"Depository")
As
"Company" under the Purchase, Warranties and Servicing Agreement, dated as
of
[_____________________] 1, 200[_] (the "Agreement"), we hereby authorize and
request you to establish an account, as a Custodial Account pursuant to Section
4.04 of the Agreement, to be designated as
"[______________________________________], in trust for the [Purchaser], Owner
of Adjustable Rate Mortgage Loans". All deposits in the account shall be subject
to withdrawal therefrom by order signed by the Company. This letter is submitted
to you in duplicate. Please execute and return one original to us.
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[__________________________]
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By:
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Name:
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Title:
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The
undersigned, as "Depository", hereby certifies that the above described account
has been established under Account Number [__________], at the office of the
depository indicated above, and agrees to honor withdrawals on such account
as
provided above. The full amount deposited at any time in the account will be
insured up to applicable limits by the Federal Deposit Insurance Corporation
through the Bank Insurance Fund or the Savings Association Insurance Fund or
will be invested in Permitted Investments as defined in the
Agreement.
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[__________________________]
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By:
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Name:
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Title:
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EXHIBIT
C
ESCROW
ACCOUNT LETTER AGREEMENT
_____________,
2003
To: [_______________________]
(the
"Depository")
As
“Company” under the Purchase Warranties and Servicing Agreement, dated as of
[____________________]1, 200[_] (the "Agreement"), we hereby authorize and
request you to establish an account, as an Escrow Account pursuant to Section
4.06 of the Agreement, to be designated as "[__________________________], in
trust for the [Purchaser], Owner of Adjustable Rate Mortgage Loans, and various
Mortgagors." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Company. This letter is submitted to you in
duplicate. Please execute and return one original to us.
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[__________________________]
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By:
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Name:
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Title:
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The
undersigned, as "Depository", hereby certifies that the above described account
has been established under Account Number __________, at the office of the
depository indicated above, and agrees to honor withdrawals on such account
as
provided above. The full amount deposited at any time in the account will be
insured up to applicable limits by the Federal Deposit Insurance Corporation
through the Bank Insurance Fund or the Savings Association Insurance Fund or
will be invested in Permitted Investments as defined in the
Agreement.
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[__________________________]
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By:
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Name:
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Title:
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EXHIBIT
D
FORM
OF
ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT
This
is a
Purchase, Assignment, Assumption and Recognition Agreement (this “PAAR
Agreement”) made as of __________, 200__, among EMC Mortgage Corporation (the
“Assignor”), ___________________ (the “Assignee”), and _______________________
(the “Company”).
In
consideration of the mutual promises contained herein the parties hereto agree
that the residential mortgage loans (the “Assigned Loans”) listed on Attachment
1 annexed hereto (the "Assigned Loan Schedule") now serviced by Company for
Assignor and its successors and assigns pursuant to the Purchase, Warranties
and
Servicing Agreement, dated as of _________, 200__, between Assignor and Company
(the “Purchase Agreement”) shall be subject to the terms of this PAAR Agreement.
Capitalized terms used herein but not defined shall have the meanings ascribed
to them in the Purchase Agreement.
Purchase,
Assignment and Assumption
1. Assignor
hereby grants, transfers and assigns to Assignee all of the right, title and
interest of Assignor in the Assigned Loans and, as they relate to the Assigned
Loans, all of its right, title and interest in, to and under the Purchase
Agreement.
2. Simultaneously
with the execution hereof, (i) Assignee shall pay to Assignor the “Funding
Amount” as set forth in that certain letter agreement, dated as of _________
____, between Assignee and Assignor (the “Confirmation”) and (ii) Assignor, at
its expense, shall have caused to be delivered to Assignee or its designee
the
Mortgage File for each Assigned Loan in Assignor's or its custodian's
possession, as set forth in the Purchase Agreement, along with, for each
Assigned Loan, an endorsement of the Mortgage Note from the Company, in blank,
and an assignment of mortgage in recordable form from the Company, in blank.
Assignee shall pay the Funding Amount by wire transfer of immediately available
funds to the account specified by Assignor. Assignee shall be entitled to all
scheduled payments due on the Assigned Loans after ___________, 200__ and all
unscheduled payments or other proceeds or other recoveries on the Assigned
Loans
received on and after _____________, 200__.
Representations,
Warranties and Covenants
3. Assignor
warrants and represents to Assignee and Company as of the date
hereof:
(a) Attached
hereto as Attachment 2 is a true and accurate copy of the Purchase 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 Purchase Agreement as they relate to the Assigned Loans, free and clear
from
any and all 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 Assignee’s interests, rights and
obligations under the Purchase Agreement as they relate to the Assigned Loans,
free and clear of any and all liens, claims and encumbrances;
(c) There
are
no offsets, counterclaims or other defenses available to Company with respect
to
the Assigned Loans or the Purchase Agreement;
(d) Assignor
has no knowledge of, and has not received notice of, any waivers under, or
any
modification of, any Assigned Loan;
(e) Assignor
is duly organized, validly existing and in good standing under the laws of
the
jurisdiction of its incorporation, and has all requisite power and authority
to
acquire, own and sell the Assigned Loans;
(f) Assignor
has full corporate power and authority to execute, deliver and perform its
obligations under this PAAR Agreement, and to consummate the transactions set
forth herein. The consummation of the transactions contemplated by this PAAR
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 PAAR Agreement and the consummation by
it of
the transactions contemplated hereby, have been duly authorized by all necessary
corporate action on part of Assignor. This PAAR 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
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 PAAR Agreement, or the consummation by it of the transactions
contemplated hereby; and
(h) Neither
Assignor nor anyone acting on its behalf has offered, transferred, pledged,
sold
or otherwise disposed of the Assigned Loans or any interest in the Assigned
Loans, or solicited any offer to buy or accept a transfer, pledge or other
disposition of the Assigned Loans, or any interest in the Assigned Loans or
otherwise approached or negotiated with respect to the Assigned Loans, or 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 of 1933, as amended (the “1933 Act”) or which
would render the disposition of the Assigned Loans a violation of Section 5
of
the 1933 Act or require registration pursuant thereto.
4. Assignee
warrants and represents to, and covenants with, Assignor and Company as of
the
date hereof:
(a) 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, own and purchase the Assigned Loans;
(b) Assignee
has full corporate power and authority to execute, deliver and perform its
obligations under this PAAR Agreement, and to consummate the transactions set
forth herein. The consummation of the transactions contemplated by this PAAR
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 charter or by-laws 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 PAAR Agreement and the consummation by
it of
the transactions contemplated hereby, have been duly authorized by all necessary
corporate action on part of Assignee. This PAAR 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 principles of equity regardless
of whether enforceability is considered in a proceeding in equity or at law;
(c) No
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 PAAR Agreement, or the consummation by it of the transactions
contemplated hereby; and
(d) Assignee
agrees to be bound as “Purchaser” by all of the terms, covenants and conditions
of the Purchase Agreement with respect to the Assigned Loans, and from and
after
the date hereof, Assignee assumes for the benefit of each of Assignor and
Company all of Assignor's obligations as “Purchaser” thereunder but solely with
respect to such Assigned Loans.
5. Company
warrants and represents to, and covenant with, Assignor and Assignee as of
the
date hereof:
(a) Attached
hereto as Attachment 2 is a true and accurate copy of the Purchase 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)
Company
is duly organized, validly existing and in good standing under the laws of
the
jurisdiction of its incorporation, and has all requisite power and authority
to
service the Assigned Loans and otherwise to perform its obligations under the
Purchase Agreement;
| (c) |
Company
has full corporate power and authority to execute, deliver and perform
its
obligations under this PAAR Agreement, and to consummate the transactions
set forth herein. The consummation of the transactions contemplated
by
this PAAR Agreement is in the ordinary course of Company’s business and
will not conflict with, or result in a breach of, any of the terms,
conditions or provisions of Company’s charter or by-laws or any legal
restriction, or any material agreement or instrument to which Company
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 Company or
its
property is subject. The execution, delivery and performance by Company
of
this PAAR Agreement and the consummation by it of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action on part of Company. This PAAR Agreement has been duly executed
and
delivered by Company, and, upon the due authorization, execution and
delivery by Assignor and Assignee, will constitute the valid and legally
binding obligation of Company, enforceable against Company 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;
|
| (d) |
No
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 Company of this PAAR Agreement, or the consummation by it of the
transactions contemplated hereby; and
|
| (e) |
No
event has occurred
from the Closing Date to the date hereof which would render the
representations and warranties as to the related Assigned Loans made
by
the Company in Sections 3.01 and 3.02 of the Purchase Agreement to
be
untrue in any material respect.
|
| (f) |
Neither
this AAR Agreement nor any certification, statement, report or other
agreement, document or instrument furnished or to be furnished by the
Company pursuant to this AAR Agreement contains or will contain any
materially untrue statement of fact or omits or will omit to state
a fact
necessary to make the statements contained therein not
misleading.
|
Recognition
of Assignee
6. From
and
after the date hereof, Company shall recognize Assignee as owner of the Assigned
Loans and will service the Assigned Loans in accordance with the Purchase
Agreement. It is the intention of Assignor, Company and Assignee that this
PAAR
Agreement shall be binding upon and for the benefit of the respective successors
and assigns of the parties hereto. Neither Company nor Assignor shall amend
or
agree to amend, modify, waiver, or otherwise alter any of the terms or
provisions of the Purchase Agreement which amendment, modification, waiver
or
other alteration would in any way affect the Assigned Loans without the prior
written consent of Assignee.
Miscellaneous
7. All
demands, notices and communications related to the Assigned Loans, the Purchase
Agreement and this PAAR Agreement shall be in writing and shall be deemed to
have been duly given if personally delivered at or mailed by registered mail,
postage prepaid, as follows:
(a) In
the
case of Company,
With
a copy to ______________________________________.
| (b) |
In
the case of Assignor,
|
(c) In
the
case of Assignee,
EMC
Mortgage Corporation
Mac
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier
No.: (▇▇▇) ▇▇▇-▇▇▇▇
with
a
copy to:
___________________
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
___________
Telecopier
No.: (212) 272-____
8. Each
party will pay any commissions it has incurred and the fees of its attorneys
in
connection with the negotiations for, documenting of and closing of the
transactions contemplated by this PAAR Agreement.
9. This
PAAR
Agreement shall be construed in accordance with the laws of the State of New
York, without regard to conflicts of law principles, and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws.
10. No
term
or provision of this PAAR Agreement may be waived or modified unless such waiver
or modification is in writing and signed by the party against whom such waiver
or modification is sought to be enforced.
11. This
PAAR
Agreement shall inure to the benefit of the successors and assigns of the
parties hereto. Any entity into which Assignor, Assignee or Company may be
merged or consolidated shall, without the requirement for any further writing,
be deemed Assignor, Assignee or Company, respectively, hereunder.
12. This
PAAR
Agreement shall survive the conveyance of the Assigned Loans, the assignment
of
the Purchase Agreement to the extent of the Assigned Loans by Assignor to
Assignee and the termination of the Purchase Agreement.
13. This
PAAR
Agreement may be executed simultaneously in any number of counterparts. Each
counterpart shall be deemed to be an original and all such counterparts shall
constitute one and the same instrument.
14. In
the
event that any provision of this PAAR Agreement conflicts with any provision
of
the Purchase Agreement with respect to the Assigned Loans, the terms of this
PAAR Agreement shall control. In the event that any provision of this PAAR
Agreement conflicts with any provision of the Confirmation with respect to
the
Assigned Loans, the terms of this PAAR Agreement shall control.
[Modification
of Purchase Agreement
15. The
Company and Assignor hereby amend the Purchase Agreement as
follows:
(a) The
following definitions are added to Section 1.01 of the Purchase
Agreement:
Securities
Administrator: ________________________
Supplemental
PMI Insurer: ________________________
Supplemental
PMI Policy: The
primary guarantee insurance policy of the Supplemental PMI Insurer attached
hereto as Exhibit J, or any successor Supplemental PMI Policy given to the
Servicer by the Assignee.
Trustee:
________________________
(b) The
following definition is amended and restated:
Insurance
Proceeds: Proceeds
of any Primary Mortgage Insurance Policy, the Supplemental PMI Policy, any
title
policy, any hazard insurance policy or any other insurance policy covering
a
Mortgage Loan or other related Mortgaged Property, including any amounts
required to be deposited in the Custodial Account pursuant to Section 4.04,
to
the extent such proceeds are not to be applied to the restoration of the related
Mortgaged Property or released to the Mortgagor in accordance with Accepted
Servicing Practices.
(c) The
following are added as the fourth, fifth and sixth paragraphs of Section
4.08:
“In
connection with its activities as servicer, the Company agrees to prepare and
present, on behalf of itself and the Purchaser, claims to the Supplemental
PMI
Insurer with respect to the Supplemental PMI Policy and, in this regard, to
take
such action as shall be necessary to permit recovery under any Supplemental
PMI
Policy respecting a defaulted Mortgage Loan. Pursuant to Section 4.04, any
amounts collected by the Company under any Supplemental PMI Policy shall be
deposited in the Custodial Account, subject to withdrawal pursuant to Section
4.05.
In
accordance with the Supplemental PMI Policy, the Company shall provide to the
Supplemental PMI Insurer any required information regarding the Mortgage
Loans.
The
Company shall provide to the [Securities Administrator] on a monthly basis
via
computer tape, or other mutually acceptable format, the unpaid principal
balance, insurer certificate number, lender loan number, and premium due the
Supplemental PMI Insurer for each Mortgage Loan covered by the Supplemental
PMI
Policy. In addition, the Company agrees to forward to the Purchaser and the
[Securities Administrator] any statements or other reports given by the
Supplemental PMI Insurer to the Servicer in connection with a claim under the
Supplemental PMI Policy.”
(d) Clause
(vi) of Section 6.1 is amended to read as follows:
“Company
ceases to be approved by either ▇▇▇▇▇▇ ▇▇▇ or FHLMC as a mortgage loan seller
or
servicer for more than thirty days, or the Company fails to meet the servicer
eligibility requirements of the Supplemental PMI Insurer; or”]
(e) Section
____ Annual
Statement as to Compliance.
The
Company will deliver to the Master Servicer on or before March 15 of each year,
beginning with March 15, 200__, an Officers' Certificate stating that (i) a
review of the activities of the Company during the preceding calendar year
and
of performance under this Agreement has been made under such officers'
supervision, (ii) the Company has fully complied with the provisions of this
Agreement and (iii) to the best of such officers' knowledge, based on such
review, the Company has fulfilled all of its obligations under this Agreement
throughout such year, or, if there has been a default in the fulfillment of
any
such obligation, specifying each such default known to such officer and the
nature and status thereof.
(f) Section
____ Annual Certification.
(a)
The
Company will deliver to the Master Servicer, on or before March 15 of each
year
beginning March 15, 200__ a certification in the form attached hereto as Exhibit
__ with respect to the servicing reports delivered by the Company pursuant
to
this Agreement, the Company’s compliance with the servicing obligations set
forth in this Agreement and any other information within the control of the
Company. Such certification shall be signed by the senior officer in charge
of
servicing of the Company. In addition, the Company shall provide such other
information with respect to the Mortgage Loans and the servicing and
administration thereof within the control of the Company which shall be required
to enable the Master Servicer, Trustee or Depositor, as applicable, to comply
with the reporting requirements of the Securities and Exchange Act of 1934,
as
amended.
IN
WITNESS WHEREOF, the parties hereto have executed this PAAR Agreement as of
the
day and year first above written.
|
EMC
MORTGAGE CORPORATION
Assignor
|
|
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By:
|
|
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Name:
|
|
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Title:
|
|
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Assignee
|
|
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By:
|
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Name:
|
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Title:
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Company
|
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By:
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Name:
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Title:
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EXHIBIT
___
FORM
OF COMPANY CERTIFICATION
I,
[identify certifying individual], certify to the [Trustee] [Seller] [Securities
Administrator] [Mortgage Loan Seller] [Purchaser] and [Master Servicer]
that:
1. I
have reviewed the servicing reports prepared by [COMPANY] (the “Company”)
pursuant to the [Servicing Agreement] (the “Servicing Agreement”), dated as of
__________ between __________ and the Company (as modified by the AAR Agreement
(as defined below) and delivered to [MASTER SERVICER] (the “Master Servicer”)
pursuant to the Assignment, Assumption and Recognition Agreement (the “AAR
Agreement”), dated as of __________ among [ASSIGNOR] as Assignor, Company and
[ASSIGNEE], as Assignee.
2. Based
on my knowledge, the information in these reports, taken as a whole, does not
contain any untrue statement of a material fact or omit to state a material
fact
necessary to make the statements made, in light of the circumstances under
which
such statements were made, not misleading as of the last day of the period
covered by such servicing reports.
3. Based
on my knowledge, the servicing information required to be provided to the Master
Servicer under the Servicing Agreement and the AAR Agreement is included in
these reports.
4. I
am responsible for reviewing the activities performed the Company under the
Servicing Agreement and the AAR Agreement and based upon the review required
under the Servicing Agreement and the AAR Agreement, and except as disclosed
in
the Annual Statement of Compliance, the Company has fulfilled its obligations
under the Servicing Agreement and the AAR Agreement.
5. I
have disclosed to the Master Servicer's certified public accountants all
significant deficiencies relating to the Company's compliance with the minimum
servicing standards in accordance with a review conduced in compliance with
the
Uniform Single Attestation Program for Mortgage Bankers or similar standard
as
set forth in the Servicing Agreement and the AAR Agreement.
Capitalized
terms used but not defined herein have the meanings ascribed to them in the
AAR
Agreement.
Date:______________
_____________________
[Signature]
[Title]
ATTACHMENT
1
ASSIGNED
LOAN SCHEDULE
ATTACHMENT
2
EXHIBIT
E
FORM
OF
TRIAL BALANCE
| · |
S50Y
- Scheduled/Scheduled Monthly Remittance
Report
|
| · |
P139
- Monthly Trial Balance Report
|
| · |
S214
- Monthly Pay-off Report
|
| · |
S215
- Monthly Actual Collections Report EXHIBIT
G
|
REQUEST
FOR RELEASE OF DOCUMENTS AND RECEIPT
RE: Mortgage
Loan #___________________________________
BORROWER:__________________________________________________
PROPERTY:
__________________________________________________
Pursuant
to a Purchase, Warranties and Servicing Agreement (the "Agreement") between
the
Company and the Purchaser, the undersigned hereby certifies that he or she
is an
officer of the Company requesting release of the documents for the reason
specified below. The undersigned further certifies that:
(Check
one of the items below)
_____ On
_________________, the above captioned mortgage loan was paid in full or that
the Company has been notified that payment in full has been or will be escrowed.
The Company hereby certifies that all amounts with respect to this loan which
are required under the Agreement have been or will be deposited in the Custodial
Account as required.
_____ The
above
captioned loan is being repurchased pursuant to the terms of the Agreement.
The
Company hereby certifies that the repurchase price has been credited to the
Custodial Account as required under the Agreement.
_____ The
above
captioned loan is being placed in foreclosure and the original documents are
required to proceed with the foreclosure action. The Company hereby certifies
that the documents will be returned to the Purchaser in the event of
reinstatement.
_____ Other
(explain)
_______________________________________________________
_______________________________________________________
All
capitalized terms used herein and not defined shall have the meanings assigned
to them in the Agreement.
Based
on
this certification and the indemnities provided for in the Agreement, please
release to the Company all original mortgage documents in your possession
relating to this loan.
Dated:_________________
By:________________________________
Signature
___________________________________
Title
Send
documents to: _____________________________________________
_____________________________________________
_____________________________________________
Acknowledgement:
Purchaser
hereby acknowledges that all original documents previously released on the
above
captioned mortgage loan have been returned and received by the
Purchaser.
Dated:________________
By:________________________________
Signature
_______________________________
Title
EXHIBIT
H
COMPANY’S
UNDERWRITING GUIDELINES
EXHIBIT
I
TERM
SHEET
This
TERM
SHEET (the "Term Sheet") dated _____________, among First Horizon Home Loan
Corporation, a Kansas corporation, located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇ (the “Seller”), First Tennessee Mortgage Services, Inc., as servicer (the
“Servicer”), a Kansas corporation, located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇ (the Servicer and the Seller together referred to as the "Company") and
EMC Mortgage Corporation, a Delaware corporation, located at Mac ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "Purchaser")
is
made pursuant to the terms and conditions of that certain Purchase, Warranties
and Servicing Agreement (the "Agreement") dated as of September 1, 2003, among
the Servicer, the Seller and the Purchaser, the provisions of which are
incorporated herein as if set forth in full herein, as such terms and conditions
may be modified or supplemented hereby. All initially capitalized terms used
herein unless otherwise defined shall have the meanings ascribed thereto in
the
Agreement.
The
Purchaser hereby purchases from the Seller and the Seller hereby sells to the
Purchaser, all of the Seller’s right, title and interest in and to the Mortgage
Loans described on the Mortgage Loan Schedule annexed hereto as Schedule
I,
pursuant to and in accordance with the terms and conditions set forth in the
Agreement, as same may be supplemented or modified hereby. Hereinafter, the
Servicer shall service the Mortgage Loans for the benefit of the Purchaser
and
all subsequent transferees of the Mortgage Loans pursuant to and in accordance
with the terms and conditions set forth in the Agreement.
1. Definitions
For
purposes of the Mortgage Loans to be sold pursuant to this Term Sheet, the
following terms shall have the following meanings:
Aggregate
Principal Balance
(as
of
the Cut-Off Date):
Closing
Date:
Custodian:
Cut-off
Date:
Initial
Weighted Average
Mortgage
Loan Remittance Rate:
Mortgage
Loan:
Purchase
Price Percentage:
Servicing
Fee Rate:
Additional
Closing Conditions:
In
addition to the conditions specified in the Agreement, the obligation of each
of
the Company and the Purchaser is subject to the fulfillment, on or prior to
the
applicable Closing Date, of the following additional conditions: [None].
Additional
Loan Documents:
In
addition to the contents of the Mortgage File specified in the Agreement, the
following documents shall be delivered with respect to the Mortgage Loans:
[None]
[Additional]
[Modification] of Representations and Warranties:
[In
addition to the representations and warranties set forth in the Agreement,
as of
the date hereof, the Company makes the following additional representations
and
warranties with respect to the Mortgage Loans: [None]. [Notwithstanding anything
to the contrary set forth in the Agreement, with respect to each Mortgage Loan
to be sold on the Closing Date, the representation and warranty set forth in
Section ______ of the Agreement shall be modified to read as
follows:]
Except
as
modified herein, Section ______ of the Agreement shall remain in full force
and
effect as of the date hereof.
IN
WITNESS WHEREOF, the parties hereto have caused their names to be signed hereto
by their respective duly authorized officers as of the date first above
written.
|
FIRST
HORIZON HOME LOAN CORPORATION
|
|
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By:
|
|
|
Name:
|
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Title:
|
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EMC
MORTGAGE CORPORATION
|
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By:
|
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Name:
|
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Title:
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FIRST
TENNESSEE MORTGAGE SERVICES, INC.
|
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By:
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Name:
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Title:
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SCHEDULE
I
MORTGAGE
LOAN SCHEDULE
EXHIBIT
J
RECONSTITUTED
MORTGAGE LOAN REPORTING
|
(a)
|
Servicer
Mortgage Loan Number
|
|
(b)
|
FNMA
Mortgage Loan Number (if applicable)
|
|
(c)
|
Lender/Seller
Mortgage Loan Number (if available)
|
|
(d)
|
Scheduled
Balance (scheduled end of month balance reporting to Master
Servicer/Trustee)
|
|
(e)
|
Actual
Balance (actual end of month balance received from
Mortgagor)
|
|
(f)
|
Gross
Rate (current gross rate)
|
|
(g)
|
Net
Rate (current passthrough)
|
|
(h)
|
Last
Payment Date (LPI_DATE in Fannie's Laser Reporting)
|
|
(i)
|
Delinquency
Month (if available)
|
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(j)
|
Default
Flag, i.e. FC, REO, etc. (if available)
|
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(k)
|
Pay-In-Full
Date (Mortgage Loan paid off by Mortgagor)
|
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(l)
|
Foreclosure
start date
|
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(m)
|
Foreclosure
end date
|
|
(n)
|
REO
Property date
|
|
(o)
|
With
respect to Liquidated Mortgage Loans:
|
|
(i)
amount of loss or gain (as applicable)
|
|
|
(ii)
the date of the loss or gain.
|
|
|
(iii)
the liquidation reason (paid in full or repurchased out of deal)
|
|
|
(p)
|
Fannie's
Laser Reporting
|
|
(i) Action
Code (for default or paid off Mortgage Loans; i.e. 60, 65,
etc.)
|
|
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(ii)
Action Date
|
|
|
(iii)
Remit Prin (submitted principal amount)
|
|
|
(iv)
Remit Int (submitted interest amount)
|
|
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(v)
Pool/Invest indicator (indicating Schedule/Schedule or Actual/Actual
pool)
|
|