Exhibit 99.4
================================================================================
MASTER MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT
▇▇▇▇▇▇▇ ▇▇▇▇▇ BANK, USA
Purchaser
COUNTRYWIDE HOME LOANS, INC.
Seller and Servicer
Dated as of November 1, 2004
Conventional Fixed and Adjustable Rate "A" Quality Mortgage Loans
[_____ 2004]
First Liens
================================================================================
TABLE OF CONTENTS
Page
----
SECTION 1. Definitions.................................................. 1
SECTION 2. Agreement to Purchase........................................ 16
SECTION 3. Mortgage Loan Schedules...................................... 16
SECTION 4. Purchase Price............................................... 16
SECTION 5. Examination of Mortgage Files................................ 17
SECTION 6. Conveyance from Seller to Initial Purchaser.................. 17
SECTION 7. Representations, Warranties and Covenants of the Seller:
Remedies for Breach.......................................... 19
SECTION 8. Closing...................................................... 32
SECTION 9. Closing Documents............................................ 33
SECTION 10. Costs........................................................ 34
SECTION 11. Seller's Servicing Obligations............................... 34
SECTION 12. Removal of Mortgage Loans from Inclusion under This Agreement
Upon a Whole Loan Transfer or a Pass-Through Transfer on One
or More Reconstitution Dates................................. 34
SECTION 13. The Seller................................................... 36
SECTION 14. Default...................................................... 38
SECTION 15. Termination.................................................. 40
SECTION 16. Successor to the Seller...................................... 40
SECTION 17. Financial Statements......................................... 41
SECTION 18. Mandatory Delivery........................................... 41
SECTION 19. Notices...................................................... 42
SECTION 20. Severability Clause.......................................... 42
SECTION 21. Counterparts................................................. 43
SECTION 22. Governing Law................................................ 43
SECTION 23. Intention of the Parties..................................... 43
SECTION 24. Successors and Assigns....................................... 43
SECTION 25. Waivers...................................................... 43
SECTION 26. Exhibits..................................................... 43
SECTION 27. Nonsolicitation.............................................. 43
SECTION 28. General Interpretive Principles.............................. 44
SECTION 29. Reproduction of Documents.................................... 44
SECTION 30. Further Agreements........................................... 45
SECTION 31. Protection of Confidential Information....................... 45
SECTION 32. Survival..................................................... 45
-ii-
EXHIBITS
EXHIBIT 1 SELLER'S OFFICER'S CERTIFICATE
EXHIBIT 2 FORM OF OPINION OF COUNSEL TO THE SELLER
EXHIBIT 3 SECURITY RELEASE CERTIFICATION
EXHIBIT 4 FORM OF WARRANTY ▇▇▇▇ OF SALE
EXHIBIT 5 CONTENTS OF EACH MORTGAGE FILE
EXHIBIT 6 FORM OF CUSTODIAL ACCOUNT CERTIFICATION
EXHIBIT 7 FORM OF ESCROW ACCOUNT CERTIFICATION
EXHIBIT 8 SERVICING ADDENDUM
EXHIBIT 9 FORM OF TRADE CONFIRMATION
SCHEDULE I FINAL MORTGAGE LOAN SCHEDULE
-iii-
MASTER MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT
This is a MASTER MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT (the
"Agreement"), dated as of November 1, 2004, by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank,
USA, having an office at 4 World Financial Center, 9th floor, New York, New York
10080 (the "Initial Purchaser", and the Initial Purchaser or the Person, if any,
to which the Initial Purchaser has assigned its rights and obligations hereunder
as Purchaser with respect to a Mortgage Loan, and each of their respective
successors and assigns, the "Purchaser") and Countrywide Home Loans, Inc.,
having an office at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Seller").
WITNESSETH:
WHEREAS, the Seller desires to sell, from time to time, to the
Purchaser, and the Purchaser desires to purchase, from time to time, from the
Seller, certain conventional fixed and adjustable rate residential first lien
mortgage loans, (the "Mortgage Loans") as described herein on a
servicing-retained basis, and which shall be delivered in groups of whole loans
on various dates as provided in the related Trade Confirmation (each, a "Closing
Date");
WHEREAS, each Mortgage Loan 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 Final Mortgage Loan Schedule for
the related Mortgage Loan Package, which is to be annexed hereto on each Closing
Date as Schedule I;
WHEREAS, the Purchaser and the Seller wish to prescribe the manner of
the conveyance, servicing and control of the Mortgage Loans; and
WHEREAS, following its purchase of the Mortgage Loans from the Seller,
the Purchaser desires to sell some or all of the Mortgage Loans to one or more
purchasers as a whole loan transfer in a whole loan or participation format or a
public or private mortgage-backed securities transaction;
NOW, THEREFORE, in consideration of the premises and mutual agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Purchaser and the Seller agree
as follows:
SECTION 1. Definitions. For purposes of this Agreement the following
capitalized terms shall have the respective meanings set forth below.
Adjustable Rate Mortgage Loan: A Mortgage Loan which provides for the
adjustment of the Mortgage Interest Rate payable in respect thereto.
Adjustment Date: With respect to each Adjustable Rate Mortgage Loan,
the date set forth in the related Mortgage Note on which the Mortgage Interest
Rate on such Adjustable Rate Mortgage Loan is adjusted in accordance with the
terms of the related Mortgage Note.
Agreement: This Master Mortgage Loan Purchase and Servicing Agreement
including all exhibits, schedules, amendments and supplements hereto.
Appraised Value: With respect to any Mortgaged Property, the lesser of
(i) the value thereof as determined by an appraisal made for the originator of
the Mortgage Loan at the time of origination of the Mortgage Loan by an
appraiser who met the minimum requirements of FNMA or FHLMC, and (ii) the
purchase price paid for the related Mortgaged Property by the Mortgagor with the
proceeds of the Mortgage Loan, provided, however, in the case of a Refinanced
Mortgage Loan, such value of the Mortgaged Property is based solely upon the
value determined by an appraisal made for the originator of such Refinanced
Mortgage Loan at the time of origination of such Refinanced Mortgage Loan by an
appraiser who met the minimum requirements of FNMA or FHLMC.
Assignment of Mortgage: An individual assignment of the Mortgage,
notice of transfer or equivalent instrument in recordable form, sufficient under
the laws of the jurisdiction wherein the related Mortgaged Property is located
to give record notice of the sale of the Mortgage to the Purchaser.
Balloon Loan: A Mortgage Loan identified on the Mortgage Loan Schedule
as a balloon mortgage loan.
Business Day: Any day other than a Saturday or Sunday, or a day on
which banking and savings and loan institutions in the State of California, or
the state in which the Seller's servicing operations are located, or the State
of New York are authorized or obligated by law or executive order to be closed.
Buydown Mortgage Loan: A Mortgage Loan in which buydown funds are used
to pay a portion of the interest payable on the Mortgage Loan for a specified
period of time.
Cash-Out Refinancing: A Refinanced Mortgage Loan the proceeds of which
were in excess of the principal balance of any existing first mortgage on the
related Mortgaged Property and related closing costs, and were used to pay any
such existing first mortgage, related closing costs and subordinate mortgages on
the related Mortgaged Property.
Closing Date: The date or dates on which the Purchaser from time to
time shall purchase and the Seller from time to time shall sell to the
Purchaser, the Mortgage Loans listed on the related Final Mortgage Loan Schedule
with respect to the related Mortgage Loan Package.
Closing Documents: With respect to any Closing Date, the documents
required pursuant to Section 9.
Code: The Internal Revenue Code of 1986, or any successor statute
thereto.
Combined Loan-to-Value Ratio or CLTV: With respect to any Mortgage
Loan, the fraction, expressed as a percentage, the numerator of which is the sum
of (a) the original principal balance of the Mortgage Loan, plus (b) the unpaid
principal balance of any related subordinate mortgage loan or loans secured by
the Mortgaged Property, and the denominator of which is the Appraised Value of
the related Mortgaged Property.
-2-
Condemnation Proceeds: All awards, compensation and settlements in
respect of a taking of all or part of a Mortgaged Property by exercise of the
power of condemnation or the right of eminent domain.
Convertible Mortgage Loan: A Mortgage Loan that by its terms and
subject to certain conditions contained in the related Mortgage or Mortgage Note
allows the Mortgagor to convert the adjustable Mortgage Interest Rate on such
Mortgage Loan to a fixed Mortgage Interest Rate.
Credit Score: The credit score of the Mortgagor provided by an
organization providing credit scores at the time of the origination of a
Mortgage Loan. If two credit scores are obtained, the Credit Score shall be the
lower of the two credit scores. If three credit scores are obtained, the Credit
Score shall be the middle of the three credit scores.
Custodial Account: One or more accounts created and maintained
pursuant to Exhibit 8, which accounts shall be held as a special deposit by the
depository institution maintaining such accounts in a fiduciary capacity,
separate and apart from its funds or general assets and shall not be held in any
capacity that would create a debtor-creditor relationship between the depository
institution maintaining the accounts and the Seller or Purchaser.
Custodial Agreement: The agreement between the Initial Purchaser and
the Custodian, governing the retention of the originals of the Mortgage Loan
Documents.
Custodian: The custodian designated by the Initial Purchaser under the
Custodial Agreement, or its successor in interest or assigns, or any successor
to the Custodian under the Custodial Agreement.
Cut-off Date: The first day of the month in which the related Closing
Date occurs or as otherwise set forth in the related Trade Confirmation.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Qualified Substitute Mortgage Loan.
Determination Date: With respect to each Remittance Date, the
fifteenth (15th) day of the calendar month in which such Remittance Date occurs
or, if such fifteenth (15th) day is not a Business Day, the Business Day
immediately following such fifteenth (15th) day.
Due Date: With respect to each Remittance Date, the first day of the
calendar month in which such Remittance Date occurs, which is the day on which
the Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace.
Due Period: With respect to each Remittance Date, the period
commencing on the second day of the month preceding the month of the Remittance
Date and ending on the first day of the month of the Remittance Date.
Eligible Account: A Custodial Account maintained with a depository
institution whose deposits are insured by the Bank Insurance Fund or the Savings
Association Insurance Fund of the FDIC, the unsecured and uncollateralized debt
obligations of which shall be rated
-3-
"AA" or better by S&P and "Aa2"or better by Moody's and in the highest
short-term rating category by S&P and the highest short term rating category by
Moody's, and which is either (i) a federal savings and loan association duly
organized, validly existing and in good standing under the federal banking laws,
(ii) an institution duly organized, validly existing and in good standing under
the applicable banking laws of any state; or (iii) a national banking
association duly organized, validly existing and in good standing under the
federal banking laws.
Eligible Investment: Any one or more of the obligations and securities
listed below which investment provides for a date of maturity not later than the
Remittance Date in each month:
(1) direct obligations of or obligations fully guaranteed by, (i) the
United States of America, or (ii) 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;
(2) federal funds, demand, money market, or time deposits in,
certificates of deposits of, or banker's acceptances issued by any
depository institution or trust company incorporated or organized
under the laws of the United States of America or any state thereof,
subject to supervision and examination by federal and/or state banking
authorities, and, at the time of such investment or contractual
commitment providing for such investment, whose commercial paper or
other short-term debt obligations (or, in the case of a depository
institution or trust company that is a subsidiary of a holding
company, the commercial paper or other short-term debt obligations of
such holding company) is rated "P-1" by Moody's and "A-1" by S&P and
whose long-term debt obligations (or, in the case of a depository
institution that is a subsidiary of a holding company, the long-term
debt obligations of such holding company) are rated at least "Aa2" by
▇▇▇▇▇'▇ and "AA" by S&P (collectively, with all other rating
categories set out in this paragraph, the "Investment Ratings").
Notwithstanding the foregoing, Eligible Investments shall not include
(i) "stripped securities," (ii) any investments which contractually may return
less than the unpaid principal balance therefor, or (iii) a direct purchase of
commercial paper from the issuer.
Escrow Account: One or more accounts created and maintained pursuant
to Exhibit 8.
Escrow Payments: The amounts constituting ground rents, taxes,
assessments, water charges, sewer rents, Primary Insurance Policy premiums, fire
and hazard insurance premiums and other payments required to be escrowed by the
Mortgagor with the Mortgagee pursuant to the terms of any Mortgage Note or
Mortgage.
Event of Default: Any one of the events enumerated in Subsection
14.01.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
-4-
FHLMC: The Federal Home Loan Mortgage Corporation or any successor
thereto.
Final Mortgage Loan Schedule: With respect to each Mortgage Loan
Package, the schedule of Mortgage Loans to be annexed hereto as Schedule I (or a
supplement thereto) on each Closing Date for the Mortgage Loan Package delivered
on such Closing Date in both hard copy and floppy disk, such schedule setting
forth the following information with respect to each Mortgage Loan in the
Mortgage Loan Package:
(1) the Seller's Mortgage Loan identifying number;
(2) the Mortgagor's first and last name;
(3) the street address of the Mortgaged Property including the state
and zip code;
(4) a code indicating whether the Mortgaged Property is
owner-occupied;
(5) the type of Residential Dwelling constituting the Mortgaged
Property;
(6) the original months to maturity;
(7) the original date of the Mortgage Loan and the remaining months
to maturity from the Cut-off Date, based on the original
amortization schedule;
(8) the Loan-to-Value Ratio or Combined Loan-to-Value Ratio, if
applicable, at origination;
(9) the Mortgage Interest Rate in effect immediately following the
Cut-off Date;
(10) the date on which the first Monthly Payment was due on the
Mortgage Loan;
(11) the stated maturity date;
(12) the amount of the Monthly Payment at origination;
(13) the amount of the Monthly Payment as of the Cut-off Date;
(14) the last Due Date on which a Monthly Payment was actually applied
to the unpaid Stated Principal Balance;
(15) the original principal amount of the Mortgage Loan;
(16) the Stated Principal Balance of the Mortgage Loan as of the close
of business on the Cut-off Date;
-5-
(17) with respect to each Adjustable Rate Mortgage Loan, the first
Mortgage Interest Rate Adjustment Date and the number of months
between each Adjustment Date thereafter;
(18) with respect to each Adjustable Rate Mortgage Loan, the number of
days prior to the origination date and each Adjustment Date
thereafter, whereby the Index is determined;
(19) with respect to each Adjustable Rate Mortgage Loan, the Gross
Margin;
(20) with respect to each Adjustable Rate Mortgage Loan, the Periodic
Rate Cap;
(21) with respect to each Adjustable Rate Mortgage Loan, the Initial
Rate Cap;
(22) a code indicating the purpose of the loan (i.e., purchase
financing, Rate/Term Refinancing, Cash-Out Refinancing);
(23) with respect to each Adjustable Rate Mortgage Loan, the Maximum
Mortgage Interest Rate under the terms of the Mortgage Note;
(24) with respect to each Adjustable Rate Mortgage Loan, the Minimum
Mortgage Interest Rate under the terms of the Mortgage Note;
(25) the Mortgage Interest Rate at origination;
(26) with respect to each Adjustable Rate Mortgage Loan, the first
Adjustment Date immediately following the Cut-off Date;
(27) with respect to each Adjustable Rate Mortgage Loan, the Index and
the number of decimal places to which the Index is rounded;
(28) a code indicating whether the Mortgage Loan is an Adjustable Rate
Mortgage Loan or a Fixed Rate Mortgage Loan;
(29) a code indicating the documentation style (i.e., full,
alternative or reduced);
(30) a code indicating if the Mortgage Loan is subject to a Primary
Insurance Policy;
(31) a code indicating whether the Mortgage Loan is a Buydown Mortgage
Loan;
(32) a code indicating the product type of the Mortgage Loan (e.g.,
3/1, 5/1, 7/1, 10/1, 15 year fixed, 30 year fixed, 15/30 balloon,
etc.);
(33) code indicating whether the Mortgage Loan is subject to a
Prepayment Charge and the term of such Prepayment Charge;
-6-
(34) the Appraised Value of the Mortgaged Property;
(35) the sale price of the Mortgaged Property, if applicable;
(36) a code indicating whether the Mortgaged Property is subject to a
second lien at origination of the First Lien Mortgage Loan;
(37) the Credit Score of the Mortgagor;
(38) the Mortgagor's debt to income ratio;
(39) the risk grade for each Mortgage Loan;
(40) with respect to each Adjustable Rate Mortgage Loan, the date on
which the Monthly Payment is changed to the extent that it is
different than the Adjustment Date; and
(41) with respect to each Adjustable Rate Mortgage Loan, to the extent
that such Mortgage Loan is an interest only loan, the number of
months/years whereby the scheduled payment payable by a Mortgagor
under the related Mortgage Note on each Due Date includes only
interest payments.
With respect to the Mortgage Loan Package in the aggregate, the Final Mortgage
Loan Schedule shall set forth the following information, as of the related
Cut-off Date:
(42) the number of Mortgage Loans;
(43) the current principal balance of the Mortgage Loans;
(44) the weighted average Mortgage Interest Rate of the Mortgage
Loans; and
(45) the weighted average maturity of the Mortgage Loans.
Schedule I hereto shall be supplemented as of each Closing Date to reflect the
addition of the Final Mortgage Loan Schedule with respect to the related
Mortgage Loan Package.
Final Recovery Determination: With respect to any defaulted Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO Property purchased
by the Seller pursuant to this Agreement), a determination made by the Seller
that all Insurance Proceeds, Liquidation Proceeds and other payments or
recoveries which the Seller, in its reasonable good faith judgment, expects to
be finally recoverable in respect thereof have been so recovered. The Seller
shall maintain records, prepared by a servicing officer of the Seller, of each
Final Recovery Determination.
First Lien: With respect to each Mortgaged Property, the lien of the
mortgage, deed of trust or other instrument securing a Mortgage Note which
creates a first lien on the Mortgaged Property.
-7-
Fixed Rate Mortgage Loan: A Mortgage Loan with respect to which the
Mortgage Interest Rate set forth in the Mortgage Note is fixed for the term of
such Mortgage Loan.
Flood Zone Service Contract: A transferable contract maintained for
the Mortgaged Property with a nationally recognized flood zone service provider
for the purpose of obtaining the current flood zone status relating to such
Mortgaged Property.
FNMA: ▇▇▇▇▇▇ ▇▇▇ or any successor thereto.
Gross Margin: With respect to any Adjustable Rate Mortgage Loan, the
fixed percentage amount set forth in the related Mortgage Note that is added to
the Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note to determine the new Mortgage Interest Rate for such Mortgage
Loan.
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
set forth in the related Mortgage Note for the purpose of calculating the
interest rate thereon.
Initial Closing Date: The Closing Date on which the Initial Purchaser
purchases and the Seller sells the first Mortgage Loan Package hereunder.
Initial Purchaser: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank, USA, or any successor.
Initial Rate Cap: With respect to each Adjustable Rate Mortgage Loan
and the initial Adjustment Date therefor, a number of percentage points per
annum that is set forth in the related Mortgage Note, which is the amount by
which the Mortgage Interest Rate for such Adjustable Rate Mortgage Loan may
increase or decrease on the initial Adjustment Date.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Liquidation Proceeds: Amounts, other than Insurance Proceeds and
Condemnation Proceeds, received in connection with the liquidation of a
defaulted Mortgage Loan through trustee's sale, foreclosure sale or otherwise,
other than amounts received following the acquisition of REO Property.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan as of
any date of determination, the ratio on such date of the outstanding principal
amount of the Mortgage Loan, to the Appraised Value of the Mortgaged Property.
Maximum Mortgage Interest Rate: With respect to each Adjustable Rate
Mortgage Loan, a rate that is set forth on the related Final Mortgage Loan
Schedule and in the related Mortgage Note and is the maximum interest rate to
which the Mortgage Interest Rate on such Mortgage Loan may be increased on any
Adjustment Date.
-8-
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
MERS Loan: Any Mortgage Loan registered with MERS on the MERS System.
MERS System: The system of recording transfers of mortgages
electronically maintained by MERS
Minimum Mortgage Interest Rate: With respect to each Adjustable Rate
Mortgage Loan, a rate that is set forth on the related Final Mortgage Loan
Schedule and in the related Mortgage Note and is the minimum interest rate to
which the Mortgage Interest Rate on such Mortgage Loan may be decreased on any
Adjustment Date.
MIN: The Mortgage Identification Number for any MERS Loan.
MOM Loan: Any Loan as to which MERS is acting as mortgagee, solely as
nominee for the originator of such Loan and its successors and assigns.
Monthly Advance: The aggregate of the advances made by the Seller on
any Distribution Date pursuant to Subsection 11.30 of the Servicing Addendum.
Monthly Payment: With respect to any Mortgage Loan, the scheduled
combined payment of principal and interest payable by a Mortgagor under the
related Mortgage Note on each Due Date.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. or its successor in interest.
Mortgage: The mortgage, deed of trust or other instrument creating a
first lien on Mortgaged Property securing the Mortgage Note.
Mortgagee: The mortgagee or beneficiary named in the Mortgage and the
successors and assigns of such mortgagee or beneficiary.
Mortgage File: The items pertaining to a particular Mortgage Loan
referred to in Exhibit 5 annexed hereto, and any additional documents required
to be added to the Mortgage File pursuant to this Agreement or the related Trade
Confirmation.
Mortgage Interest Rate: With respect to each Fixed Rate Mortgage Loan,
the fixed annual rate of interest provided for in the related Mortgage Note and,
with respect to each Adjustable Rate Mortgage Loan, the annual rate that
interest accrues on such Adjustable Rate Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note.
Mortgage Loan: Each first lien, residential mortgage loan, sold,
assigned and transferred to the Purchaser pursuant to this Agreement and the
related Trade Confirmation and identified on the Final Mortgage Loan Schedule
annexed to this Agreement on such Closing Date, which Mortgage Loan includes
without limitation the Mortgage File, the Monthly Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance
-9-
Proceeds, REO Disposition proceeds, and all other rights, benefits, proceeds and
obligations arising from or in connection with such Mortgage Loan.
Mortgage Loan Documents: The following documents:
(1) The original Mortgage Note endorsed, "Pay to the order of
______________, without recourse" and signed in the name of the Seller by
an authorized officer of the Seller. If the Mortgage Loan was acquired by
the Seller in a merger or other type of acquisition, the endorsement must
be by "[Seller], successor [by merger to or in interest to, as applicable]
[name of predecessor]"; and if the Mortgage Loan was acquired or originated
by the Seller while doing business under another name, the endorsement must
be by "[Seller], successor in interest to [previous name]." The Mortgage
Note shall include all intervening endorsements showing a complete chain of
title from the originator to the Seller;
(2) Except as provided below and for each Mortgage Loan that is not a
MERS Loan, the original recorded Mortgage, with evidence of recording
thereon, or, if the original Mortgage has not yet been returned from the
recording office, a copy of the original Mortgage certified by the Seller
to be a true copy of the original of the Mortgage that has been delivered
for recording in the appropriate recording office of the jurisdiction in
which the Mortgaged Property is located and in the case of each MERS Loan,
the original Mortgage, noting the presence of the MIN of the Loan and
either language indicating that the Mortgage Loan is a MOM Loan or if the
Mortgage Loan was not a MOM Loan at origination, the original Mortgage and
the assignment thereof to MERS, with evidence of recording indicated
thereon, or a copy of the Mortgage certified by the public recording office
in which such Mortgage has been recorded;
(3) In the case of each Mortgage Loan that is not a MERS Loan, the
original Assignment of each Mortgage, executed in blank. If the Mortgage
Loan was acquired by the Seller in a merger or other type of acquisition,
the assignment must be by "[Seller], successor [by merger to or in interest
to, as applicable] [name of predecessor]"; and in the event that the
Mortgage Loan was acquired or originated by the Seller while doing business
under another name, the assignment must be by "[Seller], successor in
interest to [previous name]";
(4) The original policy of title insurance (or a preliminary title
report if the original title insurance policy has not been received from
the title insurance company);
(5) Originals of any intervening assignments of the Mortgage, with
evidence of recording thereon or, if the original intervening assignment
has not yet been returned from the recording office, a copy of such
assignment certified to be a true copy of the original of the assignment
which has been sent for recording in the appropriate jurisdiction in which
the Mortgaged Property is located;
(6) With respect to a Mortgage Loan that, according to the Final
Mortgage Loan Schedule is covered by a primary mortgage insurance policy,
the original or a copy of the policy of primary mortgage insurance; and
-10-
(7) Originals of all assumption and modification agreements, if any.
Mortgage Loan Package: The Mortgage Loans listed on a Final Mortgage
Loan Schedule, delivered to the Custodian and the Purchaser at least five (5)
Business Days prior to the related Closing Date and attached to this Agreement
as Schedule I on the related Closing Date.
Mortgage Note: The original executed note or other evidence of the
Mortgage Loan indebtedness of a Mortgagor.
Mortgaged Property: The Mortgagor's real property securing repayment
of a related Mortgage Note, consisting of a fee simple interest in a single
parcel of real property improved by a Residential Dwelling.
Mortgagor: The obligor on a Mortgage Note, the owner of the Mortgaged
Property and the grantor or mortgagor named in the related Mortgage and such
grantor's or mortgagor's successor's in title to the Mortgaged Property.
Net Mortgage Interest Rate: With respect to any Mortgage Loan (or the
related REO Property), as of any date of determination, a per annum rate of
interest equal to the then applicable Mortgage Interest Rate for such Mortgage
Loan minus the Servicing Fee Rate.
Nonrecoverable Monthly Advance: Any Monthly Advance previously made or
proposed to be made in respect of a Mortgage Loan or REO Property that, in the
good faith business judgment of the Seller, will not, or, in the case of a
proposed Monthly Advance, would not be, ultimately recoverable from related late
payments, Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan or
REO Property as provided herein.
Officer's Certificate: A certificate signed by the Chairman of the
Board or the Vice Chairman of the Board or a President or a Vice President and
by the Treasurer or the Secretary or one of the Assistant Treasurers or
Assistant Secretaries of the Person on behalf of whom such certificate is being
delivered.
Opinion of Counsel: A written opinion of counsel, who may be salaried
counsel for the Person on behalf of whom the opinion is being given, reasonably
acceptable to each Person to whom such opinion is addressed.
Pass-Through Transfer: The sale or transfer of some or all of the
Mortgage Loans by the Purchaser to a trust to be formed as part of a publicly
issued or privately placed mortgage-backed securities transaction.
Payment Clearing Account: An Eligible Account created and maintained
pursuant to Exhibit 8.
Periodic Rate Cap: With respect to each Adjustable Rate Mortgage Loan
and any Adjustment Date therefor, a number of percentage points per annum that
is set forth in the related Mortgage Note, which is the maximum amount by which
the Mortgage Interest Rate for such Adjustable Rate Mortgage Loan may increase
(without regard to the Maximum Mortgage
-11-
Interest Rate) or decrease (without regard to the Minimum Mortgage Interest
Rate) on such Adjustment Date from the Mortgage Interest Rate in effect
immediately prior to such Adjustment Date.
Person: An individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Preliminary Mortgage Loan Schedule:
(1) the Seller's Mortgage Loan identifying number;
(2) the Mortgagor's first and last name;
(3) the Mortgage Interest Rate at origination;
(4) the Mortgage Interest Rate in effect immediately following the
Cut-off Date;
(5) the original months to maturity;
(6) the original date of the Mortgage Loan and the remaining months
to maturity from the Cut-off Date, based on the original
amortization schedule;
(7) the stated maturity date;
(8) the amount of the Monthly Payment at origination;
(9) the amount of the Monthly Payment as of the Cut-off Date;
(10) the Stated Principal Balance of the Mortgage Loan as of the close
of business on the Cut-off Date;
(11) a code indicating whether the Mortgaged Property is
owner-occupied;
(12) a code indicating the documentation style;
(13) a code indicating whether the Mortgaged Property is subject to a
second lien at origination of the First Lien Mortgage Loan;
(14) the debt to income ratio; and
(15) the Credit Score.
Preliminary Servicing Period: With respect to any Mortgage Loans, the
period commencing on the related Closing Date and ending on the date the Seller
enters into Reconstitution Agreements which amend or restate the servicing
provisions of this Agreement.
-12-
Prepayment Charge: With respect to any Mortgage Loan, any prepayment
penalty or premium thereon payable in connection with a principal prepayment on
such Mortgage Loan pursuant to the terms of the related Mortgage Note.
Primary Insurance Policy: A policy of primary mortgage guaranty
insurance issued by a Qualified Insurer.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date, including
any Prepayment Charge, 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: The price paid on the related Closing Date by the
Purchaser to the Seller pursuant to the related Trade Confirmation in exchange
for the Mortgage Loans purchased on such Closing Date as calculated as provided
in Section 4.
Qualified Depository: Any institution offering an Eligible Account.
Qualified Insurer: Any insurer which meets the requirements of FNMA or
FHLMC.
Qualified Substitute Mortgage Loan: A mortgage loan substituted for a
Deleted Mortgage Loan pursuant to the terms of this Agreement which must, on the
date of such substitution, (i) have an outstanding principal balance, after
application of all scheduled payments of principal and interest due during or
prior to the month of substitution, not in excess of the Stated Principal
Balance of the Deleted Mortgage Loan as of the Due Date in the calendar month
during which the substitution occurs, (ii) have a Mortgage Interest Rate not
less than (and not more than one percentage point in excess of) the Mortgage
Interest Rate of the Deleted Mortgage Loan, (iii) have a net Mortgage Interest
Rate not less than (and not more than one percentage point in excess of) the net
Mortgage Interest Rate of the Deleted Mortgage Loan, (iv) have a remaining terms
to maturity not greater than (and not more than one year less than) that of the
Deleted Mortgage Loan, (v) have the same Due Date as the Due Date on the Deleted
Mortgage Loan, (vi) have a Loan-to-Value Ratio as of the date of substitution
equal to or lower than the Loan-to-Value Ratio of the Deleted Mortgage Loan as
of such date, (vii) be covered under a Primary Insurance Policy if such
Qualified Substitute Mortgage Loan has a Loan-to-Value Ratio in excess of 80%,
(viii) conform to each representation and warranty set forth in Subsection 7.02
of this Agreement and (ix) be the same type of mortgage loan (i.e. fixed or
adjustable rate with the same Gross Margin and Index as the Deleted Mortgage
Loan). In the event that one or more mortgage loans are substituted for one or
more Deleted Mortgage Loans, the amounts described in clause (i) hereof shall be
determined on the basis of aggregate principal balances, the Mortgage Interest
Rates described in clause (ii) hereof shall be determined on the basis of
weighted average Mortgage Interest Rates, the Net Mortgage Rates described in
clause (iii) hereof shall be satisfied as to each such mortgage loan, the terms
described in clause (iv) shall be determined on the basis of weighted average
remaining terms to maturity, the Loan-to-Value Ratios described in clause (vi)
hereof shall be satisfied as to each such mortgage loan and, except to the
extent otherwise provided in this sentence, the representations and warranties
-13-
described in clause (viii) hereof must be satisfied as to each Qualified
Substitute Mortgage Loan or in the aggregate, as the case may be.
Rate/Term Refinancing: A Refinanced Mortgage Loan, the proceeds of
which are not in excess of the existing first mortgage loan on the related
Mortgaged Property and related closing costs, and were used exclusively to
satisfy the then existing first mortgage loan of the Mortgagor on the related
Mortgaged Property and to pay related closing costs.
Reconstitution Agreements: The agreement or agreements entered into by
the Seller and the Purchaser and/or certain third parties on the Reconstitution
Date or Dates with respect to any or all of the Mortgage Loans serviced
hereunder, in connection with a Whole Loan Transfer or a Pass-Through Transfer
as provided in Section 12.
Reconstitution Date: The date or dates on which any or all of the
Mortgage Loans serviced under this Agreement shall be removed from this
Agreement and reconstituted as part of a Whole Loan Transfer or Pass-Through
Transfer pursuant to Section 12 hereof.
Record Date: With respect to each Remittance Date, the last Business
Day of the month immediately preceding the month in which such Remittance Date
occurs.
Refinanced Mortgage Loan: A Mortgage Loan the proceeds of which were
not used to purchase the related Mortgaged Property.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating to
REMICs, which appear in Sections 860A through 860G of the Code, and related
provisions, and proposed, temporary and final regulations and published rulings,
notices and announcements promulgated thereunder, as the foregoing may be in
effect from time to time.
Remittance Date: The eighteenth (18th) day of each month, commencing
on the eighteenth day of the month next following the month in which the related
Cut-off Date occurs, or if such eighteenth (18th) day is not a Business Day, the
first Business Day immediately following such eighteenth (18th) day.
REO Disposition: The final sale by the Seller of any REO Property.
REO Property: A Mortgaged Property acquired as a result of the
liquidation of a Mortgage Loan.
Repurchase Price: With respect to any Mortgage Loan, a price equal to
(i) the Stated Principal Balance of such Mortgage Loan, plus (ii) interest on
such Stated Principal Balance at the Mortgage Interest Rate from and including
the last Due Date through which interest has been paid by or on behalf of the
Mortgagor to the first day of the month following the date of repurchase, less
amounts received in respect of such repurchased Mortgage Loan which are being
held in the Custodial Account for distribution in connection with such Mortgage
Loan.
-14-
Residential Dwelling: Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
one-family dwelling unit in a FNMA eligible condominium project, or (iv) a
detached one-family dwelling in a planned unit development, none of which is a
cooperative, mobile or manufactured home.
Servicing Addendum: The terms and conditions attached hereto as
Exhibit 8 which will govern the servicing of the Mortgage Loans by Seller during
the Preliminary Servicing Period.
Servicing Advances: All customary, reasonable and necessary
"out-of-pocket" costs and expenses incurred by the Seller in the performance of
its servicing obligations, including, but not limited to, the cost of (i)
preservation, restoration and repair of a Mortgaged Property, (ii) any
enforcement or judicial proceedings with respect to a Mortgage Loan, including
foreclosure actions, (iii) the management and liquidation of REO Property, and
(iv) compliance with the obligations under this Agreement.
Servicing Fee: With respect to each Mortgage Loan, the amount of the
annual servicing fee the Purchaser shall pay to the Seller, which shall, for
each month, be equal to one-twelfth of the product of (a) the Servicing Fee Rate
and (b) the unpaid principal balance of the Mortgage Loan. Such fee shall be
payable monthly, computed on the basis of the same principal amount and period
respectively 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
payable solely from, the interest portion (including recoveries with respect to
interest from Liquidation Proceeds and other proceeds, to the extent permitted
by Section 11.5) of related Monthly Payment collected by the Seller, or as
otherwise proved under Section 11.5. If the Preliminary Servicing Period
includes any partial month, the Servicing Fee for such month shall be pro rated
at a per diem rate based upon a 30-day month.
Servicing Fee Rate: The per annum rate set forth in the related Trade
Confirmation at which the Servicing Fee accrues.
Servicing File: With respect to each Mortgage Loan, the file retained
by the Seller consisting of originals of all documents in the Mortgage File
which are not delivered to the Purchaser or the Custodian and copies of the
Mortgage Loan Documents.
S&P: Standard & Poor's Ratings Services, a Division of the ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc. or its successor in interest.
Stated Principal Balance: As to each Mortgage Loan as of any date of
determination, (i) the principal balance of the Mortgage Loan as of the Cut-off
Date after giving effect to payments of principal received on or before such
date, minus (ii) all amounts previously distributed to the Purchaser with
respect to the related Mortgage Loan representing payments or recoveries of
principal.
Tax Service Contract: A transferable contract maintained for the
Mortgaged Property with a tax service provider for the purpose of obtaining
current information from local taxing authorities relating to such Mortgaged
Property.
-15-
Trade Confirmation: With respect to any Mortgage Loan Package
purchased and sold on any Closing Date, the letter agreement between the
Purchaser and the Seller, in the form annexed hereto as Exhibit 9 (including any
exhibits, schedules and attachments thereto), setting forth the terms and
conditions of such transaction and describing the Mortgage Loans to be purchased
by the Purchaser on such Closing Date. A Trade Confirmation may relate to more
than one Mortgage Loan Package to be purchased on one or more Closing Dates
hereunder.
Warranty ▇▇▇▇ of Sale: A Warranty ▇▇▇▇ of Sale with respect to the
Mortgage Loans purchased on a Closing Date in the form annexed hereto as Exhibit
4.
Whole Loan Transfer: Any sale or transfer of some or all of the
Mortgage Loans by the Purchaser to a third party, which sale or transfer is not
a Pass-Through Transfer.
SECTION 2. Agreement to Purchase. The Seller agrees to sell, and the
Purchaser agrees to purchase, from time-to-time, Mortgage Loans having an
aggregate principal balance on the related Cut-off Date in an amount as set
forth in the related Trade Confirmation, or in such other amount as agreed by
the Purchaser and the Seller as evidenced by the actual aggregate principal
balance of the Mortgage Loans accepted by the Purchaser on the related Closing
Date. The obligation of the Purchaser to purchase any Mortgage Loan from the
Seller on any particular Closing Date shall be subject to the satisfaction of
the conditions precedent to the Purchaser's obligation to purchase set forth in
Section 8.
SECTION 3. Mortgage Loan Schedules. Prior to the date on which the
Seller and the Purchaser execute a Trade Confirmation, the Seller shall provide
the Purchaser with the Preliminary Mortgage Loan Schedule. The Seller shall
deliver the Final Mortgage Loan Schedule for a Mortgage Loan Package to be
purchased on a particular Closing Date to the Purchaser on or prior to the
related Closing Date.
SECTION 4. Purchase Price. The Purchase Price for each Mortgage Loan
listed on the related Final Mortgage Loan Schedule shall be the percentage of
par as stated in the related Trade Confirmation (subject to adjustment as
provided therein), multiplied by its Stated Principal Balance as of the related
Cut-off Date. If so provided in the related Trade Confirmation, portions of the
Mortgage Loans shall be priced separately.
In addition to the Purchase Price as described above, the Initial
Purchaser shall pay to the Seller, at closing, accrued interest on the Stated
Principal Balance of each Mortgage Loan as of the related Cut-off Date at the
Net Mortgage Interest Rate from the related Cut-off Date through the day prior
to the related Closing Date, both inclusive.
The Purchaser shall own and be entitled to receive with respect to
each Mortgage Loan purchased, (1) all scheduled principal due after the related
Cut-off Date, (2) all other recoveries of principal collected 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 Seller after the related
Cut-off Date shall belong to the Seller), and (3) all payments of interest on
the Mortgage Loans net of the Servicing Fee (minus that portion of any such
interest payment that is allocable to the period prior to the related Cut-off
Date). The Stated Principal Balance of each Mortgage Loan as of the related
Cut-off Date is determined after application to the
-16-
reduction of principal of payments of principal due on or before the related
Cut-off Date whether or not collected. Therefore, for the purposes of this
Agreement, 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 (minus the applicable
Servicing Fee) shall be the property of the Purchaser. The Seller shall deposit
any such prepaid amounts into the Custodial Account, which account is
established for the benefit of the Purchaser, for remittance by the Seller to
the Purchaser on the first related Remittance Date. All payments of principal
and interest, less the applicable Servicing Fee, due on a Due Date following the
related Cut-off Date shall belong to the Purchaser.
SECTION 5. Examination of Mortgage Files. In addition to the rights
granted to the Initial Purchaser under the related Trade Confirmation to
underwrite the Mortgage Loans and review the Mortgage Files prior to the Closing
Date, prior to the related Closing Date, the Seller shall (a) deliver to the
Custodian in escrow, for examination with respect to each Mortgage Loan to be
purchased on such Closing Date, the related Mortgage File, including the
Assignment of Mortgage, pertaining to each Mortgage Loan, or (b) make the
related Mortgage File available to the Initial Purchaser for examination at the
Seller's offices or such other location as shall otherwise be agreed upon by the
Initial Purchaser and the Seller. Such examination may be made by the Initial
Purchaser or its designee at any reasonable time before or after the related
Closing Date. If the Initial Purchaser makes such examination prior to the
related Closing Date and identifies any Mortgage Loans that do not conform to
the terms of the related Trade Confirmation, such Mortgage Loans may, at the
Initial Purchaser's option, be rejected for purchase by the Initial Purchaser.
If not purchased by the Initial Purchaser, such Mortgage Loans shall be deleted
from the related Final Mortgage Loan Schedule and may be replaced by a Qualified
Substitute Mortgage Loan pursuant to Section 7. The Initial Purchaser may, at
its option and without notice to the Seller, purchase all or part of any
Mortgage Loan Package without conducting any partial or complete examination.
The fact that the Initial Purchaser has conducted or has determined not to
conduct any partial or complete examination of the Mortgage Files shall not
affect the Initial Purchaser's (or any of its successors') rights to demand
repurchase or other relief or remedy provided for in this Agreement.
SECTION 6. Conveyance from Seller to Initial Purchaser.
Subsection 6.01. Conveyance of Mortgage Loans; Possession of Servicing
Files.
The Seller, simultaneously with the payment of the Purchase Price,
shall execute and deliver to the Initial Purchaser a Warranty ▇▇▇▇ of Sale with
respect to the related Mortgage Loan Package in the form attached hereto as
Exhibit 4. The Servicing File retained by the Seller with respect to each
Mortgage Loan pursuant to this Agreement shall be appropriately identified in
the Seller's computer system to reflect clearly the sale of such related
Mortgage Loan to the Purchaser. The Seller shall release from its custody the
contents of any Servicing File retained by it only in accordance with this
Agreement, except when such release is required in connection with a repurchase
of any such Mortgage Loan pursuant to Subsection 7.03 or 7.04.
In addition, in connection with the assignment of any MERS Loan, the
Seller agrees that on or prior to each Closing Date it will cause, at its own
expense, the MERS System to indicate that the related Mortgage Loans have been
assigned by the Seller to the Purchaser in
-17-
accordance with this Agreement by including in such computer files the
information required by the MERS System to identify the Purchaser as owner of
such Mortgage Loans.
Subsection 6.02. Books and Records.
Record title to each Mortgage and the related Mortgage Note as of the
related Closing Date shall be in the name of the Seller, the Purchaser, the
Custodian or one or more designees of the Purchaser, as the Purchaser shall
designate. Notwithstanding the foregoing, beneficial ownership of each Mortgage
and the related Mortgage Note shall be vested solely in the Purchaser or the
appropriate designee of the Purchaser, as the case may be. All rights arising
out of the Mortgage Loans including, but not limited to, all funds received by
the Seller after the related Cut-off Date on or in connection with a Mortgage
Loan as provided in Section 4 shall be vested in the Purchaser or one or more
designees of the Purchaser; provided, however, that all such funds received on
or in connection with a Mortgage Loan as provided in Section 4 shall be received
and held by the Seller in trust for the benefit of the Purchaser or the assignee
of the Purchaser, as the case may be, as the owner of the Mortgage Loans
pursuant to the terms of this Agreement.
It is the express intention of the parties that the transactions
contemplated by this Agreement be, and be construed as, a sale of the Mortgage
Loans by the Seller and not a pledge of the Mortgage Loans by the Seller to the
Purchaser to secure a debt or other obligation of the Seller. Consequently, the
sale of each Mortgage Loan shall be reflected as a sale on the Seller's business
records, tax returns and financial statements.
Subsection 6.03. Delivery of Mortgage Loan Documents.
The Seller shall from time to time in connection with each Closing
Date, at least five (5) Business Days prior to such Closing Date, or such other
period as agreed to by the Seller and the Purchaser, deliver in escrow to the
Custodian the Mortgage Loan Documents with respect to each Mortgage Loan to be
purchased and sold on the related Closing Date and set forth on the related
Preliminary Mortgage Loan Schedule delivered with such Mortgage Loan Documents.
The Custodian shall certify its receipt of all such Mortgage Loan
Documents for the related Closing Date, pursuant to an initial custody receipt
and initial certification of the Custodian.
The Seller shall forward to the Custodian original documents
evidencing an assumption, modification, consolidation or extension of any
Mortgage Loan entered into in accordance with this Agreement within two weeks of
their execution, provided, however, that the Seller shall provide the Custodian
with a certified true copy of any such document submitted for recordation within
two weeks of its execution, and shall provide the original of any document
submitted for recordation or a copy of such document certified by the
appropriate public recording office to be a true and complete copy of the
original within one hundred and eighty (180) days of its submission for
recordation. To the extent that the Seller cannot deliver any original documents
within the time specified due to a delay in the recording office, Seller may
-18-
deliver an Officer's Certificate describing the additional time expected to
receive such documents from the recording office.
SECTION 7. Representations, Warranties and Covenants of the Seller:
Remedies for Breach.
Subsection 7.01. Representations and Warranties Respecting the Seller.
The Seller represents, warrants and covenants to the Purchaser as of
the date hereof and as of each respective Closing Date or as of such date
specifically provided herein or in the applicable Warranty ▇▇▇▇ of Sale:
(i) The Seller is duly organized, validly existing and in good
standing under the laws of the state of New York and is and will remain in
compliance with the laws of each state in which any Mortgaged Property is
located to the extent necessary to ensure the enforceability of each Mortgage
Loan and the servicing of the Mortgage Loan in accordance with the terms of this
Agreement or is otherwise exempt under applicable law from such qualification or
is otherwise not required under applicable law to effect such qualification. No
licenses or approvals obtained by the Seller have been suspended or revoked by
any court, administrative agency, arbitrator or governmental body and no
proceedings are pending which might result in such suspension or revocation;
(ii) The Seller has the full power and authority to hold each Mortgage
Loan, to sell each Mortgage Loan, and to execute, deliver and perform, and to
enter into and consummate, all transactions contemplated by this Agreement. The
Seller has duly authorized the execution, delivery and performance of this
Agreement, has duly executed and delivered this Agreement, and this Agreement,
assuming due authorization, execution and delivery by the Purchaser, constitutes
a legal, valid and binding obligation of the Seller, enforceable against it in
accordance with its terms except as the enforceability thereof may be limited by
bankruptcy, insolvency or reorganization;
(iii) The execution and delivery of this Agreement by the Seller and
the performance of and compliance with the terms of this Agreement will not
violate the Seller's articles of incorporation or by-laws or constitute a
default under or result in a breach or acceleration of, any material contract,
agreement or other instrument to which the Seller is a party or which may be
applicable to the Seller or its assets;
(iv) The Seller is not in violation of, and the execution and delivery
of this Agreement by the Seller and its performance and compliance with the
terms of this Agreement will not constitute a violation with respect to, any
order or decree of any court or any order or regulation of any federal, state,
municipal or governmental agency having jurisdiction over the Seller or its
assets, which violation might have consequences that would materially and
adversely affect the condition (financial or otherwise) or the operation of the
Seller or its assets or might have consequences that would materially and
adversely affect the performance of its obligations and duties hereunder;
(v) The Seller is an approved seller/servicer for FNMA or FHLMC in
good standing and is a HUD approved mortgagee pursuant to Section 203 of the
National Housing
-19-
Act. No event has occurred, including but not limited to a change in insurance
coverage, which would make the Seller unable to comply with FNMA, FHLMC or HUD
eligibility requirements or which would require notification to FNMA, FHLMC or
HUD;
(vi) The Seller does not believe, nor does it have any reason or cause
to believe, that it cannot perform each and every covenant contained in this
Agreement;
(vii) There are no actions or proceedings against, or investigations
of, the Seller before any court, administrative agency or other tribunal (A)
that prohibit its entering into this Agreement, (B) seeking to prevent the sale
of the Mortgage Loans or the consummation of the transactions contemplated by
this Agreement or (C) that prohibit or materially and adversely affect the
performance by the Seller of its obligations under, or the validity or
enforceability of, this Agreement;
(viii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of, or compliance by the Seller with, this Agreement
or the consummation of the transactions contemplated by this Agreement, except
for such consents, approvals, authorizations or orders, if any, that have been
obtained prior to the related Closing Date;
(ix) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Seller, and the
transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by
the Seller pursuant to this Agreement are not subject to the bulk transfer or
any similar statutory provisions;
(x) Neither this Agreement nor any written statement, report or other
document prepared and furnished or to be prepared and furnished by the Seller
pursuant to this Agreement or in connection with the transactions contemplated
hereby contains any untrue statement of material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading;
(xi) The consideration received by the Seller upon the sale of the
Mortgage Loans constitutes fair consideration and reasonably equivalent value
for such Mortgage Loans;
(xii) The Seller is solvent and will not be rendered insolvent by the
consummation of the transactions contemplated hereby. The Seller is not
transferring any Mortgage Loan with any intent to hinder, delay or defraud any
of its creditors; and
(xiii) The Seller is in good standing, and will comply in all material
respects with the rules and procedures of MERS in connection with the servicing
of the MERS Loans for as long as such Mortgage Loans are registered with MERS.
Subsection 7.02. Representations and Warranties Regarding Individual
Mortgage Loans.
The Seller hereby represents and warrants to the Purchaser that, as to
each Mortgage Loan, as of the related Closing Date for such Mortgage Loan:
-20-
(i) The information set forth in the related Final Mortgage Loan
Schedule is complete, true and correct in all material respects;
(ii) The Mortgage Loan is in compliance with all requirements set
forth in the related Trade Confirmation, and the characteristics of the related
Mortgage Loan Package as set forth in the related Trade Confirmation are true
and correct;
(iii) All payments required to be made up to and excluding the related
Cutoff Date for such Mortgage Loan under the terms of the Mortgage Note have
been made; the Seller has not advanced funds, or induced, solicited or knowingly
received any advance of funds from a party other than the owner of the related
Mortgaged Property, directly or indirectly, for the payment of any amount
required by the Mortgage Note or Mortgage; and there has been no more than one
delinquency of thirty (30) days, exclusive of any period of grace, in any
payment by the Mortgagor thereunder during the last twelve months;
(iv) There are no delinquent taxes, ground rents, water charges, sewer
rents, assessments, insurance premiums, leasehold payments, including
assessments payable in future installments or other outstanding charges
affecting the related Mortgaged Property;
(v) The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments, recorded in the applicable public recording office if necessary to
maintain the lien priority of the Mortgage, and which have been delivered to the
Custodian, the Purchaser, or the Purchaser's designee; the substance of any such
waiver, alteration or modification has been approved by the insurer under the
Primary Insurance Policy, if any, and the title insurer, to the extent required
by the related policy, and is reflected on the related Final Mortgage Loan
Schedule. No instrument of waiver, alteration or modification has been executed,
and no Mortgagor has been released, in whole or in part, except in connection
with an assumption agreement approved by the insurer under the Primary Insurance
Policy, if any, the title insurer, to the extent required by the policy, and
which assumption agreement has been delivered to the Custodian and the terms of
which are reflected in the related Final Mortgage Loan Schedule;
(vi) The Mortgage Note and the Mortgage are not subject to any right
of rescission, set-off, counterclaim or defense, including the defense of usury,
nor will the operation of any of the terms of the Mortgage Note and the
Mortgage, or the exercise of any right thereunder, render the 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;
(vii) All buildings upon the Mortgaged Property are insured by an
insurer acceptable to FNMA or FHLMC against loss by fire, hazards of extended
coverage and such other hazards as are customary in the area where the Mortgaged
Property is located, pursuant to insurance policies conforming to the
requirements of the Servicing Addendum. All such insurance policies contain a
standard mortgagee clause naming the Seller, its successors and assigns as
mortgagee and all premiums thereon have been paid. If the Mortgaged Property is
in an area identified on a Flood Hazard Map or Flood Insurance Rate Map issued
by the Federal Emergency Management Agency as having special flood hazards (and
such flood insurance has
-21-
been made available) a flood insurance policy meeting the requirements of the
current guidelines of the Federal Insurance Administration is in effect which
policy conforms to the requirements of FNMA or FHLMC. 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 Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor;
(viii) Any and all requirements of any federal, state or local law
including, without limitation, usury, truth in lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity, fair housing,
disclosure laws and all applicable predatory and abusive lending laws applicable
to the origination and servicing of mortgage loans of a type similar to the
Mortgage Loans have been complied with;
(ix) The Mortgage has not been satisfied, cancelled, subordinated or
rescinded, in whole or in part, and the Mortgaged Property has not been released
from the lien of the Mortgage, in whole or in part, nor has any instrument been
executed that would effect any such satisfaction, cancellation, subordination,
rescission or release;
(x) The related Mortgage is properly recorded and is a valid, existing
and enforceable (A) first lien and first priority security interest with respect
to each Mortgage Loan which is indicated by the Seller to be a First Lien (as
reflected on the Final Mortgage Loan Schedule), on the Mortgaged Property,
including all improvements on the Mortgaged Property subject only to (a) the
lien of current real property taxes and assessments not yet due and payable, (b)
covenants, conditions and restrictions, rights of way, easements and other
matters of the public record as of the date of recording being acceptable to
mortgage lending institutions generally and specifically referred to in the
lender's title insurance policy delivered to the originator of the Mortgage Loan
and which do not adversely affect the Appraised Value of the Mortgaged Property,
and (c) other matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be provided
by the Mortgage or the use, enjoyment, value or marketability of the related
Mortgaged Property. Any security agreement, chattel mortgage or equivalent
document related to and delivered in connection with the Mortgage Loan
establishes and creates a valid, existing and enforceable (A) first lien and
first priority security interest with respect to each Mortgage Loan which is
indicated by the Seller to be a First Lien (as reflected on the Final Mortgage
Loan Schedule on the property described therein and the Seller has full right to
sell and assign the same to the Purchaser. Except as set forth on the
Preliminary Mortgage Loan Schedule and Final Mortgage Loan Schedule, the
Mortgaged Property was not, as of the date of origination of the Mortgage Loan,
subject to a mortgage, deed of trust, deed to secure debt or other security
instrument creating a lien subordinate to the lien of the Mortgage;
(xi) The Mortgage Note and the related Mortgage are genuine and each
is the legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms;
(xii) At origination, all parties to the Mortgage Note and the
Mortgage had legal capacity to enter into the Mortgage Loan and to execute and
deliver the Mortgage Note and
-22-
the Mortgage, and the Mortgage Note and the Mortgage have been duly and properly
executed by such parties. The Mortgagor is a natural person;
(xiii) The proceeds of the Mortgage Loan have been fully disbursed to
or for the account of the Mortgagor and there is no obligation for the Mortgagee
to advance additional funds thereunder and any and all requirements as to
completion of any on-site or off-site improvement 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 have been paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due to the Mortgagee pursuant to the Mortgage Note or Mortgage;
(xiv) The Seller is the sole legal, beneficial and equitable owner of
the Mortgage Note and the Mortgage. The Seller has full right and authority
under all governmental and regulatory bodies having jurisdiction over such
Seller, subject to no interest or participation of, or agreement with, any
party, to transfer and sell the Mortgage Loan to the Purchaser pursuant to this
Agreement free and clear of any encumbrance or right of others, equity, lien,
pledge, charge, mortgage, claim, participation interest or security interest of
any nature (collectively, a "Lien"); and immediately upon the transfers and
assignments herein contemplated, the Seller shall have transferred and sold all
of its right, title and interest in and to each Mortgage Loan and the Purchaser
will hold good, marketable and indefeasible title to, and be the owner of, each
Mortgage Loan subject to no Lien;
(xv) All parties which have had any interest in the Mortgage Loan,
whether as originator, mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were): (A)
organized under the laws of such state, or (B) qualified to do business in such
state, or (C) federal savings and loan associations or national banks having
principal offices in such state, or (D) not doing business in such state so as
to require qualification or licensing, or (E) not otherwise required to be
licensed in such state;
(xvi) The Mortgage Loan is covered by an American Land Title
Association ("ALTA") ALTA lender's title insurance policy (which, in the case of
an Adjustable Rate Mortgage Loan has an adjustable rate mortgage endorsement in
the form of ALTA 6.0 or 6.1) generally acceptable to FNMA or FHLMC, issued by a
Qualified Insurer qualified to do business in the jurisdiction where the
Mortgaged Property is located, insuring (subject to the exceptions contained
above in (x)(a) and (d)) the Seller, its successors and assigns as to the first
priority lien of the Mortgage in the original principal amount of the Mortgage
Loan and, with respect to any Adjustable Rate Mortgage Loan, against any loss by
reason of the invalidity or unenforceability of the lien resulting from the
provisions of the Mortgage providing for adjustment in the Mortgage Interest
Rate and Monthly Payment. Additionally, such lender's title insurance policy
affirmatively insures ingress and egress to and from the Mortgaged Property, and
against encroachments by or upon the Mortgaged Property or any interest therein.
The Seller is the sole insured of such lender's title insurance policy, and such
lender's title insurance policy is in full force and effect and will be in full
force and effect upon the consummation of the transactions contemplated by this
Agreement. No claims have been made under such lender's title insurance policy,
and no prior holder of the related Mortgage, including the Seller, has done, by
act or omission, anything which would impair the coverage of such lender's title
insurance policy;
-23-
(xvii) There is no default, breach, violation or event of acceleration
existing under the Mortgage or the Mortgage Note and no event which, with the
passage of time or with notice and the expiration of any grace or cure period,
would constitute a default, breach, violation or event of acceleration, and the
Seller has not waived any default, breach, violation or event of acceleration;
(xviii) 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 lien) affecting the related Mortgaged Property which
are or may be liens prior to, or equal or coordinate with, the lien of the
related Mortgage;
(xix) All improvements which were considered in determining the
Appraised Value of the related Mortgaged Property lay wholly within the
boundaries and building restriction lines of the Mortgaged Property, and no
improvements on adjoining properties encroach upon the Mortgaged Property;
(xx) The Mortgage Loan was originated by the Seller or by a savings
and loan association, a savings bank, a commercial bank or similar banking
institution which is supervised and examined by a federal or state authority, or
by a mortgagee approved as such by the Secretary of HUD;
(xxi) Principal payments on the Mortgage Loan shall commence (with
respect to any newly originated Mortgage Loans) or commenced no more than sixty
(60) days after the proceeds of the Mortgage Loan were disbursed. The Mortgage
Loan bears interest at the Mortgage Interest Rate. With respect to each Mortgage
Loan, the Mortgage Note is payable on the first day of each month in Monthly
Payments, which, (A) in the case of a Fixed Rate Mortgage Loan, are sufficient
to fully amortize the original principal balance over the original term thereof
and to pay interest at the related Mortgage Interest Rate, (B) in the case of an
Adjustable Rate Mortgage Loan, are changed on each Adjustment Date, and in any
case, are sufficient to fully amortize the original principal balance over the
original term thereof and to pay interest at the related Mortgage Interest Rate
and (C) in the case of a Balloon Loan, are based on a fifteen (15) or thirty
(30) year amortization schedule, as set forth in the related Mortgage Note, and
a final monthly payment substantially greater than the preceding monthly payment
which is sufficient to amortize the remaining principal balance of the Balloon
Loan and to pay interest at the related Mortgage Interest Rate. The Index for
each Adjustable Rate Mortgage Loan is as defined in the related Trade
Confirmation. The Mortgage Note does not permit negative amortization. No
Mortgage Loan is a Convertible Mortgage Loan;
(xxii) The origination and collection practices used by the Seller
with respect to each Mortgage Note and Mortgage have been in all respects legal,
proper, prudent and customary in the mortgage origination and servicing
industry. The Mortgage Loan has been serviced by the Seller and any predecessor
servicer in accordance with the terms of the Mortgage Note. With respect to any
Mortgage Loan which provides for an adjustable interest rate, all rate
adjustments have been performed in accordance with the terms of the related
Mortgage Note or subsequent modifications, if any. With respect to escrow
deposits and Escrow Payments, if any, all such payments are in the possession
of, or under the control of, the Seller and there exist no deficiencies in
connection therewith for which customary arrangements for repayment thereof
-24-
have not been made. No escrow deposits or Escrow Payments or other charges or
payments due the Seller have been capitalized under any Mortgage or the related
Mortgage Note and no such escrow deposits or Escrow Payments are being held by
the Seller for any work on a Mortgaged Property which has not been completed;
(xxiii) The Mortgaged Property is free of damage and waste and there
is no proceeding pending or, to the best of the Seller's knowledge, threatened
for the total or partial condemnation thereof nor is such a proceeding currently
occurring;
(xxiv) The Mortgage and related Mortgage Note contain customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property of the
benefits of the security provided thereby, including, (a) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (b) otherwise by
judicial foreclosure. At the time of origination of the Mortgage Loan and as of
the Closing Date, the Mortgaged Property has not and is not subject to any
bankruptcy proceeding or foreclosure proceeding, and the Mortgagor has not filed
for protection under applicable bankruptcy laws. 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.
(xxv) The Mortgagor has not notified the Seller and the Seller has no
knowledge of any relief requested or allowed to the Mortgagor under the
Servicemembers Civil Relief Act;
(xxvi) The Mortgage Loan was underwritten in accordance with the
underwriting standards of the Seller in effect at the time the Mortgage Loan was
originated; and the Mortgage Note and Mortgage are on forms acceptable to FNMA
or FHLMC;
(xxvii) The Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage on the Mortgaged
Property and the security interest of any applicable security agreement or
chattel mortgage referred to in (x) above;
(xxviii) The Mortgage File contains an appraisal of the related
Mortgaged Property which satisfied the standards of FNMA or FHLMC and was made
and signed, prior to the approval of the Mortgage Loan application, by a
qualified appraiser, duly appointed by the Seller, who had no interest, direct
or indirect in the Mortgaged Property or in any loan made on the security
thereof, whose compensation is not affected by the approval or disapproval of
the Mortgage Loan and who met the minimum qualifications of FNMA or FHLMC. Each
appraisal of the Mortgage Loan was made in accordance with the relevant
provisions of the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989;
(xxix) In the event the Mortgage constitutes a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Mortgage, and no fees or
expenses are or will become payable by the Purchaser to the trustee under the
deed of trust, except in connection with a trustee's sale after default by the
Mortgagor;
-25-
(xxx) No Mortgage Loan contains provisions pursuant to which Monthly
Payments are (a) paid or partially paid with funds deposited in any separate
account established by the Seller, the Mortgagor, or anyone on behalf of the
Mortgagor, (b) paid by any source other than the Mortgagor or (c) contains any
other similar provisions which may constitute a "buydown" provision. The
Mortgage Loan is not a graduated payment mortgage loan and the Mortgage Loan
does not have a shared appreciation or other contingent interest feature;
(xxxi) The Mortgagor has received all disclosure materials required by
applicable law with respect to the making of fixed rate mortgage loans in the
case of Fixed Rate Mortgage Loans, and adjustable rate mortgage loans in the
case of Adjustable Rate Mortgage Loans and rescission materials with respect to
Refinanced Mortgage Loans;
(xxxii) No Mortgage Loan was made in connection with (a) the
construction or rehabilitation of a Mortgaged Property or (b) facilitating the
trade-in or exchange of a Mortgaged Property;
(xxxiii) Predatory Lending Regulations; High Cost Loans. No Mortgage
Loan is (a) subject to, covered by or in violation of the provisions of the
Homeownership and Equity Protection Act of 1994, as amended, (b) a "high cost",
"covered", "abusive", "predatory", "home loan", "Oklahoma Section 10" or "high
risk" mortgage loan (or a similarly designated loan using different terminology)
under any federal, state or local law, including without limitation, the
provisions of the Georgia Fair Lending Act, New York Banking Law, Section 6-1,
the City of Oakland, California Anti-Predatory Lending Ordinance No. 12361, the
Arkansas Home Loan Protection Act, effective as of June 14, 2003, Kentucky State
Statute KRS 360.100, effective as of June 25, 2003, the New Jersey Home
Ownership Security Act of ▇▇▇▇ (▇▇▇ "▇▇ ▇▇▇"), ▇▇▇ ▇▇▇ ▇▇▇▇▇▇ Home Loan
Protection Act (N.M. Stat. ▇▇▇. Sections 58-21A-1 et seq.), the Illinois
High-Risk Home Loan Act (815 Ill. Comp. Stat. 137/1 et seq.), the Oklahoma Home
Ownership and Equity Protection Act, Nevada Assembly ▇▇▇▇ No. 284, effective as
of Oct. 1, 2003, the Minnesota Residential Mortgage Originator and Servicer
Licensing Act (MN Stat. Section 58.137), the South Carolina High-Cost and
Consumer Home Loans Act, effective January 1, 2004, or any other statute or
regulation providing assignee liability to holders of such mortgage loans, or
(c) subject to or in violation of any such or comparable federal, state or local
statutes or regulations. Each Mortgage Loan is in compliance with the
anti-predatory lending eligibility for purchase requirements of ▇▇▇▇▇▇ Mae's
Selling Guide. No Mortgage Loan is a High Cost Loan or Covered Loan, as
applicable (as such terms are defined in the then current Standard & Poor's
LEVELS(R) Glossary);
(xxxiv) Each Mortgage Loan with an LTV at origination in excess of 80%
is and will be subject to a Primary Mortgage Insurance Policy, issued by a
Qualified Insurer, which insures that portion of the Mortgage Loan in excess of
the portion of the Appraised Value of the Mortgaged Property required by FNMA.
All provisions of such Primary Insurance Policy have been and are being complied
with, such policy is in full force and effect, and all premiums due thereunder
have been paid. Any Mortgage subject to any such Primary Insurance Policy
obligates the Mortgagor thereunder to maintain such insurance and to pay all
premiums and charges in connection therewith. The Mortgage Interest Rate for the
Mortgage Loan does not include any such insurance premium;
-26-
(xxxv) At origination, the Mortgaged Property was lawfully occupied
under applicable law; all inspections, licenses and certificates required to be
made or issued with respect to all occupied portions of 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. At origination, no
improvement located on or being part of any Mortgaged Property is in violation
of any applicable zoning law or regulation;
(xxxvi) No error, omission, misrepresentation, fraud or similar
occurrence with respect to a Mortgage Loan has taken place on the part of the
Seller, or to the best of Seller's knowledge, any other person, including
without limitation the Mortgagor, any appraiser, any builder or developer, or
any other party involved in the origination of the Mortgage Loan or in the
application of any insurance in relation to such Mortgage Loan;
(xxxvii) Each original Mortgage was recorded or is in the process of
being recorded, in the appropriate jurisdictions wherein such recordation is
necessary to perfect the lien thereof as against creditors of the Seller. All
intervening assignments of the original Mortgage (other than the assignment to
the Purchaser) have been recorded, or are in the process of being recorded, in
the appropriate jurisdictions wherein such recordation is necessary to perfect
the lien thereof as against creditors of the Seller. The Assignment of Mortgage
is in recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property is located;
(xxxviii) Any principal advances made to the Mortgagor prior to the
Cut-off Date have been consolidated with the outstanding principal amount
secured by the Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term. The lien of the Mortgage
securing the consolidated principal amount is expressly insured as having first
lien priority with respect to each Mortgage Loan which is indicated by the
Seller to be a First Lien (as reflected on the Final Mortgage Loan Schedule), by
a title insurance policy, an endorsement to the policy insuring the mortgagee's
consolidated interest or by other title evidence acceptable to FNMA or FHLMC.
The consolidated principal amount does not exceed the original principal amount
of the Mortgage Loan;
(xxxix) If the Residential Dwelling on the Mortgaged Property is a
condominium unit or a unit in a planned unit development (other than a de
minimis planned unit development) such condominium or planned unit development
project meets the eligibility requirements of FNMA or FHLMC;
(xl) Each Mortgage Loan originated in the state of Texas pursuant to
Article XVI, Section 50(a)(6) of the Texas Constitution (a "Texas Refinance
Loan") has been originated in compliance with the provisions of Article XVI,
Section 50(a)(6) of the Texas Constitution, Texas Civil Statutes and the Texas
Finance Code. With respect to each Texas Refinance Loan that is a Cash-Out
Refinancing, the related Mortgage Loan Documents state that the Mortgagor may
prepay such Texas Refinance Loan in whole or in part without incurring a
Prepayment Charge. The Seller does not collect any such Prepayment Charges in
connection with any such Texas Refinance Loan;
-27-
(xli) To the extent required by the Seller's underwriting guidelines,
the source of the down payment with respect to each Mortgage Loan has been fully
verified by the Seller;
(xlii) Interest on each Mortgage Loan is calculated on the basis of a
360-day year consisting of twelve 30-day months;
(xliii) To the best of the Seller's knowledge, the Mortgaged Property
is in material compliance with all applicable environmental laws pertaining to
environmental hazards including, without limitation, asbestos, and neither the
Seller nor, to the Seller's knowledge, the related Mortgagor, has received any
notice of any violation or potential violation of such law;
(xliv) The Seller shall, at its own expense, cause each Mortgage Loan
to be covered by a "life of loan" Tax Service Contract which is assignable to
the Purchaser or its designee at no cost to the Purchaser or its designee;
provided however, that if the Seller fails to purchase such Tax Service
Contract, the Seller shall be required to reimburse the Purchaser for all costs
and expenses incurred by the Purchaser in connection with the purchase of any
such Tax Service Contract;
(xlv) Each Mortgage Loan is covered by a "life of loan" Flood Zone
Service Contract which is assignable to the Purchaser or its designee at no cost
to the Purchaser or its designee or, for each Mortgage Loan not covered by such
Flood Zone Service Contract, the Seller agrees to purchase such Flood Zone
Service Contract;
(xlvi) None of the Adjustable Rate Mortgage Loans include an option to
convert to a Fixed Rate Mortgage Loan;
(xlvii) No selection procedures were used by the Seller that
identified the Mortgage Loans as being less desirable or valuable than other
comparable mortgage loans in the Seller's portfolio;
(xlviii) Each Mortgage Loan constitutes a "qualified mortgage" under
Section 860G(a)(3)(A) of the Code and Treasury Regulation Section
1.860G-2(a)(1);
(xlix) No Mortgage Loan shall (a) be subject to Section 226.32 of
Regulation Z or any similar state or local law (relating to high interest rate
credit/lending transactions), (b) include any single premium credit life or
accident and health insurance or disability insurance, or (c) contain any term
or condition, or involves any loan origination practice, that has been defined
as "predatory" or "threshold" under applicable federal, state or local law, or
which has been expressly categorized as an "unfair" or "deceptive" term,
condition, or practice in any applicable federal, state or local law dealing
with "predatory" or "high cost" mortgage lending;
(l) The Mortgage Loan Documents with respect to each Mortgage Loan
subject to Prepayment Charges specifically authorizes such Prepayment Charges to
be collected and such Prepayment Charges are permissible and enforceable in
accordance with the terms of the related Mortgage Loan Documents and applicable
law (except to the extent that the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws relating
to creditors' rights generally or the collectability thereof may be limited due
to acceleration in connection with a foreclosure);
-28-
(li) No Mortgage Loan had an LTV or a CLTV in excess of 100% at
origination;
(lii) Illinois Interest Act: No Mortgage Loan secured by a Mortgage
Property located in the State of Illinois is in violation of the provisions of
the Illinois Interest Act, including Section 4.1a which provides that no such
Mortgage Loan with a Mortgage Interest Rate in excess of 8.0% per annum has
lender-imposed fees (or other charges) in excess of 3.0% of the original
principal balance of the Mortgage Loan;
(liii) No Mortgage Loan made on or after October 1, 2002 and prior to
March 7, 2003 is subject to the Georgia Fair Lending Act (OGCA Sections 7 6A 1,
et. seq.);
(liv) No Mortgage Loan had an original term to maturity of more than
thirty (30) years;
(lv) Each Mortgage contains a provision for the acceleration of the
payment of the unpaid principal balance of the related Mortgage Loan in the
event the related Mortgaged Property is sold without the prior consent of the
mortgagee thereunder;
(lvi) The Seller and any predecessor servicer has fully furnished, in
accordance with the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information (e.g., favorable and unfavorable) on its
borrower credit files to Equifax, Experian and Trans Union Credit Information
Company (three of the credit repositories), on a monthly basis;
(lvii) Each Mortgage Note is comprised of one original promissory note
and each such promissory note constitutes an "instrument" for purposes of
section 9-102(a)(65) of the UCC;
(lviii) No predatory or deceptive lending practices, including but not
limited to, the extension of credit to the mortgagor without regard for the
mortgagor's ability to repay the Mortgage Loan and the extension of credit to
the mortgagor which has no apparent benefit to the mortgagor, were employed by
the originator of the Mortgage Loan in connection with the origination of the
Mortgage Loan; and
(lix) The Seller has complied with all applicable anti-money
laundering laws and regulations, including without limitation the USA Patriot
Act of 2001.
Subsection 7.03. Remedies for Breach of Representations and
Warranties.
It is understood and agreed that the representations and warranties
set forth in Subsections 7.01 and 7.02 shall survive the sale of the Mortgage
Loans to the Purchaser and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note or
Assignment of Mortgage or the examination or lack of examination of any Mortgage
File. Upon discovery by either the Seller or the Purchaser of a breach of any of
the foregoing representations and warranties which materially and adversely
affects the value of the Mortgage Loans or the interest of the Purchaser (or
which materially and adversely affects the interests of the Purchaser in the
related Mortgage Loan in the case of a representation and
-29-
warranty relating to a particular Mortgage Loan), the party discovering such
breach shall give prompt written notice to the other.
Within sixty (60) days of the earlier of either discovery by or notice
to the Seller of any breach of a representation or warranty which materially and
adversely affects the value of a Mortgage Loan or the Mortgage Loans, the Seller
shall use its best efforts promptly to cure such breach in all material respects
and, if such breach cannot be cured, the Seller shall, at the Purchaser's
option, repurchase such Mortgage Loan at the Repurchase Price. In the event that
a breach shall involve any representation or warranty set forth in Subsection
7.01 and such breach cannot be cured within sixty (60) days of the earlier of
either discovery by or notice to the Seller of such breach, all of the Mortgage
Loans shall, at the Purchaser's option, be repurchased by the Seller at the
Repurchase Price. The Seller may, assuming that Seller has a Qualified
Substitute Mortgage Loan, rather than repurchase the Mortgage Loan as provided
above, remove such Mortgage Loan and substitute in its place a Qualified
Substitute Mortgage Loan or Loans; provided that such substitution shall not
violate any REMIC Provisions. If the Seller has no Qualified Substitute Mortgage
Loan, it shall repurchase the deficient Mortgage Loan. Any repurchase of a
Mortgage Loan(s) pursuant to the foregoing provisions of this Subsection 7.03
shall occur on a date designated by the Purchaser and shall be accomplished by
deposit in the Custodial Account of the amount of the Repurchase Price for
distribution to the Purchaser on the next scheduled Remittance Date.
At the time of repurchase of any deficient Mortgage Loan, the
Purchaser and the Seller shall arrange for the reassignment of the repurchased
Mortgage Loan to the Seller and the delivery to the Seller of any documents held
by the Custodian relating to the repurchased Mortgage Loan. In the event the
Repurchase Price is deposited in the Custodial Account, the Seller shall,
simultaneously with such deposit, give written notice to the Purchaser that such
deposit has taken place. Upon such repurchase the related Final Mortgage Loan
Schedule shall be amended to reflect the withdrawal of the repurchased Mortgage
Loan from this Agreement.
As to any Deleted Mortgage Loan for which the Seller substitutes a
Qualified Substitute Mortgage Loan or Loans, the Seller shall effect such
substitution by delivering to the Purchaser for such Qualified Substitute
Mortgage Loan or Loans the Mortgage Loan Documents with the Mortgage Note
endorsed as required herein. The Seller shall deposit in the Custodial Account
the Monthly Payment less the Servicing Fee due on such Qualified Substitute
Mortgage Loan or Loans in the month following the date of such substitution.
Monthly Payments due with respect to Qualified Substitute Mortgage Loans in the
month of substitution will be retained by the Seller. For the month of
substitution, distributions to the Purchaser will include the Monthly Payment
due on such Deleted Mortgage Loan in the month of substitution, and the Seller
shall thereafter be entitled to retain all amounts subsequently received by the
Seller in respect of such Deleted Mortgage Loan. The Seller shall give written
notice to the Purchaser that such substitution has taken place and shall amend
the Final Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage
Loan from the terms of this Agreement and the substitution of the Qualified
Substitute Mortgage Loan. Upon such substitution, such Qualified Substitute
Mortgage Loan or Loans shall be subject to the terms of this Agreement in all
respects, and the Seller shall be deemed to have made with respect to such
Qualified Substitute Mortgage Loan or Loans, as of the date of substitution, the
covenants, representations and warranties set forth in Subsections 7.01 and
7.02.
-30-
For any month in which the Seller substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Seller
will determine the amount (if any) by which the aggregate principal balance of
all such Qualified Substitute Mortgage Loans as of the date of substitution is
less than the aggregate Stated Principal Balance of all such Deleted Mortgage
Loans (after application of scheduled principal payments due in the month of
substitution). An amount equal to the product of the amount of such shortfall
multiplied by the Repurchase Price shall be distributed by the Seller in the
month of substitution pursuant to the Servicing Addendum. Accordingly, on the
date of such substitution, the Seller will deposit from its own funds into the
Custodial Account an amount equal to such amount.
In addition to such cure, repurchase and substitution obligation, the
Seller shall indemnify the Purchaser and hold it harmless against any losses,
damages, penalties, fines, forfeitures, reasonable and necessary legal fees and
related costs, judgments, and other costs and expenses resulting from any claim,
demand, defense or assertion based on or grounded upon, or resulting from, a
breach of the Seller's representations and warranties contained in Subsections
7.01 and 7.02. It is understood and agreed that the obligations of the Seller
set forth in this Subsection 7.03 to cure, substitute for or repurchase a
defective Mortgage Loan and to indemnify the Purchaser as provided in this
Subsection 7.03 constitute the sole remedies of the Purchaser respecting a
breach of the foregoing representations and warranties.
Any cause of action against the Seller relating to or arising out of
the breach of any representations and warranties made in Subsections 7.01 or
7.02 shall accrue as to any Mortgage Loan upon (i) discovery of such breach by
the Purchaser or notice thereof by the Seller to the Purchaser, (ii) failure by
the Seller to cure such breach or repurchase such Mortgage Loan as specified
above, and (iii) demand upon the Seller by the Purchaser for compliance with the
relevant provisions of this Agreement.
Subsection 7.04. Repurchase of First Payment Default Mortgage Loans.
In the event that the Mortgagor does not make the first Monthly
Payment due on the Mortgage Loan following the related Closing Date, the Seller
shall repurchase the affected Mortgage Loans at an amount equal to the purchase
price percentage, as set forth in the related Trade Confirmation, times the
outstanding principal balance of any such Mortgage Loan, plus accrued net
interest thereon from the last date through which interest has been paid to the
date of repurchase, which shall be paid as provided for in Subsection 7.03.
Subsection 7.05. Representations and Warranties Respecting the
Purchaser.
The Purchaser represents, warrants and covenants to the Seller as of
the date hereof and as of each respective Closing Date or as of such date
specifically provided herein or in the applicable Warranty ▇▇▇▇ of Sale:
(i) The Purchaser has all requisite power and authority to enter into
and perform the obligations to be performed by it under this and any other
documents necessary to effectuate the purchase of the Mortgage Notes by the
Purchaser, and to consummate the transactions contemplated hereby and thereby,
including, without limitation, full authority to buy, assume, and accept from
the Seller the Mortgage Loans;
-31-
(ii) This Agreement constitutes the legal, valid and binding
obligation of the Purchaser enforceable against the Purchaser in accordance with
its terms (subject to bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditor's rights generally); and
(iii) Neither the execution, delivery and performance of this
Agreement nor the consummation of the transactions contemplated hereby is
prohibited by, or requires the Purchaser to obtain any consent, authorization,
approval or registration under any law, statute, rule, regulation, judgment,
order writ, injunction or decree which is binding upon Purchaser.
Subsection 7.06. Indemnification by the Purchaser.
The Purchaser shall indemnify the Seller and hold it harmless against
any losses, damages, penalties, fines, forfeitures, reasonable and necessary
legal fees and related costs, judgments, and other costs and expenses resulting
from any claim, demand, defense or assertion based on or grounded upon, or
resulting from, a breach of the Purchaser's representations and warranties
contained in Subsection 7.05 above.
SECTION 8. Closing. The closing for each Mortgage Loan Package shall
take place on the related Closing Date. At the Purchaser's option, 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 each Closing
Date shall be subject to each of the following conditions:
(a) all of the representations and warranties of the Seller under
this Agreement shall be 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 default under this
Agreement, the related Trade Confirmation or the related Warranty
▇▇▇▇ of Sale;
(b) the Initial Purchaser shall have received, or the Initial
Purchaser's attorneys shall have received in escrow, all Closing
Documents as specified in Section 9, 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;
(c) the Seller shall have delivered and released the Mortgage Loan
Documents to the Custodian;
(d) all other terms and conditions of this Agreement shall have been
complied with; and
(e) all of the representations and warranties of the Purchaser under
this Agreement shall be 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 default under this
Agreement.
-32-
Subject to the foregoing conditions, the Initial Purchaser shall pay
to the Seller on the related Closing Date the Purchase Price, plus accrued
interest pursuant to Section 4, by wire transfer of immediately available funds
to the account designated by the Seller.
SECTION 9. Closing Documents.
(a) On or before the Initial Closing Date, the Seller shall submit to
the Initial Purchaser fully executed originals of the following documents:
1. this Agreement, in four counterparts;
2. a Custodial Account Certification in the form attached as Exhibit
6 hereto;
3. as Escrow Account Certification in the form attached as Exhibit 7
hereto;
4. evidence of the existence of the Payment Clearing Account;
5. an Officer's Certificate, in the form of Exhibit 1 hereto,
including all attachments thereto;
6. an Opinion of Counsel to the Seller (who may be an employee of
the Seller), in the form of Exhibit 2 hereto; and
7. the Seller's underwriting guidelines.
(b) The Closing Documents for the Mortgage Loans to be purchased on
each Closing Date shall consist of fully executed originals of the following
documents:
1. the related Trade Confirmation;
2. the related Final Mortgage Loan Schedule;
3. an Officer's Certificate, in the form of Exhibit 1 hereto,
including all attachments thereto;
4. if requested by the Initial Purchaser, an Opinion of Counsel to
the Seller (who may be an employee of the Seller), in the form of
Exhibit 2 hereto;
5. a Security Release Certification, in the form of Exhibit 3 hereto
executed by any Person, as requested by the Initial Purchaser, if
any of the Mortgage Loans are subject to any security interest
immediately prior to the related Closing Date, pledge or
hypothecation for the benefit of such Person;
6. a certificate or other evidence of merger or change of name,
signed or stamped by the applicable regulatory authority, if any
of the Mortgage Loans were acquired by the Seller by merger or
acquired or originated by the Seller while conducting business
under a name other than its present name, if applicable; and
-33-
7. a Warranty ▇▇▇▇ of Sale in the form of Exhibit 4 hereto.
SECTION 10. Costs. The Purchaser shall pay any commissions due its
salesmen and the legal fees and expenses of its attorneys. All other costs and
expenses incurred in connection with the transfer and delivery of the Mortgage
Loans, including without limitation recording fees, fees for title policy
endorsements and continuations, fees for recording Assignments of Mortgage and
the Seller's attorney's fees, shall be paid by the Seller.
SECTION 11. Seller's Servicing Obligations. The Seller, as independent
contract servicer, shall service and administer the Mortgage Loans during the
Preliminary Servicing Period in accordance with the terms and provisions set
forth in the Servicing Addendum attached as Exhibit 8, which Servicing Addendum
is incorporated herein by reference.
SECTION 12. Removal of Mortgage Loans from Inclusion under This
Agreement Upon a Whole Loan Transfer or a Pass-Through Transfer on One or More
Reconstitution Dates.
The Seller and the Initial Purchaser agree that with respect to some
or all of the Mortgage Loans, the Initial Purchaser may effect no more than
three (3) of either:
(1) Whole Loan Transfers; and/or
(2) Pass-Through Transfers.
With respect to each Whole Loan Transfer or Pass-Through Transfer, as
the case may be, entered into by the Initial Purchaser, the Seller agrees:
(1) to cooperate reasonably with the Purchaser and any prospective
purchaser with respect to all reasonable requests and due
diligence procedures including participating in meetings with
rating agencies, bond insurers and such other parties as the
Purchaser shall designate and participating in meetings with
prospective purchasers of the Mortgage Loans or interests therein
and providing information reasonably requested by such
purchasers;
(2) to execute all Reconstitution Agreements provided that (i) such
Reconstitution Agreements are reasonably acceptable to the
Seller, and (ii) each of the Seller and the Purchaser is given an
opportunity to review and reasonably negotiate in good faith the
content of such documents not specifically referenced or provided
for herein, and (iii) such Reconstitution Agreements do not
materially diminish Seller' rights or materially increase the
Seller's responsibilities as stated in this Agreement;
(3) with respect to any Whole Loan Transfer or Pass-Through Transfer,
the Seller shall make the representations and warranties
regarding the Seller if such Whole Loan Transfer or Pass-Through
Transfer occurs within 12 months of the related Closing Date;
-34-
(4) to deliver to the Purchaser for inclusion in any prospectus or
other offering material such publicly available information
regarding the Seller, its financial condition and its most
recently publicly disclosed mortgage loan delinquency,
foreclosure and loss experience as shall be requested by the
Purchaser and any additional information which the Seller is
capable of providing without unreasonable effort or expense and
the Seller shall indemnify and hold harmless the Purchaser, each
affiliate designated by the Purchaser and each person who
controls the Purchaser or such affiliate from and against any and
all losses, claims, damages and liabilities arising from, with
respect to information provided by the Seller pursuant to this
Section 12, information on the Final Mortgage Loan Schedule and
information that is otherwise correctly derived from or based on
such Final Mortgage Loan Schedule (collectively, the "Seller
Information"), any untrue statement or alleged untrue statement
of a material fact contained in the Seller Information, or caused
by any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading; provided however, the Seller
shall not indemnify the Purchaser for any error, omission,
misstatement, or other errors in Seller Information that are
attributable to or caused by the Purchaser or its agents;
provided further, that the Purchaser, shall indemnify and hold
harmless the Seller, each affiliate designated by the Seller and
each person who controls the Seller or such affiliate from and
against any and all losses, claims, damages and liabilities
arising from, with respect to information that is not Seller
Information, any untrue statement or alleged untrue statement of
a material fact contained in any information in the related
offering documents, or caused by any omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;;
(5) to deliver to the Purchaser and to any Person designated by the
Purchaser, at the Purchaser's expense, such statements and audit
letters of reputable, certified public accountants pertaining to
information provided by the Seller pursuant to clause 4 above as
shall be reasonably requested by the Purchaser;
(6) to deliver to the Purchaser, and to any Person designated by the
Purchaser, such documents and Opinions of Counsel as are
customarily delivered by originators or servicers, as the case
may be, and reasonably determined by the Purchaser to be
necessary in connection with Whole Loan Transfers or Pass-Through
Transfers, as the case may be, such Opinions of Counsel for a
Pass-Through Transfer to be in the form reasonably acceptable to
the Purchaser, it being understood that the cost of any opinions
of outside special counsel that may be required for a Whole Loan
Transfer or Pass-
-35-
Through Transfer, as the case may be, shall be the responsibility
of the Purchaser;
(7) to negotiate and execute one or more subservicing agreements
between the Seller and any master servicer which is generally
considered to be a prudent master servicer in the secondary
mortgage market, designated by the Purchaser after reasonable
consultation with the Seller provided that the Seller is given a
reasonable opportunity to review and reasonably negotiate such
subservicing agreements and such subservicing agreements do not
materially diminish the Seller's rights or materially increase
the Seller's responsibilities as stated in this Agreement and/or
one or more custodial and servicing agreements among the
Purchaser, the Seller and a third party custodian/trustee which
is generally considered to be a prudent custodian/trustee in the
secondary mortgage market designated by the Purchaser after
reasonable consultation with the Seller, in either case for the
purpose of pooling the Mortgage Loans with other Mortgage Loans
for resale or securitization; and
(8) in connection with any securitization of any Mortgage Loans, to
execute a pooling and servicing agreement, provided that such
pooling and servicing agreement does not materially diminish the
Seller' rights or materially increase the Seller's
responsibilities as stated in this Agreement.
All Mortgage Loans not sold or transferred pursuant to a Whole Loan
Transfer or Pass-Through Transfer shall be subject to this Agreement and shall
continue to be serviced for the remainder of the Preliminary Servicing Period in
accordance with the terms of this Agreement and with respect thereto this
Agreement shall remain in full force and effect.
SECTION 13. The Seller.
Subsection 13.01. Additional Indemnification by the Seller.
In addition to the indemnification provided in Subsection 7.03, the
Seller shall indemnify the Purchaser and hold the Purchaser harmless against any
and all claims, losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments, and any other costs, fees and
expenses that the Purchaser may sustain in any way related to the failure of the
Seller to service and administer the Mortgage Loans in strict compliance with
the terms of this Agreement. Notwithstanding the foregoing, the Purchaser shall
indemnify the Seller and hold it harmless against any and all claims, losses,
damages, penalties, fines, forfeitures, reasonable and necessary legal fees and
related costs, judgments, and any other costs, fees and expenses that the Seller
may sustain in any way related to (a) actions or inactions of the Seller which
were taken or omitted upon the instruction or direction of the Purchaser, or (b)
the failure of the Purchaser to perform its obligations under this Agreement,
including the provisions of Subsection 13.03.
Subsection 13.02. Merger or Consolidation of the Seller.
-36-
The Seller shall keep in full force and effect its existence, rights
and franchises as a corporation under the laws of the state of its incorporation
except as permitted herein, and shall 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 any of the Mortgage Loans, and to enable the Seller to perform
its duties under this Agreement.
Any Person into which the Seller may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Seller shall be a party, or any Person succeeding to the business of the Seller,
shall be the successor of the Seller hereunder, without the execution or filing
of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding; provided, however, that the
successor or surviving Person shall be an institution whose deposits are insured
by the FDIC or a company whose business is the origination and servicing of
mortgage loans, shall be a FNMA or FHLMC approved seller/servicer and shall
satisfy any requirements of Section 16 with respect to the qualifications of a
successor to the Seller.
Subsection 13.03. Limitation on Liability of the Seller and Others.
Neither the Seller nor any of the officers, employees or agents of the
Seller shall be under any liability to the Purchaser for any action taken or for
refraining from the taking of any action in good faith in connection with the
servicing of the Mortgage Loans pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the Seller or
any such person against any breach of warranties or representations made herein,
or failure to perform its obligations in compliance with any standard of care
set forth in this Agreement, or any liability which would otherwise be imposed
by reason of any breach of the terms and conditions of this Agreement. The
Seller and any officer, employee or agent of the Seller may rely in good faith
on any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. To the extent the Purchaser
records with the recording office an Assignment of Mortgage which designates the
Purchaser as the holder of record of the Mortgage, the Purchaser agrees that it
shall (i) provide the Seller with immediate notice of any action with respect to
the Mortgage or the related Mortgaged Property and ensure that the proper
department or person at the Seller, designated in writing from the Seller to the
Purchaser, receives such notice; and (ii) immediately complete, sign and return
to the Seller any document reasonably requested by the Seller to comply with its
servicing obligations, including without limitation, any instrument required to
release the Mortgage upon payment in full of the obligation or take any other
action reasonably required by the Seller. The Purchaser further agrees that the
Seller shall have no liability for the Purchaser's failure to comply with
subsections (i) or (ii) in the foregoing sentence. The Seller shall not be under
any obligation to appear in, prosecute or defend any legal action which is not
incidental to its obligation to sell or duty to service the Mortgage Loans in
accordance with this Agreement and which in its opinion may result in its
incurring any expenses or liability; provided, however, that the Seller may,
with the consent of the Purchaser, undertake any such action which it may deem
necessary or desirable in respect to this Agreement and the rights and duties of
the parties hereto. In such event, the legal expenses and costs of such action
and any liability resulting therefrom shall be expenses, costs and liabilities
for which the Purchaser shall be liable, and the Seller shall be entitled to
reimbursement therefor from the Purchaser upon written demand except when such
-37-
expenses, costs and liabilities are subject to the Seller's indemnification
under Subsections 7.03 or 13.01.
Subsection 13.04. Seller Not to Resign.
The Seller shall not assign this Agreement or resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Seller and the Purchaser or upon the determination that its servicing duties
hereunder are no longer permissible under applicable law and such incapacity
cannot be cured by the Seller in which event the Seller may resign as servicer.
Any such determination permitting the resignation of the Seller as servicer
shall be evidenced by an Opinion of Counsel to such effect delivered to the
Purchaser which Opinion of Counsel shall be in form and substance reasonably
acceptable to the Purchaser and which shall be provided at the cost of the
Seller. No such resignation shall become effective until a successor shall have
assumed the Seller's responsibilities and obligations hereunder in the manner
provided in Section 16.
Subsection 13.05. No Transfer of Servicing.
The Seller acknowledges that the Purchaser has acted in reliance upon
the Seller'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 Seller 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 will not be unreasonably withheld. Nothing in this Agreement shall
prohibit or limit the right of the Seller to assign the servicing rights
hereunder to Countrywide Home Loans Servicing LP.
SECTION 14. Default.
Subsection 14.01. Events of Default.
In case one or more of the following Events of Default by the Seller
shall occur and be continuing, that is to say:
(i) any failure by the Seller to remit to the Purchaser any payment
required to be made under the terms of this Agreement which continues unremedied
for a period of two Business Day after the date upon which written notice of
such failure, requiring the same to be remedied, shall have been given to the
Seller by the Purchaser; or
(ii) failure on the part of the Seller duly to observe or perform in
any material respect any other of the covenants or agreements on the part of the
Seller set forth in this Agreement which continues unremedied for a period of
thirty (30) days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Seller 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,
-38-
bankruptcy, readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Seller and such decree or order shall have
remained in force undischarged or unstayed for a period of sixty (60) days; or
(iv) the Seller shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, bankruptcy, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
the Seller or relating to all or substantially all of its property; or
(v) the Seller shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
(vi) failure by the Seller to be in compliance with the "doing
business" or licensing laws of any jurisdiction where a Mortgaged Property is
located which continues unremedied for a period of thirty (30) days; or
(vii) the Seller ceases to meet the qualifications of either a FNMA or
FHLMC seller/servicer which continues unremedied for a period of thirty (30)
days; or
(viii) subject to the provisions of this Agreement, the Seller
attempts, without the consent of the Purchaser, to sell or otherwise dispose of
all or substantially all of its property or assets or to assign this Agreement
or the servicing responsibilities hereunder or to delegate its duties hereunder
or any portion thereof; or
(ix) failure by the Seller to duly perform, within the required time
period, its obligations under Sections 11.25, 11.26 and 11.27 of the Servicing
Addendum which failure 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 Seller by any party to this Agreement or
by any master servicer responsible for master servicing the Mortgage Loans
pursuant to a securitization of such Mortgage Loans;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, the Purchaser, by notice in writing to the Seller may, in
addition to whatever rights the Purchaser may have at law or equity to damages,
including injunctive relief and specific performance, terminate all the rights
and obligations of the Seller as servicer under this Agreement. On or after the
receipt by the Seller of such written notice, all authority and power of the
Seller to service the Mortgage Loans under this Agreement shall on the date set
forth in such notice pass to and be vested in the successor appointed pursuant
to Section 16.
Subsection 14.02. Waiver of Defaults.
The Purchaser may waive any default by the Seller in the performance
of its obligations hereunder and its consequences. Upon any such waiver of a
past default, such default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been
-39-
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.
SECTION 15. Termination. The respective obligations and
responsibilities of the Seller, as servicer, shall terminate upon the
distribution to the Purchaser of the final payment or liquidation with respect
to the last Mortgage Loan (or advances of same by the Seller) or the disposition
of all property acquired upon foreclosure or deed in lieu of foreclosure with
respect to the last Mortgage Loan and the remittance of all funds due hereunder
unless terminated with respect to all or a portion of the Mortgage Loans on an
earlier date at the option of the Purchaser pursuant to Section 14. Upon written
request from the Purchaser in connection with any such termination, the Seller
shall prepare, execute and deliver, any and all documents and other instruments,
place in the Purchaser's possession all Mortgage Files, and do or accomplish all
other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement or
assignment of the Mortgage Loans and related documents, or otherwise, at the
Seller's sole expense. The Seller agrees to cooperate with the Purchaser and
such successor in effecting the termination of the Seller's responsibilities and
rights hereunder as servicer, including, without limitation, the transfer to
such successor for administration by it of all cash amounts which shall at the
time be credited by the Seller to the Custodial Account or Escrow Account or
thereafter received with respect to the Mortgage Loans.
SECTION 16. Successor to the Seller. Prior to termination of the
Seller's responsibilities and duties under this Agreement pursuant to Section
12, 13, 14 or 15, the Purchaser shall (i) succeed to and assume all of the
Seller's responsibilities, rights, duties and obligations under this Agreement,
or (ii) appoint a successor which shall succeed to all rights and assume all of
the responsibilities, duties and liabilities of the Seller as servicer under
this Agreement. In connection with such appointment and assumption, the
Purchaser may make such arrangements for the compensation of such successor out
of payments on Mortgage Loans as it and such successor shall agree. In the event
that the Seller's duties, responsibilities and liabilities as servicer under
this Agreement should be terminated pursuant to the aforementioned Sections, the
Seller shall discharge such duties and responsibilities during the period from
the date it acquires knowledge of such termination until the effective date
thereof with the same degree of diligence and prudence which it is obligated to
exercise under this Agreement, and shall take no action whatsoever that might
impair or prejudice the rights or financial condition of the Purchaser or such
successor. The termination of the Seller as servicer pursuant to the
aforementioned Sections shall not become effective until a successor shall be
appointed pursuant to this Section 16 and shall in no event relieve the Seller
of the representations and warranties made pursuant to Subsections 7.01 and 7.02
and the remedies available to the Purchaser under Subsection 7.03 or 7.04, it
being understood and agreed that the provisions of such Subsections 7.01, 7.02,
7.03 and 7.04 shall be applicable to the Seller notwithstanding any such
resignation or termination of the Seller, or the termination of this Agreement.
Any successor appointed as provided herein shall execute, acknowledge
and deliver to the Seller and to the Purchaser an instrument accepting such
appointment, whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and liabilities of the
Seller, with like effect as if originally named as a party to this Agreement
provided, however, that such successor shall not assume, any and all liabilities
arising out of the Seller's acts as servicer. Any termination of the Seller as
servicer pursuant to
-40-
Section 12, 13, 14 or 15 shall not affect any claims that the Purchaser may have
against the Seller arising prior to any such termination or resignation or
remedies with respect to such claims.
If any of the Mortgage Loans are MERS Loans, in connection with the
termination or resignation of the Seller hereunder, either (i) the successor
shall represent and warrant that it is a member of MERS in good standing and
shall agree to comply in all material respects with the rules and procedures of
MERS in connection with the servicing of the Mortgage Loans that are registered
with MERS, or (ii) the Seller shall cooperate with the successor either (x) in
causing MERS to execute and deliver an assignment of Mortgage in recordable form
to transfer the Mortgage from MERS to the Purchaser and to execute and deliver
such other notices, documents and other instruments as may be necessary or
desirable to effect a transfer of such Loan or servicing of such Mortgage Loan
on the MERS System to the successor or (y) in causing MERS to designate on the
MERS System the successor as the servicer of such Mortgage Loan.
The Seller shall timely deliver to the successor the funds in the
Custodial Account and the Escrow Account and the Mortgage Files and related
documents and statements held by it hereunder and the Seller shall account for
all funds. The Seller shall execute and deliver such instruments and do such
other things all as may reasonably be required to more fully and definitely vest
and confirm in the successor all such rights, powers, duties, responsibilities,
obligations and liabilities of the Seller as servicer. The successor shall
reimburse the Seller for amounts the Seller actually expended as servicer
pursuant to this Agreement which would otherwise have been recovered by the
Seller pursuant to this Agreement but for the appointment of the successor
servicer.
SECTION 17. Financial Statements. The Seller understands that in
connection with the Purchaser's marketing of the Mortgage Loans, the Purchaser
shall make available to prospective purchasers financial statements of the
Seller and the Seller's parent company, if applicable, for the most recently
completed three fiscal years respecting which such statements are available. The
Seller also shall make available any comparable interim statements to the extent
any such statements have been prepared by the Seller (and are available upon
request to members or stockholders of the Seller or the public at large). The
Seller, if it has not already done so, agrees to furnish promptly to the
Purchaser copies of the statements specified above. The Seller also shall make
available information on its servicing performance with respect to mortgage
loans serviced for others, including delinquency ratios.
The Seller also agrees to allow reasonable access to knowledgeable
financial, accounting, origination and servicing officers of the Seller for the
purpose of answering questions asked by any prospective purchaser regarding
recent developments affecting the Seller, its loan origination or servicing
practices or the financial statements of the Seller.
SECTION 18. Mandatory Delivery. The sale and delivery of each Mortgage
Loan on or before the related Closing Date is mandatory from and after the date
of the execution of the related Trade Confirmation, it being specifically
understood and agreed that each Mortgage Loan is unique and identifiable on the
date hereof and that an award of money damages would be insufficient to
compensate the Initial Purchaser for the losses and damages incurred by the
Initial Purchaser (including damages to prospective purchasers of the Mortgage
-41-
Loans) in the event of the Seller's failure to deliver (i) each of the related
Mortgage Loans, (ii) one or more Qualified Substitute Mortgage Loans delivered
pursuant to Section 7, or (iii) one or more Mortgage Loans otherwise acceptable
to the Initial Purchaser on or before the related Closing Date. All rights and
remedies of the Purchaser under this Agreement are distinct from, and cumulative
with, any other rights or remedies under this Agreement or afforded by law or
equity and all such rights and remedies may be exercised concurrently,
independently or successively.
SECTION 19. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed, by
registered or certified mail, return receipt requested, or, if by other means,
when received by the other party at the address as follows:
(i) if to the Purchaser:
▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank, USA
4 World Financial Center,
9th floor New York, New
York 10080
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
(ii) if to the Seller:
Countrywide Home Loans, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇, EVP
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 20. Severability Clause. Any part, provision, representation
or warranty of this Agreement which is prohibited or which is held to be void or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any part,
provision, representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall
be ineffective, as to such jurisdiction, to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law which prohibits or renders void or unenforceable any
provision hereof. If the invalidity of any part, provision, representation or
warranty of this Agreement shall deprive any party of the economic benefit
intended to be conferred by this Agreement, the parties shall negotiate, in
good-faith, to develop a structure the
-42-
economic effect of which is nearly as possible the same as the economic effect
of this Agreement without regard to such invalidity.
SECTION 21. Counterparts. This 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.
SECTION 22. Governing Law. The Agreement shall be construed in accordance
with the laws of the State of New York without regard to any conflicts of law
provisions and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with the laws of the State of New York, except
to the extent preempted by Federal law.
SECTION 23. Intention of the Parties. It is the intention of the parties
that the Initial Purchaser is purchasing, and the Seller is selling, the
Mortgage Loans and not a debt instrument of the Seller or another security.
Accordingly, the parties hereto each intend to treat the transaction for Federal
income tax purposes as a sale by the Seller, and a purchase by the Purchaser, of
the Mortgage Loans. The Initial Purchaser shall have the right to review the
Mortgage Loans and the related Mortgage File to determine the characteristics of
the Mortgage Loans which shall affect the Federal income tax consequences of
owning the Mortgage Loans and the Seller shall cooperate with all reasonable
requests made by the Initial Purchaser in the course of such review.
SECTION 24. Successors and Assigns. This Agreement shall bind and inure to
the benefit of and be enforceable by the Seller and the Purchaser and the
respective successors and assigns of the Seller and the Purchaser. 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 the "Purchaser" hereunder unless such transferee shall agree in writing to be
bound by the terms of this Agreement and an original counterpart of the document
evidencing such agreement shall have been executed by the Purchaser and the
transferee and delivered to the Seller. Notwithstanding the foregoing, no
transfer shall be effective if such transfer would result in there being more
than three (3) "Purchasers" outstanding hereunder with respect to any Mortgage
Loan Package. This Agreement shall not be assigned, pledged or hypothecated by
the Seller to a third party without the consent of the Purchaser.
SECTION 25. Waivers. No term or provision of this 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.
SECTION 26. Exhibits. The exhibits to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this Agreement.
SECTION 27. Nonsolicitation. From and after the related Closing Date, the
Seller hereby agrees that the Seller will not take any action or permit or cause
any action to be taken by any of its agents or affiliates, or by any independent
contractors or independent mortgage brokerage companies on the Seller's behalf,
to personally, by telephone or mail, solicit
-43-
the Mortgagor under any Mortgage Loan for the purpose of refinancing such
Mortgage Loan; provided, that the Seller may solicit any Mortgagor for whom the
Seller or its affiliates have received a request for verification of mortgage, a
request for demand for payoff, a Mortgagor-initiated written or verbal
communication indicating a desire to prepay the related Mortgage Loan, or the
Mortgagor initiates a title search, provided further, it is understood and
agreed that promotions undertaken by the Seller or any of its affiliates which
(i) concern optional insurance products or other additional products or (ii) are
directed to the general public at large, including, without limitation, mass
mailings based on commercially acquired mailing lists, newspaper, radio and
television advertisements shall not constitute solicitation nor is the Seller
prohibited from responding to unsolicited requests or inquiries made by a
Mortgagor or an agent of a Mortgagor. Notwithstanding the foregoing, the
following solicitations, if undertaken by the Seller or any affiliate of the
Seller, shall not be prohibited: (i) solicitations that are directed to the
general public at large, including, without limitation, mass mailings based on
commercially acquired mailing lists and newspaper, radio, television and other
mass media advertisements and (ii) borrower messages included on, and statement
inserts provided with, the monthly statements sent to mortgagors; provided,
however, that similar messages and inserts are sent to the borrowers of other
mortgage loans serviced by the Seller or any affiliate of the Seller.
SECTION 28. General Interpretive Principles. For purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(a) 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;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting
principles;
(c) 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;
(d) 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;
(e) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
SECTION 29. Reproduction of Documents. This Agreement and all documents
relating thereto, including, without limitation, (a) consents, waivers and
modifications which may hereafter be executed, (b) documents received by any
party at the closing, and (c) 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
-44-
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 30. Further Agreements. The Seller and the Purchaser each agree to
execute and deliver to the other such reasonable and appropriate additional
documents, instruments or agreements as may be necessary or appropriate to
effectuate the purposes of this Agreement.
SECTION 31. Protection of Confidential Information. The Seller will keep
confidential and will not, without the Purchaser's written consent, divulge to
any party the Purchase Price of the Mortgage Loans, except to the extent that it
is appropriate to do so in working with legal counsel, auditors, taxing
authorities or other governmental agencies.
SECTION 32. Survival. The Seller agrees that the representations,
warranties and agreements made by the Seller herein and in any certificate or
other instrument delivered pursuant hereto shall be deemed to be relied upon by
the Purchaser, notwithstanding any investigation heretofore or hereafter made by
the Purchaser or on the Purchaser's behalf, and that the representations,
warranties and agreements made by the Seller herein or in any such certificate
or other instrument shall survive the delivery and payment for the Mortgage
Loans for each Transaction.
SECTION 33. Conflicts. The Purchaser and the Seller agree that in the event
of a conflict between this Agreement and the related Trade Confirmation, the
related Trade Confirmation shall control. In the event of a breach of any term
in the related Trade Confirmation the Purchaser and the Seller shall be entitled
to all remedies set forth in this Agreement.
-45-
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their names to
be signed hereto by their respective officers thereunto duly authorized as of
the date first above written.
COUNTRYWIDE HOME LOANS, INC.
(Seller)
By:
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Executive Vice President
▇▇▇▇▇▇▇ ▇▇▇▇▇ BANK, USA
(Initial Purchaser)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
46
EXHIBIT 1
SELLER'S OFFICER'S CERTIFICATE
I, ______________, hereby certify that I am the duly elected ______ of
Countrywide Home Loans, Inc., a ___________ (the "Seller"), and further certify,
on behalf of the Seller as follows:
1. Attached hereto as Attachment I are a true and correct copy of the
Certificate of Incorporation and by-laws of the Seller as are in full force
and effect on the date hereof.
2. No proceedings looking toward merger, liquidation, dissolution or
bankruptcy of the Seller are pending or contemplated.
3. Each person who, as an officer or attorney-in-fact of the Seller,
signed (a) the Master Mortgage Loan Purchase and Servicing Agreement (the
"Purchase Agreement"), dated as of November 1, 2004, by and between the
Seller and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank, USA (the "Purchaser"); (b) the Trade
Confirmation, dated ___________ 2004, between the Seller and the Purchaser
(the "Trade Confirmation"); and (c) any other document delivered prior
hereto or on the date hereof in connection with the sale and servicing of
the Mortgage Loans in accordance with the Purchase Agreement and the Trade
Confirmation was, at the respective times of such signing and delivery, and
is as of the date hereof, duly elected or appointed, qualified and acting
as such officer or attorney-in-fact, and the signatures of such persons
appearing on such documents are their genuine signatures.
4. Attached hereto as Attachment II is a true and correct copy of the
resolutions duly adopted by the board of directors of the Seller on
___________, 2004 (the "Resolutions") with respect to the authorization and
approval of the sale and servicing of the Mortgage Loans; said Resolutions
have not been amended, modified, annulled or revoked and are in full force
and effect on the date hereof.
5. Attached hereto as Attachment III is a Certificate of Good Standing
of the Seller dated ______________, 2004. No event has occurred since
________________, 2004 which has affected the good standing of the Seller
under the laws of the State of Utah.
6. All of the representations and warranties of the Seller contained
in Subsections 7.01 and 7.02 of the Purchase Agreement were true and
correct in all material respects as of the date of the Purchase Agreement
and are true and correct in all material respects as of the date hereof.
7. The Seller has performed all of its duties and has satisfied all
the material conditions on its part to be performed or satisfied prior to
the related Closing Date pursuant to the Purchase Agreement and the related
Trade Confirmation.
All capitalized terms used herein and not otherwise defined shall have the
meaning assigned to them in the Purchase Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal of
the Seller.
Dated:
------------------------------
Seal]
COUNTRYWIDE HOME LOANS, INC.
(Seller)
By:
------------------------------------
Name:
----------------------------------
Title: [ ]
-------------------------------
I, __________, Secretary of the Seller, hereby certify that ____________ is
the duly elected, qualified and acting Vice President of the Seller and that the
signature appearing above is genuine.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:
------------------------------
Seal]
COUNTRYWIDE HOME LOANS, INC.
(Seller)
By:
------------------------------------
Name:
----------------------------------
Title: [Assistant] Secretary
E-1-2
EXHIBIT 2
[FORM OF OPINION OF COUNSEL TO THE SELLER]
_____________________
(Date)
▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank, USA
4 World Financial ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Master Mortgage Loan Purchase and Servicing Agreement, dated as of
November 1, 2004
Gentlemen:
I have acted as counsel to Countrywide Home Loans, Inc., a ___________ (the
"Seller"), in connection with the sale of certain mortgage loans by the Seller
to ▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank, USA (the "Purchaser") pursuant to the Master Mortgage
Loan Purchase and Servicing Agreement, dated as of November 1, 2004, between the
Seller and the Purchaser (the "Purchase Agreement") [and the Trade Confirmation,
dated __________, 2004, between the Seller and the Purchaser (the "Trade
Confirmation")]. Capitalized terms not otherwise defined herein have the
meanings set forth in the Purchase Agreement.
I connection with rendering this opinion letter, I, or attorneys working
under my direction, have examined, among other things, originals, certified
copies or copies otherwise identified to my satisfaction as being true copies of
the following:
A. The Purchase Agreement;
B. [The Trade Confirmation;]
C. The Seller's Certificate of Incorporation and by-laws, as amended to
date; and
D Resolutions adopted by the Board of Directors of the Seller with specific
reference to actions relating to the transactions covered by this opinion
(the "Board Resolutions").
For the purpose of rendering this opinion, I have made such documentary,
factual and legal examinations as I deemed necessary under the circumstances. As
to factual matters, I have relied upon statements, certificates and other
assurances of public officials and of officers and other representatives of the
Seller, and upon such other certificates as I deemed appropriate, which factual
matters have not been independently established or verified by me. I have also
assumed, among other things, the genuineness of all signatures, the legal
capacity of all natural persons, the authenticity of all documents submitted to
me as originals, and the conformity to
original documents of all documents submitted to me as copies and the
authenticity of the originals of such copied documents.
On the basis of and subject to the foregoing examination, and in reliance
thereon, and subject to the assumptions, qualifications, exceptions and
limitations expressed herein, I am of the opinion that:
1. The Seller has been duly incorporated and is validly existing and in
good standing under the laws of the State of Utah with corporate power and
authority to own its properties and conduct its business as presently conducted
by it. The Seller has the corporate power and authority to service the Mortgage
Loans, and to execute, deliver, and perform its obligations under the Purchase
Agreement [and the Trade Confirmation] (sometimes collectively, the
"Agreements").
2. The Purchase Agreement [and the Trade Confirmation] have been duly and
validly authorized, executed and delivered by the Seller.
3. The Purchase Agreement [and the Trade Confirmation] constitute valid,
legal and binding obligations of the Seller, enforceable against the Seller in
accordance with their respective terms.
4. No consent, approval, authorization or order of any state or federal
court or government agency or body is required for the execution, delivery and
performance by the Seller of the Purchase Agreement [and the Trade
Confirmation], or the consummation of the transactions contemplated by the
Purchase Agreement [and the Trade Confirmation], except for those consents,
approvals, authorizations or orders which previously have been obtained.
5. Neither the servicing of the Mortgage Loans by the Seller as provided in
the Purchase Agreement [and the Trade Confirmation,] nor the fulfillment of the
terms of or the consummation of any other transactions contemplated in the
Purchase Agreement [and the Trade Confirmation] will result in a breach of any
term or provision of the [certificate of incorporation or by-laws][certificate
of limited partnership or limited partnership agreement] of the Seller, or, to
the best of my knowledge, will conflict with, result in a breach or violation
of, or constitute a default under, (i) the terms of any indenture or other
agreement or instrument known to me to which the Seller is a party or by which
it is bound, (ii) any State of Utah or federal statute or regulation applicable
to the Seller, or (iii) any order of any State of Utah or federal court,
regulatory body, administrative agency or governmental body having jurisdiction
over the Seller, except in any such case where the default, breach or violation
would not have a material adverse effect on the Seller or its ability to perform
its obligations under the Purchase Agreement.
6. There is no action, suit, proceeding or investigation pending or, to the
best of my knowledge, threatened against the Seller which, in my judgment,
either in any one instance or in the aggregate, would draw into question the
validity of the Purchase Agreement or which would be likely to impair materially
the ability of the Seller to perform under the terms of the Purchase Agreement.
E-2-2
7. The sale of each Mortgage Note and Mortgage as and in the manner
contemplated by the Purchase Agreement is sufficient fully to transfer to the
Purchaser all right, title and interest of the Seller thereto as noteholder and
mortgagee.
8. The Assignments of Mortgage are in recordable form and upon completion
will be acceptable for recording under the laws of the State of Utah. When
endorsed, as provided in the Purchase Agreement, the Mortgage Notes will be duly
endorsed under Utah law.
The opinions above are subject to the following additional assumptions,
exceptions, qualifications and limitations:
A. I have assumed that all parties to the Agreements other than the Seller
have all requisite power and authority to execute, deliver and perform their
respective obligations under each of the Agreements, and that the Agreements
have been duly authorized by all necessary corporate action on the part of such
parties, have been executed and delivered by such parties and constitute the
legal, valid and binding obligations of such parties.
B. My opinion expressed in paragraphs 3 and 7 above is subject to the
qualifications that (i) the enforceability of the Agreements may be limited by
the effect of laws relating to (1) bankruptcy, reorganization, insolvency,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, including, without limitation, the effect of
statutory or other laws regarding fraudulent conveyances or preferential
transfers, and (2) general principles of equity upon the specific enforceability
of any of the remedies, covenants or other provisions of the Agreements and upon
the availability of injunctive relief or other equitable remedies and the
application of principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law) as such principles relate to,
limit or affect the enforcement of creditors' rights generally and the
discretion of the court before which any proceeding for such enforcement may be
brought; and (ii) I express no opinion herein with respect to the validity,
legality, binding effect or enforceability of (a) provisions for indemnification
in the Agreements to the extent such provisions may be held to be unenforceable
as contrary to public policy or (b) Section 18 of the Purchase Agreement.
C. I have assumed, without independent check or certification, that there
are no agreements or understandings among the Seller, the Purchaser and any
other party which would expand, modify or otherwise affect the terms of the
documents described herein or the respective rights or obligations of the
parties thereunder.
I am admitted to practice in the State of Utah, and I render no opinion
herein as to matters involving the laws of any jurisdiction other than the State
of Utah and the Federal laws of the United States of America.
Very truly yours
E-2-3
EXHIBIT 3
SECURITY RELEASE CERTIFICATION
I. Release of Security Interest
____________________, hereby relinquishes any and all right, title and
interest it may have in and to the Mortgage Loans described in Exhibit A
attached hereto upon purchase thereof by ▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank, USA from the Seller
named below pursuant to that certain Master Mortgage Loan Purchase and Servicing
Agreement, dated as of November 1, 2004, as of the date and time of receipt by
_________________________ of $_______________ for such Mortgage Loans (the "Date
and Time of Sale"), and certifies that all notes, mortgages, assignments and
other documents in its possession relating to such Mortgage Loans have been
delivered and released to the Seller named below or its designees as of the Date
and Time of Sale.
Name and Address of Financial Institution
-------------------------------------
(Name)
-------------------------------------
(Address)
By:
---------------------------------
II. Certification of Release
The Seller named below hereby certifies to ▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank, USA
that, as of the Date and Time of Sale of the above mentioned Mortgage Loans to
▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank, USA, the security interests in the Mortgage Loans released
by the above named corporation comprise all security interests relating to or
affecting any and all such Mortgage Loans. The Seller warrants that, as of such
time, there are and will be no other security interests affecting any or all of
such Mortgage Loans.
COUNTRYWIDE HOME LOANS, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT 4
WARRANTY ▇▇▇▇ OF SALE
On this _______ day of ________, 2004, Countrywide Home Loans, Inc.
("Seller") as the Seller under that certain Master Mortgage Loan Purchase and
Servicing Agreement, dated as of November 1, 2004 (the "Agreement") does hereby
sell, transfer, assign, set over and convey to ▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank, USA as
Purchaser under the Agreement, without recourse, but subject to the terms of the
Agreement, all rights, title and interest of the Seller in and to the Mortgage
Loans listed on the Final Mortgage Loan Schedule attached hereto, together with
the related Mortgage Files and all rights and obligations arising under the
documents contained therein. Pursuant to Subsection 6.03 of the Agreement, the
Seller has delivered to the Custodian the documents for each Mortgage Loan to be
purchased as set forth in the Agreement. The contents of each related Servicing
File required to be retained by the Seller to service the Mortgage Loans
pursuant to the Agreement and thus not delivered to the Purchaser are and shall
be held in trust by the Seller for the benefit of the Purchaser as the owner
thereof. The Seller's possession of any portion of each such Servicing File is
at the will of the Purchaser for the sole purpose of facilitating servicing of
the related Mortgage Loan pursuant to the Agreement, and such retention and
possession by the Seller shall be in a custodial capacity only. The ownership of
each Mortgage Note, Mortgage, and the contents of the Mortgage File and
Servicing File is vested in the Purchaser and the ownership of all records and
documents with respect to the related Mortgage Loan prepared by or which come
into the possession of the Seller shall immediately vest in the Purchaser and
shall be retained and maintained, in trust, by the Seller at the will of the
Purchaser in such custodial capacity only.
The Seller confirms to the Purchaser that the representation and
warranties set forth in Subsections 7.01 and 7.02 of the Agreement and in the
Trade Confirmation are true and correct as of the date hereof, and that all
statements made in the Seller's Officer's Certificates and all Attachments
thereto remain complete, true and correct in all respects as of the date hereof,
and makes the following additional representations and warranties to the
Purchaser, which additional representations and warranties are hereby
incorporated into Subsection 7.02 of the Agreement:
(1) When measured by aggregate Stated Principal Balance as of the
Cut-off Date, no more than ____________ percent (__%) of the
Mortgage Loans are Rate/Term Refinancings and no more than
_____________ percent (__%) of the Mortgage Loans are Cash-Out
Refinancings.
(2) When measured by aggregate Stated Principal Balance as of the
Cut-off Date, (i) no less than ______________ percent (__%) of
the Mortgage Loans are secured by detached one-family dwellings
or detached one-family dwellings in planned unit developments,
(ii) no more than ____________ percent (__%) of the Mortgage
Loans are secured by attached one-family dwellings in a planned
unit development, (iii) no more than ______ percent (__%) of the
Mortgage Loans are secured by individual condominium units, and
(iv) no more than _____ percent (__%)
of the Mortgage Loans are secured by detached two-to-four family
dwellings;
(3) When measured by aggregate Stated Principal Balance as of the
Cut-off Date, no more than ______ percent (__%) of the Mortgage
Loans had Loan-to-Value Ratio at origination in excess of 80%,
and the weighted average Loan-to-Value Ratio for all Mortgage
Loans at origination did not exceed __%;
(4) With respect to all of the Mortgage Loans, at the time that the
Mortgage Loan was made, the Mortgagor represented that the
Mortgagor would occupy the Mortgaged Property as the Mortgagor's
primary residence;
(5) No Mortgage Loan had a principal balance at origination in excess
of $______ and the average principal balance of the Mortgage
Loans on the Cut-off Date was not in excess of $______. When
measured by the aggregate Stated Principal Balance as of the
Cut-off Date, no more than _____ percent __% of the Mortgage
Loans had a principal balance at origination in excess of
$_________;
(6) Each Mortgage Loan has a Mortgage Interest Rate of at least _____
percent ____%. The Mortgage Loans have a weighted average
Mortgage Interest Rate of ______% as of the Cut-off Date;
(7) All of the Mortgage Loans had an original term to maturity of 30
years; and
(8) When measured by aggregate Closing Date Principal Balance as of
the Cut-off Date, no more than five percent (5%) of the Mortgage
Loans are secured by Mortgaged Properties located in the same
United States postal zip code.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Agreement.
COUNTRYWIDE HOME LOANS, INC.
(Seller)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT 5
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, which shall be available for inspection by the
Purchaser and which shall be retained by the Seller or delivered to the
Custodian:
(1) Mortgage Loan Documents.
(2) Residential loan application.
(3) Mortgage Loan closing statement.
(4) Verification of employment and income.
(5) Verification of acceptable evidence of source and amount of
downpayment.
(6) Credit report on Mortgagor.
(7) Residential appraisal report.
(8) Photograph of the Mortgaged Property.
(9) Survey of the Mortgaged Property.
(10) Copy of each instrument necessary to complete identification of
any exception set forth in the exception schedule in the title
policy, i.e., map or plat, restrictions, easements, sewer
agreements, home association declarations, etc.
(11) All required disclosure statements and statement of Mortgagor
confirming receipt thereof.
(12) If available, termite report, structural engineer's report, water
potability and septic certification.
(13) Sales Contract, if applicable.
(14) Hazard insurance policy.
(15) Tax receipts, insurance premium receipts, ledger sheets, payment
history from date of origination, insurance claim files,
correspondence, current and historical computerized data files,
and all other processing, underwriting and closing papers and
records which are customarily contained in a mortgage loan file
and which are required to document the Mortgage Loan or to
service the Mortgage Loan.
(16) Amortization schedule, if available.
E-5-2
EXHIBIT 6
CUSTODIAL ACCOUNT CERTIFICATION
____________________ __, 2004
To: ___________________________
___________________________
___________________________
(the "Depository")
As Seller under the Master Mortgage Loan Purchase and Servicing
Agreement, (the "Agreement") dated as of November 1, 2004, we hereby authorize
and request you to establish an account, as a Custodial Account, to be
designated as "Countrywide Home Loans, Inc., as Servicer, in trust for ▇▇▇▇▇▇▇
▇▇▇▇▇ Bank, USA" All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Seller in accordance with the Agreement. You
may refuse any deposit which would result in violation of the requirement that
the account be fully insured as described below. This letter is submitted to you
in duplicate. Please execute and return one original to us.
COUNTRYWIDE HOME LOANS, INC.
(Seller)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
The undersigned, as Depository, hereby certifies that the
above-described account has been established as a Custodial Account pursuant to
the Agreement 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 by
the Federal Deposit Insurance Corporation through the Bank Insurance Fund
("BIF") or the Savings Association Insurance Fund ("SAIF").
----------------------------------------
Depository
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
EXHIBIT 7
ESCROW ACCOUNT CERTIFICATION
__________ __, 2004
To: ___________________________
___________________________
___________________________
(the "Depository")
As Seller under the Master Mortgage Loan Purchase and Servicing
Agreement, (the "Agreement") dated as of November 1, 2004, we hereby authorize
and request you to establish an account, as an Escrow Account, to be designated
as "Countrywide Home Loans, Inc., in trust for the Purchaser and various
Mortgagors, Fixed and Adjustable Rate Mortgage Loans." All deposits in the
account shall be subject to withdrawal therefrom by order signed by the Seller
in accordance with the Agreement. You may refuse any deposit which would result
in violation of the requirement that the account be fully insured as described
below. This letter is submitted to you in duplicate. Please execute and return
one original to us.
COUNTRYWIDE HOME LOANS, INC.
(Seller)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
The undersigned, as Depository, hereby certifies that the
above-described account has been established as an Escrow Account pursuant to
the Agreement 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 by
the Federal Deposit Insurance Corporation through the Bank Insurance Fund
("BIF") or the Savings Association Insurance Fund ("SAIF").
----------------------------------------
Depository
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
EXHIBIT 8
SERVICING ADDENDUM
Section 11.01. Seller to Act as Servicer.
The Seller, as independent contract servicer, shall service and
administer the Mortgage Loans in accordance with this Agreement and shall have
full power and authority, acting alone, to do or cause to be done any and all
things in connection with such servicing and administration which the Seller may
deem necessary or desirable and consistent with the terms of this Agreement.
Consistent with the terms of this Agreement, the Seller may waive,
modify or vary any term of any Mortgage Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Mortgagor if in the Seller's reasonable and prudent determination such waiver,
modification, postponement or indulgence is not materially adverse to the
Purchaser; provided, however, that the Seller shall not, without the prior
written consent of the Purchaser, permit any modification with respect to any
Mortgage Loan that would change the Mortgage Interest Rate, defer or forgive the
payment thereof or of any principal or interest payments, reduce the outstanding
principal amount (except for actual payments of principal), make additional
advances of additional principal or extend the final maturity date on such
Mortgage Loan. Without limiting the generality of the foregoing, the Seller
shall continue, and is hereby authorized and empowered, to execute and deliver
on behalf of itself, and the Purchaser, all instruments of satisfaction or
cancellation, or of partial or full release, discharge and all other comparable
instruments, with respect to the Mortgage Loans and with respect to the
Mortgaged Property. If reasonably required by the Seller, the Purchaser shall
furnish the Seller with any powers of attorney and other documents necessary or
appropriate to enable the Seller to carry out its servicing and administrative
duties under this Agreement.
In servicing and administering the Mortgage Loans, the Seller shall
employ procedures including collection procedures and exercise the same care
that it customarily employs and exercises in servicing and administering
mortgage loans for its own account giving due consideration to accepted mortgage
servicing practices of prudent lending institutions and the Purchaser's reliance
on the Seller.
Section 11.02. Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest on
all Mortgage Loans serviced by Seller are paid in full, the Seller shall proceed
diligently to collect all payments due under each Mortgage Loan serviced by
Seller when the same shall become due and payable and shall, to the extent such
procedures shall be consistent with this Agreement and the terms and provisions
of any related Primary Insurance Policy, follow such collection procedures as it
follows with respect to mortgage loans comparable to the Mortgage Loans and held
for its own account. Further, the Seller shall take special care in ascertaining
and estimating annual ground rents, taxes, assessments, water rates, fire and
hazard insurance premiums, mortgage insurance premiums, and all other charges
that, as provided in the Mortgage, will
E-8-1
become due and payable to the end that the installments payable by the
Mortgagors will be sufficient to pay such charges as and when they become due
and payable.
Section 11.03. Realization Upon Defaulted Mortgage Loans.
(a) The Seller shall use its best efforts, consistent with the
procedures that the Seller would use in servicing loans for its own account, to
foreclose upon or otherwise comparably convert the ownership of such Mortgaged
Properties 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 11.01. The Seller shall use its best efforts to realize upon defaulted
Mortgage Loans in such a manner as will maximize the receipt of principal and
interest by the Purchaser, taking into account, among other things, the timing
of foreclosure proceedings. The foregoing is subject to the provisions that, in
any case in which Mortgaged Property shall have suffered damage, the Seller
shall not be required to expend its own funds toward the restoration of such
property in excess of $2,000 unless it shall determine in its discretion (i)
that such restoration will increase the proceeds of liquidation of the related
Mortgage Loan to Purchaser after reimbursement to itself for such expenses, and
(ii) that such expenses will be recoverable by the Seller through Insurance
Proceeds or Liquidation Proceeds from the related Mortgaged Property, as
contemplated in Section 11.06. In the event that any payment due under any
Mortgage Loan is not paid when the same becomes due and payable, or in the event
the Mortgagor fails to perform any other covenant or obligation under the
Mortgage Loan and such failure continues beyond any applicable grace period, the
Seller shall take such action as it shall deem to be in the best interest of the
Purchaser. In the event that any payment due under any Mortgage Loan remains
delinquent for a period of ninety (90) days or more, the Seller shall commence
foreclosure proceedings. The Seller shall notify the Purchaser in writing of the
commencement of foreclosure proceedings. In such connection, the Seller shall be
responsible for all costs and expenses incurred by it in any such proceedings;
provided, however, that it shall be entitled to reimbursement thereof from the
related Mortgaged Property, as contemplated in Section 11.06.
(b) Notwithstanding the foregoing provisions of this Section 11.03,
with respect to any Mortgage Loan as to which the Seller has received actual
notice of, or has actual knowledge of, the presence of any toxic or hazardous
substance on the related Mortgaged Property the Seller shall not either (i)
obtain title to such Mortgaged Property as a result of or in lieu of foreclosure
or otherwise, or (ii) otherwise acquire possession of, or take any other action,
with respect to, such Mortgaged Property if, as a result of any such action, the
Purchaser would be considered to hold title to, to be a mortgagee-in-possession
of, or to be an owner or operator of such Mortgaged Property within the meaning
of the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended from time to time, or any comparable law, unless the Seller has
also previously determined, based on its reasonable judgment and a prudent
report prepared by a Person who regularly conducts environmental audits using
customary industry standards, that:
(1) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic
interest of the Purchaser to take such actions as are necessary to
bring the Mortgaged Property into compliance therewith; and
E-8-2
(2) there are no circumstances present at such Mortgaged Property
relating to the use, management or disposal of any hazardous
substances, hazardous materials, hazardous wastes, or petroleum-based
materials for which investigation, testing, monitoring, containment,
clean-up or remediation could be required under any federal, state or
local law or regulation, or that if any such materials are present for
which such action could be required, that it would be in the best
economic interest of the Purchaser to take such actions with respect
to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by this
Section 11.03 shall be advanced by the Seller, subject to the Seller's right to
be reimbursed therefor from the Custodial Account as provided in Section 11.06.
If the Seller determines, as described above, that it is in the best
economic interest of the Purchaser to take such actions as are necessary to
bring any such Mortgaged Property into compliance with applicable environmental
laws, or to take such action with respect to the containment, clean-up or
remediation of hazardous substances, hazardous materials, hazardous wastes, or
petroleum-based materials affecting any such Mortgaged Property, then the Seller
shall take such action as it deems to be in the best economic interest of the
Purchaser. The cost of any such compliance, containment, cleanup or remediation
shall be advanced by the Seller, subject to the Seller's right to be reimbursed
therefor from the Custodial Account as provided in Section 11.06.
(c) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds in respect of any Mortgage Loan, will
be applied in the following order of priority: first, to reimburse the Seller
for any related unreimbursed Servicing Advances, pursuant to Section 11.06;
second, to accrued and unpaid interest on the Mortgage Loan, to the date of the
Final Recovery Determination, or to the Due Date prior to the Remittance Date on
which such amounts are to be distributed if not in connection with a Final
Recovery Determination; and third, as a recovery of principal of the Mortgage
Loan. If the amount of the recovery so allocated to interest is less than the
full amount of accrued and unpaid interest due on such Mortgage Loan, the amount
of such recovery will be allocated by the Seller as follows: first, to unpaid
Servicing Fees; and second, to the balance of the interest then due and owing.
Section 11.04. Establishment of Payment Clearing Accounts.
(a) The Seller shall maintain one or more Payment Clearing Accounts
for the deposit of all funds collected in connection with the Mortgage Loans.
The Seller shall deposit in the Payment Clearing Account prior to the opening of
business on the Business Day following the day on which such amounts are
received by the Seller, all payments and collections received in connection with
the Mortgage Loans subsequent to the Cut-off Date or prior to the Cut-off Date
but allocable to a period subsequent to such date. The funds deposited and held
in the Payment Clearing Account may be commingled with other funds, including
the proceeds of other mortgage loans or funds serviced for other investors or
for the Seller's own portfolio. The Seller shall transfer funds deposited into
the Payment Clearing Account to the Custodial Accounts and Escrow Accounts, as
provided in Sections 11.05 and 11.07, within two (2) Business Days.
E-8-3
The Seller's account agreement for the Payment Clearing Account shall
provide that such account is a special deposit, required to be segregated and
held by the depository institution maintaining such account in a fiduciary
capacity, separate and apart from the institution's own funds and general assets
and that the account shall not be held in any capacity that would create a
debtor-creditor relationship between the institution and the Seller or the
Purchaser. At all times, Purchaser shall be the sole beneficial owner of the
funds in the Payment Clearing Accounts received in connection with the Mortgage
Loans and Seller's possession or control of any such funds shall be solely in
Seller's capacity as collecting agent for Purchaser.
Section 11.05 Establishment of Custodial Accounts; Deposits in
Custodial Accounts.
(a) The Seller shall establish and maintain one or more Custodial
Accounts for the deposit of funds specified in Section 11.05(b) collected
in connection with the Mortgage Loans.
(b) The Seller shall transfer the following funds into the applicable
Custodial Account within two (2) Business Days of receipt:
(i) all payments on account of principal on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts required to be
deposited pursuant to Sections 11.11 and 11.12, 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 the Seller's normal servicing procedures, the loan documents or
applicable law;
(v) all Condemnation Proceeds affecting any Mortgaged Property
which are not released to the Mortgagor in accordance with the
Seller's normal servicing procedures, the loan documents or applicable
law;
(vi) all Monthly Advances;
(vii) all proceeds of any Mortgage Loan repurchased in accordance
with Subsections 7.03 and 7.04 and all amounts required to be
deposited by the Seller in connection with shortfalls in principal
amount of Qualified Substitute Mortgage Loans pursuant to Subsection
7.03;
(viii) any amounts required to be deposited by the Seller
pursuant to Section 11.12 in connection with the deductible clause in
any blanket hazard insurance policy. Such deposit shall be made from
the Seller's own funds, without reimbursement therefor;
E-8-4
(ix) any amounts required to be deposited by the Seller in
connection with any REO Property pursuant to Section 11.14;
(x) any amounts required to be deposited in the Custodial Account
pursuant to Sections 11.20 or 11.21; and
(xi) with respect to each Principal Prepayment, an amount (to be
paid by the Seller out of its own funds without reimbursement
therefor) which, when added to all amounts allocable to interest
received in connection with such Principal Prepayment, equals one
month's interest on the amount of principal so prepaid at the Mortgage
Interest Rate.
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,
Prepayment Charges, assumption fees and similar fees and charges, to the extent
permitted by Section 11.01, need not be deposited by the Seller in the Custodial
Account. Each Custodial Account shall be an Eligible Account. The Seller shall
give notice to the Purchaser of the location of the Custodial Account when
established and prior to any change thereto.
Any amounts held in the Custodial Account may be, but are not required
to be, invested by the Seller. Any such investment by the Seller must be in
Eligible Investments. Any interest or other income on Eligible Investments shall
accrue to the benefit of the Seller and the Seller shall be entitled to retain
and withdraw such funds from the Custodial Account pursuant to Section 11.06.
Other than such interest or other income received on Eligible Investments, no
other amounts may be commingled in the Custodial Account. The Seller shall
promptly deposit in the Custodial Account from its own funds, without any right
of reimbursement, the full amount of any losses on its investment of funds in
the Custodial Account.
(c) Without limiting the foregoing, the funds in the Custodial
Accounts shall at all times be segregated and held separate and apart from
the Seller's own funds and general assets and from any other funds or
assets collected or held by the Seller on behalf of third parties. The
Seller's account agreement for each Custodial Account shall provide that
such account is a special deposit, required to be segregated and held by
the depository institution maintaining such account in a fiduciary
capacity, separate and apart from the institution's own funds and general
assets and that the account shall not be held in any capacity that would
create a debtor-creditor relationship between the institution and the
Seller or the Purchaser. Each Custodial Account shall be evidenced by a
Custodial Account Certification in the form of Exhibit 6 and shall be
entitled "Countrywide Home Loans, Inc., as servicer, in trust for the
Purchaser". At all times, the Purchaser shall be the sole beneficial owner
of all funds in the Custodial Accounts. Seller's possession or control of
any such funds shall be solely in Seller's capacity as collecting agent for
the Purchaser.
Section 11.06 Withdrawals From Custodial Accounts.
The Seller may, from time to time, withdraw from the Custodial Account
for the following purposes:
E-8-5
(i) to make distributions to the Purchaser in the amounts and in
the manner provided for in Section 11.15;
(ii) to reimburse itself for Monthly Advances, the Seller's right
to reimburse itself pursuant to this subclause (ii) being limited to
amounts received on the related Mortgage Loan which represent late
collections (net of the related Servicing Fees) respecting which any
such advance was made it being understood that, in the case of such
reimbursement, the Seller's right thereto shall be prior to the rights
of Purchaser, except that, where the Seller is required to repurchase
a Mortgage Loan, pursuant to Subsection 7.03, the Seller's right to
such reimbursement shall be subsequent to the payment to the Purchaser
of the Repurchase Price pursuant to Subsection 7.03, and all other
amounts required to be paid to the Purchaser with respect to such
Mortgage Loans;
(iii) to reimburse itself for unreimbursed Servicing Advances,
the Seller's right to reimburse itself pursuant to this subclause
(iii) with respect to any Mortgage Loan being limited to related
Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds and
such other amounts as may be collected by the Seller from the
Mortgagor or otherwise relating to the Mortgage Loan, it being
understood that, in the case of such reimbursement, the Seller's right
thereto shall be prior to the rights of the Purchaser, except that,
where the Seller is required to repurchase a Mortgage Loan, pursuant
to Subsection 7.03, the Seller's right to such reimbursement shall be
subsequent to the payment to the Purchaser of the Repurchase Price
pursuant to Subsection 7.03 and all other amounts required to be paid
to the Purchaser with respect to such Mortgage Loans;
(iv) to pay to itself pursuant to Section 11.23 as 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 attributable to interest on a particular Mortgage
Loan;
(v) to pay to itself with respect to each Mortgage Loan that has
been repurchased pursuant to Subsection 7.03, all amounts received
thereon and not distributed as of the date on which the related
Repurchase Price is determined;
(vi) to reimburse the Seller for any Monthly Advance previously
made which the Seller has determined to be a Nonrecoverable Monthly
Advance;
(vii) to pay, or to reimburse itself for advances in respect of,
expenses incurred in connection with any Mortgage Loan pursuant to
Section 11.03(b), but only to the extent of amounts received in
respect of the Mortgage Loans to which such expense is attributable;
(viii) to clear and terminate the Custodial Account on the
termination of this Agreement; and
(ix) to reimburse itself for any amounts deposited in the
Custodial Account in error.
E-8-6
The Seller shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the Custodial Account pursuant to such subclauses (ii) - (vii) above.
Section 11.07. Establishment of Escrow Accounts; Deposits in Escrow
Accounts.
(a) The Seller shall establish one or more Escrow Accounts for the
deposit of Escrow Payments. Seller shall segregate and hold all funds collected
and received in connection with the Mortgage Loans which constitute Escrow
Payments separate and apart from any of its own funds and general assets and
from any other funds or amounts collected or held by the Seller on behalf of
third parties.
(b) The Seller shall transfer into the applicable Escrow Account
within two (2) Business Days of receipt thereof, and retain therein the
following payments and collections:
(i) Mortgagors' Escrow Payments collected in connection with the
Mortgage Loans, for the purpose of effecting timely payment of
any such items as required under the terms of this Agreement; and
(ii) all Insurance Proceeds which are to be applied to the
restoration or repair of any Mortgaged Property.
The Seller shall make withdrawals therefrom 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 11.08.
(c) Each Escrow Account will be maintained at the expense of the
Seller at a Qualified Depository. Such accounts may be interest-bearing accounts
provided that such accounts comply with all federal state or local laws, any
other requirements of any government or any agency or instrumentality thereof
applicable to the origination and servicing of the Mortgage Loans, the
management of the Mortgage Property, and the provision of services hereunder by
the Seller as well as all local, state and federal laws and regulations
governing interest-bearing accounts and borrower escrow accounts. Each Escrow
Account shall be evidenced by an Escrow Account Certification, in the form of
Exhibit 7 and shall be entitled "Countrywide Home Loans, Inc., as servicer, in
trust for the Purchaser and various Mortgagors, Fixed and Adjustable Rate
Mortgage Loans." The Seller shall ensure that all interest credited to any
account that is not due the respective Mortgager is removed by the Seller within
thirty (30) days of receipt of such interest.
Section 11.08. Withdrawals From Escrow Accounts.
The Seller shall make withdrawals from the applicable Escrow Account
for the following:
(i) to effect timely payments of Mortgagors' Escrow Payments;
(ii) to reimburse the Seller for any Servicing Advance made by
the Seller with respect to a related Mortgage Loan but only from
amounts
E-8-7
received on the related Mortgage Loan that represent late
payments or collections of Escrow Payments thereunder;
(iii) to refund to the Mortgagor any funds determined to be
overages;
(iv) for transfer to the Custodial Account in accordance with the
terms of this Agreement;
(v) for application to restoration or repair of the Mortgaged
Property;
(vi) to pay to the Seller, or to the Mortgagor, to the extent
required by law, any interest paid on the funds deposited in the
Escrow Account;
(vii) to clear and terminate the Escrow Account on the
termination of this Agreement; and
(viii) to reimburse itself for any amounts deposited in the
Escrow Account in error.
The Seller shall be entitled to retain any interest paid on funds
deposited in the Escrow Account by the depository institution other than
interest on escrowed funds required by law to be paid to the Mortgagor and, to
the extent required by law, the Seller shall pay interest on escrowed funds to
the Mortgagor notwithstanding that the Escrow Account is non-interest bearing or
that interest paid thereon is insufficient for such purposes. If Seller elects
or is required by law to deposit a Mortgagor's Escrow funds into an
interest-bearing account, the Seller shall remain obligated to pay the
Mortgagor's taxes and insurance premiums when due, even if the Mortgagor's
Escrow funds are not withdrawable on demand.
Section 11.09. Payment of Taxes, Insurance and Other Charges;
Maintenance of Primary Insurance Policies; Collections Thereunder.
With respect to each Mortgage Loan, the Seller shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water rates
and other charges which are or may become a lien upon the Mortgaged Property and
the status of Primary Insurance Policy premiums and fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of such
charges, including insurance renewal premiums and shall effect payment thereof
prior to the applicable penalty or termination date and at a time appropriate
for securing maximum discounts allowable, employing for such purpose deposits of
the Mortgagor in the Escrow Account which shall have been estimated and
accumulated by the Seller in amounts sufficient for such purposes, as allowed
under the terms of the Mortgage and applicable law. To the extent that the
Mortgage does not provide for Escrow Payments, the Seller shall determine that
any such payments are made by the Mortgagor at the time they first become due.
The Seller assumes full responsibility for the timely payment of all such bills
and shall effect timely payments of all such bills irrespective of the
Mortgagor's faithful performance in the payment of same or the making of the
Escrow Payments and shall make advances from its own funds to effect such
payments.
E-8-8
If applicable, the Seller shall maintain in full force and effect, a
Primary Insurance Policy, issued by a Qualified Insurer, with respect to each
Mortgage Loan for which such coverage is required. Such coverage shall be
maintained until the Loan-to-Value Ratio of the related Mortgage Loan is reduced
to that amount for which FNMA no longer requires such insurance to be
maintained. The Seller will not cancel or refuse to renew any Primary Insurance
Policy in effect on the Closing Date that is required to be kept in force under
this Agreement unless a replacement Primary Insurance Policy for such cancelled
or non-renewed policy is obtained from and maintained with a Qualified Insurer.
The Seller shall not take any action which would result in non-coverage under
any applicable Primary Insurance Policy of any loss which, but for the actions
of the Seller, would have been covered thereunder. In connection with any
assumption or substitution agreement entered into or to be entered into pursuant
to Section 11.20, the Seller shall promptly notify the insurer under the related
Primary 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 Insurance Policy. If such Primary Insurance Policy is
terminated as a result of such assumption or substitution of liability, the
Seller shall obtain a replacement Primary Insurance Policy as provided above.
In connection with its activities as servicer, the Seller agrees to
prepare and present, on behalf of itself, and the Purchaser, claims to the
insurer under any Primary Insurance Policy, if applicable, in a timely fashion
in accordance with the terms of such policies and, in this regard, to take such
action as shall be necessary to permit recovery under any Primary Insurance
Policy respecting a defaulted Mortgage Loan. Pursuant to Section 11.04, any
amounts collected by the Seller under any Primary Insurance Policy shall be
deposited in the Custodial Account, subject to withdrawal pursuant to Section
11.06.
Section 11.10 Transfer of Accounts.
The Seller may transfer the Payment Clearing Account, Custodial
Account or the Escrow Account and all funds and investments therein to a
different Qualified Depository from time to time. Such transfer shall be made
only upon prior written notice to the Purchaser. In any case, the Payment
Clearing Account, Custodial Account and Escrow Account shall be Eligible
Accounts.
If any one of the Investment Ratings of a Qualified Depository holding
funds or Eligible Investments in the Payment Clearing Account, Custodial Account
or Escrow Account as an Eligible Account is downgraded by the issuing rating
agency, the Seller shall, within three (3) Business Days of receipt of notice of
the downgrading, transfer all such accounts, funds and Eligible Investments to a
different Qualified Depository in accordance with this Agreement.
Section 11.11 Maintenance of Hazard Insurance.
The Seller shall cause to be maintained for each Mortgage Loan fire
and hazard insurance with extended coverage as is customary in the area where
the Mortgaged Property is located in an amount which is at least equal to the
lesser of (i) the amount necessary to fully compensate for any damage or loss to
the improvements which are a part of such property on a replacement cost basis
or (ii) the outstanding principal balance of the Mortgage Loan, in each
E-8-9
case in an amount not less than such amount as is necessary to prevent the
Mortgagor and/or the Mortgagee from becoming a co-insurer. If the Mortgaged
Property is in an area identified on a Flood Hazard Boundary Map or Flood
Insurance Rate Map issued by the Flood Emergency Management Agency as having
special flood hazards and such flood insurance has been made available, the
Seller will cause to be maintained a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
with a generally acceptable insurance carrier, in an amount representing
coverage not less than the lesser of (i) the outstanding principal balance of
the Mortgage Loan or (ii) the maximum amount of insurance which is available
under the National Flood Insurance Act of 1968 or the Flood Disaster Protection
Act of 1973, as amended. The Seller also shall maintain on any REO Property,
fire and hazard insurance with extended coverage in an amount which is at least
equal to the lesser of (i) the maximum insurable value of the improvements which
are a part of such property and (ii) the outstanding principal balance of the
related Mortgage Loan at the time it became an REO Property plus accrued
interest at the Mortgage Interest Rate and related Servicing Advances, liability
insurance and, to the extent required and available under the National Flood
Insurance Act of 1968 or the Flood Disaster Protection Act of 1973, as amended,
flood insurance in an amount as provided above. Pursuant to Section 11.04, any
amounts collected by the Seller under any such policies other than amounts to be
deposited in the Escrow Account and applied to the restoration or repair of the
Mortgaged Property or REO Property, or released to the Mortgagor in accordance
with the Seller's normal servicing procedures, shall be deposited in the
Custodial Account, subject to withdrawal pursuant to Section 11.06. Any cost
incurred by the Seller in maintaining any such insurance shall not, for the
purpose of calculating distributions to the Purchaser, be added to the unpaid
principal balance of the related Mortgage Loan, notwithstanding that the terms
of such Mortgage Loan so permit. It is understood and agreed that no earthquake
or other additional insurance need be required by the Seller or the Mortgagor or
maintained on property acquired in respect of the Mortgage Loan, other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. All such policies shall be
endorsed with standard mortgagee clauses with loss payable to the Seller, or
upon request to the Purchaser, and shall provide for at least thirty (30) days
prior written notice of any cancellation, reduction in the amount of, or
material change in, coverage to the Seller. The Seller shall not interfere with
the Mortgagor's freedom of choice in selecting either his insurance carrier or
agent, provided, however, that the Seller shall not accept any such insurance
policies from insurance companies unless such companies are acceptable to FNMA
or FHLMC and are licensed to do business in the state wherein the property
subject to the policy is located.
Section 11.12 Maintenance of Mortgage Impairment Insurance Policy.
In the event that the Seller shall obtain and maintain a mortgage
impairment or blanket policy issued by an issuer acceptable to FNMA or FHLMC
insuring against hazard losses on all of Mortgaged Properties securing the
Mortgage Loans, then, to the extent such policy provides coverage in an amount
equal to the amount required pursuant to Section 11.11 and otherwise complies
with all other requirements of Section 11.11, the Seller shall conclusively be
deemed to have satisfied its obligations as set forth in Section 11.11, it being
understood and agreed that such policy may contain a deductible clause, in which
case the Seller shall, in the event that there shall not have been maintained on
the related Mortgaged Property or REO Property a policy complying with Section
11.11, and there shall have been one or more
E-8-10
losses which would have been covered by such policy, deposit in the Custodial
Account the amount not otherwise payable under the blanket policy because of
such deductible clause. In connection with its activities as servicer of the
Mortgage Loans, the Seller agrees to prepare and present, on behalf of the
Purchaser, claims under any such blanket policy in a timely fashion in
accordance with the terms of such policy. Upon request of the Purchaser, the
Seller shall cause to be delivered to the Purchaser a certified true copy of
such policy and 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 11.13 Fidelity Bond, Errors and Omissions Insurance.
The Seller shall maintain, at its own expense, a blanket fidelity bond and
an errors and omissions insurance policy, with broad coverage with responsible
companies that would meet the requirements of FNMA or FHLMC on all officers,
employees or other persons acting in any capacity with regard to the Mortgage
Loans to handle funds, money, documents and papers relating to the Mortgage
Loans. The fidelity bond and errors and omissions insurance shall be in the form
of the Mortgage Banker's Blanket Bond and shall protect and insure the Seller
against losses, including forgery, theft, embezzlement, fraud, errors and
omissions and negligent acts of such persons. Such fidelity bond shall also
protect and insure the Seller against losses in connection with the failure to
maintain any insurance policies required pursuant to this Agreement and the
release or satisfaction of a Mortgage Loan without having obtained payment in
full of the indebtedness secured thereby. No provision of this Section 11.13
requiring the fidelity bond and errors and omissions insurance shall diminish or
relieve the Seller from its duties and obligations as set forth in this
Agreement. The minimum coverage under any such bond and insurance policy shall
be at least equal to the corresponding amounts required by FNMA in the FNMA
Servicing Guide or by FHLMC in the FHLMC Sellers' and Servicers' Guide. Upon
request of the Purchaser, the Seller shall cause to be delivered to the
Purchaser a certified true copy of the fidelity bond and insurance policy and 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.
Section 11.14 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 Seller, as servicer, or in the event such
person is not authorized or permitted to hold title to real property in the
state where the REO Property is located, or would be adversely affected under
the "doing business" or tax laws of such state by so holding title, the deed or
certificate of sale shall be taken in the name of such Person or Persons as
shall be consistent with an opinion of counsel obtained by the Seller from an
attorney duly licensed to practice law in the state where the REO Property is
located. Any Person or Persons holding such title other than the Purchaser shall
acknowledge in writing that such title is being held as nominee for the benefit
of the Purchaser.
The Seller shall either itself or through an agent selected by the Seller,
manage, conserve, protect and operate each REO Property (and may temporarily
rent the same) 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
E-8-11
Property is managed. If a REMIC election is or is to be made with respect to the
arrangement under which the Mortgage Loans and any REO Property are held, the
Seller shall manage, conserve, protect and operate each REO Property in a manner
which does not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code or result in the
receipt by such REMIC of any "income from non-permitted assets" within the
meaning of Section 860F(a)(2)(B) of the Code or any "net income from foreclosure
property" within the meaning of Section 860G(c)(2) of the Code. The Seller shall
cause each REO Property to be inspected promptly upon the acquisition of title
thereto and shall cause each REO Property to be inspected at least annually
thereafter. The Seller shall make or cause to be made a written report of each
such inspection. Such reports shall be retained in the Mortgage File and copies
thereof shall be forwarded by the Seller to the Purchaser. The Seller shall use
its best efforts to dispose of the REO Property as soon as possible and shall
sell such REO Property in any event within one year after title has been taken
to such REO Property, unless the Seller determines, and gives appropriate notice
to the Purchaser, that a longer period is necessary for the orderly liquidation
of such REO Property. If a period longer than one year is necessary to sell any
REO property, (i) the Seller shall report monthly to the Purchaser as to the
progress being made in selling such REO Property and (ii) if, with the written
consent of the Purchaser, a purchase money mortgage is taken in connection with
such sale, such purchase money mortgage shall name the Seller as mortgagee, and
a separate servicing agreement between the Seller and the Purchaser shall be
entered into with respect to such purchase money mortgage. Notwithstanding the
foregoing, if a REMIC election is made with respect to the arrangement under
which the Mortgage Loans and the REO Property are held, such REO Property shall
be disposed of within two years or such other period as may be permitted under
Section 860G(a)(8) of the Code.
The Seller shall deposit or cause to be deposited, within two (2) business
days in each Custodial Account all revenues received with respect to the related
REO Property and shall withdraw therefrom funds necessary for the proper
operation, management and maintenance of the REO Property, including the cost of
maintaining any hazard insurance pursuant to Section 11.11 hereof and the fees
of any managing agent acting on behalf of the Seller. The Seller shall maintain
separate records with respect to each REO Property identifying all deposits and
withdrawals from the Custodial Account for each REO Property.
The Seller shall furnish to the Purchaser on each Remittance Date, an
operating statement for each REO Property covering the operation of each REO
Property for the previous month. Such operating statement shall be accompanied
by such other information as the Purchaser shall reasonably request.
Each REO Disposition shall be carried out by the Seller at such price and
upon such terms and conditions as the Seller deems to be in the best interest of
the Purchaser only with the prior written consent of the Purchaser. If as of the
date title to any REO Property was acquired by the Seller there were outstanding
unreimbursed Servicing Advances and unpaid servicing fees with respect to the
REO Property, the Seller, upon an REO Disposition of such REO Property, shall be
entitled to reimbursement for any related unreimbursed Servicing Advances and
unpaid servicing fees from proceeds received in connection with such REO
Disposition. The proceeds from the REO Disposition, net of any payment to the
Seller as provided above, shall be deposited in the Custodial Account and shall
be transferred to the
E-8-12
Custodial Account on the Determination Date in the month following receipt
thereof for distribution on the succeeding Remittance Date in accordance with
Section 11.15.
With respect to each REO Property, the Seller shall segregate and hold all
funds collected and received in connection with the operation of the REO
Property separate and apart from its own funds or general assets and shall
maintain separate records and reports with respect to the funds received and
distributed on an REO Property by REO Property basis.
Section 11.15 Distributions.
On each Remittance Date, the Seller shall distribute 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 11.06;. plus (ii) all Monthly Advances, if
any, which the Seller is obligated to distribute pursuant to Section 11.22,
minus (iii) any amounts attributable to Principal Prepayments received after the
last day of the Calendar month immediately preceding the related Remittance Date
and (iv) any amounts attributable to Monthly Prepayments collected but due on a
Due Date or Dates subsequent to the preceding Determination Date.
All distributions made to the Purchaser on each Remittance Date will be
made to the Purchaser of record on the preceding Record Date, and shall be based
on the Mortgage Loans owned and held by the Purchaser, and shall be made by wire
transfer of immediately available funds to the account of the Purchaser at a
bank or other entity having appropriate facilities therefor.
With respect to any remittance received by the Purchaser on or after the
second Business Day following the Business Day on which such payment was due,
the Seller shall pay to the Purchaser interest on any such late payment at an
annual rate equal to the rate of interest as is publicly announced from time to
time at its principal office by JPMorgan, New York, New York, as its prime
lending rate, adjusted as of the date of each change, plus one percentage
points, but in no event greater than the maximum amount permitted by applicable
law. Such interest shall be paid by the Seller to the Purchaser on the date such
late payment is made and shall cover the period commencing with the day
following such second Business Day and ending with the Business Day on which
such payment is made, both inclusive. Such interest shall be remitted along with
such late payment. The payment by the Seller of any such interest shall not be
deemed an extension of time for payment or a waiver of any Event of Default by
the Seller.
Section 11.16 Remittance Reports.
No later than the fifth Business Day of each month, the Seller shall
furnish to the Purchaser or its designee an electronic copy of the determination
data with respect to the related Remittance Date, together with such other
information with respect to the Mortgage Loans as the Purchaser may reasonably
require to allocate distributions made pursuant to this Agreement and provide
appropriate statements with respect to such distributions. In addition to the
information set forth in the Remittance Report, such report shall also set
forth, for each Mortgage Loan, (i) the Mortgage Interest Rate; (ii) the amount
of any shortfall in the Servicing Fee due to delinquencies; (iii) the amount of
any delinquency in the scheduled payment of principal and
E-8-13
interest delineated at 30 days, 60 days and greater than 90 days past due; and
(iv) such other information as may be reasonably requested by the Purchaser.
Section 11.17 Statements to the Purchaser.
The Seller shall provide the Purchaser with such information concerning the
Mortgage Loans as is necessary for the Purchaser to prepare its federal income
tax return and as the Purchaser may reasonably request from time to time. The
Purchaser agrees to pay for all reasonable out-of-pocket expenses incurred by
the Seller in connection with complying with any request made by the Purchaser
hereunder if such information is not customarily provided by the Purchaser in
the ordinary course of servicing mortgage loans similar to the Mortgage Loans.
Section 11.18 Real Estate Owned Reports.
Together with the statement furnished pursuant to Section 11.14, with
respect to any REO Property, the Seller shall furnish to the Purchaser a
statement covering the Seller's efforts in connection with the sale of such REO
Property and any rental of such REO Property incidental to the sale thereof for
the previous month, together with the operating statement. Such statement shall
be accompanied by such other information as the Purchaser shall reasonably
request.
Section 11.19 Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Purchaser pursuant to a deed-in-lieu of foreclosure, the Seller
shall submit to the Purchaser a liquidation report with respect to such
Mortgaged Property.
Section 11.20 Assumption Agreements.
The Seller shall, 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 applicable thereto; provided, however, that the Seller
shall not exercise any such rights if prohibited by law from doing so or if the
exercise of such rights would impair or threaten to impair any recovery under
the related Primary Insurance Policy, if any. If the Seller reasonably believes
it is unable under applicable law to enforce such "due-on-sale" clause, the
Seller shall 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 11.20, the Seller, with the
prior written consent of the insurer under the Primary Insurance Policy, 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.
E-8-14
In connection with any such assumption or substitution of liability, the
Seller shall follow the underwriting practices and procedures of prudent
mortgage lenders in the state in which the related Mortgaged Property is
located. With respect to an assumption or substitution of liability, the
Mortgage Interest Rate, the amount of the Monthly Payment, and the final
maturity date of such Mortgage Note may not be changed. The Seller shall notify
the Purchaser that any such substitution of liability or assumption agreement
has been completed by forwarding to the Purchaser the original of any such
substitution of liability or assumption agreement, which document shall be added
to the related Mortgage File and shall, for all purposes, be considered a part
of such Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. Any fee collected by the Seller for entering into
an assumption or substitution of liability agreement in excess of 1% of the
outstanding principal balance of the Mortgage Loan shall be deposited in the
Custodial Account pursuant to Section 11.05.
Notwithstanding the foregoing paragraphs of this Section or any other
provision of this Agreement, the Seller shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or any assumption which the
Seller may be restricted by law from preventing, for any reason whatsoever. For
purposes of this Section 11.20, 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 11.21 Satisfaction of Mortgages and Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the Seller
of a notification that payment in full will be escrowed in a manner customary
for such purposes, the Seller will immediately notify the Purchaser by a
certification of a servicing officer of the Seller (a "Servicing Officer"),
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 11.05 have been or
will be so deposited, and shall request execution of any document necessary to
satisfy the Mortgage Loan and delivery to it the portion of the Mortgage File
held by the Purchaser or the Purchaser's designee. Upon receipt of such
certification and request, the Purchaser shall promptly release the related
mortgage documents to the Seller and the Seller shall prepare and process any
satisfaction or release. No expense incurred in connection with any instrument
of satisfaction or deed of reconveyance shall be chargeable to the Custodial
Account or the Purchaser.
In the event the Seller satisfies or releases a Mortgage without having
obtained payment in full of the indebtedness secured by the Mortgage or should
it otherwise prejudice any right the Purchaser may have under the mortgage
instruments, the Seller, upon written demand, shall remit to the Purchaser the
then outstanding principal balance of the related Mortgage Loan by deposit
thereof in the Custodial Account. The Seller shall maintain the fidelity bond
insuring the Seller against any loss it may sustain with respect to any Mortgage
Loan not satisfied in accordance with the procedures set forth herein.
From time to time and as appropriate for the servicing or foreclosure of
the Mortgage Loan, including for this purpose collection under any Primary
Insurance Policy, the Purchaser shall, upon request of the Seller and delivery
to the Purchaser of a servicing receipt
E-8-15
signed by a Servicing Officer, release the requested portion of the Mortgage
File held by the Purchaser to the Seller. Such servicing receipt shall obligate
the Seller to return the related Mortgage documents to the Purchaser when the
need therefor by the Seller no longer exists, unless the Mortgage Loan has been
liquidated and the Liquidation Proceeds relating to the Mortgage Loan have been
deposited in the Custodial Account or the Mortgage File or such document has
been delivered to an attorney, or to a public trustee or other public official
as required by law, for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Mortgaged Property either judicially or
non-judicially, and the Seller has delivered to the Purchaser 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 Seller.
Section 11.22 Monthly Advances by the Seller.
(a) Not later than the close of business on the Business Day preceding
each Remittance Date, the Seller shall deposit in the Custodial Account an
amount equal to all payments not previously advanced by the Seller, whether or
not deferred pursuant to Section 11.01, of principal (due after the Cut-off
Date) and interest not allocable to the period prior to the Cut-off Date, at the
Mortgage Interest Rate net of the Servicing Fee, which were due on a Mortgage
Loan and delinquent at the close of business on the related Determination Date.
(b) The obligation of the Seller to make such Monthly Advances is
mandatory, notwithstanding any other provision of this Agreement, and, with
respect to any Mortgage Loan or REO Property, shall continue until a Final
Recovery Determination in connection therewith; provided that, notwithstanding
anything herein to the contrary, no Monthly Advance shall be required to be made
hereunder by the Seller if such Monthly Advance would, if made, constitute a
Nonrecoverable Monthly Advance. The determination by the Seller that it has made
a Nonrecoverable Monthly Advance or that any proposed Monthly Advance, if made,
would constitute a Nonrecoverable Monthly Advance, shall be evidenced by an
Officers' Certificate delivered to the Purchaser.
Section 11.23 Servicing Compensation.
As compensation for its services hereunder, the Seller shall, subject
to Section 11.05(xi), be entitled to withdraw from the Custodial Account or to
retain from interest payments on the Mortgage Loans the amounts provided for as
the Seller's Servicing Fee. Additional servicing compensation in the form of
assumption fees, as provided in Section 11.20, interest earned from the
investment in Eligible Investments of amounts held in Custodial Accounts
pursuant to Section 11.05, Prepayment Charges, and late payment charges and
similar fees and charges shall be retained by the Seller to the extent not
required to be deposited in the Custodial Account. The Seller shall be required
to pay all expenses incurred by it in connection with its servicing activities
hereunder and shall not be entitled to reimbursement therefor except as
specifically provided for.
Section 11.24 Notification of Adjustments.
E-8-16
On each Adjustment Date, the Seller shall make interest rate
adjustments for each Adjustable Rate Mortgage Loan in compliance with the
requirements of the related Mortgage and Mortgage Note. The Seller shall execute
and deliver the notices required by each Mortgage and Mortgage Note regarding
interest rate adjustments. The Seller also shall provide timely notification to
the Purchaser of all applicable data and information regarding such interest
rate adjustments and the Seller's methods of implementing such interest rate
adjustments. Upon the discovery by the Seller or the Purchaser that the Seller
has failed to adjust a Mortgage Interest Rate or a Monthly Payment pursuant to
the terms of the related Mortgage Note and Mortgage, the Seller shall
immediately deposit in the Custodial Account from its own funds the amount of
any interest loss caused thereby without reimbursement therefor.
Section 11.25 Statement as to Compliance.
The Seller will deliver to the Purchaser on or before March 15th of
each year, beginning with March 15, 2005, an Officers' Certificate stating, as
to each signatory thereof, that (i) a review of the activities of the Seller
during the preceding calendar year and of performance under this Agreement has
been made under such officers' supervision and (ii) to the best of such
officers' knowledge, based on such review, the Seller has fulfilled all of its
obligations under this Agreement throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officer and the nature and status thereof.
Section 11.26 Independent Public Accountants' Servicing Report.
On or before March 1st of each year, beginning with March 15, 2005,
the Seller at its expense shall cause a firm of independent public accountants
(which may also render other services to the Seller) which is a member of the
American Institute of Certified Public Accountants to furnish a statement to the
Purchaser or its designee to the effect that such firm has examined certain
documents and records relating to servicing of mortgage loans by the Seller
generally that may include a sampling of the Mortgage Loans and that, on the
basis of such an examination conducted substantially in compliance with the
Uniform Single Attestation Program for Mortgage Bankers or the Audit Program for
Mortgages serviced for FHLMC, such firm confirms that such servicing has been
conducted in compliance with this Agreement, except for exceptions as such firm
shall believe to be immaterial or such significant exceptions or errors in
records that, in the opinion of such firm, the Uniform Single Attestation
Program for Mortgage Bankers or the Audit Program for Mortgages serviced for
FHLMC requires it to report.
Section 11.27 Securitization Certifications.
(a) For so long as (1) the Mortgage Loans are being master serviced by
a master servicer in a Pass-Through Transfer (the "Master Servicer") or serviced
by the Seller in a securitization transaction and (2) an annual certification is
required to be provided by Section 302 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, by
March 15, 2005 and by March 1st of each year thereafter (or if not a Business
Day, the immediately preceding Business Day), an officer of the Seller shall
execute and deliver an Officer's Certificate to either the Master Servicer the
depositor or trustee of such securitization for the benefit of either the Master
Servicer, depositor or trustee and its officers, directors and affiliates,
certifying as to the following matters:
E-8-17
(i) Based on such officer's knowledge, the information in the Annual
Statement of Compliance, the Annual Independent Public Accountant's
Servicing Report and all servicing reports, officer's certificates and
other information relating to the servicing of the Mortgage Loans
submitted to either the Master Servicer, the depositor or the trustee
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 date of this certification;
(ii) Based on such officer's knowledge, the servicing information
required to be provided to either the Master Servicer, the depositor
or the trustee by the Seller under this Agreement has been provided to
either the Master Servicer, the depositor or the trustee;
(iii) Such officer is responsible for reviewing the activities
performed by the Seller under this Agreement and based upon such
officer's knowledge and the review required by this Agreement, and
except as disclosed in the Annual Statement of Compliance, the Annual
Independent Public Accountant's Servicing Report and all servicing
reports, officer's certificates and other information relating to the
servicing of the Mortgage Loans submitted to either the Master
Servicer, the depositor or the trustee, the Seller has, as of the date
of this certification fulfilled its obligations under this Agreement;
and
(iv) Such officer has disclosed to the Master Servicer, the depositor
or the trustee all significant deficiencies relating to the Seller's
compliance with the minimum servicing standards in accordance with a
review conducted in compliance with the Uniform Single Attestation
Program for Mortgage Bankers or similar standard as set forth in this
Agreement.
(b) The Seller shall indemnify and hold harmless either the Master
Servicer, the depositor and the trustee of a securitization and its officers,
directors, agents and affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses arising out of or based upon a breach by
the Seller or any of its officers, directors, agents or affiliates of its
obligations under this Section 11.27, or Sections 11.25 and 11.26 or the bad
faith or willful misconduct of the Seller in connection therewith. If the
indemnification provided for herein is unavailable or insufficient to hold
harmless either the Master Servicer, the depositor or the trustee then the
Seller agrees that it shall contribute to the amount paid or payable by either
the Master Servicer, the depositor or the trustee as a result of the losses,
claims, damages or liabilities of either the Master Servicer, the depositor or
the trustee in such proportion as is appropriate to reflect the relative fault
of either the Master Servicer, the depositor or the trustee on the one hand and
the Seller on the other in connection with a breach of the Seller's obligations
under this Section 11.27, Sections 11.25 and 11.26 or the Seller's bad faith or
willful misconduct in connection therewith; provided, however, that the Seller
shall not be obligated to indemnify or hold harmless the Master Servicer and its
officers, directors, agents and affiliates from or against any losses, damages,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses
E-8-18
arising out of or based upon the bad faith or willful misconduct of such Master
Servicer and its officers, directors, agents and affiliates.
Section 11.28 Access to Certain Documentation.
The Seller shall provide to the Office of Thrift Supervision, the FDIC
and any other federal or state banking or insurance regulatory authority that
may exercise authority over the Purchaser access to the documentation regarding
the Mortgage Loans serviced by the Seller required by applicable laws and
regulations. Such access shall be afforded without charge, but only upon
reasonable request and during normal business hours at the offices of the
Seller. In addition, access to the documentation will be provided to the
Purchaser and any Person identified to the Seller by the Purchaser without
charge, upon reasonable request during normal business hours at the offices of
the Seller.
Section 11.29 Reports and Returns to be Filed by the Seller.
The Seller shall file information reports with respect to the receipt
of mortgage interest received in a trade or business, reports of foreclosures
and abandonments of any Mortgaged Property and information returns relating to
cancellation of indebtedness income with respect to any Mortgaged Property as
required by Sections 6050H, 6050J and 6050P of the Code. Such reports shall be
in form and substance sufficient to meet the reporting requirements imposed by
such Sections 6050H, 6050J and 6050P of the Code.
Section 11.30 Compliance with REMIC Provisions.
If a REMIC election has been made with respect to the arrangement
under which the Mortgage Loans and REO Property are held, the Seller shall not
take any action, 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 in Section 860F(a)(2)
of the Code and the tax on "contributions" to a REMIC set forth in Section
860G(d) of the Code) unless the Seller has received an Opinion of Counsel (at
the expense of the party seeking to take such action) to the effect that the
contemplated action will not endanger such REMIC status or result in the
imposition of any such tax.
E-8-19
EXHIBIT 9
FORM OF TRADE CONFIRMATION
[INTENTIONALLY OMITTED]
SCHEDULE ONE
FINAL MORTGAGE LOAN SCHEDULE
[INTENTIONALLY OMITTED]