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INTERIM SERVICING AGREEMENT
between
▇▇▇▇▇▇ Brothers Bank, FSB,
Purchaser
and
BancMortgage, A Division of National Bank of Commerce,
Seller/Interim Servicer
Dated as of July 11, 2003
CONVENTIONAL FIXED AND ADJUSTABLE RATE RESIDENTIAL MORTGAGE
LOANS
Group No. 2003-1
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.01 Definitions....................................................1
ARTICLE II
SERVICING
Section 2.01 Seller to Act as Servicer......................................5
Section 2.02 Liquidation of Mortgage Loans..................................6
Section 2.03 Collection of Mortgage Loan Payments...........................6
Section 2.04 Establishment of and Deposits to Custodial Account.............7
Section 2.05 Permitted Withdrawals From Custodial Account...................8
Section 2.06 Establishment of and Deposits to Escrow Account................8
Section 2.07 Permitted Withdrawals From Escrow Account......................9
Section 2.08 Payment of Taxes, Insurance and Other Charges.................10
Section 2.09 PMI Obligations...............................................10
Section 2.10 Protection of Accounts........................................10
Section 2.11 Maintenance of Hazard Insurance...............................11
Section 2.12 Maintenance of Mortgage Impairment Insurance..................12
Section 2.13 Maintenance of Fidelity Bond and Errors and
Omissions Insurance.........................................12
Section 2.14 Inspections...................................................13
Section 2.15 Restoration of Mortgaged Property.............................13
Section 2.16 Maintenance of PMI Policy; Claims.............................14
Section 2.17 Title, Management and Disposition of REO Property.............14
Section 2.18 Permitted Withdrawals with respect to REO Property............16
Section 2.19 Real Estate Owned Reports.....................................16
Section 2.20 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..............16
Section 2.21 Notification of Adjustments...................................16
Section 2.22 Reports of Foreclosures and Abandonments of Mortgaged
Property....................................................16
Section 2.23 Credit Reporting..............................................16
ARTICLE III
PAYMENTS TO PURCHASER
Section 3.01 Remittances...................................................17
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Section 3.02 Statements to Purchaser.......................................17
Section 3.03 Principal and Interest Advances by Seller.....................17
ARTICLE IV
GENERAL SERVICING PROCEDURES
Section 4.01 Transfers of Mortgaged Property...............................18
Section 4.02 Satisfaction of Mortgages and Release of Mortgage Files.......18
Section 4.03 Servicing Compensation........................................19
Section 4.04 Annual Statement as to Compliance.............................19
Section 4.05 Annual Independent Public Accountants' Servicing Report.......19
Section 4.06 Right to Examine Seller Records...............................20
ARTICLE V
SELLER TO COOPERATE
Section 5.01 Provision of Information......................................20
Section 5.02 Financial Statements; Servicing Facilities....................20
Section 5.03 Compliance with Safeguarding Customer Information
Requirements................................................20
ARTICLE VI
TERMINATION
Section 6.01 Agency Suspension.............................................21
Section 6.02 Damages.......................................................21
Section 6.03 Termination Upon Transfer of Servicing........................21
ARTICLE VII
BOOKS AND RECORDS
Section 7.01 Possession of Servicing Files Prior to the Transfer Date......22
ARTICLE VIII
INDEMNIFICATION AND ASSIGNMENT
Section 8.01 Indemnification...............................................23
Section 8.02 Limitation on Liability of Seller and Others..................23
Section 8.03 Limitation on Resignation and Assignment by Seller............24
Section 8.04 Assignment by Purchaser.......................................24
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ARTICLE IX
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER
Section 9.01 Authority and Capacity........................................24
Section 9.02 Assistance....................................................25
ARTICLE X
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 10.01 Due Organization and Authority................................25
Section 10.02 Ordinary Course of Business...................................25
Section 10.03 No Conflicts..................................................25
Section 10.04 Ability to Service............................................25
Section 10.05 Ability to Perform............................................26
Section 10.06 No Litigation Pending.........................................26
Section 10.07 No Consent Required...........................................26
Section 10.08 No Untrue Information.........................................26
ARTICLE XI
DEFAULT
Section 11.01 Events of Default.............................................26
Section 11.02 Waiver of Defaults............................................27
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Notices.......................................................28
Section 12.02 Waivers.......................................................28
Section 12.03 Entire Agreement; Amendment...................................28
Section 12.04 Execution; Binding Effect.....................................28
Section 12.05 Headings......................................................29
Section 12.06 Applicable Law................................................29
Section 12.07 Relationship of Parties.......................................29
Section 12.08 Severability of Provisions....................................29
Section 12.09 Recordation of Assignments of Mortgage........................29
Section 12.10 Appointment and Designation of Master Servicer................29
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EXHIBITS
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EXHIBIT 1 FORM OF MONTHLY REMITTANCE ADVICE
EXHIBIT 2 FORM OF CUSTODIAL ACCOUNT CERTIFICATION
EXHIBIT 3 FORM OF CUSTODIAL ACCOUNT LETTER AGREEMENT
EXHIBIT 4 FORM OF ESCROW ACCOUNT CERTIFICATION
EXHIBIT 5 FORM OF ESCROW ACCOUNT LETTER AGREEMENT
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INTERIM SERVICING AGREEMENT
This Interim Servicing Agreement (the "Agreement") is entered into as
of the 11th day of July, 2003, by and between BancMortgage, A Division of
National Bank of Commerce (the "Seller"), a federal bank and ▇▇▇▇▇▇ BROTHERS
BANK, FSB, a federal savings bank (the "Purchaser").
WHEREAS, the Purchaser and Seller entered into a Mortgage Loan Purchase
and Warranties Agreement dated as of the date hereof (the "Purchase Agreement")
pursuant to which the Purchaser purchased from the Seller certain conventional,
residential, fixed and adjustable rate first mortgage loans (the "Mortgage
Loans") delivered as whole loans servicing released; and
WHEREAS, the Purchaser desires to have the Seller service the Mortgage
Loans during the period between the Closing Date and the Transfer Date (the
"Interim Period"), the Seller desires to service and administer the Mortgage
Loans on behalf of the Purchaser during the Interim Period, and the parties
desire to provide the terms and conditions of such interim servicing by the
Seller.
NOW, THEREFORE, in consideration of the mutual covenants made herein
and for other good and valuable consideration the sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. All capitalized terms not otherwise defined
herein have the respective meanings set forth in the Purchase Agreement. The
following terms are defined as follows (except as otherwise agreed by the
parties).
Accepted Servicing Practices: With respect to any Mortgage Loan, those
mortgage servicing practices of prudent mortgage lending institutions which
service mortgage loans of the same type as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located.
Agreement: This agreement between the Purchaser and the Seller for the
interim servicing and administration of the Mortgage Loans.
Appropriate Federal Banking Agency: Appropriate Federal Banking Agency
shall have the meaning ascribed to it by Section 1813(q) of Title 12 of the
United States Code, as amended from time to time.
Custodial Account: The separate account or accounts created and
maintained pursuant to Section 2.04.
Condemnation Proceeds: All awards or settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
Eligible Investments: Any one or more of the obligations and securities
listed below which investment provides for a date of maturity not later than the
Determination Date in each month:
(i) direct obligations of, and obligations fully guaranteed
by, the United States of America, or any agency or instrumentality of
the United States of America the obligations of which are backed by the
full faith and credit of the United States of America; and
(ii) federal funds, demand and time deposits in, certificates
of deposits of, or bankers' 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 and subject to
supervision and examination by federal and/or state banking
authorities, so long as at the time of such investment or contractual
commitment providing for such investment the commercial paper or other
short-term debt obligations of such depository institution or trust
company (or, in the case of a depository institution or trust company
which is the principal subsidiary of a holding company, the commercial
paper or other short-term debt obligations of such holding company) are
rated "P-1" by ▇▇▇▇▇'▇ Investors Service, Inc. and the long-term debt
obligations of such holding company) are rated "P-1" by ▇▇▇▇▇'▇
Investors Service, Inc. and the long-term debt obligations of such
depository institution or trust company (or, in the case of a
depository institution or trust company which is the principal
subsidiary of a holding company, the long-term debt obligations of such
holding company) are rated at least "Aa" by ▇▇▇▇▇'▇ Investors Service,
Inc.
provided, however, that no such instrument shall be an Eligible Investment if
such instrument evidences either (i) a right to receive only interest payments
with respect to the obligations underlying such instrument, or (ii) both
principal and interest payments derived from obligations underlying such
instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations.
Escrow Account: The separate account or accounts created and maintained
pursuant to Section 2.06.
Escrow Payment: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.
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Event of Default: Any one of the conditions or circumstances enumerated
in Section 11.01.
Fidelity Bond: A fidelity bond to be maintained by the Seller pursuant
to Section 2.13.
▇▇▇▇▇▇ Mae Guides: The ▇▇▇▇▇▇ ▇▇▇ Selling Guide and the ▇▇▇▇▇▇ Mae
Servicing Guide and all amendments or additions thereto.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
Insured Depository Institution: Insured Depository Institution shall
have the meaning ascribed to such term by Section 1813(c)(2) of Title 12 of the
United States Code, as amended from time to time.
Interim Period: The period between the Closing Date and the Transfer
Date.
Liquidation Proceeds: Cash received in connection with the liquidation
of a defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or the sale of the
related Mortgaged Property if the Mortgaged Property is acquired in satisfaction
of the Mortgage Loan.
Mortgage Impairment Insurance Policy: A mortgage impairment or blanket
hazard insurance policy as described in Section 2.12.
Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Purchaser, which shall be equal to the
Mortgage Interest Rate minus the Servicing Fee.
PMI Policy: A policy of primary mortgage guaranty insurance issued by a
Qualified Insurer, as required by this Agreement with respect to certain
Mortgage Loans.
Prime Rate: The prime rate announced to be in effect from time to time,
as published as the average rate in The Wall Street Journal.
Purchase Agreement: The Mortgage Loan Purchase and Warranties Agreement
between the Purchaser and the Seller related to the purchase of the Mortgage
Loans dated as of the Cut-off Date.
Qualified Depository: ______________________ or such other depository
the accounts of which are insured by the FDIC through the BIF or the SAIF.
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Qualified Insurer: A mortgage guaranty insurance company duly
authorized and licensed where required by law to transact mortgage guaranty
insurance business and approved as an insurer by ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac.
Remittance Date: The 18th day (or if such 18th day is not a Business
Day, the first Business Day immediately following) of any month, beginning with
the first Remittance Date.
REO Disposition: The final sale by the Seller of any REO Property.
REO Disposition Proceeds: All amounts received with respect to an REO
Disposition pursuant to Section 2.17.
REO Property: A Mortgaged Property acquired by the Seller on behalf of
the Purchaser through foreclosure or by deed in lieu of foreclosure, as
described in Section 2.17.
SAIF: The Savings Association Insurance Fund, or any successor thereto.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable attorneys' fees and
disbursements) incurred in the performance by the Seller of its servicing
obligations, including, but not limited to, the cost of (a) the preservation,
restoration and protection of the Mortgaged Property, (b) any enforcement or
judicial proceedings, including foreclosures, (c) the management and liquidation
of the Mortgaged Property if the Mortgaged Property is acquired in satisfaction
of the Mortgage and (d) compliance with the obligations under Section 2.08.
Servicing Fee: With respect to each Mortgage Loan, an amount equal to
$7.00 per month. Such fee shall be payable monthly and shall be pro rated for
any portion of a month during which the Mortgage Loans is serviced pursuant to
this Agreement. The obligation of the Purchaser to pay the Servicing Fee is
limited to, and the Servicing Fee is payable solely from, the interest portion
(including recoveries with respect to interest from Liquidation Proceeds, to the
extent permitted by Section 2.05) of such Monthly Payment collected by the
Seller, or as otherwise provided under Section 2.05.
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 and copies of the Mortgage Loan
Documents listed on Exhibit B to the Purchase Agreement.
Servicing Officer: Any officer of the Seller involved in or responsible
for, the administration and servicing of the Mortgage Loans whose name appears
on a list of servicing officers furnished by the Seller to the Purchaser upon
request, as such list may from time to time be amended.
Transfer Date: Shall have the meaning provided in Section 6.03 hereof.
Well Capitalized: Well Capitalized shall mean, with respect to any
Insured Depository Institution, the maintenance by such Insured Depository
Institution of capital ratios at or above the required minimum levels for such
capital category under the regulations promulgated pursuant to Section 1831(o)
of the United States Code, as amended from time to time, by the Appropriate
Federal Banking Agency for such institution, as such regulation may be amended
from time to time.
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ARTICLE II
SERVICING
Section 2.01 Seller to Act as Servicer. The Seller, as an independent
contractor, shall service and administer the Mortgage Loans and shall have full
power and authority, acting alone, to do any and all things in connection with
such servicing and administration which the Seller may deem necessary or
desirable, consistent with the terms of this Agreement and with Accepted
Servicing Practices.
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 unless the Seller has obtained the prior
written consent of the Purchaser, the Seller shall not permit any modification
with respect to any Mortgage Loan that would change the Mortgage Interest Rate,
defer or forgive the payment of principal or interest, reduce or increase the
outstanding principal balance (except for actual payments of principal) or
change the final maturity date on such Mortgage Loan. In the event of any such
modification which permits the deferral of interest or principal payments on any
Mortgage Loan, the Seller shall, on the Business Day immediately preceding the
Remittance Date in any month in which any such principal or interest payment has
been deferred, deposit in the Custodial Account from its own funds, in
accordance with Section 2.04, the difference between (a) such month's principal
and one month's interest at the Mortgage Loan Remittance Rate on the unpaid
principal balance of such Mortgage Loan and (b) the amount paid by the
Mortgagor. The Seller shall be entitled to reimbursement for such advances to
the same extent as for all other advances made pursuant to Section 2.05. 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 Properties. 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
Servicing Practices where such practices do not conflict with the requirements
of this Agreement, and the Purchaser's reliance on the Seller.
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The Seller shall keep at its servicing office books and records in
which, subject to such reasonable regulations as it may prescribe, the Seller
shall note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be
made unless such transfer is in compliance with the terms hereof. For the
purposes of this Agreement, Seller shall be under no obligation to deal with any
Person with respect to this Agreement or the Mortgage Loans unless the Seller
has been notified of such transfers as provided in this Section 2.01. The
Purchaser may sell and transfer, in whole or in part, the Mortgage Loans,
provided that no such sale and transfer shall be binding upon Seller unless such
transferee shall agree in writing in the form of the Assignment and Assumption
Agreement attached to the Purchase Agreement as Exhibit H, to be bound by the
terms of this Agreement and the Purchase Agreement, and an executed copy of the
same shall have been delivered to the Seller. Upon receipt thereof, Seller shall
▇▇▇▇ its books and records to reflect the ownership of the Mortgage Loans by
such assignee, and the previous Purchaser shall be released from its obligations
hereunder. This Agreement shall be binding upon and inure to the benefit of the
Purchaser and Seller and their permitted successors, assignees and designees.
Section 2.02 Liquidation of Mortgage Loans. In the event that any
payment due under any Mortgage Loan and not postponed pursuant to Section 2.01
is not paid when the same becomes due and payable, or in the event the Mortgagor
fails to perform any other covenant or obligation under the Mortgage Loan and
such failure continues beyond any applicable grace period, the Seller shall take
such action as (1) the Seller would take under similar circumstances with
respect to a similar mortgage loan held for its own account for investment, (2)
shall be consistent with Accepted Servicing Practices, (3) the Seller shall
determine prudently to be in the best interest of Purchaser, and (4) is
consistent with any related PMI Policy. In the event that any payment due under
any Mortgage Loan is not postponed pursuant to Section 2.01 and remains
delinquent for a period of 90 days or any other default continues for a period
of 90 days beyond the expiration of any grace or cure period, the Seller shall
commence foreclosure proceedings, provided that, prior to commencing foreclosure
proceedings, the Seller shall notify the Purchaser in writing of the Seller's
intention to do so, and the Seller shall not commence foreclosure proceedings if
the Purchaser objects to such action within 10 Business Days of receiving such
notice. In such connection, the Seller shall from its own funds make all
necessary and proper Servicing Advances, provided, however, that the Seller
shall not be required to expend its own funds in connection with any foreclosure
or towards the restoration or preservation of any Mortgaged Property, unless it
shall determine (a) that such preservation, restoration and/or foreclosure will
increase the proceeds of liquidation of the Mortgage Loan to Purchaser after
reimbursement to itself for such expenses and (b) that such expenses will be
recoverable by it either through Liquidation Proceeds (respecting which it shall
have priority for purposes of withdrawals from the Custodial Account pursuant to
Section 2.05) or through Insurance Proceeds (respecting which it shall have
similar priority).
Section 2.03 Collection of Mortgage Loan Payments. Continuously from
the date hereof until the Transfer Date the Seller shall proceed diligently to
collect all payments due under each of the Mortgage Loans when the same shall
become due and payable and shall take special care in ascertaining and
estimating Escrow Payments and all other charges that will become due and
payable with respect to the Mortgage Loans and each related Mortgaged Property,
to the end that the installments payable by the Mortgagors will be sufficient to
pay such charges as and when they become due and payable.
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Section 2.04 Establishment of and Deposits to Custodial Account. The
Seller shall segregate and hold all funds collected and received pursuant to the
Mortgage Loans separate and apart from any of its own funds and general assets
and shall establish and maintain one or more Custodial Accounts, in the form of
time deposit or demand accounts, titled "BancMortgage, A Division of National
Bank of Commerce in trust for ▇▇▇▇▇▇ Brothers Bank, FSB, Residential Fixed and
Adjustable Rate Mortgage Loans, Group No. 2003-1." The Custodial Account shall
be established with a Qualified Depository acceptable to the Purchaser. Any
funds deposited in the Custodial Account shall at all times be fully insured to
the full extent permitted under applicable law. Funds deposited in the Custodial
Account may be drawn on by the Seller in accordance with Section 2.05. The
creation of any Custodial Account shall be evidenced by a certification in the
form of Exhibit 2 hereto, in the case of an account established with the Seller,
or by a letter agreement in the form of Exhibit 3 hereto, in the case of an
account held by a depository other than the Seller. A copy of such certification
or letter agreement shall be furnished to the Purchaser and, upon request, to
any subsequent Purchaser.
The Seller shall deposit in the Custodial Account on a daily basis, and
retain therein, the following collections received by the Seller after the
Cut-off Date:
(i) all payments on account of principal on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans adjusted
to the Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts required to be deposited
pursuant to Section 2.11 (other than proceeds to be held in the Escrow
Account and applied to the restoration or repair of the Mortgaged Property
or released to the Mortgagor in accordance with Section 2.15), Section 2.12
and Section 2.16;
(v) all Condemnation Proceeds which are not applied to the restoration
or repair of the Mortgaged Property or released to the Mortgagor in
accordance with Section 2.15;
(vi) any amount required to be deposited in the Custodial Account
pursuant to Section 2.01, 2.10, 2.17, 4.01 or 4.02;
(vii) any amounts payable in connection with the repurchase of any
Mortgage Loan pursuant to Section 8 of the Purchase Agreement; and
(viii) any amounts required to be deposited by the Seller pursuant to
Section 2.11 in connection with the deductible clause in any blanket hazard
insurance policy.
The foregoing requirements for deposit into the Custodial Account shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges and
assumption fees, to the extent permitted by Section 4.01, need not be deposited
by the Seller into the Custodial Account. Any interest paid on funds deposited
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in the Custodial Account by the depository institution shall accrue to the
benefit of the Seller and the Seller shall be entitled to retain and withdraw
such interest from the Custodial Account pursuant to Section 2.05.
Section 2.05 Permitted Withdrawals From Custodial Account. The Seller
shall, from time to time, withdraw funds from the Custodial Account for the
following purposes:
(i) to make payments to the Purchaser in the amounts and in the manner
provided for in Section 3.01;
(ii) to reimburse itself for unreimbursed Servicing Advances, any
unpaid Servicing Fees and for unreimbursed advances of Seller funds made
pursuant to Section 2.17, 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 any such reimbursement, the Seller's right thereto shall be prior
to the rights of the Purchaser except that, where the Seller is required to
repurchase a Mortgage Loan pursuant to Section 8 of the Purchase Agreement
or Section 4.02 of this Agreement, the Seller's right to such reimbursement
shall be subsequent to the payment to the Purchaser of the Repurchase Price
pursuant to such sections and all other amounts required to be paid to the
Purchaser with respect to such Mortgage Loan;
(iii) to pay itself interest on funds deposited in the Custodial
Account;
(iv) to reimburse itself for expenses incurred and reimbursable to it
pursuant to Section 4.03;
(v) to clear and terminate the Custodial Account upon the termination
of this Agreement; and
(vi) to withdraw funds deposited in error.
In the event that the Custodial Account is interest bearing, on each
Remittance Date, the Seller shall withdraw all funds from the Custodial Account
except for those amounts which, pursuant to Section 3.01, the Seller is not
obligated to remit on such Remittance Date. The Seller may use such withdrawn
funds only for the purposes described in this Section 2.05.
Section 2.06 Establishment of and Deposits to Escrow Account. The
Seller shall segregate and hold all funds collected and received pursuant to a
Mortgage Loan constituting Escrow Payments separate and apart from any of its
own funds and general assets and shall establish and maintain one or more Escrow
Accounts, in the form of time deposit or demand accounts, titled, "BancMortgage,
A Division of National Bank of Commerce, in trust for ▇▇▇▇▇▇ Brothers Bank, FSB
Residential Fixed and Adjustable Rate Mortgage Loans, Group No. 2003-1, and
various Mortgagors". The Escrow Accounts shall be established with a Qualified
Depository, in a manner which shall provide maximum available insurance
thereunder. Funds deposited in the Escrow Account may be drawn on by the Seller
in accordance with Section 2.07. The creation of any Escrow Account shall be
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evidenced by a certification in the form of Exhibit 4 hereto, in the case of an
account established with the Seller, or by a letter agreement in the form of
Exhibit 5 hereto, in the case of an account held by a depository other than the
Seller. A copy of such certification shall be furnished to the Purchaser and,
upon request, to any subsequent Purchaser.
The Seller shall deposit in the Escrow Account or Accounts on a daily
basis, and retain therein:
(i) all Escrow Payments collected on account of the Mortgage Loans, for
the purpose of effecting timely payment of any such items as required under
the terms of this Agreement; and
(ii) all amounts representing Insurance Proceeds or Condemnation
Proceeds which are to be applied to the restoration or repair of any
Mortgaged Property.
The Seller shall make withdrawals from the Escrow Account only to
effect such payments as are required under this Agreement, as set forth in
Section 2.07. The Seller shall be entitled to retain any interest paid on funds
deposited in the Escrow Account by the depository institution, other than
interest on escrowed funds required by law to be paid to the Mortgagor. To the
extent required by law, the Seller shall pay interest on escrowed funds to the
Mortgagor notwithstanding that the Escrow Account may be non-interest bearing or
that interest paid thereon is insufficient for such purposes.
Section 2.07 Permitted Withdrawals From Escrow Account. Withdrawals
from the Escrow Account or Accounts may be made by the Seller only:
(i) to effect timely payments of ground rents, taxes, assessments,
water rates, mortgage insurance premiums, condominium charges, fire and
hazard insurance premiums or other items constituting Escrow Payments for
the related Mortgage;
(ii) to reimburse the Seller for any Servicing Advance made by the
Seller pursuant to Section 2.08 with respect to a related Mortgage Loan,
but only from amounts received on the related Mortgage Loan which represent
late collections of Escrow Payments thereunder;
(iii) to refund to any Mortgagor any funds found to be in excess of the
amounts required under the terms of the related Mortgage Loan;
(iv) for transfer to the Custodial Account and application to reduce
the principal balance of the Mortgage Loan in accordance with the terms of
the related Mortgage and Mortgage Note;
(v) for application to restoration or repair of the Mortgaged Property
in accordance with the procedures outlined in Section 2.15;
(vi) to pay to the Seller, or any Mortgagor to the extent required by
law, any interest paid on the funds deposited in the Escrow Account;
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(vii) to clear and terminate the Escrow Account on the termination of
this Agreement; and
(viii) to withdraw funds deposited in error.
Section 2.08 Payment of Taxes, Insurance and Other Charges. With
respect to each Mortgage Loan, the Seller shall maintain accurate records
reflecting the status of ground rents, taxes, assessments, water rates, sewer
rents, and other charges which are or may become a lien upon the Mortgaged
Property and the status of PMI Policy premiums and fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of such
charges (including renewal premiums) and shall effect payment thereof prior to
the applicable penalty or termination date, employing for such purpose deposits
of the Mortgagor in the Escrow Account which shall have been estimated and
accumulated by the Seller in amounts sufficient for such purposes, as allowed
under the terms of the Mortgage. To the extent that a 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
payment of all such charges irrespective of each Mortgagor's faithful
performance in the payment of same or the making of the Escrow Payments, and the
Seller shall make advances from its own funds to effect such payments.
Section 2.09 PMI Obligations. The Servicer shall comply with all
provisions of applicable state and federal law relating to the cancellation of,
or collection of premiums with respect to, PMI Policies, including, but not
limited to, the provisions of the Homeowners Protection Act of 1998, and all
regulations promulgated thereunder, as amended from time to time.
Section 2.10 Protection of Accounts. The Seller may transfer the
Custodial Account or the Escrow Account to a different Qualified Depository from
time to time. Such transfer shall be made only upon obtaining the consent of the
Purchaser, which consent shall not be withheld unreasonably.
The Seller shall bear any expenses, losses or damages sustained by the
Purchaser because the Custodial Account and/or the Escrow Account are not demand
deposit accounts.
Amounts on deposit in the Custodial Account and the Escrow Account may
at the option of the Seller be invested in Eligible Investments; provided that
in the event that amounts on deposit in the Custodial Account or the Escrow
Account exceed the amount fully insured by the FDIC (the "Insured Amount") the
Seller shall be obligated to invest the excess amount over the Insured Amount in
Eligible Investments on the same Business Day as such excess amount becomes
present in the Custodial Account or the Escrow Account. Any such Eligible
Investment shall mature no later than the Determination Date next following the
date of such Eligible Investment, provided, however, that if such Eligible
Investment is an obligation of a Qualified Depository (other than the Seller)
that maintains the Custodial Account or the Escrow Account, then such Eligible
Investment may mature on such Remittance Date. Any such Eligible Investment
shall be made in the name of the Seller in trust for the benefit of the
Purchaser. All income on or gain realized from any such Eligible Investment
shall be for the benefit of the Seller and may be withdrawn at any time by the
Seller. Any losses incurred in respect of any such investment shall be deposited
in the Custodial Account or the Escrow Account, by the Seller out of its own
funds immediately as realized.
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Section 2.11 Maintenance of Hazard Insurance. The Seller shall cause
to be maintained for each Mortgage Loan, hazard insurance such that all
buildings upon the Mortgaged Property are insured by a generally acceptable
insurer rated A:VI or better in the current Best's Key Rating Guide ("Best's")
against loss by fire, hazards of extended coverage and such other hazards as are
customary in the area where the Mortgaged Property is located, in an amount
which is at least equal to the lesser of (i) the maximum insurable value of the
improvements securing such Mortgage Loan and (ii) the greater of (a) the
outstanding principal balance of the Mortgage Loan and (b) an amount such that
the proceeds thereof shall be sufficient to prevent the Mortgagor or the loss
payee from becoming a co-insurer.
If upon origination of the Mortgage Loan, the related Mortgaged
Property was located in an area identified in the Federal Register by the Flood
Emergency Management Agency as having special flood hazards (and such flood
insurance has been made available) a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
is in effect with a generally acceptable insurance carrier rated A:VI or better
in Best's in an amount representing coverage equal to the lesser of (i) the
minimum amount required, under the terms of coverage, to compensate for any
damage or loss on a replacement cost basis (or the unpaid balance of the
mortgage if replacement cost coverage is not available for the type of building
insured) and (ii) the maximum amount of insurance which is available under the
Flood Disaster Protection Act of 1973, as amended. If at any time during the
term of the Mortgage Loan, the Seller determines in accordance with applicable
law and pursuant to the ▇▇▇▇▇▇ ▇▇▇ Guides that a Mortgaged Property is located
in a special flood hazard area and is not covered by flood insurance or is
covered in an amount less than the amount required by the Flood Disaster
Protection Act of 1973, as amended, the Seller shall notify the related
Mortgagor that the Mortgagor must obtain such flood insurance coverage, and if
said Mortgagor fails to obtain the required flood insurance coverage within
forty-five (45) days after such notification, the Seller shall immediately force
place the required flood insurance on the Mortgagor's behalf.
If a Mortgage is secured by a unit in a condominium project, the Seller
shall verify that the coverage required of the owner's association, including
hazard, flood, liability, and fidelity coverage, is being maintained in
accordance with then current ▇▇▇▇▇▇ Mae requirements, and secure from the
owner's association its agreement to notify the Seller promptly of any change in
the insurance coverage or of any condemnation or casualty loss that may have a
material effect on the value of the Mortgaged Property as security.
The Seller shall cause to be maintained on each Mortgaged Property
earthquake or such other or additional insurance as may be required pursuant to
such applicable laws and regulations as shall at any time be in force and as
shall require such additional insurance, or pursuant to the requirements of any
private mortgage guaranty insurer, or as may be required to conform with
Accepted Servicing Practices.
In the event that the Purchaser or the Seller shall determine that the
Mortgaged Property should be insured against loss or damage by hazards and risks
not covered by the insurance required to be maintained by the Mortgagor pursuant
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to the terms of the Mortgage, the Seller shall communicate and consult with the
Mortgagor with respect to the need for such insurance and bring to the
Mortgagor's attention the desirability of protection of the Mortgaged Property.
All policies required hereunder shall name the Seller as loss payee and
shall be endorsed with standard or New York mortgagee clauses, without
contribution, which shall provide for at least 30 days prior written notice of
any cancellation, reduction in amount or material change in coverage.
The 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 rated A:VI or better in Best's and are licensed to do
business in the jurisdiction in which the Mortgaged Property is located. The
Seller shall determine that such policies provide sufficient risk coverage and
amounts, that they insure the property owner, and that they properly describe
the property address. The Seller shall furnish to the Mortgagor a formal notice
of expiration of any such insurance in sufficient time for the Mortgagor to
arrange for renewal coverage by the expiration date.
Pursuant to Section 2.04, 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 related Mortgaged Property, or
property acquired in liquidation of the Mortgage Loan, or to be released to the
Mortgagor, in accordance with the Seller's normal servicing procedures as
specified in Section 2.15) shall be deposited in the Custodial Account subject
to withdrawal pursuant to Section 2.05.
Section 2.12 Maintenance of Mortgage Impairment Insurance. In the
event that the Seller shall obtain and maintain a blanket policy insuring
against losses arising from fire and hazards covered under extended coverage on
all of the Mortgage Loans, then, to the extent such policy provides coverage in
an amount equal to the amount required pursuant to Section 2.11 and otherwise
complies with all other requirements of Section 2.11, it shall conclusively be
deemed to have satisfied its obligations as set forth in Section 2.11. Any
amounts collected by the Seller under any such policy relating to a Mortgage
Loan shall be deposited in the Custodial Account subject to withdrawal pursuant
to Section 2.05. Such policy may contain a deductible clause, in which case, in
the event that there shall not have been maintained on the related Mortgaged
Property a policy complying with Section 2.11, and there shall have been a loss
which would have been covered by such policy, the Seller shall deposit in the
Custodial Account at the time of such loss the amount not otherwise payable
under the blanket policy because of such deductible clause, such amount to be
deposited from the Seller's funds, without reimbursement therefor. 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
30 days' prior written notice to the Purchaser.
Section 2.13 Maintenance of Fidelity Bond and Errors and Omissions
Insurance. The Seller shall maintain with responsible companies, at its own
expense, a blanket Fidelity Bond and an Errors and Omissions Insurance Policy,
with broad
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coverage on all officers, employees or other persons acting in any capacity
requiring such persons to handle funds, money, documents or papers relating to
the Mortgage Loans ("Seller Employees"). Any such Fidelity Bond and Errors and
Omissions Insurance Policy shall be in the form of the Mortgage Banker's Blanket
Bond and shall protect and insure the Seller against losses, including forgery,
theft, embezzlement, fraud, errors and omissions and negligent acts of such
Seller Employees. Such Fidelity Bond and Errors and Omissions Insurance Policy
also shall protect and insure the Seller against losses in connection with the
release or satisfaction of a Mortgage Loan without having obtained payment in
full of the indebtedness secured thereby. No provision of this Section 2.13
requiring such Fidelity Bond and Errors and Omissions Insurance Policy 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 ▇▇▇▇▇▇ ▇▇▇ in
the ▇▇▇▇▇▇ Mae Guides or by ▇▇▇▇▇▇▇ Mac in the ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇' & Servicers'
Guide. Upon the request of the Purchaser, the Seller shall cause to be delivered
to the Purchaser a certified true copy of such fidelity bond and insurance
policy and a statement from the surety and the insurer that such fidelity bond
and insurance policy shall in no event be terminated or materially modified
without 30 days' prior written notice to the Purchaser.
Section 2.14 Inspections. The Seller shall inspect the Mortgaged
Property as often as deemed necessary by the Seller to assure itself that the
value of the Mortgaged Property is being preserved. In addition, if any Mortgage
Loan is more than 60 days delinquent, the Seller immediately shall inspect the
Mortgaged Property and shall conduct subsequent inspections in accordance with
Accepted Servicing Practices or as may be required by the primary mortgage
guaranty insurer. The Seller shall keep a written report of each such
inspection.
Section 2.15 Restoration of Mortgaged Property. The Seller need not
obtain the approval of the Purchaser prior to releasing any Insurance Proceeds
or Condemnation Proceeds to the Mortgagor to be applied to the restoration or
repair of the Mortgaged Property if such release is in accordance with Accepted
Servicing Practices. At a minimum, the Seller shall comply with the following
conditions in connection with any such release of Insurance Proceeds or
Condemnation Proceeds:
(i) the Seller shall receive satisfactory independent verification of
completion of repairs and issuance of any required approvals with respect
thereto;
(ii) the Seller shall take all steps necessary to preserve the priority
of the lien of the Mortgage, including, but not limited to requiring
waivers with respect to mechanics' and materialmen's liens;
(iii) the Seller shall verify that the Mortgage Loan is not in default;
and
(iv) pending repairs or restoration, the Seller shall place the
Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
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If the Purchaser is named as an additional loss payee, the Seller is
hereby empowered to endorse any loss draft issued in respect of such a claim in
the name of the Purchaser.
Section 2.16 Maintenance of PMI Policy; Claims. With respect to each
Mortgage Loan with a LTV in excess of 80%, the Seller shall, without any cost to
the Purchaser, maintain or cause the Mortgagor to maintain in full force and
effect a PMI Policy insuring that portion of the Mortgage Loan in excess of 75%
of value, and shall pay or shall cause the Mortgagor to pay the premium thereon
on a timely basis, until the LTV of such Mortgage Loan is reduced to 80%. In the
event that such PMI Policy shall be terminated, the Seller shall obtain from
another Qualified Insurer a comparable replacement policy, with a total coverage
equal to the remaining coverage of such terminated PMI Policy. If the insurer
shall cease to be a Qualified Insurer, the Seller shall determine whether
recoveries under the PMI Policy are jeopardized for reasons related to the
financial condition of such insurer, it being understood that the Seller shall
in no event have any responsibility or liability for any failure to recover
under the PMI Policy for such reason. If the Seller determines that recoveries
are so jeopardized, it shall notify the Purchaser and the Mortgagor, if
required, and obtain from another Qualified Insurer a replacement insurance
policy. The Seller shall not take any action which would result in noncoverage
under any applicable PMI Policy of any loss which, but for the actions of the
Seller would have been covered thereunder. In connection with any assumption or
substitution agreement entered into or to be entered into pursuant to Section
4.01, the Seller shall promptly notify the insurer under the related PMI Policy,
if any, of such assumption or substitution of liability in accordance with the
terms of such PMI Policy and shall take all actions which may be required by
such insurer as a condition to the continuation of coverage under such PMI
Policy. If such PMI Policy is terminated as a result of such assumption or
substitution of liability, the Seller shall obtain a replacement PMI 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 PMI Policy in a timely fashion in accordance with the terms of
such PMI Policy and, in this regard, to take such action as shall be necessary
to permit recovery under any PMI Policy respecting a defaulted Mortgage Loan.
Pursuant to Section 2.04, any amounts collected by the Seller under any PMI
Policy shall be deposited in the Custodial Account, subject to withdrawal
pursuant to Section 2.05.
Section 2.17 Title, Management and Disposition of REO Property. In the
event that title to any Mortgaged Property is acquired in foreclosure or by deed
in lieu of foreclosure, the deed or certificate of sale shall be taken in the
name of the Purchaser, or in the event the Purchaser is not authorized or
permitted to hold title to real property in the state where the REO Property is
located, or would be adversely affected under the "doing business" or tax laws
of such state by so holding title, the deed or certificate of sale shall be
taken in the name of such Person or Persons as shall be consistent with an
Opinion of Counsel obtained by the Seller from any attorney duly licensed to
practice law in the state where the REO Property is located. The Person or
Persons holding such title other than the Purchaser shall acknowledge in writing
that such title is being held as nominee for the Purchaser.
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The Seller shall manage, conserve, protect and operate each REO
Property for the Purchaser solely for the purpose of its prompt disposition and
sale. The Seller, either itself or through an agent selected by the Seller,
shall manage, conserve, protect and operate the REO Property in the same manner
that it manages, conserves, protects and operates other foreclosed property for
its own account, and in the same manner that similar property in the same
locality as the REO Property is managed. The Seller shall attempt to sell the
same (and may temporarily rent the same for a period not greater than one year,
except as otherwise provided below) on such terms and conditions as the Seller
deems to be in the best interest of 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 an appropriate notice to the Purchaser to such effect, that a longer
period is necessary for the orderly liquidation of such REO Property. If a
period longer than one year is permitted under the foregoing sentence and 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 such purchase money mortgage shall not be held pursuant
to this Agreement, but instead a separate participation agreement among the
Seller and Purchaser shall be entered into with respect to such purchase money
mortgage.
The Seller shall also maintain on each REO Property fire and hazard
insurance with extended coverage in an amount which is at least equal to the
maximum insurable value of the improvements which are a part of such property,
liability insurance and, to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance in the amount
required above.
The disposition of REO Property shall be carried out by the Seller at
such price, and upon such terms and conditions, as the Seller deems to be in the
best interests of the Purchaser. The proceeds of sale of the REO Property shall
be promptly deposited in the Custodial Account. As soon as practical thereafter
the expenses of such sale shall be paid and the Seller shall reimburse itself
for any related unreimbursed Servicing Advances, unpaid Servicing Fees and
unreimbursed advances made pursuant to this Section, and on the Remittance Date
immediately following the Principal Prepayment Period in which such sale
proceeds are received the net cash proceeds of such sale remaining in the
Custodial Account shall be distributed to the Purchaser.
With respect to each REO Property, the Seller shall hold all funds
collected and received in connection with the operation of the REO Property in
the Custodial Account. The Seller shall cause to be deposited on a daily basis
upon the receipt thereof in each Custodial Account all revenues received with
respect to the conservation and disposition of the related REO Property.
Notwithstanding the foregoing, at any time and from time to time, the
Purchaser may at its election terminate this Agreement with respect to one or
more REO Properties as provided by Section 6.03(d).
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Section 2.18 Permitted Withdrawals with respect to REO Property. The
Seller shall withdraw REO funds on deposit in the Custodial Account with respect
to each related REO Property necessary for the proper operation, management and
maintenance of the REO Property, including the cost of maintaining any hazard
insurance pursuant to Section 2.11 and the fees of any managing agent acting on
behalf of the Seller. The Seller shall make monthly distributions on each
Remittance Date to the Purchaser of the net cash flow from the REO Property
(which shall equal the revenues from such REO Property net of the expenses
described in Section 2.17 and of any reserves reasonably required from time to
time to be maintained to satisfy anticipated liabilities for such expenses).
Section 2.19 Real Estate Owned Reports. Together with the statement
furnished pursuant to Section 2.20, the Seller shall furnish to the Purchaser on
or before the 15th day of each month a statement with respect to any REO
Property covering the operation of such REO Property for the previous month and
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. That statement shall be accompanied by such other information as the
Purchaser shall reasonably request.
Section 2.20 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 2.21 Notification of Adjustments. With respect to each
adjustable rate Mortgage Loan, the Seller shall adjust the Mortgage Interest
Rate on the related Interest Rate Adjustment Date in compliance with the
requirements of applicable law and the related Mortgage and Mortgage Note. The
Seller shall execute and deliver any and all necessary notices required under
applicable law and the terms of the related Mortgage Note and Mortgage regarding
the Mortgage Interest Rate adjustments. The Seller shall promptly, upon written
request therefor, deliver to the Purchaser such notifications and any additional
applicable data regarding such adjustments and the methods used to calculate and
implement such adjustments. Upon the discovery by the Seller or the receipt of
notice from the Purchaser that the Seller has failed to adjust a Mortgage
Interest Rate in accordance with the terms of the related Mortgage Note, the
Seller shall immediately deposit in the Custodial Account from its own funds the
amount of any interest loss or deferral caused the Purchaser thereby.
Section 2.22 Reports of Foreclosures and Abandonments of Mortgaged
Property. Following the foreclosure sale or abandonment of any Mortgaged
Property, the Seller shall report such foreclosure or abandonment as required
pursuant to Section 6050J of the Code.
Section 2.23 Credit Reporting For each Mortgage Loan, the Servicer
shall accurately and fully furnish, in accordance with the Fair Credit Reporting
Act and its implementing regulations, accurate and complete information on its
borrower credit files to each of the following credit repositories: Equifax
Credit Information Services, Inc., TransUnion, LLC and Experian Information
Solution, Inc. on a monthly basis.
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ARTICLE III
PAYMENTS TO PURCHASER
Section 3.01 Remittances. On each Remittance Date the Seller shall
remit by wire transfer of immediately available funds to the Purchaser (a) all
amounts deposited in the Custodial Account as of the close of business on the
Determination Date (net of charges against or withdrawals from the Custodial
Account pursuant to Section 2.05), plus (b) all amounts, if any, which the
Seller is obligated to distribute pursuant to Section 2.03.
With respect to any remittance received by the Purchaser after the
second Business Day following the Business Day on which such payment was due,
the Seller shall pay to the Purchaser interest on any such late payment at an
annual rate equal to the Prime Rate, adjusted as of the date of each change,
plus three percentage points, but in no event greater than the maximum amount
permitted by applicable law. Such interest shall be deposited in the Custodial
Account by the Seller on the date such late payment is made and shall cover the
period commencing with the day following such second Business Day and ending
with the Business Day on which such payment is made, both inclusive. Such
interest shall be remitted along with the distribution payable on the next
succeeding Remittance Date. The payment by the 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 3.02 Statements to Purchaser. Not later than the Remittance
Date, the Seller shall furnish to the Purchaser a Monthly Remittance Advice,
with a trial balance report attached thereto, in the form of Exhibit 1 annexed
hereto in hard copy and electronic medium mutually acceptable to the parties as
to the preceding remittance and the period ending on the preceding Determination
Date.
In addition, not more than 60 days after the end of each calendar year,
the Seller shall furnish to each Person who was a Purchaser at any time during
such calendar year an annual statement in accordance with the requirements of
applicable federal income tax law as to the aggregate of remittances for the
applicable portion of such year.
Such obligation of the Seller shall be deemed to have been satisfied to
the extent that substantially comparable information shall be provided by the
Seller pursuant to any requirements of the Internal Revenue Code as from time to
time are in force.
The Seller shall prepare and file any and all tax returns, information
statements or other filings required to be delivered to any governmental taxing
authority or to the Purchaser pursuant to any applicable law with respect to the
Mortgage Loans and the transactions contemplated hereby. In addition, 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 as
the Purchaser may reasonably request from time to time.
Section 3.03 Principal and Interest Advances by Seller. The Seller
shall have no obligation to advance any amounts constituting delinquent
principal and interest payments.
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ARTICLE IV
GENERAL SERVICING PROCEDURES
Section 4.01 Transfers of Mortgaged Property. The Seller shall use its
best efforts to enforce any "due-on-sale" provision contained in any Mortgage or
Mortgage Note and to deny assumption by the person to whom the Mortgaged
Property has been or is about to be sold whether by absolute conveyance or by
contract of sale, and whether or not the Mortgagor remains liable on the
Mortgage and the Mortgage Note. When the Mortgaged Property has been conveyed by
the Mortgagor, the Seller shall, to the extent it has knowledge of such
conveyance, exercise its rights to accelerate the maturity of such Mortgage Loan
under the "due-on-sale" clause applicable thereto, provided, however, that the
Seller shall not exercise such rights if prohibited by law from doing so or if
the exercise of such rights would impair or threaten to impair any recovery
under the related PMI Policy, if any.
If the Seller reasonably believes it is unable under applicable law to
enforce such "due-on-sale" clause, the Seller shall enter into (i) an assumption
and modification agreement with the person to whom such property has been
conveyed, pursuant to which such person becomes liable under the Mortgage Note
and the original Mortgagor remains liable thereon or (ii) in the event the
Seller is unable under applicable law to require that the original Mortgagor
remain liable under the Mortgage Note and the Seller has the prior consent of
the primary mortgage guaranty insurer, a substitution of liability agreement
with the purchaser of the Mortgaged Property pursuant to which the original
Mortgagor is released from liability and the purchaser of the Mortgaged Property
is substituted as Mortgagor and becomes liable under the Mortgage Note. If an
assumption fee is collected by the Seller for entering into an assumption
agreement, a portion of such fee, up to an amount equal to one-half of one
percent (0.5%) of the outstanding principal balance of the related Mortgage
Loan, will be retained by the Seller as additional servicing compensation, and
any portion thereof in excess of one-half of one percent (0.5%) shall be
deposited in the Custodial Account for the benefit of the Purchaser. In
connection with any such assumption, neither the Mortgage Interest Rate borne by
the related Mortgage Note, the term of the Mortgage Loan nor the outstanding
principal amount of the Mortgage Loan shall be changed.
To the extent that any Mortgage Loan is assumable, the Seller shall
inquire diligently into the creditworthiness of the proposed transferee, and
shall use the underwriting criteria for approving the credit of the proposed
transferee which are used by ▇▇▇▇▇▇ ▇▇▇ with respect to underwriting mortgage
loans of the same type as the Mortgage Loans. If the credit of the proposed
transferee does not meet such underwriting criteria, the Seller diligently
shall, to the extent permitted by the Mortgage or the Mortgage Note and by
applicable law, accelerate the maturity of the Mortgage Loan.
Section 4.02 Satisfaction of Mortgages and Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the Seller of a
notification that payment in full will be escrowed in a manner customary for
such purposes, the Seller shall notify the Purchaser in the Monthly Remittance
Advice as provided in Section 3.02, and may request the release of any Mortgage
Loan Documents from the Purchaser in accordance with this Section 4.02 hereof.
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If the Seller satisfies or releases a Mortgage without first having
obtained payment in full of the indebtedness secured by the Mortgage or should
the Seller otherwise prejudice any rights the Purchaser may have under the
mortgage instruments, upon written demand of the Purchaser, the Seller shall
repurchase the related Mortgage Loan at the Repurchase Price by deposit thereof
in the Custodial Account within 2 Business Days of receipt of such demand by the
Purchaser. The Seller shall maintain the Fidelity Bond and Errors and Omissions
Insurance Policy as provided for in Section 2.13 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.
Section 4.03 Servicing Compensation. As consideration for servicing
the Mortgage Loans during the period from the Closing Date up to but not
including the Transfer Date, the Seller shall retain a Servicing Fee with
respect to each Mortgage Loan in the amount of $7.00 per month, which amount
shall be prorated for any portion of a month during which the Mortgage Loan is
serviced by the Seller pursuant to this Agreement. The obligation of the
Purchaser to pay the Servicing Fee is limited to, and the Servicing Fee is
payable solely from, the interest portion (including recoveries with respect to
interest from Liquidation Proceeds, to the extent permitted by Section 2.02), of
such Monthly Payment collected by the Seller, or as otherwise provided under
Section 2.03.
Additional servicing compensation in the form of assumption fees, to
the extent provided in Section 4.01, and late payment 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 thereof except as specifically provided for herein.
Section 4.04 Annual Statement as to Compliance. The Seller shall
deliver to the Purchaser, on or before March 31 each year beginning March 31,
2004, and on the Transfer Date an Officer's Certificate, stating 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 officer's supervision,
and (ii) the Seller has complied fully with the provisions of Article II and
Article IV, and (iii) to the best of such officer's knowledge, based on such
review, the Seller has fulfilled all 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 and the action being taken by the Seller to cure such
default.
Section 4.05 Annual Independent Public Accountants' Servicing Report.
On or before March 31st of each year beginning March 31, 2004, the Seller, at
its expense, shall cause a firm of independent public accountants which is a
member of the American Institute of Certified Public Accountants to furnish a
statement to each Purchaser to the effect that such firm has examined certain
documents and records relating to the servicing of the Mortgage Loans and this
Agreement and that such firm is of the opinion that the provisions of Article II
and Article III have been complied with, and that, on the basis of such
examination conducted substantially in compliance with the Single Audit Program
for Mortgage Bankers, nothing has come to their attention which would indicate
that such servicing has not been conducted in compliance therewith, except for
(i) such exceptions as such firm shall believe to be immaterial, and (ii) such
other exceptions as shall be set forth in such statement.
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Section 4.06 Right to Examine Seller Records. The Purchaser shall
have the right to examine and audit any and all of the books, records, or other
information of the Seller, whether held by the Seller or by another on its
behalf, with respect to or concerning this Agreement or the Mortgage Loans,
during business hours or at such other times as may be reasonable under
applicable circumstances, upon reasonable advance notice.
ARTICLE V
SELLER TO COOPERATE
Section 5.01 Provision of Information. During the term of this
Agreement, the Seller shall furnish to the Purchaser such periodic, special, or
other reports or information, whether or not provided for herein, as shall be
necessary, reasonable, or appropriate with respect to the Purchaser or the
purposes of this Agreement. All such reports or information shall be provided by
and in accordance with all reasonable instructions and directions which the
Purchaser may give.
The Seller shall execute and deliver all such instruments and take all
such action as the Purchaser may reasonably request from time to time, in order
to effectuate the purposes and to carry out the terms of this Agreement.
Section 5.02 Financial Statements; Servicing Facilities. In connection
with marketing the Mortgage Loans, the Purchaser may make available to a
prospective Purchaser a Consolidated Statement of Operations of the Seller for
the most recently completed five fiscal years for which such a statement is
available, as well as a Consolidated Statement of Condition at the end of the
last two fiscal years covered by such Consolidated Statement of Operations. The
Seller also shall make available any comparable interim statements to the extent
any such statements have been prepared by or on behalf of the Seller (and are
available upon request to members or stockholders of the Seller or to the public
at large). If it has not already done so, the Seller shall furnish promptly to
the Purchaser copies of the statement specified above.
The Seller shall make available to the Purchaser or any prospective
Purchaser a knowledgeable financial or accounting officer for the purpose of
answering questions respecting recent developments affecting the Seller or the
financial statements of the Seller, and to permit any prospective Purchaser to
inspect the Seller's servicing facilities or those of any Subservicer for the
purpose of satisfying such prospective Purchaser that the Seller and any
Subservicer have the ability to service the Mortgage Loans as provided in this
Agreement.
Section 5.03 Compliance with Safeguarding Customer Information
Requirements. The Seller has implemented and will maintain security measures
designed to meet the objectives of the Interagency Guidelines Establishing
Standards for Safeguarding Customer Information published in final form on
February 1, 2001, 66 Fed. Reg. 8616, and the rules promulgated thereunder, as
amended from time to time (the "Guidelines"). The Seller shall promptly provide
Purchaser with information regarding such security measures upon the reasonable
request of Purchaser which information shall include, but not be limited to, any
SAS 70 report covering the Seller's operations, and any other audit reports,
summaries of test results or equivalent measures taken by the Seller with
respect to its security measures.
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ARTICLE VI
TERMINATION
Section 6.01 Agency Suspension. Should the Seller at any time during
the term of this Agreement have its right to service temporarily or permanently
suspended by ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac or otherwise cease to be an approved
seller/servicer of conventional residential mortgage loans for ▇▇▇▇▇▇ Mae or
▇▇▇▇▇▇▇ Mac, then the Purchaser may immediately terminate this Agreement and
accelerate performance of the provisions of the Purchase Agreement to require
immediate transfer of the Servicing Rights.
Section 6.02 Damages. The Purchaser shall have the right at any time
to seek and recover from the Seller any damages or losses suffered by it as a
result of any failure by the Seller to observe or perform any duties,
obligations, covenants or agreements herein contained or contained in the
Purchase Agreement, or as a result of a party's failure to remain an approved
▇▇▇▇▇▇ Mae mortgage servicer. Section 6.03 Termination Upon Transfer of
Servicing. Termination Procedures. This Agreement shall terminate with respect
to the Mortgage Loans or portion thereof transferred on the Transfer Date. In no
case shall the Transfer Date be later than September 1, 2003.
The Purchaser may elect to terminate this Agreement and transfer the
servicing from the Seller prior to the Transfer Date with respect to all or any
portion of the Mortgage Loans by providing written notice to the Seller at least
10 Business Days prior to the date on which it intends to transfer the servicing
of its intent to transfer the servicing from the Seller. On or before the date
specified by the Purchaser in accordance with this paragraph (a) for the
transfer of servicing from the Seller, the Seller shall prepare, execute and
deliver to the successor entity designated by the Purchaser any and all
documents and other instruments, place in such successor's possession all
Mortgage Loan Documents necessary or appropriate to effect the purposes of such
notice of termination, including but not limited to the transfer and endorsement
or assignment of the Mortgage Loans and related documents, at the Seller's sole
expense. The Seller shall cooperate with the Purchaser and such successor in
effecting the termination of the Seller's responsibilities and rights hereunder.
On the Transfer Date, the Seller shall comply with all of the
provisions of Section 5 of the Purchase Agreement to effect a complete transfer
of the Servicing Rights. On the related Transfer Date for each Mortgage Loan,
this Agreement, except for Articles VI, VIII, IX and X which shall survive the
Transfer Date, shall terminate.
(a) Mortgage Loans in Foreclosure. The servicing with respect to
Mortgage Loans in foreclosure on or before the Transfer Date shall not be
transferred from the Seller to the Purchaser or the successor servicer, as the
case may be, and such Mortgage Loans shall continue to be serviced by the Seller
pursuant to the terms of this Agreement. However, if the Purchaser so elects,
the Purchaser may waive the provisions of this paragraph (b) and accept transfer
of servicing of such Mortgage Loans and all amounts received by the Seller
thereunder.
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(b) Servicing Advances. Notwithstanding the fact that the Transfer Date
has occurred, the Seller shall not be reimbursed for any Servicing Advances with
respect to any Mortgage Loan until the Seller or the successor servicer receives
a Monthly Payment or Liquidation Proceeds with respect to such Mortgage Loan. At
such time, the Seller shall be entitled to be reimbursed for all unreimbursed
Servicing Advances with respect to such Mortgage Loan on a first priority basis
(but subject to any successor servicer's rights to reimbursement with respect to
Servicing Advances) from the Monthly Payment or Liquidation Proceeds received
with respect to such Mortgage Loan. This Section 6.03(c) shall survive the
Transfer Date.
(c) Additional Termination Provisions. Notwithstanding and in addition
to the foregoing, in the event that (i) a Mortgage Loan becomes delinquent for a
period of 90 days or more (a "Delinquent Mortgage Loan") or (ii) a Mortgage Loan
becomes an REO Property, the Purchaser may at its election terminate this
Agreement with respect to such Delinquent Mortgage Loan or REO Property, upon 15
days' written notice to the Seller.
ARTICLE VII
BOOKS AND RECORDS
Section 7.01 Possession of Servicing Files Prior to the Transfer Date.
Prior to the Transfer Date, the contents of each Servicing File are and shall be
held in trust by the Seller for the benefit of the Purchaser as the owner
thereof. The Seller shall maintain in the Servicing File a copy of the contents
of each Mortgage File and the originals of the documents in each Mortgage File
not delivered to the Purchaser. The possession of the Servicing File by the
Seller is at the will of the Purchaser for the sole purpose of servicing the
related Mortgage Loan, pursuant to this Agreement, and such retention and
possession by the Seller is in its capacity as Servicer only and at the election
of the Purchaser. The Seller shall release its custody of the contents of any
Servicing File only in accordance with written instructions from the Purchaser,
unless such release is required as incidental to the Seller's servicing of the
Mortgage Loans pursuant to this Agreement, or is in connection with a repurchase
of any Mortgage Loan pursuant to Section 8 of the Purchase Agreement.
The Seller shall be responsible for maintaining, and shall maintain, a
complete set of books and records for each Mortgage Loan which shall be marked
clearly to reflect the ownership of each Mortgage Loan by the Purchaser. In
particular, the Seller shall maintain in its possession, available for
inspection by the Purchaser or its designee, and shall deliver to the Purchaser
or its designee upon demand, evidence of compliance with all federal, state and
local laws, rules and regulations, and requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇
Mac, including but not limited to documentation as to the method used in
determining the applicability of the provisions of the Flood Disaster Protection
Act of 1973, as amended, to the Mortgaged Property, documentation evidencing
insurance coverage and eligibility of any condominium project for approval by
▇▇▇▇▇▇ Mae and periodic inspection reports as required by Section 2.14.
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The Seller shall keep at its servicing office books and records in
which, subject to such reasonable regulations as it may prescribe, the Seller
shall note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be
made unless such transfer is in compliance with the terms hereof. For the
purposes of this Agreement, the Seller shall be under no obligation to deal with
any person with respect to this Agreement or the Mortgage Loans unless the books
and records show such person as the owner of the Mortgage Loan. The Purchaser
may, subject to the terms of this Agreement, sell or transfer one or more of the
Mortgage Loans. The Purchaser also shall advise the Seller of the transfer. Upon
receipt of notice of the transfer, the Seller shall ▇▇▇▇ its books and records
to reflect the ownership of the Mortgage Loans of such assignee, and shall
release the previous Purchaser from its obligations hereunder with respect to
the Mortgage Loans sold or transferred.
ARTICLE VIII
INDEMNIFICATION AND ASSIGNMENT
Section 8.01 Indemnification. The Seller agrees to indemnify the
Purchaser and hold it harmless against any and all claims, losses, damages,
penalties, fines, and forfeitures, including, but not limited to 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
Seller to (a) perform its duties and service the Mortgage Loans in strict
compliance with the terms of this Agreement and/or (b) comply with applicable
law. The Seller immediately shall notify the Purchaser if a claim is made by a
third party with respect to this Agreement, assume (with the prior written
consent of the Purchaser) the defense of any such claim and pay all expenses in
connection therewith, including counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against it or the Purchaser
in respect of such claim. The Seller shall follow any written instructions
received from the Purchaser in connection with such claim. The Purchaser
promptly shall reimburse the Seller for all amounts advanced by it pursuant to
the preceding sentence except when the claim is in any way related to the
Seller's indemnification pursuant to Section 8 of the Purchase Agreement, or the
failure of the Seller to (a) service and administer the Mortgage Loans in strict
compliance with the terms of this Agreement and/or (b) comply with applicable
law.
Section 8.02 Limitation on Liability of Seller and Others. Neither the
Seller nor any of the directors, officers, employees or agents of the Seller
shall be under any liability to the Purchaser for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment, provided, however, that this provision
shall not protect the Seller or any such person against any breach of warranties
or representations made herein, or failure to perform its obligations in strict
compliance with any standard of care set forth in this Agreement, or any
liability which would otherwise be imposed by reason of any breach of the terms
and conditions of this Agreement. The Seller and any director, 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. The Seller shall not be under any obligation to appear in,
prosecute or defend any legal action which is not incidental to its duties to
service the Mortgage loans in accordance with this Agreement and which in its
opinion may involve it in any expense 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 Seller shall be entitled to
reimbursement from the Purchaser of the reasonable legal expenses and costs of
such action.
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Section 8.03 Limitation on Resignation and Assignment by Seller. The
Purchaser has entered into this Agreement with the Seller and subsequent
Purchasers will purchase the Mortgage Loans in reliance upon the independent
status of the Seller, and the representations as to the adequacy of its
servicing facilities, plant, personnel, records and procedures, its integrity,
reputation and financial standing, and the continuance thereof. Therefore, the
Seller shall neither assign this Agreement or the servicing hereunder or
delegate its rights or duties hereunder or any portion hereof (to other than a
Subservicer) or sell or otherwise dispose of all or substantially all of its
property or assets without the prior written consent of the Purchaser, which
consent shall be granted or withheld in the sole discretion of the Purchaser.
The Seller shall not 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 duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Seller. Any such
determination permitting the resignation of the Seller shall be evidenced by an
Opinion of Counsel to such effect delivered to the Purchaser which Opinion of
Counsel shall be in form and substance acceptable to the Purchaser. No such
resignation shall become effective until a successor shall have assumed the
Seller's responsibilities and obligations hereunder in the manner provided in
Section 6.03.
Without in any way limiting the generality of this Section 8.03, in the
event that the Seller either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its 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 consent of the Purchaser, then the
Purchaser shall have the right to terminate this Agreement upon notice given as
set forth in Section 6.03, without any payment of any penalty or damages and
without any liability whatsoever to the Seller or any third party.
Section 8.04 Assignment by Purchaser. The Purchaser shall have the
right, without the consent of the Seller, to assign, in whole or in part, its
interest under this Agreement with respect to some or all of the Mortgage Loans,
and designate any person to exercise any rights of the Purchaser hereunder. All
references to the Purchaser in this Agreement shall be deemed to include its
assignee or designee with respect to such Mortgage Loans.
ARTICLE IX
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER
The Purchaser warrants and represents to, and covenants and agrees
with, the Seller as follows:
Section 9.01 Authority and Capacity. The execution, delivery and
performance by the Purchaser of this Agreement has been and will remain duly and
validly authorized by all necessary corporate action. This Agreement constitutes
and will continue to constitute a legal, valid and enforceable obligation of the
Purchaser.
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Section 9.02 Assistance. To the extent possible, the Purchaser shall
cooperate with and assist the Seller as requested by the Seller, in carrying out
Seller's covenants, agreements duties and responsibilities under the Purchase
Agreement and in connection therewith shall execute and deliver all such papers,
documents and instruments as may be necessary and appropriate in furtherance
thereof.
ARTICLE X
REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller warrants and represents to, and covenants and agrees with,
the Purchaser as follows:
Section 10.01 Due Organization and Authority. The Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the United States and has all licenses necessary to carry on its business as
now being conducted and is licensed, qualified and in good standing in each
state where a Mortgaged Property is located if the laws of such state require
licensing or qualification in order to conduct business of the type conducted by
the Seller, and in any event the Seller is in compliance with the laws of any
such state to the extent necessary to ensure the enforceability of the related
Mortgage Loan in accordance with the terms of this Agreement; the Seller has the
full corporate power and authority to execute and deliver this Agreement and to
perform in accordance herewith; the execution, delivery and performance of this
Agreement (including all instruments or transfer to be delivered pursuant to
this Agreement) by the Seller and the consummation of the transactions
contemplated hereby have been duly and validly authorized; this Agreement
evidences the valid, binding and enforceable obligation of the Seller; and all
requisite corporate action has been taken by the Seller to make this Agreement
valid and binding upon the Seller in accordance with its terms;
Section 10.02 Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Seller;
Section 10.03 No Conflicts. Neither the execution and delivery of this
Agreement, nor the fulfillment of or compliance with the terms and conditions of
this Agreement, will conflict with or result in a breach of any of the terms,
conditions or provisions of the Seller's charter or by-laws or any legal
restriction or any agreement or instrument to which the Seller is now a party or
by which it is bound, or constitute a default or result in an acceleration under
any of the foregoing, or result in the violation of any law, rule, regulation,
order, judgment or decree to which the Seller or its property is subject, or
impair the ability of the Purchaser to realize on the Mortgage Loans, or impair
the value of the Mortgage Loans;
Section 10.04 Ability to Service. The Seller is an approved
seller/servicer of conventional residential mortgage loans for ▇▇▇▇▇▇ ▇▇▇ or
▇▇▇▇▇▇▇ Mac, with the facilities, procedures, and experienced personnel
necessary for the sound servicing of mortgage loans of the same type as the
Mortgage Loans. The Seller is in good standing to sell mortgage loans to and
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service mortgage loans for ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, and no event has occurred,
including but not limited to a change in insurance coverage, which would make
the Seller unable to comply with ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac eligibility
requirements or which would require notification to either ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇
Mac;
Section 10.05 Ability to Perform. 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;
Section 10.06 No Litigation Pending. There is no action, suit,
proceeding or investigation pending or threatened against the Seller which,
either in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition, properties or
assets of the Seller, or in any material impairment of the right or ability of
the Seller to carry on its business substantially as now conducted, or in any
material liability on the part of the Seller, or which would draw into question
the validity of this Agreement or the Mortgage Loans or of any action taken or
to be taken in connection with the obligations of the Seller contemplated
herein, or which would be likely to impair materially the ability of the Seller
to perform under the terms of this Agreement;
Section 10.07 No Consent Required. No consent, approval, authorization
or order of any court or governmental agency or body is required for the
execution, delivery and performance by the Seller of or compliance by the Seller
with this Agreement or the Servicing of the Mortgage Loans as evidenced by the
consummation of the transactions contemplated by this Agreement, or if required,
such approval has been obtained prior to the Closing Date;
Section 10.08 No Untrue Information. Neither this Agreement nor any
statement, report or other document furnished or to be furnished pursuant to
this Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of fact or omits to state a fact necessary to make
the statements contained therein not misleading.
ARTICLE XI
DEFAULT
Section 11.01 Events of Default. The following shall constitute an
Event of Default under this Agreement on the part of the Seller:
(a) 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 five days after the date upon which written notice of such
failure, requiring the same to be remedied, shall have been given to the Seller
by the Purchaser; or
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(b) the failure by 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 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
(c) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshaling 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 60 days;
or
(d) the Seller shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings of or relating to the Seller or of
or relating to all or substantially all of its property; or
(e) 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
(f) the Seller ceases to meet the qualifications of a ▇▇▇▇▇▇ ▇▇▇
servicer; or
(g) the Seller fails to maintain a minimum net worth of $25,000,000; or
(h) the Seller, if it is an Insured Depository Institution, shall
become the subject of a cease and desist order of the Appropriate Federal
Banking Agency or interest into a memorandum of understanding, consent agreement
or any similar agreement with the Appropriate Federal Banking Agency, any of
which, would have or is purportedly the result of, any condition which would
have a material adverse effect on the Mortgage Loans, the Seller, or the
Seller's ability to service the Mortgage Loans as provided hereunder; or
(i) the Seller shall fail to maintain its status as Well Capitalized;
or
(j) the Seller attempts to assign its right to servicing compensation
hereunder or the Seller attempts, without the consent of the Purchaser, to sell
or otherwise dispose of all or substantially all of its property or assets or to
assign this Agreement or the servicing responsibilities hereunder or to delegate
its duties hereunder or any portion thereof.
In each and every such case, so long as an Event of Default shall not
have been remedied, in addition to whatever rights the Purchaser may have at law
or equity to damages, including injunctive relief and specific performance, the
Purchaser, by notice in writing to the Seller, may terminate all the rights and
obligations of the Seller under this Agreement and in and to the Mortgage Loans
and the proceeds thereof.
Upon receipt by the Seller of such written notice, all authority and
power of the Seller under this Agreement, whether with respect to the Mortgage
Loans or otherwise, shall pass to and be vested in the successor appointed
pursuant to Section 6.03.
Section 11.02 Waiver of Defaults. By a written notice, the Purchaser
may waive any default by the Seller in the performance of its obligations
hereunder and its consequences. Upon any waiver of a past default, such default
shall cease to exist, and any Event of Default arising therefrom shall be deemed
to have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent thereon
except to the extent expressly so waived.
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ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Notices. All notices, requests, demands and other
communications which are required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given upon the
delivery or mailing thereof, as the case may be, sent by registered or certified
mail, return receipt requested:
(a) If to Purchaser to:
▇▇▇▇▇▇ Brothers Bank, FSB
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Contract Finance
(b) If to Seller to:
BancMortgage, A Division of National Bank of Commerce
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Section 12.02 Waivers. Either the Seller or Purchaser may upon consent
of all parties, by written notice to the others:
(a) Waive compliance with any of the terms, conditions or covenants
required to be complied with by the others hereunder; and
(b) Waive or modify performance of any of the obligations of the others
hereunder.
The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any other subsequent
breach.
Section 12.03 Entire Agreement; Amendment. This Agreement and the
Purchase Agreement constitute the entire agreement between the parties with
respect to servicing of the Mortgages during the Interim Period. This Agreement
may be amended and any provision hereof waived, but, only in writing signed by
the party against whom such enforcement is sought.
Section 12.04 Execution; Binding Effect. This Agreement may be
executed in one or more counterparts and by the different parties hereto on
separate counterparts, each of which, when so executed, shall be deemed to be an
original; such counterparts, together, shall constitute one and the same
agreement. Subject to Section 8.03, this Agreement shall inure to the benefit of
and be binding upon the Seller and the Purchaser and their respective successors
and assigns.
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Section 12.05 Headings. Headings of the Articles and Sections in this
Agreement are for reference purposes only and shall not be deemed to have any
substantive effect.
Section 12.06 Applicable Law. This Agreement shall be construed in
accordance with the laws of the State of New York.
Section 12.07 Relationship of Parties. Nothing herein contained shall
be deemed or construed to create a partnership or joint venture between the
parties. The duties and responsibilities of the Seller shall be rendered by them
as independent contractors and not as an agent of Purchaser. The Seller shall
have full control of all of its acts, doings, proceedings, relating to or
requisite in connection with the discharge of its duties and responsibilities
under this Agreement.
Section 12.08 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
Section 12.09 Recordation of Assignments of Mortgage. To the extent
permitted by applicable law, each of the Assignments of Mortgage is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public recording
office or elsewhere, such recordation to be effected at the Seller's expense in
the event recordation is either necessary under applicable law or requested by
the Purchaser at its sole option.
Section 12.10 Appointment and Designation of Master Servicer. The
Purchaser hereby appoints and designates Aurora Loan Services, Inc. as its
master servicer (the "Master Servicer") for the Mortgage Loans subject to this
Agreement. The Seller is hereby authorized and instructed to take any and all
instructions with respect to servicing the Mortgage Loans hereunder as if the
Master Servicer were the Purchaser hereunder. The authorization and instruction
set forth herein shall remain in effect until such time as the Seller shall
receive written instruction from the Purchaser that such authorization and
instruction is terminated.
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IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the date and year first above written.
▇▇▇▇▇▇ BROTHERS BANK, FSB
(the Purchaser)
By:_______________________________
Name:
Title:
BANCMORTGAGE, A DIVISION OF
NATIONAL BANK OF COMMERCE
_______________________________
(the Seller)
By:_______________________________
Name:
Title:
EXHIBIT 1
FORM OF MONTHLY REMITTANCE ADVICE
[INTENTIONALLY OMITTED]
1-1
EXHIBIT 2
FORM OF CUSTODIAL ACCOUNT CERTIFICATION
_______ __, 200_
BancMortgage, A Division of National Bank of Commerce hereby certifies
that it has established the account described below as a Custodial Account
pursuant to Section 2.04 of the Interim Servicing Agreement, dated as of July
11, 2003, Fixed and Adjustable Rate Mortgage Loans, Group 2003-1.
Title of Account: "BancMortgage, A Division of National Bank of
Commerce in trust for the registered Purchaser, Group 2003-1."
Account Number:______________________________________
Address of office or branch
of the Seller at
which Account is maintained:_________________________
BANCMORTGAGE, A DIVISION OF
NATIONAL BANK OF COMMERCE
Seller
By: ______________________________
Name:
Title:
2-1
EXHIBIT 3
FORM OF CUSTODIAL ACCOUNT LETTER AGREEMENT
_______ __, 200_
To: _______________________________
_______________________________
_______________________________
(the "Depository")
As Seller under the Interim Servicing Agreement, dated as of July 11,
2003, Fixed and Adjustable Rate Mortgage Loans, Group 2003-1 (the "Agreement"),
we hereby authorize and request you to establish an account, as a Custodial
Account pursuant to Section 2.04 of the Agreement, to be designated as
"BancMortgage, A Division of National Bank of Commerce in trust for the Fixed
and Adjustable Rate Mortgage Loans - Group 2003-1." All deposits in the account
shall be subject to withdrawal therefrom by order signed by the Seller. 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.
BANCMORTGAGE, A DIVISION OF
NATIONAL BANK OF COMMERCE
Seller
By: ______________________________
Name:
Title:
Date:
3-1
The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number __________, at the
office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above. The full amount deposited at any time in the
account will be insured by the Federal Deposit Insurance Corporation through the
Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund ("SAIF").
__________________________________
Depository
By: ______________________________
Name:
Title:
Date:
3-2
EXHIBIT 4
FORM OF ESCROW ACCOUNT CERTIFICATION
_________ ___, 200_
BancMortgage, A Division of National Bank of Commerce hereby certifies
that it has established the account described below as an Escrow Account
pursuant to Section 2.06 of the Interim Servicing Agreement, dated as of July
11, 2003, Fixed and Adjustable Rate Mortgage Loans, Group 2003-1.
Title of Account: "BancMortgage, A Division of National Bank of
Commerce in trust for the Purchaser of the Fixed and Adjustable Rate Mortgage
Loans, Group 2003-1 and various Mortgagors."
Account Number:_______________________________
Address of office or branch
of the Seller at
which Account is maintained:__________________
BANCMORTGAGE, A DIVISION OF
NATIONAL BANK OF COMMERCE
Seller
By: ______________________________
Name:
Title:
Date:
4-1
EXHIBIT 5
FORM OF ESCROW ACCOUNT LETTER AGREEMENT
_______ __, 200_
To: __________________________________
__________________________________
__________________________________
(the "Depository")
As Seller under the Interim Servicing Agreement, dated as of July 11,
2003, Fixed and Adjustable Rate Mortgage Loans, Group 2003-1 (the "Agreement"),
we hereby authorize and request you to establish an account, as an Escrow
Account pursuant to Section 2.06 of the Agreement, to be designated as
"BancMortgage, A Division of National Bank of Commerce in trust for the
Purchasers of Fixed and Adjustable Rate Mortgage Loans - Group 2003-1." All
deposits in the account shall be subject to withdrawal therefrom by order signed
by the Seller. 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.
BANCMORTGAGE, A DIVISION OF
NATIONAL BANK OF COMMERCE
Seller
By: ______________________________
Name:
Title:
Date:
5-1
The undersigned, as Depository, hereby certifies that the above
described account has been established under Account Number ______, at the
office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above. The full amount deposited at any time in the
account will be insured by the Federal Deposit Insurance Corporation through the
Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund ("SAIF").
__________________________________
Depository
By: ______________________________
Name:
Title:
Date:
5-2