ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Agreement"), dated as of
August 1, 2003, among EMC Mortgage Corporation, a Delaware corporation (the
"Assignor"), JPMorgan Chase Bank, as trustee (in such capacity the "Trustee")
for the holders of Bear ▇▇▇▇▇▇▇ Asset-Backed Securities Trust 2003-SD1,
Asset-Backed Certificates, Series 2003-SD1 (the "Assignee"), and ▇▇▇▇▇ Fargo
Home Mortgage, Inc. (the "Company"):
For and in consideration of the sum of TEN DOLLARS ($10.00) and other
valuable consideration the receipt and sufficiency of which hereby are
acknowledged, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
1. The Assignor hereby grants, transfers and assigns to the Assignee all of
the right, title and interest of the Assignor, as Purchaser (under and as
defined in the Servicing Agreements referred to below), in, to and under (a)
those certain Mortgage Loans listed on Exhibit A attached hereto (the "Mortgage
Loans") that are part of WFHM Pools (i) 5758, 5759, 5760, 5761, 5762, 5763 and
5764, (ii) 5792, 5793, 5794, 5795, 5796, 5797 and 5798 and (iii) 5809, 5810,
5811, 5812, 5813 and 5814 (the "WFHM Pools"), and (b) those certain Seller's
Warranties and Servicing Agreements, dated as of June 1, 2003 (the "June
Servicing Agreement"), July 1, 2003 and July 1, 2003 (the "July Servicing
Agreements" and, together with the June Servicing Agreement, the "Servicing
Agreements"), in each case between the Assignor, as Purchaser, and the Company,
with respect to the applicable WFHM Pools; provided, however, that the Assignor
does not grant, transfer or assign to the Assignee the representations and
warranties contained in Section 3.02 of each of the Servicing Agreements and the
related remedies for breach thereof contained in Section 3.03 of the Servicing
Agreements and any right of indemnification with respect to Section 8.01 of each
of the Servicing Agreements. Capitalized terms not otherwise defined herein
shall have the meaning ascribed to such terms in the Servicing Agreements.
The Assignor specifically reserves and does not assign to the Assignee
hereunder any and all right, title and interest in, to and under and all
obligations of the Assignor with respect to any mortgage loans subject to the
Servicing Agreements, which are not the Mortgage Loans that are part of the WFHM
Pools as set forth on Exhibit A attached hereto, and are not the subject of this
Agreement.
2. The Assignor warrants and represents to the Assignee and the Company as
of the date hereof:
(a) Attached hereto as Exhibits ▇-▇, ▇-▇ and B-3 are true and accurate
copies of each of the Servicing Agreements, which are in full force and effect
as of the date hereof and the provisions of which have not been waived, amended
or modified in any respect, nor has any notice of termination been given
thereunder;
(b) The Assignor was the lawful owner of the Mortgage Loans with full right
to transfer the Mortgage Loans and any and all of its interests, rights and
obligations under the Servicing Agreements as they relate to the Mortgage Loans,
free and clear from any and all claims and encumbrances; and upon the transfer
of the Mortgage Loans to the Assignee as contemplated herein, the Assignee shall
have good title to each and every Mortgage Loan, as well as any and all of the
Assignee's interests, rights and obligations under the Servicing Agreements as
they relate to the Mortgage Loans, free and clear of any and all liens, claims
and encumbrances;
(c) There are no offsets, counterclaims or other defenses available to the
Company with respect to the Mortgage Loans or any Servicing Agreements;
(d) The Assignor has no knowledge of, and has not received notice of, any
waivers under, or any modification of, any Mortgage Loan;
(e) The Assignor is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, and has all requisite
power and authority to acquire, own and sell the Mortgage Loans;
(f) The Assignor has full corporate power and authority to execute, deliver
and perform its obligations under this Agreement, and to consummate the
transactions set forth herein. The consummation of the transactions contemplated
by this Agreement is in the ordinary course of the Assignor's business and will
not conflict with, or result in a breach of, any of the terms, conditions or
provisions of the Assignor's charter or by-laws or any legal restriction, or any
material agreement or instrument to which the Assignor is now a party or by
which it is bound, or result in the violation of any law, rule, regulation,
order, judgment or decree to which the Assignor or its property is subject. The
execution, delivery and performance by the Assignor of this Agreement and the
consummation by it of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of the Assignor. This
Agreement has been duly executed and delivered by the Assignor and, upon the due
authorization, execution and delivery by the Assignee and the Company, will
constitute the valid and legally binding obligation of the Assignor enforceable
against the Assignor in accordance with its terms except as enforceability may
be limited by bankruptcy, reorganization, insolvency, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally,
and by general principles of equity regardless of whether enforceability is
considered in a proceeding in equity or at law;
(g) No consent, approval, order or authorization of, or declaration, filing
or registration with, any governmental entity is required to be obtained or made
by the Assignor in connection with the execution, delivery or performance by the
Assignor of this Agreement, or the consummation by it of the transactions
contemplated hereby. Neither the Assignor nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of the Mortgage Loans
or any interest in the Mortgage Loans, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Mortgage Loans, or any interest in
the Mortgage Loans or otherwise approached or negotiated with respect to the
Mortgage Loans, or any interest in the Mortgage Loans with any Person in any
manner, or made any general solicitation by means of general advertising or in
any other manner, or taken any other action which would constitute a
distribution of the Mortgage Loans under the Securities Act of 1933, as amended
(the "1933 Act") or which would render the disposition of the Mortgage Loans a
violation of Section 5 of the 1933 Act or require registration pursuant thereto;
(h) The Assignor has received from the Company, and has delivered to the
Assignee, all documents required to be delivered to the Assignor by the Company
prior to the date hereof pursuant to Section 2.03 of each of the Servicing
Agreements with respect to the Mortgage Loans and has not received, and has not
requested from the Company, any additional documents; and
(i) No event has occurred from the Closing Date to the date hereof which
would render the representations and warranties as to the related Mortgage Loans
made by the Company in Section 3.02 of any Servicing Agreement to be untrue in
any material respect;
3. The Trustee, on behalf of the Assignee and not in its individual
capacity, warrants and represents to, and covenants with, the Assignor and the
Company that:
(a) The Trustee is a New York banking corporation duly organized, validly
existing and in good standing, and has all requisite power and authority to hold
the Mortgage Loans on behalf of the Assignee;
(b) The Trustee has full power and authority to execute, deliver and
perform under this Agreement, and to consummate the transactions set forth
herein. The execution, delivery and performance of the Trustee of this
Agreement, and the consummation by it of the transactions contemplated hereby,
have been duly authorized by all necessary action of the Trustee. This Agreement
has been duly executed and delivered by the Trustee on behalf of the Assignee
and constitutes the valid and legally binding obligation of the Assignee
enforceable against the Assignee in accordance with its terms except as
enforceability may be limited by bankruptcy, reorganization, insolvency,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, and by general principles of equity regardless of
whether enforceability is considered in a proceeding in equity or at law;
(c) To the best of the Trustee's knowledge, no material consent, approval,
order or authorization of, or declaration, filing or registration with, any
governmental entity is required to be obtained or made by the Trustee in
connection with the execution, delivery or performance by the Trustee of this
Agreement on behalf of the Assignee, or the consummation by it of the
transactions contemplated hereby;
(d) The Trustee on behalf of the Assignee assumes all of the Assignor's
rights as Purchaser under the Servicing Agreements, as amended hereby;
4. Company warrants and represents to, and covenant with, the Assignor and
the Assignee as of the date hereof:
(a) Attached hereto as Exhibits ▇-▇, ▇-▇ and B-3 are true and accurate
copies of the Servicing Agreements, which agreements are in full force and
effect as of the date hereof and the provisions of which have not been waived,
amended or modified in any respect, nor has any notice of termination been given
thereunder;
(b) The Company is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, and has all requisite
power and authority to service the Mortgage Loans and otherwise to perform its
obligations under the Servicing Agreements;
(c) The Company has full corporate power and authority to execute, deliver
and perform its obligations under this Agreement, and to consummate the
transactions set forth herein. The consummation of the transactions contemplated
by this Agreement is in the ordinary course of the Company's business and will
not conflict with, or result in a breach of, any of the terms, conditions or
provisions of the Company's charter or by-laws or any legal restriction, or any
material agreement or instrument to which the Company is now a party or by which
it is bound, or result in the violation of any law, rule, regulation, order,
judgment or decree to which the Company or its property is subject. The
execution, delivery and performance by the Company of this Agreement and the
consummation by it of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of the Company. This
Agreement has been duly executed and delivered by the Company, and, upon the due
authorization, execution and delivery by the Assignor and the Assignee, will
constitute the valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms except as enforceability may be
limited by bankruptcy, reorganization, insolvency, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally, and by
general principles of equity regardless of whether enforceability is considered
in a proceeding in equity or at law;
(d) No consent, approval, order or authorization of, or declaration, filing
or registration with, any governmental entity is required to be obtained or made
by the Company in connection with the execution, delivery or performance by the
Company of this Agreement, or the consummation by it of the transactions
contemplated hereby;
(e) The Company shall establish a Custodial Account and an Escrow Account
under the June Servicing Agreement in favor of the Assignee with respect to the
Mortgage Loans separate from the Custodial Accounts and Escrow Accounts
previously established under the Servicing Agreements in favor of the Assignor;
and
(f) There are no offsets, counterclaims or other defenses available to the
Company with respect to the Mortgage Loans or the Servicing Agreements.
RECOGNITION OF ASSIGNEE
5. From and after the date hereof, the Company shall recognize the Assignee
as owner of the Mortgage Loans, and acknowledges that the Mortgage Loans will be
part of a REMIC, and notwithstanding anything to the contrary set forth in any
Servicing Agreement (as amended by this Agreement), will service the Mortgage
Loans in accordance with the June Servicing Agreement, as amended by this
Agreement, but in no event in a manner that would (i) cause the REMIC to fail to
qualify as a REMIC or (ii) result in the imposition of a tax upon the REMIC
(including but not limited to the tax on prohibited transactions as defined in
Section 860F(a)(2) of the Code and the tax on contributions to a REMIC set forth
in Section 860G(d) of the Code). It is the intention of the Assignor, the
Company and the Assignee that this Agreement shall be binding upon and for the
benefit of the respective successors and assigns of the parties hereto. Neither
the Company nor the Assignor shall amend or agree to amend, modify, waive, or
otherwise alter any of the terms or provisions of the Servicing Agreements which
amendment, modification, waiver or other alteration would in any way affect the
Mortgage Loans without the prior written consent of the Assignee.
MODIFICATION OF THE SERVICING AGREEMENTS
6. The Company and the Assignor hereby amend the Servicing Agreements as
follows (provided that the amendments specified in subsections (a)(ii), (b), (d)
and (e) of this Section 6 shall only be made if such definitions, clause or
section, respectively, are not already in the applicable Servicing Agreement):
(a) The following definitions are added to Article I of each Servicing
Agreement:
(i) "ASSIGNEE: JPMorgan Chase Bank, as trustee for the holders of Bear
▇▇▇▇▇▇▇ Asset-Backed Securities Trust 2003-SD1, Asset-Backed Certificates,
Series 2003-SD1.
(ii) MONTHLY ADVANCE: The portion of each Monthly Payment that is
delinquent with respect to each Mortgage Loan at the close of business on
the Determination Date required to be advanced by the Company pursuant to
Section 5.03 on the Business Day immediately preceding the Remittance Date
of the related month.
(iii) POOLING AND SERVICING AGREEMENT: The Pooling and Servicing
Agreement, dated as of August 1, 2003, among Bear ▇▇▇▇▇▇▇ Asset Backed
Securities Inc., as depositor, EMC Mortgage Corporation, as seller and
servicer, ▇▇▇▇▇ Fargo Bank, National Association, as master servicer and
securities administrator and JPMorgan Chase Bank, as trustee, as amended.
(iv) MASTER SERVICER: ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, in its capacity as master servicer pursuant to the Pooling and
Servicing Agreement, and its successors and assigns.
(b) The definition of "Servicing Advances" in Article I of each Servicing
Agreement is hereby amended by the addition of the words "other than Monthly
Advances" immediately after the word "expenses" and prior to the beginning of
the first parenthetical on the second line thereof.
(c) The following are added as the last three paragraphs of Section 4.01 of
each Servicing Agreement:
"Notwithstanding anything in this Agreement to the contrary, the
Servicer shall not, unless the related Mortgagor is in default thereunder
or such default is, in the judgment of the Servicer, reasonably
foreseeable, make or permit any modification, waiver or amendment of any
term of any Mortgage Loan, including any reduction in the Mortgage Interest
Rate, recasting of the amortization schedule and/or extension of the
scheduled maturity thereof, or increase or reduction in the Stated
Principal Balance thereof, that would both (i) effect an exchange or
reissuance of such Mortgage Loan under Section 1001 of the Code (or
Treasury regulations promulgated thereunder) and (ii) cause the Trust Fund
to fail to qualify as a REMIC under the Code or the imposition of any tax
on "prohibited transactions" or "contributions" after the startup date
under the REMIC Provisions.
Prior to taking any action with respect to the Mortgage Loans which is
not contemplated under the terms of this Agreement, the Servicer will
obtain an Opinion of Counsel acceptable to the Trustee with respect to
whether such action could result in the imposition of a tax upon the REMIC
(including but not limited to the tax on prohibited transactions as defined
in Section 860F(a)(2) of the Code and the tax on contributions to a REMIC
set forth in Section 860G(d) of the Code) (either such event, an "Adverse
REMIC Event"), and the Servicer shall not take any such action or cause the
Trust Fund to take any such action as to which it has been advised that an
Adverse REMIC Event could occur.
The Servicer shall not permit the creation of any "interests" (within
the meaning of Section 860G of the Code) in the REMIC. The Servicer shall
not enter into any arrangement by which the REMIC will receive a fee or
other compensation for services nor permit the REMIC to receive any income
from assets other than "qualified mortgages" as defined in Section
860G(a)(3) of the Code or "permitted investments" as defined in Section
860G(a)(5) of the Code."
(d) The following new subclause is added to the end of Section 4.05 of each
Servicing Agreement:
"(x) to reimburse itself for Monthly Advances of the Company's funds
made pursuant to Section 5.03, the Company's right to reimburse itself
pursuant to this subclause (x) being limited to amounts received on the
related Mortgage Loan which represent late payments of principal and/or
interest respecting which any such advance was made, it being understood
that, in the case of any such reimbursement, the Company's right thereto
shall be prior to the rights of Purchaser, except that, where the Company
is required to repurchase a Mortgage Loan pursuant to Section 3.03 or 6.02,
the Company's right to such reimbursement shall be subsequent to the
payment to the Purchaser of the Repurchase Price pursuant to such sections
and all other amounts required to be paid to the Purchaser with respect to
such Mortgage Loan;
(e) [Reserved]
(f) The following Section is added to Article VI of each Servicing
Agreement
Section 6.07. ANNUAL CERTIFICATION.
(i) The Company will deliver to the Master Servicer, on or before
February 28 of each year beginning February 28, 2004, (or, if any such day
is not a Business Day, the immediately preceding Business Day), or at any
other time upon thirty (30) days written request, certification containing
the information set forth in Exhibit C-1. Such certification shall be
signed by the senior officer in charge of servicing of the Company. In
addition, the Company shall provide such other information with respect to
the Mortgage Loans and the servicing and administration thereof within the
control of the Company which shall be required to enable the Master
Servicer to comply with the reporting requirements of the Securities and
Exchange Act of 1934, as amended.
(ii) The Company shall indemnify and hold harmless the Master Servicer
and its officers, directors, agents and affiliates from and against any
losses, damages, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments and other costs and expenses arising out of or
based upon a breach by the Company or any of its officers, directors,
agents or affiliates of its obligations under this Section 6.07 or the
Company's negligence, bad faith or willful misconduct in connection
therewith. If the indemnification provided for herein is unavailable or
insufficient to hold harmless the Master Servicer, then the Company agrees
that it shall contribute to the amount paid or payable by the Master
Servicer as a result of the losses, claims, damages or liabilities of the
Master Servicer in such proportion as is appropriate to reflect the
relative fault of the Master Servicer on the one hand and the Company on
the other in connection with a breach of the Company's obligations under
this Section 6.07.
(g) A copy of each statement to be provided pursuant to Section 6.04 of the
June Servicing Agreement shall be furnished to the Master Servicer no later than
the date specified in Section 6.04 for delivery of such statement to the
Purchaser.
(h) A copy of each statement to be provided pursuant to Section 6.05 of the
June Servicing Agreement shall be furnished to the Master Servicer no later than
the date specified in Section 6.05 for delivery of such statement to the
Purchaser.
(i) Exhibit C-1, attached on Schedule 1 hereto, is added to the June
Servicing Agreement.
(j) Section 10.01 of the June Servicing Agreement is modified by adding the
word "or" at the end of clause (viii) thereof and inserting the following as
clause (ix):
(ix) failure by the Company to duly perform, within the required time
period, its obligations under Section 6.04, 6.05 or 6.07 of the June Servicing
Agreement, which failure continues unremedied for a period of thirty (30) days
after the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Company by any party to this Servicing
Agreement or by the Master Servicer.
6A. SERVICING OF MORTGAGE LOANS. The parties hereto agree that,
notwithstanding anything to the contrary set forth in any Servicing Agreement,
the Company shall service the mortgage loans that are part of the WFHM Pools in
accordance with the provisions of the June Servicing Agreement, as amended
hereby; provided, however, that the rights and remedies of any party under each
other Servicing Agreement (as amended hereby) with respect to the servicing
obligations of the Company shall be deemed to apply to the applicable provisions
of the June Servicing Agreement, as amended hereby, as if the terms thereof
constituted part of such Servicing Agreement.
7. ACKNOWLEDGMENT OF MASTER SERVICER. The Company understands that the
Master Servicer is acting on behalf of the Assignee pursuant to the Pooling and
Servicing Agreement, and agrees that the Master Servicer shall be entitled to
enforce the rights of the Assignee pursuant to this Agreement and the Servicing
Agreements on behalf of the Assignee. In addition, the Company agrees that the
Master Servicer shall be entitled to enforce directly the provisions of Sections
6.04, 6.05 and 6.07 of each Servicing Agreement on its own behalf.
8. WIRE INSTRUCTIONS: Distributions shall be made by wire transfer of
immediately available funds to ▇▇▇▇▇ Fargo Bank Minnesota, National Association,
ABA# ▇▇▇-▇▇▇-▇▇▇, for credit to SAS Clearing Account# ▇▇▇▇▇▇▇▇▇▇, for further
credit to BSABS 2003-SD1, Acct# 18117400. Applicable statements should be mailed
to ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: BSABS 2003-SD1.
9. Notices:
The Assignor's address for purposes of all notices and correspondence
related to the Mortgage Loans and this Agreement is:
EMC Mortgage Corporation
Mac ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Bear ▇▇▇▇▇▇▇ Mortgage Capital Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
The Assignee's address for purposes of all notices and correspondence
related to the Mortgage Loans and this Agreement is:
JPMorgan Chase Bank,
as trustee
▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Attention: Institutional Trust Services/Structured Finance
Services - BSABS 2003-SD1
The Company's address for purposes of all notices and correspondence
related to the Mortgage Loans and this Agreement is:
▇▇▇▇▇ Fargo Home Mortgage, Inc.
▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel, MAC X2401-061
MISCELLANEOUS:
10. Each party will pay any commissions it has incurred and the Assignor
shall pay the fees of its attorneys and the reasonable fees of the attorneys of
the Assignee and the Company in connection with the negotiations for,
documenting of and closing of the transactions contemplated by this Agreement.
11. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
12. No term or provision of this Agreement may be waived or modified unless
such waiver or modification is in writing and signed by the party against whom
such waiver or modification is sought to be enforced.
13. This Agreement shall inure to the benefit of the successors and assigns
of the parties hereto. Any entity into which Assignor, Assignee or Company may
be merged or consolidated shall, without the requirement for any further
writing, be deemed Assignor, Assignee or Company, respectively, hereunder.
14. This Agreement shall survive the conveyance of the Mortgage Loans and
the assignment of the Servicing Agreement to the extent of the Mortgage Loans by
Assignor to Assignee.
15. This Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original and all such
counterparts shall constitute one and the same instrument.
16. In the event that any provision of this Agreement conflicts with any
provision of the Servicing Agreement with respect to the Mortgage Loans, the
terms of this Agreement shall control.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the date first above written.
JPMORGAN CHASE BANK,
as trustee for the holders of Bear ▇▇▇▇▇▇▇
Asset-Backed Securities Trust 2003-SD1,
Asset-Backed Certificates, Series 2003-SD1
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------
Its: Trust Officer
--------------------
Taxpayer Identification Number:
---------------------------
EMC MORTGAGE CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------
Its: Executive Vice President
------------------------
Taxpayer Identification Number:
▇▇-▇▇▇▇▇▇▇
▇▇▇▇▇ FARGO HOME MORTGAGE, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
---------------
Its: Vice President
---------------
EXHIBIT A
Mortgage Loans
(Available Upon Request)
EXHIBIT B-1
JUNE SERVICING AGREEMENT
EMC MORTGAGE CORPORATION
PURCHASER
AND
▇▇▇▇▇ FARGO HOME MORTGAGE, INC.
COMPANY
----------------------------------------
SELLER'S WARRANTIES AND SERVICING AGREEMENT
DATED AS OF JUNE 1, 2003
----------------------------------------
WFHM MORTGAGE LOAN POOLS 5758, 5759, 5760, 5761, 5762, 5763 AND 5764
TABLE OF CONTENTS
ARTICLE I......................................................................1
DEFINITIONS....................................................................1
ARTICLE II.....................................................................1
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES; BOOKS AND RECORDS;
CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS.....................................1
ARTICLE III....................................................................1
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH.............................1
ARTICLE IV.....................................................................1
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS.................................1
ARTICLE V......................................................................1
PAYMENTS TO PURCHASER..........................................................1
ARTICLE VI.....................................................................1
GENERAL SERVICING PROCEDURES...................................................1
ARTICLE VII....................................................................1
COMPANY TO COOPERATE...........................................................1
ARTICLE VIII...................................................................1
THE COMPANY....................................................................1
ARTICLE IX.....................................................................1
PASS-THROUGH TRANSFER..........................................................1
ARTICLE X......................................................................1
DEFAULT........................................................................1
ARTICLE XI.....................................................................1
TERMINATION....................................................................1
ARTICLE XII....................................................................1
MISCELLANEOUS PROVISIONS.......................................................1
EXHIBITS
Exhibit A Mortgage Loan Schedule
Exhibit B Contents of Each Mortgage Loan File
Exhibit C Custodial Agreement
Exhibit D Form of Assignment and Assumption
This is a Seller's Warranties and Servicing Agreement for various
residential first mortgage loans, dated and effective as of June 1, 2003, and is
executed between EMC Mortgage Corporation, as purchaser (the "Purchaser"), and
▇▇▇▇▇ Fargo Home Mortgage, Inc., as seller and servicer (the "Company").
W I T N E S S E T H
WHEREAS, the Purchaser has agreed to purchase from the Company and the
Company has agreed to sell to the Purchaser certain fixed and adjustable
interest rate, Conventional Mortgage Loans which have an aggregate outstanding
principal balance as of the close of business on the Cut-off Date, after
deduction of payments due on or before such date, of $32,198,422.19;
WHEREAS, each of the Mortgage Loans is secured by a mortgage, deed of trust
or other security instrument creating a first lien on a residential dwelling
located in the jurisdiction indicated on the Mortgage Loan Schedule, which is
annexed hereto as Exhibit A; and
WHEREAS, the Purchaser and the Company wish to prescribe the manner of
purchase of the Mortgage Loans and the conveyance, servicing and control of the
Mortgage Loans.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the Purchaser and the Company agree as follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the content
otherwise requires, shall have the following meanings:
ACCEPTED SERVICING PRACTICES: With respect to any Mortgage Loan, those
mortgage servicing practices of prudent mortgage lending institutions which
service mortgage loans of the same type as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located.
ADJUSTMENT DATE: As to each Mortgage Loan, the date on which the Mortgage
Interest Rate is adjusted in accordance with the terms of the related Mortgage
Note.
AGENCY OR AGENCIES: ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ Mac or GNMA, or any of them as
applicable.
AGENCY SALE: Any sale or transfer of some or all of the Mortgage Loans by
the Purchaser to an Agency which sale or transfer is not a Pass-Through
Transfer.
AGREEMENT: This Seller's Warranties and Servicing Agreement and all
amendments hereof and supplements hereto.
ALTA: The American Land Title Association or any successor thereto.
APPRAISED VALUE: With respect to any Mortgage Loan, the lesser of (i) the
value set forth on the appraisal made in connection with the origination of the
related Mortgage Loan as the value of the related Mortgaged Property, or (ii)
the purchase price paid for the Mortgaged Property, provided, however, that in
the case of a refinanced Mortgage Loan, such value shall be based solely on the
appraisal made in connection with the origination of such Mortgage Loan.
ASSIGNMENT OF MORTGAGE: An assignment of the Mortgage, notice of transfer
or equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
sale of the Mortgage to the Purchaser.
BUSINESS DAY: Any day other than (i) a Saturday or Sunday, or (ii) a day on
which banking and savings and loan institutions in the states where the parties
are located are authorized or obligated by law or executive order to be closed.
BUYDOWN AGREEMENT: An agreement between the Company and a Mortgagor, or an
agreement among the Company, a Mortgagor and a seller of a Mortgaged Property or
a third party with respect to a Mortgage Loan which provides for the application
of Buydown Funds.
BUYDOWN FUNDS: In respect of any Buydown Mortgage Loan, any amount
contributed by the seller of a Mortgaged Property subject to a Buydown Mortgage
Loan, the buyer of such property, the Company or any other source, plus interest
earned thereon, in order to enable the Mortgagor to reduce the payments required
to be made from the mortgagor's funds in the early years of a Mortgage Loan.
BUYDOWN MORTGAGE LOAN: Any Mortgage Loan in respect of which, pursuant to a
Buydown Agreement, (i) the Mortgagor pays less than the full monthly payments
specified in the Mortgage Note for a specified period, and (ii) the difference
between the payments required under such Buydown Agreement and the Mortgage Note
is provided from Buydown Funds.
BUYDOWN PERIOD: The period of time when a Buydown Agreement is in effect
with respect to a related Buydown Mortgage Loan.
CLOSING DATE: June 11, 2003.
CODE: The Internal Revenue Code of 1986, as it may be amended from time to
time or any successor statute thereto, and applicable U.S. Department of the
Treasury regulations issued pursuant thereto.
COMPANY: ▇▇▇▇▇ Fargo Home Mortgage, Inc., or its successor in interest or
assigns, or any successor to the Company under this Agreement appointed as
herein provided.
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.
CONVENTIONAL MORTGAGE LOAN: A mortgage or deed of trust not insured or
guaranteed under a government program (e.g., FHA or VA).
CUSTODIAL ACCOUNT: The separate account or accounts created and maintained
pursuant to Section 4.04.
CUSTODIAL AGREEMENT: The Interim Custody Agreement dated as of November 30,
1999 by and between EMC Mortgage Corporation as Owner, and ▇▇▇▇▇ Fargo Bank
Minnesota, N.A. (formerly Norwest Bank Minnesota, N.A.) governing the retention
of the originals of each Mortgage Note, Mortgage, Assignment of Mortgage and
other Mortgage Loan Documents, annexed hereto as Exhibit C.
CUSTODIAN: The custodian under the Custodial Agreement, or its successor in
interest or assigns, or any successor to the Custodian under the Custodial
Agreement as provided therein.
CUT-OFF DATE: June 1, 2003.
DELETED MORTGAGE LOAN: A Mortgage Loan which is repurchased by the Company
in accordance with the terms of this Agreement and which is, in the case of a
substitution pursuant to Section 3.03, replaced or to be replaced with a
Qualified Substitute Mortgage Loan.
DETERMINATION DATE: The Business Day immediately preceding the related
Remittance Date.
DUE DATE: The first day of the month on which the Monthly Payment is due on
a Mortgage Loan, exclusive of any days of grace.
DUE PERIOD: With respect to each Remittance Date, the period commencing on
the second day of the month preceding the month of the Remittance Date and
ending in the first day of the month of the Remittance Date.
ERRORS AND OMISSIONS INSURANCE POLICY: An errors and omissions insurance
policy to be maintained by the Company pursuant to Section 4.12.
ESCROW ACCOUNT: The separate account or accounts created and maintained
pursuant to Section 4.06.
ESCROW PAYMENTS: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other related
document.
EVENT OF DEFAULT: Any one of the conditions or circumstances enumerated in
Section 10.01.
▇▇▇▇▇▇ ▇▇▇: The entity formerly known as the Federal National Mortgage
Association (FNMA), and its successors.
FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.
FHA: Federal Housing Administration and its successors.
FIDELITY BOND: A fidelity bond to be maintained by the Company pursuant to
Section 4.12.
FIRST REMITTANCE DATE: July 18, 2003.
▇▇▇▇▇▇▇ MAC: The entity formerly known as the Federal Home Loan Mortgage
Corporation (FHLMC), and its successors.
GNMA: Government National Mortgage Association and its successors.
GROSS MARGIN: With respect to each Mortgage Loan, the fixed percentage
amount set forth in the related Mortgage Note which is added to the Index in
order to determine the related Mortgage Interest Rate, as set forth in the
Mortgage Loan Schedule.
HUD: The United States Department of Housing and Urban Development and its
successors.
INDEX: On each Adjustment Date, the applicable index shall be a rate per
annum equal to the weekly average yield on U.S. Treasury securities adjusted to
a constant maturity of one year as made available by the Federal Reserve Board
in Statistical Release No. H.15 or a comparable publication, or, if not so
published, as reported by any Federal Reserve Bank or by any U.S. Government
department or agency, for the week for which such figures were most recently
published or reported as of the date 45 days prior to the Adjustment Date.
INSURANCE PROCEEDS: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
LGC: Loan Guaranty Certificate issued by the VA as a guarantee that the
federal government will repay to the lender a specified percentage of the loan
balance in the event of the borrower's default.
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.
LOAN-TO-VALUE RATIO OR LTV: With respect to any Mortgage Loan, the ratio of
the original loan amount of the Mortgage Loan at its origination (unless
otherwise indicated) to the Appraised Value of the Mortgaged Property.
MIC: Mortgage Insurance Certificate issued by HUD/FHA as evidence that a
mortgage has been insured and that a contract of mortgage insurance exists
between HUD/FHA and the lender.
MONTHLY ADVANCE: The portion of each Monthly Payment that is delinquent
with respect to each Mortgage Loan at the close of business on the Determination
Date required to be advanced by the Company pursuant to Section 5.03 on the
Business Day immediately preceding the Remittance Date of the related month.
MONTHLY PAYMENT: The scheduled monthly payment of principal and interest on
a Mortgage Loan.
MORTGAGE: The mortgage, deed of trust or other instrument and riders
thereto securing a Mortgage Note, which creates a first lien on an
unsubordinated estate in fee simple in real property securing the Mortgage Note.
MORTGAGE FILE: The items pertaining to a particular Mortgage Loan referred
to in Exhibit B annexed hereto, and any additional documents required to be
added to the Mortgage File pursuant to this Agreement.
MORTGAGE IMPAIRMENT INSURANCE POLICY: A mortgage impairment or blanket
hazard insurance policy as described in Section 4.11.
MORTGAGE INTEREST RATE: The annual rate of interest borne on a Mortgage
Note in accordance with the provisions of the Mortgage Note.
MORTGAGE LOAN: An individual Mortgage Loan which is the subject of this
Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the Mortgage Loan Schedule, which Mortgage Loan includes
without limitation the Mortgage File, the Monthly Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
REO Disposition Proceeds and all other rights, benefits, proceeds and
obligations arising from or in connection with such Mortgage Loan.
MORTGAGE LOAN DOCUMENTS: With respect to a Mortgage Loan, the original
related Mortgage Note with applicable addenda and riders, the original related
Mortgage and the originals of any required addenda and riders, the original
related Assignment and any original intervening related Assignments, the
original related title insurance policy, related PMI Policy, MIC or LCG, and the
related appraisal report.
MORTGAGE LOAN REMITTANCE RATE: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Purchaser, which shall be equal to the
Mortgage Interest Rate minus the Servicing Fee Rate.
MORTGAGE LOAN SCHEDULE: A schedule of Mortgage Loans annexed hereto as
Exhibit A, such schedule setting forth the following information with respect to
each Mortgage Loan: (1) the Company's Mortgage Loan number; (2) the city state
and zip code of the Mortgaged Property; (3) a code indicating whether the
Mortgaged Property is a single family residence, two-family residence,
three-family residence, four-family residence, PUD or Condominium; (4) the
current Mortgage Interest Rate; (5) the Mortgage Loan Remittance Rate; (6) the
current Monthly Payment; (7) the Gross Margin; (8) the original term to
maturity; (9) the scheduled maturity date; (10) the principal balance of the
Mortgage Loan as of the Cut-off Date after deduction of payments of principal
due on or before the Cut-off Date whether or not collected; (11) the
Loan-to-Value; (12) the next Adjustment Date; (13) the lifetime Mortgage
Interest Rate cap; (14) whether the Mortgage Loan is convertible or not; (15) a
code indicating the mortgage guaranty insurance company; and (16) the Servicing
Fee Rate.
MORTGAGE NOTE: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage and riders thereto.
MORTGAGED PROPERTY: The real property securing repayment of the debt
evidenced by a Mortgage Note.
MORTGAGOR: The obligor on a Mortgage Note.
OFFICER'S CERTIFICATE: A certificate signed by the Chairman of the Board,
the Vice Chairman of the Board, ,the President, a Vice President, an Assistant
Vice President ,the Treasurer, the Secretary or one of the Assistant Treasurers
or Assistant Secretaries of the Company, and delivered to the Purchaser as
required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may be an employee of
the Company, reasonably acceptable to the Purchaser.
PASS-THROUGH TRANSFER: The sale or transfer of some or all of the Mortgage
Loans by the Purchaser to a trust to be formed as part of a publicly issued or
privately placed mortgage-backed securities transaction.
PERIODIC INTEREST RATE CAP: As to each Mortgage Loan, the maximum increase
or decrease in the Mortgage Interest Rate on any Adjustment Date.
PERSON: Any individual, corporation, partnership, joint venture, limited
liability company, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof.
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.
PRINCIPAL PREPAYMENT: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date, including
any prepayment penalty or premium thereon and which is not accompanied by an
amount of interest representing scheduled interest due on any date or dates in
any month or months subsequent to the month of prepayment.
PRINCIPAL PREPAYMENT PERIOD: The month preceding the month in which the
related Remittance Date occurs.
PURCHASER: EMC Mortgage Corporation or its successor in interest or any
successor to the Purchaser under this Agreement as herein provided.
QUALIFIED DEPOSITORY: A deposit account or accounts maintained with a
federal or state chartered depository institution the deposits in which are
insured by the FDIC to the applicable limits and the short-term unsecured debt
obligations of which (or, in the case of a depository institution that is a
subsidiary of a holding company, the short-term unsecured debt obligations of
such holding company) are rated A-1 by Standard & Poor's Ratings Group or
Prime-1 by ▇▇▇▇▇'▇ Investors Service, Inc. (or a comparable rating if another
rating agency is specified by the Purchaser by written notice to the Company) at
the time any deposits are held on deposit therein.
QUALIFIED INSURER: A mortgage guaranty insurance company duly authorized
and licensed where required by law to transact mortgage guaranty insurance
business and approved as an insurer by the Agencies.
RATING AGENCIES: Any nationally recognized statistical rating agency, or
its successor, including Standard & Poor's Ratings Services, ▇▇▇▇▇'▇ Investor
Services, Inc., Fitch IBCA, Inc. and Duff & ▇▇▇▇▇▇ Credit Rating Co.
RECONSTITUTION DATE: The date on which any or all of the Mortgage Loans
serviced under this Agreement shall be removed from this Agreement and
reconstituted as part of an Agency Sale, Pass-Through Transfer or Whole Loan
Transfer pursuant to Section 9.01 hereof. The Reconstitution Date shall be such
date which the Purchaser and the shelf registrant shall designate. On such date,
the Mortgage Loans transferred shall cease to be covered by this Agreement and
the Company's servicing responsibilities shall cease under this Agreement with
respect to the related transferred Mortgage Loans.
RECORD DATE: The close of business of the last Business Day of the month
preceding the month of the related Remittance Date.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
REMIC PROVISIONS: Provisions of the federal income tax law relating to a
REMIC, which appear at Section 860A through 860G of Subchapter M of Chapter 1,
Subtitle A of the Code, and related provisions, and regulations, rulings or
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
REMITTANCE DATE: The 18th day (or if such 18th day is not a Business Day,
the first Business Day immediately following) of any month, beginning with the
First Remittance Date.
REO DISPOSITION: The final sale by the Company of any REO Property.
REO DISPOSITION PROCEEDS: All amounts received with respect to an REO
Disposition pursuant to Section 4.16.
REO PROPERTY: A Mortgaged Property acquired by the Company on behalf of the
Purchaser through foreclosure or by deed in lieu of foreclosure, as described in
Section 4.16.
REPURCHASE PRICE: Unless agreed otherwise by the Purchaser and the Company,
a price equal to (i) the Stated Principal Balance of the Mortgage Loan plus (ii)
interest on such Stated Principal Balance at the Mortgage Loan Remittance Rate
from the date on which interest has last been paid and distributed to the
Purchaser through the last day of the month in which such repurchase takes
place, less amounts received or advanced in respect of such repurchased Mortgage
Loan which are being held in the Custodial Account for distribution in the month
of repurchase.
SERVICING ADVANCES: All customary, reasonable and necessary "out of pocket"
costs and expenses other than Monthly Advances (including reasonable attorney's
fees and disbursements) incurred in the performance by the Company of its
servicing obligations, including, but not limited to, the cost of (a) the
preservation, restoration and protection of the Mortgaged Property, (b) any
enforcement or judicial proceedings, including foreclosures, (c) the management
and liquidation of any REO Property and (d) compliance with the obligations
under Section 4.08.
SERVICING FEE: With respect to each Mortgage Loan, the amount of the annual
fee the Purchaser shall pay to the Company, which shall, for a period of one
full month, be equal to one-twelfth of the product of (a) the Servicing Fee Rate
and (b) the outstanding principal balance of such Mortgage Loan. Such fee shall
be payable monthly, computed on the basis of the same principal amount and
period respecting which any related interest payment on a Mortgage Loan is
computed. The obligation of the Purchaser to pay the Servicing Fee is limited
to, and the Servicing Fee is payable solely from, the interest portion
(including recoveries with respect to interest from Liquidation Proceeds, to the
extent permitted by Section 4.05) of such Monthly Payment collected by the
Company, or as otherwise provided under Section 4.05. The Servicing Fee shall
not be reduced by the amount of any guaranty fee charged by GNMA.
SERVICING FEE RATE: 0.250% per annum for each Mortgage Loan.
SERVICING FILE: With respect to each Mortgage Loan, the file retained by
the Company consisting of originals of all documents in the Mortgage File which
are not delivered to the Custodian and copies of the Mortgage Loan Documents
listed in the Custodial Agreement the originals of which are delivered to the
Custodian pursuant to Section 2.03.
SERVICING OFFICER: Any officer of the Company involved in or responsible
for the administration and servicing of the Mortgage Loans whose name appears on
a list of servicing officers furnished by the Company to the Purchaser upon
request, as such list may from time to time be amended.
STATED PRINCIPAL BALANCE: As to each Mortgage Loan, (i) the principal
balance of the Mortgage Loan at the Cut-off Date after giving effect to payments
of principal due on or before such date, whether or not received, minus (ii) all
amounts previously distributed to the Purchaser with respect to the related
Mortgage Loan representing payments or recoveries of principal or advances in
lieu thereof.
VA: The United States Department of Veterans Administration and its
successors.
WHOLE LOAN TRANSFER: Any sale or transfer of some or all of the Mortgage
Loans by the Purchaser to a third party, which sale or transfer is not a
Pass-Through Transfer.
WHOLE LOAN TRANSFER DATE: The date on which any or all of the Mortgage
Loans serviced under this Agreement shall be sold by the Purchaser as part of a
Whole Loan Transfer pursuant to Section 9.01 hereof.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS
Section 2.01 CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
MAINTENANCE OF SERVICING FILES.
The Company, simultaneously with the execution and delivery of this
Agreement, does hereby sell, transfer, assign, set over and convey to the
Purchaser, without recourse, but subject to the terms of this Agreement, all the
right, title and interest of the Company in and to the Mortgage Loans. Pursuant
to Section 2.03, the Company has delivered the Mortgage Loan Documents to the
Custodian.
The contents of each Mortgage File not delivered to the Custodian are and
shall be held in trust by the Company for the benefit of the Purchaser as the
owner thereof. The Company shall maintain a Servicing File consisting of a copy
of the contents of each Mortgage File and the originals of the documents in each
Mortgage File not delivered to the Custodian. The possession of each Servicing
File by the Company is at the will of the Purchaser for the sole purpose of
servicing the related Mortgage Loan, and such retention and possession by the
Company is in a custodial capacity only. Upon the sale of the Mortgage Loans the
ownership of each Mortgage Note, the related Mortgage and the related Mortgage
File and Servicing File shall vest immediately in the Purchaser, and the
ownership of all records and documents with respect to the related Mortgage Loan
prepared by or which come into the possession of the Company shall vest
immediately in the Purchaser and shall be retained and maintained by the
Company, in trust, at the will of the Purchaser and only in such custodial
capacity. The Company shall release its custody of the contents of any Servicing
File only in accordance with written instructions from the Purchaser, unless
such release is required as incidental to the Company's servicing of the
Mortgage Loans or is in connection with a repurchase of any Mortgage Loan
pursuant to Section 3.03 or 6.02. All such costs associated with the release,
transfer and re-delivery to the Company shall be the responsibility of the
Purchaser.
Section 2.02 BOOKS AND RECORDS; TRANSFERS OF MORTGAGE LOANS.
From and after the sale of the Mortgage Loans to the Purchaser all rights
arising out of the Mortgage Loans including but not limited to all funds
received on or in connection with the Mortgage Loans, shall be received and held
by the Company in trust for the benefit of the Purchaser as owner of the
Mortgage Loans, and the Company shall retain record title to the related
Mortgages for the sole purpose of facilitating the servicing and the supervision
of the servicing of the Mortgage Loans.
The sale of each Mortgage Loan shall be reflected on the Company's balance
sheet and other financial statements as a sale of assets by the Company. The
Company shall be responsible for maintaining, and shall maintain, a complete set
of books and records for each Mortgage Loan which shall be marked clearly to
reflect the ownership of each Mortgage Loan by the Purchaser. In particular, the
Company shall maintain in its possession, available for inspection by the
Purchaser, or its designee, and shall deliver to the Purchaser upon demand,
evidence of compliance with all federal, state and local laws, rules and
regulations, and requirements of the Agencies, 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 the Agencies, and periodic inspection
reports as required by Section 4.13. To the extent that original documents are
not required for purposes of realization of Liquidation Proceeds or Insurance
Proceeds, documents maintained by the Company may be in the form of microfilm or
microfiche or such other reliable means of recreating original documents,
including but not limited to, optical imagery techniques so long as the Company
complies with the requirements of the FNMA Selling and Servicing Guide, as
amended from time to time.
The Company shall maintain with respect to each Mortgage Loan and shall
make available for inspection by any Purchaser or its designee the related
Servicing File during the time the Purchaser retains ownership of a Mortgage
Loan and thereafter in accordance with applicable laws and regulations.
The Company shall keep at its servicing office books and records in which,
subject to such reasonable regulations as it may prescribe, the Company shall
note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be made
unless such transfer is in compliance with the terms hereof. For the purposes of
this Agreement, the Company shall be under no obligation to deal with any person
with respect to this Agreement or the Mortgage Loans unless the books and
records show such person as the owner of the Mortgage Loan. The Purchaser may,
subject to the terms of this Agreement, sell and transfer one or more of the
Mortgage Loans, PROVIDED, HOWEVER, that in no event shall there be more than
four Persons at any given time having the status of "Purchaser" hereunder. The
Purchaser also shall advise the Company of the transfer. Upon receipt of notice
of the transfer, the Company shall ▇▇▇▇ its books and records to reflect the
ownership of the Mortgage Loans of such assignee, and shall release the previous
Purchaser from its obligations hereunder with respect to the Mortgage Loans sold
or transferred. If the Company receives notification of a transfer, including a
final loan schedule, less than five (5) Business Days before the last Business
Day of the month, the Company's duties to remit and report to the new
purchaser(s) as required by Section 5 shall begin with next Due Period.
Section 2.03 DELIVERY OF DOCUMENTS.
Pursuant to the Custodial Agreement delivered to the Purchaser
contemporaneously with the delivery of this Agreement, the Company has delivered
and released to the Custodian those Mortgage Loan Documents as required by the
Custodial Agreement and by this Agreement with respect to each Mortgage Loan.
The Custodian has certified its receipt of all such Mortgage Loan Documents
required to be delivered pursuant to the Custodial Agreement. The Company will
be responsible for Custodial fees and expenses with respect to the delivery and
certification of those Mortgage Loan Documents required to be delivered pursuant
to the Custodial Agreement. The Company will be responsible for the fees and
expenses related to the recording of the initial Assignment of Mortgage. The
Purchaser will be responsible for the fees and expenses of the Custodian.
After the Closing Date, the Company shall deliver to the each of the
documents described in Exhibit B, not delivered pursuant to the Agreement.
Provided however, within 150 days from the Closing Date, the Company shall
deliver to the Custodian, the original MIC or LGC, as applicable, or an
Officer's Certificate, which shall (i) state that the MIC or LGC has not been
delivered to the Custodian due solely to a delay by the insuring agency, (ii)
state the amount of time generally required by the insuring agency to process
the MIC or LGC, and (iii) specify the date the MIC or LGC will be delivered to
the Purchaser. The Company will be required to deliver the MIC or LGC to the
Custodian by the date specified in (iii) above. An extension of the date
specified in (iii) above may be requested from the Custodian, which consent
shall not be unreasonably withheld.
The Company shall forward to the Custodian original documents evidencing an
assumption, modification, consolidation or extension of any Mortgage Loan
entered into in accordance with Section 4.01 or 6.01 within one week of their
execution, provided, however, that the Company shall provide the Custodian with
a certified true copy of any such document submitted for recordation within ten
(10) days of its execution, and shall provide the original of any document
submitted for recordation or a copy of such document certified by the
appropriate public recording office to be a true and complete copy of the
original within sixty days of its submission for recordation.
In the event the public recording office is delayed in returning any
original document, the Company shall deliver to the Custodian within 240 days of
its submission for recordation, a copy of such document and an Officer's
Certificate, which shall (i) identify the recorded document; (ii) state that the
recorded document has not been delivered to the Custodian due solely to a delay
by the public recording office, (iii) state the amount of time generally
required by the applicable recording office to record and return a document
submitted for recordation, and (iv) specify the date the applicable recorded
document will be delivered to the Custodian. The Company will be required to
deliver the document to the Custodian by the date specified in (iv) above. An
extension of the date specified in (iv) above may be requested from the
Purchaser, which consent shall not be unreasonably withheld.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH
Section 3.01 COMPANY REPRESENTATIONS AND WARRANTIES.
The Company hereby represents and warrants to the Purchaser that, as of the
Closing Date:
(a) DUE ORGANIZATION AND AUTHORITY.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of California and has all
licenses necessary to carry on its business as now being conducted and
is licensed, qualified and in good standing in each state where a
Mortgaged Property is located if the laws of such state require
licensing or qualification in order to conduct business of the type
conducted by the Company, and in any event the Company is in
compliance with the laws of any such state to the extent necessary to
ensure the enforceability of the related Mortgage Loan and the
servicing of such Mortgage Loan in accordance with the terms of this
Agreement; the Company has the full 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 of transfer to be delivered pursuant to
this Agreement) by the Company and the consummation of the
transactions contemplated hereby have been duly and validly
authorized; this Agreement evidences the valid, binding and
enforceable obligation of the Company; and all requisite corporate
action has been taken by the Company to make this Agreement valid and
binding upon the Company in accordance with its terms;
(b) ORDINARY COURSE OF BUSINESS.
The consummation of the transactions contemplated by this Agreement
are in the ordinary course of business of the Company, who is in the
business of selling and servicing loans, and the transfer, assignment
and conveyance of the Mortgage Notes and the Mortgages by the Company
pursuant to this Agreement are not subject to the bulk transfer or any
similar statutory provisions in effect in any applicable jurisdiction;
(c) NO CONFLICTS.
Neither the execution and delivery of this Agreement, the acquisition
of the Mortgage Loans by the Company, the sale of the Mortgage Loans
to the Purchaser or the transactions contemplated hereby, nor the
fulfillment of or compliance with the terms and conditions of this
Agreement will conflict with or result in a breach of any of the
terms, articles of incorporation or by-laws or any legal restriction
or any agreement or instrument to which the Company is now a party or
by which it is bound, or constitute a default or result in the
violation of any law, rule, regulation, order, judgment or decree to
which the Company or its property is subject, or impair the ability of
the Purchaser to realize on the Mortgage Loans, or impair the value of
the Mortgage Loans;
(d) ABILITY TO SERVICE.
The Company is an approved seller/servicer of residential mortgage
loans for the Agencies, with the facilities, procedures, and
experienced personnel necessary for the sound servicing of mortgage
loans of the same type as the Mortgage Loans. The Company is in good
standing to sell mortgage loans to and service mortgage loans for the
Agencies, and no event has occurred, including but not limited to a
change in insurance coverage, which would make the Company unable to
comply with the Agencies eligibility requirements or which would
require notification to the Agencies;
(e) REASONABLE SERVICING FEE.
The Company acknowledges and agrees that the Servicing Fee represents
reasonable compensation for performing such services and that the
entire Servicing Fee shall be treated by the Company, for accounting
and tax purposes, as compensation for the servicing and administration
of the Mortgage Loans pursuant to this Agreement;
(f) ABILITY TO PERFORM.
The Company does not believe, nor does it have any reason or cause to
believe, that it cannot perform each and every covenant contained in
this Agreement. The Company is solvent and the sale of the Mortgage
Loans will not cause the Company to become insolvent. The sale of the
Mortgage Loans is not undertaken to hinder, delay or defraud any of
the Company's creditors;
(g) NO LITIGATION PENDING.
There is no action, suit, proceeding or investigation pending or
threatened against the Company which, either in any one instance or in
the aggregate, may result in any material adverse change in the
business, operations, financial condition, properties or assets of the
Company, or in any material impairment of the right or ability of the
Company to carry on its business substantially as now conducted, or in
any material liability on the part of the Company, or which would draw
into question the validity of this Agreement or the Mortgage Loans or
of any action taken or to be contemplated herein, or which would be
likely to impair materially the ability of the Company to perform
under the terms of this Agreement;
(h) NO CONSENT REQUIRED.
No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery
and performance by the Company of or compliance by the Company with
this Agreement or the sale of the Mortgage Loans as evidenced by the
consummation of the transactions contemplated by this Agreement, or if
required, such approval has been obtained prior to the Closing Date;
(i) 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;
(j) SALE TREATMENT.
The Company has determined that the disposition of the Mortgage Loans
pursuant to this Agreement will be afforded sale treatment for
accounting and tax purposes;
(k) NO MATERIAL CHANGE.
There has been no material adverse change in the business, operations,
financial condition or assets of the Company since the date of the
Company's most recent financial statements; and
(l) NO BROKERS' FEES.
The Company has not dealt with any broker, investment banker, agent or
other Person that may be entitled to any commission or compensation in
the connection with the sale of the Mortgage Loans.
Section 3.02 REPRESENTATIONS AND WARRANTIES REGARDING INDIVIDUAL MORTGAGE
LOANS.
As to each Mortgage Loan, the Company hereby represents and warrants to the
Purchaser that as of the Closing Date:
(a) MORTGAGE LOANS AS DESCRIBED.
The information set forth in the Mortgage Loan Schedule attached
hereto as Schedule I is true and correct;
(b) NO OUTSTANDING CHARGES.
All taxes, governmental assessments, insurance premiums, water, sewer
and municipal charges, which previously became due and owing have been
paid, or an escrow of funds has been established for every such item
which remains unpaid and which has been assessed but is not yet due
and payable;
(c) ORIGINAL TERMS UNMODIFIED.
The terms of the Mortgage Note and Mortgage have not been impaired,
waived, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary to protect the
interests of the Purchaser and which has been delivered to the
Custodian. The substance of any such waiver, alteration or
modification has been approved by FHA, VA or the issuer of any related
PMI policy and the title insurer, to the extent required by the
policy, and its terms are reflected on the Mortgage Loan Schedule. No
Mortgagor has been released, in whole or in part, except in connection
with an assumption agreement approved by the issuer the guaranty
certificate or of any related Primary Mortgage Insurance policy and
the title insurer, to the extent required by the policy or Agency
guidelines, and which assumption agreement is part of the Mortgage
Loan File delivered to the Custodian and the terms of which are
reflected in the Mortgage Loan Schedule;
(d) NO DEFENSES.
The Mortgage Loan is not subject to any right of rescission, set-off,
counterclaim or defense, including without limitation the defense of
usury, nor will the operation of any of the terms of the Mortgage Note
or the Mortgage, or the exercise of any right thereunder, render
either the Mortgage Note or the Mortgage unenforceable, in whole or in
part, or subject to any right of rescission, set-off, counterclaim or
defense, including without limitation the defense of usury, and no
such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto;
(e) NO SATISFACTION OF MORTGAGE.
The Mortgage has not been satisfied, canceled, subordinated or
rescinded, in whole or in part, and the Mortgaged Property has not
been released from the lien of the Mortgage, in whole or in part, nor
has any instrument been executed that would effect any such release,
cancellation, subordination or rescission;
(f) VALIDITY OF MORTGAGE DOCUMENTS.
The Mortgage Note and the Mortgage and related documents are genuine,
and each is the legal, valid and binding obligation of the maker
thereof enforceable in accordance with its terms. All parties to the
Mortgage Note and the Mortgage had legal capacity to enter into the
Mortgage Loan and to execute and deliver the Mortgage Note and the
Mortgage, and the Mortgage Note and the Mortgage have been duly and
properly executed by such parties;
(g) NO FRAUD.
All the documents executed in connection with the Mortgage Loan
including, but not limited to, the Mortgage Note and the Mortgage are
free of fraud and any misrepresentation, are signed by the persons
they purport to be signed by, and witnessed or, as appropriate,
notarized by the persons whose signatures appear as witnesses or
notaries, and each such document constitutes the valid and binding
legal obligation of the signatories and is enforceable in accordance
with its terms;
(h) COMPLIANCE WITH APPLICABLE LAWS.
Any and all requirements of any federal, state or local law including,
without limitation, usury, truth-in-lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity,
disclosure, or predatory and abuse lending laws applicable to the
Mortgage Loan have been complied with, and the Company shall maintain
in its possession, available for the Purchaser's inspection, and shall
deliver to the Purchaser upon demand, evidence of compliance with all
such requirements; All inspections, licenses and certificates required
to be made or issued with respect to all occupied portions of the
Mortgaged Property and, with respect to the use and occupancy of the
same, including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the
appropriate authorities;
(i) LOCATION AND TYPE OF MORTGAGED PROPERTY.
The Mortgaged Property is located in the state identified in the
Mortgage Loan Schedule and consists of a parcel of real property with
a detached single family residence erected thereon, or a two- to
four-family dwelling, or an individual condominium unit in a
condominium project, or an individual unit in a planned unit
development or a townhouse, provided, however, that any condominium
project or planned unit development shall conform with the applicable
Agency requirements regarding such dwellings, and no residence or
dwelling is a mobile home or a manufactured dwelling. As of the
respective appraisal date for each Mortgaged Property, no portion of
the Mortgaged Property was being used for commercial purposes. If the
Mortgaged Property is a condominium unit or a planned unit development
(other than a de minimus planned unit development) such condominium or
planned unit development project meets Agency eligibility requirements
or is located in a condominium or planned unit development project
which has received Agency project approval and the representations and
warranties required by Agency with respect to such condominium or
planned unit development have been made and remain true and correct in
all respects;
(j) VALID FIRST LIEN.
The Mortgage is a valid, subsisting and enforceable first lien on the
Mortgaged Property, including all buildings on the Mortgaged Property
and all installations and mechanical, electrical, plumbing, heating
and air conditioning systems located in or annexed to such buildings,
and all additions, alterations and replacements made at any time with
respect to the foregoing. The lien of the Mortgage is subject only to:
(1) the lien of current real property taxes and assessments not yet
due and payable;
(2) covenants, conditions and restrictions, rights of way, easements
and other matters of the public record as of the date of
recording acceptable to mortgage lending institutions generally
and specifically referred to in the lender's title insurance
policy delivered to the originator of the Mortgage Loan and (i)
referred to or otherwise considered in the appraisal made for the
originator of the Mortgage Loan and (ii) which do not adversely
affect the Appraised Value of the Mortgaged Property set forth in
such appraisal; and
(3) other matters to which like properties are commonly subject which
do not materially interfere with the benefits of the security
intended to be provided by the mortgage or the use, enjoyment,
value or marketability of the related Mortgaged Property.
Any security agreement, chattel mortgage or equivalent document
related to and delivered in connection with the Mortgage Loan
establishes and creates a valid, subsisting and enforceable first lien
and first priority security interest on the property described therein
and the Company has full right to sell and assign the same to the
Purchaser.
(k) FULL DISBURSEMENT OF PROCEEDS.
The proceeds of the Mortgage Loan have been fully disbursed, except
for escrows established or created due to seasonal weather conditions,
and there is no requirement for future advances thereunder. All costs,
fees and expenses incurred in making or closing the Mortgage Loan and
the recording of the Mortgage were paid, and the Mortgagor is not
entitled to any refund of any amounts paid or due under the Mortgage
Note or Mortgage;
(l) OWNERSHIP.
The Company is the sole owner of record and holder of the Mortgage
Loan and the related Mortgage Note and the Mortgage are not assigned
or pledged, and the Company has good and marketable title thereto and
has full right and authority to transfer and sell the Mortgage Loan to
the Purchaser. The Company is transferring the Mortgage Loan free and
clear of any and all encumbrances, liens, pledges, equities,
participation interests, claims, charges or security interests of any
nature encumbering such Mortgage Loan;
(m) ORIGINATION/DOING BUSINESS.
The Mortgage Loan was originated by a savings and loan association, a
savings bank, a commercial bank, a credit union, an insurance company,
or similar institution which is supervised and examined by a federal
or state authority or by a mortgagee approved by the Secretary of
Housing and Urban Development pursuant to Sections 203 and 211 or the
National Housing Act. All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise,
are (or, during the period in which they held and disposed of such
interest, were) (1) in compliance with any and all applicable
licensing requirements of the laws of the state wherein the Mortgaged
Property is located, and (2) organized under the laws of such state,
or (3) qualified to do business in such state, or (4) federal savings
and loan associations or national banks having principal offices in
such state, or (5) not doing business in such state;
(n) PRIMARY MORTGAGE INSURANCE.
With respect to any Mortgage Loan subject to a PMI Policy as indicated
on the Mortgage Loan Schedule, all provisions of such PMI Policy have
been and are being complied with, such policy is in full force and
effect, and all premiums due thereunder have been paid. Any Mortgage
Loan subject to a PMI policy obligates the Mortgagor thereunder to
maintain the PMI policy and to pay all premiums and charges in
connection therewith. The Mortgage Interest Rate for the Mortgage Loan
as set forth on the Mortgage Loan Schedule is net of any such
insurance premium;
(o) FHA INSURANCE/VA GUARANTY.
Each FHA Mortgage Loan, is fully-insured by the FHA, which insurance
is in full force and effect, and the Mortgage Loan is not subject to
any defect which would diminish or impair the FHA insurance, and all
prior transfers, if any, of the Mortgage Loan have been, and the
transactions herein contemplated are, in compliance with the FHA
regulations, and no circumstances exist with respect to the FHA
Mortgage Loans which would permit the FHA to deny coverage under the
FHA insurance; and
Each VA Mortgage Loan is guaranteed by the VA, which guaranty is in
full force and effect, and the Mortgage Loan is not subject to any
defect which would diminish or impair the VA guaranty (other than a
potential valuation of the mortgaged property), and all prior
transfers, if any, of the Mortgage Loan have been, and the
transactions herein contemplated are, in compliance with the VA
regulations, and no circumstances exist with respect to the VA
Mortgage Loan which would permit the VA to deny coverage under the VA
guaranty;
(p) TITLE INSURANCE.
The Mortgage Loan is covered by an ALTA lender's title insurance
policy (or in the case of any Mortgage Loan secured by a Mortgaged
Property located in a jurisdiction where such policies are generally
not available, an opinion of counsel of the type customarily rendered
in such jurisdiction in lieu of title insurance) or other generally
acceptable form of policy of insurance acceptable to the Agencies,
issued by a title insurer acceptable to the Agencies and qualified to
do business in the jurisdiction where the Mortgaged Property is
located, insuring the Company, its successors and assigns, as to the
first priority lien of the Mortgage in the original principal amount
of the Mortgage Loan, subject only to the exceptions contained in
clauses (1), (2) and (3) of paragraph (xi) of this Section 3(b). The
Company is the sole insured of such lender's title insurance policy,
and such lender's title insurance policy is in full force and effect
and will be in force and effect upon the consummation of the
transactions contemplated by this Agreement. No claims have been made
under such lender's title insurance policy, and no prior holder of the
Mortgage, including the Company, has done, by act or omission,
anything which would impair the coverage of such lender's title
insurance policy;
(q) NO MECHANICS' LIENS.
There are no mechanics' or similar liens or claims which have been
filed for work, labor or material (and no rights are outstanding that
under the law could give rise to such liens) affecting the related
Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage which are not
insured against by the Title Insurance policy referenced in Section
(p) above;
(r) LOCATION OF IMPROVEMENTS; NO ENCROACHMENTS.
Except as insured against by the Title Insurance policy referenced in
Section (p) above, all improvements which were considered in
determining the Appraised Value of the Mortgaged Property lay wholly
within the boundaries and building restriction lines of the Mortgaged
Property and no improvements on adjoining properties encroach upon the
Mortgaged Property. No improvement located on or being part of the
Mortgaged Property is in violation of any applicable zoning law or
regulation;
(s) CUSTOMARY PROVISIONS.
The Mortgage contains customary and enforceable provisions such as to
render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the
security provided thereby, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii) otherwise
by judicial foreclosure. There is no homestead or other exemption
available to a Mortgagor which would interfere with the right to sell
the Mortgaged Property at a trustee's sale or the right to foreclose
the Mortgage;
(t) OCCUPANCY OF THE MORTGAGED PROPERTY.
As of the date of origination, the Mortgaged Property was lawfully
occupied under applicable law.
(u) NO ADDITIONAL COLLATERAL.
The Mortgage Note is not and has not been secured by any collateral,
pledged account or other security except the lien of the corresponding
Mortgage and the security interest of any applicable security
agreement or chattel mortgage referred to in (xi) above;
(v) DEEDS OF TRUST.
In the event the Mortgage constitutes a deed of trust, a trustee, duly
qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Mortgage, and
no fees or expenses are or will become payable by the Mortgagee to the
trustee under the deed of trust, except in connection with a trustee's
sale after default by the Mortgagor;
(w) TRANSFER OF MORTGAGE LOANS.
The Assignment is in recordable form and is acceptable for recording
under the laws of the jurisdiction in which the Mortgaged Property is
located;
(x) MORTGAGED PROPERTY UNDAMAGED.
The Mortgaged Property is undamaged by water, fire, earthquake or
earth movement, windstorm, flood, tornado or other casualty so as to
affect adversely the value of the Mortgaged Property as security for
the Mortgage Loan or the use for which the premises were intended;
(y) COLLECTION PRACTICES; ESCROW DEPOSITS.
The origination and collection practices used with respect to the
Mortgage Loan have been in accordance with Prudent Servicing
Practices, and have been in all material respects legal and proper.
All Escrow Items have been collected in full compliance with state and
federal law. An escrow of funds is not prohibited by applicable law
and has been established to pay for every item that remains unpaid and
has been assessed but is not yet due and payable. No escrow deposits
or Escrow Items or other charges or payments due the Seller have been
capitalized under the Mortgage Note;
(z) NO CONDEMNATION.
To the best of Seller's knowledge, there is no proceeding pending or
threatened for the total or partial condemnation of the related
Mortgaged Property;
(aa) THE APPRAISAL.
The Mortgage Loan Documents contain an appraisal of the related
Mortgaged Property by an appraiser who had no interest, direct or
indirect, in the Mortgaged Property or in any loan made on the
security thereof; and whose compensation is not affected by the
approval or disapproval of the Mortgage Loan, and the appraisal and
the appraiser both satisfy the applicable requirements of Title XI of
the Financial Institution Reform, Recovery, and Enforcement Act of
1989 and the regulations promulgated thereunder, all as in effect on
the date the Mortgage Loan was originated;
(bb) INSURANCE.
The Mortgaged Property securing each Mortgage Loan is insured by an
insurer acceptable to the Agencies against loss by fire and such
hazards as are covered under a standard extended coverage endorsement,
in an amount which is not less than the lesser of 100% of the
insurable value of the Mortgaged Property and the outstanding
principal balance of the Mortgage Loan, but in no event less than the
minimum amount necessary to fully compensate for any damage or loss on
a replacement cost basis; if the Mortgaged Property is a condominium
unit, it is included under the coverage afforded by a blanket policy
for the project; the insurance policy contains a standard clause
naming the originator of such mortgage loan, its successor and
assigns, as insured mortgagee; if upon origination of the Mortgage
Loan, the improvements on the Mortgaged Property were in an area
identified in the Federal Register by the Federal Emergency Management
Agency as having special flood hazards, a flood insurance policy
meeting the requirements of the current guidelines of the Federal
Insurance Administration is in effect with a generally acceptable
insurance carrier, in an amount representing coverage not less than
the least of (A) the outstanding principal balance of the Mortgage
Loan, (B) the full insurable value and (C) the maximum amount of
insurance which was available under the Flood Disaster Protection Act
of 1973, as amended; and the Mortgage obligates the mortgagor
thereunder to maintain all such insurance at the mortgagor's cost and
expense and the Seller has not acted or failed to act so as to impair
the coverage of any such insurance policy or the validity, binding
effect and enforceability thereof.
(cc) SOLDIERS' AND SAILORS' CIVIL RELIEF ACT.
The Mortgagor has not notified the Seller, and the Seller has no
knowledge of any relief requested or allowed to the Mortgagor under
the Soldiers' and Sailors' Civil Relief Act of 1940, as amended.
(dd) NO VIOLATION OF ENVIRONMENTAL LAWS.
There is no pending action or proceeding directly involving any
Mortgaged Property of which the Company is aware in which compliance
with any environmental law, rule or regulation is an issue; and to the
best of the Company's knowledge nothing further remains to be done to
satisfy in full all requirements of each such law, rule or regulation
constituting a prerequisite to use and enjoyment of said property.
(ee) HOEPA.
No Mortgage Loan is subject to the provisions of the Home Ownership
and Equity Protection Act of 1994, as amended, or is considered a
"high cost loan" under any other state, federal or local laws or
ordinances."
Section 3.03 REPURCHASE.
It is understood and agreed that the representations and warranties set
forth in Sections 3.01 and 3.02 shall survive the sale of the Mortgage Loans to
the Purchaser and the delivery of the Mortgage Loan Documents to the Custodian
and shall inure to the benefit of the Purchaser, notwithstanding any restrictive
or qualified endorsement on any Mortgage Note or Assignment of Mortgage or the
examination or failure to examine any Mortgage File. Upon discovery by either
the Company or the Purchaser of a breach of any of the foregoing representations
and warranties which materially and adversely affects the value of the Mortgage
Loans or the interest of the Purchaser (or which materially and adversely
affects the interests of Purchaser in the related Mortgage Loan in the case of a
representation and warranty relating to a particular Mortgage Loan), the party
discovering such breach shall give prompt written notice to the other.
Within 90 days of the earlier of either discovery by or notice to the
Company of any breach of a representation or warranty which materially and
adversely affects the value of the Mortgage Loans, the Company shall use its
best efforts promptly to cure such breach in all material respects and, if such
breach cannot be cured, the Company shall, at the Purchaser's option, repurchase
such Mortgage Loan at the Repurchase Price. In the event that a breach shall
involve any representation or warranty set forth in Section 3.01, and such
breach cannot be cured within 90 days of the earlier of either discovery by or
notice to the Company of such breach, all of the Mortgage Loans shall, at the
Purchaser's option, be repurchased by the Company at the Repurchase Price. Any
repurchase of a Mortgage Loan or Loans pursuant to the foregoing provisions of
this Section 3.03 shall be accomplished by deposit in the Custodial Account of
the amount of the Repurchase Price for distribution to Purchaser on the next
scheduled Remittance Date, after deducting therefrom any amount received in
respect of such repurchased Mortgage Loan or Loans and being held in the
Custodial Account for future distribution.
At the time of repurchase or substitution, the Purchaser and the Company
shall arrange for the reassignment of the repurchased Mortgage Loan to the
Company and the delivery to the Company of any documents held by the Custodian
relating to the repurchased Mortgage Loan. In the event of a repurchase, the
Company shall, simultaneously with such reassignment, give written notice to the
Purchaser that such repurchase has taken place, amend the Mortgage Loan Schedule
to reflect the withdrawal of the repurchased Mortgage Loan from this Agreement.
In addition to such repurchase obligation, the Company shall indemnify the
Purchaser and hold it harmless against any losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments,
and other costs and expenses resulting from any claim, demand, defense or
assertion based on or grounded upon, or resulting from, a breach of the Company
representations and warranties contained in this Agreement. It is understood and
agreed that the obligations of the Company set forth in this Section 3.03 to
cure, substitute for or repurchase a defective Mortgage Loan and to indemnify
the Purchaser as provided in this Section 3.03 constitute the sole remedies of
the Purchaser respecting a breach of the foregoing representations and
warranties.
Any cause of action against the Company relating to or arising out of the
breach of any representations and warranties made in Sections 3.01 and 3.02
shall accrue as to any Mortgage Loan upon (i) discovery of such breach by the
Purchaser or notice thereof by the Company to the Purchaser, (ii) failures by
the Company to cure such breach or repurchase such Mortgage Loan as specified
above, and (iii) demand upon the Company by the Purchaser for compliance with
this Agreement.
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 COMPANY TO ACT AS SERVICER.
The Company, as an independent contractor, shall service and administer the
Mortgage Loans and shall have full power and authority, acting alone or through
the utilization of a third party servicing provider, to do any and all things in
connection with such servicing and administration which the Company may deem
necessary or desirable, consistent with the terms of this Agreement and with
Accepted Servicing Practices. The Company shall service the Mortgage Loans in
accordance with the guidelines of the applicable governing Agency, including the
Federal Housing Administration for FHA loans or the Veteran's Administration for
VA loans, and shall comply with all the rules and regulations as set forth by
each applicable agency.
Consistent with the terms of this Agreement and any applicable Agency
guidelines, the Company may waive, modify or vary any term of any Mortgage Loan
or consent to the postponement of strict compliance with any such term or in any
manner grant indulgence to any Mortgagor if in the Company's reasonable and
prudent determination such waiver, modification, postponement or indulgence is
not materially adverse to the Purchaser and will not result in the impairment of
coverage under any PMI Policy, the MIC or LGC. Provided, however, no such
modification shall reduce the mortgage interest rate below the Company's
prevailing market rate for similar loans in affect as of the date of
modification. In the event of any such modification which permits the deferral
of interest or principal payments on any Mortgage Loan, the Company shall
disburse on the following Remittance Date, from its own funds, 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 for any
Monthly Payment received or deferred and (b) the amount paid by the Mortgagor,
if any. Without limiting the generality of the foregoing, the Company shall
continue, and is hereby authorized and empowered, to execute and deliver on
behalf of itself and the Purchaser, all instruments of satisfaction or
cancellation, or of partial or full release, discharge and all other comparable
instruments, with respect to the Mortgage Loans and with respect to the
Mortgaged Properties. If reasonably required by the Company, the Purchaser shall
furnish the Company with any powers of attorney and other documents necessary or
appropriate to enable the Company to carry out its servicing and administrative
duties under this Agreement.
In servicing and administering the Mortgage Loans, the Company shall employ
procedures (including collection procedures) and exercise the same care that it
customarily employs and exercises in servicing and administering mortgage loans
for its own account, giving due consideration to Accepted Servicing Practices
where such practices do not conflict with the requirements of this Agreement,
and the Purchaser's reliance on the Company.
Section 4.02 LIQUIDATION OF MORTGAGE LOANS.
In the event that any payment due under any Mortgage Loan and not postponed
pursuant to Section 4.01 is not paid when the same becomes due and payable, or
in the event the Mortgagor fails to perform any other covenant or obligation
under the Mortgage Loan and such failure continues beyond any applicable grace
period, the Company shall take such action as (1) the Company would take under
similar circumstances with respect to a similar mortgage loan held for its own
account for investment, (2) shall be consistent with Accepted Servicing
Practices, (3) the Company shall determine prudently to be in the best interest
of Purchaser, and (4) is consistent with any related PMI Policy. In the event
that any payment due under any Mortgage Loan is not postponed pursuant to
Section 4.01 and remains delinquent for a period of 90 days or any other default
continues for a period of 90 days beyond the expiration of any grace or cure
period, the Company shall commence foreclosure proceedings. In such connection,
the Company shall from its own funds make all necessary and proper Servicing
Advances, provided, however, that the Company shall not be required to expend
its own funds in connection with any foreclosure or towards the restoration or
preservation of any Mortgaged Property, unless it shall determine (a) that such
preservation, restoration and/or foreclosure will increase the proceeds of
liquidation of the Mortgage Loan to Purchaser after reimbursement to itself for
such expenses and (b) that such expenses will be recoverable by it either
through Liquidation Proceeds (respecting which it shall have priority for
purposes of withdrawals from the Custodial Account pursuant to Section 4.05) or
through Insurance Proceeds (respecting which it shall have similar priority).
Notwithstanding anything to the contrary contained herein, in connection
with a foreclosure or acceptance of a deed in lieu of foreclosure, in the event
the Company has reasonable cause to believe that a Mortgaged Property is
contaminated by hazardous or toxic substances or wastes, or if the Purchaser
otherwise requests an environmental inspection or review of such Mortgaged
Property, such an inspection or review is to be conducted by a qualified
inspector. The cost for such inspection or review shall be borne by the
Purchaser. Upon completion of the inspection or review, the Company shall
promptly provide the Purchaser with a written report of the environmental
inspection.
After reviewing the environmental inspection report, the Purchaser shall
determine how the Company shall proceed with respect to the Mortgaged Property.
In the event (a) the environmental inspection report indicates that the
Mortgaged Property is contaminated by hazardous or toxic substances or wastes
and (b) the Purchaser directs the Company to proceed with foreclosure or
acceptance of a deed in lieu of foreclosure, the Company shall be reimbursed for
all reasonable costs associated with such foreclosure or acceptance of a deed in
lieu of foreclosure and any related environmental clean up costs, as applicable,
from the related Liquidation Proceeds, or if the Liquidation Proceeds are
insufficient to fully reimburse the Company, the Company shall be entitled to be
reimbursed from amounts in the Custodial Account pursuant to Section 4.05
hereof. In the event the Purchaser directs the Company not to proceed with
foreclosure or acceptance of a deed in lieu of foreclosure, the Company shall be
reimbursed for all Servicing Advances made with respect to the related Mortgaged
Property from the Custodial Account pursuant to Section 4.05 hereof.
Section 4.03 COLLECTION OF MORTGAGE LOAN PAYMENTS.
Continuously from the date hereof until the principal and interest on all
Mortgage Loans are paid in full, the Company shall proceed diligently to collect
all payments due under each of the Mortgage Loans when the same shall become due
and payable and shall take special care in ascertaining and estimating Escrow
Payments and all other charges that will become due and payable with respect to
the Mortgage Loan and the Mortgaged Property, to the end that the installments
payable by the Mortgagors will be sufficient to pay such charges as and when
they become due and payable.
Section 4.04 ESTABLISHMENT OF AND DEPOSITS TO CUSTODIAL ACCOUNT.
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts,
in the form of time deposit or demand accounts, titled "▇▇▇▇▇ Fargo Home
Mortgage, Inc. in trust for the Purchaser and/or subsequent purchasers of
Residential Mortgage Loans, and various Mortgagors - P & I." The Custodial
Account shall be established with a Qualified Depository. Upon request of the
Purchaser and within ten (10) days thereof, the Company shall provide the
Purchaser with written confirmation of the existence of such Custodial Account.
Any funds deposited in the Custodial Account shall at all times be insured to
the fullest extent allowed by applicable law. Funds deposited in the Custodial
Account may be drawn on by the Company in accordance with Section 4.05.
The Company shall deposit in the Custodial Account within two (2) Business
Days of the Company's receipt, and retain therein, the following collections
received by the Company and payments made by the Company after the Cut-off Date,
other than payments of principal and interest due on or before the Cut-off Date,
or received by the Company prior to the Cut-off Date but allocable to a period
subsequent thereto:
(i) all payments on account of principal on the Mortgage Loans, including
all Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans adjusted to
the Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts required to be deposited
pursuant to Section 4.10 (other than proceeds to be held in the Escrow
Account and applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with Section
4.14), Section 4.11 and Section 4.15;
(v) all Condemnation Proceeds which are not applied to the restoration or
repair of the Mortgaged Property or released to the Mortgagor in
accordance with Section 4.14;
(vi) any amount required to be deposited in the Custodial Account pursuant
to Section 4.01, 5.03, 6.01 or 6.02;
(vii) any amounts payable in connection with the repurchase of any Mortgage
Loan pursuant to Section 3.03 and all amounts required to be deposited
by the Company in connection with a shortfall in principal amount of
any Qualified Substitute Mortgage Loan pursuant to Section 3.03;
(viii) with respect to each Principal Prepayment an amount (to be paid by
the Company out of its funds) which, when added to all amounts
allocable to interest received in connection with the Principal
Prepayment, equals one month's interest on the amount of principal so
prepaid at the Mortgage Loan Remittance Rate;
(ix) any amounts required to be deposited by the Company pursuant to
Section 4.11 in connection with the deductible clause in any blanket
hazard insurance policy; and
(x) any amounts received with respect to or related to any REO Property
and all REO Disposition Proceeds pursuant to Section 4.16.
The foregoing requirements for deposit into the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges and assumption
fees, to the extent permitted by Section 6.01, need not be deposited by the
Company into the Custodial Account. Any interest paid on funds deposited in the
Custodial Account by the depository institution shall accrue to the benefit of
the Company and the Company shall be entitled to retain and withdraw such
interest from the Custodial Account pursuant to Section 4.05.
Section 4.05 PERMITTED WITHDRAWALS FROM CUSTODIAL ACCOUNT.
The Company shall, from time to time, withdraw funds from the Custodial
Account for the following purposes:
(i) to make payments to the Purchaser in the amounts and in the manner
provided for in Section 5.01;
(ii) to reimburse itself for Monthly Advances of the Company's funds made
pursuant to Section 5.03, the Company's right to reimburse itself
pursuant to this subclause (ii) being limited to amounts received on
the related Mortgage Loan which represent late payments of principal
and/or interest respecting which any such advance was made, it being
understood that, in the case of any such reimbursement, the Company's
right thereto shall be prior to the rights of Purchaser, except that,
where the Company is required to repurchase a Mortgage Loan pursuant
to Section 3.03 or 6.02, the Company's right to such reimbursement
shall be subsequent to the payment to the Purchaser of the Repurchase
Price pursuant to such sections and all other amounts required to be
paid to the Purchaser with respect to such Mortgage Loan;
(iii) to reimburse itself for unreimbursed Servicing Advances, and for any
unpaid Servicing Fees, the Company's right to reimburse itself
pursuant to this subclause (iii) with respect to any Mortgage Loan
being limited to related Liquidation Proceeds, Condemnation Proceeds,
Insurance Proceeds and such other amounts as may be collected by the
Company from the Mortgagor or otherwise relating to the Mortgage Loan,
it being understood that, in the case of any such reimbursement, the
Company's right thereto shall be prior to the rights of Purchaser,
except that where the Company is required to repurchase a Mortgage
Loan pursuant to Section 3.03 or 6.02, in which case the Company's
right to such reimbursement shall be subsequent to the payment to the
Purchaser of the Repurchase Price pursuant to such sections and all
other amounts required to be paid to the Purchaser with respect to
such Mortgage Loan;
(iv) to pay itself interest on funds deposited in the Custodial Account;
(v) to reimburse itself for expenses incurred and reimbursable to it
pursuant to Section 8.01;
(vi) to pay any amount required to be paid pursuant to Section 4.16 related
to any REO Property, it being understood that, in the case of any such
expenditure or withdrawal related to a particular REO Property, the
amount of such expenditure or withdrawal from the Custodial Account
shall be limited to amounts on deposit in the Custodial Account with
respect to the related REO Property;
(vii) to reimburse itself for any Servicing Advances or REO expenses after
liquidation of the Mortgaged Property not otherwise reimbursed above;
(viii) to remove funds inadvertently placed in the Custodial Account by the
Company; and
(ix) to clear and terminate the Custodial Account upon the termination of
this Agreement.
In the event that the Custodial Account is interest bearing, on each
Remittance Date, the Company shall withdraw all funds from the Custodial Account
except for those amounts which, pursuant to Section 5.01, the Company is not
obligated to remit on such Remittance Date. The Company may use such withdrawn
funds only for the purposes described in this Section 4.05.
Section 4.06 ESTABLISHMENT OF AND DEPOSITS TO ESCROW ACCOUNT.
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan constituting Escrow Payments separate and apart from
any of its own funds and general assets and shall establish and maintain one or
more Escrow Accounts, in the form of time deposit or demand accounts, titled,
"▇▇▇▇▇ Fargo Home Mortgage, Inc., in trust for the Purchaser and/or subsequent
purchasers of Mortgage Loans, and various Mortgagors - T & I." The Escrow
Accounts shall be established with a Qualified Depository, in a manner which
shall provide maximum available insurance thereunder. Upon request of the
Purchaser and within ten (10) days thereof, the Company shall provide the
Purchaser with written confirmation of the existence of such Escrow Account.
Funds deposited in the Escrow Account may be drawn on by the Company in
accordance with Section 4.07.
The Company shall deposit in the Escrow Account or Accounts within two (2)
Business Days of Company's receipt , and retain therein:
(i) all Escrow Payments collected on account of the Mortgage Loans, for
the purpose of effecting timely payment of any such items as required
under the terms of this Agreement;
(ii) all amounts representing Insurance Proceeds or Condemnation Proceeds
which are to be applied to the restoration or repair of any Mortgaged
Property; and
(iii) all payments on account of Buydown Funds.
The Company shall make withdrawals from the Escrow Account only to effect
such payments as are required under this Agreement, as set forth in Section
4.07. The Company shall be entitled to retain any interest paid on funds
deposited in the Escrow Account by the depository institution, other than
interest on escrowed funds required by law to be paid to the Mortgagor. To the
extent required by law, the Company shall pay interest on escrowed funds to the
Mortgagor notwithstanding that the Escrow Account may be non-interest bearing or
that interest paid thereon is insufficient for such purposes.
Section 4.07 PERMITTED WITHDRAWALS FROM ESCROW ACCOUNT.
Withdrawals from the Escrow Account or Accounts may be made by the Company
only:
(i) to effect timely payments of ground rents, taxes, assessments, water
rates, mortgage insurance premiums, condominium charges, fire and
hazard insurance premiums or other items constituting Escrow Payments
for the related Mortgage;
(ii) to reimburse the Company for any Servicing Advances made by the
Company pursuant to Section 4.08 with respect to a related Mortgage
Loan, but only from amounts received on the related Mortgage Loan
which represent late collections of Escrow Payments thereunder;
(iii) to refund to any Mortgagor any funds found to be in excess of the
amounts required under the terms of the related Mortgage Loan;
(iv) for transfer to the Custodial Account and application to reduce the
principal balance of the Mortgage Loan in accordance with the terms of
the related Mortgage and Mortgage Note;
(v) for application to restoration or repair of the Mortgaged Property in
accordance with the procedures outlined in Section 4.14;
(vi) to pay to the Company, or any Mortgagor to the extent required by law,
any interest paid on the funds deposited in the Escrow Account;
(vii) to remove funds inadvertently placed in the Escrow Account by the
Company;
(viii) to remit to Purchaser payments on account of Buydown Funds as
applicable; and
(ix) to clear and terminate the Escrow Account on the termination of this
Agreement.
Section 4.08 PAYMENT OF TAXES, INSURANCE AND OTHER CHARGES.
With respect to each Mortgage Loan, the Company shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water rates,
sewer rents, and other charges which are or may become a lien upon the Mortgaged
Property and the status of PMI Policy premiums and fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of such
charges (including renewal premiums) and shall effect payment thereof prior to
the applicable penalty or termination date, employing for such purpose deposits
of the Mortgagor in the Escrow Account which shall have been estimated and
accumulated by the Company in amounts sufficient for such purposes, as allowed
under the terms of the Mortgage. The Company assumes full responsibility for the
timely payment of all such bills and shall effect timely payment of all such
charges irrespective of each Mortgagor's faithful performance in the payment of
same of the making of the Escrow Payments, and the Company shall make advances
from its own funds to effect such payments.
Section 4.09 PROTECTION OF ACCOUNTS.
The Company may transfer the Custodial Account or the Escrow Account to a
different Qualified Depository from time to time.
Section 4.10 MAINTENANCE OF HAZARD INSURANCE.
The Company shall cause to be maintained for each Mortgage Loan hazard
insurance such that all buildings upon the Mortgaged Property are insured by an
insurer acceptable to the Agencies, 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. In the event a
hazard insurance policy shall be in danger of being terminated, or in the event
the insurer shall cease to be acceptable to the Agencies, the Company shall
notify the Purchaser and the related Mortgagor, and shall use its best efforts,
as permitted by applicable law, to obtain from another Qualified Insurer a
replacement hazard insurance policy substantially and materially similar in all
respects to the original policy. In no event, however, shall a Mortgage Loan be
without a hazard insurance policy at any time, subject only to Section 4.11
hereof.
If upon origination of the Mortgage Loan, the related Mortgaged Property
was located in an area identified by the Flood Emergency Management Agency as
having special flood hazards (and such flood insurance has been made available)
a flood insurance policy meeting the requirements of the current guidelines of
the Federal Insurance Administration is in effect with a generally acceptable
insurance carrier acceptable to the Agencies, 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 a Mortgage is secured by a unit in a condominium project, the Company
shall verify that the coverage required of the owner's association, including
hazard, flood, liability, and fidelity coverage, is being maintained in
accordance with then current Agency requirements, and secure from the owner's
association its agreement to notify the Company promptly of any change in the
insurance coverage or of any condemnation or casualty loss that may have a
material effect on the value of the Mortgaged Property as security.
In the event that any Purchaser or the Company shall determine that the
Mortgaged Property should be insured against loss or damage by hazards and risks
not covered by the insurance required to be maintained by the Mortgagor pursuant
to the terms of the Mortgage, the Company shall communicate and consult with the
Mortgagor with respect to the need for such insurance and bring to the
Mortgagor's attention the desirability of protection of the Mortgaged Property.
All policies required hereunder shall name the Company as loss payee and
shall be endorsed with standard or union mortgagee clauses, without
contribution, which shall provide for at least 30 days prior written notice of
any cancellation, reduction in amount or material change in coverage.
The Company shall not interfere with the Mortgagor's freedom of choice in
selecting either his insurance carrier or agent, provided, however, that the
Company shall not accept any such insurance policies from insurance companies
unless such companies are acceptable to the applicable Agency and are licensed
to do business in the jurisdiction in which the Mortgaged Property is located.
The Company shall determine that such policies provide sufficient risk coverage
and amounts, that they insure the property owner, and that they properly
describe the property address.
Pursuant to Section 4.04, any amounts collected by the Company under any
such policies (other than amounts to be deposited in the Escrow Account and
applied to the restoration or repair of the related Mortgaged Property, or
property acquired in liquidation of the Mortgage Loan, or to be released to the
Mortgagor, in accordance with the Company's normal servicing procedures as
specified in Section 4.14) shall be deposited in the Custodial Account subject
to withdrawal pursuant to Section 4.05.
Section 4.11 MAINTENANCE OF MORTGAGE IMPAIRMENT INSURANCE.
In the event that the Company shall obtain and maintain a blanket policy
insuring against losses arising from fire and hazards covered under extended
coverage on all of the Mortgage Loans, then, to the extent such policy provides
coverage in an amount equal to the amount required pursuant to Section 4.10 and
otherwise complies with all other requirements of Section 4.10, it shall
conclusively be deemed to have satisfied its obligations as set forth in Section
4.10. The Company shall prepare and make any claims on the blanket policy as
deemed necessary by the Company in accordance with prudent servicing practices.
Any amounts collected by the Company under any such policy relating to a
Mortgage Loan shall be deposited in the Custodial Account subject to withdrawal
pursuant to Section 4.05. Such policy may contain a deductible clause, in which
case, in the event that there shall not have been maintained on the related
Mortgaged Property a policy complying with Section 4.10, and there shall have
been a loss which would have been covered by such policy, the Company shall
deposit in the Custodial Account at the time of such loss the amount not
otherwise payable under the blanket policy because of such deductible clause,
such amount to be deposited from the Company's funds, without reimbursement
therefor. Upon request of any Purchaser, the Company shall cause to be delivered
to such 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 such Purchaser.
Section 4.12 MAINTENANCE OF FIDELITY BOND AND ERRORS AND OMISSIONS INSURANCE.
The Company shall maintain with responsible companies, at its own expense,
a blanket Fidelity Bond and an Errors and Omissions Insurance Policy, with broad
coverage on all officers, employees or other persons acting in any capacity
requiring such persons to handle funds, money, documents or papers relating to
the Mortgage Loans ("Company Employees"). Any such Fidelity Bond and Errors and
Omissions Insurance Policy shall be in the form of the Mortgage Banker's Blanket
Bond and shall protect and insure the Company against losses, including forgery,
theft, embezzlement, fraud, errors and omissions and negligent acts of such
Company Employees. Such Fidelity Bond and Errors and Omissions Insurance Policy
also shall protect and insure the Company against losses in connection with the
release or satisfaction of a Mortgage Loan without having obtained payment in
full of the indebtedness secured thereby. No provision of this Section 4.12
requiring such Fidelity Bond and Errors and Omissions Insurance Policy shall
diminish or relieve the Company from its duties and obligations as set forth in
this Agreement. The minimum coverage under any such bond and insurance policy
shall be at least equal to the amounts acceptable to the Agencies. Upon the
request of any Purchaser, the Company shall cause to be delivered to such
Purchaser a certificate of insurance for such fidelity bond and 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 4.13 INSPECTIONS.
If any Mortgage Loan is more than 60 days delinquent, the Company
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 Company shall keep a
written report of each such inspection.
Section 4.14 RESTORATION OF MORTGAGED PROPERTY.
The Company need not obtain the approval of the Purchaser prior to
releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be
applied to the restoration or repair of the Mortgaged Property if such release
is in accordance with Accepted Servicing Practices. For claims greater than
$15,000, at a minimum the Company shall comply with the following conditions in
connection with any such release of Insurance Proceeds or Condemnation Proceeds:
(i) The Company shall receive satisfactory independent verification of
completion of repairs and issuance of any required approvals with
respect thereto;
(ii) the Company shall take all steps necessary to preserve the priority of
the lien of the Mortgage, including, but not limited to requiring
waivers with respect to mechanics' and materialmen's liens;
(iii) the Company shall verify that the Mortgage Loan is not in default;
and
(iv) pending repairs or restoration, the Company shall place the Insurance
Proceeds or Condemnation Proceeds in the Escrow Account.
If the Purchaser is named as an additional loss payee, the Company is
hereby empowered to endorse any loss draft issued in respect of such a claim in
the name of the Purchaser.
Section 4.15 CLAIMS.
In connection with its activities as servicer, the Company agrees to
prepare and present, on behalf of itself and the Purchaser, claims to the
insurer under any PMI Policy, MIC or LGC in a timely fashion and in accordance
with the terms of the applicable policy or Agency requirements, in this regard,
to take such action as shall be necessary to permit recovery respecting a
defaulted Mortgage Loan. Pursuant to Section 4.04, any amounts collected by the
Company under any guaranty shall be deposited in the Custodial Account, subject
to withdrawal pursuant to Section 4.05.
Section 4.16 TITLE, MANAGEMENT AND DISPOSITION OF REO PROPERTY.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Purchaser, or in the event the Purchaser is
not authorized or permitted to hold title to real property in the state where
the REO Property is located, or would be adversely affected under the "doing
business" or tax laws of such state by so holding title, the deed or certificate
of sale shall be taken in the name of such Person or Persons as shall be
consistent with an Opinion of Counsel obtained by the Company from any attorney
duly licensed to practice law in the state where the REO Property is located.
The Person or Persons holding such title other than the Purchaser shall
acknowledge in writing that such title is being held as nominee for the
Purchaser.
The Purchaser shall have the option to manage and operate the REO Property
provided the Purchaser gives written notice of its intention to do so within
thirty (30) days after such REO Property is acquired in foreclosure or by deed
in lieu of foreclosure. The election by the Purchaser to manage the REO Property
shall not constitute a termination of any rights of the Company pursuant to
Section 11.02.
In the event the Purchaser does not elect to manage it's own REO property,
the Company shall manage, conserve, protect and operate each REO Property for
the Purchaser solely for the purpose of its prompt disposition and sale. The
Company, either itself or through an agent selected by the Company, shall
manage, conserve, protect and operate the REO Property in the same manner that
it manages, conserves, protects and operates other foreclosed property for its
own account, and in the same manner that similar property in the same locality
as the REO Property is managed. The Company shall attempt to sell the same (and
may temporarily rent the same for a period not greater than one year, except as
otherwise provided below) on such terms and conditions as the Company deems to
be in the best interest of the Purchaser.
The Company shall use its best efforts to dispose of the REO Property as
soon as possible and shall sell such REO Property in any event within one year
after title has been taken to such REO Property, unless the Company 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 Company 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
Company as mortgagee, and such purchase money mortgage shall not be held
pursuant to this Agreement.
The Company shall also maintain on each REO Property fire and hazard
insurance with extended coverage in amount which is at least equal to the
maximum insurable value of the improvements which are a part of such property,
liability insurance and, to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance in the amount
required above.
The disposition of REO Property shall be carried out by the Company at such
price, and upon such terms and conditions, as the Company deems to be in the
best interests of the Purchaser. The proceeds of sale of the REO Property shall
be promptly deposited in the Custodial Account. As soon as practical thereafter
the expenses of such sale shall be paid and the Company shall reimburse itself
for any related unreimbursed Servicing Advances, unpaid Servicing Fees and
unreimbursed advances made pursuant to Section 5.03. On the Remittance Date
immediately following the Principal Prepayment Period in which such sale
proceeds are received the net cash proceeds of such sale remaining in the
Custodial Account shall be distributed to the Purchaser.
The Company shall withdraw from the Custodial Account funds necessary for
the proper operation management and maintenance of the REO Property, including
the cost of maintaining any hazard insurance pursuant to Section 4.10 and the
fees of any managing agent of the Company, or the Company itself. The REO
management fee shall be $1500 per REO Property. The Company shall make monthly
distributions on each Remittance Date to the Purchaser of the net cash flow from
the REO Property (which shall equal the revenues from such REO Property net of
the expenses described in this Section 4.16 and of any reserves reasonably
required from time to time to be maintained to satisfy anticipated liabilities
for such expenses).
Section 4.17 REAL ESTATE OWNED REPORTS.
Together with the statement furnished pursuant to Section 5.02, the Company
shall furnish to the Purchaser on or before the Remittance Date each month a
statement with respect to any REO Property covering the operation of such REO
Property for the previous month and the Company's efforts in connection with the
sale of such REO Property and any rental of such REO Property incidental to the
sale thereof for the previous month. That statement shall be accompanied by such
other information as the Purchaser shall reasonably request.
Section 4.18 LIQUIDATION REPORTS.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Purchaser pursuant to a deed in lieu of foreclosure, the Company
shall submit to the Purchaser a liquidation report with respect to such
Mortgaged Property.
Section 4.19 REPORTS OF FORECLOSURES AND ABANDONMENTS OF MORTGAGED PROPERTY.
Following the foreclosure sale or abandonment of any Mortgaged Property,
the Company shall report such foreclosure or abandonment as required pursuant to
Section 6050J of the Code. The Company shall file information reports with
respect to the receipt of mortgage interest received in a trade or business and
information returns relating to cancellation of indebtedness income with respect
to any Mortgaged Property as required by the Code. Such reports shall be in form
and substance sufficient to meet the reporting requirements imposed by the Code.
Section 4.20 APPLICATION OF BUYDOWN FUNDS.
With respect to each Buydown Mortgage Loan, the Company shall have
deposited into the Escrow Account, no later than the last day of the month,
Buydown Funds in an amount equal to the aggregate undiscounted amount of
payments that, when added to the amount the Mortgagor on such Mortgage Loan is
obligated to pay on all Due Dates in accordance with the terms of the Buydown
Agreement, is equal to the full scheduled Monthly Payments which are required to
be paid by the Mortgagor under the terms of the related Mortgage Note (without
regard to the related Buydown Agreement as if the Mortgage Loan were not subject
to the terms of the Buydown Agreement). With respect to each Buydown Mortgage
Loan, the Company will distribute to the Purchaser on each Remittance Date an
amount of Buydown Funds equal to the amount that, when added to the amount
required to be paid on such date by the related Mortgagor, pursuant to and in
accordance with the related Buydown Agreement, equals the full Monthly Payment
that would otherwise be required to be paid on such Mortgage Loan by the related
Mortgagor under the terms of the related Mortgage Note (as if the Mortgage Loan
were not a Buydown Mortgage Loan and without regard to the related Buydown
Agreement).
If the Mortgagor on a Buydown Mortgage Loan defaults on such Mortgage Loan
during the Buydown Period and the Mortgaged Property securing such Buydown
Mortgage Loan is sold in the liquidation thereof (either by the Company or the
insurer under any related Primary Insurance Policy) the Company shall, on the
Remittance Date following the date upon which Liquidation Proceeds or REO
Disposition proceeds are received with respect to any such Buydown Mortgage
Loan, distribute to the Purchaser all remaining Buydown Funds for such Mortgage
Loan then remaining in the Escrow Account. Pursuant to the terms of each Buydown
Agreement, any amounts distributed to the Purchaser in accordance with the
preceding sentence will be applied to reduce the outstanding principal balance
of the related Buydown Mortgage Loan. If a Mortgagor on a Buydown Mortgage Loan
prepays such Mortgage Loan in its entirety during the related Buydown Period,
the Company shall be required to withdraw from the Escrow Account any Buydown
Funds remaining in the Escrow Account with respect to such Buydown Mortgage Loan
in accordance with the related Buydown Agreement. If a principal prepayment by a
Mortgagor on a Buydown Mortgage Loan during the related Buydown Period, together
with any Buydown Funds then remaining in the Escrow Account related to such
Buydown Mortgage Loan, would result in a principal prepayment of the entire
unpaid principal balance of the Buydown Mortgage Loan, the Company shall
distribute to the Purchaser on the Remittance Date occurring in the month
immediately succeeding the month in which such Principal Prepayment is received,
all Buydown Funds related to such Mortgage Loan so remaining in the Escrow
Account, together with any amounts required to be deposited into the Custodial
Account.
Section 4.21 NOTIFICATION OF ADJUSTMENTS.
With respect to each Mortgage Loan, the Company shall adjust the Mortgage
Interest Rate on the related Adjustment Date in compliance with the requirements
of applicable law and the related Mortgage and Mortgage Note. The Company shall
execute and deliver any and all necessary notices required under applicable law
and the terms of the related Mortgage Note and Mortgage regarding the Mortgage
Interest Rate adjustments. Upon the discovery by the Company or the receipt of
notice from the Purchaser that the Company has failed to adjust a Mortgage
Interest Rate in accordance with the terms of the related Mortgage Note, the
Company shall immediately deposit in the Custodial Account from its own funds
the amount of any interest loss or deferral caused the Purchaser thereby.
Section 4.22 CONFIDENTIALITY/PROTECTION OF CUSTOMER INFORMATION.
The Company shall keep confidential and shall not divulge to any party,
without the Purchaser's prior written consent, the price paid by the Purchaser
for the Mortgage Loans, except to the extent that it is reasonable and necessary
for the Company to do so in working with legal counsel, auditors, taxing
authorities or other governmental agencies. Each party agrees that it shall
comply with all applicable laws and regulations regarding the privacy or
security of Customer Information and shall maintain appropriate administrative,
technical and physical safeguards to protect the security, confidentiality and
integrity of Customer Information, including maintaining security measures
designed to meet the Interagency Guidelines Establishing Standards for
Safeguarding Customer Information, 66 Fed. Reg. 8616, and the rules promulgated
thereunder, if applicable. For purposes of this Section, "Customer Information"
means any personal information concerning a Mortgagor or any other Person who
grants security under any mortgage, deed of trust or other security instrument
or equivalent document that is disclosed by one party to this Agreement to the
other.
ARTICLE V
PAYMENTS TO PURCHASER
Section 5.01 REMITTANCES.
On each Remittance Date the Company shall remit by wire transfer of
immediately available funds to the Purchaser (a) all amounts deposited in the
Custodial Account as of the close of business on the Determination Date (net of
charges against or withdrawals from the Custodial Account pursuant to Section
4.05), plus (b) all amounts, if any, which the Company is obligated to
distribute pursuant to Section 5.03, minus (c) any amounts attributable to
Principal Prepayments received after the applicable Principal Prepayment Period
which amounts shall be remitted on the following Remittance Date, together with
any additional interest required to be deposited in the Custodial Account in
connection with such Principal Prepayment in accordance with Section 4.04(viii);
minus (d) any amounts attributable to Monthly Payments collected but due on a
Due Date or Dates subsequent to the first day of the month of the Remittance
Date, and minus (e) any amounts attributable to Buydown Funds being held in the
Custodial Account, which amounts shall be remitted on the Remittance Date next
succeeding the Due Period for such amounts.
With respect to any remittance received by the Purchaser after the date on
which such payment was due, the Company shall pay to the Purchaser interest on
any such late payment at an annual rate equal to the Prime Rate, adjusted as of
the date of each change, plus two percentage points, but in no event greater
than the maximum amount permitted by applicable law. Such interest shall be
distributed with such late remittance by wire transfer to the Purchaser and
shall cover the period commencing with the day following such Remittance Date
and ending with the Business Day on which such payment is made, both inclusive.
The payment by the Company of any such interest shall not be deemed an extension
of time for payment or a waiver of any Event of Default by the Company.
Section 5.02 STATEMENTS TO PURCHASER.
Not later than the Remittance Date, the Company shall furnish to the
Purchaser a monthly remittance advice in the standard form of electronic
Alltel(R) file, as to the period ending on the last day of the preceding month.
Section 5.03 MONTHLY ADVANCES BY COMPANY.
On the Business Day immediately preceding each Remittance Date, the Company
shall deposit in the Custodial Account from its own funds or from amounts held
for future distribution an amount equal to all Monthly Payments (with interest
adjusted to the Mortgage Loan Remittance Rate) which were due on the Mortgage
Loans during the applicable Due Period and which were delinquent at the close of
business on the immediately preceding Determination Date or which were deferred
pursuant to Section 4.01. Any amounts held for future distribution and so used
shall be replaced by the Company by deposit in the Custodial Account on or
before any future Remittance Date if funds in the Custodial Account on such
Remittance Date shall be less than payments to the Purchaser required to be made
on such Remittance Date. The Company's obligation to make such Monthly Advances
as to any Mortgage Loan will continue through the last Monthly Payment due prior
to the payment in full of the Mortgage Loan, or through the earlier of: (i) the
last Remittance Date prior to the Remittance Date for the distribution of all
Liquidation Proceeds and other payments or recoveries (including Insurance
Proceeds and Condemnation Proceeds) with respect to the Mortgage Loan; and (ii)
the Remittance Date prior to the date the Mortgage Loan is converted to REO
Property, provided however, that if requested in connection with a
securitization, the Company shall be obligated to make such advances through the
Remittance Date prior to the date on which cash is received in connection with
the liquidation of REO Property; provided, however, that such obligation shall
cease if the Company determines, in its sole reasonable opinion, that advances
with respect to such Mortgage Loan are non-recoverable by the Company from
Liquidation Proceeds, Insurance Proceeds, Condemnation Proceeds, or otherwise
with respect to a particular Mortgage Loan. In the event that the Company
determines that any such advances are non-recoverable, the Company shall provide
the Purchaser with a certificate signed by two officers of the Company
evidencing such determination. For purposes of this paragraph, "Rating Agency"
shall mean ▇▇▇▇▇'▇ Investors Services, Inc., Standard & Poor's Ratings Group,
Fitch Investors Services, Inc., or any other nationally recognized statistical
credit rating agency.
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01 TRANSFERS OF MORTGAGED PROPERTY.
The Company shall use its best efforts to enforce any "due-on-sale"
provision contained in any Mortgage or Mortgage Note and to deny assumption by
the person to whom the Mortgaged Property has been or is about to be sold
whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains liable on the Mortgage and the Mortgage Note. When the
Mortgaged Property has been conveyed by the Mortgagor, the Company shall, to the
extent it has knowledge of such conveyance, exercise its rights to accelerate
the maturity of such Mortgage Loan under the "due-on-sale" clause applicable
thereto, provided, however, that the Company shall not exercise such rights if
prohibited by law from doing so or if the exercise of such rights would impair
or threaten to impair any recovery under the related PMI Policy, MIC or LGC.
If the Company reasonably believes it is unable under applicable law to
enforce such "due-on-sale" clause, the Company shall enter into (i) an
assumption and modification agreement with the person to whom such property has
been conveyed, pursuant to which such person becomes liable under the Mortgage
Note and the original Mortgagor remains liable thereon or (ii) in the event the
Company is unable under applicable law to require that the original Mortgagor
remain liable under the Mortgage Note and the Company has the prior consent of
the primary mortgage guaranty insurer, a substitution of liability agreement
with the purchaser of the Mortgaged Property pursuant to which the original
Mortgagor is released from liability and the purchaser of the Mortgaged Property
is substituted as Mortgagor and becomes liable under the Mortgage Note. If an
assumption fee is collected by the Company for entering into an assumption
agreement the fee will be retained by the Company as additional servicing
compensation. In connection with any such assumption, neither the Mortgage
Interest Rate borne by the related Mortgage Note, the term of the Mortgage Loan,
the outstanding principal amount of the Mortgage Loan nor any other materials
terms shall be changed without Purchaser's consent.
To the extent that any Mortgage Loan is assumable, the Company shall
inquire diligently into the credit worthiness of the proposed transferee, and
shall use the underwriting criteria for approving the credit of the proposed
transferee which are used with respect to underwriting mortgage loans of the
same type as the Mortgage Loans. If the credit worthiness of the proposed
transferee does not meet such underwriting criteria, the Company diligently
shall, to the extent permitted by the Mortgage or the Mortgage Note and by
applicable law, accelerate the maturity of the Mortgage Loan.
Section 6.02 SATISFACTION OF MORTGAGES AND RELEASE OF MORTGAGE FILES.
Upon the payment in full of any Mortgage Loan, the Company shall notify the
Purchaser in the Monthly Remittance Advice as provided in Section 5.02, and may
request the release of any Mortgage Loan Documents.
If the Company satisfies or releases a Mortgage without first having
obtained payment in full of the indebtedness secured by the Mortgage or should
the Company otherwise prejudice any rights the Purchaser may have under the
mortgage instruments, upon written demand of the Purchaser, the Company shall
repurchase the related Mortgage Loan at the Repurchase Price by deposit thereof
in the Custodial Account within 2 Business Days of receipt of such demand by the
Purchaser. The Company shall maintain the Fidelity Bond and Errors and Omissions
Insurance Policy as provided for in Section 4.12 insuring the Company against
any loss it may sustain with respect to any Mortgage Loan not satisfied in
accordance with the procedures set forth herein.
Section 6.03 SERVICING COMPENSATION.
As compensation for its services hereunder, the Company shall be entitled
to withdraw from the Custodial Account or to retain from interest payments on
the Mortgage Loans the amount of its Servicing Fee. The Servicing Fee shall be
payable monthly and shall be computed on the basis of the same unpaid scheduled
principal balance and for the period respecting which any related interest
payment on a Mortgage Loan is computed. The obligation of the Purchaser to pay
the Servicing Fee is limited to, and payable solely from, the interest portion
of such Monthly Payments. The Servicing Fee shall not be reduced by the amount
of any guaranty fee payable to FHA or VA.
Additional servicing compensation in the form of assumption fees, to the
extent provided in Section 6.01, and late payment charges shall be retained by
the Company to the extent not required to be deposited in the Custodial Account.
The Company shall be required to pay all expenses incurred by it in connection
with its servicing activities hereunder and shall not be entitled to
reimbursement thereof except as specifically provided for herein.
Section 6.04 ANNUAL STATEMENT AS TO COMPLIANCE.
The Company shall deliver to the Purchaser, on or before February 28, each
year beginning February 28, 2004, an Officer's Certificate, stating that (i) a
review of the activities of the Company during the preceding calendar year and
of performance under this Agreement or similar agreements has been made under
such officer's supervision, and (ii) to the best of such officer's knowledge,
based on such review, the Company has fulfilled all its obligations under this
Agreements 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
Company to cure such default.
Section 6.05 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
On or before February 28, of each year beginning February 28, 2004, the
Company, at its expense, shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants to
furnish a statement to each Purchaser to the effect that such firm has examined
certain documents and records relating to the servicing of the mortgage loans
similar in nature and that such firm is of the opinion that the provisions of
this or similar Agreements have been complied with, and that, on the basis of
such examination conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers, nothing has come to their attention
which would indicate that such servicing has not been conducted in compliance
therewith, except for (i) such exceptions as such firm shall believe to be
immaterial, and (ii) such other exceptions as shall be set forth in such
statement. By providing Purchaser a copy of a Uniform Single Attestation Program
Report from their independent public accountant's on an annual basis, Company
shall be considered to have fulfilled its obligations under this Section 6.05.
Section 6.06 RIGHT TO EXAMINE COMPANY RECORDS.
The Purchaser, or its designee, shall have the right to examine and audit
any and all of the books, records, or other information of the Company, whether
held by the Company or by another on its behalf, with respect to or concerning
this Agreement or the Mortgage Loans, during business hours or at such other
times as may be reasonable under applicable circumstances, upon reasonable
advance notice. The Purchaser shall pay its own travel expenses associated with
such examination.
ARTICLE VII
COMPANY TO COOPERATE
Section 7.01 PROVISION OF INFORMATION.
During the term of this Agreement, the Company shall furnish to the
Purchaser such periodic, special, or other reports or information, and copies or
originals of any documents contained in the Servicing File for each Mortgage
Loan provided for herein. All other special reports or information not provided
for herein as shall be necessary, reasonable, or appropriate with respect to the
Purchaser or any regulatory agency will be provided at the Purchaser's expense.
All such reports, documents or information shall be provided by and in
accordance with all reasonable instructions and directions which the Purchaser
may give.
The Company shall execute and deliver all such instruments and take all
such action as the Purchaser may reasonably request from time to time, in order
to effectuate the purposes and to carry out the terms of this Agreement.
Section 7.02 FINANCIAL STATEMENTS; SERVICING FACILITY.
In connection with marketing the Mortgage Loans, the Purchaser may make
available to a prospective Purchaser a Consolidated Statement of Operations of
the Company for the most recently completed two (2) fiscal years for which such
a statement is available, as well as a Consolidated Statement of Condition at
the end of the last two (2) fiscal years covered by such Consolidated Statement
of Operations. The Company also shall make available any comparable interim
statements to the extent any such statements have been prepared by or on behalf
of the Company (and are available upon request to members or stockholders of the
Company or to the public at large).
The Company also shall make available to Purchaser or prospective Purchaser
a knowledgeable financial or accounting officer for the purpose of answering
questions respecting recent developments affecting the Company or the financial
statements of the Company, and to permit any prospective Purchaser to inspect
the Company's servicing facilities for the purpose of satisfying such
prospective Purchaser that the Company has the ability to service the Mortgage
Loans as provided in this Agreement.
ARTICLE VIII
THE COMPANY
Section 8.01 INDEMNIFICATION; THIRD PARTY CLAIMS.
The Company shall indemnify the Purchaser and hold it harmless against any
and all claims, losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments, and any other costs, fees and
expenses that the Purchaser may sustain in any way related to the failure of the
Company to perform its duties and service the Mortgage Loans in strict
compliance with the terms of this Agreement. The Company immediately shall
notify the Purchaser if a claim is made by a third party with respect to this
Agreement or the Mortgage Loans, assume (with the prior written consent of the
Purchaser) the defense of any such claim and pay all expenses in connection
therewith, including counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against it or the Purchaser in respect
of such claim. The Company shall follow any written instructions received from
the Purchaser in connection with such claim. The Purchaser promptly shall
reimburse the Company for all amounts advanced by it pursuant to the preceding
sentence except when the claim is in any way related to the Company's
indemnification pursuant to Section 3.03, or the failure of the Company to
service and administer the Mortgage Loans in strict compliance with the terms of
this Agreement.
Section 8.02 MERGER OR CONSOLIDATION OF THE COMPANY.
The Company shall keep in full effect its existence, rights and franchises
as a corporation, and shall obtain and preserve its qualification to do business
as a foreign corporation in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and enforceability of this Agreement
or any of the Mortgage Loans and to perform its duties under this Agreement.
Any person into which the Company may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Company shall be a party, or any Person succeeding to the business of the
Company, shall be the successor of the Company hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding, provided, however, that
the successor or surviving Person shall be an institution which is a
HUD/VA-approved company in good standing. Furthermore, in the event the Company
transfers or otherwise disposes of all or substantially all of its assets to an
affiliate of the Company, such affiliate shall satisfy the condition above, and
shall also be fully liable to the Purchaser for all of the Company's obligations
and liabilities hereunder.
Section 8.03 LIMITATION ON LIABILITY OF COMPANY AND OTHERS.
Neither the Company nor any of the directors, officers, employees or agents
of the Company shall be under any liability to the Purchaser for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment, provided, however, that this
provision shall not protect the Company or any such person against any breach of
warranties or representations made herein, or failure to perform its obligations
in strict compliance with any standard of care set forth in this Agreement or
any other liability which would otherwise be imposed under this Agreement. The
Company and any director, officer, employee or agent of the Company may rely in
good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder. The Company
shall not be under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its duties to service the Mortgage Loans in
accordance with this Agreement and which in its opinion may involve it in any
expense or liability, provided, however, that the Company may, with the consent
of the Purchaser, undertake any such action which it may deem necessary or
desirable in respect to this Agreement and the rights and duties of the parties
hereto. In such event, the Company shall be entitled to reimbursement from the
Purchaser of the reasonable legal expenses and costs of such action.
Section 8.04 LIMITATION ON RESIGNATION AND ASSIGNMENT BY COMPANY.
The Purchaser has entered into this Agreement with the Company and
subsequent purchaser will purchase the Mortgage Loans in reliance upon the
independent status of the Company, and the representations as to the adequacy of
its servicing facilities, plant, personnel, records and procedures, its
integrity, reputation and financial standing, and the continuance thereof.
Therefore, the Company shall neither assign this Agreement or the servicing
hereunder or delegate its rights or duties hereunder or any portion hereof or
sell or otherwise dispose of all of its property or assets without the prior
written consent of the Purchaser, which consent shall not be unreasonably
withheld.
The Company shall not resign from the obligations and duties hereby imposed
on it except by mutual consent of the Company and the Purchaser or upon the
determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Company. Any such
determination permitting the resignation of the Company shall be evidenced by an
Opinion of Counsel to such effect delivered to the Purchaser which Opinion of
Counsel shall be in form and substance acceptable to the Purchaser. No such
resignation shall become effective until a successor shall have assumed the
Company's responsibilities and obligations hereunder in the manner provided in
Section 12.01.
Without in any way limiting the generality of this Section 8.04, in the
event that the Company either shall assign this Agreement or the servicing
responsibilities hereunder or 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 10.01, without any payment of any penalty or damages and
without any liability whatsoever to the Company or any third party.
ARTICLE IX
PASS-THROUGH TRANSFER
Section 9.01 REMOVAL OF MORTGAGE LOANS FROM INCLUSION UNDER THIS AGREEMENT
The Purchaser and the Company agree that with respect to some or all of the
Mortgage Loans, the Purchaser, at its sole option, shall effect up to four Whole
Loan Transfers, Agency Sales or Pass-Through Transfers, retaining the Company as
the Servicer thereof or subservicer if a master servicer is employed, or as
applicable the "seller/servicer." On the Reconstitution Date, the Mortgage Loans
transferred shall cease to be covered by this Agreement; provided, however,
that, in the event that any Mortgage Loan transferred pursuant to this Section 9
is rejected by the transferee, the Company shall continue to service such
rejected Mortgage Loan on behalf of the Purchaser in accordance with the terms
and provisions of this Agreement.
The Company shall cooperate with the Purchaser in connection with each
Whole Loan Transfer, Agency Sale or Pass-Through Transfer in accordance with
this Section 9. In connection therewith the Company shall:
(a) make all representations and warranties with respect to the Mortgage
Loans as of the Closing Date and with respect to the Company itself as
of the closing date of each Whole Loan Transfer, Agency Sale or
Pass-Through Transfer;
(b) negotiate in good faith and execute any seller/servicer agreements or
pooling and servicing agreements required by the shelf registrant to
effectuate the foregoing provided such agreements create no greater
obligation or cost on the part of the Company than otherwise set forth
in this Agreement;
(c) provide as applicable:
(i) any and all information and appropriate verification of
information which may be reasonably available to the Company,
whether through letters of its auditors and counsel or otherwise,
as the Purchaser shall request;
(ii) such additional representations, warranties, covenants, opinions
of counsel, letters from auditors, and certificates of public
officials or officers of the Company as are reasonably believed
necessary by the trustee, any Rating Agency or the Purchaser, as
the case may be, in connection with such Whole Loan Transfers,
Agency Sales or Pass-Through Transfers. The Purchaser shall pay
all third party costs associated with the preparation of such
information. The Company shall execute any seller/servicer
agreements required within a reasonable period of time after
receipt of such seller/servicer agreements which time shall be
sufficient for the Company and Company's counsel to review such
seller/servicer agreements. Under this Agreement, the Company
shall retain a servicing fee at a rate per annum equal to no less
than 0.250% per Mortgage Loan; and
(d) indemnify the Purchaser for any material misstatements contained in
the information provided pursuant to (c) above, provided that the
Purchaser shall also provide indemnification to the Company, its
successors or assigns, with respect to any material misstatements or
omissions contained in any information (other than the information
provided by the Company pursuant to (c) above) the Purchaser may
disclose in any securitization offering materials.
In the event the Purchaser has elected to have the Company hold record title to
the Mortgages, prior to the Reconstitution Date the Company shall prepare an
Assignment in blank or to the trustee or to the subsequent purchaser from the
Company acceptable to the trustee or subsequent purchaser for each Mortgage Loan
that is part of the Whole Loan Transfers, Agency Sale or Pass-Through Transfers.
The Purchaser shall pay all preparation and recording costs associated
therewith. The Company shall execute each Assignment, track such Assignments to
ensure they have been recorded and deliver them as required by the trustee or
subsequent purchaser upon the Company's receipt thereof. Additionally, the
Company shall prepare and execute, at the direction of the Purchaser, any note
endorsements in connection with any and all seller/servicer agreements.
Notwithstanding any provisions of the this Agreement to the contrary, all
Mortgage Loans sold or transferred to an Agency, shall be serviced in accordance
with the guidelines of the respective Agency. All Mortgage Loans not sold or
transferred pursuant to Whole Loan Transfers, Agency Sales or Pass-Through
Transfers shall remain subject to this Agreement and shall continue to be
serviced in accordance with the terms of this Agreement and with respect thereto
this Agreement shall remain in full force and effect.
ARTICLE X
DEFAULT
Section 10.01 EVENTS OF DEFAULT.
Each of the following shall constitute an Event of Default on the part of
the Company:
(i) any failure by the Company to remit to the Purchaser any payment
required to be made under the terms of this Agreement which continues
unremedied for a period of five days after the date upon which written
notice of such failure, requiring the same to be remedied, shall have
been given to the Company by the Purchaser; or
(ii) failure by the Company duly to observe or perform in any material
respect any other of the covenants or agreements on the part of the
Company set forth in this Agreement 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 Company by the Purchaser or by the Custodian; or
(iii) failure by the Company to maintain its license to do business in any
jurisdiction where the Mortgaged Property is located if such license
is required; or
(iv) a decree or order of a court or agency or supervisory authority having
jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, including
bankruptcy, marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs,
shall have been entered against the Company and such degree or order
shall have remained in force undischarged or unstayed for a period of
60 days; or
(v) the Company shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or
relating to the Company or of or relating to all or substantially all
of its property; or
(vi) the Company shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency, bankruptcy or reorganization statute, make an
assignment for the benefit of its creditors, voluntarily suspend
payment of its obligations or cease its normal business operations for
three Business Days; or
(vii) the Company ceases to meet the qualifications of an Agency servicer;
or
(viii) the Company attempts to assign its right to servicing compensation
hereunder or to assign this Agreement or the servicing
responsibilities hereunder or to delegate its duties hereunder or any
portion thereof in violation of Section 8.04.
In each and every such case, so long as an Event of Default shall not have
been remedied, in addition to whatever rights the Purchaser may have at law or
equity to damages, including injunctive relief and specific performance, the
Purchaser, by notice in writing to the Company, may terminate all the rights and
obligations of the Company under this Agreement and in and to the Mortgage Loans
and the proceeds thereof.
Upon receipt by the Company of such written notice, all authority and power
of the Company under this Agreement, whether with respect to the Mortgage Loans
or otherwise, shall pass to and be vested in the successor appointed pursuant to
Section 12.01. Upon written request from any Purchaser, the Company shall
prepare, execute and deliver to the successor entity designated by the Purchaser
any and all documents and other instruments, place in such successor's
possession all Mortgage Files, and do or cause to be done all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, including but not limited to the transfer and endorsement or
assignment of the Mortgage Loans and related documents, at the Company's sole
expense. The Company shall cooperate with the Purchaser and such successor in
effecting the termination of the Company's responsibilities and rights
hereunder, including without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited by
the Company to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans.
Section 10.02 WAIVER OF DEFAULTS.
By a written notice, the Purchaser may waive any default by the Company in
the performance of its obligations hereunder and its consequences. Upon any
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
ARTICLE XI
TERMINATION
Section 11.01 TERMINATION.
This Agreement shall terminate upon either: (i) the later of the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan or the disposition of any REO Property with respect to the last
Mortgage Loan and the remittance of all funds due hereunder; or (ii) mutual
consent of the Company and the Purchaser in writing.
Section 11.02 TERMINATION WITHOUT CAUSE.
The Purchaser may terminate, at its sole option, any rights the Company may
have hereunder, without cause as provided in this Section 11.02. Any such notice
of termination shall be in writing and delivered to the Company by registered
mail as provided in Section 12.05.
The Company shall be entitled to receive, as such liquidated damages, upon
the transfer of the servicing rights, an amount equal to: (i) 2.75% of the
aggregate outstanding principal amount of the Mortgage Loans as of the
termination date paid by the Purchaser to the Company with respect to all of the
Mortgage Loans for which a servicing fee rate of 0.250% is paid per annum, (ii)
3.25% of the aggregate outstanding principal amount of the Mortgage Loans as of
the termination date paid by the Purchaser to the Company with respect to all of
the Mortgage Loans for which a servicing fee rate of .375% is paid per annum,
and (iii) 3.75% of the aggregate outstanding principal amount of the Mortgage
Loans as of the termination date paid by the Purchaser to the Company with
respect to all of the Mortgage Loans for which a servicing fee rate of 0.44% or
more is paid per annum.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 SUCCESSOR TO COMPANY.
Prior to termination of the Company's responsibilities and duties under
this Agreement pursuant to Sections 8.04, 10.01, 11.01 (ii) or pursuant to
Section 11.02, the Purchaser shall, (i) succeed to and assume all of the
Company's responsibilities, rights, duties and obligations under this Agreement,
or (ii) appoint a successor having the characteristics set forth in Section 8.02
and which shall succeed to all rights and assume all of the responsibilities,
duties and liabilities of the Company under this Agreement prior to the
termination of Company's responsibilities, duties and liabilities under this
Agreement. In connection with such appointment and assumption, the Purchaser may
make such arrangements for the compensation of such successor out of payments on
Mortgage Loans as it and such successor shall agree. In the event that the
Company's duties, responsibilities and liabilities under this Agreement should
be terminated pursuant to the aforementioned sections, the Company shall
discharge such duties and responsibilities during the period from the date it
acquires knowledge of such termination until the effective date thereof with the
same degree of diligence and prudence which it is obligated to exercise under
this Agreement, and shall take no action whatsoever that might impair or
prejudice the rights or financial condition of its successor. The resignation or
removal of the Company pursuant to the aforementioned sections shall not become
effective until a successor shall be appointed pursuant to this Section 12.01
and shall in no event relieve the Company of the representations and warranties
made pursuant to Sections 3.01 and 3.02 and the remedies available to the
Purchaser under Section 3.03, it being understood and agreed that the provisions
of such Sections 3.01, 3.02, and 3.03 shall be applicable to the Company
notwithstanding any such sale, assignment, resignation or termination of the
Company, or the termination of this Agreement.
Any successor appointed as provided herein shall execute, acknowledge and
deliver to the Company and to the Purchaser an instrument accepting such
appointment, wherein the successor shall make the representations and warranties
set forth in Section 3.01, except for the portion of subsection (h) relating to
sale of the mortgage loans and all of subsections (j) and (l) thereof, whereupon
such successor shall become fully vested with all the rights, powers, duties,
responsibilities, obligations and liabilities of the Company, with like effect
as if originally named as a party to this Agreement. Any termination or
resignation of the Company or termination of this Agreement pursuant to Section
8.04, 10.01, 11.01 or 11.02 shall not affect any claims that any Purchaser may
have against the Company arising out of the Company's actions or failure to act
prior to any such termination or resignation.
The Company shall deliver promptly to the successor servicer the funds in
the Custodial Account and Escrow Account and all Mortgage Files and related
documents and statements held by it hereunder and the Company shall account for
all funds and shall execute and deliver such instruments and do such other
things as may reasonably be required to more fully and definitively vest in the
successor all such rights, powers, duties, responsibilities, obligations and
liabilities of the Company.
Upon a successor's acceptance of appointment as such, the Company shall
notify by mail the Purchaser of such appointment in accordance with the
procedures set forth in Section 12.05.
Section 12.02 AMENDMENT.
This Agreement may be amended from time to time by written agreement signed
by the Company and the Purchaser.
Section 12.03 GOVERNING LAW.
This Agreement shall be construed in accordance with the laws of the State
of New York and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.
Each of the Company and the Purchaser hereby knowingly, voluntarily and
intentionally waives any and all rights it may have to a trial by jury in
respect or any litigation based on, or arising out of, under, or in connection
with, this Agreement, or any other documents and instruments executed in
connection herewith, or any course of conduct, course of dealing, statements
(whether oral or written), or actions of the Company or the Purchaser. This
provision is a material inducement for the Purchaser to enter into this
Agreement
Section 12.04 DURATION OF AGREEMENT.
This Agreement shall continue in existence and effect until terminated as
herein provided. This Agreement shall continue notwithstanding transfers of the
Mortgage Loans by the Purchaser.
Section 12.05 NOTICES.
All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
registered mail, postage prepaid, addressed as follows:
(i) if to the Company with respect to servicing and investor reporting
issues:
▇▇▇▇▇ Fargo Home Mortgage, Inc.
▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, MAC X2401-042
Fax: 515/▇▇▇-▇▇▇▇
If to the Company with respect to all other issues:
▇▇▇▇▇ Fargo Home Mortgage, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, MAC X4801-097
Fax: 612/▇▇▇-▇▇▇▇
In each instance with a copy to:
▇▇▇▇▇ Fargo Home Mortgage, Inc.
▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel MAC X2401-06T
or such other address as may hereafter be furnished to the Purchaser in
writing by the Company;
(ii) if to Purchaser:
EMC Mortgage Corporation
Mac ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, President
Section 12.06 SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement.
Section 12.07 RELATIONSHIP OF PARTIES.
Nothing herein contained shall be deemed or construed to create a
partnership or joint venture between the parties hereto and the services of the
Company shall be rendered as an independent contractor and not as agent for the
Purchaser.
Section 12.08 EXECUTION; SUCCESSORS AND ASSIGNS.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement. Subject to Section 8.04, this Agreement
shall inure to the benefit of and be binding upon the Company and the Purchaser
and their respective successors and assigns.
Section 12.09 RECORDATION OF ASSIGNMENTS OF MORTGAGE.
To the extent permitted by applicable law, each of the Assignments of
Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or other comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected at the Company's expense in the event recordation is either necessary
under applicable law or requested by the Purchaser at its sole option. The
company shall only be responsible for the costs of recording the initial
Assignments of Mortgage. In no event shall the Company be responsible for the
cost of recording Assignments of Mortgage in connection with a subsequent sale
or transfer of the Mortgage Loans by the Purchaser.
Section 12.10 ASSIGNMENT BY PURCHASER.
The Purchaser shall have the right, without the consent of the Company but
subject to the limit set forth in Section 2.02 hereof, to assign, in whole or in
part, its interest under this Agreement with respect to some or all of the
Mortgage Loans, and designate any person to exercise any rights of the Purchaser
hereunder, by executing an Assignment and Assumption Agreement and the assignee
or designee shall accede to the rights and obligations hereunder of the
Purchaser with respect to such Mortgage Loans. All references to the Purchaser
in this Agreement shall be deemed to include its assignee or designee.
Section 12.11 SOLICITATION OF MORTGAGOR.
The Purchaser, its affiliates, successors or assigns shall not, without the
prior written consent of the Company, take any action to solicit or make direct
contact with the Mortgagor under any Mortgage Loan except to the extent required
by the Company's breach of this Agreement or as required under applicable law or
regulatory authority. Notwithstanding any provision of this Agreement to the
contrary, in the event the Purchaser, its affiliates, successors or assigns
fails to obtain such written consent, the Company shall be entitled, in its sole
discretion, to terminate its obligations and duties under this Agreement. Upon
transfer of the servicing rights and obligations under this Agreement to the
Purchaser or Purchaser's designee, the Company shall be entitled to receive as
liquidated damages, an amount equal to: (i) 2.75% of the aggregate outstanding
principal amount of the Mortgage Loans as of the termination date paid by the
Purchaser to the Company with respect to all of the Mortgage Loans for which a
servicing fee rate of .250% is paid per annum, (ii) 3.25% of the aggregate
outstanding principal amount of the Mortgage Loans as of the termination date
paid by the Purchaser to the Company with respect to all of the Mortgage Loans
for which a servicing fee rate of .375% is paid per annum, and (iii) 3.75% of
the aggregate outstanding principal amount of the Mortgage Loans as of the
termination date paid by the Purchaser to the Company with respect to all of the
Mortgage Loans for which a servicing fee rate of 0.44% or more is paid per
annum.
The Company agrees that, after the Closing Date, it will not take any
action to solicit the refinancing of any Mortgage Loan. It is understood and
agreed that promotions undertaken by the Company or any affiliate of the Company
which are directed to the general public at large, including, without
limitation, mass mailings based upon commercially acquired mailing lists,
newspaper, radio, television advertisements or from servicing the refinancing
needs of a Mortgagor who, without solicitation, contacts Company in connection
with the refinance of such Mortgage or Mortgage Loan, shall not constitute
solicitation under this Section. Notwithstanding anything to the contrary, this
Section shall not prohibit the Company from soliciting any Mortgagor to provide
other services including but not limited to credit cards, insurance investments
and banking related services.
[Intentionally Blank - Next Page Signature Page]
IN WITNESS WHEREOF, the Company and the Purchaser have caused their names
to be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.
EMC MORTGAGE CORPORATION ▇▇▇▇▇ FARGO HOME MORTGAGE, INC.
PURCHASER COMPANY
By: By:
-------------------------------- ------------------------------
Name: Name:
------------------------------ ----------------------------
Title: Title:
----------------------------- ---------------------------
STATE OF )
) ss:
COUNTY OF ___________ )
On the _____ day of _______________, 20___ before me, a Notary Public in
and for said State, ______________________________ personally appeared , known
to me to be ______________________________ of ▇▇▇▇▇ Fargo Home Mortgage, Inc.,
the corporation that executed the within instrument and also known to me to be
the person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal the
day and year in this certificate first above written.
---------------------------------------
Notary Public
My Commission expires__________________
STATE OF )
) ss:
COUNTY OF ___________ )
On the _____ day of _______________, 20___ before me, a Notary Public in
and for said State, personally appeared _____________________________________,
known to me to be the ______________________________ of
______________________________, the corporation that executed the within
instrument and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal the
day and year in this certificate first above written.
---------------------------------------
Notary Public
My Commission expires__________________
EXHIBIT A
MORTGAGE LOAN SCHEDULE
EXHIBIT B
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include each of
the following items, which shall be available for inspection by the Purchaser
and any prospective Purchaser, and which shall be retained by the Company in the
Servicing File or delivered to the Custodian pursuant to Sections 2.01 and 2.03
of the Seller's Warranties and the Servicing Agreement to which this Exhibit is
attached (the "Agreement"):
1. The original Mortgage Note bearing all intervening endorsements,
endorsed "Pay to the order of without recourse" and signed in the name
of the Company by an authorized officer (in the event that the
Mortgage Loan was acquired by the Company in a merger, the signature
must be in the following form: "[Company], successor by merger to
[name of predecessor]"; and in the event that the Mortgage Loan was
acquired or originated by the Company while doing business under
another name, the signature must be in the following form: "[Company],
formerly know as [previous name]").
2. The original of any guarantee executed in connection with the Mortgage
Note (if any).
3. The recorded original related Mortgage pertaining to such Mortgage
Loan, together with any addenda and riders, or a copy certified by
Seller to be a true and correct copy of the original recorded
document, or if the related Mortgage is in the process of being
recorded, a photocopy of the related Mortgage, certified by the
Company or an officer of the respective prior owner of such Mortgage
Loan or by the applicable title insurance company,
closing/settlement/escrow agent or company or closing attorney to be a
true and correct copy of the related Mortgage transmitted for
recordation. Provided, however, if the Purchaser requires a clerk
certified copy of the original recorded Mortgage, the Company shall
request such from the appropriate recording office and furnish it to
the Purchaser as soon a practicable and no event later than 180 days
of Purchaser's request;
4. the originals or certified true copies of any document sent for
recordation of all assumption, modification, consolidation or
extension agreements, with evidence of recording thereon.
5. The original Assignment of Mortgage for each Mortgage Loan, in form
and substance acceptable for recording (except for the insertion of
the name of the assignee and recording information). The Assignment of
Mortgage must be duly recorded only if recordation is either necessary
under applicable law or commonly required by private institutional
mortgage investors in the area where the Mortgaged Property is located
or on direction of the Purchaser. If the Assignment of Mortgage is to
be recorded, the Mortgage shall be assigned to the Purchaser. If the
Assignment of Mortgage is not to be recorded, the Assignment of
Mortgage shall be delivered in blank. If the Mortgage Loan was
acquired by the Company in a merger, the Assignment of Mortgage must
be made by "[Company], successor by merger to [name of predecessor]."
If the Mortgage Loan was acquired or originated by the Company while
doing business under another name, the Assignment of Mortgage must be
by "[Company], formerly know as [previous name]." Subject to the
foregoing and where permitted under the applicable laws of the
jurisdiction wherein the Mortgaged property is located, such
Assignments of Mortgage may be made by blanket assignments for
Mortgage Loans secured by the Mortgaged Properties located in the same
county.
6. The recorded original, or a copy certified by the Company to be a true
and correct copy of the original recorded, intervening Assignment of
the Mortgage as is necessary to show a complete chain of title from
the respective loan originator to the respective prior owner of such
Mortgage Loan or, if any such original is unavailable because it is in
the process of being recorded, a photocopy of such intervening
Assignment certified by the Company or an officer of the prior owner
of such Mortgage Loan to be a true and correct copy of such
intervening Assignment submitted for recordation. Provided, however,
if the Purchaser requires a clerk certified copy of the original
recorded intervening Assignment, the Company shall request such from
the appropriate recording office and furnish it to the Purchaser as
soon a practicable and no event later than 180 days of Purchaser's
request;
7. The MIC or LGC as applicable, where required pursuant to the
Agreement.
8. The original mortgagee policy of title insurance or evidence of title.
9. Any security agreement, chattel mortgage or equivalent executed in
connection with the Mortgage.
With respect to each Mortgage Loan, the Mortgage File shall include each of the
following items to the extent in the possession of the Company or in the
possession of the Company's agent(s):
10. The original hazard insurance policy and, if required by law, flood
insurance policy, in accordance with Section 4.10 of the Agreement.
11. Residential loan application.
12. Mortgage Loan closing statement.
13. Verification of employment and income, unless originated under the
Company's Limited Documentation program, FNMA Timesaver Plus.
14. Verification of acceptable evidence of source and amount of down
payment.
15. Credit report on the Mortgagor.
16. Residential appraisal report.
17. Photograph of the Mortgaged Property.
18. Survey of the Mortgage property, if required by the title company or
applicable law.
19. Copy of each instrument necessary to complete identification of any
exception set forth in the exception schedule in the title policy,
i.e. map or plat, restrictions, easements, sewer agreements, home
association declarations, etc.
20. All required disclosure statements.
21. If available, termite report, structural engineer's report, water
potability and septic certification.
22. Sales contract, if applicable.
23. Evidence of payment of taxes and insurance premiums, insurance claim
files, correspondence, current and historical computerized data files,
and all other processing, underwriting and closing papers and records
which are customarily contained in a mortgage loan file and which are
required to document the Mortgage Loan or to service the Mortgage
Loan.
24. Amortization schedule, if available.
25. Payment history for any Mortgage Loan that has been closed for more
than 90 days.
26. Original power of attorney, if applicable.
In the event an Officer's Certificate of the Company is delivered to the
Custodian because of a delay caused by the public recording office in returning
any recorded document, the Company shall deliver to the Custodian, within 240
days of the Closing Date, an Officer's Certificate which shall (i) identify the
recorded document, (ii) state that the recorded document has not been delivered
to the Custodian due solely to a delay caused by the public recording office,
(iii) state the amount of time generally required by the applicable recording
office to record and return a document submitted for recordation, and (iv)
specify the date the applicable recorded document will be delivered to the
Custodian. The Company shall be required to deliver to the Custodian the
applicable recorded document by the date specified in (iv) above. An extension
of the date specified in (iv) above may be requested from the Purchaser, which
consent shall not be unreasonably withheld.
Notwithstanding paragraphs 1 and 6 above, the Purchaser acknowledges that
the Company may deliver (i) a Mortgage Note for which the chain of endorsements
is not identical to that of the intervening Assignments with respect to such
Mortgage Note, which shall not affect the enforceability of such Mortgage Note,
and/or (ii) intervening Assignments which are not identical to the chain of
endorsements with respect to such Mortgage Note, which shall not affect the
validity of such intervening Assignments; provided, however, that such
acknowledgment shall in no way operate to negate the Purchaser's remedies for
the Company's breach of the representations and warranties under this Agreement.
EXHIBIT C
CUSTODIAL AGREEMENT
EXHIBIT D
ASSIGNMENT AND ASSUMPTION
____________, 20__
ASSIGNMENT AND ASSUMPTION, dated ___________________, 20____ between
_________________, a _________________ corporation having an office at
_________________ ("Assignor") and _________________, having an office at
_________________ ("Assignee"):
For and in consideration of the sum of one dollar ($1.00) and other
valuable consideration the receipt and sufficiency of which are hereby
acknowledge, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
1. The Assignor hereby grants, transfers and assigns to Assignee all of the
right, title and interest of Assignor, as Purchaser, in, to and under that
certain Seller's Warranties and Servicing Agreement, (the "Seller's Warranties
and Servicing Agreement"), dated as of _________________, by and between
_________________ (the "Purchaser"), and _________________ (the "Company"), and
the Mortgage Loans delivered thereunder by the Company to the Assignor, and that
certain Custodial Agreement, (the "Custodial Agreement"), dated as of
_________________, by and among the Company, the Purchaser and _________________
(the "Custodian").
2. The Assignor warrants and represents to, and covenants with, the
Assignee that:
a. The Assignor is the lawful owner of the Mortgage Loans with the full
right to transfer the Mortgage Loans free from any and all claims and
encumbrances whatsoever;
b. The Assignor has not received notice of, and has no knowledge of, any
offsets, counterclaims or other defenses available to the Company with respect
to the Seller's Warranties and Servicing Agreement or the Mortgage Loans;
c. The Assignor has not waived or agreed to any waiver under, or agreed to
any amendment or other modification of, the Seller's Warranties and Servicing
Agreement, the Custodial Agreement or the Mortgage Loans, including without
limitation the transfer of the servicing obligations under the Seller's
Warranties and Servicing Agreement. The Assignor has no knowledge of, and has
not received notice of, any waivers under or amendments or other modifications
of, or assignments of rights or obligations under, the Seller's Warranties and
Servicing Agreement or the Mortgage Loans; and
d. Neither the Assignor nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any
interest in the Mortgage Loans or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Mortgage Loans, any interest in the Mortgage Loans or any other similar security
from, or otherwise approached or negotiated with respect to the Mortgage Loans,
any interest in the Mortgage Loans or any other similar security with, any
person in any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action which would
constitute a distribution of the Mortgage Loans under the Securities Act of 1933
(the "33 Act") or which would render the disposition of the Mortgage Loans a
violation of Section 5 of the 33 Act or require registration pursuant thereto.
3. That Assignee warrants and represent to, and covenants with, the
Assignor and the Company pursuant to Section 12.10 of the Seller's Warranties
and Servicing Agreement that:
a. The Assignee agrees to be bound, as Purchaser, by all of the terms,
covenants and conditions of the Seller's Warranties and Servicing Agreement, the
Mortgage Loans and the Custodial Agreement, and from and after the date hereof,
the Assignee assumes for the benefit of each of the Company and the Assignor all
of the Assignor's obligations as purchaser thereunder;
b. The Assignee understands that the Mortgage Loans have not been
registered under the 33 Act or the securities laws of any state;
c. The purchase price being paid by the Assignee for the Mortgage Loans are
in excess of $250,000.00 and will be paid by cash remittance of the full
purchase price within 60 days of the sale;
d. The Assignee is acquiring the Mortgage Loans for investment for its own
account only and not for any other person. In this connection, neither the
Assignee nor any person authorized to act therefor has offered to Mortgage Loans
by means of any general advertising or general solicitation within the meaning
of Rule 502(c) of US Securities and Exchange Commission Regulation D,
promulgated under the 1933 Act;
e. The Assignee considers itself a substantial sophisticated institutional
investor having such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of investment in the
Mortgage Loans;
f. The Assignee has been furnished with all information regarding the
Mortgage Loans that it has requested from the Assignor or the Company;
g. Neither the Assignee nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any
interest in the Mortgage Loans or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Mortgage Loans, any interest in the Mortgage Loans or any other similar security
from, or otherwise approached or negotiated with respect to the Mortgage Loans,
any interest in the Mortgage Loans or any other similar security with, any
person in any manner which would constitute a distribution of the Mortgage Loans
under the 33 Act or which would render the disposition of the Mortgage Loans a
violation of Section 5 of the 33 Act or require registration pursuant thereto,
nor will it act, nor has it authorized or will it authorize any person to act,
in such manner with respect to the Mortgage Loans; and
h. Either (1) the Assignee is not an employee benefit plan ("Plan") within
the meaning of section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") or a plan (also "Plan") within the meaning of section
4975(e)(1) of the Internal Revenue Code of 1986 ("Code"), and the Assignee is
not directly or indirectly purchasing the Mortgage Loans on behalf of,
investment manager of, as named fiduciary of, as Trustee of, or with assets of,
a Plan; or (2) the Assignee's purchase of the Mortgage Loans will not result in
a prohibited transaction under section 406 of ERISA or section 4975 of the Code.
i. The Assignee's address for purposes of all notices and correspondence
related to the Mortgage Loans and the Seller's Warranties and Servicing
Agreements is:
------------------------------
------------------------------
------------------------------
Attention: _________________
The Assignee's wire transfer instructions for purposes of all remittances
and payments related to the Mortgage Loans and the Seller's Warranties and
Servicing Agreement is:
------------------------------
------------------------------
------------------------------
Attention: _________________
[Signatures Follow]
IN WITNESS WHEREOF, the parties have caused this Assignment and Assumption
to be executed by their duly authorized officers as of the date first above
written.
------------------------- --------------------------------------
Assignor Assignee
By: By:
--------------------- -----------------------------------
Name: Name:
-------------------- ---------------------------------
Its: Its:
--------------------- ----------------------------------
Tax Payer Identification No.: Tax Payer Identification No.:
-------------------------------- --------------------------------------
MORTGAGE LOAN PURCHASE AGREEMENT
This is a Purchase Agreement (the "Agreement"), dated as of June 1, 2003 by
and between EMC Mortgage Corporation, having an office at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "Purchaser") and ▇▇▇▇▇ Fargo Home
Mortgage, Inc., having an ▇▇▇▇▇▇ ▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(the "Seller").
W I T N E S S E T H
WHEREAS, the Seller agrees to sell, and the Purchaser agrees to purchase,
certain mortgage loans (the "Mortgage Loans") on a servicing retained basis as
described herein:
WHEREAS, the Mortgage Loans shall be delivered as whole loans;
WHEREAS, the parties intend hereby to set forth the terms and conditions
upon which the proposed transactions will be effected.
NOW THEREFORE, in consideration of the promises and the mutual agreements
set forth herein, the parties hereto agree as follows:
SECTION 1. All capitalized terms not otherwise defined herein have the
respective meanings set forth in the Seller's Warranties and Servicing
Agreement, dated as of the date herewith (the "Seller's Warranties and Servicing
Agreement"). The following terms are defined as follows (except as otherwise
agreed by the parties):
Cut-off Date: June 1, 2003
Closing Date: June 11, 2003
First Remittance Date: July 18, 2003
Servicing Fee Rate: 0.250%
SECTION 2. AGREEMENT TO PURCHASE. The Seller agrees to sell, and the
Purchaser agrees to purchase, Mortgage Loans having an aggregate principal
balance on the Cut-off Date of $32,198,422.19, or in such other amount as agreed
by the Purchaser and the Seller as evidenced by the scheduled principal balance
of the Mortgage Loans accepted by the Purchaser on the Closing Date. The
Mortgage Loans will be delivered pursuant to a Seller's Warranties and Servicing
Agreement, between the Purchaser and the Seller.
SECTION 3. MORTGAGE SCHEDULES. The Seller has provided the Purchaser with
certain information constituting a listing of the Mortgage Loans to be purchased
under this Agreement (the "Mortgage Loan Schedule") substantially in the form
attached hereto as Exhibit 1. The Mortgage Loan Schedule shall conform to the
definition of "Mortgage Loan Schedule" under the Seller's Warranties and
Servicing Agreement.
SECTION 4. PURCHASE PRICE. The purchase price for the Mortgage Loans (the
"Purchase Price") shall be 100.59375%, multiplied by the aggregate principal
balance, as of the Cut-off Date, of the Mortgage Loans listed on the related
Mortgage Loan Schedule, after application of scheduled payments of principal due
on or before the Cut-off Date whether or not collected., plus accrued interest
on each Mortgage, at its respective Mortgage Interest Rate from the Cut-off Date
to and including, the day prior to the Closing Date.
The Purchaser shall be entitled to (1) all scheduled principal due after
the Cut-off Date, (2) all other recoveries of principal collected after the
Cut-off Date (provided, however, that all scheduled payments of principal due on
or before the Cut-off Date and collected by the Seller after the Cut-off Date
shall belong to the Seller), and (3) all payments of interest on the Mortgage
Loans at the Mortgage Loan Remittance Rate (minus that portion of any such
payment which is allocable to the period prior to the Cut-off Date). The
principal balance of each Mortgage Loan as of the Cut-off Date is determined
after application of payments of principal due on or before the Cut-off Date
whether or not collected. Therefore, payments of scheduled principal and
interest prepaid for a due date beyond the Cut-off Date shall not be applied to
the principal balance as of the Cut-off Date. Such prepaid amounts (minus
interest at the Servicing Fee Rate) shall be the property of the Purchaser. The
Seller shall deposit any such prepaid amounts into the Custodial Account, which
account is established for the benefit of the Purchaser for subsequent
remittance by the Seller to the Purchaser.
SECTION 5. EXAMINATION OF MORTGAGE FILES. Prior to the Closing Date, the
Seller shall (a) deliver to the Purchaser in escrow, for examination, the
Mortgage File for each Mortgage Loan, including a copy of the Assignment of
Mortgage, pertaining to each Mortgage Loan, or (b) make the Mortgage Files
available to the Purchaser for examination at the Seller's offices or such other
location as shall otherwise be agreed upon by the Purchaser and the Seller. Such
examination may be made by the Purchaser, or by any prospective purchaser of the
Mortgage Loans from the Purchaser, at any time before or after the Closing Date
upon prior reasonable notice to the Seller. The fact that the Purchaser or any
prospective purchaser of the Mortgage Loans has conducted or has failed to
conduct any partial or complete examination of the Mortgage Files shall not
affect the Purchaser's (or any of its successor's) rights to demand repurchase,
substitution or other relief as provided under the related Seller's Warranties
and Servicing Agreement.
SECTION 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SELLER. The Seller
agrees and acknowledges that it shall, as a condition to the consummation of the
transactions contemplated hereby, make the representations and warranties
specified in Section 3.01 and 3.02 of the Seller's Warranties and Servicing
Agreement, as of the Closing Date. The meaning of the term "Agreement" as used
in Sections 3.01 and 3.02 of the Seller's Warranties and Servicing Agreement
shall include this Agreement. The Seller, without conceding that the Mortgage
Loans are securities, hereby makes the following additional representations,
warranties and agreements which shall be deemed to have been made as of the
Closing Date:
a) neither the Seller nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of any Mortgage Loans, any
interest in any Mortgage Loans or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other
disposition of any Mortgage Loans, any interest in any Mortgage Loans or
any other similar security from, or otherwise approached or negotiated with
respect to any Mortgage Loans, any interest in any Mortgage Loans or any
other similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or
taken any other action which would constitute a distribution of the
Mortgage Loans under the Securities Act of 1933 (the "1933 Act") or which
would render the disposition of any Mortgage Loans a violation of Section 5
of the 1933 Act or require registration pursuant thereto, nor will it act,
nor has it authorized or will it authorize any person to act, in such
manner with respect to the Mortgage Loans; and
b) the Seller has not dealt with any broker or agent or anyone else who
might be entitled to a fee or commission in connection with this
transaction other than the Purchaser.
SECTION 7. REPRESENTATION, WARRANTIES AND AGREEMENT OF PURCHASER. The
Purchaser, without conceding that the Mortgage Loans are securities, hereby
makes the following representations, warranties and agreements, which shall have
been deemed to have been made as of the Closing Date.
a) the Purchaser understands that the Mortgage Loans have not been
registered under the 1933 Act or the securities laws of any state;
b) the Purchaser is acquiring the Mortgage Loans for its own account only
and not for any other person;
c) the Purchaser considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks
of investment in the Mortgage Loans;
d) the Purchaser has been furnished with all information regarding the
Mortgage Loans which it has requested from the Seller or the Company; and
e) neither the Purchaser nor anyone acting on its behalf offered,
transferred, pledged, sold or otherwise disposed of any Mortgage Loan, any
interest in any Mortgage Loan or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other
disposition of any Mortgage Loan, any interest in any Mortgage Loan or any
other similar security from, or otherwise approached or negotiated with
respect to any Mortgage Loan, any interest in any Mortgage Loan or any
other similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or
taken any other action which would constitute a distribution of the
Mortgage Loans under the 1933 Act or which would render the disposition of
any Mortgage Loan a violation of Section 5 of the 1933 Act or require
registration pursuant thereto, nor will it act, nor has it authorized or
will it authorize any person to act, in such manner with respect to the
Mortgage Loans.
SECTION 8. CLOSING. The closing for the purchase and sale of the Mortgage
Loans, shall take place on the Closing Date. At the Purchaser's option, the
Closing shall be either: by telephone, confirmed by letter or wire as the
parties shall agree; or conducted in person, at such place as the parties shall
agree.
The closing shall be subject to each of the following conditions:
a) all of the representations and warranties of the Seller under this
Agreement and under each Seller's Warranties and Servicing Agreement shall
be true and correct as of the Closing Date and no event shall have occurred
which, with notice or the passage of time, would constitute a default under
this Agreement or an Event of Default under the related Seller's Warranties
and Servicing Agreement;
b) the Purchaser shall have received, or the Purchaser's attorneys shall
have received in escrow, all Closing Documents as specified in Section 9 of
this Agreement, in such forms as are agreed upon and acceptable to the
Purchaser, duly executed by all signatories other than the Purchaser as
required pursuant to the respective terms thereof;
c) the Seller shall have delivered and released to the Custodian under the
Seller's Warranties and Servicing Agreement all documents required pursuant
to the related Custodial Agreement, and
d) all other terms and conditions of this Agreement shall have been
complied with.
Subject to the foregoing conditions, the Purchaser shall pay to the Seller
on the Closing Date the Purchase Price, plus accrued interest pursuant to
Section 4 of this Agreement, by wire transfer of immediately available funds to
the account designated by the Seller.
SECTION 9. CLOSING DOCUMENTS. With respect to the Mortgage Loans, the
Closing Documents shall consist of fully executed originals of the following
documents:
1. the Seller's Warranties and Servicing Agreement, dated as of the
Cut-off Date, in two counterparts;
2. this Agreement in two counterparts;
3. a copy of the Custodial Agreement, dated as of November 30, 1999 by
and between EMC Mortgage Corporation as Owner, and ▇▇▇▇▇ Fargo Bank
Minnesota, N.A. as Custodian, attached to the Seller's Warranties and
Servicing Agreement ;
4. the Mortgage Loan Schedule, one copy to be attached to each
counterpart of the Seller's Warranties and Servicing Agreement;
5. a Receipt and Certification, as required under the Custodial
Agreement;
6. an Opinion of Counsel of the Seller, in the form of Exhibit 2 hereto;
SECTION 10. COSTS. The Purchaser shall pay any commissions due its
salesmen, the legal fees and expenses of its attorneys and the costs and
expenses associated with the Custodian. The Seller shall be responsible for
reasonable costs and expenses associated with any preparation of the assignments
of mortgage. All other costs and expenses incurred in connection with the
transfer and delivery of the Mortgage Loans, including fees for title policy
endorsements and continuations and the Seller's attorney fees, shall be paid by
the Seller.
SECTION 11. SERVICING The Mortgage Loans shall be serviced by the Seller in
accordance with the terms of the applicable Seller's Warranties and Servicing
Agreement. The Seller shall be entitled to servicing fees calculated as provided
therein, at the Servicing Fee Rate shown on the first page of this Agreement
unless otherwise agreed by the parties.
SECTION 12. FINANCIAL STATEMENTS. The Seller understands that in connection
with the Purchaser's marketing of the Mortgage Loans, the Purchaser shall make
available to prospective purchasers a Consolidated Statement of Operations of
the Seller for the most recently completed two fiscal years respecting 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 Purchaser shall also make available any comparable interim
statements to the extent any such statements have been prepared by the seller in
a format intended or otherwise suitable for the public at large. The Seller, if
it has not already done so, agrees to furnish promptly to the Purchaser copies
of the statements specified above. The Seller shall also make available
information on its servicing performance with respect to loans in its own
portfolio and loans serviced for others (if any), including loss and delinquency
ratios.
The Seller also agrees to allow access to a knowledgeable (as shall be
determined by the Seller) financial or accounting officer for the purpose of
answering questions asked by any prospective purchaser regarding recent
developments affecting the Seller or the financial statements of the Seller.
SECTION 13. MANDATORY DELIVERY. The sale and delivery on the Closing Date
of the Mortgage Loans described on the Mortgage Loan Schedule is mandatory, it
being specifically understood and agreed that each Mortgage Loan is unique and
identifiable on the date hereof and that an award of money damages would be
insufficient to compensate the Purchaser for the losses and damages incurred by
the Purchaser (including damages to prospective purchasers of the Mortgage
Loans) in the event of the Seller's failure to deliver the Mortgage Loans on or
before the Closing Date. All rights and remedies of the Purchaser under this
Agreement are distinct from, and cumulative with, any other rights or remedies
under this Agreement or afforded by law or equity and all such rights and
remedies may be exercised concurrently, independently or successively.
SECTION 14. NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed, by
registered or certified mail, return receipt requested, or, if by other means,
when received by the other party at the address shown on the first page hereof,
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice of communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
SECTION 15. SEVERABILITY CLAUSE. Any part, provision, representation or
warranty of this Agreement which is prohibited or which is held to be void or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any part,
provision, representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall
be ineffective, as to such jurisdiction, to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law which prohibits or renders void or unenforceable any
provision hereof. If the invalidity of any part, provision, representation or
warranty of this Agreement shall deprive any party of the economic benefit
intended to be conferred by this Agreement, the parties shall negotiate, in
good-faith, to develop a structure the economic effect of which is as close as
possible to the economic effect of this Agreement without regard to such
invalidity.
SECTION 16. COUNTERPARTS. This Agreement may be executed simultaneously in
any number of counterparts. Each counterpart shall be deemed to be an original,
and all such counterparts shall constitute one and the same instrument.
SECTION 17. PLACE OF DELIVERY AND GOVERNING LAW. This Agreement shall be
construed in accordance with the laws of the State of New York and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with the laws of the State of New York, except to the extent
preempted by Federal Law.
Each of the Seller and the Purchaser hereby knowingly, voluntarily and
intentionally waives any and all rights it may have to a trial by jury in
respect of any litigation based on, or arising out of, under, or in connection
with, this Agreement, or any other documents and instruments executed in
connection herewith, or any course of conduct, course of dealing, statements
(whether oral or written), or actions of the Seller or the Purchaser. This
provision is a material inducement for the Purchaser to enter into this
Agreement.
SECTION 18. FURTHER AGREEMENTS. The Purchaser and the Seller each agree to
execute and deliver to the other such additional documents, instruments or
agreements as may be necessary or appropriate to effectuate the purposes of this
Agreement.
Without limiting the generality of the foregoing, the Seller shall
reasonably cooperate with the Purchaser in connection with the initial resales
of the Mortgage Loans by the Purchaser. In that connection, the Seller shall
provide to the Purchaser: (i) any and all information and appropriate
verification of information, whether through letters of its auditors and counsel
or otherwise, as the Purchaser shall reasonably request, and (ii) such
additional representations, warranties, covenants, opinions of counsel, letters
from auditors and certificates of public officials or officers of the Seller as
are reasonably believed necessary by the Purchaser in connection with such
resales. The requirement of the Seller pursuant to (ii) above shall terminate on
the Closing Date. Prior to incurring any out-of-pocket expenses pursuant to this
paragraph, the Seller shall notify the Purchaser in writing of the estimated
amount of such expense. The Purchaser shall reimburse the Seller for any such
expense following its receipt of appropriate details thereof.
SECTION 19. INTENTION OF THE PARTIES. It is the intention of the parties
that the Purchaser is purchasing, and the Seller is selling, an undivided 100%
ownership interest in the Mortgage Loans and not a debt instrument of the Seller
or another security. Accordingly, the parties hereto each intend to treat the
transaction for Federal income tax purposes as a sale by the Seller, and a
purchase by the Purchaser, of the Mortgage Loans. The Purchaser shall have the
right to review the Mortgage Loans and the related Mortgage Loan Files to
determine the characteristics of the Mortgage Loans which shall affect the
Federal income tax consequences of owning the Mortgage Loans and the Seller
shall cooperate with all reasonable requests made by the Purchaser in the course
of such review.
SECTION 20. SUCCESSORS AND ASSIGNS; ASSIGNMENT OF PURCHASE AGREEMENT. This
Agreement shall bind and inure to the benefit and be enforceable by the Seller
and the Purchaser and the respective successors and assigns of the Seller and
the Purchaser. This Agreement shall not be assigned, pledged or hypothecated by
the Seller to a third party without the consent of the Purchaser.
SECTION 21. WAIVERS; OTHER AGREEMENTS. No term or provision of this
Agreement may be waived or modified unless such waiver or modification is in
writing and signed by the party against whom such waiver or modification is
sought to be enforced.
SECTION 22. EXHIBITS. The exhibits to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this Agreement.
SECTION 23. GENERAL INTERPRETIVE PRINCIPLES. For purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
a) the terms defined in this Agreement have the meanings assigned to them
in this Agreement and include the plural as well as the singular, and the
use of any gender herein shall be deemed to include the other gender;
b) accounting terms not otherwise defined herein have the meanings assigned
to them in accordance with generally accepted accounting principles;
c) references herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other
subdivisions of this Agreement;
d) a reference to a Subsection without further reference to a Section is a
reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
e) the words "herein", "hereof", "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular
provision; and
f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
SECTION 24. REPRODUCTION OF DOCUMENTS. This Agreement and all documents
relating thereto, including, without limitation, (a) consents, waivers and
modifications which may hereafter be executed, (b) documents received by any
party at the closing, and (c) financial statements, certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding, whether or not the original is in existence and whether or not such
reproduction was made by a party in the regular course of business, and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
[Signatures Follow]
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their names to
be signed hereto by their respective officers thereunto duly authorized as of
the date first above written.
EMC MORTGAGE CORPORATION
(Purchaser)
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
▇▇▇▇▇ FARGO HOME MORTGAGE, INC.
(Seller)
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
EXHIBIT 1
MORTGAGE LOAN SCHEDULE
EXHIBIT 2
FORM OF OPINION OF COUNSEL
Re: ▇▇▇▇▇ Fargo Home Mortgage, Inc.
Mortgage Loan Series @
Dear Sir/Madam:
I am @ of ▇▇▇▇▇ Fargo Home Mortgage, Inc. and have acted as counsel to ▇▇▇▇▇
Fargo Home Mortgage, Inc. (the "Company"), with respect to certain matters in
connection with the sale by the Company of the mortgage loans designated as
Mortgage Loan Series @ (the "Mortgage Loans") pursuant to that certain Seller's
Warranties and Servicing Agreement and Mortgage Loan Purchase Agreement by and
between the Company and @ (the "Purchaser"), dated as of @, 2003, (the
"Agreements"), which sale is in the form of whole Mortgage Loans. Capitalized
terms not otherwise defined herein have the meanings set forth in the Seller's
Warranties and Servicing Agreement.
I have examined the following documents:
1. the Seller's Warranties and Servicing Agreement;
2. the Mortgage Loan Purchase Agreement;
3. the Custodial Agreement;
4. the form of endorsement of the Mortgage Notes; and
5. such other documents, records and papers as I have deemed necessary and
relevant as a basis for this opinion.
To the extent I have deemed necessary and proper, I have relied upon the
representations and warranties of the Company contained in the Agreements. I
have assumed the authenticity of all documents submitted to me as originals, the
genuineness of all signatures, the legal capacity of natural persons and the
conformity to the originals of all documents.
Based upon the foregoing, it is my opinion that;
1. The Company is a corporation duly organized, validly existing and in good
standing under the laws of the state of California.
2. The Company has the power to engage in the transactions contemplated by the
Agreements, the Custodial Agreement and all requisite power, authority and
legal right to execute and deliver the Agreements, the Custodial Agreement
and the Mortgage Loans, and to perform and observe the terms and conditions
of such instruments.
3. Each person who, as an officer or attorney-in-fact of the Company, signed
(a) the Agreements, each dated as of @, 2003, by and between the Company
and the Purchaser, and (b) any other document delivered prior hereto or on
the date hereof in connection with the sale and servicing of the Mortgage
Loans in accordance with the Agreements and the person was, at the
respective times of such signing and delivery, and is, as of the date
hereof, duly elected or appointed, qualified and acting and as such officer
or attorney-in-fact, and the signatures of such persons appearing on such
documents are their genuine signatures.
4. Each of the Agreements, the Custodial Agreement and the Mortgage Loans, has
been duly authorized, executed and delivered by the Company and is a legal,
valid and binding agreement enforceable in accordance with its terms,
subject to bankruptcy laws and other similar laws of general application
affecting rights of creditors and subject to the application of the rules
of equity, including those respecting the availability of specific
performance, none of which will materially interfere with the realization
of the benefits provided thereunder or with the Purchaser's ownership of
the Mortgage Loans.
5. The Company has been duly authorized to allow any of its officers to
execute any and all documents by original signature in order to complete
the transactions contemplated by the Agreements and the Custodial
Agreement, and by original or facsimile signature in order to execute the
endorsements to the Mortgage Notes and the assignments of the Mortgages,
and the original or facsimile signature of the officer at the Company
executing the endorsements to the Mortgage Notes and the assignments of the
Mortgages represents the legal and valid signature of said officer of the
Company.
6. Either (i) no consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Company of or compliance by the Company with the
Agreements, the Custodial Agreement or the sale and delivery of the
Mortgage Loans or the consummation of the transactions contemplated by the
Agreements, and the Custodial Agreement; or (ii) any required consent,
approval, authorization or order has been obtained by the Company.
7. Neither the consummation of the transactions contemplated by, nor the
fulfillment of the terms of the Agreements and the Custodial Agreement,
will conflict with or results in or will result in a breach of or
constitutes or will constitute a default under the charter or by-laws of
the Company, the terms of any indenture or other agreement or instrument to
which the Company is a party or by which it is bound or to which it is
subject, or violates any statute or order, rule, regulations, writ,
injunction or decree of any court, governmental authority or regulatory
body to which the Company is subject or by which it is bound.
8. There is no action, suit, proceeding or investigation pending or, to the
best of my knowledge, threatened against the Company which, in my opinion,
either in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition, properties
or assets of the Company or in any material impairment of the right or
ability of the Company to carry on its business substantially as now
conducted or in any material liability on the part of the Company or which
would draw into question the validity of the Agreements, and the Custodial
Agreement, or of any action taken or to be taken in connection with the
transactions contemplated thereby, or which would be likely to impair
materially the ability of the Company to perform under the terms of the
Agreements and the Custodial Agreement.
9. For purposes of the foregoing, I have not regarded any legal or
governmental actions, investigations or proceedings to be "threatened"
unless the potential litigant or governmental authority has manifested to
the legal department of the Company or an employee of the Company
responsible for the receipt of process a present intention to initiate such
proceedings; nor have I regarded any legal or governmental actions,
investigations or proceedings as including those that are conducted by
state or federal authorities in connection with their routine regulatory
activities. The sale of each Mortgage Note and Mortgage as and in the
manner contemplated by the Agreements is sufficient fully to transfer all
right, title and interest of the Company thereto as noteholder and
mortgagee, apart from the rights to service the Mortgage Loans pursuant to
the Agreements.
10. The form of endorsement that is to be used with respect to the Mortgage
Loans is legally valid and sufficient to duly endorse the Mortgage Notes to
the Purchaser. Upon the completion of the endorsement of the Mortgage Notes
and the completion of the assignments of the Mortgages, and the recording
thereof, the endorsement of the Mortgage Notes, the delivery to the
Custodian of the completed assignments of the Mortgages, and the delivery
of the original endorsed Mortgage Notes to the Custodian would be
sufficient to permit the entity to which such Mortgage Note is initially
endorsed at the Purchaser's direction, and to whom such assignment of
Mortgages is initially assigned at the Purchaser's direction, to avail
itself of all protection available under applicable law against the claims
of any present or future creditors of the Company, and would be sufficient
to prevent any other sale, transfer, assignment, pledge or hypothecation of
the Mortgages and the Mortgage Notes by the Company from being enforceable.
This opinion is given to you for your sole benefit, and no other person or
entity is entitled to rely hereon except that the purchaser or purchasers to
which you initially and directly resell the Mortgage Loans may rely on this
opinion as if it were addressed to them as of its date.
Sincerely,
EXHIBIT B-2
JULY SERVICING AGREEMENT (1)
EMC MORTGAGE CORPORATION
PURCHASER
AND
▇▇▇▇▇ FARGO HOME MORTGAGE, INC.
COMPANY
----------------------------------------
SELLER'S WARRANTIES AND SERVICING AGREEMENT
DATED AS OF JULY 1, 2003
----------------------------------------
WFHM MORTGAGE LOAN POOLS 5792, 5793, 5794, 5795, 5796, 5797 AND 5798
TABLE OF CONTENTS
ARTICLE I.....................................................................1
DEFINITIONS...................................................................1
ARTICLE II....................................................................9
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES; BOOKS AND RECORDS;
CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS....................................9
ARTICLE III..................................................................12
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH...........................12
ARTICLE IV...................................................................23
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS...............................23
ARTICLE V....................................................................36
PAYMENTS TO PURCHASER........................................................36
ARTICLE VI...................................................................38
GENERAL SERVICING PROCEDURES.................................................38
ARTICLE VII..................................................................40
COMPANY TO COOPERATE.........................................................40
ARTICLE VIII.................................................................41
THE COMPANY..................................................................41
ARTICLE IX...................................................................43
PASS-THROUGH TRANSFER........................................................43
ARTICLE X....................................................................45
DEFAULT......................................................................45
ARTICLE XI...................................................................46
TERMINATION..................................................................46
ARTICLE XII..................................................................47
MISCELLANEOUS PROVISIONS.....................................................47
EXHIBITS
Exhibit A Mortgage Loan Schedule
Exhibit B Contents of Each Mortgage Loan File
Exhibit C Custodial Agreement
Exhibit D Form of Assignment and Assumption
This is a Seller's Warranties and Servicing Agreement for various
residential first mortgage loans, dated and effective as of July 1, 2003, and is
executed between EMC Mortgage Corporation, as purchaser (the "Purchaser"), and
▇▇▇▇▇ Fargo Home Mortgage, Inc., as seller and servicer (the "Company").
W I T N E S S E T H
WHEREAS, the Purchaser has agreed to purchase from the Company and the
Company has agreed to sell to the Purchaser certain fixed and adjustable
interest rate, Conventional Mortgage Loans which have an aggregate outstanding
principal balance as of the close of business on the Cut-off Date, after
deduction of payments due on or before such date, of $36,136,534.22;
WHEREAS, each of the Mortgage Loans is secured by a mortgage, deed of trust
or other security instrument creating a first lien on a residential dwelling
located in the jurisdiction indicated on the Mortgage Loan Schedule, which is
annexed hereto as Exhibit A; and
WHEREAS, the Purchaser and the Company wish to prescribe the manner of
purchase of the Mortgage Loans and the conveyance, servicing and control of the
Mortgage Loans.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the Purchaser and the Company agree as follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the content
otherwise requires, shall have the following meanings:
ACCEPTED SERVICING PRACTICES: With respect to any Mortgage Loan, those
mortgage servicing practices of prudent mortgage lending institutions which
service mortgage loans of the same type as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located.
ADJUSTMENT DATE: As to each Mortgage Loan, the date on which the Mortgage
Interest Rate is adjusted in accordance with the terms of the related Mortgage
Note.
AGENCY OR AGENCIES: ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ Mac or GNMA, or any of them as
applicable.
AGENCY SALE: Any sale or transfer of some or all of the Mortgage Loans by
the Purchaser to an Agency which sale or transfer is not a Pass-Through
Transfer.
AGREEMENT: This Seller's Warranties and Servicing Agreement and all
amendments hereof and supplements hereto.
ALTA: The American Land Title Association or any successor thereto.
APPRAISED VALUE: With respect to any Mortgage Loan, the lesser of (i) the
value set forth on the appraisal made in connection with the origination of the
related Mortgage Loan as the value of the related Mortgaged Property, or (ii)
the purchase price paid for the Mortgaged Property, provided, however, that in
the case of a refinanced Mortgage Loan, such value shall be based solely on the
appraisal made in connection with the origination of such Mortgage Loan.
ASSIGNMENT OF MORTGAGE: An assignment of the Mortgage, notice of transfer
or equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
sale of the Mortgage to the Purchaser.
BUSINESS DAY: Any day other than (i) a Saturday or Sunday, or (ii) a day on
which banking and savings and loan institutions in the states where the parties
are located are authorized or obligated by law or executive order to be closed.
BUYDOWN AGREEMENT: An agreement between the Company and a Mortgagor, or an
agreement among the Company, a Mortgagor and a seller of a Mortgaged Property or
a third party with respect to a Mortgage Loan which provides for the application
of Buydown Funds.
BUYDOWN FUNDS: In respect of any Buydown Mortgage Loan, any amount
contributed by the seller of a Mortgaged Property subject to a Buydown Mortgage
Loan, the buyer of such property, the Company or any other source, plus interest
earned thereon, in order to enable the Mortgagor to reduce the payments required
to be made from the mortgagor's funds in the early years of a Mortgage Loan.
BUYDOWN MORTGAGE LOAN: Any Mortgage Loan in respect of which, pursuant to a
Buydown Agreement, (i) the Mortgagor pays less than the full monthly payments
specified in the Mortgage Note for a specified period, and (ii) the difference
between the payments required under such Buydown Agreement and the Mortgage Note
is provided from Buydown Funds.
BUYDOWN PERIOD: The period of time when a Buydown Agreement is in effect
with respect to a related Buydown Mortgage Loan.
CLOSING DATE: July 10, 2003.
CODE: The Internal Revenue Code of 1986, as it may be amended from time to
time or any successor statute thereto, and applicable U.S. Department of the
Treasury regulations issued pursuant thereto.
COMPANY: ▇▇▇▇▇ Fargo Home Mortgage, Inc., or its successor in interest or
assigns, or any successor to the Company under this Agreement appointed as
herein provided.
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.
CONVENTIONAL MORTGAGE LOAN: A mortgage or deed of trust not insured or
guaranteed under a government program (e.g., FHA or VA).
CUSTODIAL ACCOUNT: The separate account or accounts created and maintained
pursuant to Section 4.04.
CUSTODIAL AGREEMENT: The Interim Custody Agreement dated as of November 30,
1999 by and between EMC Mortgage Corporation as Owner, and ▇▇▇▇▇ Fargo Bank
Minnesota, N.A. (formerly Norwest Bank Minnesota, N.A.) governing the retention
of the originals of each Mortgage Note, Mortgage, Assignment of Mortgage and
other Mortgage Loan Documents, annexed hereto as Exhibit C.
CUSTODIAN: The custodian under the Custodial Agreement, or its successor in
interest or assigns, or any successor to the Custodian under the Custodial
Agreement as provided therein.
CUT-OFF DATE: July 1, 2003.
DELETED MORTGAGE LOAN: A Mortgage Loan which is repurchased by the Company
in accordance with the terms of this Agreement and which is, in the case of a
substitution pursuant to Section 3.03, replaced or to be replaced with a
Qualified Substitute Mortgage Loan.
DETERMINATION DATE: The Business Day immediately preceding the related
Remittance Date.
DUE DATE: The first day of the month on which the Monthly Payment is due on
a Mortgage Loan, exclusive of any days of grace.
DUE PERIOD: With respect to each Remittance Date, the period commencing on
the second day of the month preceding the month of the Remittance Date and
ending in the first day of the month of the Remittance Date.
ERRORS AND OMISSIONS INSURANCE POLICY: An errors and omissions insurance
policy to be maintained by the Company pursuant to Section 4.12.
ESCROW ACCOUNT: The separate account or accounts created and maintained
pursuant to Section 4.06.
ESCROW PAYMENTS: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other related
document.
EVENT OF DEFAULT: Any one of the conditions or circumstances enumerated in
Section 10.01.
▇▇▇▇▇▇ ▇▇▇: The entity formerly known as the Federal National Mortgage
Association (FNMA), and its successors.
FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.
FHA: Federal Housing Administration and its successors.
FIDELITY BOND: A fidelity bond to be maintained by the Company pursuant to
Section 4.12.
FIRST REMITTANCE DATE: August 18, 2003.
▇▇▇▇▇▇▇ MAC: The entity formerly known as the Federal Home Loan Mortgage
Corporation (FHLMC), and its successors.
GNMA: Government National Mortgage Association and its successors.
GROSS MARGIN: With respect to each Mortgage Loan, the fixed percentage
amount set forth in the related Mortgage Note which is added to the Index in
order to determine the related Mortgage Interest Rate, as set forth in the
Mortgage Loan Schedule.
HUD: The United States Department of Housing and Urban Development and its
successors.
INDEX: On each Adjustment Date, the applicable index shall be a rate per
annum equal to the weekly average yield on U.S. Treasury securities adjusted to
a constant maturity of one year as made available by the Federal Reserve Board
in Statistical Release No. H.15 or a comparable publication, or, if not so
published, as reported by any Federal Reserve Bank or by any U.S. Government
department or agency, for the week for which such figures were most recently
published or reported as of the date 45 days prior to the Adjustment Date.
INSURANCE PROCEEDS: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
LGC: Loan Guaranty Certificate issued by the VA as a guarantee that the
federal government will repay to the lender a specified percentage of the loan
balance in the event of the borrower's default.
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.
LOAN-TO-VALUE RATIO OR LTV: With respect to any Mortgage Loan, the ratio of
the original loan amount of the Mortgage Loan at its origination (unless
otherwise indicated) to the Appraised Value of the Mortgaged Property.
MIC: Mortgage Insurance Certificate issued by HUD/FHA as evidence that a
mortgage has been insured and that a contract of mortgage insurance exists
between HUD/FHA and the lender.
MONTHLY ADVANCE: The portion of each Monthly Payment that is delinquent
with respect to each Mortgage Loan at the close of business on the Determination
Date required to be advanced by the Company pursuant to Section 5.03 on the
Business Day immediately preceding the Remittance Date of the related month.
MONTHLY PAYMENT: The scheduled monthly payment of principal and interest on
a Mortgage Loan.
MORTGAGE: The mortgage, deed of trust or other instrument and riders
thereto securing a Mortgage Note, which creates a first lien on an
unsubordinated estate in fee simple in real property securing the Mortgage Note.
MORTGAGE FILE: The items pertaining to a particular Mortgage Loan referred
to in Exhibit B annexed hereto, and any additional documents required to be
added to the Mortgage File pursuant to this Agreement.
MORTGAGE IMPAIRMENT INSURANCE POLICY: A mortgage impairment or blanket
hazard insurance policy as described in Section 4.11.
MORTGAGE INTEREST RATE: The annual rate of interest borne on a Mortgage
Note in accordance with the provisions of the Mortgage Note.
MORTGAGE LOAN: An individual Mortgage Loan which is the subject of this
Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the Mortgage Loan Schedule, which Mortgage Loan includes
without limitation the Mortgage File, the Monthly Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
REO Disposition Proceeds and all other rights, benefits, proceeds and
obligations arising from or in connection with such Mortgage Loan.
MORTGAGE LOAN DOCUMENTS: With respect to a Mortgage Loan, the original
related Mortgage Note with applicable addenda and riders, the original related
Mortgage and the originals of any required addenda and riders, the original
related Assignment and any original intervening related Assignments, the
original related title insurance policy, related PMI Policy, MIC or LCG, and the
related appraisal report.
MORTGAGE LOAN REMITTANCE RATE: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Purchaser, which shall be equal to the
Mortgage Interest Rate minus the Servicing Fee Rate.
MORTGAGE LOAN SCHEDULE: A schedule of Mortgage Loans annexed hereto as
Exhibit A, such schedule setting forth the following information with respect to
each Mortgage Loan: (1) the Company's Mortgage Loan number; (2) the city state
and zip code of the Mortgaged Property; (3) a code indicating whether the
Mortgaged Property is a single family residence, two-family residence,
three-family residence, four-family residence, PUD or Condominium; (4) the
current Mortgage Interest Rate; (5) the Mortgage Loan Remittance Rate; (6) the
current Monthly Payment; (7) the Gross Margin; (8) the original term to
maturity; (9) the scheduled maturity date; (10) the principal balance of the
Mortgage Loan as of the Cut-off Date after deduction of payments of principal
due on or before the Cut-off Date whether or not collected; (11) the
Loan-to-Value; (12) the next Adjustment Date; (13) the lifetime Mortgage
Interest Rate cap; (14) whether the Mortgage Loan is convertible or not; (15) a
code indicating the mortgage guaranty insurance company; and (16) the Servicing
Fee Rate.
MORTGAGE NOTE: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage and riders thereto.
MORTGAGED PROPERTY: The real property securing repayment of the debt
evidenced by a Mortgage Note.
MORTGAGOR: The obligor on a Mortgage Note.
OFFICER'S CERTIFICATE: A certificate signed by the Chairman of the Board,
the Vice Chairman of the Board, ,the President, a Vice President, an Assistant
Vice President ,the Treasurer, the Secretary or one of the Assistant Treasurers
or Assistant Secretaries of the Company, and delivered to the Purchaser as
required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may be an employee of
the Company, reasonably acceptable to the Purchaser.
PASS-THROUGH TRANSFER: The sale or transfer of some or all of the Mortgage
Loans by the Purchaser to a trust to be formed as part of a publicly issued or
privately placed mortgage-backed securities transaction.
PERIODIC INTEREST RATE CAP: As to each Mortgage Loan, the maximum increase
or decrease in the Mortgage Interest Rate on any Adjustment Date.
PERSON: Any individual, corporation, partnership, joint venture, limited
liability company, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof.
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.
PRINCIPAL PREPAYMENT: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date, including
any prepayment penalty or premium thereon and which is not accompanied by an
amount of interest representing scheduled interest due on any date or dates in
any month or months subsequent to the month of prepayment.
PRINCIPAL PREPAYMENT PERIOD: The month preceding the month in which the
related Remittance Date occurs.
PURCHASER: EMC Mortgage Corporation or its successor in interest or any
successor to the Purchaser under this Agreement as herein provided.
QUALIFIED DEPOSITORY: A deposit account or accounts maintained with a
federal or state chartered depository institution the deposits in which are
insured by the FDIC to the applicable limits and the short-term unsecured debt
obligations of which (or, in the case of a depository institution that is a
subsidiary of a holding company, the short-term unsecured debt obligations of
such holding company) are rated A-1 by Standard & Poor's Ratings Group or
Prime-1 by ▇▇▇▇▇'▇ Investors Service, Inc. (or a comparable rating if another
rating agency is specified by the Purchaser by written notice to the Company) at
the time any deposits are held on deposit therein.
QUALIFIED INSURER: A mortgage guaranty insurance company duly authorized
and licensed where required by law to transact mortgage guaranty insurance
business and approved as an insurer by the Agencies.
RATING AGENCIES: Any nationally recognized statistical rating agency, or
its successor, including Standard & Poor's Ratings Services, ▇▇▇▇▇'▇ Investor
Services, Inc., Fitch IBCA, Inc. and Duff & ▇▇▇▇▇▇ Credit Rating Co.
RECONSTITUTION DATE: The date on which any or all of the Mortgage Loans
serviced under this Agreement shall be removed from this Agreement and
reconstituted as part of an Agency Sale, Pass-Through Transfer or Whole Loan
Transfer pursuant to Section 9.01 hereof. The Reconstitution Date shall be such
date which the Purchaser and the shelf registrant shall designate. On such date,
the Mortgage Loans transferred shall cease to be covered by this Agreement and
the Company's servicing responsibilities shall cease under this Agreement with
respect to the related transferred Mortgage Loans.
RECORD DATE: The close of business of the last Business Day of the month
preceding the month of the related Remittance Date.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
REMIC PROVISIONS: Provisions of the federal income tax law relating to a
REMIC, which appear at Section 860A through 860G of Subchapter M of Chapter 1,
Subtitle A of the Code, and related provisions, and regulations, rulings or
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
REMITTANCE DATE: The 18th day (or if such 18th day is not a Business Day,
the first Business Day immediately following) of any month, beginning with the
First Remittance Date.
REO DISPOSITION: The final sale by the Company of any REO Property.
REO DISPOSITION PROCEEDS: All amounts received with respect to an REO
Disposition pursuant to Section 4.16.
REO PROPERTY: A Mortgaged Property acquired by the Company on behalf of the
Purchaser through foreclosure or by deed in lieu of foreclosure, as described in
Section 4.16.
REPURCHASE PRICE: Unless agreed otherwise by the Purchaser and the Company,
a price equal to (i) the Stated Principal Balance of the Mortgage Loan plus (ii)
interest on such Stated Principal Balance at the Mortgage Loan Remittance Rate
from the date on which interest has last been paid and distributed to the
Purchaser through the last day of the month in which such repurchase takes
place, less amounts received or advanced in respect of such repurchased Mortgage
Loan which are being held in the Custodial Account for distribution in the month
of repurchase.
SERVICING ADVANCES: All customary, reasonable and necessary "out of pocket"
costs and expenses other than Monthly Advances (including reasonable attorney's
fees and disbursements) incurred in the performance by the Company of its
servicing obligations, including, but not limited to, the cost of (a) the
preservation, restoration and protection of the Mortgaged Property, (b) any
enforcement or judicial proceedings, including foreclosures, (c) the management
and liquidation of any REO Property and (d) compliance with the obligations
under Section 4.08.
SERVICING FEE: With respect to each Mortgage Loan, the amount of the annual
fee the Purchaser shall pay to the Company, which shall, for a period of one
full month, be equal to one-twelfth of the product of (a) the Servicing Fee Rate
and (b) the outstanding principal balance of such Mortgage Loan. Such fee shall
be payable monthly, computed on the basis of the same principal amount and
period respecting which any related interest payment on a Mortgage Loan is
computed. The obligation of the Purchaser to pay the Servicing Fee is limited
to, and the Servicing Fee is payable solely from, the interest portion
(including recoveries with respect to interest from Liquidation Proceeds, to the
extent permitted by Section 4.05) of such Monthly Payment collected by the
Company, or as otherwise provided under Section 4.05. The Servicing Fee shall
not be reduced by the amount of any guaranty fee charged by GNMA.
SERVICING FEE RATE: 0.250% per annum for each Mortgage Loan.
SERVICING FILE: With respect to each Mortgage Loan, the file retained by
the Company consisting of originals of all documents in the Mortgage File which
are not delivered to the Custodian and copies of the Mortgage Loan Documents
listed in the Custodial Agreement the originals of which are delivered to the
Custodian pursuant to Section 2.03.
SERVICING OFFICER: Any officer of the Company involved in or responsible
for the administration and servicing of the Mortgage Loans whose name appears on
a list of servicing officers furnished by the Company to the Purchaser upon
request, as such list may from time to time be amended.
STATED PRINCIPAL BALANCE: As to each Mortgage Loan, (i) the principal
balance of the Mortgage Loan at the Cut-off Date after giving effect to payments
of principal due on or before such date, whether or not received, minus (ii) all
amounts previously distributed to the Purchaser with respect to the related
Mortgage Loan representing payments or recoveries of principal or advances in
lieu thereof.
VA: The United States Department of Veterans Administration and its
successors.
WHOLE LOAN TRANSFER: Any sale or transfer of some or all of the Mortgage
Loans by the Purchaser to a third party, which sale or transfer is not a
Pass-Through Transfer.
WHOLE LOAN TRANSFER DATE: The date on which any or all of the Mortgage
Loans serviced under this Agreement shall be sold by the Purchaser as part of a
Whole Loan Transfer pursuant to Section 9.01 hereof.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES; BOOKS AND RECORDS;
CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS
Section 2.01 CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
MAINTENANCE OF SERVICING FILES.
The Company, simultaneously with the execution and delivery of this
Agreement, does hereby sell, transfer, assign, set over and convey to the
Purchaser, without recourse, but subject to the terms of this Agreement, all the
right, title and interest of the Company in and to the Mortgage Loans. Pursuant
to Section 2.03, the Company has delivered the Mortgage Loan Documents to the
Custodian.
The contents of each Mortgage File not delivered to the Custodian are and
shall be held in trust by the Company for the benefit of the Purchaser as the
owner thereof. The Company shall maintain a Servicing File consisting of a copy
of the contents of each Mortgage File and the originals of the documents in each
Mortgage File not delivered to the Custodian. The possession of each Servicing
File by the Company is at the will of the Purchaser for the sole purpose of
servicing the related Mortgage Loan, and such retention and possession by the
Company is in a custodial capacity only. Upon the sale of the Mortgage Loans the
ownership of each Mortgage Note, the related Mortgage and the related Mortgage
File and Servicing File shall vest immediately in the Purchaser, and the
ownership of all records and documents with respect to the related Mortgage Loan
prepared by or which come into the possession of the Company shall vest
immediately in the Purchaser and shall be retained and maintained by the
Company, in trust, at the will of the Purchaser and only in such custodial
capacity. The Company shall release its custody of the contents of any Servicing
File only in accordance with written instructions from the Purchaser, unless
such release is required as incidental to the Company's servicing of the
Mortgage Loans or is in connection with a repurchase of any Mortgage Loan
pursuant to Section 3.03 or 6.02. All such costs associated with the release,
transfer and re-delivery to the Company shall be the responsibility of the
Purchaser.
Section 2.02 BOOKS AND RECORDS; TRANSFERS OF MORTGAGE LOANS.
From and after the sale of the Mortgage Loans to the Purchaser all rights
arising out of the Mortgage Loans including but not limited to all funds
received on or in connection with the Mortgage Loans, shall be received and held
by the Company in trust for the benefit of the Purchaser as owner of the
Mortgage Loans, and the Company shall retain record title to the related
Mortgages for the sole purpose of facilitating the servicing and the supervision
of the servicing of the Mortgage Loans.
The sale of each Mortgage Loan shall be reflected on the Company's balance
sheet and other financial statements as a sale of assets by the Company. The
Company shall be responsible for maintaining, and shall maintain, a complete set
of books and records for each Mortgage Loan which shall be marked clearly to
reflect the ownership of each Mortgage Loan by the Purchaser. In particular, the
Company shall maintain in its possession, available for inspection by the
Purchaser, or its designee, and shall deliver to the Purchaser upon demand,
evidence of compliance with all federal, state and local laws, rules and
regulations, and requirements of the Agencies, 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 the Agencies, and periodic inspection
reports as required by Section 4.13. To the extent that original documents are
not required for purposes of realization of Liquidation Proceeds or Insurance
Proceeds, documents maintained by the Company may be in the form of microfilm or
microfiche or such other reliable means of recreating original documents,
including but not limited to, optical imagery techniques so long as the Company
complies with the requirements of the FNMA Selling and Servicing Guide, as
amended from time to time.
The Company shall maintain with respect to each Mortgage Loan and shall
make available for inspection by any Purchaser or its designee the related
Servicing File during the time the Purchaser retains ownership of a Mortgage
Loan and thereafter in accordance with applicable laws and regulations.
The Company shall keep at its servicing office books and records in which,
subject to such reasonable regulations as it may prescribe, the Company shall
note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be made
unless such transfer is in compliance with the terms hereof. For the purposes of
this Agreement, the Company shall be under no obligation to deal with any person
with respect to this Agreement or the Mortgage Loans unless the books and
records show such person as the owner of the Mortgage Loan. The Purchaser may,
subject to the terms of this Agreement, sell and transfer one or more of the
Mortgage Loans, PROVIDED, HOWEVER, that in no event shall there be more than
four Persons at any given time having the status of "Purchaser" hereunder. The
Purchaser also shall advise the Company of the transfer. Upon receipt of notice
of the transfer, the Company shall ▇▇▇▇ its books and records to reflect the
ownership of the Mortgage Loans of such assignee, and shall release the previous
Purchaser from its obligations hereunder with respect to the Mortgage Loans sold
or transferred. If the Company receives notification of a transfer, including a
final loan schedule, less than five (5) Business Days before the last Business
Day of the month, the Company's duties to remit and report to the new
purchaser(s) as required by Section 5 shall begin with next Due Period.
Section 2.03 DELIVERY OF DOCUMENTS.
Pursuant to the Custodial Agreement delivered to the Purchaser
contemporaneously with the delivery of this Agreement, the Company has delivered
and released to the Custodian those Mortgage Loan Documents as required by the
Custodial Agreement and by this Agreement with respect to each Mortgage Loan.
The Custodian has certified its receipt of all such Mortgage Loan Documents
required to be delivered pursuant to the Custodial Agreement. The Company will
be responsible for Custodial fees and expenses with respect to the delivery and
certification of those Mortgage Loan Documents required to be delivered pursuant
to the Custodial Agreement. The Company will be responsible for the fees and
expenses related to the recording of the initial Assignment of Mortgage. The
Purchaser will be responsible for the fees and expenses of the Custodian.
After the Closing Date, the Company shall deliver to the each of the
documents described in Exhibit B, not delivered pursuant to the Agreement.
Provided however, within 150 days from the Closing Date, the Company shall
deliver to the Custodian, the original MIC or LGC, as applicable, or an
Officer's Certificate, which shall (i) state that the MIC or LGC has not been
delivered to the Custodian due solely to a delay by the insuring agency, (ii)
state the amount of time generally required by the insuring agency to process
the MIC or LGC, and (iii) specify the date the MIC or LGC will be delivered to
the Purchaser. The Company will be required to deliver the MIC or LGC to the
Custodian by the date specified in (iii) above. An extension of the date
specified in (iii) above may be requested from the Custodian, which consent
shall not be unreasonably withheld.
The Company shall forward to the Custodian original documents evidencing an
assumption, modification, consolidation or extension of any Mortgage Loan
entered into in accordance with Section 4.01 or 6.01 within one week of their
execution, provided, however, that the Company shall provide the Custodian with
a certified true copy of any such document submitted for recordation within ten
(10) days of its execution, and shall provide the original of any document
submitted for recordation or a copy of such document certified by the
appropriate public recording office to be a true and complete copy of the
original within sixty days of its submission for recordation.
In the event the public recording office is delayed in returning any
original document, the Company shall deliver to the Custodian within 240 days of
its submission for recordation, a copy of such document and an Officer's
Certificate, which shall (i) identify the recorded document; (ii) state that the
recorded document has not been delivered to the Custodian due solely to a delay
by the public recording office, (iii) state the amount of time generally
required by the applicable recording office to record and return a document
submitted for recordation, and (iv) specify the date the applicable recorded
document will be delivered to the Custodian. The Company will be required to
deliver the document to the Custodian by the date specified in (iv) above. An
extension of the date specified in (iv) above may be requested from the
Purchaser, which consent shall not be unreasonably withheld.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH
Section 3.01 COMPANY REPRESENTATIONS AND WARRANTIES.
The Company hereby represents and warrants to the Purchaser that, as of the
Closing Date:
(a) DUE ORGANIZATION AND AUTHORITY.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of California and has all
licenses necessary to carry on its business as now being conducted and
is licensed, qualified and in good standing in each state where a
Mortgaged Property is located if the laws of such state require
licensing or qualification in order to conduct business of the type
conducted by the Company, and in any event the Company is in
compliance with the laws of any such state to the extent necessary to
ensure the enforceability of the related Mortgage Loan and the
servicing of such Mortgage Loan in accordance with the terms of this
Agreement; the Company has the full 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 of transfer to be delivered pursuant to
this Agreement) by the Company and the consummation of the
transactions contemplated hereby have been duly and validly
authorized; this Agreement evidences the valid, binding and
enforceable obligation of the Company; and all requisite corporate
action has been taken by the Company to make this Agreement valid and
binding upon the Company in accordance with its terms;
(b) ORDINARY COURSE OF BUSINESS.
The consummation of the transactions contemplated by this Agreement
are in the ordinary course of business of the Company, who is in the
business of selling and servicing loans, and the transfer, assignment
and conveyance of the Mortgage Notes and the Mortgages by the Company
pursuant to this Agreement are not subject to the bulk transfer or any
similar statutory provisions in effect in any applicable jurisdiction;
(c) NO CONFLICTS.
Neither the execution and delivery of this Agreement, the acquisition
of the Mortgage Loans by the Company, the sale of the Mortgage Loans
to the Purchaser or the transactions contemplated hereby, nor the
fulfillment of or compliance with the terms and conditions of this
Agreement will conflict with or result in a breach of any of the
terms, articles of incorporation or by-laws or any legal restriction
or any agreement or instrument to which the Company is now a party or
by which it is bound, or constitute a default or result in the
violation of any law, rule, regulation, order, judgment or decree to
which the Company or its property is subject, or impair the ability of
the Purchaser to realize on the Mortgage Loans, or impair the value of
the Mortgage Loans;
(d) ABILITY TO SERVICE.
The Company is an approved seller/servicer of residential mortgage
loans for the Agencies, with the facilities, procedures, and
experienced personnel necessary for the sound servicing of mortgage
loans of the same type as the Mortgage Loans. The Company is in good
standing to sell mortgage loans to and service mortgage loans for the
Agencies, and no event has occurred, including but not limited to a
change in insurance coverage, which would make the Company unable to
comply with the Agencies eligibility requirements or which would
require notification to the Agencies;
(e) REASONABLE SERVICING FEE.
The Company acknowledges and agrees that the Servicing Fee represents
reasonable compensation for performing such services and that the
entire Servicing Fee shall be treated by the Company, for accounting
and tax purposes, as compensation for the servicing and administration
of the Mortgage Loans pursuant to this Agreement;
(f) ABILITY TO PERFORM.
The Company does not believe, nor does it have any reason or cause to
believe, that it cannot perform each and every covenant contained in
this Agreement. The Company is solvent and the sale of the Mortgage
Loans will not cause the Company to become insolvent. The sale of the
Mortgage Loans is not undertaken to hinder, delay or defraud any of
the Company's creditors;
(g) NO LITIGATION PENDING.
There is no action, suit, proceeding or investigation pending or
threatened against the Company which, either in any one instance or in
the aggregate, may result in any material adverse change in the
business, operations, financial condition, properties or assets of the
Company, or in any material impairment of the right or ability of the
Company to carry on its business substantially as now conducted, or in
any material liability on the part of the Company, or which would draw
into question the validity of this Agreement or the Mortgage Loans or
of any action taken or to be contemplated herein, or which would be
likely to impair materially the ability of the Company to perform
under the terms of this Agreement;
(h) NO CONSENT REQUIRED.
No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery
and performance by the Company of or compliance by the Company with
this Agreement or the sale of the Mortgage Loans as evidenced by the
consummation of the transactions contemplated by this Agreement, or if
required, such approval has been obtained prior to the Closing Date;
(i) 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;
(j) SALE TREATMENT.
The Company has determined that the disposition of the Mortgage Loans
pursuant to this Agreement will be afforded sale treatment for
accounting and tax purposes;
(k) NO MATERIAL CHANGE.
There has been no material adverse change in the business, operations,
financial condition or assets of the Company since the date of the
Company's most recent financial statements; and
(l) NO BROKERS' FEES.
The Company has not dealt with any broker, investment banker, agent or
other Person that may be entitled to any commission or compensation in
the connection with the sale of the Mortgage Loans.
Section 3.02 REPRESENTATIONS AND WARRANTIES REGARDING INDIVIDUAL MORTGAGE LOANS.
As to each Mortgage Loan, the Company hereby represents and warrants to the
Purchaser that as of the Closing Date:
(a) MORTGAGE LOANS AS DESCRIBED.
The information set forth in the Mortgage Loan Schedule attached
hereto as Schedule I is true and correct;
(b) NO OUTSTANDING CHARGES.
All taxes, governmental assessments, insurance premiums, water, sewer
and municipal charges, which previously became due and owing have been
paid, or an escrow of funds has been established for every such item
which remains unpaid and which has been assessed but is not yet due
and payable;
(c) ORIGINAL TERMS UNMODIFIED.
The terms of the Mortgage Note and Mortgage have not been impaired,
waived, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary to protect the
interests of the Purchaser and which has been delivered to the
Custodian. The substance of any such waiver, alteration or
modification has been approved by FHA, VA or the issuer of any related
PMI policy and the title insurer, to the extent required by the
policy, and its terms are reflected on the Mortgage Loan Schedule. No
Mortgagor has been released, in whole or in part, except in connection
with an assumption agreement approved by the issuer the guaranty
certificate or of any related Primary Mortgage Insurance policy and
the title insurer, to the extent required by the policy or Agency
guidelines, and which assumption agreement is part of the Mortgage
Loan File delivered to the Custodian and the terms of which are
reflected in the Mortgage Loan Schedule;
(d) NO DEFENSES.
The Mortgage Loan is not subject to any right of rescission, set-off,
counterclaim or defense, including without limitation the defense of
usury, nor will the operation of any of the terms of the Mortgage Note
or the Mortgage, or the exercise of any right thereunder, render
either the Mortgage Note or the Mortgage unenforceable, in whole or in
part, or subject to any right of rescission, set-off, counterclaim or
defense, including without limitation the defense of usury, and no
such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto;
(e) NO SATISFACTION OF MORTGAGE.
The Mortgage has not been satisfied, canceled, subordinated or
rescinded, in whole or in part, and the Mortgaged Property has not
been released from the lien of the Mortgage, in whole or in part, nor
has any instrument been executed that would effect any such release,
cancellation, subordination or rescission;
(f) VALIDITY OF MORTGAGE DOCUMENTS.
The Mortgage Note and the Mortgage and related documents are genuine,
and each is the legal, valid and binding obligation of the maker
thereof enforceable in accordance with its terms. All parties to the
Mortgage Note and the Mortgage had legal capacity to enter into the
Mortgage Loan and to execute and deliver the Mortgage Note and the
Mortgage, and the Mortgage Note and the Mortgage have been duly and
properly executed by such parties;
(g) NO FRAUD.
All the documents executed in connection with the Mortgage Loan
including, but not limited to, the Mortgage Note and the Mortgage are
free of fraud and any misrepresentation, are signed by the persons
they purport to be signed by, and witnessed or, as appropriate,
notarized by the persons whose signatures appear as witnesses or
notaries, and each such document constitutes the valid and binding
legal obligation of the signatories and is enforceable in accordance
with its terms;
(h) COMPLIANCE WITH APPLICABLE LAWS.
Any and all requirements of any federal, state or local law including,
without limitation, usury, truth-in-lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity,
disclosure, or predatory and abuse lending laws applicable to the
Mortgage Loan have been complied with, and the Company shall maintain
in its possession, available for the Purchaser's inspection, and shall
deliver to the Purchaser upon demand, evidence of compliance with all
such requirements; All inspections, licenses and certificates required
to be made or issued with respect to all occupied portions of the
Mortgaged Property and, with respect to the use and occupancy of the
same, including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the
appropriate authorities;
(i) LOCATION AND TYPE OF MORTGAGED PROPERTY.
The Mortgaged Property is located in the state identified in the
Mortgage Loan Schedule and consists of a parcel of real property with
a detached single family residence erected thereon, or a two- to
four-family dwelling, or an individual condominium unit in a
condominium project, or an individual unit in a planned unit
development or a townhouse, provided, however, that any condominium
project or planned unit development shall conform with the applicable
Agency requirements regarding such dwellings, and no residence or
dwelling is a mobile home or a manufactured dwelling. As of the
respective appraisal date for each Mortgaged Property, no portion of
the Mortgaged Property was being used for commercial purposes. If the
Mortgaged Property is a condominium unit or a planned unit development
(other than a de minimus planned unit development) such condominium or
planned unit development project meets Agency eligibility requirements
or is located in a condominium or planned unit development project
which has received Agency project approval and the representations and
warranties required by Agency with respect to such condominium or
planned unit development have been made and remain true and correct in
all respects;
(j) VALID FIRST LIEN.
The Mortgage is a valid, subsisting and enforceable first lien on the
Mortgaged Property, including all buildings on the Mortgaged Property
and all installations and mechanical, electrical, plumbing, heating
and air conditioning systems located in or annexed to such buildings,
and all additions, alterations and replacements made at any time with
respect to the foregoing. The lien of the Mortgage is subject only to:
(1) the lien of current real property taxes and assessments not yet
due and payable;
(2) covenants, conditions and restrictions, rights of way, easements
and other matters of the public record as of the date of
recording acceptable to mortgage lending institutions generally
and specifically referred to in the lender's title insurance
policy delivered to the originator of the Mortgage Loan and (i)
referred to or otherwise considered in the appraisal made for the
originator of the Mortgage Loan and (ii) which do not adversely
affect the Appraised Value of the Mortgaged Property set forth in
such appraisal; and
(3) other matters to which like properties are commonly subject which
do not materially interfere with the benefits of the security
intended to be provided by the mortgage or the use, enjoyment,
value or marketability of the related Mortgaged Property.
Any security agreement, chattel mortgage or equivalent document
related to and delivered in connection with the Mortgage Loan
establishes and creates a valid, subsisting and enforceable first lien
and first priority security interest on the property described therein
and the Company has full right to sell and assign the same to the
Purchaser.
(k) FULL DISBURSEMENT OF PROCEEDS.
The proceeds of the Mortgage Loan have been fully disbursed, except
for escrows established or created due to seasonal weather conditions,
and there is no requirement for future advances thereunder. All costs,
fees and expenses incurred in making or closing the Mortgage Loan and
the recording of the Mortgage were paid, and the Mortgagor is not
entitled to any refund of any amounts paid or due under the Mortgage
Note or Mortgage;
(l) OWNERSHIP.
The Company is the sole owner of record and holder of the Mortgage
Loan and the related Mortgage Note and the Mortgage are not assigned
or pledged, and the Company has good and marketable title thereto and
has full right and authority to transfer and sell the Mortgage Loan to
the Purchaser. The Company is transferring the Mortgage Loan free and
clear of any and all encumbrances, liens, pledges, equities,
participation interests, claims, charges or security interests of any
nature encumbering such Mortgage Loan;
(m) ORIGINATION/DOING BUSINESS.
The Mortgage Loan was originated by a savings and loan association, a
savings bank, a commercial bank, a credit union, an insurance company,
or similar institution which is supervised and examined by a federal
or state authority or by a mortgagee approved by the Secretary of
Housing and Urban Development pursuant to Sections 203 and 211 or the
National Housing Act. All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise,
are (or, during the period in which they held and disposed of such
interest, were) (1) in compliance with any and all applicable
licensing requirements of the laws of the state wherein the Mortgaged
Property is located, and (2) organized under the laws of such state,
or (3) qualified to do business in such state, or (4) federal savings
and loan associations or national banks having principal offices in
such state, or (5) not doing business in such state;
(n) PRIMARY MORTGAGE INSURANCE.
With respect to any Mortgage Loan subject to a PMI Policy as indicated
on the Mortgage Loan Schedule, all provisions of such PMI Policy have
been and are being complied with, such policy is in full force and
effect, and all premiums due thereunder have been paid. Any Mortgage
Loan subject to a PMI policy obligates the Mortgagor thereunder to
maintain the PMI policy and to pay all premiums and charges in
connection therewith. The Mortgage Interest Rate for the Mortgage Loan
as set forth on the Mortgage Loan Schedule is net of any such
insurance premium;
(o) FHA INSURANCE/VA GUARANTY.
Each FHA Mortgage Loan, is fully-insured by the FHA, which insurance
is in full force and effect, and the Mortgage Loan is not subject to
any defect which would diminish or impair the FHA insurance, and all
prior transfers, if any, of the Mortgage Loan have been, and the
transactions herein contemplated are, in compliance with the FHA
regulations, and no circumstances exist with respect to the FHA
Mortgage Loans which would permit the FHA to deny coverage under the
FHA insurance; and
Each VA Mortgage Loan is guaranteed by the VA, which guaranty is in
full force and effect, and the Mortgage Loan is not subject to any
defect which would diminish or impair the VA guaranty (other than a
potential valuation of the mortgaged property), and all prior
transfers, if any, of the Mortgage Loan have been, and the
transactions herein contemplated are, in compliance with the VA
regulations, and no circumstances exist with respect to the VA
Mortgage Loan which would permit the VA to deny coverage under the VA
guaranty;
(p) TITLE INSURANCE.
The Mortgage Loan is covered by an ALTA lender's title insurance
policy (or in the case of any Mortgage Loan secured by a Mortgaged
Property located in a jurisdiction where such policies are generally
not available, an opinion of counsel of the type customarily rendered
in such jurisdiction in lieu of title insurance) or other generally
acceptable form of policy of insurance acceptable to the Agencies,
issued by a title insurer acceptable to the Agencies and qualified to
do business in the jurisdiction where the Mortgaged Property is
located, insuring the Company, its successors and assigns, as to the
first priority lien of the Mortgage in the original principal amount
of the Mortgage Loan, subject only to the exceptions contained in
clauses (1), (2) and (3) of paragraph (xi) of this Section 3(b). The
Company is the sole insured of such lender's title insurance policy,
and such lender's title insurance policy is in full force and effect
and will be in force and effect upon the consummation of the
transactions contemplated by this Agreement. No claims have been made
under such lender's title insurance policy, and no prior holder of the
Mortgage, including the Company, has done, by act or omission,
anything which would impair the coverage of such lender's title
insurance policy;
(q) NO MECHANICS' LIENS.
There are no mechanics' or similar liens or claims which have been
filed for work, labor or material (and no rights are outstanding that
under the law could give rise to such liens) affecting the related
Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage which are not
insured against by the Title Insurance policy referenced in Section
(p) above;
(r) LOCATION OF IMPROVEMENTS; NO ENCROACHMENTS.
Except as insured against by the Title Insurance policy referenced in
Section (p) above, all improvements which were considered in
determining the Appraised Value of the Mortgaged Property lay wholly
within the boundaries and building restriction lines of the Mortgaged
Property and no improvements on adjoining properties encroach upon the
Mortgaged Property. No improvement located on or being part of the
Mortgaged Property is in violation of any applicable zoning law or
regulation;
(s) CUSTOMARY PROVISIONS.
The Mortgage contains customary and enforceable provisions such as to
render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the
security provided thereby, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii) otherwise
by judicial foreclosure. There is no homestead or other exemption
available to a Mortgagor which would interfere with the right to sell
the Mortgaged Property at a trustee's sale or the right to foreclose
the Mortgage;
(t) OCCUPANCY OF THE MORTGAGED PROPERTY.
As of the date of origination, the Mortgaged Property was lawfully
occupied under applicable law.
(u) NO ADDITIONAL COLLATERAL.
The Mortgage Note is not and has not been secured by any collateral,
pledged account or other security except the lien of the corresponding
Mortgage and the security interest of any applicable security
agreement or chattel mortgage referred to in (xi) above;
(v) DEEDS OF TRUST.
In the event the Mortgage constitutes a deed of trust, a trustee, duly
qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Mortgage, and
no fees or expenses are or will become payable by the Mortgagee to the
trustee under the deed of trust, except in connection with a trustee's
sale after default by the Mortgagor;
(w) TRANSFER OF MORTGAGE LOANS.
The Assignment is in recordable form and is acceptable for recording
under the laws of the jurisdiction in which the Mortgaged Property is
located;
(x) MORTGAGED PROPERTY UNDAMAGED.
The Mortgaged Property is undamaged by water, fire, earthquake or
earth movement, windstorm, flood, tornado or other casualty so as to
affect adversely the value of the Mortgaged Property as security for
the Mortgage Loan or the use for which the premises were intended;
(y) COLLECTION PRACTICES; ESCROW DEPOSITS.
The origination and collection practices used with respect to the
Mortgage Loan have been in accordance with Prudent Servicing
Practices, and have been in all material respects legal and proper.
All Escrow Items have been collected in full compliance with state and
federal law. An escrow of funds is not prohibited by applicable law
and has been established to pay for every item that remains unpaid and
has been assessed but is not yet due and payable. No escrow deposits
or Escrow Items or other charges or payments due the Seller have been
capitalized under the Mortgage Note;
(z) NO CONDEMNATION.
To the best of Seller's knowledge, there is no proceeding pending or
threatened for the total or partial condemnation of the related
Mortgaged Property;
(aa) THE APPRAISAL.
The Mortgage Loan Documents contain an appraisal of the related
Mortgaged Property by an appraiser who had no interest, direct or
indirect, in the Mortgaged Property or in any loan made on the
security thereof; and whose compensation is not affected by the
approval or disapproval of the Mortgage Loan, and the appraisal and
the appraiser both satisfy the applicable requirements of Title XI of
the Financial Institution Reform, Recovery, and Enforcement Act of
1989 and the regulations promulgated thereunder, all as in effect on
the date the Mortgage Loan was originated;
(bb) INSURANCE.
The Mortgaged Property securing each Mortgage Loan is insured by an
insurer acceptable to the Agencies against loss by fire and such
hazards as are covered under a standard extended coverage endorsement,
in an amount which is not less than the lesser of 100% of the
insurable value of the Mortgaged Property and the outstanding
principal balance of the Mortgage Loan, but in no event less than the
minimum amount necessary to fully compensate for any damage or loss on
a replacement cost basis; if the Mortgaged Property is a condominium
unit, it is included under the coverage afforded by a blanket policy
for the project; the insurance policy contains a standard clause
naming the originator of such mortgage loan, its successor and
assigns, as insured mortgagee; if upon origination of the Mortgage
Loan, the improvements on the Mortgaged Property were in an area
identified in the Federal Register by the Federal Emergency Management
Agency as having special flood hazards, a flood insurance policy
meeting the requirements of the current guidelines of the Federal
Insurance Administration is in effect with a generally acceptable
insurance carrier, in an amount representing coverage not less than
the least of (A) the outstanding principal balance of the Mortgage
Loan, (B) the full insurable value and (C) the maximum amount of
insurance which was available under the Flood Disaster Protection Act
of 1973, as amended; and the Mortgage obligates the mortgagor
thereunder to maintain all such insurance at the mortgagor's cost and
expense and the Seller has not acted or failed to act so as to impair
the coverage of any such insurance policy or the validity, binding
effect and enforceability thereof.
(cc) SOLDIERS' AND SAILORS' CIVIL RELIEF ACT.
The Mortgagor has not notified the Seller, and the Seller has no
knowledge of any relief requested or allowed to the Mortgagor under
the Soldiers' and Sailors' Civil Relief Act of 1940, as amended.
(dd) NO VIOLATION OF ENVIRONMENTAL LAWS.
There is no pending action or proceeding directly involving any
Mortgaged Property of which the Company is aware in which compliance
with any environmental law, rule or regulation is an issue; and to the
best of the Company's knowledge nothing further remains to be done to
satisfy in full all requirements of each such law, rule or regulation
constituting a prerequisite to use and enjoyment of said property.
(ee) HOEPA.
No Mortgage Loan is subject to the provisions of the Home Ownership
and Equity Protection Act of 1994, as amended, or is considered a
"high cost loan" under any other state, federal or local laws or
ordinances."
Section 3.03 REPURCHASE.
It is understood and agreed that the representations and warranties set
forth in Sections 3.01 and 3.02 shall survive the sale of the Mortgage Loans to
the Purchaser and the delivery of the Mortgage Loan Documents to the Custodian
and shall inure to the benefit of the Purchaser, notwithstanding any restrictive
or qualified endorsement on any Mortgage Note or Assignment of Mortgage or the
examination or failure to examine any Mortgage File. Upon discovery by either
the Company or the Purchaser of a breach of any of the foregoing representations
and warranties which materially and adversely affects the value of the Mortgage
Loans or the interest of the Purchaser (or which materially and adversely
affects the interests of Purchaser in the related Mortgage Loan in the case of a
representation and warranty relating to a particular Mortgage Loan), the party
discovering such breach shall give prompt written notice to the other.
Within 90 days of the earlier of either discovery by or notice to the
Company of any breach of a representation or warranty which materially and
adversely affects the value of the Mortgage Loans, the Company shall use its
best efforts promptly to cure such breach in all material respects and, if such
breach cannot be cured, the Company shall, at the Purchaser's option, repurchase
such Mortgage Loan at the Repurchase Price. In the event that a breach shall
involve any representation or warranty set forth in Section 3.01, and such
breach cannot be cured within 90 days of the earlier of either discovery by or
notice to the Company of such breach, all of the Mortgage Loans shall, at the
Purchaser's option, be repurchased by the Company at the Repurchase Price. Any
repurchase of a Mortgage Loan or Loans pursuant to the foregoing provisions of
this Section 3.03 shall be accomplished by deposit in the Custodial Account of
the amount of the Repurchase Price for distribution to Purchaser on the next
scheduled Remittance Date, after deducting therefrom any amount received in
respect of such repurchased Mortgage Loan or Loans and being held in the
Custodial Account for future distribution.
At the time of repurchase or substitution, the Purchaser and the Company
shall arrange for the reassignment of the repurchased Mortgage Loan to the
Company and the delivery to the Company of any documents held by the Custodian
relating to the repurchased Mortgage Loan. In the event of a repurchase, the
Company shall, simultaneously with such reassignment, give written notice to the
Purchaser that such repurchase has taken place, amend the Mortgage Loan Schedule
to reflect the withdrawal of the repurchased Mortgage Loan from this Agreement.
In addition to such repurchase obligation, the Company shall indemnify the
Purchaser and hold it harmless against any losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments,
and other costs and expenses resulting from any claim, demand, defense or
assertion based on or grounded upon, or resulting from, a breach of the Company
representations and warranties contained in this Agreement. It is understood and
agreed that the obligations of the Company set forth in this Section 3.03 to
cure, substitute for or repurchase a defective Mortgage Loan and to indemnify
the Purchaser as provided in this Section 3.03 constitute the sole remedies of
the Purchaser respecting a breach of the foregoing representations and
warranties.
Any cause of action against the Company relating to or arising out of the
breach of any representations and warranties made in Sections 3.01 and 3.02
shall accrue as to any Mortgage Loan upon (i) discovery of such breach by the
Purchaser or notice thereof by the Company to the Purchaser, (ii) failures by
the Company to cure such breach or repurchase such Mortgage Loan as specified
above, and (iii) demand upon the Company by the Purchaser for compliance with
this Agreement.
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 COMPANY TO ACT AS SERVICER.
The Company, as an independent contractor, shall service and administer the
Mortgage Loans and shall have full power and authority, acting alone or through
the utilization of a third party servicing provider, to do any and all things in
connection with such servicing and administration which the Company may deem
necessary or desirable, consistent with the terms of this Agreement and with
Accepted Servicing Practices. The Company shall service the Mortgage Loans in
accordance with the guidelines of the applicable governing Agency, including the
Federal Housing Administration for FHA loans or the Veteran's Administration for
VA loans, and shall comply with all the rules and regulations as set forth by
each applicable agency.
Consistent with the terms of this Agreement and any applicable Agency
guidelines, the Company may waive, modify or vary any term of any Mortgage Loan
or consent to the postponement of strict compliance with any such term or in any
manner grant indulgence to any Mortgagor if in the Company's reasonable and
prudent determination such waiver, modification, postponement or indulgence is
not materially adverse to the Purchaser and will not result in the impairment of
coverage under any PMI Policy, the MIC or LGC. Provided, however, no such
modification shall reduce the mortgage interest rate below the Company's
prevailing market rate for similar loans in affect as of the date of
modification. In the event of any such modification which permits the deferral
of interest or principal payments on any Mortgage Loan, the Company shall
disburse on the following Remittance Date, from its own funds, 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 for any
Monthly Payment received or deferred and (b) the amount paid by the Mortgagor,
if any. Without limiting the generality of the foregoing, the Company shall
continue, and is hereby authorized and empowered, to execute and deliver on
behalf of itself and the Purchaser, all instruments of satisfaction or
cancellation, or of partial or full release, discharge and all other comparable
instruments, with respect to the Mortgage Loans and with respect to the
Mortgaged Properties. If reasonably required by the Company, the Purchaser shall
furnish the Company with any powers of attorney and other documents necessary or
appropriate to enable the Company to carry out its servicing and administrative
duties under this Agreement.
In servicing and administering the Mortgage Loans, the Company shall employ
procedures (including collection procedures) and exercise the same care that it
customarily employs and exercises in servicing and administering mortgage loans
for its own account, giving due consideration to Accepted Servicing Practices
where such practices do not conflict with the requirements of this Agreement,
and the Purchaser's reliance on the Company.
Section 4.02 LIQUIDATION OF MORTGAGE LOANS.
In the event that any payment due under any Mortgage Loan and not postponed
pursuant to Section 4.01 is not paid when the same becomes due and payable, or
in the event the Mortgagor fails to perform any other covenant or obligation
under the Mortgage Loan and such failure continues beyond any applicable grace
period, the Company shall take such action as (1) the Company would take under
similar circumstances with respect to a similar mortgage loan held for its own
account for investment, (2) shall be consistent with Accepted Servicing
Practices, (3) the Company shall determine prudently to be in the best interest
of Purchaser, and (4) is consistent with any related PMI Policy. In the event
that any payment due under any Mortgage Loan is not postponed pursuant to
Section 4.01 and remains delinquent for a period of 90 days or any other default
continues for a period of 90 days beyond the expiration of any grace or cure
period, the Company shall commence foreclosure proceedings. In such connection,
the Company shall from its own funds make all necessary and proper Servicing
Advances, provided, however, that the Company shall not be required to expend
its own funds in connection with any foreclosure or towards the restoration or
preservation of any Mortgaged Property, unless it shall determine (a) that such
preservation, restoration and/or foreclosure will increase the proceeds of
liquidation of the Mortgage Loan to Purchaser after reimbursement to itself for
such expenses and (b) that such expenses will be recoverable by it either
through Liquidation Proceeds (respecting which it shall have priority for
purposes of withdrawals from the Custodial Account pursuant to Section 4.05) or
through Insurance Proceeds (respecting which it shall have similar priority).
Notwithstanding anything to the contrary contained herein, in connection
with a foreclosure or acceptance of a deed in lieu of foreclosure, in the event
the Company has reasonable cause to believe that a Mortgaged Property is
contaminated by hazardous or toxic substances or wastes, or if the Purchaser
otherwise requests an environmental inspection or review of such Mortgaged
Property, such an inspection or review is to be conducted by a qualified
inspector. The cost for such inspection or review shall be borne by the
Purchaser. Upon completion of the inspection or review, the Company shall
promptly provide the Purchaser with a written report of the environmental
inspection.
After reviewing the environmental inspection report, the Purchaser shall
determine how the Company shall proceed with respect to the Mortgaged Property.
In the event (a) the environmental inspection report indicates that the
Mortgaged Property is contaminated by hazardous or toxic substances or wastes
and (b) the Purchaser directs the Company to proceed with foreclosure or
acceptance of a deed in lieu of foreclosure, the Company shall be reimbursed for
all reasonable costs associated with such foreclosure or acceptance of a deed in
lieu of foreclosure and any related environmental clean up costs, as applicable,
from the related Liquidation Proceeds, or if the Liquidation Proceeds are
insufficient to fully reimburse the Company, the Company shall be entitled to be
reimbursed from amounts in the Custodial Account pursuant to Section 4.05
hereof. In the event the Purchaser directs the Company not to proceed with
foreclosure or acceptance of a deed in lieu of foreclosure, the Company shall be
reimbursed for all Servicing Advances made with respect to the related Mortgaged
Property from the Custodial Account pursuant to Section 4.05 hereof.
Section 4.03 COLLECTION OF MORTGAGE LOAN PAYMENTS.
Continuously from the date hereof until the principal and interest on all
Mortgage Loans are paid in full, the Company shall proceed diligently to collect
all payments due under each of the Mortgage Loans when the same shall become due
and payable and shall take special care in ascertaining and estimating Escrow
Payments and all other charges that will become due and payable with respect to
the Mortgage Loan and the Mortgaged Property, to the end that the installments
payable by the Mortgagors will be sufficient to pay such charges as and when
they become due and payable.
Section 4.04 ESTABLISHMENT OF AND DEPOSITS TO CUSTODIAL ACCOUNT.
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts,
in the form of time deposit or demand accounts, titled "▇▇▇▇▇ Fargo Home
Mortgage, Inc. in trust for the Purchaser and/or subsequent purchasers of
Residential Mortgage Loans, and various Mortgagors - P & I." The Custodial
Account shall be established with a Qualified Depository. Upon request of the
Purchaser and within ten (10) days thereof, the Company shall provide the
Purchaser with written confirmation of the existence of such Custodial Account.
Any funds deposited in the Custodial Account shall at all times be insured to
the fullest extent allowed by applicable law. Funds deposited in the Custodial
Account may be drawn on by the Company in accordance with Section 4.05.
The Company shall deposit in the Custodial Account within two (2) Business
Days of the Company's receipt, and retain therein, the following collections
received by the Company and payments made by the Company after the Cut-off Date,
other than payments of principal and interest due on or before the Cut-off Date,
or received by the Company prior to the Cut-off Date but allocable to a period
subsequent thereto:
(i) all payments on account of principal on the Mortgage Loans, including
all Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans adjusted to
the Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts required to be deposited
pursuant to Section 4.10 (other than proceeds to be held in the Escrow
Account and applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with Section
4.14), Section 4.11 and Section 4.15;
(v) all Condemnation Proceeds which are not applied to the restoration or
repair of the Mortgaged Property or released to the Mortgagor in
accordance with Section 4.14;
(vi) any amount required to be deposited in the Custodial Account pursuant
to Section 4.01, 5.03, 6.01 or 6.02;
(vii) any amounts payable in connection with the repurchase of any Mortgage
Loan pursuant to Section 3.03 and all amounts required to be deposited
by the Company in connection with a shortfall in principal amount of
any Qualified Substitute Mortgage Loan pursuant to Section 3.03;
(viii) with respect to each Principal Prepayment an amount (to be paid by
the Company out of its funds) which, when added to all amounts
allocable to interest received in connection with the Principal
Prepayment, equals one month's interest on the amount of principal so
prepaid at the Mortgage Loan Remittance Rate;
(ix) any amounts required to be deposited by the Company pursuant to
Section 4.11 in connection with the deductible clause in any blanket
hazard insurance policy; and
(x) any amounts received with respect to or related to any REO Property
and all REO Disposition Proceeds pursuant to Section 4.16.
The foregoing requirements for deposit into the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges and assumption
fees, to the extent permitted by Section 6.01, need not be deposited by the
Company into the Custodial Account. Any interest paid on funds deposited in the
Custodial Account by the depository institution shall accrue to the benefit of
the Company and the Company shall be entitled to retain and withdraw such
interest from the Custodial Account pursuant to Section 4.05.
Section 4.05 PERMITTED WITHDRAWALS FROM CUSTODIAL ACCOUNT.
The Company shall, from time to time, withdraw funds from the Custodial
Account for the following purposes:
(i) to make payments to the Purchaser in the amounts and in the manner
provided for in Section 5.01;
(ii) to reimburse itself for Monthly Advances of the Company's funds made
pursuant to Section 5.03, the Company's right to reimburse itself
pursuant to this subclause (ii) being limited to amounts received on
the related Mortgage Loan which represent late payments of principal
and/or interest respecting which any such advance was made, it being
understood that, in the case of any such reimbursement, the Company's
right thereto shall be prior to the rights of Purchaser, except that,
where the Company is required to repurchase a Mortgage Loan pursuant
to Section 3.03 or 6.02, the Company's right to such reimbursement
shall be subsequent to the payment to the Purchaser of the Repurchase
Price pursuant to such sections and all other amounts required to be
paid to the Purchaser with respect to such Mortgage Loan;
(iii) to reimburse itself for unreimbursed Servicing Advances, and for any
unpaid Servicing Fees, the Company's right to reimburse itself
pursuant to this subclause (iii) with respect to any Mortgage Loan
being limited to related Liquidation Proceeds, Condemnation Proceeds,
Insurance Proceeds and such other amounts as may be collected by the
Company from the Mortgagor or otherwise relating to the Mortgage Loan,
it being understood that, in the case of any such reimbursement, the
Company's right thereto shall be prior to the rights of Purchaser,
except that where the Company is required to repurchase a Mortgage
Loan pursuant to Section 3.03 or 6.02, in which case the Company's
right to such reimbursement shall be subsequent to the payment to the
Purchaser of the Repurchase Price pursuant to such sections and all
other amounts required to be paid to the Purchaser with respect to
such Mortgage Loan;
(iv) to pay itself interest on funds deposited in the Custodial Account;
(v) to reimburse itself for expenses incurred and reimbursable to it
pursuant to Section 8.01;
(vi) to pay any amount required to be paid pursuant to Section 4.16 related
to any REO Property, it being understood that, in the case of any such
expenditure or withdrawal related to a particular REO Property, the
amount of such expenditure or withdrawal from the Custodial Account
shall be limited to amounts on deposit in the Custodial Account with
respect to the related REO Property;
(vii) to reimburse itself for any Servicing Advances or REO expenses after
liquidation of the Mortgaged Property not otherwise reimbursed above;
(viii) to remove funds inadvertently placed in the Custodial Account by the
Company; and
(ix) to clear and terminate the Custodial Account upon the termination of
this Agreement.
In the event that the Custodial Account is interest bearing, on each
Remittance Date, the Company shall withdraw all funds from the Custodial Account
except for those amounts which, pursuant to Section 5.01, the Company is not
obligated to remit on such Remittance Date. The Company may use such withdrawn
funds only for the purposes described in this Section 4.05.
Section 4.06 ESTABLISHMENT OF AND DEPOSITS TO ESCROW ACCOUNT.
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan constituting Escrow Payments separate and apart from
any of its own funds and general assets and shall establish and maintain one or
more Escrow Accounts, in the form of time deposit or demand accounts, titled,
"▇▇▇▇▇ Fargo Home Mortgage, Inc., in trust for the Purchaser and/or subsequent
purchasers of Mortgage Loans, and various Mortgagors - T & I." The Escrow
Accounts shall be established with a Qualified Depository, in a manner which
shall provide maximum available insurance thereunder. Upon request of the
Purchaser and within ten (10) days thereof, the Company shall provide the
Purchaser with written confirmation of the existence of such Escrow Account.
Funds deposited in the Escrow Account may be drawn on by the Company in
accordance with Section 4.07.
The Company shall deposit in the Escrow Account or Accounts within two (2)
Business Days of Company's receipt , and retain therein:
(i) all Escrow Payments collected on account of the Mortgage Loans, for
the purpose of effecting timely payment of any such items as required
under the terms of this Agreement;
(ii) all amounts representing Insurance Proceeds or Condemnation Proceeds
which are to be applied to the restoration or repair of any Mortgaged
Property; and
(iii) all payments on account of Buydown Funds.
The Company shall make withdrawals from the Escrow Account only to effect
such payments as are required under this Agreement, as set forth in Section
4.07. The Company shall be entitled to retain any interest paid on funds
deposited in the Escrow Account by the depository institution, other than
interest on escrowed funds required by law to be paid to the Mortgagor. To the
extent required by law, the Company shall pay interest on escrowed funds to the
Mortgagor notwithstanding that the Escrow Account may be non-interest bearing or
that interest paid thereon is insufficient for such purposes.
Section 4.07 PERMITTED WITHDRAWALS FROM ESCROW ACCOUNT.
Withdrawals from the Escrow Account or Accounts may be made by the Company
only:
(i) to effect timely payments of ground rents, taxes, assessments, water
rates, mortgage insurance premiums, condominium charges, fire and
hazard insurance premiums or other items constituting Escrow Payments
for the related Mortgage;
(ii) to reimburse the Company for any Servicing Advances made by the
Company pursuant to Section 4.08 with respect to a related Mortgage
Loan, but only from amounts received on the related Mortgage Loan
which represent late collections of Escrow Payments thereunder;
(iii) to refund to any Mortgagor any funds found to be in excess of the
amounts required under the terms of the related Mortgage Loan;
(iv) for transfer to the Custodial Account and application to reduce the
principal balance of the Mortgage Loan in accordance with the terms of
the related Mortgage and Mortgage Note;
(v) for application to restoration or repair of the Mortgaged Property in
accordance with the procedures outlined in Section 4.14;
(vi) to pay to the Company, or any Mortgagor to the extent required by law,
any interest paid on the funds deposited in the Escrow Account;
(vii) to remove funds inadvertently placed in the Escrow Account by the
Company;
(viii) to remit to Purchaser payments on account of Buydown Funds as
applicable; and
(ix) to clear and terminate the Escrow Account on the termination of this
Agreement.
Section 4.08 PAYMENT OF TAXES, INSURANCE AND OTHER CHARGES.
With respect to each Mortgage Loan, the Company shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water rates,
sewer rents, and other charges which are or may become a lien upon the Mortgaged
Property and the status of PMI Policy premiums and fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of such
charges (including renewal premiums) and shall effect payment thereof prior to
the applicable penalty or termination date, employing for such purpose deposits
of the Mortgagor in the Escrow Account which shall have been estimated and
accumulated by the Company in amounts sufficient for such purposes, as allowed
under the terms of the Mortgage. The Company assumes full responsibility for the
timely payment of all such bills and shall effect timely payment of all such
charges irrespective of each Mortgagor's faithful performance in the payment of
same of the making of the Escrow Payments, and the Company shall make advances
from its own funds to effect such payments.
Section 4.09 PROTECTION OF ACCOUNTS.
The Company may transfer the Custodial Account or the Escrow Account to a
different Qualified Depository from time to time.
Section 4.10 MAINTENANCE OF HAZARD INSURANCE.
The Company shall cause to be maintained for each Mortgage Loan hazard
insurance such that all buildings upon the Mortgaged Property are insured by an
insurer acceptable to the Agencies, 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. In the event a
hazard insurance policy shall be in danger of being terminated, or in the event
the insurer shall cease to be acceptable to the Agencies, the Company shall
notify the Purchaser and the related Mortgagor, and shall use its best efforts,
as permitted by applicable law, to obtain from another Qualified Insurer a
replacement hazard insurance policy substantially and materially similar in all
respects to the original policy. In no event, however, shall a Mortgage Loan be
without a hazard insurance policy at any time, subject only to Section 4.11
hereof.
If upon origination of the Mortgage Loan, the related Mortgaged Property
was located in an area identified by the Flood Emergency Management Agency as
having special flood hazards (and such flood insurance has been made available)
a flood insurance policy meeting the requirements of the current guidelines of
the Federal Insurance Administration is in effect with a generally acceptable
insurance carrier acceptable to the Agencies, 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 a Mortgage is secured by a unit in a condominium project, the Company
shall verify that the coverage required of the owner's association, including
hazard, flood, liability, and fidelity coverage, is being maintained in
accordance with then current Agency requirements, and secure from the owner's
association its agreement to notify the Company promptly of any change in the
insurance coverage or of any condemnation or casualty loss that may have a
material effect on the value of the Mortgaged Property as security.
In the event that any Purchaser or the Company shall determine that the
Mortgaged Property should be insured against loss or damage by hazards and risks
not covered by the insurance required to be maintained by the Mortgagor pursuant
to the terms of the Mortgage, the Company shall communicate and consult with the
Mortgagor with respect to the need for such insurance and bring to the
Mortgagor's attention the desirability of protection of the Mortgaged Property.
All policies required hereunder shall name the Company as loss payee and
shall be endorsed with standard or union mortgagee clauses, without
contribution, which shall provide for at least 30 days prior written notice of
any cancellation, reduction in amount or material change in coverage.
The Company shall not interfere with the Mortgagor's freedom of choice in
selecting either his insurance carrier or agent, provided, however, that the
Company shall not accept any such insurance policies from insurance companies
unless such companies are acceptable to the applicable Agency and are licensed
to do business in the jurisdiction in which the Mortgaged Property is located.
The Company shall determine that such policies provide sufficient risk coverage
and amounts, that they insure the property owner, and that they properly
describe the property address.
Pursuant to Section 4.04, any amounts collected by the Company under any
such policies (other than amounts to be deposited in the Escrow Account and
applied to the restoration or repair of the related Mortgaged Property, or
property acquired in liquidation of the Mortgage Loan, or to be released to the
Mortgagor, in accordance with the Company's normal servicing procedures as
specified in Section 4.14) shall be deposited in the Custodial Account subject
to withdrawal pursuant to Section 4.05.
Section 4.11 MAINTENANCE OF MORTGAGE IMPAIRMENT INSURANCE.
In the event that the Company shall obtain and maintain a blanket policy
insuring against losses arising from fire and hazards covered under extended
coverage on all of the Mortgage Loans, then, to the extent such policy provides
coverage in an amount equal to the amount required pursuant to Section 4.10 and
otherwise complies with all other requirements of Section 4.10, it shall
conclusively be deemed to have satisfied its obligations as set forth in Section
4.10. The Company shall prepare and make any claims on the blanket policy as
deemed necessary by the Company in accordance with prudent servicing practices.
Any amounts collected by the Company under any such policy relating to a
Mortgage Loan shall be deposited in the Custodial Account subject to withdrawal
pursuant to Section 4.05. Such policy may contain a deductible clause, in which
case, in the event that there shall not have been maintained on the related
Mortgaged Property a policy complying with Section 4.10, and there shall have
been a loss which would have been covered by such policy, the Company shall
deposit in the Custodial Account at the time of such loss the amount not
otherwise payable under the blanket policy because of such deductible clause,
such amount to be deposited from the Company's funds, without reimbursement
therefor. Upon request of any Purchaser, the Company shall cause to be delivered
to such 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 such Purchaser.
Section 4.12 MAINTENANCE OF FIDELITY BOND AND ERRORS AND OMISSIONS INSURANCE.
The Company shall maintain with responsible companies, at its own expense,
a blanket Fidelity Bond and an Errors and Omissions Insurance Policy, with broad
coverage on all officers, employees or other persons acting in any capacity
requiring such persons to handle funds, money, documents or papers relating to
the Mortgage Loans ("Company Employees"). Any such Fidelity Bond and Errors and
Omissions Insurance Policy shall be in the form of the Mortgage Banker's Blanket
Bond and shall protect and insure the Company against losses, including forgery,
theft, embezzlement, fraud, errors and omissions and negligent acts of such
Company Employees. Such Fidelity Bond and Errors and Omissions Insurance Policy
also shall protect and insure the Company against losses in connection with the
release or satisfaction of a Mortgage Loan without having obtained payment in
full of the indebtedness secured thereby. No provision of this Section 4.12
requiring such Fidelity Bond and Errors and Omissions Insurance Policy shall
diminish or relieve the Company from its duties and obligations as set forth in
this Agreement. The minimum coverage under any such bond and insurance policy
shall be at least equal to the amounts acceptable to the Agencies. Upon the
request of any Purchaser, the Company shall cause to be delivered to such
Purchaser a certificate of insurance for such fidelity bond and 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 4.13 INSPECTIONS.
If any Mortgage Loan is more than 60 days delinquent, the Company
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 Company shall keep a
written report of each such inspection.
Section 4.14 RESTORATION OF MORTGAGED PROPERTY.
The Company need not obtain the approval of the Purchaser prior to
releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be
applied to the restoration or repair of the Mortgaged Property if such release
is in accordance with Accepted Servicing Practices. For claims greater than
$15,000, at a minimum the Company shall comply with the following conditions in
connection with any such release of Insurance Proceeds or Condemnation Proceeds:
(i) The Company shall receive satisfactory independent verification of
completion of repairs and issuance of any required approvals with
respect thereto;
(ii) the Company shall take all steps necessary to preserve the priority of
the lien of the Mortgage, including, but not limited to requiring
waivers with respect to mechanics' and materialmen's liens;
(iii) the Company shall verify that the Mortgage Loan is not in default;
and
(iv) pending repairs or restoration, the Company shall place the Insurance
Proceeds or Condemnation Proceeds in the Escrow Account.
If the Purchaser is named as an additional loss payee, the Company is
hereby empowered to endorse any loss draft issued in respect of such a claim in
the name of the Purchaser.
Section 4.15 CLAIMS.
In connection with its activities as servicer, the Company agrees to
prepare and present, on behalf of itself and the Purchaser, claims to the
insurer under any PMI Policy, MIC or LGC in a timely fashion and in accordance
with the terms of the applicable policy or Agency requirements, in this regard,
to take such action as shall be necessary to permit recovery respecting a
defaulted Mortgage Loan. Pursuant to Section 4.04, any amounts collected by the
Company under any guaranty shall be deposited in the Custodial Account, subject
to withdrawal pursuant to Section 4.05.
Section 4.16 TITLE, MANAGEMENT AND DISPOSITION OF REO PROPERTY.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Purchaser, or in the event the Purchaser is
not authorized or permitted to hold title to real property in the state where
the REO Property is located, or would be adversely affected under the "doing
business" or tax laws of such state by so holding title, the deed or certificate
of sale shall be taken in the name of such Person or Persons as shall be
consistent with an Opinion of Counsel obtained by the Company from any attorney
duly licensed to practice law in the state where the REO Property is located.
The Person or Persons holding such title other than the Purchaser shall
acknowledge in writing that such title is being held as nominee for the
Purchaser.
The Purchaser shall have the option to manage and operate the REO Property
provided the Purchaser gives written notice of its intention to do so within
thirty (30) days after such REO Property is acquired in foreclosure or by deed
in lieu of foreclosure. The election by the Purchaser to manage the REO Property
shall not constitute a termination of any rights of the Company pursuant to
Section 11.02.
In the event the Purchaser does not elect to manage it's own REO property,
the Company shall manage, conserve, protect and operate each REO Property for
the Purchaser solely for the purpose of its prompt disposition and sale. The
Company, either itself or through an agent selected by the Company, shall
manage, conserve, protect and operate the REO Property in the same manner that
it manages, conserves, protects and operates other foreclosed property for its
own account, and in the same manner that similar property in the same locality
as the REO Property is managed. The Company shall attempt to sell the same (and
may temporarily rent the same for a period not greater than one year, except as
otherwise provided below) on such terms and conditions as the Company deems to
be in the best interest of the Purchaser.
The Company shall use its best efforts to dispose of the REO Property as
soon as possible and shall sell such REO Property in any event within one year
after title has been taken to such REO Property, unless the Company 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 Company 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
Company as mortgagee, and such purchase money mortgage shall not be held
pursuant to this Agreement.
The Company shall also maintain on each REO Property fire and hazard
insurance with extended coverage in amount which is at least equal to the
maximum insurable value of the improvements which are a part of such property,
liability insurance and, to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance in the amount
required above.
The disposition of REO Property shall be carried out by the Company at such
price, and upon such terms and conditions, as the Company deems to be in the
best interests of the Purchaser. The proceeds of sale of the REO Property shall
be promptly deposited in the Custodial Account. As soon as practical thereafter
the expenses of such sale shall be paid and the Company shall reimburse itself
for any related unreimbursed Servicing Advances, unpaid Servicing Fees and
unreimbursed advances made pursuant to Section 5.03. On the Remittance Date
immediately following the Principal Prepayment Period in which such sale
proceeds are received the net cash proceeds of such sale remaining in the
Custodial Account shall be distributed to the Purchaser.
The Company shall withdraw from the Custodial Account funds necessary for
the proper operation management and maintenance of the REO Property, including
the cost of maintaining any hazard insurance pursuant to Section 4.10 and the
fees of any managing agent of the Company, or the Company itself. The REO
management fee shall be $1500 per REO Property. The Company shall make monthly
distributions on each Remittance Date to the Purchaser of the net cash flow from
the REO Property (which shall equal the revenues from such REO Property net of
the expenses described in this Section 4.16 and of any reserves reasonably
required from time to time to be maintained to satisfy anticipated liabilities
for such expenses).
Section 4.17 REAL ESTATE OWNED REPORTS.
Together with the statement furnished pursuant to Section 5.02, the Company
shall furnish to the Purchaser on or before the Remittance Date each month a
statement with respect to any REO Property covering the operation of such REO
Property for the previous month and the Company's efforts in connection with the
sale of such REO Property and any rental of such REO Property incidental to the
sale thereof for the previous month. That statement shall be accompanied by such
other information as the Purchaser shall reasonably request.
Section 4.18 LIQUIDATION REPORTS.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Purchaser pursuant to a deed in lieu of foreclosure, the Company
shall submit to the Purchaser a liquidation report with respect to such
Mortgaged Property.
Section 4.19 REPORTS OF FORECLOSURES AND ABANDONMENTS OF MORTGAGED PROPERTY.
Following the foreclosure sale or abandonment of any Mortgaged Property,
the Company shall report such foreclosure or abandonment as required pursuant to
Section 6050J of the Code. The Company shall file information reports with
respect to the receipt of mortgage interest received in a trade or business and
information returns relating to cancellation of indebtedness income with respect
to any Mortgaged Property as required by the Code. Such reports shall be in form
and substance sufficient to meet the reporting requirements imposed by the Code.
Section 4.20 APPLICATION OF BUYDOWN FUNDS.
With respect to each Buydown Mortgage Loan, the Company shall have
deposited into the Escrow Account, no later than the last day of the month,
Buydown Funds in an amount equal to the aggregate undiscounted amount of
payments that, when added to the amount the Mortgagor on such Mortgage Loan is
obligated to pay on all Due Dates in accordance with the terms of the Buydown
Agreement, is equal to the full scheduled Monthly Payments which are required to
be paid by the Mortgagor under the terms of the related Mortgage Note (without
regard to the related Buydown Agreement as if the Mortgage Loan were not subject
to the terms of the Buydown Agreement). With respect to each Buydown Mortgage
Loan, the Company will distribute to the Purchaser on each Remittance Date an
amount of Buydown Funds equal to the amount that, when added to the amount
required to be paid on such date by the related Mortgagor, pursuant to and in
accordance with the related Buydown Agreement, equals the full Monthly Payment
that would otherwise be required to be paid on such Mortgage Loan by the related
Mortgagor under the terms of the related Mortgage Note (as if the Mortgage Loan
were not a Buydown Mortgage Loan and without regard to the related Buydown
Agreement).
If the Mortgagor on a Buydown Mortgage Loan defaults on such Mortgage Loan
during the Buydown Period and the Mortgaged Property securing such Buydown
Mortgage Loan is sold in the liquidation thereof (either by the Company or the
insurer under any related Primary Insurance Policy) the Company shall, on the
Remittance Date following the date upon which Liquidation Proceeds or REO
Disposition proceeds are received with respect to any such Buydown Mortgage
Loan, distribute to the Purchaser all remaining Buydown Funds for such Mortgage
Loan then remaining in the Escrow Account. Pursuant to the terms of each Buydown
Agreement, any amounts distributed to the Purchaser in accordance with the
preceding sentence will be applied to reduce the outstanding principal balance
of the related Buydown Mortgage Loan. If a Mortgagor on a Buydown Mortgage Loan
prepays such Mortgage Loan in its entirety during the related Buydown Period,
the Company shall be required to withdraw from the Escrow Account any Buydown
Funds remaining in the Escrow Account with respect to such Buydown Mortgage Loan
in accordance with the related Buydown Agreement. If a principal prepayment by a
Mortgagor on a Buydown Mortgage Loan during the related Buydown Period, together
with any Buydown Funds then remaining in the Escrow Account related to such
Buydown Mortgage Loan, would result in a principal prepayment of the entire
unpaid principal balance of the Buydown Mortgage Loan, the Company shall
distribute to the Purchaser on the Remittance Date occurring in the month
immediately succeeding the month in which such Principal Prepayment is received,
all Buydown Funds related to such Mortgage Loan so remaining in the Escrow
Account, together with any amounts required to be deposited into the Custodial
Account.
Section 4.21 NOTIFICATION OF ADJUSTMENTS.
With respect to each Mortgage Loan, the Company shall adjust the Mortgage
Interest Rate on the related Adjustment Date in compliance with the requirements
of applicable law and the related Mortgage and Mortgage Note. The Company shall
execute and deliver any and all necessary notices required under applicable law
and the terms of the related Mortgage Note and Mortgage regarding the Mortgage
Interest Rate adjustments. Upon the discovery by the Company or the receipt of
notice from the Purchaser that the Company has failed to adjust a Mortgage
Interest Rate in accordance with the terms of the related Mortgage Note, the
Company shall immediately deposit in the Custodial Account from its own funds
the amount of any interest loss or deferral caused the Purchaser thereby.
Section 4.22 CONFIDENTIALITY/PROTECTION OF CUSTOMER INFORMATION.
The Company shall keep confidential and shall not divulge to any party,
without the Purchaser's prior written consent, the price paid by the Purchaser
for the Mortgage Loans, except to the extent that it is reasonable and necessary
for the Company to do so in working with legal counsel, auditors, taxing
authorities or other governmental agencies. Each party agrees that it shall
comply with all applicable laws and regulations regarding the privacy or
security of Customer Information and shall maintain appropriate administrative,
technical and physical safeguards to protect the security, confidentiality and
integrity of Customer Information, including maintaining security measures
designed to meet the Interagency Guidelines Establishing Standards for
Safeguarding Customer Information, 66 Fed. Reg. 8616, and the rules promulgated
thereunder, if applicable. For purposes of this Section, "Customer Information"
means any personal information concerning a Mortgagor or any other Person who
grants security under any mortgage, deed of trust or other security instrument
or equivalent document that is disclosed by one party to this Agreement to the
other.
ARTICLE V
PAYMENTS TO PURCHASER
Section 5.01 REMITTANCES.
On each Remittance Date the Company shall remit by wire transfer of
immediately available funds to the Purchaser (a) all amounts deposited in the
Custodial Account as of the close of business on the Determination Date (net of
charges against or withdrawals from the Custodial Account pursuant to Section
4.05), plus (b) all amounts, if any, which the Company is obligated to
distribute pursuant to Section 5.03, minus (c) any amounts attributable to
Principal Prepayments received after the applicable Principal Prepayment Period
which amounts shall be remitted on the following Remittance Date, together with
any additional interest required to be deposited in the Custodial Account in
connection with such Principal Prepayment in accordance with Section 4.04(viii);
minus (d) any amounts attributable to Monthly Payments collected but due on a
Due Date or Dates subsequent to the first day of the month of the Remittance
Date, and minus (e) any amounts attributable to Buydown Funds being held in the
Custodial Account, which amounts shall be remitted on the Remittance Date next
succeeding the Due Period for such amounts.
With respect to any remittance received by the Purchaser after the date on
which such payment was due, the Company shall pay to the Purchaser interest on
any such late payment at an annual rate equal to the Prime Rate, adjusted as of
the date of each change, plus two percentage points, but in no event greater
than the maximum amount permitted by applicable law. Such interest shall be
distributed with such late remittance by wire transfer to the Purchaser and
shall cover the period commencing with the day following such Remittance Date
and ending with the Business Day on which such payment is made, both inclusive.
The payment by the Company of any such interest shall not be deemed an extension
of time for payment or a waiver of any Event of Default by the Company.
Section 5.02 STATEMENTS TO PURCHASER.
Not later than the Remittance Date, the Company shall furnish to the
Purchaser a monthly remittance advice in the standard form of electronic
Alltel(R) file, as to the period ending on the last day of the precedinG month.
Section 5.03 MONTHLY ADVANCES BY COMPANY.
On the Business Day immediately preceding each Remittance Date, the Company
shall deposit in the Custodial Account from its own funds or from amounts held
for future distribution an amount equal to all Monthly Payments (with interest
adjusted to the Mortgage Loan Remittance Rate) which were due on the Mortgage
Loans during the applicable Due Period and which were delinquent at the close of
business on the immediately preceding Determination Date or which were deferred
pursuant to Section 4.01. Any amounts held for future distribution and so used
shall be replaced by the Company by deposit in the Custodial Account on or
before any future Remittance Date if funds in the Custodial Account on such
Remittance Date shall be less than payments to the Purchaser required to be made
on such Remittance Date. The Company's obligation to make such Monthly Advances
as to any Mortgage Loan will continue through the last Monthly Payment due prior
to the payment in full of the Mortgage Loan, or through the earlier of: (i) the
last Remittance Date prior to the Remittance Date for the distribution of all
Liquidation Proceeds and other payments or recoveries (including Insurance
Proceeds and Condemnation Proceeds) with respect to the Mortgage Loan; and (ii)
the Remittance Date prior to the date the Mortgage Loan is converted to REO
Property, provided however, that if requested in connection with a
securitization, the Company shall be obligated to make such advances through the
Remittance Date prior to the date on which cash is received in connection with
the liquidation of REO Property; provided, however, that such obligation shall
cease if the Company determines, in its sole reasonable opinion, that advances
with respect to such Mortgage Loan are non-recoverable by the Company from
Liquidation Proceeds, Insurance Proceeds, Condemnation Proceeds, or otherwise
with respect to a particular Mortgage Loan. In the event that the Company
determines that any such advances are non-recoverable, the Company shall provide
the Purchaser with a certificate signed by two officers of the Company
evidencing such determination. For purposes of this paragraph, "Rating Agency"
shall mean ▇▇▇▇▇'▇ Investors Services, Inc., Standard & Poor's Ratings Group,
Fitch Investors Services, Inc., or any other nationally recognized statistical
credit rating agency.
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01 TRANSFERS OF MORTGAGED PROPERTY.
The Company shall use its best efforts to enforce any "due-on-sale"
provision contained in any Mortgage or Mortgage Note and to deny assumption by
the person to whom the Mortgaged Property has been or is about to be sold
whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains liable on the Mortgage and the Mortgage Note. When the
Mortgaged Property has been conveyed by the Mortgagor, the Company shall, to the
extent it has knowledge of such conveyance, exercise its rights to accelerate
the maturity of such Mortgage Loan under the "due-on-sale" clause applicable
thereto, provided, however, that the Company shall not exercise such rights if
prohibited by law from doing so or if the exercise of such rights would impair
or threaten to impair any recovery under the related PMI Policy, MIC or LGC.
If the Company reasonably believes it is unable under applicable law to
enforce such "due-on-sale" clause, the Company shall enter into (i) an
assumption and modification agreement with the person to whom such property has
been conveyed, pursuant to which such person becomes liable under the Mortgage
Note and the original Mortgagor remains liable thereon or (ii) in the event the
Company is unable under applicable law to require that the original Mortgagor
remain liable under the Mortgage Note and the Company has the prior consent of
the primary mortgage guaranty insurer, a substitution of liability agreement
with the purchaser of the Mortgaged Property pursuant to which the original
Mortgagor is released from liability and the purchaser of the Mortgaged Property
is substituted as Mortgagor and becomes liable under the Mortgage Note. If an
assumption fee is collected by the Company for entering into an assumption
agreement the fee will be retained by the Company as additional servicing
compensation. In connection with any such assumption, neither the Mortgage
Interest Rate borne by the related Mortgage Note, the term of the Mortgage Loan,
the outstanding principal amount of the Mortgage Loan nor any other materials
terms shall be changed without Purchaser's consent.
To the extent that any Mortgage Loan is assumable, the Company shall
inquire diligently into the credit worthiness of the proposed transferee, and
shall use the underwriting criteria for approving the credit of the proposed
transferee which are used with respect to underwriting mortgage loans of the
same type as the Mortgage Loans. If the credit worthiness of the proposed
transferee does not meet such underwriting criteria, the Company diligently
shall, to the extent permitted by the Mortgage or the Mortgage Note and by
applicable law, accelerate the maturity of the Mortgage Loan.
Section 6.02 SATISFACTION OF MORTGAGES AND RELEASE OF MORTGAGE FILES.
Upon the payment in full of any Mortgage Loan, the Company shall notify the
Purchaser in the Monthly Remittance Advice as provided in Section 5.02, and may
request the release of any Mortgage Loan Documents.
If the Company satisfies or releases a Mortgage without first having
obtained payment in full of the indebtedness secured by the Mortgage or should
the Company otherwise prejudice any rights the Purchaser may have under the
mortgage instruments, upon written demand of the Purchaser, the Company shall
repurchase the related Mortgage Loan at the Repurchase Price by deposit thereof
in the Custodial Account within 2 Business Days of receipt of such demand by the
Purchaser. The Company shall maintain the Fidelity Bond and Errors and Omissions
Insurance Policy as provided for in Section 4.12 insuring the Company against
any loss it may sustain with respect to any Mortgage Loan not satisfied in
accordance with the procedures set forth herein.
Section 6.03 SERVICING COMPENSATION.
As compensation for its services hereunder, the Company shall be entitled
to withdraw from the Custodial Account or to retain from interest payments on
the Mortgage Loans the amount of its Servicing Fee. The Servicing Fee shall be
payable monthly and shall be computed on the basis of the same unpaid scheduled
principal balance and for the period respecting which any related interest
payment on a Mortgage Loan is computed. The obligation of the Purchaser to pay
the Servicing Fee is limited to, and payable solely from, the interest portion
of such Monthly Payments. The Servicing Fee shall not be reduced by the amount
of any guaranty fee payable to FHA or VA.
Additional servicing compensation in the form of assumption fees, to the
extent provided in Section 6.01, and late payment charges shall be retained by
the Company to the extent not required to be deposited in the Custodial Account.
The Company shall be required to pay all expenses incurred by it in connection
with its servicing activities hereunder and shall not be entitled to
reimbursement thereof except as specifically provided for herein.
Section 6.04 ANNUAL STATEMENT AS TO COMPLIANCE.
The Company shall deliver to the Purchaser, on or before February 28, each
year beginning February 28, 2004, an Officer's Certificate, stating that (i) a
review of the activities of the Company during the preceding calendar year and
of performance under this Agreement or similar agreements has been made under
such officer's supervision, and (ii) to the best of such officer's knowledge,
based on such review, the Company has fulfilled all its obligations under this
Agreements 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
Company to cure such default.
Section 6.05 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
On or before February 28, of each year beginning February 28, 2004, the
Company, at its expense, shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants to
furnish a statement to each Purchaser to the effect that such firm has examined
certain documents and records relating to the servicing of the mortgage loans
similar in nature and that such firm is of the opinion that the provisions of
this or similar Agreements have been complied with, and that, on the basis of
such examination conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers, nothing has come to their attention
which would indicate that such servicing has not been conducted in compliance
therewith, except for (i) such exceptions as such firm shall believe to be
immaterial, and (ii) such other exceptions as shall be set forth in such
statement. By providing Purchaser a copy of a Uniform Single Attestation Program
Report from their independent public accountant's on an annual basis, Company
shall be considered to have fulfilled its obligations under this Section 6.05.
Section 6.06 RIGHT TO EXAMINE COMPANY RECORDS.
The Purchaser, or its designee, shall have the right to examine and audit
any and all of the books, records, or other information of the Company, whether
held by the Company or by another on its behalf, with respect to or concerning
this Agreement or the Mortgage Loans, during business hours or at such other
times as may be reasonable under applicable circumstances, upon reasonable
advance notice. The Purchaser shall pay its own travel expenses associated with
such examination.
ARTICLE VII
COMPANY TO COOPERATE
Section 7.01 PROVISION OF INFORMATION.
During the term of this Agreement, the Company shall furnish to the
Purchaser such periodic, special, or other reports or information, and copies or
originals of any documents contained in the Servicing File for each Mortgage
Loan provided for herein. All other special reports or information not provided
for herein as shall be necessary, reasonable, or appropriate with respect to the
Purchaser or any regulatory agency will be provided at the Purchaser's expense.
All such reports, documents or information shall be provided by and in
accordance with all reasonable instructions and directions which the Purchaser
may give.
The Company shall execute and deliver all such instruments and take all
such action as the Purchaser may reasonably request from time to time, in order
to effectuate the purposes and to carry out the terms of this Agreement.
Section 7.02 FINANCIAL STATEMENTS; SERVICING FACILITY.
In connection with marketing the Mortgage Loans, the Purchaser may make
available to a prospective Purchaser a Consolidated Statement of Operations of
the Company for the most recently completed two (2) fiscal years for which such
a statement is available, as well as a Consolidated Statement of Condition at
the end of the last two (2) fiscal years covered by such Consolidated Statement
of Operations. The Company also shall make available any comparable interim
statements to the extent any such statements have been prepared by or on behalf
of the Company (and are available upon request to members or stockholders of the
Company or to the public at large).
The Company also shall make available to Purchaser or prospective Purchaser
a knowledgeable financial or accounting officer for the purpose of answering
questions respecting recent developments affecting the Company or the financial
statements of the Company, and to permit any prospective Purchaser to inspect
the Company's servicing facilities for the purpose of satisfying such
prospective Purchaser that the Company has the ability to service the Mortgage
Loans as provided in this Agreement.
ARTICLE VIII
THE COMPANY
Section 8.01 INDEMNIFICATION; THIRD PARTY CLAIMS.
The Company shall indemnify the Purchaser and hold it harmless against any
and all claims, losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments, and any other costs, fees and
expenses that the Purchaser may sustain in any way related to the failure of the
Company to perform its duties and service the Mortgage Loans in strict
compliance with the terms of this Agreement. The Company immediately shall
notify the Purchaser if a claim is made by a third party with respect to this
Agreement or the Mortgage Loans, assume (with the prior written consent of the
Purchaser) the defense of any such claim and pay all expenses in connection
therewith, including counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against it or the Purchaser in respect
of such claim. The Company shall follow any written instructions received from
the Purchaser in connection with such claim. The Purchaser promptly shall
reimburse the Company for all amounts advanced by it pursuant to the preceding
sentence except when the claim is in any way related to the Company's
indemnification pursuant to Section 3.03, or the failure of the Company to
service and administer the Mortgage Loans in strict compliance with the terms of
this Agreement.
Section 8.02 MERGER OR CONSOLIDATION OF THE COMPANY.
The Company shall keep in full effect its existence, rights and franchises
as a corporation, and shall obtain and preserve its qualification to do business
as a foreign corporation in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and enforceability of this Agreement
or any of the Mortgage Loans and to perform its duties under this Agreement.
Any person into which the Company may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Company shall be a party, or any Person succeeding to the business of the
Company, shall be the successor of the Company hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding, provided, however, that
the successor or surviving Person shall be an institution which is a
HUD/VA-approved company in good standing. Furthermore, in the event the Company
transfers or otherwise disposes of all or substantially all of its assets to an
affiliate of the Company, such affiliate shall satisfy the condition above, and
shall also be fully liable to the Purchaser for all of the Company's obligations
and liabilities hereunder.
Section 8.03 LIMITATION ON LIABILITY OF COMPANY AND OTHERS.
Neither the Company nor any of the directors, officers, employees or agents
of the Company shall be under any liability to the Purchaser for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment, provided, however, that this
provision shall not protect the Company or any such person against any breach of
warranties or representations made herein, or failure to perform its obligations
in strict compliance with any standard of care set forth in this Agreement or
any other liability which would otherwise be imposed under this Agreement. The
Company and any director, officer, employee or agent of the Company may rely in
good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder. The Company
shall not be under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its duties to service the Mortgage Loans in
accordance with this Agreement and which in its opinion may involve it in any
expense or liability, provided, however, that the Company may, with the consent
of the Purchaser, undertake any such action which it may deem necessary or
desirable in respect to this Agreement and the rights and duties of the parties
hereto. In such event, the Company shall be entitled to reimbursement from the
Purchaser of the reasonable legal expenses and costs of such action.
Section 8.04 LIMITATION ON RESIGNATION AND ASSIGNMENT BY COMPANY.
The Purchaser has entered into this Agreement with the Company and
subsequent purchaser will purchase the Mortgage Loans in reliance upon the
independent status of the Company, and the representations as to the adequacy of
its servicing facilities, plant, personnel, records and procedures, its
integrity, reputation and financial standing, and the continuance thereof.
Therefore, the Company shall neither assign this Agreement or the servicing
hereunder or delegate its rights or duties hereunder or any portion hereof or
sell or otherwise dispose of all of its property or assets without the prior
written consent of the Purchaser, which consent shall not be unreasonably
withheld.
The Company shall not resign from the obligations and duties hereby imposed
on it except by mutual consent of the Company and the Purchaser or upon the
determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Company. Any such
determination permitting the resignation of the Company shall be evidenced by an
Opinion of Counsel to such effect delivered to the Purchaser which Opinion of
Counsel shall be in form and substance acceptable to the Purchaser. No such
resignation shall become effective until a successor shall have assumed the
Company's responsibilities and obligations hereunder in the manner provided in
Section 12.01.
Without in any way limiting the generality of this Section 8.04, in the
event that the Company either shall assign this Agreement or the servicing
responsibilities hereunder or 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 10.01, without any payment of any penalty or damages and
without any liability whatsoever to the Company or any third party.
ARTICLE IX
PASS-THROUGH TRANSFER
Section 9.01 REMOVAL OF MORTGAGE LOANS FROM INCLUSION UNDER THIS AGREEMENT
The Purchaser and the Company agree that with respect to some or all of the
Mortgage Loans, the Purchaser, at its sole option, shall effect up to four Whole
Loan Transfers, Agency Sales or Pass-Through Transfers, retaining the Company as
the Servicer thereof or subservicer if a master servicer is employed, or as
applicable the "seller/servicer." On the Reconstitution Date, the Mortgage Loans
transferred shall cease to be covered by this Agreement; provided, however,
that, in the event that any Mortgage Loan transferred pursuant to this Section 9
is rejected by the transferee, the Company shall continue to service such
rejected Mortgage Loan on behalf of the Purchaser in accordance with the terms
and provisions of this Agreement.
The Company shall cooperate with the Purchaser in connection with each Whole
Loan Transfer, Agency Sale or Pass-Through Transfer in accordance with this
Section 9. In connection therewith the Company shall:
(a) make all representations and warranties with respect to the Mortgage
Loans as of the Closing Date and with respect to the Company itself as
of the closing date of each Whole Loan Transfer, Agency Sale or
Pass-Through Transfer;
(b) negotiate in good faith and execute any seller/servicer agreements or
pooling and servicing agreements required by the shelf registrant to
effectuate the foregoing provided such agreements create no greater
obligation or cost on the part of the Company than otherwise set forth
in this Agreement;
(c) provide as applicable:
(i) any and all information and appropriate verification of
information which may be reasonably available to the Company,
whether through letters of its auditors and counsel or otherwise,
as the Purchaser shall request;
(ii) such additional representations, warranties, covenants, opinions
of counsel, letters from auditors, and certificates of public
officials or officers of the Company as are reasonably believed
necessary by the trustee, any Rating Agency or the Purchaser, as
the case may be, in connection with such Whole Loan Transfers,
Agency Sales or Pass-Through Transfers. The Purchaser shall pay
all third party costs associated with the preparation of such
information. The Company shall execute any seller/servicer
agreements required within a reasonable period of time after
receipt of such seller/servicer agreements which time shall be
sufficient for the Company and Company's counsel to review such
seller/servicer agreements. Under this Agreement, the Company
shall retain a servicing fee at a rate per annum equal to no less
than 0.250% per Mortgage Loan; and
(d) indemnify the Purchaser for any material misstatements contained in
the information provided pursuant to (c) above, provided that the
Purchaser shall also provide indemnification to the Company, its
successors or assigns, with respect to any material misstatements or
omissions contained in any information (other than the information
provided by the Company pursuant to (c) above) the Purchaser may
disclose in any securitization offering materials.
In the event the Purchaser has elected to have the Company hold record title to
the Mortgages, prior to the Reconstitution Date the Company shall prepare an
Assignment in blank or to the trustee or to the subsequent purchaser from the
Company acceptable to the trustee or subsequent purchaser for each Mortgage Loan
that is part of the Whole Loan Transfers, Agency Sale or Pass-Through Transfers.
The Purchaser shall pay all preparation and recording costs associated
therewith. The Company shall execute each Assignment, track such Assignments to
ensure they have been recorded and deliver them as required by the trustee or
subsequent purchaser upon the Company's receipt thereof. Additionally, the
Company shall prepare and execute, at the direction of the Purchaser, any note
endorsements in connection with any and all seller/servicer agreements.
Notwithstanding any provisions of the this Agreement to the contrary, all
Mortgage Loans sold or transferred to an Agency, shall be serviced in accordance
with the guidelines of the respective Agency. All Mortgage Loans not sold or
transferred pursuant to Whole Loan Transfers, Agency Sales or Pass-Through
Transfers shall remain subject to this Agreement and shall continue to be
serviced in accordance with the terms of this Agreement and with respect thereto
this Agreement shall remain in full force and effect.
ARTICLE X
DEFAULT
Section 10.01 EVENTS OF DEFAULT.
Each of the following shall constitute an Event of Default on the part of
the Company:
(i) any failure by the Company to remit to the Purchaser any payment
required to be made under the terms of this Agreement which continues
unremedied for a period of five days after the date upon which written
notice of such failure, requiring the same to be remedied, shall have
been given to the Company by the Purchaser; or
(ii) failure by the Company duly to observe or perform in any material
respect any other of the covenants or agreements on the part of the
Company set forth in this Agreement 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 Company by the Purchaser or by the Custodian; or
(iii) failure by the Company to maintain its license to do business in any
jurisdiction where the Mortgaged Property is located if such license
is required; or
(iv) a decree or order of a court or agency or supervisory authority having
jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, including
bankruptcy, marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs,
shall have been entered against the Company and such degree or order
shall have remained in force undischarged or unstayed for a period of
60 days; or
(v) the Company shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or
relating to the Company or of or relating to all or substantially all
of its property; or
(vi) the Company shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency, bankruptcy or reorganization statute, make an
assignment for the benefit of its creditors, voluntarily suspend
payment of its obligations or cease its normal business operations for
three Business Days; or
(vii) the Company ceases to meet the qualifications of an Agency servicer;
or
(viii) the Company attempts to assign its right to servicing compensation
hereunder or to assign this Agreement or the servicing
responsibilities hereunder or to delegate its duties hereunder or any
portion thereof in violation of Section 8.04.
In each and every such case, so long as an Event of Default shall not have
been remedied, in addition to whatever rights the Purchaser may have at law or
equity to damages, including injunctive relief and specific performance, the
Purchaser, by notice in writing to the Company, may terminate all the rights and
obligations of the Company under this Agreement and in and to the Mortgage Loans
and the proceeds thereof.
Upon receipt by the Company of such written notice, all authority and power
of the Company under this Agreement, whether with respect to the Mortgage Loans
or otherwise, shall pass to and be vested in the successor appointed pursuant to
Section 12.01. Upon written request from any Purchaser, the Company shall
prepare, execute and deliver to the successor entity designated by the Purchaser
any and all documents and other instruments, place in such successor's
possession all Mortgage Files, and do or cause to be done all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, including but not limited to the transfer and endorsement or
assignment of the Mortgage Loans and related documents, at the Company's sole
expense. The Company shall cooperate with the Purchaser and such successor in
effecting the termination of the Company's responsibilities and rights
hereunder, including without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited by
the Company to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans.
Section 10.02 WAIVER OF DEFAULTS.
By a written notice, the Purchaser may waive any default by the Company in
the performance of its obligations hereunder and its consequences. Upon any
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
ARTICLE XI
TERMINATION
Section 11.01 TERMINATION.
This Agreement shall terminate upon either: (i) the later of the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan or the disposition of any REO Property with respect to the last
Mortgage Loan and the remittance of all funds due hereunder; or (ii) mutual
consent of the Company and the Purchaser in writing.
Section 11.02 TERMINATION WITHOUT CAUSE.
The Purchaser may terminate, at its sole option, any rights the Company may
have hereunder, without cause as provided in this Section 11.02. Any such notice
of termination shall be in writing and delivered to the Company by registered
mail as provided in Section 12.05.
The Company shall be entitled to receive, as such liquidated damages, upon
the transfer of the servicing rights, an amount equal to: (i) 2.75% of the
aggregate outstanding principal amount of the Mortgage Loans as of the
termination date paid by the Purchaser to the Company with respect to all of the
Mortgage Loans for which a servicing fee rate of 0.250% is paid per annum, (ii)
3.25% of the aggregate outstanding principal amount of the Mortgage Loans as of
the termination date paid by the Purchaser to the Company with respect to all of
the Mortgage Loans for which a servicing fee rate of .375% is paid per annum,
and (iii) 3.75% of the aggregate outstanding principal amount of the Mortgage
Loans as of the termination date paid by the Purchaser to the Company with
respect to all of the Mortgage Loans for which a servicing fee rate of 0.44% or
more is paid per annum.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 SUCCESSOR TO COMPANY.
Prior to termination of the Company's responsibilities and duties under
this Agreement pursuant to Sections 8.04, 10.01, 11.01 (ii) or pursuant to
Section 11.02, the Purchaser shall, (i) succeed to and assume all of the
Company's responsibilities, rights, duties and obligations under this Agreement,
or (ii) appoint a successor having the characteristics set forth in Section 8.02
and which shall succeed to all rights and assume all of the responsibilities,
duties and liabilities of the Company under this Agreement prior to the
termination of Company's responsibilities, duties and liabilities under this
Agreement. In connection with such appointment and assumption, the Purchaser may
make such arrangements for the compensation of such successor out of payments on
Mortgage Loans as it and such successor shall agree. In the event that the
Company's duties, responsibilities and liabilities under this Agreement should
be terminated pursuant to the aforementioned sections, the Company shall
discharge such duties and responsibilities during the period from the date it
acquires knowledge of such termination until the effective date thereof with the
same degree of diligence and prudence which it is obligated to exercise under
this Agreement, and shall take no action whatsoever that might impair or
prejudice the rights or financial condition of its successor. The resignation or
removal of the Company pursuant to the aforementioned sections shall not become
effective until a successor shall be appointed pursuant to this Section 12.01
and shall in no event relieve the Company of the representations and warranties
made pursuant to Sections 3.01 and 3.02 and the remedies available to the
Purchaser under Section 3.03, it being understood and agreed that the provisions
of such Sections 3.01, 3.02, and 3.03 shall be applicable to the Company
notwithstanding any such sale, assignment, resignation or termination of the
Company, or the termination of this Agreement.
Any successor appointed as provided herein shall execute, acknowledge and
deliver to the Company and to the Purchaser an instrument accepting such
appointment, wherein the successor shall make the representations and warranties
set forth in Section 3.01, except for the portion of subsection (h) relating to
sale of the mortgage loans and all of subsections (j) and (l) thereof, whereupon
such successor shall become fully vested with all the rights, powers, duties,
responsibilities, obligations and liabilities of the Company, with like effect
as if originally named as a party to this Agreement. Any termination or
resignation of the Company or termination of this Agreement pursuant to Section
8.04, 10.01, 11.01 or 11.02 shall not affect any claims that any Purchaser may
have against the Company arising out of the Company's actions or failure to act
prior to any such termination or resignation.
The Company shall deliver promptly to the successor servicer the funds in
the Custodial Account and Escrow Account and all Mortgage Files and related
documents and statements held by it hereunder and the Company shall account for
all funds and shall execute and deliver such instruments and do such other
things as may reasonably be required to more fully and definitively vest in the
successor all such rights, powers, duties, responsibilities, obligations and
liabilities of the Company.
Upon a successor's acceptance of appointment as such, the Company shall
notify by mail the Purchaser of such appointment in accordance with the
procedures set forth in Section 12.05.
Section 12.02 AMENDMENT.
This Agreement may be amended from time to time by written agreement signed
by the Company and the Purchaser.
Section 12.03 GOVERNING LAW.
This Agreement shall be construed in accordance with the laws of the State
of New York and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.
Each of the Company and the Purchaser hereby knowingly, voluntarily and
intentionally waives any and all rights it may have to a trial by jury in
respect or any litigation based on, or arising out of, under, or in connection
with, this Agreement, or any other documents and instruments executed in
connection herewith, or any course of conduct, course of dealing, statements
(whether oral or written), or actions of the Company or the Purchaser. This
provision is a material inducement for the Purchaser to enter into this
Agreement
Section 12.04 DURATION OF AGREEMENT.
This Agreement shall continue in existence and effect until terminated as
herein provided. This Agreement shall continue notwithstanding transfers of the
Mortgage Loans by the Purchaser.
Section 12.05 NOTICES.
All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
registered mail, postage prepaid, addressed as follows:
(i) if to the Company with respect to servicing and investor reporting
issues:
▇▇▇▇▇ Fargo Home Mortgage, Inc.
▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, MAC X2401-042
Fax: 515/▇▇▇-▇▇▇▇
If to the Company with respect to all other issues:
▇▇▇▇▇ Fargo Home Mortgage, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, MAC X4801-097
Fax: 612/▇▇▇-▇▇▇▇
In each instance with a copy to:
▇▇▇▇▇ Fargo Home Mortgage, Inc.
▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel MAC X2401-06T
or such other address as may hereafter be furnished to the Purchaser
in writing by the Company;
(ii) if to Purchaser:
EMC Mortgage Corporation
Mac ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, President
Section 12.06 SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement.
Section 12.07 RELATIONSHIP OF PARTIES.
Nothing herein contained shall be deemed or construed to create a
partnership or joint venture between the parties hereto and the services of the
Company shall be rendered as an independent contractor and not as agent for the
Purchaser.
Section 12.08 EXECUTION; SUCCESSORS AND ASSIGNS.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement. Subject to Section 8.04, this Agreement
shall inure to the benefit of and be binding upon the Company and the Purchaser
and their respective successors and assigns.
Section 12.09 RECORDATION OF ASSIGNMENTS OF MORTGAGE.
To the extent permitted by applicable law, each of the Assignments of
Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or other comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected at the Company's expense in the event recordation is either necessary
under applicable law or requested by the Purchaser at its sole option. The
company shall only be responsible for the costs of recording the initial
Assignments of Mortgage. In no event shall the Company be responsible for the
cost of recording Assignments of Mortgage in connection with a subsequent sale
or transfer of the Mortgage Loans by the Purchaser.
Section 12.10 ASSIGNMENT BY PURCHASER.
The Purchaser shall have the right, without the consent of the Company but
subject to the limit set forth in Section 2.02 hereof, to assign, in whole or in
part, its interest under this Agreement with respect to some or all of the
Mortgage Loans, and designate any person to exercise any rights of the Purchaser
hereunder, by executing an Assignment and Assumption Agreement and the assignee
or designee shall accede to the rights and obligations hereunder of the
Purchaser with respect to such Mortgage Loans. All references to the Purchaser
in this Agreement shall be deemed to include its assignee or designee.
Section 12.11 SOLICITATION OF MORTGAGOR.
The Purchaser, its affiliates, successors or assigns shall not, without the
prior written consent of the Company, take any action to solicit or make direct
contact with the Mortgagor under any Mortgage Loan except to the extent required
by the Company's breach of this Agreement or as required under applicable law or
regulatory authority. Notwithstanding any provision of this Agreement to the
contrary, in the event the Purchaser, its affiliates, successors or assigns
fails to obtain such written consent, the Company shall be entitled, in its sole
discretion, to terminate its obligations and duties under this Agreement. Upon
transfer of the servicing rights and obligations under this Agreement to the
Purchaser or Purchaser's designee, the Company shall be entitled to receive as
liquidated damages, an amount equal to: (i) 2.75% of the aggregate outstanding
principal amount of the Mortgage Loans as of the termination date paid by the
Purchaser to the Company with respect to all of the Mortgage Loans for which a
servicing fee rate of .250% is paid per annum, (ii) 3.25% of the aggregate
outstanding principal amount of the Mortgage Loans as of the termination date
paid by the Purchaser to the Company with respect to all of the Mortgage Loans
for which a servicing fee rate of .375% is paid per annum, and (iii) 3.75% of
the aggregate outstanding principal amount of the Mortgage Loans as of the
termination date paid by the Purchaser to the Company with respect to all of the
Mortgage Loans for which a servicing fee rate of 0.44% or more is paid per
annum.
The Company agrees that, after the Closing Date, it will not take any
action to solicit the refinancing of any Mortgage Loan. It is understood and
agreed that promotions undertaken by the Company or any affiliate of the Company
which are directed to the general public at large, including, without
limitation, mass mailings based upon commercially acquired mailing lists,
newspaper, radio, television advertisements or from servicing the refinancing
needs of a Mortgagor who, without solicitation, contacts Company in connection
with the refinance of such Mortgage or Mortgage Loan, shall not constitute
solicitation under this Section. Notwithstanding anything to the contrary, this
Section shall not prohibit the Company from soliciting any Mortgagor to provide
other services including but not limited to credit cards, insurance investments
and banking related services.
[Intentionally Blank - Next Page Signature Page]
IN WITNESS WHEREOF, the Company and the Purchaser have caused their names
to be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.
EMC MORTGAGE CORPORATION ▇▇▇▇▇ FARGO HOME MORTGAGE, INC.
PURCHASER COMPANY
By: By:
--------------------------- -----------------------------------
Name: Name:
------------------------- ---------------------------------
Title: Title:
------------------------ --------------------------------
STATE OF )
) ss:
COUNTY OF ___________ )
On the _____ day of _______________, 20___ before me, a Notary Public in
and for said State, personally appeared ______________________________, known to
me to be _________________________, of ▇▇▇▇▇ Fargo Home Mortgage, Inc., the
corporation that executed the within instrument and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal the
day and year in this certificate first above written.
---------------------------------------
Notary Public
My Commission expires__________________
STATE OF )
) ss:
COUNTY OF ___________ )
On the _____ day of _______________, 20___ before me, a Notary Public in
and for said State, personally appeared _____________________________________,
known to me to be the ______________________________ of
______________________________, the corporation that executed the within
instrument and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal the
day and year in this certificate first above written.
---------------------------------------
Notary Public
My Commission expires__________________
EXHIBIT A
MORTGAGE LOAN SCHEDULE
EXHIBIT B
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include each of
the following items, which shall be available for inspection by the Purchaser
and any prospective Purchaser, and which shall be retained by the Company in the
Servicing File or delivered to the Custodian pursuant to Sections 2.01 and 2.03
of the Seller's Warranties and the Servicing Agreement to which this Exhibit is
attached (the "Agreement"):
1. The original Mortgage Note bearing all intervening endorsements,
endorsed "Pay to the order of without recourse" and signed in the name
of the Company by an authorized officer (in the event that the
Mortgage Loan was acquired by the Company in a merger, the signature
must be in the following form: "[Company], successor by merger to
[name of predecessor]"; and in the event that the Mortgage Loan was
acquired or originated by the Company while doing business under
another name, the signature must be in the following form: "[Company],
formerly know as [previous name]").
2. The original of any guarantee executed in connection with the Mortgage
Note (if any).
3. The recorded original related Mortgage pertaining to such Mortgage
Loan, together with any addenda and riders, or a copy certified by
Seller to be a true and correct copy of the original recorded
document, or if the related Mortgage is in the process of being
recorded, a photocopy of the related Mortgage, certified by the
Company or an officer of the respective prior owner of such Mortgage
Loan or by the applicable title insurance company,
closing/settlement/escrow agent or company or closing attorney to be a
true and correct copy of the related Mortgage transmitted for
recordation. Provided, however, if the Purchaser requires a clerk
certified copy of the original recorded Mortgage, the Company shall
request such from the appropriate recording office and furnish it to
the Purchaser as soon a practicable and no event later than 180 days
of Purchaser's request;
4. the originals or certified true copies of any document sent for
recordation of all assumption, modification, consolidation or
extension agreements, with evidence of recording thereon.
5. The original Assignment of Mortgage for each Mortgage Loan, in form
and substance acceptable for recording (except for the insertion of
the name of the assignee and recording information). The Assignment of
Mortgage must be duly recorded only if recordation is either necessary
under applicable law or commonly required by private institutional
mortgage investors in the area where the Mortgaged Property is located
or on direction of the Purchaser. If the Assignment of Mortgage is to
be recorded, the Mortgage shall be assigned to the Purchaser. If the
Assignment of Mortgage is not to be recorded, the Assignment of
Mortgage shall be delivered in blank. If the Mortgage Loan was
acquired by the Company in a merger, the Assignment of Mortgage must
be made by "[Company], successor by merger to [name of predecessor]."
If the Mortgage Loan was acquired or originated by the Company while
doing business under another name, the Assignment of Mortgage must be
by "[Company], formerly know as [previous name]." Subject to the
foregoing and where permitted under the applicable laws of the
jurisdiction wherein the Mortgaged property is located, such
Assignments of Mortgage may be made by blanket assignments for
Mortgage Loans secured by the Mortgaged Properties located in the same
county.
6. The recorded original, or a copy certified by the Company to be a true
and correct copy of the original recorded, intervening Assignment of
the Mortgage as is necessary to show a complete chain of title from
the respective loan originator to the respective prior owner of such
Mortgage Loan or, if any such original is unavailable because it is in
the process of being recorded, a photocopy of such intervening
Assignment certified by the Company or an officer of the prior owner
of such Mortgage Loan to be a true and correct copy of such
intervening Assignment submitted for recordation. Provided, however,
if the Purchaser requires a clerk certified copy of the original
recorded intervening Assignment, the Company shall request such from
the appropriate recording office and furnish it to the Purchaser as
soon a practicable and no event later than 180 days of Purchaser's
request;
7. The MIC or LGC as applicable, where required pursuant to the
Agreement.
8. The original mortgagee policy of title insurance or evidence of title.
9. Any security agreement, chattel mortgage or equivalent executed in
connection with the Mortgage.
With respect to each Mortgage Loan, the Mortgage File shall include each of the
following items to the extent in the possession of the Company or in the
possession of the Company's agent(s):
10. The original hazard insurance policy and, if required by law, flood
insurance policy, in accordance with Section 4.10 of the Agreement.
11. Residential loan application.
12. Mortgage Loan closing statement.
13. Verification of employment and income, unless originated under the
Company's Limited Documentation program, FNMA Timesaver Plus.
14. Verification of acceptable evidence of source and amount of down
payment.
15. Credit report on the Mortgagor.
16. Residential appraisal report.
17. Photograph of the Mortgaged Property.
18. Survey of the Mortgage property, if required by the title company or
applicable law.
19. Copy of each instrument necessary to complete identification of any
exception set forth in the exception schedule in the title policy,
i.e. map or plat, restrictions, easements, sewer agreements, home
association declarations, etc.
20. All required disclosure statements.
21. If available, termite report, structural engineer's report, water
potability and septic certification.
22. Sales contract, if applicable.
23. Evidence of payment of taxes and insurance premiums, insurance claim
files, correspondence, current and historical computerized data files,
and all other processing, underwriting and closing papers and records
which are customarily contained in a mortgage loan file and which are
required to document the Mortgage Loan or to service the Mortgage
Loan.
24. Amortization schedule, if available.
25. Payment history for any Mortgage Loan that has been closed for more
than 90 days.
26. Original power of attorney, if applicable.
In the event an Officer's Certificate of the Company is delivered to the
Custodian because of a delay caused by the public recording office in returning
any recorded document, the Company shall deliver to the Custodian, within 240
days of the Closing Date, an Officer's Certificate which shall (i) identify the
recorded document, (ii) state that the recorded document has not been delivered
to the Custodian due solely to a delay caused by the public recording office,
(iii) state the amount of time generally required by the applicable recording
office to record and return a document submitted for recordation, and (iv)
specify the date the applicable recorded document will be delivered to the
Custodian. The Company shall be required to deliver to the Custodian the
applicable recorded document by the date specified in (iv) above. An extension
of the date specified in (iv) above may be requested from the Purchaser, which
consent shall not be unreasonably withheld.
Notwithstanding paragraphs 1 and 6 above, the Purchaser acknowledges that
the Company may deliver (i) a Mortgage Note for which the chain of endorsements
is not identical to that of the intervening Assignments with respect to such
Mortgage Note, which shall not affect the enforceability of such Mortgage Note,
and/or (ii) intervening Assignments which are not identical to the chain of
endorsements with respect to such Mortgage Note, which shall not affect the
validity of such intervening Assignments; provided, however, that such
acknowledgment shall in no way operate to negate the Purchaser's remedies for
the Company's breach of the representations and warranties under this Agreement.
EXHIBIT C
CUSTODIAL AGREEMENT
EXHIBIT D
ASSIGNMENT AND ASSUMPTION
____________, 20__
ASSIGNMENT AND ASSUMPTION, dated ___________________, 20____ between
_________________, a _________________ corporation having an office at
_________________ ("Assignor") and _________________, having an office at
_________________ ("Assignee"):
For and in consideration of the sum of one dollar ($1.00) and other
valuable consideration the receipt and sufficiency of which are hereby
acknowledge, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
1. The Assignor hereby grants, transfers and assigns to Assignee all of the
right, title and interest of Assignor, as Purchaser, in, to and under that
certain Seller's Warranties and Servicing Agreement, (the "Seller's Warranties
and Servicing Agreement"), dated as of _________________, by and between
_________________ (the "Purchaser"), and _________________ (the "Company"), and
the Mortgage Loans delivered thereunder by the Company to the Assignor, and that
certain Custodial Agreement, (the "Custodial Agreement"), dated as of
_________________, by and among the Company, the Purchaser and _________________
(the "Custodian").
2. The Assignor warrants and represents to, and covenants with, the
Assignee that:
a. The Assignor is the lawful owner of the Mortgage Loans with the full
right to transfer the Mortgage Loans free from any and all claims and
encumbrances whatsoever;
b. The Assignor has not received notice of, and has no knowledge of, any
offsets, counterclaims or other defenses available to the Company with respect
to the Seller's Warranties and Servicing Agreement or the Mortgage Loans;
c. The Assignor has not waived or agreed to any waiver under, or agreed to
any amendment or other modification of, the Seller's Warranties and Servicing
Agreement, the Custodial Agreement or the Mortgage Loans, including without
limitation the transfer of the servicing obligations under the Seller's
Warranties and Servicing Agreement. The Assignor has no knowledge of, and has
not received notice of, any waivers under or amendments or other modifications
of, or assignments of rights or obligations under, the Seller's Warranties and
Servicing Agreement or the Mortgage Loans; and
d. Neither the Assignor nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any
interest in the Mortgage Loans or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Mortgage Loans, any interest in the Mortgage Loans or any other similar security
from, or otherwise approached or negotiated with respect to the Mortgage Loans,
any interest in the Mortgage Loans or any other similar security with, any
person in any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action which would
constitute a distribution of the Mortgage Loans under the Securities Act of 1933
(the "33 Act") or which would render the disposition of the Mortgage Loans a
violation of Section 5 of the 33 Act or require registration pursuant thereto.
3. That Assignee warrants and represent to, and covenants with, the
Assignor and the Company pursuant to Section 12.10 of the Seller's Warranties
and Servicing Agreement that:
a. The Assignee agrees to be bound, as Purchaser, by all of the terms,
covenants and conditions of the Seller's Warranties and Servicing Agreement, the
Mortgage Loans and the Custodial Agreement, and from and after the date hereof,
the Assignee assumes for the benefit of each of the Company and the Assignor all
of the Assignor's obligations as purchaser thereunder;
b. The Assignee understands that the Mortgage Loans have not been
registered under the 33 Act or the securities laws of any state;
c. The purchase price being paid by the Assignee for the Mortgage Loans are
in excess of $250,000.00 and will be paid by cash remittance of the full
purchase price within 60 days of the sale;
d. The Assignee is acquiring the Mortgage Loans for investment for its own
account only and not for any other person. In this connection, neither the
Assignee nor any person authorized to act therefor has offered to Mortgage Loans
by means of any general advertising or general solicitation within the meaning
of Rule 502(c) of US Securities and Exchange Commission Regulation D,
promulgated under the 1933 Act;
e. The Assignee considers itself a substantial sophisticated institutional
investor having such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of investment in the
Mortgage Loans;
f. The Assignee has been furnished with all information regarding the
Mortgage Loans that it has requested from the Assignor or the Company;
g. Neither the Assignee nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any
interest in the Mortgage Loans or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Mortgage Loans, any interest in the Mortgage Loans or any other similar security
from, or otherwise approached or negotiated with respect to the Mortgage Loans,
any interest in the Mortgage Loans or any other similar security with, any
person in any manner which would constitute a distribution of the Mortgage Loans
under the 33 Act or which would render the disposition of the Mortgage Loans a
violation of Section 5 of the 33 Act or require registration pursuant thereto,
nor will it act, nor has it authorized or will it authorize any person to act,
in such manner with respect to the Mortgage Loans; and
h. Either (1) the Assignee is not an employee benefit plan ("Plan") within
the meaning of section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") or a plan (also "Plan") within the meaning of section
4975(e)(1) of the Internal Revenue Code of 1986 ("Code"), and the Assignee is
not directly or indirectly purchasing the Mortgage Loans on behalf of,
investment manager of, as named fiduciary of, as Trustee of, or with assets of,
a Plan; or (2) the Assignee's purchase of the Mortgage Loans will not result in
a prohibited transaction under section 406 of ERISA or section 4975 of the Code.
i. The Assignee's address for purposes of all notices and correspondence
related to the Mortgage Loans and the Seller's Warranties and Servicing
Agreements is:
------------------------------
------------------------------
------------------------------
Attention: _________________
The Assignee's wire transfer instructions for purposes of all remittances
and payments related to the Mortgage Loans and the Seller's Warranties and
Servicing Agreement is:
------------------------------
------------------------------
------------------------------
Attention: ___________________
[Signatures Follow]
IN WITNESS WHEREOF, the parties have caused this Assignment and Assumption
to be executed by their duly authorized officers as of the date first above
written.
------------------------- --------------------------------------
Assignor Assignee
By: By:
--------------------- -----------------------------------
Name: Name:
-------------------- ---------------------------------
Its: Its:
--------------------- ----------------------------------
Tax Payer Identification No.: Tax Payer Identification No.:
-------------------------------- --------------------------------------
MORTGAGE LOAN PURCHASE AGREEMENT
This is a Purchase Agreement (the "Agreement"), dated as of July 1, 2003 by
and between EMC Mortgage Corporation, having an office at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "Purchaser") and ▇▇▇▇▇ Fargo Home
Mortgage, Inc., having an ▇▇▇▇▇▇ ▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(the "Seller").
W I T N E S S E T H
WHEREAS, the Seller agrees to sell, and the Purchaser agrees to purchase,
certain mortgage loans (the "Mortgage Loans") on a servicing retained basis as
described herein:
WHEREAS, the Mortgage Loans shall be delivered as whole loans;
WHEREAS, the parties intend hereby to set forth the terms and conditions
upon which the proposed transactions will be effected.
NOW THEREFORE, in consideration of the promises and the mutual agreements
set forth herein, the parties hereto agree as follows:
SECTION 1. All capitalized terms not otherwise defined herein have the
respective meanings set forth in the Seller's Warranties and Servicing
Agreement, dated as of the date herewith (the "Seller's Warranties and Servicing
Agreement"). The following terms are defined as follows (except as otherwise
agreed by the parties):
Cut-off Date: July 1, 2003
Closing Date: July 10, 2003
First Remittance Date: August 18, 2003
Servicing Fee Rate: 0.250%
SECTION 2. AGREEMENT TO PURCHASE. The Seller agrees to sell, and the
Purchaser agrees to purchase, Mortgage Loans having an aggregate principal
balance on the Cut-off Date of $36,136,534.22, or in such other amount as agreed
by the Purchaser and the Seller as evidenced by the scheduled principal balance
of the Mortgage Loans accepted by the Purchaser on the Closing Date. The
Mortgage Loans will be delivered pursuant to a Seller's Warranties and Servicing
Agreement, between the Purchaser and the Seller.
SECTION 3. MORTGAGE SCHEDULES. The Seller has provided the Purchaser with
certain information constituting a listing of the Mortgage Loans to be purchased
under this Agreement (the "Mortgage Loan Schedule") substantially in the form
attached hereto as Exhibit 1. The Mortgage Loan Schedule shall conform to the
definition of "Mortgage Loan Schedule" under the Seller's Warranties and
Servicing Agreement.
SECTION 4. PURCHASE PRICE. The purchase price for the Mortgage Loans (the
"Purchase Price") shall be 100.156250%, multiplied by the aggregate principal
balance, as of the Cut-off Date, of the Mortgage Loans listed on the related
Mortgage Loan Schedule, after application of scheduled payments of principal due
on or before the Cut-off Date whether or not collected., plus accrued interest
on each Mortgage, at its respective Mortgage Interest Rate from the Cut-off Date
to and including, the day prior to the Closing Date.
The Purchaser shall be entitled to (1) all scheduled principal due after
the Cut-off Date, (2) all other recoveries of principal collected after the
Cut-off Date (provided, however, that all scheduled payments of principal due on
or before the Cut-off Date and collected by the Seller after the Cut-off Date
shall belong to the Seller), and (3) all payments of interest on the Mortgage
Loans at the Mortgage Loan Remittance Rate (minus that portion of any such
payment which is allocable to the period prior to the Cut-off Date). The
principal balance of each Mortgage Loan as of the Cut-off Date is determined
after application of payments of principal due on or before the Cut-off Date
whether or not collected. Therefore, payments of scheduled principal and
interest prepaid for a due date beyond the Cut-off Date shall not be applied to
the principal balance as of the Cut-off Date. Such prepaid amounts (minus
interest at the Servicing Fee Rate) shall be the property of the Purchaser. The
Seller shall deposit any such prepaid amounts into the Custodial Account, which
account is established for the benefit of the Purchaser for subsequent
remittance by the Seller to the Purchaser.
SECTION 5. EXAMINATION OF MORTGAGE FILES. Prior to the Closing Date, the
Seller shall (a) deliver to the Purchaser in escrow, for examination, the
Mortgage File for each Mortgage Loan, including a copy of the Assignment of
Mortgage, pertaining to each Mortgage Loan, or (b) make the Mortgage Files
available to the Purchaser for examination at the Seller's offices or such other
location as shall otherwise be agreed upon by the Purchaser and the Seller. Such
examination may be made by the Purchaser, or by any prospective purchaser of the
Mortgage Loans from the Purchaser, at any time before or after the Closing Date
upon prior reasonable notice to the Seller. The fact that the Purchaser or any
prospective purchaser of the Mortgage Loans has conducted or has failed to
conduct any partial or complete examination of the Mortgage Files shall not
affect the Purchaser's (or any of its successor's) rights to demand repurchase,
substitution or other relief as provided under the related Seller's Warranties
and Servicing Agreement.
SECTION 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SELLER. The Seller
agrees and acknowledges that it shall, as a condition to the consummation of the
transactions contemplated hereby, make the representations and warranties
specified in Section 3.01 and 3.02 of the Seller's Warranties and Servicing
Agreement, as of the Closing Date. The meaning of the term "Agreement" as used
in Sections 3.01 and 3.02 of the Seller's Warranties and Servicing Agreement
shall include this Agreement. The Seller, without conceding that the Mortgage
Loans are securities, hereby makes the following additional representations,
warranties and agreements which shall be deemed to have been made as of the
Closing Date:
a) neither the Seller nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of any Mortgage Loans, any
interest in any Mortgage Loans or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other
disposition of any Mortgage Loans, any interest in any Mortgage Loans or
any other similar security from, or otherwise approached or negotiated with
respect to any Mortgage Loans, any interest in any Mortgage Loans or any
other similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or
taken any other action which would constitute a distribution of the
Mortgage Loans under the Securities Act of 1933 (the "1933 Act") or which
would render the disposition of any Mortgage Loans a violation of Section 5
of the 1933 Act or require registration pursuant thereto, nor will it act,
nor has it authorized or will it authorize any person to act, in such
manner with respect to the Mortgage Loans; and
b) the Seller has not dealt with any broker or agent or anyone else who
might be entitled to a fee or commission in connection with this
transaction other than the Purchaser.
SECTION 7. REPRESENTATION, WARRANTIES AND AGREEMENT OF PURCHASER. The
Purchaser, without conceding that the Mortgage Loans are securities, hereby
makes the following representations, warranties and agreements, which shall have
been deemed to have been made as of the Closing Date.
a) the Purchaser understands that the Mortgage Loans have not been
registered under the 1933 Act or the securities laws of any state;
b) the Purchaser is acquiring the Mortgage Loans for its own account only
and not for any other person;
c) the Purchaser considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks
of investment in the Mortgage Loans;
d) the Purchaser has been furnished with all information regarding the
Mortgage Loans which it has requested from the Seller or the Company; and
e) neither the Purchaser nor anyone acting on its behalf offered,
transferred, pledged, sold or otherwise disposed of any Mortgage Loan, any
interest in any Mortgage Loan or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other
disposition of any Mortgage Loan, any interest in any Mortgage Loan or any
other similar security from, or otherwise approached or negotiated with
respect to any Mortgage Loan, any interest in any Mortgage Loan or any
other similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or
taken any other action which would constitute a distribution of the
Mortgage Loans under the 1933 Act or which would render the disposition of
any Mortgage Loan a violation of Section 5 of the 1933 Act or require
registration pursuant thereto, nor will it act, nor has it authorized or
will it authorize any person to act, in such manner with respect to the
Mortgage Loans.
SECTION 8. CLOSING. The closing for the purchase and sale of the Mortgage
Loans, shall take place on the Closing Date. At the Purchaser's option, the
Closing shall be either: by telephone, confirmed by letter or wire as the
parties shall agree; or conducted in person, at such place as the parties shall
agree.
The closing shall be subject to each of the following conditions:
a) all of the representations and warranties of the Seller under this
Agreement and under each Seller's Warranties and Servicing Agreement shall
be true and correct as of the Closing Date and no event shall have occurred
which, with notice or the passage of time, would constitute a default under
this Agreement or an Event of Default under the related Seller's Warranties
and Servicing Agreement;
b) the Purchaser shall have received, or the Purchaser's attorneys shall
have received in escrow, all Closing Documents as specified in Section 9 of
this Agreement, in such forms as are agreed upon and acceptable to the
Purchaser, duly executed by all signatories other than the Purchaser as
required pursuant to the respective terms thereof;
c) the Seller shall have delivered and released to the Custodian under the
Seller's Warranties and Servicing Agreement all documents required pursuant
to the related Custodial Agreement, and
d) all other terms and conditions of this Agreement shall have been
complied with.
Subject to the foregoing conditions, the Purchaser shall pay to the Seller
on the Closing Date the Purchase Price, plus accrued interest pursuant to
Section 4 of this Agreement, by wire transfer of immediately available funds to
the account designated by the Seller.
SECTION 9. CLOSING DOCUMENTS. With respect to the Mortgage Loans, the
Closing Documents shall consist of fully executed originals of the following
documents:
1. the Seller's Warranties and Servicing Agreement, dated as of the
Cut-off Date, in two counterparts;
2. this Agreement in two counterparts;
3. a copy of the Custodial Agreement, dated as of November 30, 1999 by
and between EMC Mortgage Corporation as Owner, and ▇▇▇▇▇ Fargo Bank
Minnesota, N.A. as Custodian, attached to the Seller's Warranties and
Servicing Agreement ;
4. the Mortgage Loan Schedule, one copy to be attached to each
counterpart of the Seller's Warranties and Servicing Agreement;
5. a Receipt and Certification, as required under the Custodial
Agreement;
6. an Opinion of Counsel of the Seller, in the form of Exhibit 2 hereto;
SECTION 10. COSTS. The Purchaser shall pay any commissions due its
salesmen, the legal fees and expenses of its attorneys and the costs and
expenses associated with the Custodian. The Seller shall be responsible for
reasonable costs and expenses associated with any preparation of the assignments
of mortgage. All other costs and expenses incurred in connection with the
transfer and delivery of the Mortgage Loans, including fees for title policy
endorsements and continuations and the Seller's attorney fees, shall be paid by
the Seller.
SECTION 11. SERVICING The Mortgage Loans shall be serviced by the Seller in
accordance with the terms of the applicable Seller's Warranties and Servicing
Agreement. The Seller shall be entitled to servicing fees calculated as provided
therein, at the Servicing Fee Rate shown on the first page of this Agreement
unless otherwise agreed by the parties.
SECTION 12. FINANCIAL STATEMENTS. The Seller understands that in connection
with the Purchaser's marketing of the Mortgage Loans, the Purchaser shall make
available to prospective purchasers a Consolidated Statement of Operations of
the Seller for the most recently completed two fiscal years respecting 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 Purchaser shall also make available any comparable interim
statements to the extent any such statements have been prepared by the seller in
a format intended or otherwise suitable for the public at large. The Seller, if
it has not already done so, agrees to furnish promptly to the Purchaser copies
of the statements specified above. The Seller shall also make available
information on its servicing performance with respect to loans in its own
portfolio and loans serviced for others (if any), including loss and delinquency
ratios.
The Seller also agrees to allow access to a knowledgeable (as shall be
determined by the Seller) financial or accounting officer for the purpose of
answering questions asked by any prospective purchaser regarding recent
developments affecting the Seller or the financial statements of the Seller.
SECTION 13. MANDATORY DELIVERY. The sale and delivery on the Closing Date
of the Mortgage Loans described on the Mortgage Loan Schedule is mandatory, it
being specifically understood and agreed that each Mortgage Loan is unique and
identifiable on the date hereof and that an award of money damages would be
insufficient to compensate the Purchaser for the losses and damages incurred by
the Purchaser (including damages to prospective purchasers of the Mortgage
Loans) in the event of the Seller's failure to deliver the Mortgage Loans on or
before the Closing Date. All rights and remedies of the Purchaser under this
Agreement are distinct from, and cumulative with, any other rights or remedies
under this Agreement or afforded by law or equity and all such rights and
remedies may be exercised concurrently, independently or successively.
SECTION 14. NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed, by
registered or certified mail, return receipt requested, or, if by other means,
when received by the other party at the address shown on the first page hereof,
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice of communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
SECTION 15. SEVERABILITY CLAUSE. Any part, provision, representation or
warranty of this Agreement which is prohibited or which is held to be void or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any part,
provision, representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall
be ineffective, as to such jurisdiction, to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law which prohibits or renders void or unenforceable any
provision hereof. If the invalidity of any part, provision, representation or
warranty of this Agreement shall deprive any party of the economic benefit
intended to be conferred by this Agreement, the parties shall negotiate, in
good-faith, to develop a structure the economic effect of which is as close as
possible to the economic effect of this Agreement without regard to such
invalidity.
SECTION 16. COUNTERPARTS. This Agreement may be executed simultaneously in
any number of counterparts. Each counterpart shall be deemed to be an original,
and all such counterparts shall constitute one and the same instrument.
SECTION 17. PLACE OF DELIVERY AND GOVERNING LAW. This Agreement shall be
construed in accordance with the laws of the State of New York and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with the laws of the State of New York, except to the extent
preempted by Federal Law.
Each of the Seller and the Purchaser hereby knowingly, voluntarily and
intentionally waives any and all rights it may have to a trial by jury in
respect of any litigation based on, or arising out of, under, or in connection
with, this Agreement, or any other documents and instruments executed in
connection herewith, or any course of conduct, course of dealing, statements
(whether oral or written), or actions of the Seller or the Purchaser. This
provision is a material inducement for the Purchaser to enter into this
Agreement.
SECTION 18. FURTHER AGREEMENTS. The Purchaser and the Seller each agree to
execute and deliver to the other such additional documents, instruments or
agreements as may be necessary or appropriate to effectuate the purposes of this
Agreement.
Without limiting the generality of the foregoing, the Seller shall
reasonably cooperate with the Purchaser in connection with the initial resales
of the Mortgage Loans by the Purchaser. In that connection, the Seller shall
provide to the Purchaser: (i) any and all information and appropriate
verification of information, whether through letters of its auditors and counsel
or otherwise, as the Purchaser shall reasonably request, and (ii) such
additional representations, warranties, covenants, opinions of counsel, letters
from auditors and certificates of public officials or officers of the Seller as
are reasonably believed necessary by the Purchaser in connection with such
resales. The requirement of the Seller pursuant to (ii) above shall terminate on
the Closing Date. Prior to incurring any out-of-pocket expenses pursuant to this
paragraph, the Seller shall notify the Purchaser in writing of the estimated
amount of such expense. The Purchaser shall reimburse the Seller for any such
expense following its receipt of appropriate details thereof.
SECTION 19. INTENTION OF THE PARTIES. It is the intention of the parties
that the Purchaser is purchasing, and the Seller is selling, an undivided 100%
ownership interest in the Mortgage Loans and not a debt instrument of the Seller
or another security. Accordingly, the parties hereto each intend to treat the
transaction for Federal income tax purposes as a sale by the Seller, and a
purchase by the Purchaser, of the Mortgage Loans. The Purchaser shall have the
right to review the Mortgage Loans and the related Mortgage Loan Files to
determine the characteristics of the Mortgage Loans which shall affect the
Federal income tax consequences of owning the Mortgage Loans and the Seller
shall cooperate with all reasonable requests made by the Purchaser in the course
of such review.
SECTION 20. SUCCESSORS AND ASSIGNS; ASSIGNMENT OF PURCHASE AGREEMENT. This
Agreement shall bind and inure to the benefit and be enforceable by the Seller
and the Purchaser and the respective successors and assigns of the Seller and
the Purchaser. This Agreement shall not be assigned, pledged or hypothecated by
the Seller to a third party without the consent of the Purchaser.
SECTION 21. WAIVERS; OTHER AGREEMENTS. No term or provision of this
Agreement may be waived or modified unless such waiver or modification is in
writing and signed by the party against whom such waiver or modification is
sought to be enforced.
SECTION 22. EXHIBITS. The exhibits to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this Agreement.
SECTION 23. GENERAL INTERPRETIVE PRINCIPLES. For purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
a) the terms defined in this Agreement have the meanings assigned to them
in this Agreement and include the plural as well as the singular, and the
use of any gender herein shall be deemed to include the other gender;
b) accounting terms not otherwise defined herein have the meanings assigned
to them in accordance with generally accepted accounting principles;
c) references herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other
subdivisions of this Agreement;
d) a reference to a Subsection without further reference to a Section is a
reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
e) the words "herein", "hereof", "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular
provision; and
f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
SECTION 24. REPRODUCTION OF DOCUMENTS. This Agreement and all documents
relating thereto, including, without limitation, (a) consents, waivers and
modifications which may hereafter be executed, (b) documents received by any
party at the closing, and (c) financial statements, certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding, whether or not the original is in existence and whether or not such
reproduction was made by a party in the regular course of business, and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
[Signatures Follow]
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their names to
be signed hereto by their respective officers thereunto duly authorized as of
the date first above written.
EMC MORTGAGE CORPORATION
(Purchaser)
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
▇▇▇▇▇ FARGO HOME MORTGAGE, INC.
(Seller)
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
EXHIBIT 1
MORTGAGE LOAN SCHEDULE
EXHIBIT 2
FORM OF OPINION OF COUNSEL
Re: ▇▇▇▇▇ Fargo Home Mortgage, Inc.
Mortgage Loan Series @
Dear Sir/Madam:
I am @ of ▇▇▇▇▇ Fargo Home Mortgage, Inc. and have acted as counsel to ▇▇▇▇▇
Fargo Home Mortgage, Inc. (the "Company"), with respect to certain matters in
connection with the sale by the Company of the mortgage loans designated as
Mortgage Loan Series @ (the "Mortgage Loans") pursuant to that certain Seller's
Warranties and Servicing Agreement and Mortgage Loan Purchase Agreement by and
between the Company and @ (the "Purchaser"), dated as of @, 2003, (the
"Agreements"), which sale is in the form of whole Mortgage Loans. Capitalized
terms not otherwise defined herein have the meanings set forth in the Seller's
Warranties and Servicing Agreement.
I have examined the following documents:
1. the Seller's Warranties and Servicing Agreement;
2. the Mortgage Loan Purchase Agreement;
3. the Custodial Agreement;
4. the form of endorsement of the Mortgage Notes; and
5. such other documents, records and papers as I have deemed necessary and
relevant as a basis for this opinion.
To the extent I have deemed necessary and proper, I have relied upon the
representations and warranties of the Company contained in the Agreements. I
have assumed the authenticity of all documents submitted to me as originals, the
genuineness of all signatures, the legal capacity of natural persons and the
conformity to the originals of all documents.
Based upon the foregoing, it is my opinion that;
1. The Company is a corporation duly organized, validly existing and in good
standing under the laws of the state of California.
2. The Company has the power to engage in the transactions contemplated by the
Agreements, the Custodial Agreement and all requisite power, authority and
legal right to execute and deliver the Agreements, the Custodial Agreement
and the Mortgage Loans, and to perform and observe the terms and conditions
of such instruments.
3. Each person who, as an officer or attorney-in-fact of the Company, signed
(a) the Agreements, each dated as of @, 2003, by and between the Company
and the Purchaser, and (b) any other document delivered prior hereto or on
the date hereof in connection with the sale and servicing of the Mortgage
Loans in accordance with the Agreements and the person was, at the
respective times of such signing and delivery, and is, as of the date
hereof, duly elected or appointed, qualified and acting and as such officer
or attorney-in-fact, and the signatures of such persons appearing on such
documents are their genuine signatures.
4. Each of the Agreements, the Custodial Agreement and the Mortgage Loans, has
been duly authorized, executed and delivered by the Company and is a legal,
valid and binding agreement enforceable in accordance with its terms,
subject to bankruptcy laws and other similar laws of general application
affecting rights of creditors and subject to the application of the rules
of equity, including those respecting the availability of specific
performance, none of which will materially interfere with the realization
of the benefits provided thereunder or with the Purchaser's ownership of
the Mortgage Loans.
5. The Company has been duly authorized to allow any of its officers to
execute any and all documents by original signature in order to complete
the transactions contemplated by the Agreements and the Custodial
Agreement, and by original or facsimile signature in order to execute the
endorsements to the Mortgage Notes and the assignments of the Mortgages,
and the original or facsimile signature of the officer at the Company
executing the endorsements to the Mortgage Notes and the assignments of the
Mortgages represents the legal and valid signature of said officer of the
Company.
6. Either (i) no consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Company of or compliance by the Company with the
Agreements, the Custodial Agreement or the sale and delivery of the
Mortgage Loans or the consummation of the transactions contemplated by the
Agreements, and the Custodial Agreement; or (ii) any required consent,
approval, authorization or order has been obtained by the Company.
7. Neither the consummation of the transactions contemplated by, nor the
fulfillment of the terms of the Agreements and the Custodial Agreement,
will conflict with or results in or will result in a breach of or
constitutes or will constitute a default under the charter or by-laws of
the Company, the terms of any indenture or other agreement or instrument to
which the Company is a party or by which it is bound or to which it is
subject, or violates any statute or order, rule, regulations, writ,
injunction or decree of any court, governmental authority or regulatory
body to which the Company is subject or by which it is bound.
8. There is no action, suit, proceeding or investigation pending or, to the
best of my knowledge, threatened against the Company which, in my opinion,
either in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition, properties
or assets of the Company or in any material impairment of the right or
ability of the Company to carry on its business substantially as now
conducted or in any material liability on the part of the Company or which
would draw into question the validity of the Agreements, and the Custodial
Agreement, or of any action taken or to be taken in connection with the
transactions contemplated thereby, or which would be likely to impair
materially the ability of the Company to perform under the terms of the
Agreements and the Custodial Agreement.
9. For purposes of the foregoing, I have not regarded any legal or
governmental actions, investigations or proceedings to be "threatened"
unless the potential litigant or governmental authority has manifested to
the legal department of the Company or an employee of the Company
responsible for the receipt of process a present intention to initiate such
proceedings; nor have I regarded any legal or governmental actions,
investigations or proceedings as including those that are conducted by
state or federal authorities in connection with their routine regulatory
activities. The sale of each Mortgage Note and Mortgage as and in the
manner contemplated by the Agreements is sufficient fully to transfer all
right, title and interest of the Company thereto as noteholder and
mortgagee, apart from the rights to service the Mortgage Loans pursuant to
the Agreements.
10. The form of endorsement that is to be used with respect to the Mortgage
Loans is legally valid and sufficient to duly endorse the Mortgage Notes to
the Purchaser. Upon the completion of the endorsement of the Mortgage Notes
and the completion of the assignments of the Mortgages, and the recording
thereof, the endorsement of the Mortgage Notes, the delivery to the
Custodian of the completed assignments of the Mortgages, and the delivery
of the original endorsed Mortgage Notes to the Custodian would be
sufficient to permit the entity to which such Mortgage Note is initially
endorsed at the Purchaser's direction, and to whom such assignment of
Mortgages is initially assigned at the Purchaser's direction, to avail
itself of all protection available under applicable law against the claims
of any present or future creditors of the Company, and would be sufficient
to prevent any other sale, transfer, assignment, pledge or hypothecation of
the Mortgages and the Mortgage Notes by the Company from being enforceable.
This opinion is given to you for your sole benefit, and no other person or
entity is entitled to rely hereon except that the purchaser or purchasers to
which you initially and directly resell the Mortgage Loans may rely on this
opinion as if it were addressed to them as of its date.
Sincerely,
EXHIBIT B-3
JULY SERVICING AGREEMENT (2)
EXECUTION COPY
July 24, 2003
EMC MORTGAGE CORPORATION
PURCHASER
AND
▇▇▇▇▇ FARGO HOME MORTGAGE, INC.
COMPANY
----------------------------------------
SELLER'S WARRANTIES AND SERVICING AGREEMENT
DATED AS OF JULY 1, 2003
----------------------------------------
WFHM MORTGAGE LOAN POOLS 5809, 5810, 5811, 5812, 5813 AND 5814
TABLE OF CONTENTS
ARTICLE I.....................................................................1
DEFINITIONS...................................................................1
ARTICLE II ...................................................................9
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS.................9
ARTICLE III..................................................................12
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH...........................12
ARTICLE IV...................................................................23
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS ..............................23
ARTICLE V....................................................................37
PAYMENTS TO PURCHASER........................................................37
ARTICLE VI...................................................................38
GENERAL SERVICING PROCEDURES.................................................38
ARTICLE VII..................................................................40
COMPANY TO COOPERATE.........................................................40
ARTICLE VIII.................................................................41
THE COMPANY..................................................................41
ARTICLE IX...................................................................43
PASS-THROUGH TRANSFER........................................................43
ARTICLE X....................................................................45
DEFAULT......................................................................45
ARTICLE XI...................................................................46
TERMINATION..................................................................46
ARTICLE XII..................................................................47
MISCELLANEOUS PROVISIONS.....................................................47
EXHIBITS
Exhibit A Mortgage Loan Schedule
Exhibit B Contents of Each Mortgage Loan File
Exhibit C Custodial Agreement
Exhibit D Form of Assignment and Assumption
This is a Seller's Warranties and Servicing Agreement for various
residential first mortgage loans, dated and effective as of July 1, 2003, and is
executed between EMC Mortgage Corporation, as purchaser (the "Purchaser"), and
▇▇▇▇▇ Fargo Home Mortgage, Inc., as seller and servicer (the "Company").
W I T N E S S E T H
WHEREAS, the Purchaser has agreed to purchase from the Company and the
Company has agreed to sell to the Purchaser certain fixed and adjustable
interest rate, Conventional Mortgage Loans which have an aggregate outstanding
principal balance as of the close of business on the Cut-off Date, after
deduction of payments due on or before such date, of $62,099,761.68;
WHEREAS, each of the Mortgage Loans is secured by a mortgage, deed of trust
or other security instrument creating a first lien on a residential dwelling
located in the jurisdiction indicated on the Mortgage Loan Schedule, which is
annexed hereto as Exhibit A; and
WHEREAS, the Purchaser and the Company wish to prescribe the manner of
purchase of the Mortgage Loans and the conveyance, servicing and control of the
Mortgage Loans.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the Purchaser and the Company agree as follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the content
otherwise requires, shall have the following meanings:
ACCEPTED SERVICING PRACTICES: With respect to any Mortgage Loan, those
mortgage servicing practices of prudent mortgage lending institutions which
service mortgage loans of the same type as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located.
ADJUSTMENT DATE: As to each Mortgage Loan, the date on which the Mortgage
Interest Rate is adjusted in accordance with the terms of the related Mortgage
Note.
AGENCY OR AGENCIES: ▇▇▇▇▇▇ Mae, ▇▇▇▇▇▇▇ Mac or GNMA, or any of them as
applicable.
AGENCY SALE: Any sale or transfer of some or all of the Mortgage Loans by
the Purchaser to an Agency which sale or transfer is not a Pass-Through
Transfer.
AGREEMENT: This Seller's Warranties and Servicing Agreement and all
amendments hereof and supplements hereto.
ALTA: The American Land Title Association or any successor thereto.
APPRAISED VALUE: With respect to any Mortgage Loan, the lesser of (i) the
value set forth on the appraisal made in connection with the origination of the
related Mortgage Loan as the value of the related Mortgaged Property, or (ii)
the purchase price paid for the Mortgaged Property, provided, however, that in
the case of a refinanced Mortgage Loan, such value shall be based solely on the
appraisal made in connection with the origination of such Mortgage Loan.
ASSIGNMENT OF MORTGAGE: An assignment of the Mortgage, notice of transfer
or equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
sale of the Mortgage to the Purchaser.
BUSINESS DAY: Any day other than (i) a Saturday or Sunday, or (ii) a day on
which banking and savings and loan institutions in the states where the parties
are located are authorized or obligated by law or executive order to be closed.
BUYDOWN AGREEMENT: An agreement between the Company and a Mortgagor, or an
agreement among the Company, a Mortgagor and a seller of a Mortgaged Property or
a third party with respect to a Mortgage Loan which provides for the application
of Buydown Funds.
BUYDOWN FUNDS: In respect of any Buydown Mortgage Loan, any amount
contributed by the seller of a Mortgaged Property subject to a Buydown Mortgage
Loan, the buyer of such property, the Company or any other source, plus interest
earned thereon, in order to enable the Mortgagor to reduce the payments required
to be made from the mortgagor's funds in the early years of a Mortgage Loan.
BUYDOWN MORTGAGE LOAN: Any Mortgage Loan in respect of which, pursuant to a
Buydown Agreement, (i) the Mortgagor pays less than the full monthly payments
specified in the Mortgage Note for a specified period, and (ii) the difference
between the payments required under such Buydown Agreement and the Mortgage Note
is provided from Buydown Funds.
BUYDOWN PERIOD: The period of time when a Buydown Agreement is in effect
with respect to a related Buydown Mortgage Loan.
CLOSING DATE: July 24, 2003.
CODE: The Internal Revenue Code of 1986, as it may be amended from time to
time or any successor statute thereto, and applicable U.S. Department of the
Treasury regulations issued pursuant thereto.
COMPANY: ▇▇▇▇▇ Fargo Home Mortgage, Inc., or its successor in interest or
assigns, or any successor to the Company under this Agreement appointed as
herein provided.
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.
CONVENTIONAL MORTGAGE LOAN: A mortgage or deed of trust not insured or
guaranteed under a government program (e.g., FHA or VA).
CUSTODIAL ACCOUNT: The separate account or accounts created and maintained
pursuant to Section 4.04.
CUSTODIAL AGREEMENT: The Interim Custody Agreement dated as of November 30,
1999 by and between EMC Mortgage Corporation as Owner, and ▇▇▇▇▇ Fargo Bank
Minnesota, N.A. (formerly Norwest Bank Minnesota, N.A.) governing the retention
of the originals of each Mortgage Note, Mortgage, Assignment of Mortgage and
other Mortgage Loan Documents, annexed hereto as Exhibit C.
CUSTODIAN: The custodian under the Custodial Agreement, or its successor in
interest or assigns, or any successor to the Custodian under the Custodial
Agreement as provided therein.
CUT-OFF DATE: July 1, 2003.
DELETED MORTGAGE LOAN: A Mortgage Loan which is repurchased by the Company
in accordance with the terms of this Agreement and which is, in the case of a
substitution pursuant to Section 3.03, replaced or to be replaced with a
Qualified Substitute Mortgage Loan.
DETERMINATION DATE: The Business Day immediately preceding the related
Remittance Date.
DUE DATE: The first day of the month on which the Monthly Payment is due on
a Mortgage Loan, exclusive of any days of grace.
DUE PERIOD: With respect to each Remittance Date, the period commencing on
the second day of the month preceding the month of the Remittance Date and
ending in the first day of the month of the Remittance Date.
ERRORS AND OMISSIONS INSURANCE POLICY: An errors and omissions insurance
policy to be maintained by the Company pursuant to Section 4.12.
ESCROW ACCOUNT: The separate account or accounts created and maintained
pursuant to Section 4.06.
ESCROW PAYMENTS: With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other related
document.
EVENT OF DEFAULT: Any one of the conditions or circumstances enumerated in
Section 10.01.
▇▇▇▇▇▇ ▇▇▇: The entity formerly known as the Federal National Mortgage
Association (FNMA), and its successors.
FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.
FHA: Federal Housing Administration and its successors.
FIDELITY BOND: A fidelity bond to be maintained by the Company pursuant to
Section 4.12.
FIRST REMITTANCE DATE: August 18, 2003.
▇▇▇▇▇▇▇ MAC: The entity formerly known as the Federal Home Loan Mortgage
Corporation (FHLMC), and its successors.
GNMA: Government National Mortgage Association and its successors.
GROSS MARGIN: With respect to each Mortgage Loan, the fixed percentage
amount set forth in the related Mortgage Note which is added to the Index in
order to determine the related Mortgage Interest Rate, as set forth in the
Mortgage Loan Schedule.
HUD: The United States Department of Housing and Urban Development and its
successors.
INDEX: On each Adjustment Date, the applicable index shall be a rate per
annum equal to the weekly average yield on U.S. Treasury securities adjusted to
a constant maturity of one year as made available by the Federal Reserve Board
in Statistical Release No. H.15 or a comparable publication, or, if not so
published, as reported by any Federal Reserve Bank or by any U.S. Government
department or agency, for the week for which such figures were most recently
published or reported as of the date 45 days prior to the Adjustment Date.
INSURANCE PROCEEDS: With respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
LGC: Loan Guaranty Certificate issued by the VA as a guarantee that the
federal government will repay to the lender a specified percentage of the loan
balance in the event of the borrower's default.
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.
LOAN-TO-VALUE RATIO OR LTV: With respect to any Mortgage Loan, the ratio of
the original loan amount of the Mortgage Loan at its origination (unless
otherwise indicated) to the Appraised Value of the Mortgaged Property.
MIC: Mortgage Insurance Certificate issued by HUD/FHA as evidence that a
mortgage has been insured and that a contract of mortgage insurance exists
between HUD/FHA and the lender.
MONTHLY ADVANCE: The portion of each Monthly Payment that is delinquent
with respect to each Mortgage Loan at the close of business on the Determination
Date required to be advanced by the Company pursuant to Section 5.03 on the
Business Day immediately preceding the Remittance Date of the related month.
MONTHLY PAYMENT: The scheduled monthly payment of principal and interest on
a Mortgage Loan.
MORTGAGE: The mortgage, deed of trust or other instrument and riders
thereto securing a Mortgage Note, which creates a first lien on an
unsubordinated estate in fee simple in real property securing the Mortgage Note.
MORTGAGE FILE: The items pertaining to a particular Mortgage Loan referred
to in Exhibit B annexed hereto, and any additional documents required to be
added to the Mortgage File pursuant to this Agreement.
MORTGAGE IMPAIRMENT INSURANCE POLICY: A mortgage impairment or blanket
hazard insurance policy as described in Section 4.11.
MORTGAGE INTEREST RATE: The annual rate of interest borne on a Mortgage
Note in accordance with the provisions of the Mortgage Note.
MORTGAGE LOAN: An individual Mortgage Loan which is the subject of this
Agreement, each Mortgage Loan originally sold and subject to this Agreement
being identified on the Mortgage Loan Schedule, which Mortgage Loan includes
without limitation the Mortgage File, the Monthly Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
REO Disposition Proceeds and all other rights, benefits, proceeds and
obligations arising from or in connection with such Mortgage Loan.
MORTGAGE LOAN DOCUMENTS: With respect to a Mortgage Loan, the original
related Mortgage Note with applicable addenda and riders, the original related
Mortgage and the originals of any required addenda and riders, the original
related Assignment and any original intervening related Assignments, the
original related title insurance policy, related PMI Policy, MIC or LCG, and the
related appraisal report.
MORTGAGE LOAN REMITTANCE RATE: With respect to each Mortgage Loan, the
annual rate of interest remitted to the Purchaser, which shall be equal to the
Mortgage Interest Rate minus the Servicing Fee Rate.
MORTGAGE LOAN SCHEDULE: A schedule of Mortgage Loans annexed hereto as
Exhibit A, such schedule setting forth the following information with respect to
each Mortgage Loan: (1) the Company's Mortgage Loan number; (2) the city state
and zip code of the Mortgaged Property; (3) a code indicating whether the
Mortgaged Property is a single family residence, twofamily residence,
three-family residence, four-family residence, PUD or Condominium; (4) the
current Mortgage Interest Rate; (5) the Mortgage Loan Remittance Rate; (6) the
current Monthly Payment; (7) the Gross Margin; (8) the original term to
maturity; (9) the scheduled maturity date; (10) the principal balance of the
Mortgage Loan as of the Cut-off Date after deduction of payments of principal
due on or before the Cut-off Date whether or not collected; (11) the Loanto-
Value; (12) the next Adjustment Date; (13) the lifetime Mortgage Interest Rate
cap; (14) whether the Mortgage Loan is convertible or not; (15) a code
indicating the mortgage guaranty insurance company; and (16) the Servicing Fee
Rate.
MORTGAGE NOTE: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage and riders thereto.
MORTGAGED PROPERTY: The real property securing repayment of the debt
evidenced by a Mortgage Note.
MORTGAGOR: The obligor on a Mortgage Note.
OFFICER'S CERTIFICATE: A certificate signed by the Chairman of the Board,
the Vice Chairman of the Board, ,the President, a Vice President, an Assistant
Vice President ,the Treasurer, the Secretary or one of the Assistant Treasurers
or Assistant Secretaries of the Company, and delivered to the Purchaser as
required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may be an employee of
the Company, reasonably acceptable to the Purchaser.
PASS-THROUGH TRANSFER: The sale or transfer of some or all of the Mortgage
Loans by the Purchaser to a trust to be formed as part of a publicly issued or
privately placed mortgage-backed securities transaction.
PERIODIC INTEREST RATE CAP: As to each Mortgage Loan, the maximum increase
or decrease in the Mortgage Interest Rate on any Adjustment Date.
PERSON: Any individual, corporation, partnership, joint venture, limited
liability company, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof.
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.
PRINCIPAL PREPAYMENT: Any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date, including
any prepayment penalty or premium thereon and which is not accompanied by an
amount of interest representing scheduled interest due on any date or dates in
any month or months subsequent to the month of prepayment.
PRINCIPAL PREPAYMENT PERIOD: The month preceding the month in which the
related Remittance Date occurs.
PURCHASER: EMC Mortgage Corporation or its successor in interest or any
successor to the Purchaser under this Agreement as herein provided.
QUALIFIED DEPOSITORY: A deposit account or accounts maintained with a
federal or state chartered depository institution the deposits in which are
insured by the FDIC to the applicable limits and the short-term unsecured debt
obligations of which (or, in the case of a depository institution that is a
subsidiary of a holding company, the short-term unsecured debt obligations of
such holding company) are rated A-1 by Standard & Poor's Ratings Group or
Prime-1 by ▇▇▇▇▇'▇ Investors Service, Inc. (or a comparable rating if another
rating agency is specified by the Purchaser by written notice to the Company) at
the time any deposits are held on deposit therein.
QUALIFIED INSURER: A mortgage guaranty insurance company duly authorized
and licensed where required by law to transact mortgage guaranty insurance
business and approved as an insurer by the Agencies.
RATING AGENCIES: Any nationally recognized statistical rating agency, or
its successor, including Standard & Poor's Ratings Services, ▇▇▇▇▇'▇ Investor
Services, Inc., Fitch IBCA, Inc. and Duff & ▇▇▇▇▇▇ Credit Rating Co.
RECONSTITUTION DATE: The date on which any or all of the Mortgage Loans
serviced under this Agreement shall be removed from this Agreement and
reconstituted as part of an Agency Sale, Pass-Through Transfer or Whole Loan
Transfer pursuant to Section 9.01 hereof. The Reconstitution Date shall be such
date which the Purchaser and the shelf registrant shall designate. On such date,
the Mortgage Loans transferred shall cease to be covered by this Agreement and
the Company's servicing responsibilities shall cease under this Agreement with
respect to the related transferred Mortgage Loans.
RECORD DATE: The close of business of the last Business Day of the month
preceding the month of the related Remittance Date.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
REMIC PROVISIONS: Provisions of the federal income tax law relating to a
REMIC, which appear at Section 860A through 860G of Subchapter M of Chapter 1,
Subtitle A of the Code, and related provisions, and regulations, rulings or
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
REMITTANCE DATE: The 18th day (or if such 18th day is not a Business Day,
the first Business Day immediately following) of any month, beginning with the
First Remittance Date.
REO DISPOSITION: The final sale by the Company of any REO Property.
REO DISPOSITION PROCEEDS: All amounts received with respect to an REO
Disposition pursuant to Section 4.16.
REO PROPERTY: A Mortgaged Property acquired by the Company on behalf of the
Purchaser through foreclosure or by deed in lieu of foreclosure, as described in
Section 4.16.
REPURCHASE PRICE: Unless agreed otherwise by the Purchaser and the Company,
a price equal to (i) the Stated Principal Balance of the Mortgage Loan plus (ii)
interest on such Stated Principal Balance at the Mortgage Loan Remittance Rate
from the date on which interest has last been paid and distributed to the
Purchaser through the last day of the month in which such repurchase takes
place, less amounts received or advanced in respect of such repurchased Mortgage
Loan which are being held in the Custodial Account for distribution in the month
of repurchase.
SERVICING ADVANCES: All customary, reasonable and necessary "out of pocket"
costs and expenses other than Monthly Advances (including reasonable attorney's
fees and disbursements) incurred in the performance by the Company of its
servicing obligations, including, but not limited to, the cost of (a) the
preservation, restoration and protection of the Mortgaged Property, (b) any
enforcement or judicial proceedings, including foreclosures, (c) the management
and liquidation of any REO Property and (d) compliance with the obligations
under Section 4.08.
SERVICING FEE: With respect to each Mortgage Loan, the amount of the annual
fee the Purchaser shall pay to the Company, which shall, for a period of one
full month, be equal to onetwelfth of the product of (a) the Servicing Fee Rate
and (b) the outstanding principal balance of such Mortgage Loan. Such fee shall
be payable monthly, computed on the basis of the same principal amount and
period respecting which any related interest payment on a Mortgage Loan is
computed. The obligation of the Purchaser to pay the Servicing Fee is limited
to, and the Servicing Fee is payable solely from, the interest portion
(including recoveries with respect to interest from Liquidation Proceeds, to the
extent permitted by Section 4.05) of such Monthly Payment collected by the
Company, or as otherwise provided under Section 4.05. The Servicing Fee shall
not be reduced by the amount of any guaranty fee charged by GNMA.
SERVICING FEE RATE: 0.250% per annum for each Mortgage Loan.
SERVICING FILE: With respect to each Mortgage Loan, the file retained by
the Company consisting of originals of all documents in the Mortgage File which
are not delivered to the Custodian and copies of the Mortgage Loan Documents
listed in the Custodial Agreement the originals of which are delivered to the
Custodian pursuant to Section 2.03.
SERVICING OFFICER: Any officer of the Company involved in or responsible
for the administration and servicing of the Mortgage Loans whose name appears on
a list of servicing officers furnished by the Company to the Purchaser upon
request, as such list may from time to time be amended.
STATED PRINCIPAL BALANCE: As to each Mortgage Loan, (i) the principal
balance of the Mortgage Loan at the Cut-off Date after giving effect to payments
of principal due on or before such date, whether or not received, minus (ii) all
amounts previously distributed to the Purchaser with respect to the related
Mortgage Loan representing payments or recoveries of principal or advances in
lieu thereof.
VA: The United States Department of Veterans Administration and its
successors.
WHOLE LOAN TRANSFER: Any sale or transfer of some or all of the Mortgage
Loans by the Purchaser to a third party, which sale or transfer is not a
Pass-Through Transfer.
WHOLE LOAN TRANSFER DATE: The date on which any or all of the Mortgage
Loans serviced under this Agreement shall be sold by the Purchaser as part of a
Whole Loan Transfer pursuant to Section 9.01 hereof.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES; BOOKS AND RECORDS;
CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS
Section 2.01 CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
MAINTENANCE OF SERVICING FILES.
The Company, simultaneously with the execution and delivery of this
Agreement, does hereby sell, transfer, assign, set over and convey to the
Purchaser, without recourse, but subject to the terms of this Agreement, all the
right, title and interest of the Company in and to the Mortgage Loans. Pursuant
to Section 2.03, the Company has delivered the Mortgage Loan Documents to the
Custodian.
The contents of each Mortgage File not delivered to the Custodian are and
shall be held in trust by the Company for the benefit of the Purchaser as the
owner thereof. The Company shall maintain a Servicing File consisting of a copy
of the contents of each Mortgage File and the originals of the documents in each
Mortgage File not delivered to the Custodian. The possession of each Servicing
File by the Company is at the will of the Purchaser for the sole purpose of
servicing the related Mortgage Loan, and such retention and possession by the
Company is in a custodial capacity only. Upon the sale of the Mortgage Loans the
ownership of each Mortgage Note, the related Mortgage and the related Mortgage
File and Servicing File shall vest immediately in the Purchaser, and the
ownership of all records and documents with respect to the related Mortgage Loan
prepared by or which come into the possession of the Company shall vest
immediately in the Purchaser and shall be retained and maintained by the
Company, in trust, at the will of the Purchaser and only in such custodial
capacity. The Company shall release its custody of the contents of any Servicing
File only in accordance with written instructions from the Purchaser, unless
such release is required as incidental to the Company's servicing of the
Mortgage Loans or is in connection with a repurchase of any Mortgage Loan
pursuant to Section 3.03 or 6.02. All such costs associated with the release,
transfer and re-delivery to the Company shall be the responsibility of the
Purchaser.
Section 2.02 BOOKS AND RECORDS; TRANSFERS OF MORTGAGE LOANS.
From and after the sale of the Mortgage Loans to the Purchaser all rights
arising out of the Mortgage Loans including but not limited to all funds
received on or in connection with the Mortgage Loans, shall be received and held
by the Company in trust for the benefit of the Purchaser as owner of the
Mortgage Loans, and the Company shall retain record title to the related
Mortgages for the sole purpose of facilitating the servicing and the supervision
of the servicing of the Mortgage Loans.
The sale of each Mortgage Loan shall be reflected on the Company's balance
sheet and other financial statements as a sale of assets by the Company. The
Company shall be responsible for maintaining, and shall maintain, a complete set
of books and records for each Mortgage Loan which shall be marked clearly to
reflect the ownership of each Mortgage Loan by the Purchaser. In particular, the
Company shall maintain in its possession, available for inspection by the
Purchaser, or its designee, and shall deliver to the Purchaser upon demand,
evidence of compliance with all federal, state and local laws, rules and
regulations, and requirements of the Agencies, 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 the Agencies, and periodic inspection
reports as required by Section 4.13. To the extent that original documents are
not required for purposes of realization of Liquidation Proceeds or Insurance
Proceeds, documents maintained by the Company may be in the form of microfilm or
microfiche or such other reliable means of recreating original documents,
including but not limited to, optical imagery techniques so long as the Company
complies with the requirements of the FNMA Selling and Servicing Guide, as
amended from time to time.
The Company shall maintain with respect to each Mortgage Loan and shall
make available for inspection by any Purchaser or its designee the related
Servicing File during the time the Purchaser retains ownership of a Mortgage
Loan and thereafter in accordance with applicable laws and regulations.
The Company shall keep at its servicing office books and records in which,
subject to such reasonable regulations as it may prescribe, the Company shall
note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be made
unless such transfer is in compliance with the terms hereof. For the purposes of
this Agreement, the Company shall be under no obligation to deal with any person
with respect to this Agreement or the Mortgage Loans unless the books and
records show such person as the owner of the Mortgage Loan. The Purchaser may,
subject to the terms of this Agreement, sell and transfer one or more of the
Mortgage Loans, provided, however, that in no event shall there be more than
four Persons at any given time having the status of "Purchaser" hereunder. The
Purchaser also shall advise the Company of the transfer. Upon receipt of notice
of the transfer, the Company shall ▇▇▇▇ its books and records to reflect the
ownership of the Mortgage Loans of such assignee, and shall release the previous
Purchaser from its obligations hereunder with respect to the Mortgage Loans sold
or transferred. If the Company receives notification of a transfer, including a
final loan schedule, less than five (5) Business Days before the last Business
Day of the month, the Company's duties to remit and report to the new
purchaser(s) as required by Section 5 shall begin with next Due Period.
Section 2.03 DELIVERY OF DOCUMENTS.
Pursuant to the Custodial Agreement delivered to the Purchaser
contemporaneously with the delivery of this Agreement, the Company has delivered
and released to the Custodian those Mortgage Loan Documents as required by the
Custodial Agreement and by this Agreement with respect to each Mortgage Loan.
The Custodian has certified its receipt of all such Mortgage Loan Documents
required to be delivered pursuant to the Custodial Agreement. The Company will
be responsible for Custodial fees and expenses with respect to the delivery and
certification of those Mortgage Loan Documents required to be delivered pursuant
to the Custodial Agreement. The Company will be responsible for the fees and
expenses related to the recording of the initial Assignment of Mortgage. The
Purchaser will be responsible for the fees and expenses of the Custodian.
After the Closing Date, the Company shall deliver to the each of the
documents described in Exhibit B, not delivered pursuant to the Agreement.
Provided however, within 150 days from the Closing Date, the Company shall
deliver to the Custodian, the original MIC or LGC, as applicable, or an
Officer's Certificate, which shall (i) state that the MIC or LGC has not been
delivered to the Custodian due solely to a delay by the insuring agency, (ii)
state the amount of time generally required by the insuring agency to process
the MIC or LGC, and (iii) specify the date the MIC or LGC will be delivered to
the Purchaser. The Company will be required to deliver the MIC or LGC to the
Custodian by the date specified in (iii) above. An extension of the date
specified in (iii) above may be requested from the Custodian, which consent
shall not be unreasonably withheld.
The Company shall forward to the Custodian original documents evidencing an
assumption, modification, consolidation or extension of any Mortgage Loan
entered into in accordance with Section 4.01 or 6.01 within one week of their
execution, provided, however, that the Company shall provide the Custodian with
a certified true copy of any such document submitted for recordation within ten
(10) days of its execution, and shall provide the original of any document
submitted for recordation or a copy of such document certified by the
appropriate public recording office to be a true and complete copy of the
original within sixty days of its submission for recordation.
In the event the public recording office is delayed in returning any
original document, the Company shall deliver to the Custodian within 240 days of
its submission for recordation, a copy of such document and an Officer's
Certificate, which shall (i) identify the recorded document; (ii) state that the
recorded document has not been delivered to the Custodian due solely to a delay
by the public recording office, (iii) state the amount of time generally
required by the applicable recording office to record and return a document
submitted for recordation, and (iv) specify the date the applicable recorded
document will be delivered to the Custodian. The Company will be required to
deliver the document to the Custodian by the date specified in (iv) above. An
extension of the date specified in (iv) above may be requested from the
Purchaser, which consent shall not be unreasonably withheld.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH
Section 3.01 COMPANY REPRESENTATIONS AND WARRANTIES.
The Company hereby represents and warrants to the Purchaser that, as of the
Closing Date:
(a) DUE ORGANIZATION AND AUTHORITY.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of California and has all
licenses necessary to carry on its business as now being conducted and
is licensed, qualified and in good standing in each state where a
Mortgaged Property is located if the laws of such state require
licensing or qualification in order to conduct business of the type
conducted by the Company, and in any event the Company is in
compliance with the laws of any such state to the extent necessary to
ensure the enforceability of the related Mortgage Loan and the
servicing of such Mortgage Loan in accordance with the terms of this
Agreement; the Company has the full 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 of transfer to be delivered pursuant to
this Agreement) by the Company and the consummation of the
transactions contemplated hereby have been duly and validly
authorized; this Agreement evidences the valid, binding and
enforceable obligation of the Company; and all requisite corporate
action has been taken by the Company to make this Agreement valid and
binding upon the Company in accordance with its terms;
(b) ORDINARY COURSE OF BUSINESS.
The consummation of the transactions contemplated by this Agreement
are in the ordinary course of business of the Company, who is in the
business of selling and servicing loans, and the transfer, assignment
and conveyance of the Mortgage Notes and the Mortgages by the Company
pursuant to this Agreement are not subject to the bulk transfer or any
similar statutory provisions in effect in any applicable jurisdiction;
(c) NO CONFLICTS.
Neither the execution and delivery of this Agreement, the acquisition
of the Mortgage Loans by the Company, the sale of the Mortgage Loans
to the Purchaser or the transactions contemplated hereby, nor the
fulfillment of or compliance with the terms and conditions of this
Agreement will conflict with or result in a breach of any of the
terms, articles of incorporation or by-laws or any legal restriction
or any agreement or instrument to which the Company is now a party or
by which it is bound, or constitute a default or result in the
violation of any law, rule, regulation, order, judgment or decree to
which the Company or its property is subject, or impair the ability of
the Purchaser to realize on the Mortgage Loans, or impair the value of
the Mortgage Loans;
(d) ABILITY TO SERVICE.
The Company is an approved seller/servicer of residential mortgage
loans for the Agencies, with the facilities, procedures, and
experienced personnel necessary for the sound servicing of mortgage
loans of the same type as the Mortgage Loans. The Company is in good
standing to sell mortgage loans to and service mortgage loans for the
Agencies, and no event has occurred, including but not limited to a
change in insurance coverage, which would make the Company unable to
comply with the Agencies eligibility requirements or which would
require notification to the Agencies;
(e) REASONABLE SERVICING FEE.
The Company acknowledges and agrees that the Servicing Fee represents
reasonable compensation for performing such services and that the
entire Servicing Fee shall be treated by the Company, for accounting
and tax purposes, as compensation for the servicing and administration
of the Mortgage Loans pursuant to this Agreement;
(f) ABILITY TO PERFORM.
The Company does not believe, nor does it have any reason or cause to
believe, that it cannot perform each and every covenant contained in
this Agreement. The Company is solvent and the sale of the Mortgage
Loans will not cause the Company to become insolvent. The sale of the
Mortgage Loans is not undertaken to hinder, delay or defraud any of
the Company's creditors;
(g) NO LITIGATION PENDING.
There is no action, suit, proceeding or investigation pending or
threatened against the Company which, either in any one instance or in
the aggregate, may result in any material adverse change in the
business, operations, financial condition, properties or assets of the
Company, or in any material impairment of the right or ability of the
Company to carry on its business substantially as now conducted, or in
any material liability on the part of the Company, or which would draw
into question the validity of this Agreement or the Mortgage Loans or
of any action taken or to be contemplated herein, or which would be
likely to impair materially the ability of the Company to perform
under the terms of this Agreement;
(h) NO CONSENT REQUIRED.
No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery
and performance by the Company of or compliance by the Company with
this Agreement or the sale of the Mortgage Loans as evidenced by the
consummation of the transactions contemplated by this Agreement, or if
required, such approval has been obtained prior to the Closing Date;
(i) 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;
(j) SALE TREATMENT.
The Company has determined that the disposition of the Mortgage Loans
pursuant to this Agreement will be afforded sale treatment for
accounting and tax purposes;
(k) NO MATERIAL CHANGE.
There has been no material adverse change in the business, operations,
financial condition or assets of the Company since the date of the
Company's most recent financial statements; and
(l) NO BROKERS' FEES.
The Company has not dealt with any broker, investment banker, agent or
other Person that may be entitled to any commission or compensation in
the connection with the sale of the Mortgage Loans.
Section 3.02 REPRESENTATIONS AND WARRANTIES REGARDING INDIVIDUAL MORTGAGE LOANS.
As to each Mortgage Loan, the Company hereby represents and warrants to the
Purchaser that as of the Closing Date:
(a) MORTGAGE LOANS AS DESCRIBED.
The information set forth in the Mortgage Loan Schedule attached
hereto as Schedule I is true and correct;
(b) NO OUTSTANDING CHARGES.
All taxes, governmental assessments, insurance premiums, water, sewer
and municipal charges, which previously became due and owing have been
paid, or an escrow of funds has been established for every such item
which remains unpaid and which has been assessed but is not yet due
and payable;
(c) ORIGINAL TERMS UNMODIFIED.
The terms of the Mortgage Note and Mortgage have not been impaired,
waived, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary to protect the
interests of the Purchaser and which has been delivered to the
Custodian. The substance of any such waiver, alteration or
modification has been approved by FHA, VA or the issuer of any related
PMI policy and the title insurer, to the extent required by the
policy, and its terms are reflected on the Mortgage Loan Schedule. No
Mortgagor has been released, in whole or in part, except in connection
with an assumption agreement approved by the issuer the guaranty
certificate or of any related Primary Mortgage Insurance policy and
the title insurer, to the extent required by the policy or Agency
guidelines, and which assumption agreement is part of the Mortgage
Loan File delivered to the Custodian and the terms of which are
reflected in the Mortgage Loan Schedule;
(d) NO DEFENSES.
The Mortgage Loan is not subject to any right of rescission, set-off,
counterclaim or defense, including without limitation the defense of
usury, nor will the operation of any of the terms of the Mortgage Note
or the Mortgage, or the exercise of any right thereunder, render
either the Mortgage Note or the Mortgage unenforceable, in whole or in
part, or subject to any right of rescission, set-off, counterclaim or
defense, including without limitation the defense of usury, and no
such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto;
(e) NO SATISFACTION OF MORTGAGE.
The Mortgage has not been satisfied, canceled, subordinated or
rescinded, in whole or in part, and the Mortgaged Property has not
been released from the lien of the Mortgage, in whole or in part, nor
has any instrument been executed that would effect any such release,
cancellation, subordination or rescission;
(f) VALIDITY OF MORTGAGE DOCUMENTS.
The Mortgage Note and the Mortgage and related documents are genuine,
and each is the legal, valid and binding obligation of the maker
thereof enforceable in accordance with its terms. All parties to the
Mortgage Note and the Mortgage had legal capacity to enter into the
Mortgage Loan and to execute and deliver the Mortgage Note and the
Mortgage, and the Mortgage Note and the Mortgage have been duly and
properly executed by such parties;
(g) NO FRAUD.
All the documents executed in connection with the Mortgage Loan
including, but not limited to, the Mortgage Note and the Mortgage are
free of fraud and any misrepresentation, are signed by the persons
they purport to be signed by, and witnessed or, as appropriate,
notarized by the persons whose signatures appear as witnesses or
notaries, and each such document constitutes the valid and binding
legal obligation of the signatories and is enforceable in accordance
with its terms;
(h) COMPLIANCE WITH APPLICABLE LAWS.
Any and all requirements of any federal, state or local law including,
without limitation, usury, truth-in-lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity,
disclosure, or predatory and abuse lending laws applicable to the
Mortgage Loan have been complied with, and the Company shall maintain
in its possession, available for the Purchaser's inspection, and shall
deliver to the Purchaser upon demand, evidence of compliance with all
such requirements; All inspections, licenses and certificates required
to be made or issued with respect to all occupied portions of the
Mortgaged Property and, with respect to the use and occupancy of the
same, including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the
appropriate authorities;
(i) LOCATION AND TYPE OF MORTGAGED PROPERTY.
The Mortgaged Property is located in the state identified in the
Mortgage Loan Schedule and consists of a parcel of real property with
a detached single family residence erected thereon, or a two- to
four-family dwelling, or an individual condominium unit in a
condominium project, or an individual unit in a planned unit
development or a townhouse, provided, however, that any condominium
project or planned unit development shall conform with the applicable
Agency requirements regarding such dwellings, and no residence or
dwelling is a mobile home or a manufactured dwelling. As of the
respective appraisal date for each Mortgaged Property, no portion of
the Mortgaged Property was being used for commercial purposes. If the
Mortgaged Property is a condominium unit or a planned unit development
(other than a de minimus planned unit development) such condominium or
planned unit development project meets Agency eligibility requirements
or is located in a condominium or planned unit development project
which has received Agency project approval and the representations and
warranties required by Agency with respect to such condominium or
planned unit development have been made and remain true and correct in
all respects;
(j) VALID FIRST LIEN.
The Mortgage is a valid, subsisting and enforceable first lien on the
Mortgaged Property, including all buildings on the Mortgaged Property
and all installations and mechanical, electrical, plumbing, heating
and air conditioning systems located in or annexed to such buildings,
and all additions, alterations and replacements made at any time with
respect to the foregoing. The lien of the Mortgage is subject only to:
(1) the lien of current real property taxes and assessments not
yet due and payable;
(2) covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the
date of recording acceptable to mortgage lending
institutions generally and specifically referred to in the
lender's title insurance policy delivered to the originator
of the Mortgage Loan and (i) referred to or otherwise
considered in the appraisal made for the originator of the
Mortgage Loan and (ii) which do not adversely affect the
Appraised Value of the Mortgaged Property set forth in such
appraisal; and
(3) other matters to which like properties are commonly subject
which do not materially interfere with the benefits of the
security intended to be provided by the mortgage or the use,
enjoyment, value or marketability of the related Mortgaged
Property.
Any security agreement, chattel mortgage or equivalent document
related to and delivered in connection with the Mortgage Loan
establishes and creates a valid, subsisting and enforceable first lien
and first priority security interest on the property described therein
and the Company has full right to sell and assign the same to the
Purchaser.
(k) FULL DISBURSEMENT OF PROCEEDS.
The proceeds of the Mortgage Loan have been fully disbursed, except
for escrows established or created due to seasonal weather conditions,
and there is no requirement for future advances thereunder. All costs,
fees and expenses incurred in making or closing the Mortgage Loan and
the recording of the Mortgage were paid, and the Mortgagor is not
entitled to any refund of any amounts paid or due under the Mortgage
Note or Mortgage;
(l) OWNERSHIP.
The Company is the sole owner of record and holder of the Mortgage
Loan and the related Mortgage Note and the Mortgage are not assigned
or pledged, and the Company has good and marketable title thereto and
has full right and authority to transfer and sell the Mortgage Loan to
the Purchaser. The Company is transferring the Mortgage Loan free and
clear of any and all encumbrances, liens, pledges, equities,
participation interests, claims, charges or security interests of any
nature encumbering such Mortgage Loan;
(m) ORIGINATION/DOING BUSINESS.
The Mortgage Loan was originated by a savings and loan association, a
savings bank, a commercial bank, a credit union, an insurance company,
or similar institution which is supervised and examined by a federal
or state authority or by a mortgagee approved by the Secretary of
Housing and Urban Development pursuant to Sections 203 and 211 or the
National Housing Act. All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise,
are (or, during the period in which they held and disposed of such
interest, were) (1) in compliance with any and all applicable
licensing requirements of the laws of the state wherein the Mortgaged
Property is located, and (2) organized under the laws of such state,
or (3) qualified to do business in such state, or (4) federal savings
and loan associations or national banks having principal offices in
such state, or (5) not doing business in such state;
(n) PRIMARY MORTGAGE INSURANCE.
With respect to any Mortgage Loan subject to a PMI Policy as indicated
on the Mortgage Loan Schedule, all provisions of such PMI Policy have
been and are being complied with, such policy is in full force and
effect, and all premiums due thereunder have been paid. Any Mortgage
Loan subject to a PMI policy obligates the Mortgagor thereunder to
maintain the PMI policy and to pay all premiums and charges in
connection therewith. The Mortgage Interest Rate for the Mortgage Loan
as set forth on the Mortgage Loan Schedule is net of any such
insurance premium;
(o) FHA INSURANCE/VA GUARANTY.
Each FHA Mortgage Loan, is fully-insured by the FHA, which insurance
is in full force and effect, and the Mortgage Loan is not subject to
any defect which would diminish or impair the FHA insurance, and all
prior transfers, if any, of the Mortgage Loan have been, and the
transactions herein contemplated are, in compliance with the FHA
regulations, and no circumstances exist with respect to the FHA
Mortgage Loans which would permit the FHA to deny coverage under the
FHA insurance; and
Each VA Mortgage Loan is guaranteed by the VA, which guaranty is in
full force and effect, and the Mortgage Loan is not subject to any
defect which would diminish or impair the VA guaranty (other than a
potential valuation of the mortgaged property), and all prior
transfers, if any, of the Mortgage Loan have been, and the
transactions herein contemplated are, in compliance with the VA
regulations, and no circumstances exist with respect to the VA
Mortgage Loan which would permit the VA to deny coverage under the VA
guaranty;
(p) TITLE INSURANCE.
The Mortgage Loan is covered by an ALTA lender's title insurance
policy (or in the case of any Mortgage Loan secured by a Mortgaged
Property located in a jurisdiction where such policies are generally
not available, an opinion of counsel of the type customarily rendered
in such jurisdiction in lieu of title insurance) or other generally
acceptable form of policy of insurance acceptable to the Agencies,
issued by a title insurer acceptable to the Agencies and qualified to
do business in the jurisdiction where the Mortgaged Property is
located, insuring the Company, its successors and assigns, as to the
first priority lien of the Mortgage in the original principal amount
of the Mortgage Loan, subject only to the exceptions contained in
clauses (1), (2) and (3) of paragraph (xi) of this Section 3(b). The
Company is the sole insured of such lender's title insurance policy,
and such lender's title insurance policy is in full force and effect
and will be in force and effect upon the consummation of the
transactions contemplated by this Agreement. No claims have been made
under such lender's title insurance policy, and no prior holder of the
Mortgage, including the Company, has done, by act or omission,
anything which would impair the coverage of such lender's title
insurance policy;
(q) NO MECHANICS' LIENS.
There are no mechanics' or similar liens or claims which have been
filed for work, labor or material (and no rights are outstanding that
under the law could give rise to such liens) affecting the related
Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage which are not
insured against by the Title Insurance policy referenced in Section
(p) above;
(r) LOCATION OF IMPROVEMENTS; NO ENCROACHMENTS.
Except as insured against by the Title Insurance policy referenced in
Section (p) above, all improvements which were considered in
determining the Appraised Value of the Mortgaged Property lay wholly
within the boundaries and building restriction lines of the Mortgaged
Property and no improvements on adjoining properties encroach upon the
Mortgaged Property. No improvement located on or being part of the
Mortgaged Property is in violation of any applicable zoning law or
regulation;
(s) CUSTOMARY PROVISIONS.
The Mortgage contains customary and enforceable provisions such as to
render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the
security provided thereby, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii) otherwise
by judicial foreclosure. There is no homestead or other exemption
available to a Mortgagor which would interfere with the right to sell
the Mortgaged Property at a trustee's sale or the right to foreclose
the Mortgage;
(t) OCCUPANCY OF THE MORTGAGED PROPERTY.
As of the date of origination, the Mortgaged Property was lawfully
occupied under applicable law.
(u) No Additional Collateral.
The Mortgage Note is not and has not been secured by any collateral,
pledged account or other security except the lien of the corresponding
Mortgage and the security interest of any applicable security
agreement or chattel mortgage referred to in (xi) above;
(v) DEEDS OF TRUST.
In the event the Mortgage constitutes a deed of trust, a trustee, duly
qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Mortgage, and
no fees or expenses are or will become payable by the Mortgagee to the
trustee under the deed of trust, except in connection with a trustee's
sale after default by the Mortgagor;
(w) TRANSFER OF MORTGAGE LOANS.
The Assignment is in recordable form and is acceptable for recording
under the laws of the jurisdiction in which the Mortgaged Property is
located;
(x) MORTGAGED PROPERTY UNDAMAGED.
The Mortgaged Property is undamaged by water, fire, earthquake or
earth movement, windstorm, flood, tornado or other casualty so as to
affect adversely the value of the Mortgaged Property as security for
the Mortgage Loan or the use for which the premises were intended;
(y) COLLECTION PRACTICES; ESCROW DEPOSITS.
The origination and collection practices used with respect to the
Mortgage Loan have been in accordance with Prudent Servicing
Practices, and have been in all material respects legal and proper.
All Escrow Items have been collected in full compliance with state and
federal law. An escrow of funds is not prohibited by applicable law
and has been established to pay for every item that remains unpaid and
has been assessed but is not yet due and payable. No escrow deposits
or Escrow Items or other charges or payments due the Seller have been
capitalized under the Mortgage Note;
(z) NO CONDEMNATION.
To the best of Seller's knowledge, there is no proceeding pending or
threatened for the total or partial condemnation of the related
Mortgaged Property;
(aa) THE APPRAISAL.
The Mortgage Loan Documents contain an appraisal of the related
Mortgaged Property by an appraiser who had no interest, direct or
indirect, in the Mortgaged Property or in any loan made on the
security thereof; and whose compensation is not affected by the
approval or disapproval of the Mortgage Loan, and the appraisal and
the appraiser both satisfy the applicable requirements of Title XI of
the Financial Institution Reform, Recovery, and Enforcement Act of
1989 and the regulations promulgated thereunder, all as in effect on
the date the Mortgage Loan was originated;
(bb) INSURANCE.
The Mortgaged Property securing each Mortgage Loan is insured by an
insurer acceptable to the Agencies against loss by fire and such
hazards as are covered under a standard extended coverage endorsement,
in an amount which is not less than the lesser of 100% of the
insurable value of the Mortgaged Property and the outstanding
principal balance of the Mortgage Loan, but in no event less than the
minimum amount necessary to fully compensate for any damage or loss on
a replacement cost basis; if the Mortgaged Property is a condominium
unit, it is included under the coverage afforded by a blanket policy
for the project; the insurance policy contains a standard clause
naming the originator of such mortgage loan, its successor and
assigns, as insured mortgagee; if upon origination of the Mortgage
Loan, the improvements on the Mortgaged Property were in an area
identified in the Federal Register by the Federal Emergency Management
Agency as having special flood hazards, a flood insurance policy
meeting the requirements of the current guidelines of the Federal
Insurance Administration is in effect with a generally acceptable
insurance carrier, in an amount representing coverage not less than
the least of (A) the outstanding principal balance of the Mortgage
Loan, (B) the full insurable value and (C) the maximum amount of
insurance which was available under the Flood Disaster Protection Act
of 1973, as amended; and the Mortgage obligates the mortgagor
thereunder to maintain all such insurance at the mortgagor's cost and
expense and the Seller has not acted or failed to act so as to impair
the coverage of any such insurance policy or the validity, binding
effect and enforceability thereof.
(cc) SOLDIERS' AND SAILORS' CIVIL RELIEF ACT.
The Mortgagor has not notified the Seller, and the Seller has no
knowledge of any relief requested or allowed to the Mortgagor under
the Soldiers' and Sailors' Civil Relief Act of 1940, as amended.
(dd) NO VIOLATION OF ENVIRONMENTAL LAWS.
There is no pending action or proceeding directly involving any
Mortgaged Property of which the Company is aware in which compliance
with any environmental law, rule or regulation is an issue; and to the
best of theCompany's knowledge nothing further remains to be done to
satisfy in full all requirements of each such law, rule or regulation
constituting a prerequisite to use and enjoyment of said property.
(ee) HOEPA.
No Mortgage Loan is subject to the provisions of the Home Ownership
and Equity Protection Act of 1994, as amended, or is considered a
"high cost loan" under any other state, federal or local laws or
ordinances."
Section 3.03 REPURCHASE.
It is understood and agreed that the representations and warranties set
forth in Sections 3.01 and 3.02 shall survive the sale of the Mortgage Loans to
the Purchaser and the delivery of the Mortgage Loan Documents to the Custodian
and shall inure to the benefit of the Purchaser, notwithstanding any restrictive
or qualified endorsement on any Mortgage Note or Assignment of Mortgage or the
examination or failure to examine any Mortgage File. Upon discovery by either
the Company or the Purchaser of a breach of any of the foregoing representations
and warranties which materially and adversely affects the value of the Mortgage
Loans or the interest of the Purchaser (or which materially and adversely
affects the interests of Purchaser in the related Mortgage Loan in the case of a
representation and warranty relating to a particular Mortgage Loan), the party
discovering such breach shall give prompt written notice to the other.
Within 90 days of the earlier of either discovery by or notice to the
Company of any breach of a representation or warranty which materially and
adversely affects the value of the Mortgage Loans, the Company shall use its
best efforts promptly to cure such breach in all material respects and, if such
breach cannot be cured, the Company shall, at the Purchaser's option, repurchase
such Mortgage Loan at the Repurchase Price. In the event that a breach shall
involve any representation or warranty set forth in Section 3.01, and such
breach cannot be cured within 90 days of the earlier of either discovery by or
notice to the Company of such breach, all of the Mortgage Loans shall, at the
Purchaser's option, be repurchased by the Company at the Repurchase Price. Any
repurchase of a Mortgage Loan or Loans pursuant to the foregoing provisions of
this Section 3.03 shall be accomplished by deposit in the Custodial Account of
the amount of the Repurchase Price for distribution to Purchaser on the next
scheduled Remittance Date, after deducting therefrom any amount received in
respect of such repurchased Mortgage Loan or Loans and being held in the
Custodial Account for future distribution.
At the time of repurchase or substitution, the Purchaser and the Company
shall arrange for the reassignment of the repurchased Mortgage Loan to the
Company and the delivery to the Company of any documents held by the Custodian
relating to the repurchased Mortgage Loan. In the event of a repurchase, the
Company shall, simultaneously with such reassignment, give written notice to the
Purchaser that such repurchase has taken place, amend the Mortgage Loan Schedule
to reflect the withdrawal of the repurchased Mortgage Loan from this Agreement.
In addition to such repurchase obligation, the Company shall indemnify the
Purchaser and hold it harmless against any losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments,
and other costs and expenses resulting from any claim, demand, defense or
assertion based on or grounded upon, or resulting from, a breach of the Company
representations and warranties contained in this Agreement. It is understood and
agreed that the obligations of the Company set forth in this Section 3.03 to
cure, substitute for or repurchase a defective Mortgage Loan and to indemnify
the Purchaser as provided in this Section 3.03 constitute the sole remedies of
the Purchaser respecting a breach of the foregoing representations and
warranties.
Any cause of action against the Company relating to or arising out of the
breach of any representations and warranties made in Sections 3.01 and 3.02
shall accrue as to any Mortgage Loan upon (i) discovery of such breach by the
Purchaser or notice thereof by the Company to the Purchaser, (ii) failures by
the Company to cure such breach or repurchase such Mortgage Loan as specified
above, and (iii) demand upon the Company by the Purchaser for compliance with
this Agreement.
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 COMPANY TO ACT AS SERVICER.
The Company, as an independent contractor, shall service and administer the
Mortgage Loans and shall have full power and authority, acting alone or through
the utilization of a third party servicing provider, to do any and all things in
connection with such servicing and administration which the Company may deem
necessary or desirable, consistent with the terms of this Agreement and with
Accepted Servicing Practices. The Company shall service the Mortgage Loans in
accordance with the guidelines of the applicable governing Agency, including the
Federal Housing Administration for FHA loans or the Veteran's Administration for
VA loans, and shall comply with all the rules and regulations as set forth by
each applicable agency.
Consistent with the terms of this Agreement and any applicable Agency
guidelines, the Company may waive, modify or vary any term of any Mortgage Loan
or consent to the postponement of strict compliance with any such term or in any
manner grant indulgence to any Mortgagor if in the Company's reasonable and
prudent determination such waiver, modification, postponement or indulgence is
not materially adverse to the Purchaser and will not result in the impairment of
coverage under any PMI Policy, the MIC or LGC. Provided, however, no such
modification shall reduce the mortgage interest rate below the Company's
prevailing market rate for similar loans in affect as of the date of
modification. In the event of any such modification which permits the deferral
of interest or principal payments on any Mortgage Loan, the Company shall
disburse on the following Remittance Date, from its own funds, 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 for any
Monthly Payment received or deferred and (b) the amount paid by the Mortgagor,
if any. Without limiting the generality of the foregoing, the Company shall
continue, and is hereby authorized and empowered, to execute and deliver on
behalf of itself and the Purchaser, all instruments of satisfaction or
cancellation, or of partial or full release, discharge and all other comparable
instruments, with respect to the Mortgage Loans and with respect to the
Mortgaged Properties. If reasonably required by the Company, the Purchaser shall
furnish the Company with any powers of attorney and other documents necessary or
appropriate to enable the Company to carry out its servicing and administrative
duties under this Agreement.
In servicing and administering the Mortgage Loans, the Company shall employ
procedures (including collection procedures) and exercise the same care that it
customarily employs and exercises in servicing and administering mortgage loans
for its own account, giving due consideration to Accepted Servicing Practices
where such practices do not conflict with the requirements of this Agreement,
and the Purchaser's reliance on the Company.
Section 4.02 LIQUIDATION OF MORTGAGE LOANS.
In the event that any payment due under any Mortgage Loan and not postponed
pursuant to Section 4.01 is not paid when the same becomes due and payable, or
in the event the Mortgagor fails to perform any other covenant or obligation
under the Mortgage Loan and such failure continues beyond any applicable grace
period, the Company shall take such action as (1) the Company would take under
similar circumstances with respect to a similar mortgage loan held for its own
account for investment, (2) shall be consistent with Accepted Servicing
Practices, (3) the Company shall determine prudently to be in the best interest
of Purchaser, and (4) is consistent with any related PMI Policy. In the event
that any payment due under any Mortgage Loan is not postponed pursuant to
Section 4.01 and remains delinquent for a period of 90 days or any other default
continues for a period of 90 days beyond the expiration of any grace or cure
period, the Company shall commence foreclosure proceedings. In such connection,
the Company shall from its own funds make all necessary and proper Servicing
Advances, provided, however, that the Company shall not be required to expend
its own funds in connection with any foreclosure or towards the restoration or
preservation of any Mortgaged Property, unless it shall determine (a) that such
preservation, restoration and/or foreclosure will increase the proceeds of
liquidation of the Mortgage Loan to Purchaser after reimbursement to itself for
such expenses and (b) that such expenses will be recoverable by it either
through Liquidation Proceeds (respecting which it shall have priority for
purposes of withdrawals from the Custodial Account pursuant to Section 4.05) or
through Insurance Proceeds (respecting which it shall have similar priority).
Notwithstanding anything to the contrary contained herein, in connection
with a foreclosure or acceptance of a deed in lieu of foreclosure, in the event
the Company has reasonable cause to believe that a Mortgaged Property is
contaminated by hazardous or toxic substances or wastes, or if the Purchaser
otherwise requests an environmental inspection or review of such Mortgaged
Property, such an inspection or review is to be conducted by a qualified
inspector. The cost for such inspection or review shall be borne by the
Purchaser. Upon completion of the inspection or review, the Company shall
promptly provide the Purchaser with a written report of the environmental
inspection.
After reviewing the environmental inspection report, the Purchaser shall
determine how the Company shall proceed with respect to the Mortgaged Property.
In the event (a) the environmental inspection report indicates that the
Mortgaged Property is contaminated by hazardous or toxic substances or wastes
and (b) the Purchaser directs the Company to proceed with foreclosure or
acceptance of a deed in lieu of foreclosure, the Company shall be reimbursed for
all reasonable costs associated with such foreclosure or acceptance of a deed in
lieu of foreclosure and any related environmental clean up costs, as applicable,
from the related Liquidation Proceeds, or if the Liquidation Proceeds are
insufficient to fully reimburse the Company, the Company shall be entitled to be
reimbursed from amounts in the Custodial Account pursuant to Section 4.05
hereof. In the event the Purchaser directs the Company not to proceed with
foreclosure or acceptance of a deed in lieu of foreclosure, the Company shall be
reimbursed for all Servicing Advances made with respect to the related Mortgaged
Property from the Custodial Account pursuant to Section 4.05 hereof.
Section 4.03 COLLECTION OF MORTGAGE LOAN PAYMENTS.
Continuously from the date hereof until the principal and interest on all
Mortgage Loans are paid in full, the Company shall proceed diligently to collect
all payments due under each of the Mortgage Loans when the same shall become due
and payable and shall take special care in ascertaining and estimating Escrow
Payments and all other charges that will become due and payable with respect to
the Mortgage Loan and the Mortgaged Property, to the end that the installments
payable by the Mortgagors will be sufficient to pay such charges as and when
they become due and payable.
Section 4.04 ESTABLISHMENT OF AND DEPOSITS TO CUSTODIAL ACCOUNT.
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Custodial Accounts,
in the form of time deposit or demand accounts, titled "▇▇▇▇▇ Fargo Home
Mortgage, Inc. in trust for the Purchaser and/or subsequent purchasers of
Residential Mortgage Loans, and various Mortgagors - P & I." The Custodial
Account shall be established with a Qualified Depository. Upon request of the
Purchaser and within ten (10) days thereof, the Company shall provide the
Purchaser with written confirmation of the existence of such Custodial Account.
Any funds deposited in the Custodial Account shall at all times be insured to
the fullest extent allowed by applicable law. Funds deposited in the Custodial
Account may be drawn on by the Company in accordance with Section 4.05.
The Company shall deposit in the Custodial Account within two (2) Business
Days of the Company's receipt, and retain therein, the following collections
received by the Company and payments made by the Company after the Cut-off Date,
other than payments of principal and interest due on or before the Cut-off Date,
or received by the Company prior to the Cut-off Date but allocable to a period
subsequent thereto:
(i) all payments on account of principal on the Mortgage Loans, including
all Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans adjusted to
the Mortgage Loan Remittance Rate;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts required to be deposited
pursuant to Section 4.10 (other than proceeds to be held in the Escrow
Account and applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with Section
4.14), Section 4.11 and Section 4.15;
(v) all Condemnation Proceeds which are not applied to the restoration or
repair of the Mortgaged Property or released to the Mortgagor in
accordance with Section 4.14;
(vi) any amount required to be deposited in the Custodial Account pursuant
to Section 4.01, 5.03, 6.01 or 6.02;
(vii) any amounts payable in connection with the repurchase of any Mortgage
Loan pursuant to Section 3.03 and all amounts required to be deposited
by the Company in connection with a shortfall in principal amount of
any Qualified Substitute Mortgage Loan pursuant to Section 3.03;
(viii) with respect to each Principal Prepayment an amount (to be paid by
the Company out of its funds) which, when added to all amounts
allocable to interest received in connection with the Principal
Prepayment, equals one month's interest on the amount of principal so
prepaid at the Mortgage Loan Remittance Rate;
(ix) any amounts required to be deposited by the Company pursuant to
Section 4.11 in connection with the deductible clause in any blanket
hazard insurance policy; and
(x) any amounts received with respect to or related to any REO Property
and all REO Disposition Proceeds pursuant to Section 4.16.
The foregoing requirements for deposit into the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges and assumption
fees, to the extent permitted by Section 6.01, need not be deposited by the
Company into the Custodial Account. Any interest paid on funds deposited in the
Custodial Account by the depository institution shall accrue to the benefit of
the Company and the Company shall be entitled to retain and withdraw such
interest from the Custodial Account pursuant to Section 4.05.
Section 4.05 PERMITTED WITHDRAWALS FROM CUSTODIAL ACCOUNT.
The Company shall, from time to time, withdraw funds from the Custodial
Account for the following purposes:
(i) to make payments to the Purchaser in the amounts and in the manner
provided for in Section 5.01;
(ii) to reimburse itself for Monthly Advances of the Company's funds made
pursuant to Section 5.03, the Company's right to reimburse itself
pursuant to this subclause
(ii) being limited to amounts received on the related Mortgage Loan which
represent late payments of principal and/or interest respecting which
any such advance was made, it being understood that, in the case of
any such reimbursement, the Company's right thereto shall be prior to
the rights of Purchaser, except that, where the Company is required to
repurchase a Mortgage Loan pursuant to Section 3.03 or 6.02, the
Company's right to such reimbursement shall be subsequent to the
payment to the Purchaser of the Repurchase Price pursuant to such
sections and all other amounts required to be paid to the Purchaser
with respect to such Mortgage Loan;
(iii) to reimburse itself for unreimbursed Servicing Advances, and for any
unpaid Servicing Fees, the Company's right to reimburse itself
pursuant to this subclause (iii) with respect to any Mortgage Loan
being limited to related Liquidation Proceeds, Condemnation Proceeds,
Insurance Proceeds and such other amounts as may be collected by the
Company from the Mortgagor or otherwise relating to the Mortgage Loan,
it being understood that, in the case of any such reimbursement, the
Company's right thereto shall be prior to the rights of Purchaser,
except that where the Company is required to repurchase a Mortgage
Loan pursuant to Section 3.03 or 6.02, in which case the Company's
right to such reimbursement shall be subsequent to the payment to the
Purchaser of the Repurchase Price pursuant to such sections and all
other amounts required to be paid to the Purchaser with respect to
such Mortgage Loan;
(iv) to pay itself interest on funds deposited in the Custodial Account;
(v) to reimburse itself for expenses incurred and reimbursable to it
pursuant to Section 8.01;
(vi) to pay any amount required to be paid pursuant to Section 4.16 related
to any REO Property, it being understood that, in the case of any such
expenditure or withdrawal related to a particular REO Property, the
amount of such expenditure or withdrawal from the Custodial Account
shall be limited to amounts on deposit in the Custodial Account with
respect to the related REO Property;
(vii) to reimburse itself for any Servicing Advances or REO expenses after
liquidation of the Mortgaged Property not otherwise reimbursed above;
(viii) to remove funds inadvertently placed in the Custodial Account by the
Company; and
(ix) to clear and terminate the Custodial Account upon the termination of
this Agreement.
In the event that the Custodial Account is interest bearing, on each
Remittance Date, the Company shall withdraw all funds from the Custodial Account
except for those amounts which, pursuant to Section 5.01, the Company is not
obligated to remit on such Remittance Date. The Company may use such withdrawn
funds only for the purposes described in this Section 4.05.
Section 4.06 ESTABLISHMENT OF AND DEPOSITS TO ESCROW ACCOUNT.
The Company shall segregate and hold all funds collected and received
pursuant to a Mortgage Loan constituting Escrow Payments separate and apart from
any of its own funds and general assets and shall establish and maintain one or
more Escrow Accounts, in the form of time deposit or demand accounts, titled,
"▇▇▇▇▇ Fargo Home Mortgage, Inc., in trust for the Purchaser and/or subsequent
purchasers of Mortgage Loans, and various Mortgagors - T & I." The Escrow
Accounts shall be established with a Qualified Depository, in a manner which
shall provide maximum available insurance thereunder. Upon request of the
Purchaser and within ten (10) days thereof, the Company shall provide the
Purchaser with written confirmation of the existence of such Escrow Account.
Funds deposited in the Escrow Account may be drawn on by the Company in
accordance with Section 4.07.
The Company shall deposit in the Escrow Account or Accounts within two (2)
Business Days of Company's receipt , and retain therein:
(i) all Escrow Payments collected on account of the Mortgage Loans, for
the purpose of effecting timely payment of any such items as required
under the terms of this Agreement;
(ii) all amounts representing Insurance Proceeds or Condemnation Proceeds
which are to be applied to the restoration or repair of any Mortgaged
Property; and
(iii) all payments on account of Buydown Funds.
The Company shall make withdrawals from the Escrow Account only to effect
such payments as are required under this Agreement, as set forth in Section
4.07. The Company shall be entitled to retain any interest paid on funds
deposited in the Escrow Account by the depository institution, other than
interest on escrowed funds required by law to be paid to the Mortgagor. To the
extent required by law, the Company shall pay interest on escrowed funds to the
Mortgagor notwithstanding that the Escrow Account may be non-interest bearing or
that interest paid thereon is insufficient for such purposes.
Section 4.07 PERMITTED WITHDRAWALS FROM ESCROW ACCOUNT.
Withdrawals from the Escrow Account or Accounts may be made by the Company
only:
(i) to effect timely payments of ground rents, taxes, assessments, water
rates, mortgage insurance premiums, condominium charges, fire and
hazard insurance premiums or other items constituting Escrow Payments
for the related Mortgage;
(ii) to reimburse the Company for any Servicing Advances made by the
Company pursuant to Section 4.08 with respect to a related Mortgage
Loan, but only from amounts received on the related Mortgage Loan
which represent late collections of Escrow Payments thereunder;
(iii) to refund to any Mortgagor any funds found to be in excess of the
amounts required under the terms of the related Mortgage Loan;
(iv) for transfer to the Custodial Account and application to reduce the
principal balance of the Mortgage Loan in accordance with the terms of
the related Mortgage and Mortgage Note;
(v) for application to restoration or repair of the Mortgaged Property in
accordance with the procedures outlined in Section 4.14;
(vi) to pay to the Company, or any Mortgagor to the extent required by law,
any interest paid on the funds deposited in the Escrow Account;
(vii) to remove funds inadvertently placed in the Escrow Account by the
Company;
(viii) to remit to Purchaser payments on account of Buydown Funds as
applicable; and
(ix) to clear and terminate the Escrow Account on the termination of this
Agreement.
Section 4.08 PAYMENT OF TAXES, INSURANCE AND OTHER CHARGES.
With respect to each Mortgage Loan, the Company shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water rates,
sewer rents, and other charges which are or may become a lien upon the Mortgaged
Property and the status of PMI Policy premiums and fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of such
charges (including renewal premiums) and shall effect payment thereof prior to
the applicable penalty or termination date, employing for such purpose deposits
of the Mortgagor in the Escrow Account which shall have been estimated and
accumulated by the Company in amounts sufficient for such purposes, as allowed
under the terms of the Mortgage. The Company assumes full responsibility for the
timely payment of all such bills and shall effect timely payment of all such
charges irrespective of each Mortgagor's faithful performance in the payment of
same of the making of the Escrow Payments, and the Company shall make advances
from its own funds to effect such payments.
Section 4.09 PROTECTION OF ACCOUNTS.
The Company may transfer the Custodial Account or the Escrow Account to a
different Qualified Depository from time to time.
Section 4.10 MAINTENANCE OF HAZARD INSURANCE.
The Company shall cause to be maintained for each Mortgage Loan hazard
insurance such that all buildings upon the Mortgaged Property are insured by an
insurer acceptable to the Agencies, 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. In the event a
hazard insurance policy shall be in danger of being terminated, or in the event
the insurer shall cease to be acceptable to the Agencies, the Company shall
notify the Purchaser and the related Mortgagor, and shall use its best efforts,
as permitted by applicable law, to obtain from another Qualified Insurer a
replacement hazard insurance policy substantially and materially similar in all
respects to the original policy. In no event, however, shall a Mortgage Loan be
without a hazard insurance policy at any time, subject only to Section 4.11
hereof.
If upon origination of the Mortgage Loan, the related Mortgaged Property
was located in an area identified by the Flood Emergency Management Agency as
having special flood hazards (and such flood insurance has been made available)
a flood insurance policy meeting the requirements of the current guidelines of
the Federal Insurance Administration is in effect with a generally acceptable
insurance carrier acceptable to the Agencies, 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 a Mortgage is secured by a unit in a condominium project, the Company
shall verify that the coverage required of the owner's association, including
hazard, flood, liability, and fidelity coverage, is being maintained in
accordance with then current Agency requirements, and secure from the owner's
association its agreement to notify the Company promptly of any change in the
insurance coverage or of any condemnation or casualty loss that may have a
material effect on the value of the Mortgaged Property as security.
In the event that any Purchaser or the Company shall determine that the
Mortgaged Property should be insured against loss or damage by hazards and risks
not covered by the insurance required to be maintained by the Mortgagor pursuant
to the terms of the Mortgage, the Company shall communicate and consult with the
Mortgagor with respect to the need for such insurance and bring to the
Mortgagor's attention the desirability of protection of the Mortgaged Property.
All policies required hereunder shall name the Company as loss payee and
shall be endorsed with standard or union mortgagee clauses, without
contribution, which shall provide for at least 30 days prior written notice of
any cancellation, reduction in amount or material change in coverage.
The Company shall not interfere with the Mortgagor's freedom of choice in
selecting either his insurance carrier or agent, provided, however, that the
Company shall not accept any such insurance policies from insurance companies
unless such companies are acceptable to the applicable Agency and are licensed
to do business in the jurisdiction in which the Mortgaged Property is located.
The Company shall determine that such policies provide sufficient risk coverage
and amounts, that they insure the property owner, and that they properly
describe the property address.
Pursuant to Section 4.04, any amounts collected by the Company under any
such policies (other than amounts to be deposited in the Escrow Account and
applied to the restoration or repair of the related Mortgaged Property, or
property acquired in liquidation of the Mortgage Loan, or to be released to the
Mortgagor, in accordance with the Company's normal servicing procedures as
specified in Section 4.14) shall be deposited in the Custodial Account subject
to withdrawal pursuant to Section 4.05.
Section 4.11 MAINTENANCE OF MORTGAGE IMPAIRMENT INSURANCE.
In the event that the Company shall obtain and maintain a blanket policy
insuring against losses arising from fire and hazards covered under extended
coverage on all of the Mortgage Loans, then, to the extent such policy provides
coverage in an amount equal to the amount required pursuant to Section 4.10 and
otherwise complies with all other requirements of Section 4.10, it shall
conclusively be deemed to have satisfied its obligations as set forth in Section
4.10. The Company shall prepare and make any claims on the blanket policy as
deemed necessary by the Company in accordance with prudent servicing practices.
Any amounts collected by the Company under any such policy relating to a
Mortgage Loan shall be deposited in the Custodial Account subject to withdrawal
pursuant to Section 4.05. Such policy may contain a deductible clause, in which
case, in the event that there shall not have been maintained on the related
Mortgaged Property a policy complying with Section 4.10, and there shall have
been a loss which would have been covered by such policy, the Company shall
deposit in the Custodial Account at the time of such loss the amount not
otherwise payable under the blanket policy because of such deductible clause,
such amount to be deposited from the Company's funds, without reimbursement
therefor. Upon request of any Purchaser, the Company shall cause to be delivered
to such 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 such Purchaser.
Section 4.12 MAINTENANCE OF FIDELITY BOND AND ERRORS AND OMISSIONS INSURANCE.
The Company shall maintain with responsible companies, at its own expense,
a blanket Fidelity Bond and an Errors and Omissions Insurance Policy, with broad
coverage on all officers, employees or other persons acting in any capacity
requiring such persons to handle funds, money, documents or papers relating to
the Mortgage Loans ("Company Employees"). Any such Fidelity Bond and Errors and
Omissions Insurance Policy shall be in the form of the Mortgage Banker's Blanket
Bond and shall protect and insure the Company against losses, including forgery,
theft, embezzlement, fraud, errors and omissions and negligent acts of such
Company Employees. Such Fidelity Bond and Errors and Omissions Insurance Policy
also shall protect and insure the Company against losses in connection with the
release or satisfaction of a Mortgage Loan without having obtained payment in
full of the indebtedness secured thereby. No provision of this Section 4.12
requiring such Fidelity Bond and Errors and Omissions Insurance Policy shall
diminish or relieve the Company from its duties and obligations as set forth in
this Agreement. The minimum coverage under any such bond and insurance policy
shall be at least equal to the amounts acceptable to the Agencies. Upon the
request of any Purchaser, the Company shall cause to be delivered to such
Purchaser a certificate of insurance for such fidelity bond and 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 4.13 INSPECTIONS.
If any Mortgage Loan is more than 60 days delinquent, the Company
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 Company shall keep a
written report of each such inspection.
Section 4.14 RESTORATION OF MORTGAGED PROPERTY.
The Company need not obtain the approval of the Purchaser prior to
releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be
applied to the restoration or repair of the Mortgaged Property if such release
is in accordance with Accepted Servicing Practices. For claims greater than
$15,000, at a minimum the Company shall comply with the following conditions in
connection with any such release of Insurance Proceeds or Condemnation Proceeds:
(i) The Company shall receive satisfactory independent verification of
completion of repairs and issuance of any required approvals with
respect thereto;
(ii) the Company shall take all steps necessary to preserve the priority of
the lien of the Mortgage, including, but not limited to requiring
waivers with respect to mechanics' and materialmen's liens;
(iii) the Company shall verify that the Mortgage Loan is not in default;
and
(iv) pending repairs or restoration, the Company shall place the Insurance
Proceeds or Condemnation Proceeds in the Escrow Account.
If the Purchaser is named as an additional loss payee, the Company is
hereby empowered to endorse any loss draft issued in respect of such a claim in
the name of the Purchaser.
Section 4.15 CLAIMS.
In connection with its activities as servicer, the Company agrees to
prepare and present, on behalf of itself and the Purchaser, claims to the
insurer under any PMI Policy, MIC or LGC in a timely fashion and in accordance
with the terms of the applicable policy or Agency requirements, in this regard,
to take such action as shall be necessary to permit recovery respecting a
defaulted Mortgage Loan. Pursuant to Section 4.04, any amounts collected by the
Company under any guaranty shall be deposited in the Custodial Account, subject
to withdrawal pursuant to Section 4.05.
Section 4.16 TITLE, MANAGEMENT AND DISPOSITION OF REO PROPERTY.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in the name of the Purchaser, or in the event the Purchaser is
not authorized or permitted to hold title to real property in the state where
the REO Property is located, or would be adversely affected under the "doing
business" or tax laws of such state by so holding title, the deed or certificate
of sale shall be taken in the name of such Person or Persons as shall be
consistent with an Opinion of Counsel obtained by the Company from any attorney
duly licensed to practice law in the state where the REO Property is located.
The Person or Persons holding such title other than the Purchaser shall
acknowledge in writing that such title is being held as nominee for the
Purchaser.
The Purchaser shall have the option to manage and operate the REO Property
provided the Purchaser gives written notice of its intention to do so within
thirty (30) days after such REO Property is acquired in foreclosure or by deed
in lieu of foreclosure. The election by the Purchaser to manage the REO Property
shall not constitute a termination of any rights of the Company pursuant to
Section 11.02.
In the event the Purchaser does not elect to manage it's own REO property,
the Company shall manage, conserve, protect and operate each REO Property for
the Purchaser solely for the purpose of its prompt disposition and sale. The
Company, either itself or through an agent selected by the Company, shall
manage, conserve, protect and operate the REO Property in the same manner that
it manages, conserves, protects and operates other foreclosed property for its
own account, and in the same manner that similar property in the same locality
as the REO Property is managed. The Company shall attempt to sell the same (and
may temporarily rent the same for a period not greater than one year, except as
otherwise provided below) on such terms and conditions as the Company deems to
be in the best interest of the Purchaser.
The Company shall use its best efforts to dispose of the REO Property as
soon as possible and shall sell such REO Property in any event within one year
after title has been taken to such REO Property, unless the Company 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 Company 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
Company as mortgagee, and such purchase money mortgage shall not be held
pursuant to this Agreement.
The Company shall also maintain on each REO Property fire and hazard
insurance with extended coverage in amount which is at least equal to the
maximum insurable value of the improvements which are a part of such property,
liability insurance and, to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance in the amount
required above.
The disposition of REO Property shall be carried out by the Company at such
price, and upon such terms and conditions, as the Company deems to be in the
best interests of the Purchaser. The proceeds of sale of the REO Property shall
be promptly deposited in the Custodial Account. As soon as practical thereafter
the expenses of such sale shall be paid and the Company shall reimburse itself
for any related unreimbursed Servicing Advances, unpaid Servicing Fees and
unreimbursed advances made pursuant to Section 5.03. On the Remittance Date
immediately following the Principal Prepayment Period in which such sale
proceeds are received the net cash proceeds of such sale remaining in the
Custodial Account shall be distributed to the Purchaser.
The Company shall withdraw from the Custodial Account funds necessary for
the proper operation management and maintenance of the REO Property, including
the cost of maintaining any hazard insurance pursuant to Section 4.10 and the
fees of any managing agent of the Company, or the Company itself. The REO
management fee shall be $1500 per REO Property. The Company shall make monthly
distributions on each Remittance Date to the Purchaser of the net cash flow from
the REO Property (which shall equal the revenues from such REO Property net of
the expenses described in this Section 4.16 and of any reserves reasonably
required from time to time to be maintained to satisfy anticipated liabilities
for such expenses).
Section 4.17 REAL ESTATE OWNED REPORTS.
Together with the statement furnished pursuant to Section 5.02, the Company
shall furnish to the Purchaser on or before the Remittance Date each month a
statement with respect to any REO Property covering the operation of such REO
Property for the previous month and the Company's efforts in connection with the
sale of such REO Property and any rental of such REO Property incidental to the
sale thereof for the previous month. That statement shall be accompanied by such
other information as the Purchaser shall reasonably request.
Section 4.18 LIQUIDATION REPORTS.
Upon the foreclosure sale of any Mortgaged Property or the acquisition
thereof by the Purchaser pursuant to a deed in lieu of foreclosure, the Company
shall submit to the Purchaser a liquidation report with respect to such
Mortgaged Property.
Section 4.19 REPORTS OF FORECLOSURES AND ABANDONMENTS OF MORTGAGED PROPERTY.
Following the foreclosure sale or abandonment of any Mortgaged Property,
the Company shall report such foreclosure or abandonment as required pursuant to
Section 6050J of the Code. The Company shall file information reports with
respect to the receipt of mortgage interest received in a trade or business and
information returns relating to cancellation of indebtedness income with respect
to any Mortgaged Property as required by the Code. Such reports shall be in form
and substance sufficient to meet the reporting requirements imposed by the Code.
Section 4.20 APPLICATION OF BUYDOWN FUNDS.
With respect to each Buydown Mortgage Loan, the Company shall have
deposited into the Escrow Account, no later than the last day of the month,
Buydown Funds in an amount equal to the aggregate undiscounted amount of
payments that, when added to the amount the Mortgagor on such Mortgage Loan is
obligated to pay on all Due Dates in accordance with the terms of the Buydown
Agreement, is equal to the full scheduled Monthly Payments which are required to
be paid by the Mortgagor under the terms of the related Mortgage Note (without
regard to the related Buydown Agreement as if the Mortgage Loan were not subject
to the terms of the Buydown Agreement). With respect to each Buydown Mortgage
Loan, the Company will distribute to the Purchaser on each Remittance Date an
amount of Buydown Funds equal to the amount that, when added to the amount
required to be paid on such date by the related Mortgagor, pursuant to and in
accordance with the related Buydown Agreement, equals the full Monthly Payment
that would otherwise be required to be paid on such Mortgage Loan by the related
Mortgagor under the terms of the related Mortgage Note (as if the Mortgage Loan
were not a Buydown Mortgage Loan and without regard to the related Buydown
Agreement).
If the Mortgagor on a Buydown Mortgage Loan defaults on such Mortgage Loan
during the Buydown Period and the Mortgaged Property securing such Buydown
Mortgage Loan is sold in the liquidation thereof (either by the Company or the
insurer under any related Primary Insurance Policy) the Company shall, on the
Remittance Date following the date upon which Liquidation Proceeds or REO
Disposition proceeds are received with respect to any such Buydown Mortgage
Loan, distribute to the Purchaser all remaining Buydown Funds for such Mortgage
Loan then remaining in the Escrow Account. Pursuant to the terms of each Buydown
Agreement, any amounts distributed to the Purchaser in accordance with the
preceding sentence will be applied to reduce the outstanding principal balance
of the related Buydown Mortgage Loan. If a Mortgagor on a Buydown Mortgage Loan
prepays such Mortgage Loan in its entirety during the related Buydown Period,
the Company shall be required to withdraw from the Escrow Account any Buydown
Funds remaining in the Escrow Account with respect to such Buydown Mortgage Loan
in accordance with the related Buydown Agreement. If a principal prepayment by a
Mortgagor on a Buydown Mortgage Loan during the related Buydown Period, together
with any Buydown Funds then remaining in the Escrow Account related to such
Buydown Mortgage Loan, would result in a principal prepayment of the entire
unpaid principal balance of the Buydown Mortgage Loan, the Company shall
distribute to the Purchaser on the Remittance Date occurring in the month
immediately succeeding the month in which such Principal Prepayment is received,
all Buydown Funds related to such Mortgage Loan so remaining in the Escrow
Account, together with any amounts required to be deposited into the Custodial
Account.
Section 4.21 NOTIFICATION OF ADJUSTMENTS.
With respect to each Mortgage Loan, the Company shall adjust the Mortgage
Interest Rate on the related Adjustment Date in compliance with the requirements
of applicable law and the related Mortgage and Mortgage Note. The Company shall
execute and deliver any and all necessary notices required under applicable law
and the terms of the related Mortgage Note and Mortgage regarding the Mortgage
Interest Rate adjustments. Upon the discovery by the Company or the receipt of
notice from the Purchaser that the Company has failed to adjust a Mortgage
Interest Rate in accordance with the terms of the related Mortgage Note, the
Company shall immediately deposit in the Custodial Account from its own funds
the amount of any interest loss or deferral caused the Purchaser thereby.
Section 4.22 CONFIDENTIALITY/PROTECTION OF CUSTOMER INFORMATION.
The Company shall keep confidential and shall not divulge to any party, without
the Purchaser's prior written consent, the price paid by the Purchaser for the
Mortgage Loans, except to the extent that it is reasonable and necessary for the
Company to do so in working with legal counsel, auditors, taxing authorities or
other governmental agencies. Each party agrees that it shall comply with all
applicable laws and regulations regarding the privacy or security of Customer
Information and shall maintain appropriate administrative, technical and
physical safeguards to protect the security, confidentiality and integrity of
Customer Information, including maintaining security measures designed to meet
the Interagency Guidelines Establishing Standards for Safeguarding Customer
Information, 66 Fed. Reg. 8616, and the rules promulgated thereunder, if
applicable. For purposes of this Section, "Customer Information" means any
personal information concerning a Mortgagor or any other Person who grants
security under any mortgage, deed of trust or other security instrument or
equivalent document that is disclosed by one party to this Agreement to the
other.
ARTICLE V
PAYMENTS TO PURCHASER
Section 5.01 REMITTANCES.
On each Remittance Date the Company shall remit by wire transfer of
immediately available funds to the Purchaser (a) all amounts deposited in the
Custodial Account as of the close of business on the Determination Date (net of
charges against or withdrawals from the Custodial Account pursuant to Section
4.05), plus (b) all amounts, if any, which the Company is obligated to
distribute pursuant to Section 5.03, minus (c) any amounts attributable to
Principal Prepayments received after the applicable Principal Prepayment Period
which amounts shall be remitted on the following Remittance Date, together with
any additional interest required to be deposited in the Custodial Account in
connection with such Principal Prepayment in accordance with Section 4.04(viii);
minus (d) any amounts attributable to Monthly Payments collected but due on a
Due Date or Dates subsequent to the first day of the month of the Remittance
Date, and minus (e) any amounts attributable to Buydown Funds being held in the
Custodial Account, which amounts shall be remitted on the Remittance Date next
succeeding the Due Period for such amounts.
With respect to any remittance received by the Purchaser after the date on
which such payment was due, the Company shall pay to the Purchaser interest on
any such late payment at an annual rate equal to the Prime Rate, adjusted as of
the date of each change, plus two percentage points, but in no event greater
than the maximum amount permitted by applicable law. Such interest shall be
distributed with such late remittance by wire transfer to the Purchaser and
shall cover the period commencing with the day following such Remittance Date
and ending with the Business Day on which such payment is made, both inclusive.
The payment by the Company of any such interest shall not be deemed an extension
of time for payment or a waiver of any Event of Default by the Company.
Section 5.02 STATEMENTS TO PURCHASER.
Not later than the Remittance Date, the Company shall furnish to the
Purchaser a monthly remittance advice in the standard form of electronic
Alltel(R)file, as to the period ending on the last day of the preceding month.
Section 5.03 MONTHLY ADVANCES BY COMPANY.
On the Business Day immediately preceding each Remittance Date, the Company
shall deposit in the Custodial Account from its own funds or from amounts held
for future distribution an amount equal to all Monthly Payments (with interest
adjusted to the Mortgage Loan Remittance Rate) which were due on the Mortgage
Loans during the applicable Due Period and which were delinquent at the close of
business on the immediately preceding Determination Date or which were deferred
pursuant to Section 4.01. Any amounts held for future distribution and so used
shall be replaced by the Company by deposit in the Custodial Account on or
before any future Remittance Date if funds in the Custodial Account on such
Remittance Date shall be less than payments to the Purchaser required to be made
on such Remittance Date. The Company's obligation to make such Monthly Advances
as to any Mortgage Loan will continue through the last Monthly Payment due prior
to the payment in full of the Mortgage Loan, or through the earlier of: (i) the
last Remittance Date prior to the Remittance Date for the distribution of all
Liquidation Proceeds and other payments or recoveries (including Insurance
Proceeds and Condemnation Proceeds) with respect to the Mortgage Loan; and (ii)
the Remittance Date prior to the date the Mortgage Loan is converted to REO
Property, provided however, that if requested in connection with a
securitization, the Company shall be obligated to make such advances through the
Remittance Date prior to the date on which cash is received in connection with
the liquidation of REO Property; provided, however, that such obligation shall
cease if the Company determines, in its sole reasonable opinion, that advances
with respect to such Mortgage Loan are non-recoverable by the Company from
Liquidation Proceeds, Insurance Proceeds, Condemnation Proceeds, or otherwise
with respect to a particular Mortgage Loan. In the event that the Company
determines that any such advances are non-recoverable, the Company shall provide
the Purchaser with a certificate signed by two officers of the Company
evidencing such determination. For purposes of this paragraph, "Rating Agency"
shall mean ▇▇▇▇▇'▇ Investors Services, Inc., Standard & Poor's Ratings Group,
Fitch Investors Services, Inc., or any other nationally recognized statistical
credit rating agency.
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01 TRANSFERS OF MORTGAGED PROPERTY.
The Company shall use its best efforts to enforce any "due-on-sale"
provision contained in any Mortgage or Mortgage Note and to deny assumption by
the person to whom the Mortgaged Property has been or is about to be sold
whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains liable on the Mortgage and the Mortgage Note. When the
Mortgaged Property has been conveyed by the Mortgagor, the Company shall, to the
extent it has knowledge of such conveyance, exercise its rights to accelerate
the maturity of such Mortgage Loan under the "due-on-sale" clause applicable
thereto, provided, however, that the Company shall not exercise such rights if
prohibited by law from doing so or if the exercise of such rights would impair
or threaten to impair any recovery under the related PMI Policy, MIC or LGC.
If the Company reasonably believes it is unable under applicable law to
enforce such "due-on-sale" clause, the Company shall enter into (i) an
assumption and modification agreement with the person to whom such property has
been conveyed, pursuant to which such person becomes liable under the Mortgage
Note and the original Mortgagor remains liable thereon or (ii) in the event the
Company is unable under applicable law to require that the original Mortgagor
remain liable under the Mortgage Note and the Company has the prior consent of
the primary mortgage guaranty insurer, a substitution of liability agreement
with the purchaser of the Mortgaged Property pursuant to which the original
Mortgagor is released from liability and the purchaser of the Mortgaged Property
is substituted as Mortgagor and becomes liable under the Mortgage Note. If an
assumption fee is collected by the Company for entering into an assumption
agreement the fee will be retained by the Company as additional servicing
compensation. In connection with any such assumption, neither the Mortgage
Interest Rate borne by the related Mortgage Note, the term of the Mortgage Loan,
the outstanding principal amount of the Mortgage Loan nor any other materials
terms shall be changed without Purchaser's consent.
To the extent that any Mortgage Loan is assumable, the Company shall
inquire diligently into the credit worthiness of the proposed transferee, and
shall use the underwriting criteria for approving the credit of the proposed
transferee which are used with respect to underwriting mortgage loans of the
same type as the Mortgage Loans. If the credit worthiness of the proposed
transferee does not meet such underwriting criteria, the Company diligently
shall, to the extent permitted by the Mortgage or the Mortgage Note and by
applicable law, accelerate the maturity of the Mortgage Loan.
Section 6.02 SATISFACTION OF MORTGAGES AND RELEASE OF MORTGAGE FILES.
Upon the payment in full of any Mortgage Loan, the Company shall notify the
Purchaser in the Monthly Remittance Advice as provided in Section 5.02, and may
request the release of any Mortgage Loan Documents.
If the Company satisfies or releases a Mortgage without first having
obtained payment in full of the indebtedness secured by the Mortgage or should
the Company otherwise prejudice any rights the Purchaser may have under the
mortgage instruments, upon written demand of the Purchaser, the Company shall
repurchase the related Mortgage Loan at the Repurchase Price by deposit thereof
in the Custodial Account within 2 Business Days of receipt of such demand by the
Purchaser. The Company shall maintain the Fidelity Bond and Errors and Omissions
Insurance Policy as provided for in Section 4.12 insuring the Company against
any loss it may sustain with respect to any Mortgage Loan not satisfied in
accordance with the procedures set forth herein.
Section 6.03 SERVICING COMPENSATION.
As compensation for its services hereunder, the Company shall be entitled
to withdraw from the Custodial Account or to retain from interest payments on
the Mortgage Loans the amount of its Servicing Fee. The Servicing Fee shall be
payable monthly and shall be computed on the basis of the same unpaid scheduled
principal balance and for the period respecting which any related interest
payment on a Mortgage Loan is computed. The obligation of the Purchaser to pay
the Servicing Fee is limited to, and payable solely from, the interest portion
of such Monthly Payments. The Servicing Fee shall not be reduced by the amount
of any guaranty fee payable to FHA or VA.
Additional servicing compensation in the form of assumption fees, to the
extent provided in Section 6.01, and late payment charges shall be retained by
the Company to the extent not required to be deposited in the Custodial Account.
The Company shall be required to pay all expenses incurred by it in connection
with its servicing activities hereunder and shall not be entitled to
reimbursement thereof except as specifically provided for herein.
Section 6.04 Annual Statement as to Compliance.
The Company shall deliver to the Purchaser, on or before February 28, each
year beginning February 28, 2004, an Officer's Certificate, stating that (i) a
review of the activities of the Company during the preceding calendar year and
of performance under this Agreement or similar agreements has been made under
such officer's supervision, and (ii) to the best of such officer's knowledge,
based on such review, the Company has fulfilled all its obligations under this
Agreements 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
Company to cure such default.
Section 6.05 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
On or before February 28, of each year beginning February 28, 2004, the
Company, at its expense, shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants to
furnish a statement to each Purchaser to the effect that such firm has examined
certain documents and records relating to the servicing of the mortgage loans
similar in nature and that such firm is of the opinion that the provisions of
this or similar Agreements have been complied with, and that, on the basis of
such examination conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers, nothing has come to their attention
which would indicate that such servicing has not been conducted in compliance
therewith, except for (i) such exceptions as such firm shall believe to be
immaterial, and (ii) such other exceptions as shall be set forth in such
statement. By providing Purchaser a copy of a Uniform Single Attestation Program
Report from their independent public accountant's on an annual basis, Company
shall be considered to have fulfilled its obligations under this Section 6.05.
Section 6.06 RIGHT TO EXAMINE COMPANY RECORDS.
The Purchaser, or its designee, shall have the right to examine and audit
any and all of the books, records, or other information of the Company, whether
held by the Company or by another on its behalf, with respect to or concerning
this Agreement or the Mortgage Loans, during business hours or at such other
times as may be reasonable under applicable circumstances, upon reasonable
advance notice. The Purchaser shall pay its own travel expenses associated with
such examination.
ARTICLE VII
COMPANY TO COOPERATE
Section 7.01 PROVISION OF INFORMATION.
During the term of this Agreement, the Company shall furnish to the
Purchaser such periodic, special, or other reports or information, and copies or
originals of any documents contained in the Servicing File for each Mortgage
Loan provided for herein. All other special reports or information not provided
for herein as shall be necessary, reasonable, or appropriate with respect to the
Purchaser or any regulatory agency will be provided at the Purchaser's expense.
All such reports, documents or information shall be provided by and in
accordance with all reasonable instructions and directions which the Purchaser
may give.
The Company shall execute and deliver all such instruments and take all
such action as the Purchaser may reasonably request from time to time, in order
to effectuate the purposes and to carry out the terms of this Agreement.
Section 7.02 FINANCIAL STATEMENTS; SERVICING FACILITY.
In connection with marketing the Mortgage Loans, the Purchaser may make
available to a prospective Purchaser a Consolidated Statement of Operations of
the Company for the most recently completed two (2) fiscal years for which such
a statement is available, as well as a Consolidated Statement of Condition at
the end of the last two (2) fiscal years covered by such Consolidated Statement
of Operations. The Company also shall make available any comparable interim
statements to the extent any such statements have been prepared by or on behalf
of the Company (and are available upon request to members or stockholders of the
Company or to the public at large).
The Company also shall make available to Purchaser or prospective Purchaser
a knowledgeable financial or accounting officer for the purpose of answering
questions respecting recent developments affecting the Company or the financial
statements of the Company, and to permit any prospective Purchaser to inspect
the Company's servicing facilities for the purpose of satisfying such
prospective Purchaser that the Company has the ability to service the Mortgage
Loans as provided in this Agreement.
ARTICLE VIII
THE COMPANY
Section 8.01 INDEMNIFICATION; THIRD PARTY CLAIMS.
The Company shall indemnify the Purchaser and hold it harmless against any
and all claims, losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments, and any other costs, fees and
expenses that the Purchaser may sustain in any way related to the failure of the
Company to perform its duties and service the Mortgage Loans in strict
compliance with the terms of this Agreement. The Company immediately shall
notify the Purchaser if a claim is made by a third party with respect to this
Agreement or the Mortgage Loans, assume (with the prior written consent of the
Purchaser) the defense of any such claim and pay all expenses in connection
therewith, including counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against it or the Purchaser in respect
of such claim. The Company shall follow any written instructions received from
the Purchaser in connection with such claim. The Purchaser promptly shall
reimburse the Company for all amounts advanced by it pursuant to the preceding
sentence except when the claim is in any way related to the Company's
indemnification pursuant to Section 3.03, or the failure of the Company to
service and administer the Mortgage Loans in strict compliance with the terms of
this Agreement.
Section 8.02 MERGER OR CONSOLIDATION OF THE COMPANY.
The Company shall keep in full effect its existence, rights and franchises
as a corporation, and shall obtain and preserve its qualification to do business
as a foreign corporation in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and enforceability of this Agreement
or any of the Mortgage Loans and to perform its duties under this Agreement.
Any person into which the Company may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Company shall be a party, or any Person succeeding to the business of the
Company, shall be the successor of the Company hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding, provided, however, that
the successor or surviving Person shall be an institution which is a
HUD/VA-approved company in good standing. Furthermore, in the event the Company
transfers or otherwise disposes of all or substantially all of its assets to an
affiliate of the Company, such affiliate shall satisfy the condition above, and
shall also be fully liable to the Purchaser for all of the Company's obligations
and liabilities hereunder.
Section 8.03 LIMITATION ON LIABILITY OF COMPANY AND OTHERS.
Neither the Company nor any of the directors, officers, employees or agents
of the Company shall be under any liability to the Purchaser for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment, provided, however, that this
provision shall not protect the Company or any such person against any breach of
warranties or representations made herein, or failure to perform its obligations
in strict compliance with any standard of care set forth in this Agreement or
any other liability which would otherwise be imposed under this Agreement. The
Company and any director, officer, employee or agent of the Company may rely in
good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder. The Company
shall not be under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its duties to service the Mortgage Loans in
accordance with this Agreement and which in its opinion may involve it in any
expense or liability, provided, however, that the Company may, with the consent
of the Purchaser, undertake any such action which it may deem necessary or
desirable in respect to this Agreement and the rights and duties of the parties
hereto. In such event, the Company shall be entitled to reimbursement from the
Purchaser of the reasonable legal expenses and costs of such action.
Section 8.04 LIMITATION ON RESIGNATION AND ASSIGNMENT BY COMPANY.
The Purchaser has entered into this Agreement with the Company and
subsequent purchaser will purchase the Mortgage Loans in reliance upon the
independent status of the Company, and the representations as to the adequacy of
its servicing facilities, plant, personnel, records and procedures, its
integrity, reputation and financial standing, and the continuance thereof.
Therefore, the Company shall neither assign this Agreement or the servicing
hereunder or delegate its rights or duties hereunder or any portion hereof or
sell or otherwise dispose of all of its property or assets without the prior
written consent of the Purchaser, which consent shall not be unreasonably
withheld.
The Company shall not resign from the obligations and duties hereby imposed
on it except by mutual consent of the Company and the Purchaser or upon the
determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Company. Any such
determination permitting the resignation of the Company shall be evidenced by an
Opinion of Counsel to such effect delivered to the Purchaser which Opinion of
Counsel shall be in form and substance acceptable to the Purchaser. No such
resignation shall become effective until a successor shall have assumed the
Company's responsibilities and obligations hereunder in the manner provided in
Section 12.01.
Without in any way limiting the generality of this Section 8.04, in the
event that the Company either shall assign this Agreement or the servicing
responsibilities hereunder or 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 10.01, without any payment of any penalty or damages and
without any liability whatsoever to the Company or any third party.
ARTICLE IX
PASS-THROUGH TRANSFER
Section 9.01 REMOVAL OF MORTGAGE LOANS FROM INCLUSION UNDER THIS AGREEMENT
The Purchaser and the Company agree that with respect to some or all of the
Mortgage Loans, the Purchaser, at its sole option, shall effect up to four Whole
Loan Transfers, Agency Sales or Pass-Through Transfers, retaining the Company as
the Servicer thereof or subservicer if a master servicer is employed, or as
applicable the "seller/servicer." On the Reconstitution Date, the Mortgage Loans
transferred shall cease to be covered by this Agreement; provided, however,
that, in the event that any Mortgage Loan transferred pursuant to this Section 9
is rejected by the transferee, the Company shall continue to service such
rejected Mortgage Loan on behalf of the Purchaser in accordance with the terms
and provisions of this Agreement.
The Company shall cooperate with the Purchaser in connection with each Whole
Loan Transfer, Agency Sale or Pass-Through Transfer in accordance with this
Section 9. In connection therewith the Company shall:
(a) make all representations and warranties with respect to the Mortgage
Loans as of the Closing Date and with respect to the Company itself as
of the closing date of each Whole Loan Transfer, Agency Sale or
Pass-Through Transfer;
(b) negotiate in good faith and execute any seller/servicer agreements or
pooling and servicing agreements required by the shelf registrant to
effectuate the foregoing provided such agreements create no greater
obligation or cost on the part of the Company than otherwise set forth
in this Agreement;
(c) provide as applicable:
(i) any and all information and appropriate verification of
information which may be reasonably available to the Company,
whether through letters of its auditors and counsel or otherwise,
as the Purchaser shall request;
(ii) such additional representations, warranties, covenants, opinions
of counsel, letters from auditors, and certificates of public
officials or officers of the Company as are reasonably believed
necessary by the trustee, any Rating Agency or the Purchaser, as
the case may be, in connection with such Whole Loan Transfers,
Agency Sales or Pass-Through Transfers. The Purchaser shall pay
all third party costs associated with the preparation of such
information. The Company shall execute any seller/servicer
agreements required within a reasonable period of time after
receipt of such seller/servicer agreements which time shall be
sufficient for the Company and Company's counsel to review such
seller/servicer agreements. Under this Agreement, the Company
shall retain a servicing fee at a rate per annum equal to no less
than 0.250% per Mortgage Loan; and
(d) indemnify the Purchaser for any material misstatements contained in
the information provided pursuant to (c) above, provided that the
Purchaser shall also provide indemnification to the Company, its
successors or assigns, with respect to any material misstatements or
omissions contained in any information (other than the information
provided by the Company pursuant to (c) above) the Purchaser may
disclose in any securitization offering materials.
In the event the Purchaser has elected to have the Company hold record title to
the Mortgages, prior to the Reconstitution Date the Company shall prepare an
Assignment in blank or to the trustee or to the subsequent purchaser from the
Company acceptable to the trustee or subsequent purchaser for each Mortgage Loan
that is part of the Whole Loan Transfers, Agency Sale or Pass-Through Transfers.
The Purchaser shall pay all preparation and recording costs associated
therewith. The Company shall execute each Assignment, track such Assignments to
ensure they have been recorded and deliver them as required by the trustee or
subsequent purchaser upon the Company's receipt thereof. Additionally, the
Company shall prepare and execute, at the direction of the Purchaser, any note
endorsements in connection with any and all seller/servicer agreements.
Notwithstanding any provisions of the this Agreement to the contrary, all
Mortgage Loans sold or transferred to an Agency, shall be serviced in accordance
with the guidelines of the respective Agency. All Mortgage Loans not sold or
transferred pursuant to Whole Loan Transfers, Agency Sales or Pass-Through
Transfers shall remain subject to this Agreement and shall continue to be
serviced in accordance with the terms of this Agreement and with respect thereto
this Agreement shall remain in full force and effect.
ARTICLE X
DEFAULT
Section 10.01 EVENTS OF DEFAULT.
Each of the following shall constitute an Event of Default on the part of
the Company:
(i) any failure by the Company to remit to the Purchaser any payment
required to be made under the terms of this Agreement which continues
unremedied for a period of five days after the date upon which written
notice of such failure, requiring the same to be remedied, shall have
been given to the Company by the Purchaser; or
(ii) failure by the Company duly to observe or perform in any material
respect any other of the covenants or agreements on the part of the
Company set forth in this Agreement 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 Company by the Purchaser or by the Custodian; or
(iii) failure by the Company to maintain its license to do business in any
jurisdiction where the Mortgaged Property is located if such license
is required; or
(iv) a decree or order of a court or agency or supervisory authority having
jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, including
bankruptcy, marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs,
shall have been entered against the Company and such degree or order
shall have remained in force undischarged or unstayed for a period of
60 days; or
(v) the Company shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or
relating to the Company or of or relating to all or substantially all
of its property; or
(vi) the Company shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency, bankruptcy or reorganization statute, make an
assignment for the benefit of its creditors, voluntarily suspend
payment of its obligations or cease its normal business operations for
three Business Days; or
(vii) the Company ceases to meet the qualifications of an Agency servicer;
or
(viii) the Company attempts to assign its right to servicing compensation
hereunder or to assign this Agreement or the servicing
responsibilities hereunder or to delegate its duties hereunder or any
portion thereof in violation of Section 8.04.
In each and every such case, so long as an Event of Default shall not have
been remedied, in addition to whatever rights the Purchaser may have at law or
equity to damages, including injunctive relief and specific performance, the
Purchaser, by notice in writing to the Company, may terminate all the rights and
obligations of the Company under this Agreement and in and to the Mortgage Loans
and the proceeds thereof.
Upon receipt by the Company of such written notice, all authority and power
of the Company under this Agreement, whether with respect to the Mortgage Loans
or otherwise, shall pass to and be vested in the successor appointed pursuant to
Section 12.01. Upon written request from any Purchaser, the Company shall
prepare, execute and deliver to the successor entity designated by the Purchaser
any and all documents and other instruments, place in such successor's
possession all Mortgage Files, and do or cause to be done all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, including but not limited to the transfer and endorsement or
assignment of the Mortgage Loans and related documents, at the Company's sole
expense. The Company shall cooperate with the Purchaser and such successor in
effecting the termination of the Company's responsibilities and rights
hereunder, including without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited by
the Company to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans.
Section 10.02 WAIVER OF DEFAULTS.
By a written notice, the Purchaser may waive any default by the Company in
the performance of its obligations hereunder and its consequences. Upon any
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
ARTICLE XI
TERMINATION
Section 11.01 TERMINATION.
This Agreement shall terminate upon either: (i) the later of the final
payment or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan or the disposition of any REO Property with respect to the last
Mortgage Loan and the remittance of all funds due hereunder; or (ii) mutual
consent of the Company and the Purchaser in writing.
Section 11.02 TERMINATION WITHOUT CAUSE.
The Purchaser may terminate, at its sole option, any rights the Company may
have hereunder, without cause as provided in this Section 11.02. Any such notice
of termination shall be in writing and delivered to the Company by registered
mail as provided in Section 12.05.
The Company shall be entitled to receive, as such liquidated damages, upon
the transfer of the servicing rights, an amount equal to: (i) 2.75% of the
aggregate outstanding principal amount of the Mortgage Loans as of the
termination date paid by the Purchaser to the Company with respect to all of the
Mortgage Loans for which a servicing fee rate of 0.250% is paid per annum, (ii)
3.25% of the aggregate outstanding principal amount of the Mortgage Loans as of
the termination date paid by the Purchaser to the Company with respect to all of
the Mortgage Loans for which a servicing fee rate of .375% is paid per annum,
and (iii) 3.75% of the aggregate outstanding principal amount of the Mortgage
Loans as of the termination date paid by the Purchaser to the Company with
respect to all of the Mortgage Loans for which a servicing fee rate of 0.44% or
more is paid per annum.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 SUCCESSOR TO COMPANY.
Prior to termination of the Company's responsibilities and duties under
this Agreement pursuant to Sections 8.04, 10.01, 11.01 (ii) or pursuant to
Section 11.02, the Purchaser shall, (i) succeed to and assume all of the
Company's responsibilities, rights, duties and obligations under this Agreement,
or (ii) appoint a successor having the characteristics set forth in Section 8.02
and which shall succeed to all rights and assume all of the responsibilities,
duties and liabilities of the Company under this Agreement prior to the
termination of Company's responsibilities, duties and liabilities under this
Agreement. In connection with such appointment and assumption, the Purchaser may
make such arrangements for the compensation of such successor out of payments on
Mortgage Loans as it and such successor shall agree. In the event that the
Company's duties, responsibilities and liabilities under this Agreement should
be terminated pursuant to the aforementioned sections, the Company shall
discharge such duties and responsibilities during the period from the date it
acquires knowledge of such termination until the effective date thereof with the
same degree of diligence and prudence which it is obligated to exercise under
this Agreement, and shall take no action whatsoever that might impair or
prejudice the rights or financial condition of its successor. The resignation or
removal of the Company pursuant to the aforementioned sections shall not become
effective until a successor shall be appointed pursuant to this Section 12.01
and shall in no event relieve the Company of the representations and warranties
made pursuant to Sections 3.01 and 3.02 and the remedies available to the
Purchaser under Section 3.03, it being understood and agreed that the provisions
of such Sections 3.01, 3.02, and 3.03 shall be applicable to the Company
notwithstanding any such sale, assignment, resignation or termination of the
Company, or the termination of this Agreement.
Any successor appointed as provided herein shall execute, acknowledge and
deliver to the Company and to the Purchaser an instrument accepting such
appointment, wherein the successor shall make the representations and warranties
set forth in Section 3.01, except for the portion of subsection (h) relating to
sale of the mortgage loans and all of subsections (j) and (l) thereof, whereupon
such successor shall become fully vested with all the rights, powers, duties,
responsibilities, obligations and liabilities of the Company, with like effect
as if originally named as a party to this Agreement. Any termination or
resignation of the Company or termination of this Agreement pursuant to Section
8.04, 10.01, 11.01 or 11.02 shall not affect any claims that any Purchaser may
have against the Company arising out of the Company's actions or failure to act
prior to any such termination or resignation.
The Company shall deliver promptly to the successor servicer the funds in
the Custodial Account and Escrow Account and all Mortgage Files and related
documents and statements held by it hereunder and the Company shall account for
all funds and shall execute and deliver such instruments and do such other
things as may reasonably be required to more fully and definitively vest in the
successor all such rights, powers, duties, responsibilities, obligations and
liabilities of the Company.
Upon a successor's acceptance of appointment as such, the Company shall
notify by mail the Purchaser of such appointment in accordance with the
procedures set forth in Section 12.05.
Section 12.02 AMENDMENT.
This Agreement may be amended from time to time by written agreement signed
by the Company and the Purchaser.
Section 12.03 GOVERNING LAW.
This Agreement shall be construed in accordance with the laws of the State
of New York and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.
Each of the Company and the Purchaser hereby knowingly, voluntarily and
intentionally waives any and all rights it may have to a trial by jury in
respect or any litigation based on, or arising out of, under, or in connection
with, this Agreement, or any other documents and instruments executed in
connection herewith, or any course of conduct, course of dealing, statements
(whether oral or written), or actions of the Company or the Purchaser. This
provision is a material inducement for the Purchaser to enter into this
Agreement
Section 12.04 DURATION OF AGREEMENT.
This Agreement shall continue in existence and effect until terminated as
herein provided. This Agreement shall continue notwithstanding transfers of the
Mortgage Loans by the Purchaser.
Section 12.05 Notices.
All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
registered mail, postage prepaid, addressed as follows:
(i) if to the Company with respect to servicing and investor reporting
issues:
▇▇▇▇▇ Fargo Home Mortgage, Inc.
▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, MAC X2401-042
Fax: 515/▇▇▇-▇▇▇▇
If to the Company with respect to all other issues:
▇▇▇▇▇ Fargo Home Mortgage, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, MAC X4801-097
Fax: 612/▇▇▇-▇▇▇▇
In each instance with a copy to:
▇▇▇▇▇ Fargo Home Mortgage, Inc.
▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel MAC X2401-06T
or such other address as may hereafter be furnished to the Purchaser
in writing
by the Company;
(ii) if to Purchaser:
EMC Mortgage Corporation
Mac ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, President
Section 12.06 SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement.
Section 12.07 RELATIONSHIP OF PARTIES.
Nothing herein contained shall be deemed or construed to create a
partnership or joint venture between the parties hereto and the services of the
Company shall be rendered as an independent contractor and not as agent for the
Purchaser.
Section 12.08 EXECUTION; SUCCESSORS AND ASSIGNS.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement. Subject to Section 8.04, this Agreement
shall inure to the benefit of and be binding upon the Company and the Purchaser
and their respective successors and assigns.
Section 12.09 RECORDATION OF ASSIGNMENTS OF MORTGAGE.
To the extent permitted by applicable law, each of the Assignments of
Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or other comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected at the Company's expense in the event recordation is either necessary
under applicable law or requested by the Purchaser at its sole option. The
company shall only be responsible for the costs of recording the initial
Assignments of Mortgage. In no event shall the Company be responsible for the
cost of recording Assignments of Mortgage in connection with a subsequent sale
or transfer of the Mortgage Loans by the Purchaser.
Section 12.10 ASSIGNMENT BY PURCHASER.
The Purchaser shall have the right, without the consent of the Company but
subject to the limit set forth in Section 2.02 hereof, to assign, in whole or in
part, its interest under this Agreement with respect to some or all of the
Mortgage Loans, and designate any person to exercise any rights of the Purchaser
hereunder, by executing an Assignment and Assumption Agreement and the assignee
or designee shall accede to the rights and obligations hereunder of the
Purchaser with respect to such Mortgage Loans. All references to the Purchaser
in this Agreement shall be deemed to include its assignee or designee.
Section 12.11 SOLICITATION OF MORTGAGOR.
The Purchaser, its affiliates, successors or assigns shall not, without the
prior written consent of the Company, take any action to solicit or make direct
contact with the Mortgagor under any Mortgage Loan except to the extent required
by the Company's breach of this Agreement or as required under applicable law or
regulatory authority. Notwithstanding any provision of this Agreement to the
contrary, in the event the Purchaser, its affiliates, successors or assigns
fails to obtain such written consent, the Company shall be entitled, in its sole
discretion, to terminate its obligations and duties under this Agreement. Upon
transfer of the servicing rights and obligations under this Agreement to the
Purchaser or Purchaser's designee, the Company shall be entitled to receive as
liquidated damages, an amount equal to: (i) 2.75% of the aggregate outstanding
principal amount of the Mortgage Loans as of the termination date paid by the
Purchaser to the Company with respect to all of the Mortgage Loans for which a
servicing fee rate of .250% is paid per annum, (ii) 3.25% of the aggregate
outstanding principal amount of the Mortgage Loans as of the termination date
paid by the Purchaser to the Company with respect to all of the Mortgage Loans
for which a servicing fee rate of .375% is paid per annum, and (iii) 3.75% of
the aggregate outstanding principal amount of the Mortgage Loans as of the
termination date paid by the Purchaser to the Company with respect to all of the
Mortgage Loans for which a servicing fee rate of 0.44% or more is paid per
annum.
The Company agrees that, after the Closing Date, it will not take any
action to solicit the refinancing of any Mortgage Loan. It is understood and
agreed that promotions undertaken by the Company or any affiliate of the Company
which are directed to the general public at large, including, without
limitation, mass mailings based upon commercially acquired mailing lists,
newspaper, radio, television advertisements or from servicing the refinancing
needs of a Mortgagor who, without solicitation, contacts Company in connection
with the refinance of such Mortgage or Mortgage Loan, shall not constitute
solicitation under this Section. Notwithstanding anything to the contrary, this
Section shall not prohibit the Company from soliciting any Mortgagor to provide
other services including but not limited to credit cards, insurance investments
and banking related services.
[Intentionally Blank - Next Page Signature Page]
IN WITNESS WHEREOF, the Company and the Purchaser have caused their names
to be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.
EMC MORTGAGE CORPORATION ▇▇▇▇▇ FARGO HOME MORTGAGE,
INC.
PURCHASER COMPANY
By:_______________________________ By:_______________________________
Name:_____________________________ Name:_____________________________
Title:____________________________ Title:____________________________
STATE OF )
) ss:
COUNTY OF ___________ )
On the _____ day of _______________, 20___ before me, a Notary Public in
and for said State, personally appeared , known to me to be of ▇▇▇▇▇ Fargo Home
Mortgage, Inc., the corporation that executed the within instrument and also
known to me to be the person who executed it on behalf of said corporation, and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal the
day and year in this certificate first above written.
_____________________________________
Notary Public
My Commission expires________________
STATE OF )
) ss:
COUNTY OF ___________ )
On the _____ day of _______________, 20___ before me, a Notary Public in
and for said State, personally appeared _____________________________________,
known to me to be the ______________________________ of
______________________________, the corporation that executed the within
instrument and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal the
day and year in this certificate first above written.
_____________________________________
Notary Public
My Commission expires________________
EXHIBIT A
MORTGAGE LOAN SCHEDULE
EXHIBIT B
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include each of
the following items, which shall be available for inspection by the Purchaser
and any prospective Purchaser, and which shall be retained by the Company in the
Servicing File or delivered to the Custodian pursuant to Sections 2.01 and 2.03
of the Seller's Warranties and the Servicing Agreement to which this Exhibit is
attached (the "Agreement"):
1. The original Mortgage Note bearing all intervening endorsements,
endorsed "Pay to the order of without recourse" and signed in the name
of the Company by an authorized officer (in the event that the
Mortgage Loan was acquired by the Company in a merger, the signature
must be in the following form: "[Company], successor by merger to
[name of predecessor]"; and in the event that the Mortgage Loan was
acquired or originated by the Company while doing business under
another name, the signature must be in the following form: "[Company],
formerly know as [previous name]").
2. The original of any guarantee executed in connection with the Mortgage
Note (if any).
3. The recorded original related Mortgage pertaining to such Mortgage
Loan, together with any addenda and riders, or a copy certified by
Seller to be a true and correct copy of the original recorded
document, or if the related Mortgage is in the process of being
recorded, a photocopy of the related Mortgage, certified by the
Company or an officer of the respective prior owner of such Mortgage
Loan or by the applicable title insurance company,
closing/settlement/escrow agent or company or closing attorney to be a
true and correct copy of the related Mortgage transmitted for
recordation. Provided, however, if the Purchaser requires a clerk
certified copy of the original recorded Mortgage, the Company shall
request such from the appropriate recording office and furnish it to
the Purchaser as soon a practicable and no event later than 180 days
of Purchaser's request;
4. the originals or certified true copies of any document sent for
recordation of all assumption, modification, consolidation or
extension agreements, with evidence of recording thereon.
5. The original Assignment of Mortgage for each Mortgage Loan, in form
and substance acceptable for recording (except for the insertion of
the name of the assignee and recording information). The Assignment of
Mortgage must be duly recorded only if recordation is either necessary
under applicable law or commonly required by private institutional
mortgage investors in the area where the Mortgaged Property is located
or on direction of the Purchaser. If the Assignment of Mortgage is to
be recorded, the Mortgage shall be assigned to the Purchaser. If the
Assignment of Mortgage is not to be recorded, the Assignment of
Mortgage shall be delivered in blank. If the Mortgage Loan was
acquired by the Company in a merger, the Assignment of Mortgage must
be made by "[Company], successor by merger to [name of predecessor]."
If the Mortgage Loan was acquired or originated by the Company while
doing business under another name, the Assignment of Mortgage must be
by "[Company], formerly know as [previous name]." Subject to the
foregoing and where permitted under the applicable laws of the
jurisdiction wherein the Mortgaged property is located, such
Assignments of Mortgage may be made by blanket assignments for
Mortgage Loans secured by the Mortgaged Properties located in the same
county.
6. The recorded original, or a copy certified by the Company to be a true
and correct copy of the original recorded, intervening Assignment of
the Mortgage as is necessary to show a complete chain of title from
the respective loan originator to the respective prior owner of such
Mortgage Loan or, if any such original is unavailable because it is in
the process of being recorded, a photocopy of such intervening
Assignment certified by the Company or an officer of the prior owner
of such Mortgage Loan to be a true and correct copy of such
intervening Assignment submitted for recordation. Provided, however,
if the Purchaser requires a clerk certified copy of the original
recorded intervening Assignment, the Company shall request such from
the appropriate recording office and furnish it to the Purchaser as
soon a practicable and no event later than 180 days of Purchaser's
request;
7. The MIC or LGC as applicable, where required pursuant to the
Agreement.
8. The original mortgagee policy of title insurance or evidence of title.
9. Any security agreement, chattel mortgage or equivalent executed in
connection with the Mortgage.
With respect to each Mortgage Loan, the Mortgage File shall include each of the
following items to the extent in the possession of the Company or in the
possession of the Company's agent(s):
10. The original hazard insurance policy and, if required by law, flood
insurance policy, in accordance with Section 4.10 of the Agreement.
11. Residential loan application.
12. Mortgage Loan closing statement.
13. Verification of employment and income, unless originated under the
Company's Limited Documentation program, FNMA Timesaver Plus.
14. Verification of acceptable evidence of source and amount of down
payment.
15. Credit report on the Mortgagor.
16. Residential appraisal report.
17. Photograph of the Mortgaged Property.
18. Survey of the Mortgage property, if required by the title company or
applicable law.
19. Copy of each instrument necessary to complete identification of any
exception set forth in the exception schedule in the title policy,
i.e. map or plat, restrictions, easements, sewer agreements, home
association declarations, etc.
20. All required disclosure statements.
21. If available, termite report, structural engineer's report, water
potability and septic certification.
22. Sales contract, if applicable.
23. Evidence of payment of taxes and insurance premiums, insurance claim
files, correspondence, current and historical computerized data files,
and all other processing, underwriting and closing papers and records
which are customarily contained in a mortgage loan file and which are
required to document the Mortgage Loan or to service the Mortgage
Loan.
24. Amortization schedule, if available.
25. Payment history for any Mortgage Loan that has been closed for more
than 90 days.
26. Original power of attorney, if applicable.
In the event an Officer's Certificate of the Company is delivered to the
Custodian because of a delay caused by the public recording office in returning
any recorded document, the Company shall deliver to the Custodian, within 240
days of the Closing Date, an Officer's Certificate which shall (i) identify the
recorded document, (ii) state that the recorded document has not been delivered
to the Custodian due solely to a delay caused by the public recording office,
(iii) state the amount of time generally required by the applicable recording
office to record and return a document submitted for recordation, and (iv)
specify the date the applicable recorded document will be delivered to the
Custodian. The Company shall be required to deliver to the Custodian the
applicable recorded document by the date specified in (iv) above. An extension
of the date specified in (iv) above may be requested from the Purchaser, which
consent shall not be unreasonably withheld.
Notwithstanding paragraphs 1 and 6 above, the Purchaser acknowledges that
the Company may deliver (i) a Mortgage Note for which the chain of endorsements
is not identical to that of the intervening Assignments with respect to such
Mortgage Note, which shall not affect the enforceability of such Mortgage Note,
and/or (ii) intervening Assignments which are not identical to the chain of
endorsements with respect to such Mortgage Note, which shall not affect the
validity of such intervening Assignments; provided, however, that such
acknowledgment shall in no way operate to negate the Purchaser's remedies for
the Company's breach of the representations and warranties under this Agreement.
EXHIBIT C
CUSTODIAL AGREEMENT
EXHIBIT D
ASSIGNMENT AND ASSUMPTION
____________, 20__
ASSIGNMENT AND ASSUMPTION, dated ___________________, 20____ between
_________________, a _________________ corporation having an office at
_________________ ("Assignor") and _________________, having an office at
_________________ ("Assignee"):
For and in consideration of the sum of one dollar ($1.00) and other
valuable consideration the receipt and sufficiency of which are hereby
acknowledge, and of the mutual covenants herein contained, the parties hereto
hereby agree as follows:
1. The Assignor hereby grants, transfers and assigns to Assignee all of the
right, title and interest of Assignor, as Purchaser, in, to and under that
certain Seller's Warranties and Servicing Agreement, (the "Seller's Warranties
and Servicing Agreement"), dated as of _________________, by and between
_________________ (the "Purchaser"), and _________________ (the "Company"), and
the Mortgage Loans delivered thereunder by the Company to the Assignor, and that
certain Custodial Agreement, (the "Custodial Agreement"), dated as of
_________________, by and among the Company, the Purchaser and _________________
(the "Custodian").
2. The Assignor warrants and represents to, and covenants with, the
Assignee that:
a. The Assignor is the lawful owner of the Mortgage Loans with the
full right to transfer the Mortgage Loans free from any and all claims and
encumbrances whatsoever;
b. The Assignor has not received notice of, and has no knowledge of,
any offsets, counterclaims or other defenses available to the Company with
respect to the Seller's Warranties and Servicing Agreement or the Mortgage
Loans;
c. The Assignor has not waived or agreed to any waiver under, or
agreed to any amendment or other modification of, the Seller's Warranties
and Servicing Agreement, the Custodial Agreement or the Mortgage Loans,
including without limitation the transfer of the servicing obligations
under the Seller's Warranties and Servicing Agreement. The Assignor has no
knowledge of, and has not received notice of, any waivers under or
amendments or other modifications of, or assignments of rights or
obligations under, the Seller's Warranties and Servicing Agreement or the
Mortgage Loans; and
d. Neither the Assignor nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any
interest in the Mortgage Loans or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other
disposition of the Mortgage Loans, any interest in the Mortgage Loans or
any other similar security from, or otherwise approached or negotiated with
respect to the Mortgage Loans, any interest in the Mortgage Loans or any
other similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or
taken any other action which would constitute a distribution of the
Mortgage Loans under the Securities Act of 1933 (the "33 Act") or which
would render the disposition of the Mortgage Loans a violation of Section 5
of the 33 Act or require registration pursuant thereto.
3. That Assignee warrants and represent to, and covenants with, the
Assignor and the Company pursuant to Section 12.10 of the Seller's Warranties
and Servicing Agreement that:
a. The Assignee agrees to be bound, as Purchaser, by all of the terms,
covenants and conditions of the Seller's Warranties and Servicing
Agreement, the Mortgage Loans and the Custodial Agreement, and from and
after the date hereof, the Assignee assumes for the benefit of each of the
Company and the Assignor all of the Assignor's obligations as purchaser
thereunder;
b. The Assignee understands that the Mortgage Loans have not been
registered under the 33 Act or the securities laws of any state;
c. The purchase price being paid by the Assignee for the Mortgage
Loans are in excess of $250,000.00 and will be paid by cash remittance of
the full purchase price within 60 days of the sale;
d. The Assignee is acquiring the Mortgage Loans for investment for its
own account only and not for any other person. In this connection, neither
the Assignee nor any person authorized to act therefor has offered to
Mortgage Loans by means of any general advertising or general solicitation
within the meaning of Rule 502(c) of US Securities and Exchange Commission
Regulation D, promulgated under the 1933 Act;
e. The Assignee considers itself a substantial sophisticated
institutional investor having such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks
of investment in the Mortgage Loans;
f. The Assignee has been furnished with all information regarding the
Mortgage Loans that it has requested from the Assignor or the Company;
g. Neither the Assignee nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any
interest in the Mortgage Loans or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other
disposition of the Mortgage Loans, any interest in the Mortgage Loans or
any other similar security from, or otherwise approached or negotiated with
respect to the Mortgage Loans, any interest in the Mortgage Loans or any
other similar security with, any person in any manner which would
constitute a distribution of the Mortgage Loans under the 33 Act or which
would render the disposition of the Mortgage Loans a violation of Section 5
of the 33 Act or require registration pursuant thereto, nor will it act,
nor has it authorized or will it authorize any person to act, in such
manner with respect to the Mortgage Loans; and
h. Either (1) the Assignee is not an employee benefit plan ("Plan")
within the meaning of section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or a plan (also "Plan") within
the meaning of section 4975(e)(1) of the Internal Revenue Code of 1986
("Code"), and the Assignee is not directly or indirectly purchasing the
Mortgage Loans on behalf of, investment manager of, as named fiduciary of,
as Trustee of, or with assets of, a Plan; or (2) the Assignee's purchase of
the Mortgage Loans will not result in a prohibited transaction under
section 406 of ERISA or section 4975 of the Code.
i. The Assignee's address for purposes of all notices and
correspondence related to the Mortgage Loans and the Seller's Warranties
and Servicing Agreements is:
_____________________________
_____________________________
_____________________________
Attention: __________________
The Assignee's wire transfer instructions for purposes of all remittances
and payments related to the Mortgage Loans and the Seller's Warranties and
Servicing Agreement is:
_____________________________
_____________________________
_____________________________
Attention: __________________
[Signatures Follow]
IN WITNESS WHEREOF, the parties have caused this Assignment and Assumption to be
executed by their duly authorized officers as of the date first above written.
__________________________________ __________________________________
Assignor Assignee
By:_______________________________ By:_______________________________
Name:_____________________________ Name:_____________________________
Its:______________________________ Its:______________________________
Tax Payer Identification No.: Tax Payer Identification No.:
__________________________________ __________________________________
MORTGAGE LOAN PURCHASE AGREEMENT
This is a Purchase Agreement (the "Agreement"), dated as of July 1, 2003 by
and between EMC Mortgage Corporation, having an office at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "Purchaser") and ▇▇▇▇▇ Fargo Home
Mortgage, Inc., having an ▇▇▇▇▇▇ ▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(the "Seller").
W I T N E S S E T H
WHEREAS, the Seller agrees to sell, and the Purchaser agrees to purchase,
certain mortgage loans (the "Mortgage Loans") on a servicing retained basis as
described herein:
WHEREAS, the Mortgage Loans shall be delivered as whole loans;
WHEREAS, the parties intend hereby to set forth the terms and conditions
upon which the proposed transactions will be effected.
NOW THEREFORE, in consideration of the promises and the mutual agreements
set forth herein, the parties hereto agree as follows:
SECTION 1. All capitalized terms not otherwise defined herein have the
respective meanings set forth in the Seller's Warranties and Servicing
Agreement, dated as of the date herewith (the "Seller's Warranties and Servicing
Agreement"). The following terms are defined as follows (except as otherwise
agreed by the parties):
Cut-off Date: July 1, 2003
Closing Date: July 24, 2003
First Remittance Date: August 18, 2003
Servicing Fee Rate: 0.250%
SECTION 2. AGREEMENT TO PURCHASE. The Seller agrees to sell, and the
Purchaser agrees to purchase, Mortgage Loans having an aggregate principal
balance on the Cut-off Date of $___, or in such other amount as agreed by the
Purchaser and the Seller as evidenced by the scheduled principal balance of the
Mortgage Loans accepted by the Purchaser on the Closing Date. The Mortgage Loans
will be delivered pursuant to a Seller's Warranties and Servicing Agreement,
between the Purchaser and the Seller.
SECTION 3. MORTGAGE SCHEDULES. The Seller has provided the Purchaser with
certain information constituting a listing of the Mortgage Loans to be purchased
under this Agreement (the "Mortgage Loan Schedule") substantially in the form
attached hereto as Exhibit 1. The Mortgage Loan Schedule shall conform to the
definition of "Mortgage Loan Schedule" under the Seller's Warranties and
Servicing Agreement.
SECTION 4. PURCHASE PRICE. The purchase price for the Mortgage Loans (the
"Purchase Price") shall be 100.156250%, multiplied by the aggregate principal
balance, as of the Cut-off Date, of the Mortgage Loans listed on the related
Mortgage Loan Schedule, after application of scheduled payments of principal due
on or before the Cut-off Date whether or not collected., plus accrued interest
on each Mortgage, at its respective Mortgage Interest Rate from the Cut-off Date
to and including, the day prior to the Closing Date.
The Purchaser shall be entitled to (1) all scheduled principal due after
the Cut-off Date, (2) all other recoveries of principal collected after the
Cut-off Date (provided, however, that all scheduled payments of principal due on
or before the Cut-off Date and collected by the Seller after the Cut-off Date
shall belong to the Seller), and (3) all payments of interest on the Mortgage
Loans at the Mortgage Loan Remittance Rate (minus that portion of any such
payment which is allocable to the period prior to the Cut-off Date). The
principal balance of each Mortgage Loan as of the Cut-off Date is determined
after application of payments of principal due on or before the Cut-off Date
whether or not collected. Therefore, payments of scheduled principal and
interest prepaid for a due date beyond the Cut-off Date shall not be applied to
the principal balance as of the Cut-off Date. Such prepaid amounts (minus
interest at the Servicing Fee Rate) shall be the property of the Purchaser. The
Seller shall deposit any such prepaid amounts into the Custodial Account, which
account is established for the benefit of the Purchaser for subsequent
remittance by the Seller to the Purchaser.
SECTION 5. EXAMINATION OF MORTGAGE FILES. Prior to the Closing Date, the
Seller shall (a) deliver to the Purchaser in escrow, for examination, the
Mortgage File for each Mortgage Loan, including a copy of the Assignment of
Mortgage, pertaining to each Mortgage Loan, or (b) make the Mortgage Files
available to the Purchaser for examination at the Seller's offices or such other
location as shall otherwise be agreed upon by the Purchaser and the Seller. Such
examination may be made by the Purchaser, or by any prospective purchaser of the
Mortgage Loans from the Purchaser, at any time before or after the Closing Date
upon prior reasonable notice to the Seller. The fact that the Purchaser or any
prospective purchaser of the Mortgage Loans has conducted or has failed to
conduct any partial or complete examination of the Mortgage Files shall not
affect the Purchaser's (or any of its successor's) rights to demand repurchase,
substitution or other relief as provided under the related Seller's Warranties
and Servicing Agreement.
SECTION 6. Representations, Warranties and Agreements of Seller. The Seller
agrees and acknowledges that it shall, as a condition to the consummation of the
transactions contemplated hereby, make the representations and warranties
specified in Section 3.01 and 3.02 of the Seller's Warranties and Servicing
Agreement, as of the Closing Date. The meaning of the term "Agreement" as used
in Sections 3.01 and 3.02 of the Seller's Warranties and Servicing Agreement
shall include this Agreement. The Seller, without conceding that the Mortgage
Loans are securities, hereby makes the following additional representations,
warranties and agreements which shall be deemed to have been made as of the
Closing Date:
a) neither the Seller nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of any Mortgage Loans, any
interest in any Mortgage Loans or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other
disposition of any Mortgage Loans, any interest in any Mortgage Loans or
any other similar security from, or otherwise approached or negotiated with
respect to any Mortgage Loans, any interest in any Mortgage Loans or any
other similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or
taken any other action which would constitute a distribution of the
Mortgage Loans under the Securities Act of 1933 (the "1933 Act") or which
would render the disposition of any Mortgage Loans a violation of Section 5
of the 1933 Act or require registration pursuant thereto, nor will it act,
nor has it authorized or will it authorize any person to act, in such
manner with respect to the Mortgage Loans; and
b) the Seller has not dealt with any broker or agent or anyone else who
might be entitled to a fee or commission in connection with this
transaction other than the Purchaser.
SECTION 7. REPRESENTATION, WARRANTIES AND AGREEMENT OF PURCHASER. The
Purchaser, without conceding that the Mortgage Loans are securities, hereby
makes the following representations, warranties and agreements, which shall have
been deemed to have been made as of the Closing Date.
a) the Purchaser understands that the Mortgage Loans have not been
registered under the 1933 Act or the securities laws of any state;
b) the Purchaser is acquiring the Mortgage Loans for its own account only
and not for any other person;
c) the Purchaser considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks
of investment in the Mortgage Loans;
d) the Purchaser has been furnished with all information regarding the
Mortgage Loans which it has requested from the Seller or the Company; and
e) neither the Purchaser nor anyone acting on its behalf offered,
transferred, pledged, sold or otherwise disposed of any Mortgage Loan, any
interest in any Mortgage Loan or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other
disposition of any Mortgage Loan, any interest in any Mortgage Loan or any
other similar security from, or otherwise approached or negotiated with
respect to any Mortgage Loan, any interest in any Mortgage Loan or any
other similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or
taken any other action which would constitute a distribution of the
Mortgage Loans under the 1933 Act or which would render the disposition of
any Mortgage Loan a violation of Section 5 of the 1933 Act or require
registration pursuant thereto, nor will it act, nor has it authorized or
will it authorize any person to act, in such manner with respect to the
Mortgage Loans.
SECTION 8. CLOSING. The closing for the purchase and sale of the Mortgage
Loans, shall take place on the Closing Date. At the Purchaser's option, the
Closing shall be either: by telephone, confirmed by letter or wire as the
parties shall agree; or conducted in person, at such place as the parties shall
agree.
The closing shall be subject to each of the following conditions:
a) all of the representations and warranties of the Seller under this
Agreement and under each Seller's Warranties and Servicing Agreement shall
be true and correct as of the Closing Date and no event shall have occurred
which, with notice or the passage of time, would constitute a default under
this Agreement or an Event of Default under the related Seller's Warranties
and Servicing Agreement;
b) the Purchaser shall have received, or the Purchaser's attorneys shall
have received in escrow, all Closing Documents as specified in Section 9 of
this Agreement, in such forms as are agreed upon and acceptable to the
Purchaser, duly executed by all signatories other than the Purchaser as
required pursuant to the respective terms thereof;
c) the Seller shall have delivered and released to the Custodian under the
Seller's Warranties and Servicing Agreement all documents required pursuant
to the related Custodial Agreement, and
d) all other terms and conditions of this Agreement shall have been
complied with. Subject to the foregoing conditions, the Purchaser shall pay
to the Seller on the Closing Date the Purchase Price, plus accrued interest
pursuant to Section 4 of this Agreement, by wire transfer of immediately
available funds to the account designated by the Seller.
SECTION 9. CLOSING DOCUMENTS. With respect to the Mortgage Loans, the
Closing Documents shall consist of fully executed originals of the following
documents:
1. the Seller's Warranties and Servicing Agreement, dated as of the
Cut-off Date, in two counterparts;
2. this Agreement in two counterparts;
3. a copy of the Custodial Agreement, dated as of November 30, 1999 by
and between EMC Mortgage Corporation as Owner, and ▇▇▇▇▇ Fargo Bank
Minnesota, N.A. as Custodian, attached to the Seller's Warranties and
Servicing Agreement ;
4. the Mortgage Loan Schedule, one copy to be attached to each
counterpart of the Seller's Warranties and Servicing Agreement;
5. a Receipt and Certification, as required under the Custodial
Agreement;
6. an Opinion of Counsel of the Seller, in the form of Exhibit 2 hereto;
SECTION 10. COSTS. The Purchaser shall pay any commissions due its
salesmen, the legal fees and expenses of its attorneys and the costs and
expenses associated with the Custodian. The Seller shall be responsible for
reasonable costs and expenses associated with any preparation of the assignments
of mortgage. All other costs and expenses incurred in connection with the
transfer and delivery of the Mortgage Loans, including fees for title policy
endorsements and continuations and the Seller's attorney fees, shall be paid by
the Seller.
SECTION 11. SERVICING. The Mortgage Loans shall be serviced by the Seller
in accordance with the terms of the applicable Seller's Warranties and Servicing
Agreement. The Seller shall be entitled to servicing fees calculated as provided
therein, at the Servicing Fee Rate shown on the first page of this Agreement
unless otherwise agreed by the parties.
SECTION 12. Financial Statements. The Seller understands that in connection
with the Purchaser's marketing of the Mortgage Loans, the Purchaser shall make
available to prospective purchasers a Consolidated Statement of Operations of
the Seller for the most recently completed two fiscal years respecting 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 Purchaser shall also make available any comparable interim
statements to the extent any such statements have been prepared by the seller in
a format intended or otherwise suitable for the public at large. The Seller, if
it has not already done so, agrees to furnish promptly to the Purchaser copies
of the statements specified above. The Seller shall also make available
information on its servicing performance with respect to loans in its own
portfolio and loans serviced for others (if any), including loss and delinquency
ratios.
The Seller also agrees to allow access to a knowledgeable (as shall be
determined by the Seller) financial or accounting officer for the purpose of
answering questions asked by any prospective purchaser regarding recent
developments affecting the Seller or the financial statements of the Seller.
SECTION 13. MANDATORY DELIVERY. The sale and delivery on the Closing Date
of the Mortgage Loans described on the Mortgage Loan Schedule is mandatory, it
being specifically understood and agreed that each Mortgage Loan is unique and
identifiable on the date hereof and that an award of money damages would be
insufficient to compensate the Purchaser for the losses and damages incurred by
the Purchaser (including damages to prospective purchasers of the Mortgage
Loans) in the event of the Seller's failure to deliver the Mortgage Loans on or
before the Closing Date. All rights and remedies of the Purchaser under this
Agreement are distinct from, and cumulative with, any other rights or remedies
under this Agreement or afforded by law or equity and all such rights and
remedies may be exercised concurrently, independently or successively.
SECTION 14. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed, by
registered or certified mail, return receipt requested, or, if by other means,
when received by the other party at the address shown on the first page hereof,
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice of communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
SECTION 15. SEVERABILITY CLAUSE. Any part, provision, representation or
warranty of this Agreement which is prohibited or which is held to be void or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any part,
provision, representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall
be ineffective, as to such jurisdiction, to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law which prohibits or renders void or unenforceable any
provision hereof. If the invalidity of any part, provision, representation or
warranty of this Agreement shall deprive any party of the economic benefit
intended to be conferred by this Agreement, the parties shall negotiate, in
good-faith, to develop a structure the economic effect of which is as close as
possible to the economic effect of this Agreement without regard to such
invalidity.
SECTION 16. COUNTERPARTS. This Agreement may be executed simultaneously in
any number of counterparts. Each counterpart shall be deemed to be an original,
and all such counterparts shall constitute one and the same instrument.
SECTION 17. PLACE OF DELIVERY AND GOVERNING LAW. This Agreement shall be
construed in accordance with the laws of the State of New York and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with the laws of the State of New York, except to the extent
preempted by Federal Law.
Each of the Seller and the Purchaser hereby knowingly, voluntarily and
intentionally waives any and all rights it may have to a trial by jury in
respect of any litigation based on, or arising out of, under, or in connection
with, this Agreement, or any other documents and instruments executed in
connection herewith, or any course of conduct, course of dealing, statements
(whether oral or written), or actions of the Seller or the Purchaser. This
provision is a material inducement for the Purchaser to enter into this
Agreement.
SECTION 18. FURTHER AGREEMENTS. The Purchaser and the Seller each agree to
execute and deliver to the other such additional documents, instruments or
agreements as may be necessary or appropriate to effectuate the purposes of this
Agreement.
Without limiting the generality of the foregoing, the Seller shall
reasonably cooperate with the Purchaser in connection with the initial resales
of the Mortgage Loans by the Purchaser. In that connection, the Seller shall
provide to the Purchaser: (i) any and all information and appropriate
verification of information, whether through letters of its auditors and counsel
or otherwise, as the Purchaser shall reasonably request, and (ii) such
additional representations, warranties, covenants, opinions of counsel, letters
from auditors and certificates of public officials or officers of the Seller as
are reasonably believed necessary by the Purchaser in connection with such
resales. The requirement of the Seller pursuant to (ii) above shall terminate on
the Closing Date. Prior to incurring any out-of-pocket expenses pursuant to this
paragraph, the Seller shall notify the Purchaser in writing of the estimated
amount of such expense. The Purchaser shall reimburse the Seller for any such
expense following its receipt of appropriate details thereof.
SECTION 19. INTENTION OF THE PARTIES. It is the intention of the parties
that the Purchaser is purchasing, and the Seller is selling, an undivided 100%
ownership interest in the Mortgage Loans and not a debt instrument of the Seller
or another security. Accordingly, the parties hereto each intend to treat the
transaction for Federal income tax purposes as a sale by the Seller, and a
purchase by the Purchaser, of the Mortgage Loans. The Purchaser shall have the
right to review the Mortgage Loans and the related Mortgage Loan Files to
determine the characteristics of the Mortgage Loans which shall affect the
Federal income tax consequences of owning the Mortgage Loans and the Seller
shall cooperate with all reasonable requests made by the Purchaser in the course
of such review.
SECTION 20. SUCCESSORS AND ASSIGNS; ASSIGNMENT OF PURCHASE AGREEMENT. This
Agreement shall bind and inure to the benefit and be enforceable by the Seller
and the Purchaser and the respective successors and assigns of the Seller and
the Purchaser. This Agreement shall not be assigned, pledged or hypothecated by
the Seller to a third party without the consent of the Purchaser.
SECTION 21. WAIVERS; OTHER AGREEMENTS. No term or provision of this
Agreement may be waived or modified unless such waiver or modification is in
writing and signed by the party against whom such waiver or modification is
sought to be enforced.
SECTION 22. EXHIBITS. The exhibits to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this Agreement.
SECTION 23. GENERAL INTERPRETIVE PRINCIPLES. For purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
a) the terms defined in this Agreement have the meanings assigned to them
in this Agreement and include the plural as well as the singular, and the
use of any gender herein shall be deemed to include the other gender;
b) accounting terms not otherwise defined herein have the meanings assigned
to them in accordance with generally accepted accounting principles;
c) references herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other
subdivisions of this Agreement;
d) a reference to a Subsection without further reference to a Section is a
reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
e) the words "herein", "hereof", "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular
provision; and
f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
SECTION 24. REPRODUCTION OF DOCUMENTS. This Agreement and all documents
relating thereto, including, without limitation, (a) consents, waivers and
modifications which may hereafter be executed, (b) documents received by any
party at the closing, and (c) financial statements, certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding, whether or not the original is in existence and whether or not such
reproduction was made by a party in the regular course of business, and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
[Signatures Follow]
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their names to
be signed hereto by their respective officers thereunto duly authorized as of
the date first above written.
EMC MORTGAGE CORPORATION
(Purchaser)
By:_______________________________
Name:_____________________________
Title:____________________________
▇▇▇▇▇ FARGO HOME MORTGAGE, INC.
(Seller)
By:_______________________________
Name:_____________________________
Title:____________________________
EXHIBIT 1
MORTGAGE LOAN SCHEDULE
EXHIBIT 2
FORM OF OPINION OF COUNSEL
@
@
@
@
Re: ▇▇▇▇▇ Fargo Home Mortgage, Inc.
Mortgage Loan Series @
Dear Sir/Madam:
I am @ of ▇▇▇▇▇ Fargo Home Mortgage, Inc. and have acted as counsel to ▇▇▇▇▇
Fargo Home Mortgage, Inc. (the "Company"), with respect to certain matters in
connection with the sale by the Company of the mortgage loans designated as
Mortgage Loan Series @ (the "Mortgage Loans") pursuant to that certain Seller's
Warranties and Servicing Agreement and Mortgage Loan Purchase Agreement by and
between the Company and @ (the "Purchaser"), dated as of @, 2003, (the
"Agreements"), which sale is in the form of whole Mortgage Loans. Capitalized
terms not otherwise defined herein have the meanings set forth in the Seller's
Warranties and Servicing Agreement.
I have examined the following documents:
1. the Seller's Warranties and Servicing Agreement;
2. the Mortgage Loan Purchase Agreement;
3. the Custodial Agreement;
4. the form of endorsement of the Mortgage Notes; and
5. such other documents, records and papers as I have deemed necessary and
relevant as a basis for this opinion.
To the extent I have deemed necessary and proper, I have relied upon the
representations and warranties of the Company contained in the Agreements. I
have assumed the authenticity of all documents submitted to me as originals, the
genuineness of all signatures, the legal capacity of natural persons and the
conformity to the originals of all documents.
Based upon the foregoing, it is my opinion that;
1. The Company is a corporation duly organized, validly existing and in good
standing under the laws of the state of California.
2. The Company has the power to engage in the transactions contemplated by the
Agreements, the Custodial Agreement and all requisite power, authority and
legal right to execute and deliver the Agreements, the Custodial Agreement
and the Mortgage Loans, and to perform and observe the terms and conditions
of such instruments.
3. Each person who, as an officer or attorney-in-fact of the Company, signed
(a) the Agreements, each dated as of @, 2003, by and between the Company
and the Purchaser, and (b) any other document delivered prior hereto or on
the date hereof in connection with the sale and servicing of the Mortgage
Loans in accordance with the Agreements and the person was, at the
respective times of such signing and delivery, and is, as of the date
hereof, duly elected or appointed, qualified and acting and as such officer
or attorney-in-fact, and the signatures of such persons appearing on such
documents are their genuine signatures.
4. Each of the Agreements, the Custodial Agreement and the Mortgage Loans, has
been duly authorized, executed and delivered by the Company and is a legal,
valid and binding agreement enforceable in accordance with its terms,
subject to bankruptcy laws and other similar laws of general application
affecting rights of creditors and subject to the application of the rules
of equity, including those respecting the availability of specific
performance, none of which will materially interfere with the realization
of the benefits provided thereunder or with the Purchaser's ownership of
the Mortgage Loans.
5. The Company has been duly authorized to allow any of its officers to
execute any and all documents by original signature in order to complete
the transactions contemplated by the Agreements and the Custodial
Agreement, and by original or facsimile signature in order to execute the
endorsements to the Mortgage Notes and the assignments of the Mortgages,
and the original or facsimile signature of the officer at the Company
executing the endorsements to the Mortgage Notes and the assignments of the
Mortgages represents the legal and valid signature of said officer of the
Company.
6. Either (i) no consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Company of or compliance by the Company with the
Agreements, the Custodial Agreement or the sale and delivery of the
Mortgage Loans or the consummation of the transactions contemplated by the
Agreements, and the Custodial Agreement; or (ii) any required consent,
approval, authorization or order has been obtained by the Company.
7. Neither the consummation of the transactions contemplated by, nor the
fulfillment of the terms of the Agreements and the Custodial Agreement,
will conflict with or results in or will result in a breach of or
constitutes or will constitute a default under the charter or bylaws of the
Company, the terms of any indenture or other agreement or instrument to
which the Company is a party or by which it is bound or to which it is
subject, or violates any statute or order, rule, regulations, writ,
injunction or decree of any court, governmental authority or regulatory
body to which the Company is subject or by which it is bound.
8. There is no action, suit, proceeding or investigation pending or, to the
best of my knowledge, threatened against the Company which, in my opinion,
either in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition, properties
or assets of the Company or in any material impairment of the right or
ability of the Company to carry on its business substantially as now
conducted or in any material liability on the part of the Company or which
would draw into question the validity of the Agreements, and the Custodial
Agreement, or of any action taken or to be taken in connection with the
transactions contemplated thereby, or which would be likely to impair
materially the ability of the Company to perform under the terms of the
Agreements and the Custodial Agreement.
9. For purposes of the foregoing, I have not regarded any legal or
governmental actions, investigations or proceedings to be "threatened"
unless the potential litigant or governmental authority has manifested to
the legal department of the Company or an employee of the Company
responsible for the receipt of process a present intention to initiate such
proceedings; nor have I regarded any legal or governmental actions,
investigations or proceedings as including those that are conducted by
state or federal authorities in connection with their routine regulatory
activities. The sale of each Mortgage Note and Mortgage as and in the
manner contemplated by the Agreements is sufficient fully to transfer all
right, title and interest of the Company thereto as noteholder and
mortgagee, apart from the rights to service the Mortgage Loans pursuant to
the Agreements.
10. The form of endorsement that is to be used with respect to the Mortgage
Loans is legally valid and sufficient to duly endorse the Mortgage Notes to
the Purchaser. Upon the completion of the endorsement of the Mortgage Notes
and the completion of the assignments of the Mortgages, and the recording
thereof, the endorsement of the Mortgage Notes, the delivery to the
Custodian of the completed assignments of the Mortgages, and the delivery
of the original endorsed Mortgage Notes to the Custodian would be
sufficient to permit the entity to which such Mortgage Note is initially
endorsed at the Purchaser's direction, and to whom such assignment of
Mortgages is initially assigned at the Purchaser's direction, to avail
itself of all protection available under applicable law against the claims
of any present or future creditors of the Company, and would be sufficient
to prevent any other sale, transfer, assignment, pledge or hypothecation of
the Mortgages and the Mortgage Notes by the Company from being enforceable.
This opinion is given to you for your sole benefit, and no other person or
entity is entitled to rely hereon except that the purchaser or purchasers to
which you initially and directly resell the Mortgage Loans may rely on this
opinion as if it were addressed to them as of its date.
Sincerely,
@
@
@/@
Schedule 1
EXHIBIT C-1
FORM OF ANNUAL CERTIFICATION
I, _____________, Vice President of ▇▇▇▇▇ Fargo Home Mortgage, Inc. (the
"Servicer"), certify to ▇▇▇▇▇ Fargo Bank Minnesota, National Association, and
its officers, directors, agents and affiliates (in its role as master servicer,
the "Master Servicer"), and with the knowledge and intent that they will rely
upon this certification, that:
(i) Based on my knowledge, the information relating to the Mortgage Loans
and the servicing thereof submitted by the Servicer to the Master
Servicer which is used in connection with preparation of the reports
on Form 8-K and the annual report on Form 10-K filed with the SEC with
respect to each transaction listed on the attached Exhibit A, taken as
a whole, does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were made,
not misleading as of the date of this certification;
(ii) The servicing information required to be provided to the Master
Servicer by the Servicer under the relevant servicing agreements has
been provided to the Master Servicer;
(iii) I am responsible for reviewing the activities performed by the
Servicer under the relevant servicing agreements and based upon the
review required by the relevant servicing agreements, and except as
disclosed in the Annual Statement of Compliance, the Annual
Independent Public Accountant's Servicing Report and all servicing
reports, officer's certificates and other information relating to the
servicing of the Mortgage Loans submitted to the Master Servicer, the
Servicer has, as of the date of this certification fulfilled its
obligations under the relevant servicing agreements; and
(iv) I have disclosed to the Master Servicer all significant deficiencies
relating to the Servicer's compliance with the minimum servicing
standards in accordance with a review conducted in compliance with the
Uniform Single Attestation Program for Mortgage Bankers or similar
standard as set forth in the relevant servicing agreements.
(v) The Servicer shall indemnify and hold harmless the Master Servicer and
its officers, directors, agents and affiliates from and against any
losses, damages, penalties, fines, forfeitures, reasonable legal fees
and related costs, judgments and other costs and expenses arising out
of or based upon a breach by the Servicer or any of its officers,
directors, agents or affiliates of its obligations under this
Certification or the negligence, bad faith or willful misconduct of
the Servicer in connection therewith. If the indemnification provided
for herein is unavailable or insufficient to hold harmless the Master
Servicer, then the Servicer agrees that it shall contribute to the
amount paid or payable by the Master Servicer as a result of the
losses, claims, damages or liabilities of the Master Servicer in such
proportion as is appropriate to reflect the relative fault of the
Master Servicer on the one hand and the Servicer on the other in
connection with a breach of the Servicer's obligations under this
Certification or the Servicer's negligence, bad faith or willful
misconduct in connection therewith.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal of
the Servicer.
Dated:____________________________ By:_________________________
Name:_______________________
Title:______________________