EXECUTION COPY
RESIDENTIAL FUNDING CORPORATION,
as Master Servicer
HOME LOAN TRUST 2005-HI3,
as Issuer
and
JPMORGAN CHASE BANK, N.A.
as Indenture Trustee
SERVICING AGREEMENT
Dated as of October 27, 2005
Home Loans
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS...............................................................1
Section 1.01. Definitions.......................................................1
Section 1.02. Other Definitional Provisions.....................................1
Section 1.03. Interest Calculations.............................................2
ARTICLE II REPRESENTATIONS AND WARRANTIES............................................2
Section 2.01. Representations and Warranties Regarding the Master Servicer......2
Section 2.02. Representations and Warranties of the Issuer......................3
Section 2.03. Enforcement of Representations and Warranties.....................4
ARTICLE III ADMINISTRATION AND SERVICING OF HOME LOANS................................5
Section 3.01. The Master Servicer...............................................5
Section 3.02. Collection of Certain Home Loan Payments..........................8
Section 3.03. Withdrawals from the Custodial Account...........................11
Section 3.04. Maintenance of Hazard Insurance; Property Protection Expenses....12
Section 3.05. Modification Agreements; Release or Substitution of Lien.........13
Section 3.06. Trust Estate; Related Documents..................................14
Section 3.07. Realization Upon Defaulted Home Loans; Loss Mitigation...........15
Section 3.08. Issuer and Indenture Trustee to Cooperate........................17
Section 3.09. Servicing Compensation; Payment of Certain Expenses by
Master Servicer..................................................18
Section 3.10. Annual Statement as to Compliance................................18
Section 3.11. Annual Independent Public Accountants' Servicing Report..........19
Section 3.12. Access to Certain Documentation and Information Regarding
the Home Loans...................................................19
Section 3.13. Maintenance of Certain Servicing Insurance Policies..............20
Section 3.14. Information Required by the Internal Revenue Service and
Reports of Foreclosures and Abandonments of Mortgaged
Property.........................................................20
Section 3.15. Optional Repurchase of Defaulted Home Loans......................20
Section 3.16. Limited Home Loan Repurchase Right...............................21
ARTICLE IV SERVICING CERTIFICATE....................................................21
Section 4.01. Statements to Securityholders....................................21
Section 4.02. Tax Reporting....................................................23
Section 4.03. Calculation of Adjusted Issue Price..............................23
Section 4.04. Exchange Act Reporting...........................................23
ARTICLE V PAYMENT ACCOUNT..........................................................24
Section 5.01. Payment Account..................................................24
ARTICLE VI THE MASTER SERVICER......................................................24
Section 6.01. Liability of the Master Servicer.................................24
Section 6.02. Merger or Consolidation of, or Assumption of the Obligations
of, the Master Servicer..........................................24
Section 6.03. Limitation on Liability of the Master Servicer and Others........25
Section 6.04. Master Servicer Not to Resign....................................26
Section 6.05. Delegation of Duties.............................................26
Section 6.06. Master Servicer to Pay Indenture Trustee's and Owner
Trustee's Fees and Expenses; Indemnification.....................26
ARTICLE VII DEFAULT..................................................................27
Section 7.01. Servicing Default................................................28
Section 7.02. Indenture Trustee to Act; Appointment of Successor...............29
Section 7.03. Notification to Securityholders..................................31
ARTICLE VIII MISCELLANEOUS PROVISIONS.................................................31
Section 8.01. Amendment........................................................31
Section 8.02. GOVERNING LAW....................................................31
Section 8.03. Notices..........................................................32
Section 8.04. Severability of Provisions.......................................32
Section 8.05. Third-Party Beneficiaries........................................32
Section 8.06. Counterparts.....................................................32
Section 8.07. Effect of Headings and Table of Contents.........................33
Section 8.08. Termination Upon Purchase by the Master Servicer or
Liquidation of All Home Loans; Partial Redemption................33
Section 8.09. Certain Matters Affecting the Indenture Trustee..................33
Section 8.10. Owner Trustee Not Liable for Related Documents...................34
EXHIBIT A - HOME LOANS...................................................................A-1
EXHIBIT B - POWER OF ATTORNEY............................................................B-1
EXHIBIT C - FORM OF REQUEST FOR RELEASE .................................................C-1
EXHIBIT D - FORM OF FORM 10-K CERTIFICATE ...............................................D-1
This is a Servicing Agreement, dated as of October 27, 2005 (the
"Servicing Agreement"), among Residential Funding Corporation (the "Master
Servicer"), the Home Loan Trust 2005-HI3 (the "Issuer") and JPMorgan Chase Bank,
N.A. (the "Indenture Trustee").
W I T N E S S E T H T H A T:
WHEREAS, pursuant to the terms of the Home Loan Purchase Agreement,
Residential Funding Corporation (in its capacity as Seller) will sell to the
Depositor the Home Loans together with the Related Documents on the Closing
Date;
WHEREAS, the Depositor will sell the Home Loans and all of its rights
under the Home Loan Purchase Agreement to the Issuer, together with the Related
Documents on the Closing Date;
WHEREAS, pursuant to the terms of the Trust Agreement, the Issuer will
issue and transfer to or at the direction of the Depositor, the Certificates;
WHEREAS, pursuant to the terms of the Indenture, the Issuer will issue
and transfer to or at the direction of the Depositor, the Notes; and
WHEREAS, pursuant to the terms of this Servicing Agreement, the Master
Servicer will service the Home Loans directly or through one or more
Subservicers;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. For all purposes of this Servicing Agreement, except
as otherwise expressly provided herein or unless the context otherwise requires,
capitalized terms not otherwise defined herein shall have the meanings assigned
to such terms in the Definitions contained in Appendix A to the Indenture dated
October 27, 2005 (the "Indenture"), between Home Loan Trust 2005-HI3, as issuer,
and JPMorgan Chase Bank, N.A., as indenture trustee, which is incorporated by
reference herein. All other capitalized terms used herein shall have the
meanings specified herein.
Section 1.02. Other Definitional Provisions. (a) All terms defined in this
Servicing Agreement shall have the defined meanings when used in any certificate
or other document made or delivered pursuant hereto unless otherwise defined
therein.
(b) As used in this Servicing Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Servicing Agreement or in any such certificate or other document, and
accounting terms partly defined in this Servicing Agreement or in any such
certificate or other document, to the extent not defined, shall have the
respective meanings given to them under generally accepted accounting
principles. To the extent that the definitions of accounting terms in this
Servicing Agreement or in any such certificate or other document are
inconsistent with the meanings of such terms under generally accepted accounting
principles, the definitions contained in this Servicing Agreement or in any such
certificate or other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of similar import when
used in this Servicing Agreement shall refer to this Servicing Agreement as a
whole and not to any particular provision of this Servicing Agreement; Section
and Exhibit references contained in this Servicing Agreement are references to
Sections and Exhibits in or to this Servicing Agreement unless otherwise
specified; and the term "including" shall mean "including without limitation".
(d) The definitions contained in this Servicing Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred to herein or in any
instrument or certificate delivered in connection herewith means such agreement,
instrument or statute as from time to time amended, modified or supplemented and
includes (in the case of agreements or instruments) references to all
attachments thereto and instruments incorporated therein; references to a Person
are also to its permitted successors and assigns.
Section 1.03. Interest Calculations. All calculations of interest hereunder that
are made in respect of the Loan Balance of a Home Loan shall be made in
accordance with the Mortgage Note. All calculations of interest on the
Securities (other than the Class A-1 Notes) shall be made on the basis of a
30-day month and a year assumed to consist of 360 days. Calculation of interest
on the Class A-1 Notes shall be made on the basis of the actual number of days
in the applicable Interest Accrual Period and a year assumed to consist of 360
days. The calculation of the Servicing Fee shall be made on the basis of a
30-day month and a year assumed to consist of 360 days. All dollar amounts
calculated hereunder shall be rounded to the nearest ▇▇▇▇▇ with one-half of one
▇▇▇▇▇ being rounded up.
ARTICLE II
Representations and Warranties
Section 2.01. Representations and Warranties Regarding the Master Servicer. The
Master Servicer represents and warrants to the Issuer and for the benefit of the
Indenture Trustee, as pledgee of the Home Loans, as of the Cut-off Date:
(i) The Master Servicer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has the
corporate power to own its assets and to transact the business in which
it is currently engaged. The Master Servicer is duly qualified to do
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business as a foreign corporation and is in good standing in each
jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in
which the failure to so qualify would have a material adverse effect on
the business, properties, assets, or condition (financial or other) of
the Master Servicer;
(ii) The Master Servicer has the power and authority to make, execute,
deliver and perform this Servicing Agreement and all of the transactions
contemplated under this Servicing Agreement, and has taken all necessary
corporate action to authorize the execution, delivery and performance of
this Servicing Agreement. When executed and delivered, this Servicing
Agreement will constitute the legal, valid and binding obligation of the
Master Servicer enforceable in accordance with its terms, except as
enforcement of such terms may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally
and by the availability of equitable remedies;
(iii) The Master Servicer is not required to obtain the consent of any other
Person or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity
or enforceability of this Servicing Agreement, except for such consent,
license, approval or authorization, or registration or declaration, as
shall have been obtained or filed, as the case may be;
(iv) The execution and delivery of this Servicing Agreement and the
performance of the transactions contemplated hereby by the Master
Servicer will not violate any provision of any existing law or
regulation or any order or decree of any court applicable to the Master
Servicer or any provision of the Certificate of Incorporation or Bylaws
of the Master Servicer, or constitute a material breach of any mortgage,
indenture, contract or other agreement to which the Master Servicer is a
party or by which the Master Servicer may be bound;
(v) No litigation or administrative proceeding of or before any court,
tribunal or governmental body is currently pending, or to the knowledge
of the Master Servicer threatened, against the Master Servicer or any of
its properties or with respect to this Servicing Agreement or the
Securities which in the opinion of the Master Servicer has a reasonable
likelihood of resulting in a material adverse effect on the transactions
contemplated by this Servicing Agreement; and
(vi) The Master Servicer is a member of MERS in good standing, and will
comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the Home Loans that are registered with
MERS.
The foregoing representations and warranties shall survive any
termination of the Master Servicer hereunder.
Section 2.02. Representations and Warranties of the Issuer. The Issuer hereby
represents and warrants to the Master Servicer and for the benefit of the
Indenture Trustee, as pledgee of the Home Loans, as of the Cut-off Date:
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(i) The Issuer is a statutory trust duly formed and in good standing under
the laws of the State of Delaware and has full power, authority and
legal right to execute and deliver this Servicing Agreement and to
perform its obligations under this Servicing Agreement, and has taken
all necessary action to authorize the execution, delivery and
performance by it of this Servicing Agreement; and
(ii) The execution and delivery by the Issuer of this Servicing Agreement and
the performance by the Issuer of its obligations under this Servicing
Agreement will not violate any provision of any law or regulation
governing the Issuer or any order, writ, judgment or decree of any
court, arbitrator or governmental authority or agency applicable to the
Issuer or any of its assets. Such execution, delivery, authentication
and performance will not require the authorization, consent or approval
of, the giving of notice to, the filing or registration with, or the
taking of any other action with respect to, any governmental authority
or agency regulating the activities of statutory trusts. Such execution,
delivery, authentication and performance will not conflict with, or
result in a breach or violation of, any mortgage, deed of trust, lease
or other agreement or instrument to which the Issuer is bound.
Section 2.03. Enforcement of Representations and Warranties. The Master
Servicer, on behalf of and subject to the direction of the Indenture Trustee, as
pledgee of the Home Loans, or the Issuer, shall enforce the representations and
warranties of the Seller pursuant to the Home Loan Purchase Agreement. Upon the
discovery by the Seller, the Depositor, the Master Servicer, the Indenture
Trustee, the Issuer, or any Custodian of a breach of any of the representations
and warranties made in the Home Loan Purchase Agreement or of the existence of a
Repurchase Event, in respect of any Home Loan which materially and adversely
affects the interests of the Securityholders, the party discovering such breach
or existence shall give prompt written notice to the other parties. The Master
Servicer shall promptly notify the Seller of such breach or existence and
request that, pursuant to the terms of the Home Loan Purchase Agreement, the
Seller either (i) cure such breach or Repurchase Event in all material respects
within 45 days (with respect to a breach of the representations and warranties
contained in Section 3.1(a) of the Home Loan Purchase Agreement or Repurchase
Event) or 90 days (with respect to a breach of the representations and
warranties contained in Section 3.1(b) of the Home Loan Purchase Agreement) from
the date the Seller was notified of such breach or Repurchase Event or (ii)
purchase such Home Loan from the Issuer at the price and in the manner set forth
in Section 3.1(c) of the Home Loan Purchase Agreement; provided that the Seller
shall, subject to compliance with all the conditions set forth in the Home Loan
Purchase Agreement, have the option to substitute an Eligible Substitute Loan or
Loans for such Home Loan. In the event that the Seller elects to substitute one
or more Eligible Substitute Loans pursuant to Section 3.1(c) of the Home Loan
Purchase Agreement, the Seller shall deliver to the Issuer with respect to such
Eligible Substitute Loans, the original Mortgage Note, the Mortgage, and such
other documents and agreements as are required by the Home Loan Purchase
Agreement. Payments due with respect to Eligible Substitute Loans in the month
of substitution shall not be transferred to the Issuer and will be retained by
the Master Servicer and remitted by the Master Servicer to the Seller on the
next succeeding Payment Date provided a payment at least equal to the applicable
Monthly Payment has been received by the Issuer for such month in respect of the
Home Loan to be removed. The Master Servicer shall amend or cause to be amended
the Home Loan Schedule to reflect the removal of such Home Loan and the
substitution of the Eligible Substitute Loans and the Master Servicer shall
promptly deliver the amended Home Loan Schedule to the Owner Trustee and the
Indenture Trustee.
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It is understood and agreed that the obligation of the Seller to cure
such breach or purchase or substitute for such Home Loan as to which such a
breach has occurred and is continuing shall constitute the sole remedy
respecting such breach available to the Issuer and the Indenture Trustee, as
pledgee of the Home Loans, against the Seller. In connection with the purchase
of or substitution for any such Home Loan by the Seller, the Issuer shall assign
to the Seller all of its right, title and interest in respect of the Home Loan
Purchase Agreement applicable to such Home Loan. Upon receipt of the Repurchase
Price, or upon completion of such substitution, the Master Servicer shall notify
the Custodian and then the Custodian shall deliver the Mortgage Files to the
Master Servicer, together with all relevant endorsements and assignments
prepared by the Master Servicer which the Indenture Trustee shall execute.
ARTICLE III
Administration and Servicing
of Home Loans
Section 3.01. The Master Servicer. (a) The Master Servicer shall service and
administer the Home Loans in accordance with the terms of this Servicing
Agreement, following such procedures as it would employ in its good faith
business judgment and which are normal and usual in its general mortgage
servicing activities, and shall have full power and authority, acting alone or
through a Subservicer, to do any and all things in connection with such
servicing and administration which it may deem necessary or desirable, it being
understood, however, that the Master Servicer shall at all times remain
responsible to the Issuer and the Indenture Trustee for the performance of its
duties and obligations hereunder in accordance with the terms hereof. Without
limiting the generality of the foregoing, the Master Servicer shall continue,
and is hereby authorized and empowered by the Issuer and the Indenture Trustee,
as pledgee of the Home Loans, to execute and deliver, on behalf of itself, the
Issuer, the Indenture Trustee or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, or of
consent to modification in connection with a proposed conveyance, or of
assignment of any Mortgage and Mortgage Note in connection with the repurchase
of a Home Loan and all other comparable instruments with respect to the Home
Loans and with respect to the Mortgaged Properties, or with respect to the
modification or re-recording of a Mortgage for the purpose of correcting the
Mortgage, the subordination of the lien of the Mortgage in favor of a public
utility company or government agency or unit with powers of eminent domain, the
taking of a deed in lieu of foreclosure, the commencement, prosecution or
completion of judicial or non-judicial foreclosure, the acquisition of any
property acquired by foreclosure or deed in lieu of foreclosure, or the
management, marketing and conveyance of any property acquired by foreclosure or
deed in lieu of foreclosure. The Issuer, the Indenture Trustee and the
Custodian, as applicable, shall furnish the Master Servicer with any powers of
attorney and other documents necessary or appropriate to enable the Master
Servicer to carry out its servicing and administrative duties hereunder. In
addition, the Master Servicer may, at its own discretion and on behalf of the
Indenture Trustee, obtain credit information in the form of a Credit Score from
a credit repository. On the Closing Date, the Indenture Trustee shall deliver to
the Master Servicer a limited power of attorney substantially in the form of
Exhibit B hereto. The Master Servicer further is authorized and empowered by the
Issuer and the Indenture Trustee, on behalf of the Noteholders and the Indenture
Trustee, in its own name or in the name of the Subservicer, when the Master
Servicer or the Subservicer, as the case may be, believes it is appropriate in
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its best judgment to register any Home Loan on the MERS(R) System, or cause the
removal from the registration of any Home Loan on the MERS(R) System, to execute
and deliver, on behalf of the Indenture Trustee and the Noteholders or any of
them, any and all instruments of assignment and other comparable instruments
with respect to such assignment or re-recording of a Mortgage in the name of
MERS, solely as nominee for the Indenture Trustee and its successors and
assigns. Any expenses incurred in connection with the actions described in the
preceding sentence shall be borne by the Master Servicer in accordance with
Section 3.09, with no right of reimbursement; provided, that if, as a result of
MERS discontinuing or becoming unable to continue operations in connection with
the MERS(R) System, it becomes necessary to remove any Home Loan from
registration on the MERS(R) System and to arrange for the assignment of the
related Mortgages to the Indenture Trustee, then any related expenses shall be
reimbursable to the Master Servicer as set forth in Section 3.03(ii).
If the Mortgage relating to a Home Loan did not have a lien senior to
the Home Loan on the related Mortgaged Property as of the Cut-off Date, then the
Master Servicer, in such capacity, may not consent to the placing of a lien
senior to that of the Mortgage on the related Mortgaged Property. If the
Mortgage relating to a Home Loan had a lien senior to the Home Loan on the
related Mortgaged Property as of the Cut-off Date, then the Master Servicer, in
such capacity, may consent to the refinancing of the prior senior lien, provided
that the following requirements are met:
(i) (A) the Mortgagor's debt-to-income ratio resulting from such refinancing
is less than the original debt-to-income ratio as set forth on the
Mortgage Loan Schedule; provided, however, that in no instance shall the
resulting Combined Loan-to-Value Ratio of such Home Loan be higher than
that permitted by the Program Guide; or
(B) the resulting Combined Loan-to-Value Ratio of such Home Loan is no
higher than the Combined Loan-to-Value Ratio prior to such refinancing;
provided, however, if such refinanced mortgage loan is a "rate and term"
mortgage loan (meaning, the Mortgagor does not receive any cash from the
refinancing), the Combined Loan-to-Value Ratio may increase to the
extent of either (a) the reasonable closing costs of such refinancing or
(b) any decrease in the value of the related Mortgaged Property, if the
Mortgagor is in good standing as defined by the Program Guide;
(ii) the interest rate, or, in the case of an adjustable rate existing senior
lien, the maximum interest rate, for the loan evidencing the refinanced
senior lien is no more than 2.0% higher than the interest rate or the
maximum interest rate, as the case may be, on the loan evidencing the
existing senior lien immediately prior to the date of such refinancing;
provided, however (a) if the loan evidencing the existing senior lien
prior to the date of refinancing has an adjustable rate and the loan
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evidencing the refinanced senior lien has a fixed rate, then the current
interest rate on the loan evidencing the refinanced senior lien may be
up to 2.0% higher than the then-current loan rate of the loan evidencing
the existing senior lien and (b) if the loan evidencing the existing
senior lien prior to the date of refinancing has a fixed rate and the
loan evidencing the refinanced senior lien has an adjustable rate, then
the maximum interest rate on the loan evidencing the refinanced senior
lien shall be less than or equal to (x) the interest rate on the loan
evidencing the existing senior lien prior to the date of refinancing
plus (y) 2.0%; and
(iii) the loan evidencing the refinanced senior lien is not subject to
negative amortization.
The relationship of the Master Servicer (and of any successor to the
Master Servicer as servicer under this Servicing Agreement) to the Issuer under
this Servicing Agreement is intended by the parties to be that of an independent
contractor and not that of a joint venturer, partner or agent.
(b) The Master Servicer may continue in effect Subservicing Agreements entered
into by Residential Funding and Subservicers prior to the execution and delivery
of this Servicing Agreement, and may enter into Subservicing Agreements with
Subservicers for the servicing and administration of certain of the Home Loans.
Each Subservicer of a Home Loan shall be entitled to receive and retain, as
provided in the related Subservicing Agreement and in Section 3.02, the related
Subservicing Fee from payments of interest received on such Home Loan after
payment of all amounts required to be remitted to the Master Servicer in respect
of such Home Loan. For any Home Loan not subject to a Subservicing Agreement,
the Master Servicer shall be entitled to receive and retain an amount equal to
the Subservicing Fee from payments of interest. References in this Servicing
Agreement to actions taken or to be taken by the Master Servicer in servicing
the Home Loans include actions taken or to be taken by a Subservicer on behalf
of the Master Servicer. Each Subservicing Agreement will be upon such terms and
conditions as are not inconsistent with this Servicing Agreement and as the
Master Servicer and the Subservicer have agreed. With the approval of the Master
Servicer, a Subservicer may delegate its servicing obligations to third-party
servicers, but such Subservicers will remain obligated under the related
Subservicing Agreements. The Master Servicer and the Subservicer may enter into
amendments to the related Subservicing Agreements; provided, however, that any
such amendments shall not cause the Home Loans to be serviced in a manner that
would be materially inconsistent with the standards set forth in this Servicing
Agreement. The Master Servicer shall be entitled to terminate any Subservicing
Agreement in accordance with the terms and conditions thereof and without any
limitation by virtue of this Servicing Agreement; provided, however, that in the
event of termination of any Subservicing Agreement by the Master Servicer or the
Subservicer, the Master Servicer shall either act as servicer of the related
Home Loan or enter into a Subservicing Agreement with a successor Subservicer
which will be bound by the terms of the related Subservicing Agreement. The
Master Servicer shall be entitled to enter into any agreement with a Subservicer
for indemnification of the Master Servicer and nothing contained in this
Servicing Agreement shall be deemed to limit or modify such indemnification. The
Program Guide and any other Subservicing Agreement entered into between the
Master Servicer and any Subservicer shall require the Subservicer to accurately
and fully report its borrower credit files to each of the Credit Repositories in
a timely manner.
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In the event that the rights, duties and obligations of the Master
Servicer are terminated hereunder, any successor to the Master Servicer in its
sole discretion may, to the extent permitted by applicable law, terminate the
existing Subservicing Agreement with any Subservicer in accordance with the
terms of the applicable Subservicing Agreement or assume the terminated Master
Servicer's rights and obligations under such subservicing arrangements which
termination or assumption will not violate the terms of such arrangements.
As part of its servicing activities hereunder, the Master Servicer, for
the benefit of the Securityholders, shall use reasonable efforts to enforce the
obligations of each Subservicer under the related Subservicing Agreement, to the
extent that the non-performance of any such obligation would have a material
adverse effect on a Home Loan. Such enforcement, including, without limitation,
the legal prosecution of claims, termination of Subservicing Agreements and the
pursuit of other appropriate remedies, shall be in such form and carried out to
such an extent and at such time as the Master Servicer would employ in its good
faith business judgment and which are normal and usual in its general mortgage
servicing activities. The Master Servicer shall pay the costs of such
enforcement at its own expense, and shall be reimbursed therefor only (i) from a
general recovery resulting from such enforcement to the extent, if any, that
such recovery exceeds all amounts due in respect of the related Home Loan or
(ii) from a specific recovery of costs, expenses or attorneys fees against the
party against whom such enforcement is directed.
Section 3.02. Collection of Certain Home Loan Payments. (a) The Master Servicer
shall make reasonable efforts to collect all payments called for under the terms
and provisions of the Home Loans, and shall, to the extent such procedures shall
be consistent with this Servicing Agreement and generally consistent with any
related insurance policy, follow such collection procedures as it would employ
in its good faith business judgment and which are normal and usual in its
general mortgage servicing activities. Consistent with the foregoing, and
without limiting the generality of the foregoing, the Master Servicer may in its
discretion waive any late payment charge, prepayment charge or penalty interest
or other fees which may be collected in the ordinary course of servicing such
Home Loan. The Master Servicer may also extend the Due Date for payment due on a
Home Loan in accordance with the Program Guide, provided, however, that the
Master Servicer shall first determine that any such waiver or extension will not
impair the coverage of any related insurance policy or materially adversely
affect the lien of the related Mortgage (except as described below) or the
interests of the Securityholders. Notwithstanding anything in this Section to
the contrary, the Master Servicer or any Subservicer shall not enforce any
prepayment charge to the extent that such enforcement would violate any
applicable law. Consistent with the terms of this Servicing Agreement, the
Master Servicer may also:
(i) waive, modify or vary any term of any Home Loan;
(ii) consent to the postponement of strict compliance with any such term or
in any manner grant indulgence to any Mortgagor;
(iii) arrange with a Mortgagor a schedule for the payment of principal and
interest due and unpaid;
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(iv) forgive any portion of the amounts contractually owed under the Home
Loan;
(v) capitalize past due amounts owed under the Home Loan by adding any
amounts in arrearage to the existing principal balance of the Home Loan
(a "Capitalization Workout") of which will result in an increased
Monthly Payment amount, provided that: (A) the amount added to the
existing principal balance of the Home Loan (the "Capitalized Amount")
shall be no greater than five times the Mortgagor's current Monthly
Payment amount; and (B) the Master Servicer shall not enter into a
Capitalization Workout unless the Combined Loan-to-Value Ratio of the
Home Loan prior to the Capitalization Workout equals or exceeds 80% and
the Mortgagor has qualified for the Capitalization Workout under the
Master Servicer's servicing guidelines;
(vi) reset the Due Date for the Home Loan, or any combination of the
foregoing;
if in the Master Servicer's determination such waiver, modification,
postponement or indulgence, arrangement or other action referred to above is not
materially adverse to the interests of the Securityholders and is generally
consistent with the Master Servicer's policies with respect to mortgage loans
similar to those in the Home Loan Pool (meaning, mortgage loans used for home
improvement or debt consolidation); provided, however, that the Master Servicer
may not modify or permit any Subservicer to modify any Home Loan (including
without limitation any modification that would change the Loan Rate, forgive the
payment of any principal or interest (unless in connection with the liquidation
of the related Home Loan) or extend the final maturity date of such Home Loan)
unless such Home Loan is in default or, in the judgment of the Master Servicer,
such default is reasonably foreseeable. The general terms of any waiver,
modification, forgiveness, postponement or indulgence with respect to any of the
Home Loans will be included in the Servicing Certificate, and such Home Loans
will not be considered "delinquent" for the purposes of the Basic Documents so
long as the Mortgagor complies with the terms of such waiver, modification,
forgiveness, postponement or indulgence.
(b) The Master Servicer shall establish a Custodial Account, which shall be
an Eligible Account in which the Master Servicer shall deposit or cause
to be deposited any amounts representing payments and collections in
respect of the Home Loans received by it subsequent to the Cut-off Date
(other than in respect of the payments referred to in the following
paragraph) within one Business Day following receipt thereof (or
otherwise on or prior to the Closing Date), including the following
payments and collections received or made by it (without duplication):
(i) all payments of principal or interest on the Home Loans received by the
Master Servicer from the respective Subservicer, net of any portion of
the interest thereof retained by the Subservicer as Subservicing Fees;
(ii) the aggregate Repurchase Price of the Home Loans purchased by the Master
Servicer pursuant to Section 3.15 or by the Limited Repurchase Price
Holder pursuant to Section 3.16;
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(iii) Net Liquidation Proceeds net of any related Foreclosure Profit;
(iv) all proceeds of any Home Loans repurchased by the Seller pursuant to the
Home Loan Purchase Agreement, and all Substitution Adjustment Amounts
required to be deposited in connection with the substitution of an
Eligible Substitute Loan pursuant to the Home Loan Purchase Agreement;
(v) Insurance Proceeds, other than Net Liquidation Proceeds, resulting from
any insurance policy maintained on a Mortgaged Property; and
(vi) amounts required to be paid by the Master Servicer pursuant to Sections
3.04 and 8.08 and any prepayments or collections constituting prepayment
charges.
provided, however, that with respect to each Collection Period, the Master
Servicer shall be permitted to retain from payments in respect of interest on
the Home Loans, the Master Servicing Fee for such Collection Period. The
foregoing requirements respecting deposits to the Custodial Account are
exclusive, it being understood that, without limiting the generality of the
foregoing, the Master Servicer need not deposit in the Custodial Account amounts
representing Foreclosure Profits, fees (including annual fees) or late charge
penalties payable by Mortgagors (such amounts to be retained as additional
servicing compensation in accordance with Section 3.09 hereof), or amounts
received by the Master Servicer for the accounts of Mortgagors for application
towards the payment of taxes, insurance premiums, assessments and similar items.
In the event any amount not required to be deposited in the Custodial Account is
so deposited, the Master Servicer may at any time withdraw such amount from the
Custodial Account, any provision herein to the contrary notwithstanding. The
Custodial Account may contain funds that belong to one or more trust funds
created for the notes or certificates of other series and may contain other
funds respecting payments on other mortgage loans belonging to the Master
Servicer or serviced or master serviced by it on behalf of others.
Notwithstanding such commingling of funds, the Master Servicer shall keep
records that accurately reflect the funds on deposit in the Custodial Account
that have been identified by it as being attributable to the Home Loans and
shall hold all collections in the Custodial Account to the extent they represent
collections on the Home Loans for the benefit of the Trust, the Securityholders
and the Indenture Trustee, as their interests may appear. The Master Servicer
shall retain all Foreclosure Profits as additional servicing compensation.
The Master Servicer may cause the institution maintaining the Custodial
Account to invest any funds in the Custodial Account in Permitted Investments
(including obligations of the Master Servicer or any of its Affiliates, if such
obligations otherwise qualify as Permitted Investments), which investments shall
mature not later than the Business Day preceding the next succeeding Payment
Date and which investments shall not be sold or disposed of prior to maturity.
Except as provided above, all income and gain realized from any such investment
shall inure to the benefit of the Master Servicer and shall be subject to its
withdrawal or order from time to time. The amount of any losses incurred in
respect of the principal amount of any such investments shall be deposited in
the Custodial Account by the Master Servicer out of its own funds immediately as
realized.
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(c) The Master Servicer shall require each Subservicer to hold all funds
constituting collections on the Home Loans, pending remittance thereof to the
Master Servicer, in one or more accounts meeting the requirements of an Eligible
Account, and invested in Permitted Investments.
Section 3.03. Withdrawals from the Custodial Account. The Master Servicer shall,
from time to time as provided herein, make withdrawals from the Custodial
Account of amounts on deposit therein pursuant to Section 3.02 that are
attributable to the Home Loans for the following purposes:
(i) to remit to the Paying Agent for deposit in the Payment Account, on the
Business Day prior to each Payment Date, an amount equal to the Interest
Collections and Principal Collections required to be distributed on such
Payment Date and any payments or collections constituting prepayment
charges received during the related Prepayment Period;
(ii) to the extent deposited to the Custodial Account, to reimburse itself or
the related Subservicer for previously unreimbursed expenses, made
pursuant to Section 3.01, incurred in maintaining individual insurance
policies pursuant to Section 3.04, or Liquidation Expenses, paid
pursuant to Section 3.07 or otherwise reimbursable pursuant to the terms
of this Servicing Agreement (to the extent not payable pursuant to
Section 3.09), such withdrawal right being limited to amounts received
on particular Home Loans (other than any Repurchase Price in respect
thereof) which represent late recoveries of the payments for which such
advances were made, or from related Net Liquidation Proceeds or the
proceeds of the purchase of such Home Loan;
(iii) to pay to itself out of each payment received on account of interest on
a Home Loan as contemplated by Section 3.09, an amount equal to the
related Master Servicing Fee (to the extent not retained pursuant to
Section 3.02), and to pay to any Subservicer any Subservicing Fees not
previously withheld by the Subservicer;
(iv) to the extent deposited in the Custodial Account to pay to itself as
additional servicing compensation any interest or investment income
earned on funds deposited in the Custodial Account and Payment Account
that it is entitled to withdraw pursuant to Sections 3.02(b) and 5.01;
(v) to the extent deposited in the Custodial Account, to pay to itself as
additional servicing compensation any Foreclosure Profits;
(vi) to pay to itself or the Seller, with respect to any Home Loan or
property acquired in respect thereof that has been purchased or
otherwise transferred to the Seller, the Master Servicer, the Limited
Repurchase Right Holder or other entity, all amounts received thereon
and not required to be distributed to Securityholders as of the date on
which the related Purchase Price or Repurchase Price is determined;
(vii) to clear and terminate the Custodial Account upon the termination of
this Agreement; and
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(viii) to withdraw any other amount deposited in the Custodial Account that was
not required to be deposited therein pursuant to Section 3.02.
Since, in connection with withdrawals pursuant to clauses (ii), (iii),
(v) and (vi), the Master Servicer's entitlement thereto is limited to
collections or other recoveries on the related Home Loan, the Master Servicer
shall keep and maintain separate accounting, on a Home Loan by Home Loan basis,
for the purpose of justifying any withdrawal from the Custodial Account pursuant
to such clauses. Notwithstanding any other provision of this Servicing
Agreement, the Master Servicer shall be entitled to reimburse itself for any
previously unreimbursed expenses incurred pursuant to Section 3.07 or otherwise
reimbursable pursuant to the terms of this Servicing Agreement that the Master
Servicer determines to be otherwise nonrecoverable (except with respect to any
Home Loan as to which the Repurchase Price has been paid), by withdrawal from
the Custodial Account of amounts on deposit therein attributable to the Home
Loans on any Business Day prior to the Payment Date succeeding the date of such
determination.
Section 3.04. Maintenance of Hazard Insurance; Property Protection Expenses. The
Master Servicer shall cause to be maintained for each Home Loan hazard insurance
naming the Master Servicer or related Subservicer as loss payee thereunder
providing extended coverage in an amount which is at least equal to at least
100% of the insurable value of the improvements (guaranteed replacement) or the
sum of the unpaid principal balance of the first mortgage loan and the Home Loan
amount. The Master Servicer shall also cause to be maintained on property
acquired upon foreclosure, or deed in lieu of foreclosure, of any Home Loan,
fire insurance with extended coverage in an amount which is at least equal to
the amount necessary to avoid the application of any co-insurance clause
contained in the related hazard insurance policy. Amounts collected by the
Master Servicer under any such policies (other than amounts to be applied to the
restoration or repair of the related Mortgaged Property or property thus
acquired or amounts released to the Mortgagor in accordance with the Master
Servicer's normal servicing procedures) shall be deposited in the Custodial
Account to the extent called for by Section 3.02. In cases in which any
Mortgaged Property is located at any time during the life of a Home Loan in a
federally designated flood area, the hazard insurance to be maintained for the
related Home Loan shall include flood insurance (to the extent available). All
such flood insurance shall be in amounts equal to the lesser of (i) the amount
required to compensate for any loss or damage to the related Mortgaged Property
on a replacement cost basis and (ii) the maximum amount of such insurance
available for such Mortgaged Property under the national flood insurance program
(assuming that the area in which such Mortgaged Property is located is
participating in such program). The Master Servicer shall be under no obligation
to require that any Mortgagor maintain earthquake or other additional insurance
and shall be under no obligation itself to maintain any such additional
insurance on property acquired in respect of a Home Loan, other than pursuant to
such applicable laws and regulations as shall at any time be in force and as
shall require such additional insurance. If the Master Servicer shall obtain and
maintain a blanket policy consistent with its general mortgage servicing
activities insuring against hazard losses on all of the Home Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first sentence of this Section 3.04, it being understood and agreed that such
blanket policy may contain a deductible clause, in which case the Master
Servicer shall, in the event that there shall not have been maintained on the
related Mortgaged Property a policy complying with the first sentence of this
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Section 3.04 and there shall have been a loss which would have been covered by
such policy, deposit in the Custodial Account the amount not otherwise payable
under the blanket policy because of such deductible clause. Any such deposit by
the Master Servicer shall be made on the last Business Day of the Collection
Period in the month in which payments under any such policy would have been
deposited in the Custodial Account. In connection with its activities as
servicer of the Home Loans, the Master Servicer agrees to present, on behalf of
itself, the Issuer and the Indenture Trustee, claims under any such blanket
policy.
Section 3.05. Modification Agreements; Release or Substitution of Lien. (a) The
Master Servicer or the related Subservicer, as the case may be, shall be
entitled to (A) execute assumption agreements, modification agreements,
substitution agreements, and instruments of satisfaction or cancellation or of
partial or full release or discharge, or any other document contemplated by this
Servicing Agreement and other comparable instruments with respect to the Home
Loans and with respect to the Mortgaged Properties subject to the Mortgages (and
the Issuer and the Indenture Trustee each shall promptly execute any such
documents on request of the Master Servicer) and (B) approve the granting of an
easement thereon in favor of another Person, any alteration or demolition of the
related Mortgaged Properties or other similar matters, in each case if it has
determined, exercising its good faith business judgment in the same manner as it
would if it were the owner of the related Home Loans, that the security for, and
the timely and full collectability of, such Home Loans would not be adversely
affected thereby. A partial release pursuant to this Section 3.05 shall be
permitted only if the Combined Loan-to-Value Ratio for such Home Loan after such
partial release does not exceed the Combined Loan-to-Value Ratio for such Home
Loan as of the Cut-off Date. Any fee collected by the Master Servicer or the
related Subservicer for processing such request will be retained by the Master
Servicer or such Subservicer as additional servicing compensation.
(b) The Master Servicer may enter into an agreement with a Mortgagor to
release the lien on the Mortgaged Property relating to a Home Loan (the
"Existing Lien"), if at the time of such agreement the Home Loan is
current in payment of principal and interest, under any of the following
circumstances:
(i) in any case in which, simultaneously with the release of the Existing
Lien, the Mortgagor executes and delivers to the Master Servicer a
Mortgage on a substitute Mortgaged Property, provided that the Combined
Loan-to-Value Ratio of the Home Loan (calculated based on the Appraised
Value of the substitute Mortgaged Property) is not greater than the
Combined Loan-to-Value Ratio prior to releasing the Existing Lien;
(ii) in any case in which, simultaneously with the release of the Existing
Lien, the Mortgagor executes and delivers to the Master Servicer a
Mortgage on a substitute Mortgaged Property, provided that: (A) the
Combined Loan-to-Value Ratio of the Home Loan (calculated based on the
Appraised Value of the substitute Mortgaged Property) is not greater
than the lesser of (1) 125% and (2) 105% of the Combined Loan-to-Value
Ratio prior to releasing the Existing Lien; and (B) the Master Servicer
determines that at least two appropriate compensating factors are
present (compensating factors may include, without limitation, an
increase in the Mortgagor's monthly cash flow after debt service, the
Mortgagor's debt-to-income ratio has not increased since origination, or
an increase in the Mortgagor's credit score); or
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(iii) in any case in which, at the time of release of the Existing Lien, the
Mortgagor does not provide the Master Servicer with a Mortgage on a
substitute Mortgaged Property (any Home Loan that becomes and remains
unsecured in accordance with this subsection, an "Unsecured Loan"),
provided that: (A) the Mortgagor, in addition to being current in
payment of principal and interest on the related Home Loan, is current
in payment of principal and interest on any loan senior to the Home
Loan; (B) the Mortgagor's Credit Score, as determined by the Master
Servicer at the time of the request for release of lien, is not less
than 640; (C) the Mortgagor makes a cash contribution in reduction of
the outstanding principal balance of the Home Loan, which may include
any net proceeds from the sale of the original Mortgaged Property, of
not less than 20% of the unpaid principal balance of the Home Loan; and
(D) the Mortgagor signs a reaffirmation agreement acknowledging that
they must continue to pay in accordance with the terms of the original
Mortgage Note;
(iv) If the above conditions (iii)(A) through (iii)(D) are not met, the
Master Servicer may still enter into an agreement to release the
Existing Lien, provided that: (A) the Master Servicer shall not permit
the release of an Existing Lien under this clause (iv) as to more than
200 Home Loans in any calendar year; (B) at no time shall the aggregate
Principal Balance of Unsecured Loans exceed 5% of the then Pool Balance;
(C) the Mortgagor agrees to an automatic debit payment plan; and (D) the
Master Servicer shall provide notice to each Rating Agency that has
requested notice of such releases.
In connection with any Unsecured Loan, the Master Servicer may require
the Mortgagor to enter into an agreement under which: (i) the Loan Rate may be
increased effective until a substitute Mortgage meeting the criteria under (i)
or (ii) above is provided; or (ii) any other provision may be made which the
Master Servicer considers to be appropriate. Thereafter, the Master Servicer
shall determine in its discretion whether to accept any proposed Mortgage on any
substitute Mortgaged Property as security for the Home Loan, and the Master
Servicer may require the Mortgagor to agree to any further conditions which the
Master Servicer considers appropriate in connection with such substitution,
which may include a reduction of the Loan Rate (but not below the Loan Rate in
effect at the Closing Date). Any Home Loan as to which a Mortgage on a
substitute Mortgaged Property is provided in accordance with the preceding
sentence shall no longer be deemed to be an Unsecured Loan.
Section 3.06. Trust Estate; Related Documents. (a) When required by the
provisions of this Servicing Agreement, the Issuer or the Indenture Trustee
shall execute instruments to release property from the terms of the Trust
Agreement, Indenture or Custodial Agreement, as applicable, or convey the
Issuer's or the Indenture Trustee's interest in the same, in a manner and under
circumstances which are not inconsistent with the provisions of this Servicing
Agreement. No party relying upon an instrument executed by the Issuer or the
Indenture Trustee as provided in this Section 3.06 shall be bound to ascertain
the Issuer's or the Indenture Trustee's authority, inquire into the satisfaction
of any conditions precedent or see to the application of any monies.
(b) If from time to time the Master Servicer shall deliver to the Custodian
copies of any written assurance, assumption agreement or substitution agreement
or other similar agreement pursuant to Section 3.05, the Custodian shall check
that each of such documents purports to be an original executed copy (or a copy
of the original executed document if the original executed copy has been
submitted for recording and has not yet been returned) and, if so, shall file
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such documents, and upon receipt of the original executed copy from the
applicable recording office or receipt of a copy thereof certified by the
applicable recording office shall file such originals or certified copies with
the Related Documents. If any such documents submitted by the Master Servicer do
not meet the above qualifications, such documents shall promptly be returned by
the Custodian to the Master Servicer pursuant to the related Custodial
Agreement, with a direction to the Master Servicer to forward the correct
documentation.
(c) Upon receipt of a Request for Release from the Master Servicer, to the
effect that a Home Loan has been the subject of a final payment or a prepayment
in full and the related Home Loan has been terminated or that substantially all
Liquidation Proceeds which have been determined by the Master Servicer in its
reasonable judgment to be finally recoverable have been recovered, and upon
deposit to the Custodial Account of such final monthly payment, prepayment in
full together with accrued and unpaid interest to the date of such payment with
respect to such Home Loan or, if applicable, Net Liquidation Proceeds, the
Custodian shall promptly release the Related Documents to the Master Servicer
pursuant to the related Custodial Agreement, which the Indenture Trustee shall
execute, along with such documents as the Master Servicer or the related
Mortgagor may request to evidence satisfaction and discharge of such Home Loan,
upon request of the Master Servicer. If from time to time and as appropriate for
the servicing or foreclosure of any Home Loan, the Master Servicer requests the
Custodian to release the Related Documents and delivers to the Custodian a trust
receipt reasonably satisfactory to the Custodian and signed by a Responsible
Officer of the Master Servicer, the Custodian shall release the Related
Documents to the Master Servicer pursuant to the related Custodial Agreement. If
such Home Loans shall be liquidated and the Custodian receives a certificate
from the Master Servicer as provided above, then, upon request of the Master
Servicer, the Custodian shall release the trust receipt to the Master Servicer
pursuant to the related Custodial Agreement.
Section 3.07. Realization Upon Defaulted Home Loans; Loss Mitigation. With
respect to such of the Home Loans as come into and continue in default, the
Master Servicer shall decide whether to (i) foreclose upon the Mortgaged
Properties securing such Home Loans, (ii) write off the unpaid principal balance
of the Home Loans as bad debt, (iii) take a deed in lieu of foreclosure, (iv)
accept a short sale (a payoff of the Home Loan for an amount less than the total
amount contractually owed in order to facilitate a sale of the Mortgaged
Property by the Mortgagor) or permit a short refinancing (a payoff of the Home
Loan for an amount less than the total amount contractually owed in order to
facilitate refinancing transactions by the Mortgagor not involving a sale of the
Mortgaged Property), (v) arrange for a repayment plan, (vi) agree to a
modification in accordance with this Servicing Agreement, or (vii) take an
unsecured note, in connection with a negotiated release of the lien of the
Mortgage in order to facilitate a settlement with the Mortgagor; in each case
subject to the rights of any related first lien holder; provided that in
connection with the foregoing if the Master Servicer has actual knowledge that
any Mortgaged Property is affected by hazardous or toxic wastes or substances
and that the acquisition of such Mortgaged Property would not be commercially
reasonable, then the Master Servicer shall not cause the Issuer or the Indenture
Trustee to acquire title to such Mortgaged Property in a foreclosure or similar
proceeding. In connection with such decision, the Master Servicer shall follow
such practices (including, in the case of any default on a related senior
mortgage loan, the advancing of funds to correct such default if deemed to be
appropriate by the Master Servicer) and procedures as it shall deem necessary or
advisable and as shall be normal and usual in its general mortgage servicing
activities and as shall be required or permitted by the Program Guide; provided
15
that the Master Servicer shall not be liable in any respect hereunder if the
Master Servicer is acting in connection with any such foreclosure or attempted
foreclosure which is not completed or other conversion in a manner that is
consistent with the provisions of this Servicing Agreement. The foregoing is
subject to the proviso that the Master Servicer shall not be required to expend
its own funds in connection with any foreclosure or attempted foreclosure which
is not completed or towards the correction of any default on a related senior
mortgage loan or restoration of any property unless it shall determine that such
expenditure will increase Net Liquidation Proceeds. In the event of a
determination by the Master Servicer that any such expenditure previously made
pursuant to this Section 3.07 will not be reimbursable from Net Liquidation
Proceeds, the Master Servicer shall be entitled to reimbursement of its funds so
expended pursuant to Section 3.03.
Notwithstanding any provision of this Servicing Agreement, a Home Loan
may be deemed to be finally liquidated if substantially all amounts expected by
the Master Servicer to be received in connection with the related defaulted Home
Loan have been received; provided, however, the Master Servicer shall treat any
Home Loan that is 180 days or more delinquent as having been finally liquidated.
Any subsequent collections with respect to any such Home Loan shall be deposited
to the Custodial Account. For purposes of determining the amount of any
Liquidation Proceeds or Insurance Proceeds, or other unscheduled collections,
the Master Servicer may take into account minimal amounts of additional receipts
expected to be received or any estimated additional liquidation expenses
expected to be incurred in connection with the related defaulted Home Loan.
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 issued to the Indenture Trustee, who shall hold the same on behalf of
the Issuer in accordance with Section 3.13 of the Indenture. Notwithstanding any
such acquisition of title and cancellation of the related Home Loan, such
Mortgaged Property shall (except as otherwise expressly provided herein) be
considered to be an outstanding Home Loan held as an asset of the Issuer until
such time as such property shall be sold.
Any proceeds from the purchase or repurchase that occurs prior to the
Home Loan becoming a Liquidated Home Loan of any Home Loan pursuant to the terms
of this Servicing Agreement (including without limitation Sections 2.03, 3.15
and 3.16) will be applied in the following order of priority: first, to the
Master Servicer or the related Subservicer, all Servicing Fees payable therefrom
to the Payment Date on which such amounts are to be deposited in the Payment
Account; second, as Interest Collections, accrued and unpaid interest on the
related Home Loan, at the Net Loan Rate to the Payment Date on which such
amounts are to be deposited in the Payment Account; and third, as Principal
Collections, as a recovery of principal on the Home Loan.
Liquidation Proceeds with respect to a Liquidated Home Loan will be
applied in the following order of priority: first, to reimburse the Master
Servicer or the related Subservicer in accordance with this Section 3.07 for any
Liquidation Expenses; second, to the Master Servicer or the related Subservicer,
all unpaid Servicing Fees through the date of receipt of the final Liquidation
16
Proceeds; third, as Principal Collections, as a recovery of principal on the
Home Loan, up to an amount equal to the Loan Balance of the related Home Loan
immediately prior to the date it became a Liquidated Home Loan; fourth, as
Interest Collections, accrued and unpaid interest on the related Home Loan at
the Net Loan Rate through the date of receipt of the final Liquidation Proceeds;
and fifth, to Foreclosure Profits.
Proceeds and other recoveries from a Home Loan after it becomes a
Liquidated Home Loan will be applied in the following order of priority: first,
to reimburse the Master Servicer or the related Subservicer in accordance with
this Section 3.07 for any expenses previously unreimbursed from Liquidation
Proceeds or otherwise; second, to the Master Servicer or the related
Subservicer, all unpaid Servicing Fees payable thereto through the date of
receipt of the proceeds previously unreimbursed from Liquidation Proceeds or
otherwise; third, as Interest Collections, up to an amount equal to the sum of
(a) the Loan Balance of the related Home Loan immediately prior to the date it
became a Liquidated Home Loan, less any Net Liquidation Proceeds previously
received with respect to such Home Loan and applied as a recovery of principal,
and (b) accrued and unpaid interest on the related Home Loan at the Net Loan
Rate through the date it became a Liquidation Home Loan; and fourth, to
Foreclosure Profits.
Section 3.08. Issuer and Indenture Trustee to Cooperate. On or before each
Payment Date, the Master Servicer will notify the Indenture Trustee or the
Custodian, with a copy to the Issuer, of the termination of or the payment in
full and the termination of any Home Loan during the preceding Collection
Period. Upon receipt of payment in full, the Master Servicer is authorized to
execute, pursuant to the authorization contained in Section 3.01, if the
assignments of Mortgage have been recorded if required under the Home Loan
Purchase Agreement, an instrument of satisfaction regarding the related
Mortgage, which instrument of satisfaction shall be recorded by the Master
Servicer if required by applicable law and be delivered to the Person entitled
thereto, and to cause the removal from the registration on the MERS(R) System of
such Mortgage, if applicable. It is understood and agreed that any expenses
incurred in connection with such instrument of satisfaction or transfer shall be
reimbursed from amounts deposited in the Custodial Account. From time to time
and as appropriate for the servicing or foreclosure of any Home Loan, the
Indenture Trustee or the Custodian shall, upon request of the Master Servicer
and delivery to the Indenture Trustee or Custodian, with a copy to the Issuer,
of a Request for Release, signed by a Servicing Officer, release or cause to be
released the related Mortgage File to the Master Servicer and the Issuer or
Indenture Trustee shall promptly execute such documents, in the forms provided
by the Master Servicer, as shall be necessary for the prosecution of any such
proceedings or the taking of other servicing actions. Such trust receipt shall
obligate the Master Servicer to return the Mortgage File to the Indenture
Trustee or the Custodian (as specified in such receipt) when the need therefor
by the Master Servicer no longer exists unless the Home Loan shall be
liquidated, in which case, upon receipt of a certificate of a Servicing Officer
similar to that hereinabove specified, the trust receipt shall be released to
the Master Servicer.
In order to facilitate the foreclosure of the Mortgage securing any Home
Loan that is in default following recordation of the related Assignment of
Mortgage in accordance with the provisions of the Home Loan Purchase Agreement,
the Indenture Trustee or the Issuer shall, if so requested in writing by the
Master Servicer, promptly execute an appropriate assignment in the form provided
by the Master Servicer to assign such Home Loan for the purpose of collection to
17
the Master Servicer (any such assignment shall unambiguously indicate that the
assignment is for the purpose of collection only), and, upon such assignment,
such assignee for collection will thereupon bring all required actions in its
own name and otherwise enforce the terms of the Home Loan and deposit or credit
the Net Liquidation Proceeds, exclusive of Foreclosure Profits, received with
respect thereto in the Custodial Account. In the event that all delinquent
payments due under any such Home Loan are paid by the Mortgagor and any other
defaults are cured, then the assignee for collection shall promptly reassign
such Home Loan to the Indenture Trustee and return all Related Documents to the
place where the related Mortgage File was being maintained.
In connection with the Issuer's obligation to cooperate as provided in
this Section 3.08 and all other provisions of this Servicing Agreement requiring
the Issuer to authorize or permit any actions to be taken with respect to the
Home Loans, the Indenture Trustee, as pledgee of the Home Loans and as assignee
of record of the Home Loans on behalf of the Issuer pursuant to Section 3.13 of
the Indenture, expressly agrees, on behalf of the Issuer, to take all such
actions on behalf of the Issuer and to promptly execute and return all
instruments reasonably required by the Master Servicer in connection therewith;
provided that if the Master Servicer shall request a signature of the Indenture
Trustee, on behalf of the Issuer, the Master Servicer shall deliver to the
Indenture Trustee an Officer's Certificate stating that such signature is
necessary or appropriate to enable the Master Servicer to carry out its
servicing and administrative duties under this Servicing Agreement.
Section 3.09. Servicing Compensation; Payment of Certain Expenses by Master
Servicer. The Master Servicer shall be entitled to receive the Master Servicing
Fee in accordance with Sections 3.02 and 3.03 as compensation for its services
in connection with servicing the Home Loans. Moreover, additional servicing
compensation in the form of late payment charges, investment income on amounts
in the Custodial Account or the Payment Account and other receipts not required
to be deposited in the Custodial Account as specified in Section 3.02 shall be
retained by the Master Servicer. The Master Servicer shall be required to pay
all expenses incurred by it in connection with its activities hereunder
(including payment of all other fees and expenses not expressly stated hereunder
to be for the account of the Securityholders, including, without limitation, the
fees and expenses of the Owner Trustee, Indenture Trustee and any Custodian) and
shall not be entitled to reimbursement therefor.
Section 3.10. Annual Statement as to Compliance.
---------------------------------
(a) The Master Servicer shall deliver to the Depositor and the Indenture Trustee
on or before the earlier of (a) March 31 of each year, beginning with the first
March 31 that occurs at least six months after the Cut-off Date, or (b) with
respect to any calendar year during which the Depositor's annual report on Form
10-K is required to be filed in accordance with the Exchange Act and the rules
and regulations of the Commission, the date on which the Depositor's annual
report on Form 10-K is required to be filed in accordance with the Exchange Act
and the rules and regulations of the Commission (or, in each case, if such day
is not a Business Day, the immediately preceding Business Day), an Officers'
Certificate stating, as to each signer thereof, that (i) a review of the
activities of the Master Servicer during the preceding calendar year related to
its servicing of mortgage loans and of its performance under servicing
agreements, including this Servicing Agreement, has been made under such
18
officers' supervision, (ii) to the best of such officers' knowledge, based on
such review, the Master Servicer has complied in all material respects with the
minimum servicing standards set forth in the Uniform Single Attestation Program
for Mortgage Bankers and has fulfilled all of its material obligations in all
material respects throughout such year, or, if there has been material
noncompliance with such servicing standards or a default in the fulfillment in
all material respects of any such obligation relating to this Servicing
Agreement, such statement shall include a description of such noncompliance or
specify each such default, as the case may be, known to such officer and the
nature and status thereof.
(b) The Master Servicer shall deliver to the Issuer and the Indenture Trustee,
promptly after having obtained knowledge thereof, but in no event later than
five Business Days thereafter, written notice by means of an Officer's
Certificate of any event which with the giving of notice or the lapse of time or
both, would become a Servicing Default.
Section 3.11. Annual Independent Public Accountants' Servicing Report.
-------------------------------------------------------
On or before the earlier of (a) March 31 of each year, beginning with
the first March 31 that occurs at least six months after the Cut-off Date, or
(b) with respect to any calendar year during which the Depositor's annual report
on Form 10-K is required to be filed in accordance with the Exchange Act and the
rules and regulations of the Commission, the date on which the Depositor's
annual report on Form 10-K is required to be filed in accordance with the
Exchange Act and the rules and regulations of the Commission (or, in each case,
if such day is not a Business Day, the immediately preceding Business Day), the
Master Servicer at its expense shall cause a firm of independent public
accountants which shall be members of the American Institute of Certified Public
Accountants to furnish a report to the Depositor and the Indenture Trustee
stating its opinion that, on the basis of an examination conducted by such firm
substantially in accordance with standards established by the American Institute
of Certified Public Accountants, the assertions made pursuant to Section 3.10
regarding compliance with the minimum servicing standards set forth in the
Uniform Single Attestation Program for Mortgage Bankers during the preceding
calendar year are fairly stated in all material respects, subject to such
exceptions and other qualifications that, in the opinion of such firm, such
accounting standards require it to report. In rendering such statement, such
firm may rely, as to matters relating to the direct servicing of mortgage loans
by Subservicers, upon comparable statements for examinations conducted by
independent public accountants substantially in accordance with standards
established by the American Institute of Certified Public Accountants (rendered
within one year of such statement) with respect to such Subservicers.
Section 3.12. Access to Certain Documentation and Information Regarding the Home
Loans. Whenever required by statute or regulation, the Master Servicer shall
provide to any Securityholder upon reasonable request (or a regulator for a
Securityholder) or the Indenture Trustee, reasonable access to the documentation
regarding the Home Loans such access shall be afforded without charge but only
upon reasonable request and during normal business hours at the offices of the
Master Servicer. Nothing in this Section 3.12 shall derogate from the obligation
of the Master Servicer to observe any applicable law prohibiting disclosure of
information regarding the Mortgagors and the failure of the Master Servicer to
provide access as provided in this Section 3.12 as a result of such obligation
shall not constitute a breach of this Section 3.12.
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Section 3.13. Maintenance of Certain Servicing Insurance Policies. The Master
Servicer shall during the term of its service as servicer maintain in force (i)
a policy or policies of insurance covering errors and omissions in the
performance of its obligations as master servicer hereunder and (ii) a fidelity
bond in respect of its officers, employees or agents. Each such policy or
policies and fidelity bond shall be at least equal to the coverage that would be
required by FNMA or FHLMC, whichever is greater, for Persons performing
servicing for loans similar to the Home Loans purchased by such entity.
Section 3.14. Information Required by the Internal Revenue Service and Reports
of Foreclosures and Abandonments of Mortgaged Property. The Master Servicer
shall prepare and deliver all federal and state information reports when and as
required by all applicable state and federal income tax laws. In particular,
with respect to the requirement under Section 6050J of the Code to the effect
that the Master Servicer or Subservicer shall make reports of foreclosures and
abandonments of any mortgaged property for each year beginning in 2005, the
Master Servicer or Subservicer shall file reports relating to each instance
occurring during the previous calendar year in which the Master Servicer (i) on
behalf of the Issuer, acquires an interest in any Mortgaged Property through
foreclosure or other comparable conversion in full or partial satisfaction of a
Home Loan, or (ii) knows or has reason to know that any Mortgaged Property has
been abandoned. The reports from the Master Servicer or Subservicer shall be in
form and substance sufficient to meet the reporting requirements imposed by
Section 6050J and Section 6050H (reports relating to mortgage interest received)
of the Code.
Section 3.15. Optional Repurchase of Defaulted Home Loans. Notwithstanding any
provision in Section 3.07 to the contrary, the Master Servicer, at its option
and in its sole discretion, may repurchase any Home Loan delinquent in payment
for a period of 90 days or longer for a price equal to the Repurchase Price.
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Section 3.16. Limited Home Loan Repurchase Right. The Limited Repurchase Right
Holder will have the irrevocable option at any time to purchase any of the Home
Loans at the Repurchase Price, up to a maximum of five Home Loans. In the event
that this option is exercised as to any five Home Loans in the aggregate, this
option will thereupon terminate. If at any time the Limited Repurchase Right
Holder makes a payment to the Custodial Account covering the amount of the
Repurchase Price for such a Home Loan, and the Limited Repurchase Right Holder
provides to the Indenture Trustee a certification signed by a Servicing Officer
stating that the amount of such payment has been deposited in the Custodial
Account, then, at the request of the Limited Repurchase Right Holder, the
Indenture Trustee shall execute the assignment of such Home Loan, without
recourse, to the Limited Repurchase Right Holder which shall succeed to all the
Indenture Trustee's right, title and interest in and to such Home Loan, and all
security and documents relative thereto. Such assignment shall be an assignment
outright and not for security. The Limited Repurchase Right Holder will
thereupon own such Mortgage, and all such security and documents, free of any
further obligation to the Indenture Trustee with respect thereto.
ARTICLE IV
Servicing Certificate
Section 4.01. Statements to Securityholders. (a) With respect to each Payment
Date, on the Business Day following the related Determination Date, the Master
Servicer shall forward to the Indenture Trustee and the Indenture Trustee
pursuant to Section 3.26 of the Indenture shall forward or cause to be forwarded
by mail or otherwise make available electronically at ▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇/▇▇▇ to
each Certificateholder, Noteholder, the Depositor, the Owner Trustee, the
Certificate Paying Agent and each Rating Agency, a statement setting forth the
following information (the "Servicing Certificate") as to the Notes and
Certificates, to the extent applicable:
(i) the aggregate amount of (a) Interest Collections, (b) Principal
Collections and (c) Substitution Adjustment Amounts;
(ii) the amount of such distribution as principal to the Noteholders;
(iii) the amount of such distribution as interest to the Noteholders,
separately stating the portion thereof in respect of overdue accrued
interest;
(iv) the number and Pool Balance of the Home Loans as of the end of the
related Collection Period;
(v) the number and aggregate Loan Balances of Home Loans (a) as to which the
Monthly Payment is Delinquent for 30-59 days, 60-89 days and 90 or more
days, respectively, (b) that are foreclosed, (c) that have become REO,
and (d) that have been finally liquidated due to being 180 days or more
delinquent, in each case as of the end of the related Collection Period;
provided, however, that such information will not be provided on the
statements relating to the first Payment Date;
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(vi) the weighted average Loan Rate for the related Collection Period;
(vii) the aggregate Liquidation Loss Amounts with respect to the related
Collection Period, the amount of any Liquidation Loss Distribution
Amounts with respect to the Notes, and the aggregate of the Liquidation
Loss Amounts from all Collection Periods to date expressed as dollars
and as a percentage of the aggregate Cut-off Date Loan Balance;
(viii) the aggregate Excess Loss Amounts with respect to the related Collection
Period and the aggregate of the Excess Loss Amounts from all Collection
Periods to date;
(ix) the Note Balance of the Notes and the Certificate Principal Balance of
the Certificates after giving effect to the distribution of principal on
such Payment Date;
(x) the aggregate Servicing Fees for the related Collection Period;
(xi) the Outstanding Reserve Amount and the Reserve Amount Target immediately
following such Payment Date;
(xii) (a) the number and principal amount of release agreements pursuant to
Section 3.05(b)(iv) entered into during the calendar year and since the
Closing Date, stated separately, for the Home Loans and, the aggregate
outstanding principal amount of such release agreements expressed as a
percentage of the Pool Balance with information provided separately with
respect to all Unsecured Loans and (b) the number and principal amount
of Capitalization Workouts pursuant to Section 3.02(a)(v) entered into
since the Closing Date;
(xiii) the aggregate amount recovered during the related Collection Period
consisting of all subsequent recoveries on any Home Loan that was 180
days or more delinquent;
(xiv) the amount, if any, to be paid by a Derivative Counterparty under a
Derivative Contract; and
(xv) whether or not a Servicing Trigger has occurred.
In the case of information furnished pursuant to clauses (ii) and (iii)
above, the amounts shall be expressed as an aggregate dollar amount per Note or
Certificate, as applicable, with a $1,000 denomination.
(b) In addition, with respect to each Payment Date, on the Business Day
following the related Determination Date, the Master Servicer shall
forward to the Rating Agencies the following information for each
Capitalization Workout entered into during the related Collection
Period:
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(i) the original Home Loan amount;
(ii) the Home Loan amount after the Capitalization Workout;
(iii) the original Monthly Payment amount;
(iv) the Monthly Payment amount after the Capitalization Workout;
(v) the Capitalized Amount as defined in Section 3.02(a)(v) herein;
(vi) the Combined Loan-to-Value Ratio prior to the Capitalization Workout;
(vii) the Combined Loan-to-Value Ratio after the Capitalization Workout; and
(viii) if an appraisal was used in determining the Combined Loan-to-Value Ratio
referred to in (vii) above, the type and date of appraisal.
The Master Servicer shall also forward to the Indenture Trustee any
other information reasonably requested by the Indenture Trustee necessary to
make distributions pursuant to Section 3.05 of the Indenture. Prior to the close
of business on the Business Day next succeeding each Determination Date, the
Master Servicer shall furnish a written statement to the Certificate Paying
Agent and the Indenture Trustee setting forth the aggregate amounts required to
be withdrawn from the Custodial Account and deposited into the Payment Account
on the Business Day preceding the related Payment Date pursuant to Section 3.03.
The determination by the Master Servicer of such amounts shall, in the absence
of obvious error, be presumptively deemed to be correct for all purposes
hereunder and the Owner Trustee and Indenture Trustee shall be protected in
relying upon the same without any independent check or verification. In
addition, upon the Issuer's written request, the Master Servicer shall promptly
furnish information reasonably requested by the Issuer that is reasonably
available to the Master Servicer to enable the Issuer to perform its federal and
state income tax reporting obligations.
Section 4.02. Tax Reporting. So long as 100% of the Certificates are owned by
the same person, then no separate federal and state income tax returns and
information returns or reports will be filed with respect to the Issuer, and the
Issuer will be treated as an entity disregarded from the 100% Certificateholder.
Section 4.03. Calculation of Adjusted Issue Price. The Master Servicer shall
calculate the Adjusted Issue Price for purposes of calculating the Termination
Price.
Section 4.04. Exchange Act Reporting. The Master Servicer shall, on behalf of
the Depositor and in respect of the Trust Estate, prepare, sign and cause to be
filed with the Commission any periodic reports required to be filed under the
provisions of the Exchange Act, and the rules and regulations of the Commission
thereunder. Neither the Master Servicer nor the Indenture Trustee shall have any
liability with respect to the Master Servicer's failure to properly prepare or
file such periodic reports resulting from or relating to the Master Servicer's
inability or failure to obtain any information not resulting from the Master
Servicer's own negligence or willful misconduct. Any Form 10-K filed with the
Commission in connection with this Section 4.04 shall include a certification,
signed by the senior officer in charge of the servicing functions of the Master
Servicer, in the form attached as Exhibit D hereto or such other form as may be
required or permitted by the Commission (the "Form 10-K Certification"), in
compliance with Rule 13a-14 and 15d-14 under the Exchange Act and any additional
directives of the Commission. This Section 4.04 may be amended in accordance
with the provisions of this Servicing Agreement without the consent of the
Securityholders.
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ARTICLE V
Payment Account
Section 5.01. Payment Account. The Indenture Trustee shall establish and
maintain a Payment Account entitled "JPMorgan Chase Bank, N.A., as Indenture
Trustee, for the benefit of the Securityholders and the Certificate Paying Agent
pursuant to the Indenture, dated as of October 27, 2005, between Home Loan Trust
2005-HI3 and JPMorgan Chase Bank, N.A.". The Payment Account shall be an
Eligible Account. On each Payment Date, amounts on deposit in the Payment
Account will be distributed by the Indenture Trustee in accordance with Section
3.05 of the Indenture. The Indenture Trustee shall, upon written request from
the Master Servicer, invest or cause the institution maintaining the Payment
Account to invest the funds in the Payment Account in Permitted Investments
designated in the name of the Indenture Trustee, which shall mature not later
than the Business Day next preceding the Payment Date next following the date of
such investment (except that (i) any investment in the institution with which
the Payment Account is maintained or a fund for which such institution serves as
custodian may mature on such Payment Date and (ii) any other investment may
mature on such Payment Date if the Indenture Trustee shall advance funds on such
Payment Date to the Payment Account in the amount payable on such investment on
such Payment Date, pending receipt thereof to the extent necessary to make
distributions on the Securities) and shall not be sold or disposed of prior to
maturity. All income and gain realized from any such investment shall be for the
benefit of the Master Servicer and shall be subject to its withdrawal or order
from time to time. The amount of any losses incurred in respect of any such
investments shall be deposited in the Payment Account by the Master Servicer out
of its own funds immediately as realized.
ARTICLE VI
The Master Servicer
Section 6.01. Liability of the Master Servicer. The Master Servicer shall be
liable in accordance herewith only to the extent of the obligations specifically
imposed upon and undertaken by the Master Servicer herein.
Section 6.02. Merger or Consolidation of, or Assumption of the Obligations of,
the Master Servicer. Any corporation into which the Master Servicer may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Master
Servicer shall be a party, or any corporation succeeding to the business of the
Master Servicer, shall be the successor of the Master Servicer, 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.
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The Master Servicer may assign its rights and delegate its duties and
obligations under this Servicing Agreement; provided that the Person accepting
such assignment or delegation shall be a Person which is qualified to service
mortgage loans similar to those in the Trust Estate (meaning, mortgage loans
used for home improvement or debt consolidation), is reasonably satisfactory to
the Indenture Trustee (as pledgee of the Home Loans) and the Issuer, is willing
to service the Home Loans and executes and delivers to the Indenture Trustee and
the Issuer an agreement in form and substance reasonably satisfactory to the
Indenture Trustee and the Issuer, which contains an assumption by such Person of
the due and punctual performance and observance of each covenant and condition
to be performed or observed by the Master Servicer under this Servicing
Agreement; provided further that each Rating Agency's rating of the Securities
in effect immediately prior to such assignment and delegation will not be
qualified, reduced, or withdrawn as a result of such assignment and delegation
(as evidenced by a letter to such effect from each Rating Agency), and provided
further that the Owner Trustee receives an Opinion of Counsel to the effect that
such assignment or delegation shall not cause the Owner Trust to be treated as a
corporation for federal or state income tax purposes.
Section 6.03. Limitation on Liability of the Master Servicer and Others. Neither
the Master Servicer nor any of the directors or officers or employees or agents
of the Master Servicer shall be under any liability to the Issuer, the Owner
Trustee, the Indenture Trustee or the Securityholders for any action taken or
for refraining from the taking of any action in good faith pursuant to this
Servicing Agreement, provided, however, that this provision shall not protect
the Master Servicer or any such Person against any liability which would
otherwise be imposed by reason of its willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder or by reason of its
reckless disregard of its obligations and duties hereunder. The Master Servicer
and any director or officer or employee or agent of the Master Servicer 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 Master
Servicer and any director or officer or employee or agent of the Master Servicer
shall be indemnified by the Issuer and held harmless against any loss, liability
or expense incurred in connection with any legal action relating to this
Servicing Agreement or the Securities, including any amount paid to the Owner
Trustee or the Indenture Trustee pursuant to Section 6.06(b), other than any
loss, liability or expense incurred by reason of its willful misfeasance, bad
faith or gross negligence in the performance of its duties hereunder or by
reason of its reckless disregard of its obligations and duties hereunder. The
Master Servicer 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
Home Loans in accordance with this Servicing Agreement, and which in its opinion
may involve it in any expense or liability; provided, however, that the Master
Servicer may in its sole discretion undertake any such action which it may deem
necessary or desirable in respect of this Servicing Agreement, and the rights
and duties of the parties hereto and the interests of the Securityholders. In
such event, the reasonable legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Issuer, and the Master Servicer shall be entitled to be reimbursed therefor. The
Master Servicer's right to indemnity or reimbursement pursuant to this Section
6.03 shall survive any resignation or termination of the Master Servicer
pursuant to Section 6.04 or 7.01 with respect to any losses, expenses, costs or
liabilities arising prior to such resignation or termination (or arising from
events that occurred prior to such resignation or termination).
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Section 6.04. Master Servicer Not to Resign. Subject to the provisions of
Section 6.02, the Master Servicer shall not resign from the obligations and
duties hereby imposed on it except (i) upon determination that the performance
of its obligations or duties hereunder are no longer permissible under
applicable law or are in material conflict by reason of applicable law with any
other activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Master Servicer so causing such a conflict being of a type and
nature carried on by the Master Servicer or its subsidiaries or Affiliates at
the date of this Servicing Agreement or (ii) upon satisfaction of the following
conditions: (a) the Master Servicer shall have proposed a successor servicer to
the Issuer and the Indenture Trustee in writing and such proposed successor
servicer is reasonably acceptable to the Issuer and the Indenture Trustee; and
(b) each Rating Agency shall have delivered a letter to the Issuer and the
Indenture Trustee prior to the appointment of the successor servicer stating
that the proposed appointment of such successor servicer as Master Servicer
hereunder will not result in the reduction or withdrawal of the then current
rating of the Securities, provided, however, that no such resignation by the
Master Servicer shall become effective until such successor servicer or, in the
case of (i) above, the Indenture Trustee, as pledgee of the Home Loans, shall
have assumed the Master Servicer's responsibilities and obligations hereunder or
the Indenture Trustee, as pledgee of the Home Loans, shall have designated a
successor servicer in accordance with Section 7.02. Any such resignation shall
not relieve the Master Servicer of responsibility for any of the obligations
specified in Sections 7.01 and 7.02 as obligations that survive the resignation
or termination of the Master Servicer. Any such determination permitting the
resignation of the Master Servicer shall be evidenced by an Opinion of Counsel
to such effect delivered to the Indenture Trustee.
Section 6.05. Delegation of Duties. In the ordinary course of business, the
Master Servicer at any time may delegate any of its duties hereunder to any
Person, including any of its Affiliates, who agrees to conduct such duties in
accordance with standards comparable to those with which the Master Servicer
complies pursuant to Section 3.01. Such delegation shall not relieve the Master
Servicer of its liabilities and responsibilities with respect to such duties and
shall not constitute a resignation within the meaning of Section 6.04.
Section 6.06. Master Servicer to Pay Indenture Trustee's and Owner Trustee's
Fees and Expenses; Indemnification. (a) The Master Servicer covenants and agrees
to pay to the Owner Trustee, the Indenture Trustee and any co-trustee of the
Indenture Trustee or the Owner Trustee from time to time, and the Owner Trustee,
the Indenture Trustee and any such co-trustee shall be entitled to, reasonable
compensation (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust) for all services rendered by
each of them in the execution of the trusts created under the Trust Agreement
and the Indenture and in the exercise and performance of any of the powers and
duties under the Trust Agreement or the Indenture, as the case may be, of the
Owner Trustee, the Indenture Trustee and any co-trustee, and the Master Servicer
will pay or reimburse the Indenture Trustee and any co-trustee upon request for
all reasonable expenses, disbursements and advances incurred or made by the
Indenture Trustee or any co-trustee in accordance with any of the provisions of
this Servicing Agreement except any such expense, disbursement or advance as may
arise from its negligence, willful misfeasance or bad faith.
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(b) The Master Servicer agrees to indemnify the Indenture Trustee and the
Owner Trustee for, and to hold the Indenture Trustee and the Owner
Trustee, as the case may be, harmless against, any loss, liability or
expense incurred without negligence, bad faith or willful misconduct on
the part of the Indenture Trustee or the Owner Trustee, as the case may
be, arising out of, or in connection with, the acceptance and
administration of the Issuer and the assets thereof, including the costs
and expenses (including reasonable legal fees and expenses) of defending
the Indenture Trustee or the Owner Trustee, as the case may be, against
any claim in connection with the exercise or performance of any of its
powers or duties under any Basic Document (including, without
limitation, any claim against the Indenture Trustee or the Owner Trustee
alleging a violation of the Homeownership and Equity Protection Act of
1994, as amended), provided that:
(i) with respect to any such claim, the Indenture Trustee or Owner Trustee,
as the case may be, shall have given the Master Servicer written notice
thereof promptly after the Indenture Trustee or Owner Trustee, as the
case may be, shall have actual knowledge thereof;
(ii) while maintaining control over its own defense, the Issuer, the
Indenture Trustee or Owner Trustee, as the case may be, shall cooperate
and consult fully with the Master Servicer in preparing such defense;
and
(iii) notwithstanding anything in this Servicing Agreement to the contrary,
the Master Servicer shall not be liable for settlement of any claim by
the Indenture Trustee or the Owner Trustee, as the case may be, entered
into without the prior consent of the Master Servicer.
No termination of this Servicing Agreement shall affect the obligations created
by this Section 6.06 of the Master Servicer to indemnify the Indenture Trustee
and the Owner Trustee under the conditions and to the extent set forth herein.
Notwithstanding the foregoing, the indemnification provided by the
Master Servicer in this Section 6.06(b) shall not pertain to any loss, liability
or expense of the Indenture Trustee or the Owner Trustee, including the costs
and expenses of defending itself against any claim, incurred in connection with
any actions taken by the Indenture Trustee or the Owner Trustee at the direction
of the Noteholders or Certificateholders, as the case may be, pursuant to the
terms of this Servicing Agreement.
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ARTICLE VII
Default
Section 7.01. Servicing Default. If any one of the following events ("Servicing
Default") shall occur and be continuing:
(i) Any failure by the Master Servicer to deposit in the Custodial Account
or to remit to the Paying Agent for deposit in the Payment Account any
deposit required to be made under the terms of this Servicing Agreement
which continues unremedied for a period of five Business Days after the
date upon which written notice of such failure shall have been given to
the Master Servicer by the Issuer or the Indenture Trustee; or
(ii) Failure on the part of the Master Servicer duly to observe or perform in
any material respect any other covenants or agreements of the Master
Servicer set forth in the Securities or in this Servicing Agreement,
which failure, in each case, materially and adversely affects the
interests of Securityholders and which continues unremedied for a period
of 45 days after the date on which written notice of such failure,
requiring the same to be remedied, and stating that such notice is a
"Notice of Default" hereunder, shall have been given to the Master
Servicer by the Issuer or the Indenture Trustee; or
(iii) The entry against the Master Servicer of a decree or order by a court or
agency or supervisory authority having jurisdiction in the premises for
the appointment of a trustee, conservator, receiver or liquidator in any
insolvency, conservatorship, receivership, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding up or liquidation of its affairs, and the continuance of any
such decree or order undischarged or unstayed and in effect for a period
of 60 consecutive days; or
(iv) The Master Servicer shall voluntarily go into liquidation, consent to
the appointment of a conservator, receiver, liquidator or similar person
in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Master Servicer
or of or relating to all or substantially all of its property, or a
decree or order of a court, agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator,
receiver, liquidator or similar person in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings,
or for the winding-up or liquidation of its affairs, shall have been
entered against the Master Servicer and such decree or order shall have
remained in force undischarged, unbonded or unstayed for a period of 60
days; or the Master Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations.
Then, and in every such case, so long as a Servicing Default shall not have been
remedied by the Master Servicer, either the Issuer or the Indenture Trustee, by
notice then given in writing to the Master Servicer may terminate all of the
rights and obligations of the Master Servicer as servicer under this Servicing
Agreement other than its right to receive servicing compensation and expenses
for servicing the Home Loans hereunder during any period prior to the date of
such termination and the Issuer or the Indenture Trustee. Any such notice to the
Master Servicer shall also be given to each Rating Agency and the Issuer. On or
after the receipt by the Master Servicer of such written notice, all authority
and power of the Master Servicer under this Servicing Agreement, whether with
respect to the Securities or the Home Loans or otherwise, shall pass to and be
vested in the Indenture Trustee as successor Master Servicer, pursuant to and
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under this Section 7.01; and, without limitation, the Indenture Trustee is
hereby authorized and empowered to execute and deliver, on behalf of the Master
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of each Home Loan and related documents,
or otherwise. The Master Servicer agrees to cooperate with the Indenture Trustee
in effecting the termination of the responsibilities and rights of the Master
Servicer hereunder, including, without limitation, the transfer to the Indenture
Trustee for the administration by it of all cash amounts relating to the Home
Loans that shall at the time be held by the Master Servicer and to be deposited
by it in the Custodial Account, or that have been deposited by the Master
Servicer in the Custodial Account or thereafter received by the Master Servicer
with respect to the Home Loans. All reasonable costs and expenses (including,
but not limited to, attorneys' fees) incurred in connection with amending this
Servicing Agreement to reflect such succession as Master Servicer pursuant to
this Section 7.01 shall be paid by the predecessor Master Servicer (or if the
predecessor Master Servicer is the Indenture Trustee, the initial Master
Servicer) upon presentation of reasonable documentation of such costs and
expenses.
Notwithstanding any termination of the activities of the Master Servicer
hereunder, the Master Servicer shall be entitled to receive, out of any late
collection of a payment on a Home Loan which was due prior to the notice
terminating the Master Servicer's rights and obligations hereunder and received
after such notice, that portion to which the Master Servicer would have been
entitled pursuant to Sections 3.03 and 3.09 as well as its Master Servicing Fee
in respect thereof, and any other amounts payable to the Master Servicer
hereunder the entitlement to which arose prior to the termination of its
activities hereunder.
Notwithstanding the foregoing, a delay in or failure of performance
under Section 7.01(i) or under Section 7.01(ii) after the applicable grace
periods specified in such Sections, shall not constitute a Servicing Default if
such delay or failure could not be prevented by the exercise of reasonable
diligence by the Master Servicer and such delay or failure was caused by an act
of God or the public enemy, acts of declared or undeclared war, public disorder,
rebellion or sabotage, epidemics, landslides, lightning, fire, hurricanes,
earthquakes, floods or similar causes. The preceding sentence shall not relieve
the Master Servicer from using reasonable efforts to perform its respective
obligations in a timely manner in accordance with the terms of this Servicing
Agreement and the Master Servicer shall provide the Indenture Trustee and the
Securityholders with notice of such failure or delay by it, together with a
description of its efforts to so perform its obligations. The Master Servicer
shall immediately notify the Indenture Trustee and the Issuer in writing of any
Servicing Default.
Section 7.02. Indenture Trustee to Act; Appointment of Successor. (a) On and
after the time the Master Servicer receives a notice of termination pursuant to
Section 7.01 or sends a notice pursuant to Section 6.04, the Indenture Trustee
shall be the successor in all respects to the Master Servicer in its capacity as
servicer under this Servicing Agreement and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Master Servicer by the terms and
provisions hereof. Nothing in this Servicing Agreement or in the Trust Agreement
shall be construed to permit or require the Indenture Trustee to (i) succeed to
the responsibilities, duties and liabilities of the initial Master Servicer in
its capacity as Seller under the Home Loan Purchase Agreement, (ii) be
responsible or accountable for any act or omission of the Master Servicer prior
29
to the issuance of a notice of termination hereunder, (iii) require or obligate
the Indenture Trustee, in its capacity as successor Master Servicer, to
purchase, repurchase or substitute any Home Loan, (iv) fund any losses on any
Permitted Investment directed by any other Master Servicer or (v) be responsible
for the representations and warranties of the Master Servicer. As compensation
therefor, the Indenture Trustee shall be entitled to such compensation as the
Master Servicer would have been entitled to hereunder if no such notice of
termination had been given. Notwithstanding the above, (i) if the Indenture
Trustee is unwilling to act as successor Master Servicer, or (ii) if the
Indenture Trustee is legally unable so to act, the Indenture Trustee may (in the
situation described in clause (i)) or shall (in the situation described in
clause (ii)) appoint or petition a court of competent jurisdiction to appoint
any established housing and home finance institution, bank or other mortgage
loan or home equity loan servicer having a net worth of not less than
$10,000,000 as the successor to the Master Servicer hereunder in the assumption
of all or any part of the responsibilities, duties or liabilities of the Master
Servicer hereunder; provided that the appointment of any such successor Master
Servicer will not result in the qualification, reduction or withdrawal of the
ratings assigned to the Securities by the Rating Agencies. Pending appointment
of a successor to the Master Servicer hereunder, unless the Indenture Trustee is
prohibited by law from so acting, the Indenture Trustee shall act in such
capacity as herein above provided. In connection with such appointment and
assumption, the successor Master Servicer shall be entitled to receive
compensation out of payments on Home Loans in an amount equal to the
compensation which the Master Servicer would otherwise have received pursuant to
Section 3.09 (or such lesser compensation as the Indenture Trustee and such
successor shall agree). The appointment of a successor Master Servicer shall not
affect any liability of the predecessor Master Servicer which may have arisen
under this Servicing Agreement prior to its termination as Master Servicer
(including, without limitation, the obligation to purchase Home Loans pursuant
to Section 3.01, to pay any deductible under an insurance policy pursuant to
Section 3.04 or to indemnify the Indenture Trustee pursuant to Section 6.06),
nor shall any successor Master Servicer be liable for any acts or omissions of
the predecessor Master Servicer or for any breach by such Master Servicer of any
of its representations or warranties contained herein or in any related document
or agreement. The Indenture Trustee and such successor shall take such action,
consistent with this Servicing Agreement, as shall be necessary to effectuate
any such succession.
(b) Any successor, including the Indenture Trustee, to the Master Servicer as
servicer shall during the term of its service as servicer (i) continue to
service and administer the Home Loans for the benefit of the Securityholders,
and (ii) maintain in force a policy or policies of insurance covering errors and
omissions in the performance of its obligations as Master Servicer hereunder and
a fidelity bond in respect of its officers, employees and agents to the same
extent as the Master Servicer is so required pursuant to Section 3.13.
(c) Any successor Master Servicer, including the Indenture Trustee, shall not be
deemed in default or to have breached its duties hereunder if the predecessor
Master Servicer shall fail to deliver any required deposit to the Custodial
Account or otherwise cooperate with any required servicing transfer or
succession hereunder.
30
(d) In connection with the termination or resignation of the Master Servicer
hereunder, either (i) the successor Master Servicer, including the Indenture
Trustee if the Indenture Trustee is acting as successor Master Servicer, shall
represent and warrant that it is a member of MERS in good standing and shall
agree to comply in all material respects with the rules and procedures of MERS
in connection with the servicing of the Home Loans that are registered with
MERS, in which case the predecessor Master Servicer shall cooperate with the
successor Master Servicer in causing MERS to revise its records to reflect the
transfer of servicing to the successor Master Servicer as necessary under MERS'
rules and regulations, or (ii) the predecessor Master Servicer shall cooperate
with the successor Master Servicer in causing MERS to execute and deliver an
assignment of Mortgage in recordable form to transfer the Mortgage from MERS to
the Indenture Trustee and to execute and deliver such other notices, documents
and other instruments as may be necessary or desirable to effect a transfer of
such Home Loan or servicing of such Home Loan on the MERS System to the
successor Master Servicer. The predecessor Master Servicer shall file or cause
to be filed any such assignment in the appropriate recording office. The
predecessor Master Servicer shall bear any and all fees of MERS, costs of
preparing any assignments of Mortgage, and fees and costs of filing any
assignments of Mortgage that may be required under this subsection (d). The
successor Master Servicer shall cause such assignment to be delivered to the
Indenture Trustee or the Custodian promptly upon receipt of the original with
evidence of recording thereon or a copy certified by the public recording office
in which such assignment was recorded.
Section 7.03. Notification to Securityholders. Upon any termination of or
appointment of a successor to the Master Servicer pursuant to this Article VII
or Section 6.04, the Indenture Trustee shall give prompt written notice thereof
to the Securityholders, the Issuer and each Rating Agency.
ARTICLE VIII
Miscellaneous Provisions
Section 8.01. Amendment. This Servicing Agreement may be amended from time to
time by the parties hereto, provided that any amendment be accompanied by a
letter from the Rating Agencies that the amendment will not result in the
downgrading or withdrawal of the rating then assigned to the Securities and the
consent of the Indenture Trustee. Promptly after the execution by the Master
Servicer, the Issuer and the Indenture Trustee of any amendment of this
Servicing Agreement pursuant to this Section 8.01, the Indenture Trustee shall
provide the Custodian with written copies thereof. Any failure of the Indenture
Trustee to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amendment.
Section 8.02. GOVERNING LAW. THIS SERVICING AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICTS OF LAW PROVISIONS (EXCEPT SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATION LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
31
Section 8.03. 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 certified mail, return receipt requested, to (a) in
the case of the Master Servicer, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Addition Director - Bond Administration, (b)
in the case of ▇▇▇▇▇'▇, Home Mortgage Loan Monitoring Group, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, (c) in the case of Standard & Poor's, ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ - 41st Floor, New York, New York 10041, Attention: Residential
Mortgage Surveillance Group, (d) in the case of the Owner Trustee, Wilmington
Trust Company, ▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust Administration, (e) in the case
of the Issuer, to Home Loan Trust 2005-HI3, c/o Owner Trustee, Wilmington Trust
Company, ▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust Administration, (f) in the case of the
Indenture Trustee, JPMorgan Chase Bank, N.A., 4 New York Plaza, 6th Floor, New
York, New York 10004, Attention: Worldwide Securities Services/Global Debt Home
Loan Trust 2005-HI3 and (g) in the case of the Underwriters c/o the
Representative, at Residential Funding Securities Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel; or, as
to each party, at such other address as shall be designated by such party in a
written notice to each other party. Any notice required or permitted to be
mailed to a Securityholder shall be given by first class mail, postage prepaid,
at the address of such Securityholder as shown in the Register. Any notice so
mailed within the time prescribed in this Servicing Agreement shall be
conclusively presumed to have been duly given, whether or not the Securityholder
receives such notice. Any notice or other document required to be delivered or
mailed by the Indenture Trustee to any Rating Agency shall be given on a
reasonable efforts basis and only as a matter of courtesy and accommodation and
the Indenture Trustee shall have no liability for failure to delivery such
notice or document to any Rating Agency.
Section 8.04. Severability of Provisions. If any one or more of the covenants,
agreements, provisions or terms of this Servicing Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Servicing Agreement and shall in no way affect the
validity or enforceability of the other provisions of this Servicing Agreement
or of the Securities or the rights of the Securityholders thereof.
Section 8.05. Third-Party Beneficiaries. This Servicing Agreement shall inure to
the benefit of and be binding upon the parties hereto, the Securityholders, the
Owner Trustee and their respective successors and permitted assigns. Except as
otherwise provided in this Servicing Agreement, no other Person shall have any
right or obligation hereunder.
Section 8.06. Counterparts. This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument.
32
Section 8.07. Effect of Headings and Table of Contents. The Article and Section
headings herein and the Table of Contents are for convenience only and shall not
affect the construction hereof.
Section 8.08. Termination Upon Purchase by the Master Servicer or Liquidation of
All Home Loans; Partial Redemption. (a) The respective obligations and
responsibilities of the Master Servicer, the Issuer and the Indenture Trustee
created hereby shall terminate upon the last action required to be taken by the
Issuer pursuant to the Trust Agreement and by the Indenture Trustee pursuant to
the Indenture following the earlier of:
(i) the date on or before which the Indenture or Trust Agreement is
terminated, or
(ii) the purchase by the Master Servicer from the Issuer of all Home Loans
and all property acquired in respect of any Home Loan at a price equal
to the Termination Price.
The right of the Master Servicer to purchase the assets of the Issuer pursuant
to clause (ii) above on any Payment Date is conditioned upon the Pool Balance
(after applying payments received in the related Collection Period) as of such
Payment Date being less than ten percent of the aggregate of the Cut-off Date
Loan Balances of the Home Loans. If such right is exercised by the Master
Servicer, the Master Servicer shall deposit the Termination Price calculated
pursuant to clause (ii) above with the Indenture Trustee pursuant to Section
4.10 of the Indenture and, upon the receipt of such deposit, the Indenture
Trustee or Custodian shall release to the Master Servicer, the files pertaining
to the Home Loans being purchased.
(b) The Master Servicer, at its expense, shall prepare and deliver to the
Indenture Trustee for execution, at the time the Home Loans are to be
released to the Master Servicer, appropriate documents assigning each
such Home Loan from the Indenture Trustee or the Issuer to the Master
Servicer or the appropriate party.
(c) The Master Servicer shall give the Indenture Trustee not less than seven
Business Days' prior written notice of the Payment Date on which the
Master Servicer anticipates that the final distribution will be made to
Noteholders. Notice of any termination, specifying the anticipated Final
Scheduled Payment Date or other Payment Date (which shall be a date that
would otherwise be a Payment Date) upon which the Noteholders may
surrender their Notes to the Indenture Trustee (if so required by the
terms hereof) for payment of the final distribution and cancellation,
shall be given promptly by the Master Servicer to the Indenture Trustee
specifying:
(i) the anticipated Final Scheduled Payment Date or other Payment Date upon
which final payment of the Notes is anticipated to be made upon
presentation and surrender of Notes at the office or agency of the
Indenture Trustee therein designated; and
(ii) the amount of any such final payment, if known.
Section 8.09. Certain Matters Affecting the Indenture Trustee. For all purposes
of this Servicing Agreement, in the performance of any of its duties or in the
exercise of any of its powers hereunder, the Indenture Trustee shall be subject
to and entitled to the benefits of Article VI of the Indenture.
33
Section 8.10. Owner Trustee Not Liable for Related Documents. The recitals
contained herein shall be taken as the statements of the Depositor, and the
Owner Trustee assumes no responsibility for the correctness thereof. The Owner
Trustee makes no representations as to the validity or sufficiency of this
Servicing Agreement, of any Basic Document or of the Certificates (other than
the signatures of the Owner Trustee on the Certificates) or the Notes, or of any
Related Documents, or of MERS or the MERS(R) System. The Owner Trustee shall at
no time have any responsibility or liability with respect to the sufficiency of
the Owner Trust Estate or its ability to generate the payments to be distributed
to Certificateholders under the Trust Agreement or the Noteholders under the
Indenture, including, the compliance by the Depositor or the Seller with any
warranty or representation made under any Basic Document or in any related
document or the accuracy of any such warranty or representation, or any action
of the Certificate Paying Agent, the Certificate Registrar or the Indenture
Trustee taken in the name of the Owner Trustee.
34
IN WITNESS WHEREOF, the Master Servicer, the Indenture Trustee and the
Issuer have caused this Servicing Agreement to be duly executed by their
respective officers or representatives all as of the day and year first above
written.
RESIDENTIAL FUNDING CORPORATION,
as Master Servicer
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Associate
HOME LOAN TRUST 2005-HI3
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Financial Services Officer
JPMORGAN CHASE BANK, N.A.
as Indenture Trustee
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Assistant Vice President
EXHIBIT A
HOME LOAN SCHEDULE
(Available Upon Request)
EXHIBIT B
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PREMISES:
That JPMorgan Chase Bank, N.A., as Indenture Trustee (the "Trustee"), under the
Indenture (the "Indenture") among ________________________________________ and
the Indenture Trustee, a national banking association organized and existing
under the laws of the State of New York, and having its principal office located
at 4 New York Plaza, in the City of New York in the State of New York, hath
made, constituted and appointed, and does by these presents make, constitute and
appoint Residential Funding Corporation, a corporation organized and existing
under the laws of the State of Delaware, its true and lawful Attorney-in-Fact,
with full power and authority to sign, execute, acknowledge, deliver, file for
record, and record any instrument on its behalf and to perform such other act or
acts as may be customarily and reasonably necessary and appropriate to
effectuate the following enumerated transactions in respect of any of the
mortgages or deeds of trust (the "Mortgages" and the "Deeds of Trust",
respectively) creating a trust or second lien or an estate in fee simple
interest in real property securing a Home Loan and promissory notes secured
thereby (the "Mortgage Notes") for which the undersigned is acting as Indenture
Trustee for various Securityholders (whether the undersigned is named therein as
mortgagee or beneficiary or has become mortgagee by virtue of Endorsement of the
Mortgage Note secured by any such Mortgage or Deed of Trust) and for which
Residential Funding Corporation is acting as master servicer pursuant to a
Servicing Agreement, dated as of October 27, 2005 (the "Servicing Agreement").
This appointment shall apply only to transactions which the Trustee is
authorized to enter into under the Indenture, but in no event shall apply to any
transactions other than the following enumerated transactions only:
1. The modification or re-recording of a Mortgage or Deed of Trust,
where said modification or re-recording is for the purpose of
correcting the Mortgage or Deed of Trust to conform same to the
original intent of the parties thereto or to correct title errors
discovered after such title insurance was issued and said
modification or re-recording, in either instance, does not
adversely affect the lien of the Mortgage or Deed of Trust as
insured.
2. The subordination of the lien of a Mortgage or Deed of Trust to
an easement in favor of a public utility company or a government
agency or unit with powers of eminent domain; this section shall
include, without limitation, the execution of partial
satisfactions/releases, partial reconveyances or the execution of
requests to trustees to accomplish same.
3. With respect to a Mortgage or Deed of Trust, the foreclosure, the
taking of a deed in lieu of foreclosure, or the completion of
judicial or non-judicial foreclosure or termination, cancellation
or rescission of any such foreclosure, including, without
limitation, any and all of the following acts:
a. The substitution of trustee(s) serving under a Deed of
Trust, in accordance with state law and the Deed of Trust;
b. Statements of breach or non-performance;
c. Notices of default;
d. Cancellations/rescissions of notices of default and/or
notices of sale;
e. The taking of a deed in lieu of foreclosure; and
f. Such other documents and actions as may be necessary under
the terms of the Mortgage, Deed of Trust or state law to
expeditiously complete said transactions.
4. The conveyance of the properties to the mortgage insurer, or the
closing of the title to the property to be acquired as real
estate owned, or conveyance of title to real estate owned.
5. The completion of loan assumption agreements.
6. The full satisfaction/release of a Mortgage or Deed of Trust or
full reconveyance upon payment and discharge of all sums secured
thereby, including, without limitation, cancellation of the
related Mortgage Note.
7. The assignment of any Mortgage or Deed of Trust and the related
Mortgage Note, in connection with the repurchase of the Home Loan
secured and evidenced thereby pursuant to the requirements of a
Residential Funding Corporation Seller Contract, or the removal
of any Mortgage from the MERS(R) System or the re-recording of
such Mortgage in the name of MERS.
8. The full assignment of a Mortgage or Deed of Trust upon payment
and discharge of all sums secured thereby in conjunction with the
refinancing thereof, including, without limitation, the
endorsement of the related Mortgage Note.
9. The modification or re-recording of a Mortgage or Deed of Trust,
where said modification or re-recording is for the purpose of any
modification pursuant to Section 3.01 of the Servicing Agreement.
10. The subordination of the lien of a Mortgage or Deed of Trust,
where said subordination is in connection with any modification
pursuant to Section 3.01 of the Servicing Agreement, and the
execution of partial satisfactions/releases in connection with
such same Section 3.01.
The undersigned gives said Attorney-in-Fact full power and authority to execute
such instruments and to do and perform all and every act and thing necessary and
proper to carry into effect the power or powers granted by or under this Limited
Power of Attorney as fully as the undersigned might or could do, and hereby does
ratify and confirm to all that said Attorney-in-Fact shall lawfully do or cause
to be done by authority hereof.
Capitalized terms used herein that are not otherwise defined shall have the
meanings ascribed thereto in Appendix A to the Indenture.
Third parties without actual notice may rely upon the exercise of the power
granted under this Limited Power of Attorney; and may be satisfied that this
Limited Power of Attorney shall continue in full force and effect has not been
revoked unless an instrument of revocation has been made in writing by the
undersigned.
JPMORGAN CHASE BANK, N.A., not in its
individual capacity, but solely as Indenture
Trustee under the Servicing Agreement and
the Indenture
Name: Name:
-------------------------- ------------------------------------
Title: Title:
------------------------- ------------------------------------
STATE OF ............. )
.............. SS.
COUNTY OF ............ )
On this __ day of _______________, 2005, before me the undersigned,
Notary Public of said State, personally appeared _______________________________
personally known to me to be duly authorized officers of JPMorgan Chase Bank,
N.A. that executed the within instrument and personally known to me to be the
persons who executed the within instrument on behalf of JPMorgan Chase Bank,
N.A. therein named, and acknowledged to me such JPMorgan Chase Bank, N.A.
executed the within instrument pursuant to its by-laws.
WITNESS my hand and official seal.
-------------------------------
Notary Public in and for the
State of ___________________
After recording, please mail to:
=============================
-----------------------------
Attn: ________________________
EXHIBIT C
FORM OF REQUEST FOR RELEASE
DATE:
TO:
RE: .......REQUEST FOR RELEASE OF DOCUMENTS
In connection with your administration of the Home Loans, we request the release
of the Mortgage File described below.
Servicing Agreement Dated:
Series #:
Account #:
Pool #:
Loan #:
Borrower Name(s):
Reason for Document Request: (circle one) ..Home Loan Prepaid in Full
Home Loan Repurchased
"We hereby certify that all amounts received or to be received in connection
with such payments which are required to be deposited have been or will be so
deposited as provided in the Servicing Agreement."
-------------------------------------
Residential Funding Corporation
Authorized Signature
******************************************************************************
TO CUSTODIAN/INDENTURE TRUSTEE: Please acknowledge this request, and check off
documents being enclosed with a copy of this form. You should retain this form
for your files in accordance with the terms of the Servicing Agreement.
Enclosed Documents: [ ] Promissory Note
[ ] Mortgage or Deed of Trust
[ ] Assignment(s) of Mortgage or
Deed of Trust
[ ] Title Insurance Policy
[ ] Other: ___________________________
-----------------
Name
-----------------
Title
-----------------
Date
EXHIBIT D
FORM OF FORM 10-K CERTIFICATE
I, [identify the certifying individual], certify that:
1......I have reviewed the annual report on Form 10-K for the fiscal
year [___], and all reports on Form 8-K containing distribution or servicing
reports filed in respect of periods included in the year covered by that annual
report, of the trust (the "Trust") created pursuant to the Amended and Restated
Trust Agreement dated October 27, 2005 (the "Trust Agreement") between
Residential Funding Mortgage Securities II, Inc. (the "Company") and Wilmington
Trust Company (the "Owner Trustee");
2......Based on my knowledge, the information in these reports, taken as
a whole, does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading as of the
last day of the period covered by that annual report;
3......Based on my knowledge, the servicing information required to be
provided to the Master Servicer under the Servicing Agreement is included in
these reports;
4......I am responsible for reviewing the activities performed by the
Master Servicer under the Servicing Agreement and based upon the review required
under the Servicing Agreement, and except as disclosed in the report, the Master
Servicer has fulfilled its obligations under the Servicing Agreement; and
5......I have disclosed to the Company's certified public accountants
all significant deficiencies relating the Master 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 as set forth in
the Servicing Agreement.
In giving the certifications above, I have reasonably relied on
information provided tome by the following unaffiliated parties.
Date: ____________
By: ____________________________
Name: ______________________
Company: ___________________
Title: _____________________