EXECUTION
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▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
as Servicer
and
▇▇▇▇▇▇ BROTHERS HOLDINGS INC.,
as Seller
and
AURORA LOAN SERVICES INC.,
as Master Servicer
_____________________________
Structured Asset Securities Corporation
Structured Adjustable Rate Mortgage Loan Trust
Mortgage Pass-Through Certificates, Series 2004-7
SECURITIZATION SUBSERVICING AGREEMENT
Dated as of May 1, 2004
_____________________________
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TABLE OF CONTENTS
Page
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ARTICLE I.
Definitions
ARTICLE II.
SELLER'S ENGAGEMENT OF SERVICER TO PERFORM SERVICING
RESPONSIBILITIES
Section 2.01. Contract for Servicing; Possession of Servicing Files........................................13
Section 2.02. Books and Records............................................................................14
ARTICLE III.
Servicing of the Mortgage Loans
Section 3.01. Servicer to Service..........................................................................14
Section 3.02. Collection and Liquidation of Mortgage Loans.................................................16
Section 3.03. Establishment of and Deposits to Custodial Account...........................................17
Section 3.04. Permitted Withdrawals From Custodial Account.................................................19
Section 3.05. Establishment of and Deposits to Escrow Account..............................................20
Section 3.06. Permitted Withdrawals From Escrow Account....................................................21
Section 3.07. Notification of Adjustments..................................................................22
Section 3.08. (Reserved.)..................................................................................22
Section 3.09. Payment of Taxes, Insurance and Other Charges................................................22
Section 3.10. Protection of Accounts.......................................................................23
Section 3.11. Maintenance of Hazard Insurance..............................................................23
Section 3.12. Maintenance of Mortgage Impairment Insurance.................................................24
Section 3.13. Maintenance of Fidelity Bond and Errors and Omissions Insurance..............................25
Section 3.14. Inspections..................................................................................25
Section 3.15. Restoration of Mortgaged Property............................................................26
Section 3.16. Maintenance of PMI and/or LPMI Policy; Claims................................................26
Section 3.17. Title, Management and Disposition of REO Property............................................28
Section 3.18. Real Estate Owned Reports....................................................................30
Section 3.19. Liquidation Reports..........................................................................31
Section 3.20. Reports of Foreclosures and Abandonments of Mortgaged Property...............................31
Section 3.21. Prepayment Charges...........................................................................31
Section 3.22. Confidentiality/Protecting Customer Information..............................................31
Section 3.23. Credit Reporting.............................................................................32
Section 3.24. Superior Liens...............................................................................32
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ARTICLE IV.
PAYMENTS TO MASTER SERVICER
Section 4.01. Remittances..................................................................................33
Section 4.02. Statements to Master Servicer................................................................34
Section 4.03. Monthly Advances by Servicer.................................................................34
Section 4.04. Due Dates Other Than the First of the Month..................................................35
ARTICLE V.
GENERAL SERVICING PROCEDURES
Section 5.01. Transfers of Mortgaged Property..............................................................35
Section 5.02. Satisfaction of Mortgages and Release of Mortgage Files......................................36
Section 5.03. Servicing Compensation.......................................................................36
Section 5.04. Annual Audit Report..........................................................................37
Section 5.05. Annual Officer's Certificate.................................................................37
Section 5.06. Inspection...................................................................................38
ARTICLE VI.
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
Section 6.01. Representations, Warranties and Agreements of the Servicer...................................38
Section 6.02. Remedies for Breach of Representations and Warranties of the Servicer........................40
Section 6.03. Additional Indemnification by the Servicer...................................................41
Section 6.04. Indemnification with Respect to Certain Taxes and Loss of REMIC Status.......................41
Section 6.05. Purchase of Distressed Mortgage Loans........................................................42
ARTICLE VII.
THE SERVICER
Section 7.01. Merger or Consolidation of the Servicer......................................................42
Section 7.02. Limitation on Liability of the Servicer and Others...........................................43
Section 7.03. Limitation on Resignation and Assignment by the Servicer.....................................43
ARTICLE VIII.
TERMINATION
Section 8.01. Termination for Cause........................................................................44
Section 8.02. Termination Without Cause....................................................................46
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Section 8.03. (Reserved.)..................................................................................47
Section 8.04. Termination for Distressed Mortgage Loans....................................................47
ARTICLE IX.
MISCELLANEOUS PROVISIONS
Section 9.01. Successor to the Servicer....................................................................48
Section 9.02. Costs........................................................................................50
Section 9.03. Protection of Confidential Information.......................................................50
Section 9.04. Notices......................................................................................50
Section 9.05. Severability Clause..........................................................................52
Section 9.06. No Personal Solicitation.....................................................................52
Section 9.07. Counterparts.................................................................................52
Section 9.08. Place of Delivery and Governing Law..........................................................53
Section 9.09. Further Agreements...........................................................................53
Section 9.10. Intention of the Parties.....................................................................53
Section 9.11. Successors and Assigns; Assignment of Servicing Agreement....................................53
Section 9.12. Assignment by the Seller.....................................................................53
Section 9.13. Amendment....................................................................................54
Section 9.14. Waivers......................................................................................54
Section 9.15. Exhibits.....................................................................................54
Section 9.16. Intended Third Party Beneficiaries...........................................................54
Section 9.17. General Interpretive Principles..............................................................55
Section 9.18. Reproduction of Documents....................................................................55
EXHIBITS
EXHIBIT A MORTGAGE LOAN SCHEDULE
EXHIBIT B CUSTODIAL ACCOUNT CERTIFICATION
EXHIBIT C ESCROW ACCOUNT CERTIFICATION
EXHIBIT D SARM 2004-7 TRUST AGREEMENT
EXHIBIT E FORM OF CERTIFICATION
EXHIBIT F ▇▇▇▇▇▇ ▇▇▇ GUIDE NO. 95-19
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This SECURITIZATION SUBSERVICING AGREEMENT (this "Agreement"),
entered into as of the 1st day of May, 2004, by and among ▇▇▇▇▇▇ BROTHERS
HOLDINGS INC., a Delaware corporation (the "Seller"), ▇▇▇▇▇ FARGO BANK, NATIONAL
ASSOCIATION, a national banking association (the "Servicer"), Aurora Loan
Services Inc., as master servicer (the "Master Servicer"), and acknowledged by
HSBC BANK USA, as trustee (the "Trustee") under the Trust Agreement (as defined
herein), recites and provides as follows:
W I T N E S S E T H:
WHEREAS, the Servicer and ▇▇▇▇▇▇ Brothers Bank, FSB (the
"Bank") are parties to a Flow Subservicing Agreement, dated as of October 1,
2003 (the "Bank Flow Servicing Agreement"), pursuant to which the Servicer
services certain of the residential, fixed and adjustable rate mortgage loans
identified on Exhibit A hereto originated by unrelated third party originators
(the "Bank Mortgage Loans").
WHEREAS, pursuant to an Assignment and Assumption Agreement,
dated as of May 1, 2004 (the "Assignment Agreement"), the Seller acquired from
the Bank all of the Bank's right, title and interest in and to the mortgage
loans currently serviced under the Bank Flow Servicing Agreement and assumed for
the benefit of the Servicer and the Bank the rights and obligations of the Bank
as owner of such mortgage loans pursuant to the Bank Flow Servicing Agreement.
WHEREAS, the Servicer and the Seller are parties to a Flow
Subservicing Agreement, dated as of October 1, 2003 (the "Holdings Flow
Servicing Agreement"), pursuant to which the Servicer services certain of the
mortgage loans identified on Exhibit A hereto originated by unrelated third
party originators (the "Holdings Mortgage Loans," and together with the Bank
Mortgage Loans, the "Mortgage Loans").
WHEREAS, the Seller has conveyed the Mortgage Loans on a
servicing-retained basis to Structured Asset Securities Corporation (the
"Depositor"), which in turn has conveyed the Mortgage Loans to the Trustee under
a trust agreement dated as of May 1, 2004 (the "Trust Agreement"), among the
Trustee, the Depositor, the Master Servicer, and ▇▇▇▇▇ Fargo Bank, National
Association as securities administrator (the "Securities Administrator");
WHEREAS, from time to time certain other of the mortgage loans
conveyed by the Depositor to the Trustee under the Trust Agreement on the
Closing Date and serviced by other servicers may subsequent to the Closing Date
be transferred to the Servicer for servicing under this Agreement, at which date
Exhibit A hereto will be amended to include such mortgage loans which will then
be considered "Mortgage Loans" under this Agreement;
WHEREAS, the Seller desires that the Servicer service the
Mortgage Loans pursuant to this Agreement, and the Servicer has agreed to do so,
subject to the right of the Seller and of the Master Servicer to terminate the
rights and obligations of the Servicer hereunder at any time and to the other
conditions set forth herein;
WHEREAS, the Seller and the Servicer agree that the provisions
of the Bank Flow Servicing Agreement and Holdings Flow Servicing Agreement shall
not apply to such related Mortgage Loans for so long as such related Mortgage
Loans remain subject to the provisions of the Trust Agreement;
WHEREAS, the Master Servicer shall be obligated under the
Trust Agreement, among other things, to supervise the servicing of the Mortgage
Loans on behalf of the Trustee, and shall have the right, under certain
circumstances, to terminate the rights and obligations of the Servicer under
this Servicing Agreement upon the occurrence and continuance of an Event of
Default as provided herein;
WHEREAS, multiple classes of certificates (the
"Certificates"), including the Class P and the Class X Certificates, will be
issued on the Closing Date pursuant to the Trust Agreement, and ▇▇▇▇▇▇ Brothers
Inc. or a nominee thereof is expected to be the initial registered holder of the
Class P and Class X Certificates;
WHEREAS, subsequent to the Closing Date, ▇▇▇▇▇▇ Brothers Inc.
intends to convey all of its rights, title and interest in and to the Class P
and the Class X Certificates and all payments and all other proceeds received
thereunder to an owner trust or other special purpose entity in which it will
hold the sole equity interest, which owner trust or special purpose entity will
issue net interest margin securities ("NIM Securities") through an indenture
trust, such NIM Securities secured, in part, by the payments on such
Certificates (the "NIMS Transaction");
WHEREAS, one or more insurers (collectively, the "NIMS
Insurer") may each issue one or more insurance policies guaranteeing certain
payments under the NIM Securities to be issued pursuant to the indenture in the
NIMS Transaction;
WHEREAS, in the event there may be two or more individual
insurers it is intended that the rights extended to the NIMS Insurer pursuant to
this Agreement be allocated among two or more individual insurers that issue
insurance policies in connection with the NIMS Transaction through a NIMS
Insurance Agreement by and among such insurers and the parties hereto;
WHEREAS, the Seller and the Servicer acknowledge and agree
that the Seller will assign all of its rights and delegate all of its
obligations hereunder (excluding (i) the Seller's rights and obligations as
owner of the servicing rights relating to the Mortgage Loans, (ii) its rights to
terminate the rights and obligations of the Servicer under Section 8.02(iii)
hereunder and (iii) its obligations pursuant to Section 9.02, all of which
rights and obligations will remain with the Seller or be delegated or assigned
by the Master Servicer) to the Trustee, and that each reference herein to the
Seller is intended, unless otherwise specified, to mean the Seller or the
Trustee, as assignee, whichever is the owner of the Mortgage Loans from time to
time;
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NOW, THEREFORE, in consideration of the mutual agreements
hereinafter set forth and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the Seller, the Master Servicer
and the Servicer hereby agree as follows:
ARTICLE I.
DEFINITIONS
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The following terms are defined as follows:
Accepted Servicing Practices: With respect to any Mortgage
Loan, those mortgage servicing practices of prudent mortgage lending
institutions which service mortgage loans of the same type as such Mortgage
Loans in the jurisdiction where the related Mortgaged Property is located.
Agreement: This Securitization Subservicing Agreement and all
amendments hereof and supplements hereto.
Ancillary Income: All income derived from the Mortgage Loans
(excluding (i) the ▇▇▇▇▇ Fargo Servicing Fee and (ii) Prepayment Charges
attributable to the Mortgage Loans), including but not limited to interest
received on funds deposited in the Custodial Account or any Escrow Account, late
charges, fees received with respect to checks or bank drafts returned by the
related bank for non-sufficient funds, assumption fees, optional insurance
administrative fees and all other incidental fees and charges. The Servicer
shall retain all Ancillary Income to the extent not required to be deposited
into the Custodial Account.
Assignment of Mortgage: An assignment of the Mortgage, notice
of transfer or equivalent instrument in recordable form, sufficient under the
laws of the jurisdiction wherein the related Mortgaged Property is located to
reflect the transfer of the Mortgage to the party indicated therein or if the
related Mortgage has been recorded in the name of MERS or its designee, such
actions as are necessary to cause the Seller or its designee to be shown as the
owner of the related Mortgage on the records of MERS for purposes of the system
of recording transfers of beneficial ownership of mortgages maintained by MERS.
Business Day: Any day other than (i) a Saturday or Sunday, or
(ii) a day on which banking and savings and loan institutions in the States of
Colorado, Iowa, Maryland, Minnesota and New York are authorized or obligated by
law or executive order to be closed.
Certificateholder: The meaning set forth in the Trust
Agreement.
Certificates: Any or all of the Certificates issued pursuant
to the Trust Agreement.
Closing Date: May 28, 2004.
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Code: The Internal Revenue Code of 1986, as it may be amended
from time to time or any successor statute thereto, and applicable U.S.
Department of the Treasury regulations issued pursuant thereto.
Combined Loan-to-Value Ratio: As to any Mortgage Loan at any
date of determination, the ratio (expressed as a percentage) of the principal
balance of such Mortgage Loan at the date of determination, plus the principal
balance of any Superior Lien based upon the most recent information available to
the Servicer, to (a) in the case of a purchase, the lesser of the sales price of
the Mortgaged Property and its appraised value at the time of sale, or (b) in
the case of a refinancing or modification, the appraised value of the Mortgaged
Property at the time of such refinancing or modification.
Condemnation Proceeds: All awards or settlements in respect of
a Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan documents.
Custodial Account: The separate account or accounts created
and maintained pursuant to Section 3.03.
Custodial Agreement: Each custodial agreement relating to the
custody of certain of the Mortgage Loans, between a Custodian and the Trustee,
as acknowledged by the related Servicers, each dated as of May 1, 2004.
Custodian: Each of U.S. Bank National Association and ▇▇▇▇▇
Fargo Bank, National Association and their respective successors and assigns.
Cut-off Date: May 1, 2004.
Depositor: Structured Asset Securities Corporation, a Delaware
corporation, or any successor in interest.
Determination Date: With respect to each Remittance Date, the
15th day of the month in which such Remittance Date occurs, or, if such 15th day
is not a Business Day, the next succeeding Business Day.
Distressed Mortgage Loan: As of any Determination Date, any
Mortgage Loan that is delinquent in payment for a period of ninety (90) days or
more, without giving effect to any grace period permitted by the related
Mortgage Loan, or for which the Servicer or Trustee has accepted a deed in lieu
of foreclosure.
Distribution Date: Commencing in June 2004, the 25th day of
each month (or, if such day is not a Business Day, the next succeeding Business
Day).
Due Date: The day of the calendar month on which the Monthly
Payment is due on a Mortgage Loan, exclusive of any days of grace. Pursuant to
Section 4.04, with respect to the Mortgage Loans for which payment from the
Mortgagor is due on a day other than the first day of the month, such Mortgage
Loans will be treated as if the Monthly Payment is due on the first day of the
immediately succeeding month.
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Due Period: With respect to each Remittance Date, the period
commencing on the second day of the month immediately preceding the month of the
Remittance Date and ending on the first day of the month of the Remittance Date.
Eligible Deposit Account: An account that is maintained with a
federal or state-chartered depository institution or trust company that complies
with the definition of Eligible Institution.
Eligible Institution: Any of the following:
(i) an institution whose:
(A) commercial paper, short-term debt obligations,
or other short-term deposits are rated at least "A-1+" or
long-term unsecured debt obligations are rated at least "AA-"
by S&P, if the amounts on deposit are to be held in the
account for no more than 365 days; or
(B) commercial paper, short-term debt obligations,
demand deposits, or other short-term deposits are rated at
least "A-2" by S&P, if the amounts on deposit are to be held
in the account for no more than 30 days and are not intended
to be used as credit enhancement. Upon the loss of the
required rating set forth in this clause (i), the accounts
shall be transferred immediately to accounts which have the
required rating. Furthermore, commingling by the Servicer is
acceptable at the A-2 rating level if the Servicer is a bank,
thrift, or depository and provided the Servicer has the
capability to immediately segregate funds and commence
remittance to an Eligible Deposit Account upon a downgrade; or
(ii) the corporate trust department of a federal
depository institution or state-chartered depository institution subject to
regulations regarding fiduciary funds on deposit similar to Title 12 of the U.S.
Code of Federal Regulation Section 9.10(b), which, in either case, has corporate
trust powers and is acting in its fiduciary capacity.
Environmental Problem Property: A Mortgaged Property or REO
Property that is in violation of any environmental law, rule or regulation.
Errors and Omissions Insurance: Errors and Omissions Insurance
to be maintained by the Servicer in accordance with Section 3.13.
Escrow Account: The separate account or accounts operated and
maintained pursuant to Section 3.05.
Escrow Payments: With respect to any Mortgage Loan, the
amounts constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.
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Event of Default: Any event set forth in Section 8.01.
▇▇▇▇▇▇ ▇▇▇: ▇▇▇▇▇▇ ▇▇▇, or any successor thereto.
▇▇▇▇▇▇ Mae Guides: The ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇' Guide and the
▇▇▇▇▇▇ Mae Servicers' Guide and all amendments or additions thereto.
FDIC: The Federal Deposit Insurance Corporation or any
successor thereto.
Fidelity Bond: A fidelity bond to be maintained by the
Servicer in accordance with Section 3.13.
Fitch: Fitch Ratings Inc. or any successor in interest.
▇▇▇▇▇▇▇ Mac: ▇▇▇▇▇▇▇ Mac, or any successor thereto.
General Servicing Fee: With respect to each Due Period and any
Mortgage Loan, an amount equal to one-twelfth the product of (i) the General
Servicing Fee Rate and (ii) the outstanding principal balance of such Mortgage
Loan as of the related Determination Date. The General Servicing Fee is payable
solely from the interest portion (including recoveries with respect to interest
from Liquidation Proceeds to the extent permitted by Section 3.02 of this
Agreement) of such Monthly Payments collected by the Servicer, or as otherwise
provided under this Agreement.
General Servicing Fee Rate: 0.25% per annum.
Holder: The meaning set forth in the Trust Agreement.
Insurance Proceeds: With respect to each Mortgage Loan,
proceeds of insurance policies insuring the Mortgage Loan or the related
Mortgaged Property, including the proceeds of any hazard or flood insurance
policy, LPMI Policy or PMI Policy.
Liquidation Proceeds: Cash received in connection with the
liquidation of a defaulted Mortgage Loan, whether through the sale or assignment
of such Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or the
sale of the related REO Property, if the Mortgaged Property is acquired in
satisfaction of the Mortgage Loan.
LPMI Loan: A Mortgage Loan with a LPMI Policy.
LPMI Policy: A policy of primary mortgage guaranty insurance
issued by a Qualified Insurer pursuant to which the related premium is to be
paid by the Master Servicer or the Trustee from payments of interest made by the
Mortgagor in an amount as is set forth in the related Mortgage Loan Schedule. An
LPMI Policy shall also include any policy of primary mortgage guaranty insurance
issued by a Qualified Insurer that is purchased by the Seller with respect to
some or all of the Mortgage Loans.
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Master Servicer: Aurora Loan Services Inc., or any successor
in interest, or if any successor master servicer shall be appointed as provided
in the Trust Agreement, then such successor master servicer.
MERS: Mortgage Electronic Registration Systems, Inc., a
corporation organized and existing under the laws of the State of Delaware, or
any successor thereto.
MERS Mortgage Loan: Any Mortgage Loan registered with MERS on
the MERS System.
MERS System: The system of recording transfers of mortgages
electronically maintained by MERS.
Monthly Advance: With respect to each Remittance Date and each
Mortgage Loan (other than a Simple Interest Mortgage Loan), an amount equal to
the Monthly Payment (with the interest portion of such Monthly Payment adjusted
to the Mortgage Loan Remittance Rate) that was due on the Mortgage Loan on the
Due Date in the related Due Period, and that (i) was delinquent at the close of
business on the related Determination Date and (ii) was not the subject of a
previous Monthly Advance, but only to the extent that such amount is expected,
in the reasonable judgment of the Servicer, to be recoverable from collections
or other recoveries in respect of such Mortgage Loan. With respect to each
Remittance Date and each Simple Interest Mortgage Loan, an amount equal to the
interest accrued on such Mortgage Loan through the related Due Date, but not
received as of the close of business on the last day of the related Due Period
(net of the applicable Servicing Fee), but only to the extent that such amount
is expected, in the reasonable judgment of the Servicer, to be recoverable from
collections or other recoveries in respect of such Simple Interest Mortgage
Loan. To the extent that the Servicer determines that any such amount is not
recoverable from collections or other recoveries in respect of such Mortgage
Loan, such determination shall be evidenced by an Officer's Certificate of a
Servicing Officer delivered to the Master Servicer and the NIMS Insurer setting
forth such determination and the procedures and considerations of the Servicer
forming the basis of such determination.
Monthly Payment: The scheduled monthly payment of principal
and interest on a Mortgage Loan.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. or any successor in
interest.
Mortgage: The mortgage, deed of trust or other instrument
securing a Mortgage Note, which creates a first or second lien on an
unsubordinated estate in fee simple in real property securing the Mortgage Note.
Mortgage Impairment Insurance Policy: A mortgage impairment or
blanket hazard insurance policy to be maintained by the Servicer in accordance
with Section 3.12.
Mortgage Interest Rate: The annual rate of interest borne on a
Mortgage Note after giving effect to any applicable Relief Act Reduction.
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Mortgage Loan: An individual mortgage loan that is the subject
of this Agreement and identified on the related Mortgage Loan Schedule, which
may be a first lien Mortgage Loan or a subordinate lien Mortgage Loan and which
Mortgage Loan includes without limitation the Mortgage Loan documents, the
Monthly Payments, Principal Prepayments, Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds, REO Disposition Proceeds, and all other rights,
benefits, proceeds and obligations arising from or in connection with such
Mortgage Loan.
Mortgage Loan Remittance Rate: With respect to each Mortgage
Loan, the annual rate of interest remitted to the Master Servicer, which shall
be equal to the Mortgage Interest Rate minus the General Servicing Fee, if any.
Mortgage Loan Schedule: A schedule of the Mortgage Loans
attached hereto as Exhibit A setting forth information with respect to such
Mortgage Loans as agreed to by the Seller, the Servicer and the Master Servicer,
including but not limited to (i) a data field indicating whether such Mortgage
Loan is insured under a PMI Policy or LPMI Policy and identifying the related
Qualified Insurer, (ii) a Prepayment Charge Schedule, which Mortgage Loan
Schedule may be amended from time to time to include additional mortgage loans
which are transferred to the Servicer by a Prior Servicer in a Servicing
Transfer, (iii) a data field indicating the applicable Custodian, (iv) a data
field indicating the ▇▇▇▇▇ Fargo Servicing Fee Rate and (v) a data field
designated "DSI" indicating whether such Mortgage Loan is a Simple Interest
Mortgage Loan.
Mortgage Note: The note or other evidence of the indebtedness
of a Mortgagor secured by a Mortgage.
Mortgaged Property: The real property securing repayment of
the debt evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
Net Simple Interest Excess: With respect to any Distribution
Date, the excess, if any, of (a) the amount of the payments received by the
Servicer in the related Due Period allocable to interest in respect of Simple
Interest Mortgage Loans, calculated in accordance with the Simple Interest
Method, net of the related Servicing Fees, over (b) 30 days' interest at the Net
Mortgage Rate as of the first day of the related Due Period, as determined by
the Servicer, on the principal balance of such Simple Interest Mortgage Loan for
such Distribution Date.
Net Simple Interest Shortfall: With respect to any
Distribution Date, the excess, if any, of (a) 30 days' interest at the Net
Mortgage Rate of the Simple Interest Mortgage Loan as of the first day of the
related Due Period, as determined by the Servicer, on the principal balance of
such Simple Interest Mortgage Loan for such Remittance Date, over (b) the amount
of the payments received by the Servicer in the related Due Period allocable to
interest in respect of such Simple Interest Mortgage Loans, calculated in
accordance with the Simple Interest Method, net of the related Servicing Fees.
NIM Securities: As defined in the tenth Recital to this
Agreement.
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NIMS Insurer: As defined in the eleventh Recital to this
Agreement. As of the Closing Date, there shall not be a NIMS Insurer. In the
event a NIMS Insurer is engaged after the Closing Date, the Master Servicer
shall promptly notify the Servicer as provided in Section 9.04 hereunder.
NIMS Transaction: As defined in the tenth Recital to this
Agreement.
Officer's Certificate: A certificate signed by the Chairman of
the Board or the Vice Chairman of the Board or the President, or a Vice
President or an assistant Vice President and by the Treasurer, the Secretary or
one of the Assistant Treasurers or Assistant Secretaries of the Servicer, and
delivered to the Seller, the Master Servicer, Trustee and/or the NIMS Insurer as
required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be
an employee of the Servicer, reasonably acceptable to the Seller, the Trustee,
the Master Servicer and/or the NIMS Insurer, but which must be an independent
outside counsel with respect to any such opinion of counsel concerning all
federal income tax matters. An independent outside counsel's Opinion of Counsel
shall be obtained at the expense of the party requesting such Opinion of Counsel
but shall be obtained at the expense of the Trust Fund if the Trustee is
requesting such opinion.
Person: Any individual, corporation, partnership, joint
venture, association, limited liability company, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof.
PMI Policy: A policy of primary mortgage guaranty insurance
issued by a Qualified Insurer, including any bulk policy acquired in respect of
the Mortgage Loans, as required by this Agreement with respect to certain
Mortgage Loans.
Prepayment Charge: With respect to any Mortgage Loan and
Remittance Date, the charges or premiums, as specified in the Prepayment Charge
Schedule, if any, due in connection with a full or partial prepayment of such
Mortgage Loan during the immediately preceding Principal Prepayment Period in
accordance with the terms thereof.
Prepayment Charge Schedule: A data field in the Mortgage Loan
Schedule attached hereto as Exhibit A which sets forth the amount or method of
calculation of the Prepayment Charge and the term during which such Prepayment
Charge is imposed with respect to a Mortgage Loan.
Prepayment Interest Shortfall Amount: With respect to any
Mortgage Loan that was subject to a Principal Prepayment in full or in part
during any Due Period, which Principal Prepayment was applied to such Mortgage
Loan prior to such Mortgage Loan's Due Date in such Due Period, the amount of
interest (net of the General Servicing Fee) that would have accrued on the
amount of such Principal Prepayment during the period commencing on the date as
of which such Principal Prepayment was applied to such Mortgage Loan and ending
on the day immediately preceding such Due Date, inclusive.
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Prime Rate: The prime rate published from time to time, as
published as the average rate in The Wall Street Journal Northeast Edition.
Principal Prepayment: Any payment or other recovery of
principal on a Mortgage Loan, including any payment or other recovery of
principal in connection with repurchase of a Mortgage Loan by the Seller, the
Servicer, the NIMS Insurer, or any other Person, which is received in advance of
its scheduled Due Date, including any Prepayment Charge or premium thereon and
which is not accompanied by an amount of interest representing scheduled
interest due on any date or dates in any month or months subsequent to the month
of prepayment.
Principal Prepayment Period: With respect to any Remittance
Date and any full or partial Principal Prepayment, the calendar month
immediately preceding the month of such Remittance Date.
Prior Servicer: Any prior servicer (other than the Servicer)
of any or all of the Mortgage Loans.
Purchase Price: With respect to any Distressed Mortgage Loan
or REO Property to be purchased by the NIMS Insurer pursuant to Section 6.05, an
amount equal to the sum of (i) 100% of the principal balance thereof as of the
date of purchase, (ii) accrued interest on such principal balance at the
applicable mortgage interest rate in effect from time to time to the due date as
to which interest was last covered by a payment by the Mortgagor or a Monthly
Advance by the Servicer or Master Servicer and (iii) any unreimbursed Servicing
Advances, Monthly Advances and any unpaid General Servicing Fees allocable to
such Distressed Mortgage Loan or REO Property.
Qualified Insurer: A mortgage guaranty insurance company duly
authorized and licensed where required by law to transact mortgage guaranty
insurance business and approved as an insurer by ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac.
Rating Agency: Each of ▇▇▇▇▇'▇, Fitch and S&P or their
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be such nationally recognized statistical rating
agencies, or other comparable person, agreed upon and designated by the Seller,
notice of which designation shall be given to the Trustee, the NIMS Insurer, the
Master Servicer and the Servicer.
Relief Act Reduction: With respect to any Mortgage Loan as to
which there has been a reduction in the amount of the interest collectible
thereon as a result of the application of the Servicemembers Civil Relief Act,
any amount by which interest collectible on such Mortgage Loan for the Due Date
in the related Due Period is less than the interest accrued thereon for the
applicable one-month period at the Mortgage Interest Rate without giving effect
to such reduction.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
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Remittance Date: With respect to each Distribution Date, the
18th day (or if such 18th day is not a Business Day, the first Business Day
immediately following) of the month in which such Distribution Date occurs.
REO Disposition: The final sale by the Servicer of any REO
Property.
REO Disposition Proceeds: All amounts received with respect to
an REO Disposition pursuant to Section 3.17.
REO Property: A Mortgaged Property acquired by the Servicer on
behalf of the Trustee through foreclosure or by deed in lieu of foreclosure, as
described in Section 3.17.
Residual Certificate: The Class R Certificate.
S&P: Standard & Poor's Ratings Services, a Division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. or any successor in interest.
Securities Administrator: ▇▇▇▇▇ Fargo Bank, National
Association or its successor in interest.
Seller: ▇▇▇▇▇▇ Brothers Holdings Inc. or its successor in
interest or assigns.
Seller Remittance Amount: With respect to each Due Period and
any Mortgage Loan, an amount equal to one-twelfth the product of (a) the Seller
Remittance Rate and (b) the outstanding principal balance of the Mortgage Loan
as of the related Determination Date. The obligation of the Servicer to pay the
Seller Remittance Amount with respect to a Mortgage Loan is limited to, and the
Seller Remittance Amount is payable solely from, the interest portion (including
recoveries with respect to interest from Liquidation Proceeds to the extent
permitted by Section 3.02 of this Agreement) of the Monthly Payments collected
by the Servicer with respect to such Mortgage Loan, or as otherwise provided
under this Agreement.
Seller Remittance Rate: With respect to each Mortgage Loan,
the difference between the General Servicing Fee Rate and the ▇▇▇▇▇ Fargo
Servicing Fee Rate.
Servicer: ▇▇▇▇▇ Fargo Bank, National Association or its
successor in interest or assigns or any successor to the Servicer under this
Agreement as herein provided.
Servicing Advances: All customary, reasonable and necessary
"out of pocket" costs and expenses (including reasonable attorneys' fees and
disbursements) incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (a) the preservation,
restoration and protection of the Mortgaged Property, (b) any enforcement or
administrative or judicial proceedings, including foreclosures, (c) the
management and liquidation of the Mortgaged Property if the Mortgaged Property
is acquired in satisfaction of the Mortgage, (d) taxes, assessments, water
rates, sewer rents and other charges which are or may become a lien upon the
Mortgaged Property, PMI Policy premiums and fire and hazard insurance coverage,
(e) in connection with the liquidation of a Mortgage Loan which has a Superior
Lien, any expenditures relating to the purchase or maintenance of any Superior
Lien pursuant to Section 3.24 hereof, (f) any losses sustained by the Servicer
with respect to the liquidation of the Mortgaged Property, (g) compliance with
the obligations pursuant to the provisions of the ▇▇▇▇▇▇ Mae Guides and (h)
penalties or late fees that were advanced by the Servicer but which did not
arise out of strict compliance with this Agreement.
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Servicing File: The items pertaining to a particular Mortgage
Loan including, but not limited to, the computer files, data disks, books,
records, data tapes, notes, and all additional documents generated as a result
of or utilized in originating and/or servicing each Mortgage Loan, which are
delivered to or generated by the Servicer and held in trust for the Trustee by
the Servicer.
Servicing Officer: Any officer of the Servicer involved in or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished by the Servicer to the
Master Servicer upon request, as such list may from time to time be amended.
Servicing Transfer: Any transfer of the servicing by a Prior
Servicer of Mortgage Loans to the Servicer under this Agreement.
Servicing Transfer Date: The date on which a Servicing
Transfer occurs.
Simple Interest Method: The method of allocating a payment to
principal and interest, pursuant to which the portion of such payment that is
allocated to interest is equal to the product of the applicable rate of interest
multiplied by the unpaid principal balance multiplied by the period of time
elapsed since the preceding payment of interest was made and divided by either
360 or 365, as specified in the related Mortgage Note and the remainder of such
payment is allocated to principal.
Simple Interest Mortgage Loan: Those simple interest loans as
noted on the Mortgage Loan Schedule under the data field designated "DSI."
Special Servicer: The person designated by the Seller (with
the prior written consent of the Trustee, the Master Servicer and the NIMS
Insurer) to assume the servicing of Distressed Mortgage Loans pursuant to
Section 8.04 hereof.
Superior Lien: With respect to any Mortgage Loan, any other
mortgage loan relating to the corresponding Mortgaged Property which creates a
lien on the Mortgaged Property which is senior to the Mortgage Loan.
Termination Fee: The amount that the Seller shall be required
to pay to the Servicer as liquidated damages as a result of the Seller
terminating this Agreement without cause with respect to some or all of the
Mortgage Loans pursuant to Section 8.02 hereof.
Termination Fee Percentage: Means (i) 0.75% for any
termination during the first year following the Closing Date, (ii) 0.50% for any
termination during the second year following the Closing Date, (iii) 0.25% for
any termination during the third year following the Closing Date and (iv) no fee
(0.00%) for any termination at any time after the third anniversary of the
Closing Date.
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▇▇▇▇▇▇▇ ▇▇▇▇▇: Not applicable.
Trust Agreement: The Trust Agreement dated as of May 1, 2004,
among the Trustee, the Master Servicer, the Securities Administrator and the
Depositor.
Trust Fund: The trust fund established by the Trust Agreement,
the assets of which consist of the Mortgage Loans and any other assets as set
forth therein.
Trustee: HSBC Bank USA, or any successor in interest, or if
any successor trustee or co-trustee shall be appointed as provided in the Trust
Agreement, then such successor trustee or such co-trustee, as the case may be.
▇▇▇▇▇ Fargo Servicing Fee: With respect to each Due Period and
any Mortgage Loan, an amount equal to the sum of (a) one-twelfth the product of
(i) the ▇▇▇▇▇ Fargo Servicing Fee Rate and (ii) the outstanding principal
balance of such Mortgage Loan as of the related Determination Date. The ▇▇▇▇▇
Fargo Servicing Fee is payable solely from, the interest portion (including
recoveries with respect to interest from Liquidation Proceeds, Insurance
Proceeds or Condemnation Proceeds to the extent permitted by Section 3.04 of
this Agreement) of such Monthly Payments collected by the Servicer, or as
otherwise provided under this Agreement.
▇▇▇▇▇ Fargo Servicing Fee Rate: For each Mortgage Loan, the
per annum rate set forth in the Mortgage Loan Schedule.
Any capitalized terms used and not defined in this Agreement
shall have the meanings ascribed to such terms in the Trust Agreement.
ARTICLE II.
SELLER'S ENGAGEMENT OF SERVICER TO PERFORM SERVICING
RESPONSIBILITIES
----------------------------------------------------
Section 2.01. Contract for Servicing; Possession of Servicing
Files.
The Seller, by execution and delivery of this Agreement, does
hereby contract with the Servicer as an independent contractor, subject to the
terms of this Agreement, for the servicing of the Mortgage Loans. On or before
the Closing Date or Servicing Transfer Date, as applicable, the Seller shall
cause to be delivered to the Servicer, the Servicing Files with respect to the
Mortgage Loans listed on the Mortgage Loan Schedule. The Servicer shall maintain
a Servicing File with respect to each Mortgage Loan in order to service such
Mortgage Loans pursuant to this Agreement and each Servicing File delivered to
the Servicer shall be held in trust by the Servicer for the benefit of the
Trustee; provided, however, that the Servicer shall have no liability for any
Servicing Files (or portions thereof) not delivered by the Seller. The
Servicer's possession of any portion of the Mortgage Loan documents shall be at
the will of the Trustee for the sole purpose of facilitating servicing of the
related Mortgage Loan pursuant to this Agreement, and such retention and
possession by the Servicer shall be in a custodial capacity only. The ownership
of each Mortgage Note, Mortgage, and the contents of the Servicing File shall be
vested in the Trustee and the ownership of all records and documents with
respect to the related Mortgage Loan prepared by or which come into the
possession of the Servicer shall immediately vest in the Trustee and shall be
retained and maintained, in trust, by the Servicer at the will of the Trustee in
such custodial capacity only. The portion of each Servicing File retained by the
Servicer pursuant to this Agreement shall be appropriately marked to clearly
reflect the ownership of the related Mortgage Loan by the Trustee. The Servicer
shall release from its custody the contents of any Servicing File retained by it
only in accordance with this Agreement.
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Section 2.02. Books and Records.
All rights arising out of the Mortgage Loans shall be vested
in the Trustee, subject to the Servicer's right to service and administer the
Mortgage Loans hereunder in accordance with the terms of this Agreement. All
funds received on or in connection with a Mortgage Loan, other than the ▇▇▇▇▇
Fargo Servicing Fee and other compensation and reimbursement to which the
Servicer is entitled as set forth herein, including but not limited to Section
5.03 below, shall be received and held by the Servicer in trust for the benefit
of the Trustee pursuant to the terms of this Agreement.
The Servicer shall forward to the Custodian original documents
evidencing an assumption, modification, consolidation or extension of any
Mortgage Loan entered into in accordance with Section 3.01 within one week of
their execution; provided, however, that the Servicer shall provide the
Custodian with a certified true copy of any such document submitted for
recordation within one week of its execution, and shall provide the original of
any document submitted for recordation or a copy of such document certified by
the appropriate public recording office to be a true and complete copy of the
original within 120 days of its submission for recordation.
ARTICLE III.
SERVICING OF THE MORTGAGE LOANS
Section 3.01. Servicer to Service.
The Servicer, as an independent contractor, shall service and
administer the Mortgage Loans from and after the Closing Date or Servicing
Transfer Date, as applicable, and shall have full power and authority, acting
alone or through the utilization of a third party service provider, to do any
and all things in connection with such servicing and administration which the
Servicer may deem necessary or desirable, consistent with the terms of this
Agreement and with Accepted Servicing Practices. The Servicer shall service the
Mortgage Loans in accordance with the guidelines of the applicable agency guides
and shall comply with the rules and regulations of the applicable agency. The
Servicer shall be responsible for any and all acts of a third party service
provider and the Servicer's utilization of such third party service provider
shall in no way relieve the liability of the Servicer under this Agreement.
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Consistent with the terms of this Agreement, the Servicer may
waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in the Servicer's reasonable and prudent
determination such waiver, modification, postponement or indulgence is not
materially adverse to the Trust Fund; provided, however, that unless the
Servicer has obtained the prior written consent of the Master Servicer and the
NIMS Insurer, the Servicer shall not permit any modification with respect to any
Mortgage Loan that would change the Mortgage Interest Rate (except for
modifications relating to Relief Act Reductions), defer or forgive the payment
of principal or interest, reduce or increase the outstanding principal balance
(except for actual payments of principal) or change the final maturity date on
such Mortgage Loan. In the event of any such modification which permits the
deferral of interest or principal payments on any Mortgage Loan, the Servicer
shall, on the Business Day immediately preceding the Remittance Date in any
month in which any such principal or interest payment has been deferred, make a
Monthly Advance in accordance with Section 4.03, in an amount equal to the
difference between (a) such month's principal and one month's interest at the
Mortgage Loan Remittance Rate on the unpaid principal balance of such Mortgage
Loan and (b) the amount paid by the Mortgagor. The Servicer shall be entitled to
reimbursement for such advances to the same extent as for all other advances
made pursuant to Section 3.04. Without limiting the generality of the foregoing,
the Servicer shall continue, and is hereby authorized and empowered, to execute
and deliver on behalf of itself and the Trustee, all instruments of satisfaction
or cancellation, or of partial or full release, discharge and all other
comparable instruments, with respect to the Mortgage Loans and with respect to
the Mortgaged Properties. Upon the reasonable request of the Servicer, the
Trustee shall execute and deliver to the Servicer with any powers of attorney
and other documents, furnished to it by the Servicer and reasonably satisfactory
to the Trustee, necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties under this Agreement; provided, that the
Trustee shall not be liable for the actions of the Servicer under such powers of
attorney unless such actions of the Servicer are performed at, and in accordance
with, the written direction of the Trustee. Promptly after the execution of any
assumption, modification, consolidation or extension of any Mortgage Loan, the
Servicer shall forward to the Master Servicer copies of any documents evidencing
such assumption, modification, consolidation or extension. Notwithstanding
anything to the contrary contained in this Servicing Agreement, the Servicer
shall not make or permit any modification, waiver or amendment of any term of
any Mortgage Loan that would cause any REMIC created under the Trust Agreement
to fail to qualify as a REMIC or result in the imposition of any tax under
Section 860F(a) or Section 860G(d) of the Code.
The Servicer is authorized, without the prior approval of the
Trustee, to consent to the refinancing of any Superior Lien on Mortgaged
Property, provided that (i) the resulting Combined Loan-to-Value Ratio of such
Mortgage Loan is no higher than the Combined Loan-to-Value Ratio prior to such
refinancing; (ii) the interest rate, or in the case of any Superior Lien which
is an adjustable rate Mortgage Loan, the applicable Maximum Rate which can be
charged under the related Mortgage Note is no more than 2.00% higher than the
interest rate or the Maximum Rate, as the case may be, on the Mortgage Loan
evidencing the existing Superior Lien immediately prior to the date of such
refinancing; (iii) the Mortgage Loan evidencing the Superior Lien is not subject
to negative amortization and (iv) the Monthly Payment on the Mortgage Loan
evidencing the existing Superior Lien has not increased since the Due Date
immediately prior to the date of such refinancing.
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The Servicer shall not without the Trustee's written consent:
(i) initiate any action, suit or proceedings solely under the Trustee's name
without indicating the Servicer's, representative capacity or (ii) take any
action with the intent to cause, and which actually does cause, the Trustee to
be registered to do business in any state. The Servicer shall indemnify the
Trustee for any and all costs, liabilities and expenses incurred by the Trustee
in connection with the negligent or willful misuse of such powers of attorney by
the Servicer.
In servicing and administering the Mortgage Loans, the
Servicer shall employ procedures (including collection procedures) and exercise
the same care that it would employ and exercise in servicing and administering
similar mortgage loans for its own account, giving due consideration to Accepted
Servicing Practices where such practices do not conflict with the requirements
of this Agreement.
Section 3.02. Collection and Liquidation of Mortgage Loans.
Continuously from the Closing Date or Servicing Transfer Date,
as applicable, until the date each Mortgage Loan ceases to be subject to this
Agreement, the Servicer shall proceed diligently to collect all payments due
under each of the Mortgage Loans when the same shall become due and payable and
shall take special care in ascertaining and estimating Escrow Payments and all
other charges that will become due and payable with respect to the Mortgage
Loans and each related Mortgaged Property, to the end that the installments
payable by the Mortgagors will be sufficient to pay such charges as and when
they become due and payable. The Servicer shall also apply payments of interest
and principal against any Simple Interest Mortgage Loans using the Simple
Interest Method.
The Servicer shall use its best efforts, consistent with the
procedures that the Servicer would use in servicing similar mortgage loans for
its own account, to foreclose upon or otherwise comparably convert the ownership
of such Mortgaged Properties as come into and continue in default and as to
which no satisfactory arrangements can be made for collection of delinquent
payments pursuant to Section 3.01. The Servicer shall use its best efforts to
realize upon defaulted Mortgage Loans in such a manner as will maximize the
receipt of principal and interest by the Trustee, taking into account, among
other things, the timing of foreclosure proceedings. The foregoing is subject to
the provisions that, in any case in which Mortgaged Property shall have suffered
damage, the Servicer shall not be required to expend its own funds toward the
restoration of such property unless it shall determine in its discretion (i)
that such restoration will increase the proceeds of liquidation of the related
Mortgage Loan to the Master Servicer after reimbursement to itself for such
expenses, and (ii) that such expenses will be recoverable by the Servicer
through Insurance Proceeds or Liquidation Proceeds from the related Mortgaged
Property. In the event that any payment due under any Mortgage Loan and not
postponed pursuant to Section 3.01 is not paid when the same becomes due and
payable, or in the event the Mortgagor fails to perform any other covenant or
obligation under the Mortgage Loan and such failure continues beyond any
applicable grace period, the Servicer shall take such action as (1) the Servicer
would take for other institutional investors under similar circumstances with
respect to a similar mortgage loan, (2) shall be consistent with Accepted
Servicing Practices, (3) the Servicer shall determine prudently to be in the
best interest of the Trust Fund, and (4) is consistent with any related PMI
Policy or LPMI Policy. In the event that any payment due under any Mortgage Loan
is not postponed pursuant to Section 3.01 and remains delinquent for a period of
ninety (90) days or any other default continues for a period of ninety (90) days
beyond the expiration of any grace or cure period, the Servicer shall commence
foreclosure proceedings, provided that prior to commencing foreclosure
proceedings, the Servicer shall notify the Master Servicer, the Trustee and the
NIMS Insurer in writing of the Servicer's intention to do so, and the Servicer
shall not commence foreclosure proceedings if the Master Servicer objects to
such action within three (3) Business Days of receiving such notice. In such
connection, the Servicer shall be responsible for advancing all costs and
expenses incurred by it in any such proceedings; provided, however, that it
shall be entitled to reimbursement thereof from the related Mortgaged Property,
as contemplated in Section 3.04.
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Section 3.03. Establishment of and Deposits to Custodial
Account.
The Servicer shall segregate and hold all funds collected and
received pursuant to the Mortgage Loans separate and apart from any of its own
funds and general assets and shall establish and maintain one or more Custodial
Accounts, in the form of time deposit or demand accounts, titled "▇▇▇▇▇ Fargo
Bank, National Association in trust for HSBC Bank USA, as Trustee for Structured
Adjustable Rate Mortgage Loan Trust, 2004-7." The Custodial Account shall be an
Eligible Deposit Account established with an Eligible Institution. Funds
deposited in the Custodial Account may be drawn on by the Servicer in accordance
with Section 3.04. The creation of any Custodial Account shall be evidenced by a
certification in the form of Exhibit B hereto. A copy of such certification
shall be furnished to the Master Servicer and the NIMS Insurer.
The Servicer shall deposit in the Custodial Account within one
(1) Business Day of the Servicer's receipt, and retain therein, the following
collections received by the Servicer and payments made by the Servicer after the
Cut-off Date (other than scheduled payments of principal and interest due on or
before the Cut-off Date) or the Servicing Transfer Date, as applicable:
(i) all payments on account of principal on the
Mortgage Loans, including all Principal Prepayments;
(ii) all payments on account of interest on the
Mortgage Loans adjusted to the Mortgage Loan Remittance Rate and the Seller
Remittance Amount;
(iii) all Prepayment Charges;
(iv) all Liquidation Proceeds;
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(v) all Insurance Proceeds including amounts required
to be deposited pursuant to Section 3.11 (other than proceeds to be held in the
Escrow Account and applied to the restoration and repair of the Mortgaged
Property or released to the Mortgagor in accordance with the related Mortgage
Loan documents and Accepted Servicing Practices);
(vi) all Condemnation Proceeds that are not applied to
the restoration or repair of the Mortgaged Property or released to the Mortgagor
in accordance with the related Mortgage Loan documents and Accepted Servicing
Practices;
(vii) any amount required to be deposited in the
Custodial Account pursuant to this Agreement;
(viii) with respect to each Principal Prepayment in
full or in part, the Prepayment Interest Shortfall Amount, if any, for the month
of distribution. Such deposit shall be made from the Servicer's own funds
without reimbursement therefor up to a maximum amount per month of the General
Servicing Fee actually received for such month for the Mortgage Loans;
(ix) all Monthly Advances made by the Servicer
pursuant to Section 4.03;
(x) any amounts received from the seller of a Mortgage
Loan or any other person giving representations and warranties with respect to
the Mortgage Loan, in connection with the repurchase of any Mortgage Loan;
(xi) any amounts required to be deposited by the
Servicer pursuant to Section 3.11 in connection with the deductible clause in
any blanket hazard insurance policy;
(xii) any amounts received with respect to or related
to any REO Property or REO Disposition Proceeds;
(xiii) any amounts required to be deposited by the
Servicer pursuant to Section 3.16 in connection with any unpaid claims that are
a result of a breach by the Servicer or any subservicer of the obligations
hereunder or under the terms of a PMI Policy; and
(xiv) any amounts received by the Servicer under a PMI
or LPMI Policy.
The Servicer shall also deposit from its own funds into the
Custodial Account, without the right to reimbursement, except from Net Simple
Interest Excess, an amount equal to any Net Simple Interest Shortfall (to the
extent not offset by Net Simple Interest Excess) for the related Due Period and
remit such funds to the Master Servicer pursuant to Section 4.01.
The foregoing requirements for deposit into the Custodial
Account shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of the ▇▇▇▇▇
Fargo Servicing Fee and Ancillary Income need not be deposited by the Servicer
into the Custodial Account. Any interest paid on funds deposited in the
Custodial Account by the depository institution shall accrue to the benefit of
the Servicer and the Servicer shall be entitled to retain and withdraw such
interest from the Custodial Account pursuant to Section 3.04. Additionally, any
other benefit derived from the Custodial Account associated with the receipt,
disbursement and accumulation of principal, interest, taxes, hazard insurance,
mortgage insurance, etc. shall accrue to the Servicer.
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Section 3.04. Permitted Withdrawals From Custodial Account.
The Servicer shall, from time to time, withdraw funds from the
Custodial Account for the following purposes:
(i) to make payments to the Master Servicer in the
amounts and in the manner provided for in Section 4.01;
(ii) to deposit the Seller Remittance Amount into the
Collection Account, for ultimate payment to the Seller;
(iii) in the event the Servicer has elected not to
retain the ▇▇▇▇▇ Fargo Servicing Fee out of any Mortgagor payments on account of
interest or other recovery of interest with respect to a particular Mortgage
Loan (including late collections of interest on such Mortgage Loan, or interest
portions of Insurance Proceeds, Liquidation Proceeds or Condemnation Proceeds)
prior to the deposit of such Mortgagor payment or recovery in the Custodial
Account, to pay to itself the related ▇▇▇▇▇ Fargo Servicing Fee from all such
Mortgagor payments on account of interest or other such recovery for interest
with respect to that Mortgage Loan;
(iv) following the liquidation of a Mortgage Loan, to
reimburse itself for unreimbursed Monthly Advances and Servicing Advances, the
Servicer's right to reimburse itself pursuant to this subclause (iii) with
respect to any Mortgage Loan being limited to related Liquidation Proceeds,
Condemnation Proceeds, Insurance Proceeds, REO Disposition Proceeds and other
amounts received in respect of the related REO Property, and such other amounts
as may be collected by the Servicer from the Mortgagor or otherwise relating to
such Mortgage Loan, it being understood that, in the case of any such
reimbursement, the Servicer's right thereto shall be prior to the rights of the
Trust Fund;
(v) to reimburse itself for any unpaid ▇▇▇▇▇ Fargo
Servicing Fees, the Servicer's right to reimburse itself pursuant to this
subclause (iv) with respect to any Mortgage Loan being limited to related
Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds, REO Disposition
Proceeds and other amounts received in respect of the related REO Property, and
such other amounts as may be collected by the Servicer from the Mortgagor or
otherwise relating to the Mortgage Loan, it being understood that, in the case
of any such reimbursement, the Servicer's right thereto shall be prior to the
rights of the Trust Fund;
(vi) to reimburse itself for remaining unreimbursed
Servicing Advances and unpaid Servicing Fees with respect to any defaulted
Mortgage Loan as to which the Servicer has determined that all amounts that it
expects to recover on behalf of the Trust Fund from or on account of such
Mortgage Loan have been recovered;
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(vii) to pay itself interest on funds deposited in the
Custodial Account;
(viii) to transfer funds to another Eligible
Institution in accordance with Section 3.11 hereof;
(ix) to withdraw funds deposited in error;
(x) to clear and terminate the Custodial Account upon
the termination of this Agreement; and
(xi) to pay itself an amount equal to the Net Simple
Interest Excess for the related Due Period to the extent not offset by Net
Simple Interest Shortfalls.
Section 3.05. Establishment of and Deposits to Escrow Account.
The Servicer shall segregate and hold all funds collected and
received pursuant to a Mortgage Loan constituting Escrow Payments separate and
apart from any of its own funds and general assets and shall establish and
maintain one or more Escrow Accounts, in the form of time deposit or demand
accounts, titled, "▇▇▇▇▇ Fargo Bank, National Association in trust for HSBC Bank
USA, as Trustee for Structured Adjustable Rate Mortgage Loan Trust, 2004-7." The
Escrow Accounts shall be Eligible Deposit Accounts established with an Eligible
Institution. Funds deposited in the Escrow Account may be drawn on by the
Servicer in accordance with Section 3.06. The creation of any Escrow Account
shall be evidenced by a certification in the form of Exhibit C hereto. A copy of
such certification shall be furnished to the Master Servicer and the NIMS
Insurer.
The Servicer shall deposit in the Escrow Account or Accounts
within one (1) Business Day of the Servicer's receipt, and retain therein:
(i) all Escrow Payments collected on account of the
Mortgage Loans, for the purpose of effecting timely payment of any such items as
required under the terms of this Agreement; and
(ii) all amounts representing Insurance Proceeds or
Condemnation Proceeds which are to be applied to the restoration or repair of
any Mortgaged Property.
The Servicer shall make withdrawals from the Escrow Account
only to effect such payments as are required under this Agreement, as set forth
in Section 3.06. The Servicer shall be entitled to retain any interest paid on
funds deposited in the Escrow Account by the depository institution, other than
interest on escrowed funds required by law to be paid to the Mortgagor. To the
extent required by law, the Servicer shall pay interest on escrowed funds to the
Mortgagor notwithstanding that the Escrow Account may be non-interest bearing or
that interest paid thereon is insufficient for such purposes.
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Section 3.06. Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account or Accounts may be made by
the Servicer only:
(i) to effect timely payments of ground rents, taxes,
assessments, water rates, mortgage insurance premiums, condominium charges, fire
and hazard insurance premiums or other items constituting Escrow Payments for
the related Mortgage;
(ii) to reimburse the Servicer for any Servicing
Advance made by the Servicer with respect to a related Mortgage Loan, but only
from amounts received on the related Mortgage Loan which represent late
collections of Escrow Payments thereunder;
(iii) to refund to any Mortgagor any funds found to be
in excess of the amounts required under the terms of the related Mortgage Loan;
(iv) to the extent permitted by applicable law, for
transfer to the Custodial Account and application to reduce the principal
balance of the Mortgage Loan in accordance with the terms of the related
Mortgage and Mortgage Note;
(v) for application to restoration or repair of the
Mortgaged Property in accordance with Section 3.15;
(vi) to pay to the Servicer, or any Mortgagor to the
extent required by law, any interest paid on the funds deposited in the Escrow
Account;
(vii) to withdraw funds deposited in error; and
(viii) to clear and terminate the Escrow Account on
the termination of this Agreement.
The Servicer will be responsible for the administration of the
Escrow Accounts and will be obligated to make Servicing Advances to the Escrow
Account in respect of its obligations under this Section 3.06, reimbursable from
the Escrow Accounts or Custodial Account to the extent not collected from the
related Mortgagor, anything to the contrary notwithstanding, when and as
necessary to avoid the lapse of insurance coverage on the Mortgaged Property, or
which the Servicer knows, or in the exercise of the required standard of care of
the Servicer hereunder should know, is necessary to avoid the loss of the
Mortgaged Property due to a tax sale or the foreclosure as a result of a tax
lien. If any such payment has not been made and the Servicer receives notice of
a tax lien with respect to the Mortgage being imposed, the Servicer will, within
ten (10) Business Days of such notice, advance or cause to be advanced funds
necessary to discharge such lien on the Mortgaged Property.
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Section 3.07. Notification of Adjustments.
With respect to each adjustable rate Mortgage Loan, the
Servicer shall adjust the Mortgage Interest Rate on the related interest rate
adjustment date and shall adjust the Monthly Payment on the related mortgage
payment adjustment date, if applicable, in compliance with the requirements of
applicable law and the related Mortgage and Mortgage Note. The Servicer shall
execute and deliver any and all necessary notices required under applicable law
and the terms of the related Mortgage Note and Mortgage regarding the Mortgage
Interest Rate and Monthly Payment adjustments. The Servicer shall promptly, upon
written request therefor, deliver to the Master Servicer such notifications and
any additional applicable data regarding such adjustments and the methods used
to calculate and implement such adjustments. Upon the discovery by the Servicer
or the receipt of notice from the Master Servicer that the Servicer has failed
to adjust a Mortgage Interest Rate or Monthly Payment in accordance with the
terms of the related Mortgage Note, the Servicer shall immediately deposit in
the Custodial Account from its own funds the amount of any interest loss or
deferral caused the Seller thereby.
Section 3.08. (Reserved.)
Section 3.09. Payment of Taxes, Insurance and Other Charges.
(a) With respect to each Mortgage Loan which provides for
Escrow Payments, the Servicer shall maintain accurate records of those escrowed
items which are or may become a lien upon the Mortgaged Property and the status
of fire and hazard insurance coverage and shall obtain, from time to time, all
bills for the payment of such charges (including renewal premiums) ("Property
Charges") and shall effect payment thereof prior to the applicable penalty or
termination date, employing for such purpose deposits of the Mortgagor in the
Escrow Account which shall have been estimated and accumulated by the Servicer
in amounts sufficient for such purposes, as allowed under the terms of the
Mortgage. The Servicer assumes full responsibility for the timely payment of all
such bills and shall effect timely payment of all such charges irrespective of
each Mortgagor's faithful performance in the payment of same or the making of
the Escrow Payments, and such payments
(b) To the extent that a Mortgage Loan does not provide for
Escrow Payments, the Servicer shall make advances from its own funds to effect
payment of all Property Charges upon receipt of notice of any failure to pay on
the part of the Mortgagor, or at such other time as the Servicer determines to
be in the best interest of the Trust Fund, provided, that in any event the
Servicer shall pay such charges on or before the earlier of (a) any date by
which payment is necessary to preserve the lien status of the Mortgage or (b)
the date which is ninety days after the date on which such charges first became
due. The Servicer shall pay any late fee or penalty which is payable due to any
delay in payment of any Property Charge after the earlier to occur of (a) the
date on which the Servicer receives notice of the failure of the Mortgagor to
pay such Property Charge or (b) the date which is ninety days after the date on
which such charges first became due.
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Section 3.10. Protection of Accounts.
The Servicer may transfer the Custodial Account or any Escrow
Account to a different Eligible Institution from time to time and shall give
notice to the Master Servicer and the NIMS Insurer of any change in the location
of the Custodial Account; provided that in the event the Custodial Account or
any Escrow Account is held in a depository institution or trust company that
ceases to be an Eligible Institution, the Servicer shall transfer such Custodial
Account or Escrow Account, as the case may be, to an Eligible Institution.
The Servicer shall bear any expenses, losses or damages
sustained by the Master Servicer or the Trustee if the Custodial Account and/or
the Escrow Account are not demand deposit accounts.
Section 3.11. Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained for each Mortgage
Loan hazard insurance such that all buildings upon the Mortgaged Property are
insured by a generally acceptable insurer acceptable under ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇
Mac guidelines against loss by fire, hazards of extended coverage and such other
hazards as are customary in the area where the Mortgaged Property is located, in
an amount which is at least equal to the lesser of (i) the replacement value of
the improvements securing such Mortgage Loan and (ii) the greater of (a) the
outstanding principal balance of the Mortgage Loan and (b) an amount such that
the proceeds thereof shall be sufficient to prevent the Mortgagor or the loss
payee from becoming a co-insurer.
If upon origination of the Mortgage Loan, the related
Mortgaged Property was located in an area identified in the Federal Register by
the Flood Emergency Management Agency as having special flood hazards (and such
flood insurance has been made available) a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
is in effect with a generally acceptable insurance carrier acceptable to ▇▇▇▇▇▇
Mae or ▇▇▇▇▇▇▇ Mac in an amount representing coverage equal to the lesser of (i)
the minimum amount required, under the terms of coverage, to compensate for any
damage or loss on a replacement cost basis (or the unpaid balance of the
mortgage if replacement cost coverage is not available for the type of building
insured) and (ii) the maximum amount of insurance which is available under the
Flood Disaster Protection Act of 1973, as amended. If at any time during the
term of the Mortgage Loan, the Servicer determines in accordance with applicable
law and pursuant to the ▇▇▇▇▇▇ Mae Guides that a Mortgaged Property is located
in a special flood hazard area and is not covered by flood insurance or is
covered in an amount less than the amount required by the Flood Disaster
Protection Act of 1973, as amended, the Servicer shall notify the related
Mortgagor that the Mortgagor must obtain such flood insurance coverage, and if
said Mortgagor fails to obtain the required flood insurance coverage within
forty-five (45) days after such notification, the Servicer shall immediately
force place the required flood insurance on the Mortgagor's behalf.
If a Mortgage Loan is secured by a unit in a condominium
project, the Servicer shall verify that the coverage required of the owner's
association, including hazard, flood, liability and fidelity coverage, is being
maintained in accordance with then current ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac
requirements.
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In the event that the Master Servicer or the Servicer shall
determine that the Mortgaged Property should be insured against loss or damage
by hazards and risks not covered by the insurance required to be maintained by
the Mortgagor pursuant to the terms of the Mortgage, the Servicer shall
communicate and consult with the Mortgagor with respect to the need for such
insurance and bring to the Mortgagor's attention the desirability of protection
of the Mortgaged Property.
All policies required hereunder shall name the Servicer as
loss payee and shall be endorsed with standard or union mortgagee clauses,
without contribution, which shall provide for at least 30 days prior written
notice of any cancellation, reduction in amount or material change in coverage.
The Servicer shall not interfere with the Mortgagor's freedom
of choice in selecting either his insurance carrier or agent, provided, however,
that the Servicer shall not accept any such insurance policies from insurance
companies unless such companies are acceptable to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac and
are licensed to do business in the jurisdiction in which the Mortgaged Property
is located. The Servicer shall determine that such policies provide sufficient
risk coverage and amounts, that they insure the property owner, and that they
properly describe the property address. The Servicer shall furnish to the
Mortgagor a formal notice of expiration of any such insurance in sufficient time
for the Mortgagor to arrange for renewal coverage by the expiration date.
Pursuant to Section 3.04, any amounts collected by the
Servicer under any such policies (other than amounts to be deposited in the
Escrow Account and applied to the restoration or repair of the related Mortgaged
Property, or property acquired in liquidation of the Mortgage Loan, or to be
released to the Mortgagor, in accordance with the Servicer's normal servicing
procedures as specified in Section 3.15) shall be deposited in the Custodial
Account subject to withdrawal pursuant to Section 3.05.
Notwithstanding anything set forth in the preceding paragraph,
the Servicer agrees to indemnify the Trustee, the NIMS Insurer, the
Certificateholders, the Master Servicer and the Trust Fund for any claims,
losses, damages, penalties, fines, forfeitures, legal fees and related costs,
judgments and any other costs, fees and expenses that any such indemnified party
may sustain in any way related to the failure of the Mortgagor (or the Servicer)
to maintain hazard insurance or flood insurance with respect to the related
Mortgaged Property which complies with the requirements of this section.
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Section 3.12. Maintenance of Mortgage Impairment Insurance.
In the event that the Servicer shall obtain and maintain a
blanket policy insuring against losses arising from fire and hazards covered
under extended coverage on all of the Mortgage Loans, then, to the extent such
policy provides coverage in an amount equal to the amount required pursuant to
Section 3.11 and otherwise complies with all other requirements of Section 3.11,
it shall conclusively be deemed to have satisfied its obligations as set forth
in Section 3.11. Any amounts collected by the Servicer under any such policy
relating to a Mortgage Loan shall be deposited in the Custodial Account subject
to withdrawal pursuant to Section 3.05. Such policy may contain a deductible
clause, in which case, in the event that there shall not have been maintained on
the related Mortgaged Property a policy complying with Section 3.11, and there
shall have been a loss which would have been covered by such policy, the
Servicer shall deposit in the Custodial Account at the time of such loss the
amount not otherwise payable under the blanket policy because of such deductible
clause, such amount to deposited from the Servicer's funds, without
reimbursement therefor. Upon request of the Master Servicer, the Trustee or the
NIMS Insurer, the Servicer shall cause to be delivered to such person a
certificate of insurance of such policy and a statement from the insurer
thereunder that such policy shall in no event be terminated or materially
modified without 30 days' prior written notice to the Master Servicer, the
Trustee and the NIMS Insurer.
Section 3.13. Maintenance of Fidelity Bond and Errors and
Omissions Insurance.
The Servicer shall maintain with responsible companies, at its own expense, a
blanket Fidelity Bond and an Errors and Omissions Insurance Policy, with broad
coverage on all officers, employees or other persons acting in any capacity
requiring such persons to handle funds, money, documents or papers relating to
the Mortgage Loans ("Servicer Employees"). Any such Fidelity Bond and Errors and
Omissions Insurance Policy shall be in the form of the Mortgage Banker's Blanket
Bond and shall protect and insure the Servicer against losses, including
forgery, theft, embezzlement, fraud, errors and omissions and negligent acts of
such Servicer Employees. Such Fidelity Bond and Errors and Omissions Insurance
Policy also shall protect and insure the Servicer against losses in connection
with the release or satisfaction of a Mortgage Loan without having obtained
payment in full of the indebtedness secured thereby. No provision of this
Section 3.13 requiring such Fidelity Bond and Errors and Omissions Insurance
Policy shall diminish or relieve the Servicer from its duties and obligations as
set forth in this Agreement. The minimum coverage under any such bond and
insurance policy shall be acceptable to ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac. Upon the
request of the Master Servicer, the Trustee or the NIMS Insurer, the Servicer
shall cause to be delivered to such party a certificate of insurance for such
fidelity bond and insurance policy and a statement from the surety and the
insurer that such fidelity bond and insurance policy shall in no event be
terminated or materially modified without 30 days' prior written notice to the
Master Servicer, the Trustee and the NIMS Insurer.
Section 3.14. Inspections.
The Servicer shall inspect the Mortgaged Property as often as
deemed necessary by the Servicer in accordance with Accepted Servicing Practices
to assure itself that the value of the Mortgaged Property is being preserved. In
addition, if any Mortgage Loan is more than 45 days delinquent, the Servicer
promptly shall inspect the Mortgaged Property and shall conduct subsequent
inspections in accordance with Accepted Servicing Practices or as may be
required by the primary mortgage guaranty insurer. Upon request, the Servicer
shall produce an electronic report of each such inspection.
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Section 3.15. Restoration of Mortgaged Property.
The Servicer need not obtain the approval of the Master
Servicer or the Trustee prior to releasing any Insurance Proceeds or
Condemnation Proceeds to the Mortgagor to be applied to the restoration or
repair of the Mortgaged Property if such release is in accordance with Accepted
Servicing Practices. For claims greater than $15,000, at a minimum, the Servicer
shall comply with the following conditions in connection with any such release
of Insurance Proceeds or Condemnation Proceeds:
(i) the Servicer shall receive satisfactory independent
verification of completion of repairs and issuance of any required approvals
with respect thereto;
(ii) the Servicer shall take all steps necessary to preserve
the priority of the lien of the Mortgage, including, but not limited to
requiring waivers with respect to mechanics' and materialmen's liens;
(iii) the Servicer shall verify that the Mortgage Loan is not
in default; and
(iv) pending repairs or restoration, the Servicer shall place
the Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
Section 3.16. Maintenance of PMI and/or LPMI Policy; Claims.
(a) The Servicer shall comply with all provisions of
applicable state and federal law relating to the cancellation of, or collection
of premiums with respect to, PMI Policies, including, but not limited to, the
provisions of the Homeowners Protection Act of 1998, and all regulations
promulgated thereunder, as amended from time to time. The Servicer shall be
obligated to make premium payments with respect to PMI Policies required to be
maintained by the Mortgagor rather than the Seller, if the Mortgagor is required
but fails to pay any PMI Policy premium, which shall be paid from the Servicer's
own funds. The Servicer shall not be required to make any premium payments with
respect to LPMI Policies. Any premium payments made by the Servicer from its own
funds pursuant to this Section 3.16(a) shall be recoverable by the Servicer as a
Servicing Advance, subject to the reimbursement provisions of Section 3.04(iv).
With respect to each Mortgage Loan (other than LPMI Loans)
with a loan-to-value ratio at origination in excess of 80%, the Servicer shall
maintain or cause the Mortgagor to maintain (to the extent that the Mortgage
Loan requires the Mortgagor to maintain such insurance) in full force and effect
a PMI Policy, and shall pay or shall cause the Mortgagor to pay the premium
thereon on a timely basis, until the LTV of such Mortgage Loan is reduced to
80%. In the event that such PMI Policy shall be terminated, the Servicer shall
obtain from another Qualified Insurer a comparable replacement policy, with a
total coverage equal to the remaining coverage of such terminated PMI Policy, at
substantially the same fee level. The Servicer shall not take any action which
would result in noncoverage under any applicable PMI Policy of any loss which,
but for the actions of the Servicer would have been covered thereunder. In
connection with any assumption or substitution agreements entered into or to be
entered into with respect to a Mortgage Loan, the Servicer shall promptly notify
the insurer under the related PMI Policy, if any, of such assumption or
substitution of liability in accordance with the terms of such PMI Policy and
shall take all actions which may be required by such insurer as a condition to
the continuation of coverage under such PMI Policy. If such PMI Policy is
terminated as a result of such assumption or substitution of liability, the
Servicer shall obtain a replacement PMI Policy as provided above.
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(b) With respect to each Mortgage Loan covered by a PMI Policy
or LPMI Policy, the Servicer shall take all such actions on behalf of the
Trustee as are necessary to service, maintain and administer the related
Mortgage Loan in accordance with such Policy and to enforce the rights under
such Policy. Except as expressly set forth herein, the Servicer shall have full
authority on behalf of the Trust Fund to do anything it deems appropriate or
desirable in connection with the servicing, maintenance and administration of
such Policy; provided that the Servicer shall not take any action to permit any
modification or assumption of a Mortgage Loan covered by an LPMI Policy or PMI
Policy, or take any other action with respect to such Mortgage Loan, which would
result in non-coverage under such Policy of any loss which, but for actions of
any Servicer or the subservicer, would have been covered thereunder. If the
Qualified Insurer fails to pay a claim under an LPMI Policy or PMI Policy solely
as a result of a breach by the Servicer or subservicer of its obligations
hereunder or under such Policy, the Servicer shall be required to deposit in the
Custodial Account on or prior to the next succeeding Remittance Date an amount
equal to such unpaid claim from its own funds without any rights to
reimbursement from the Trust Fund. The Servicer shall cooperate with the
Qualified Insurers and shall furnish all reasonable evidence and information in
the possession of the Servicer to which the Servicer has access with respect to
the related Mortgage Loan; provided, however, notwithstanding anything to the
contrary contained in any LPMI Policy or PMI Policy, the Servicer shall not be
required to submit any reports to the related Qualified Insurer until a
reporting date that is at least 15 days after the Servicer has received
sufficient loan level information from the Seller to appropriately code its
servicing systems in accordance with the Qualified Insurer's requirements.
(c) In connection with its activities as servicer, the
Servicer agrees to prepare and present, on behalf of itself and the Trustee,
claims to the Qualified Insurer under any PMI Policy or LPMI Policy in a timely
fashion in accordance with the terms of such PMI Policy or LPMI Policy and, in
this regard, to take such action as shall be necessary to permit recovery under
any PMI Policy or LPMI Policy respecting a defaulted Mortgage Loan. Any amounts
collected by the Servicer under any PMI Policy or LPMI Policy shall be deposited
in the Custodial Account pursuant to Section 3.03(xii), subject to withdrawal
pursuant to Section 3.04.
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(d) The Trustee shall furnish the Servicer with any powers of
attorney and other documents (within three (3) Business Days upon request from
the Servicer) in form as provided to it necessary or appropriate to enable the
Servicer to service and administer any PMI or LPMI Policy; provided, however,
that the Trustee shall not be liable for the actions of the Servicer under such
power of attorney unless such actions of the Servicer are performed at, and in
accordance with, the written direction of the Trustee.
(e) The Servicer shall deposit into the Custodial Account
pursuant to Section 3.03(v) hereof, all Insurance Proceeds received under the
terms of a PMI Policy or a LPMI Policy.
(f) Notwithstanding the provisions of (a) and (b) above, the
Servicer shall not take any action in regard to any PMI Policy or LPMI Policy
inconsistent with the interests of the Trustee or the Certificateholders or with
the rights and interests of the Trustee or the Certificateholders under this
Agreement.
Section 3.17. Title, Management and Disposition of REO
Property.
In the event that title to any Mortgaged Property is acquired
in foreclosure or by deed in lieu of foreclosure, the deed or certificate of
sale shall be taken in the name of the Trustee or its nominee in trust for the
benefit of the Certificateholders, or in the event the Trustee is not authorized
or permitted to hold title to real property in the state where the REO Property
is located, or would be adversely affected under the "doing business" or tax
laws of such state by so holding title, the deed or certificate of sale shall be
taken in the name of such Person or Persons as shall be consistent with an
Opinion of Counsel obtained by the Servicer from any attorney duly licensed to
practice law in the state where the REO Property is located. The Person or
Persons holding such title other than the Trustee shall acknowledge in writing
that such title is being held as nominee for the Trustee.
The Servicer shall manage, conserve, protect and operate each
REO Property for the Trustee solely for the purpose of its prompt disposition
and sale. The Servicer, either itself or through an agent selected by the
Servicer, shall manage, conserve, protect and operate the REO Property in the
same manner that it manages, conserves, protects and operates other foreclosed
property for its own account, and in the same manner that similar property in
the same locality as the REO Property is managed. The Servicer shall attempt to
sell the same (and may temporarily rent the same for a period not greater than
one year, except as otherwise provided below) on such terms and conditions as
the Servicer deems to be in the best interest of the Trustee and the
Certificateholders.
If the Servicer hereafter becomes aware that a Mortgaged
Property is an Environmental Problem Property, the Servicer will notify the
Master Servicer and the NIMS Insurer of the existence of the Environmental
Problem Property. Additionally, the Servicer shall set forth in such notice a
description of such problem, a recommendation to the Master Servicer and the
NIMS Insurer relating to the proposed action regarding the Environmental Problem
Property, and the Servicer shall carry out the recommendation set forth in such
notice unless otherwise directed by the Master Servicer or the NIMS Insurer in
writing within five (5) days after its receipt (or deemed receipt) of such
notice in accordance with the terms and provisions of Section 9.04 below. The
Master Servicer shall be provided a copy of the NIMS Insurer's instructions to
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the Servicer. Notwithstanding the foregoing, the Servicer shall obtain the
Master Servicer's and the NIMS Insurer's written consent to any expenditures
proposed to remediate Environmental Problem Properties or to defend any claims
associated with Environmental Problem Properties if such expenses, in the
aggregate, are expected to exceed $100,000. Failure to provide written notice of
disapproval of the expenditure within five (5) days of receipt (or deemed
receipt) of such request for prepaid expenditures shall be deemed an approval of
such expenditure. The Master Servicer shall be provided with a copy of the NIMS
Insurer's instructions to the Servicer. If the Servicer has received reliable
instructions to the effect that a Property is an Environmental Problem Property
(e.g., Servicer obtains a broker's price opinion which reveals the potential for
such problem), the Servicer will not accept a deed-in-lieu of foreclosure upon
any such Property without first obtaining a preliminary environmental
investigation for the Property satisfactory to the Master Servicer or the NIMS
Insurer.
In the event that the Trust Fund acquires any REO Property in
connection with a default or imminent default on a Mortgage Loan, the Servicer
shall dispose of such REO Property not later than the end of the third taxable
year after the year of its acquisition by the Trust Fund unless the Servicer has
applied for and received a grant of extension from the Internal Revenue Service
(and provide a copy of the same to the NIMS Insurer and the Master Servicer) to
the effect that, under the REMIC Provisions and any relevant proposed
legislation and under applicable state law, the applicable Trust REMIC may hold
REO Property for a longer period without adversely affecting the REMIC status of
such REMIC or causing the imposition of a federal or state tax upon such REMIC.
If the Servicer has received such an extension (and provided a copy of the same
to the NIMS Insurer and the Master Servicer), then the Servicer shall continue
to attempt to sell the REO Property for its fair market value for such period
longer than three years as such extension permits (the "Extended Period"). If
the Servicer has not received such an extension and the Servicer is unable to
sell the REO Property within the period ending three months before the end of
such third taxable year after its acquisition by the Trust Fund or if the
Servicer has received such an extension, and the Servicer is unable to sell the
REO Property within the period ending three months before the close of the
Extended Period, the Servicer shall, before the end of the three-year period or
the Extended Period, as applicable, (i) purchase such REO Property at a price
equal to the REO Property's fair market value, as acceptable to the NIMS Insurer
or (ii) auction the REO Property to the highest bidder (which may be the
Servicer) in an auction reasonably designed to produce a fair price prior to the
expiration of the three-year period or the Extended Period, as the case may be.
The Trustee shall sign any document or take any other action reasonably
requested by the Servicer which would enable the Servicer, on behalf of the
Trust Fund, to request such grant of extension.
Notwithstanding any other provisions of this Agreement, no REO
Property acquired by the Trust Fund shall be rented (or allowed to continue to
be rented) or otherwise used by or on behalf of the Trust Fund in such a manner
or pursuant to any terms that would: (i) cause such REO Property to fail to
qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code; or (ii) subject any Trust REMIC to the imposition of any federal
income taxes on the income earned from such REO Property, including any taxes
imposed by reason of Sections 860F or 860G(c) of the Code, unless the Servicer
has agreed to indemnify and hold harmless the Trust Fund and the NIMS Insurer
with respect to the imposition of any such taxes.
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The disposition of REO Property shall be carried out by the
Servicer at such price, and upon such terms and conditions, as the Servicer
deems to be in the best interests of the Trust Fund. Notwithstanding the
previous sentence, prior to acceptance by the Servicer of an offer to sell any
REO Property for a sale price that is less than 90% of the unpaid principal
balance of the related Mortgage Loan, the Servicer shall notify the Master
Servicer and the NIMS Insurer of such offering in writing which notification
shall set forth all material terms of said offer (each a "Notice of Sale"). The
Master Servicer and/or the NIMS Insurer shall be deemed to have approved the
sale of any REO Property unless it notifies the Servicer in writing within five
(5) Business Days after its receipt of the related Notice of Sale, that it
disapproves of the related sale, in which case the Servicer shall not proceed
with such sale. The proceeds of sale of the REO Property shall be promptly
deposited in the Custodial Account.
The Servicer shall also maintain on each REO Property fire and
hazard insurance with extended coverage in amount which is at least equal to the
maximum insurable value of the improvements which are a part of such property,
liability insurance and, to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance in the amount
required above.
The proceeds of sale of the REO Property shall be promptly
deposited in the Custodial Account. As soon as practical thereafter the expenses
of such sale shall be paid and the Servicer shall reimburse itself for any
related unreimbursed Servicing Advances, unpaid ▇▇▇▇▇ Fargo Servicing Fees and
unreimbursed advances made pursuant to this Section or Section 4.03.
The Servicer shall make advances of all funds necessary for
the proper operation, management and maintenance of the REO Property, including
the cost of maintaining any hazard insurance pursuant to Section 3.10, such
advances to be reimbursed from the disposition or liquidation proceeds of the
REO Property. The Servicer shall make monthly distributions on each Remittance
Date to the Master Servicer of the net cash flow from the REO Property (which
shall equal the revenues from such REO Property net of the expenses described in
this Section 3.17 and of any reserves reasonably required from time to time to
be maintained to satisfy anticipated liabilities for such expenses).
Section 3.18. Real Estate Owned Reports.
Together with the statement furnished pursuant to Section
4.02, the Servicer shall furnish to the Master Servicer and the NIMS Insurer on
or before the Remittance Date in each month a statement with respect to any REO
Property covering the operation of such REO Property for the previous month and
the Servicer's efforts in connection with the sale of such REO Property and any
rental of such REO Property incidental to the sale thereof for the previous
month. That statement shall be accompanied by such other information as either
the Master Servicer or the NIMS Insurer shall reasonably request.
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Section 3.19. Liquidation Reports.
Upon the foreclosure sale of any Mortgaged Property or the
acquisition thereof by the Trustee pursuant to a deed in lieu of foreclosure,
the Servicer shall submit to the Trustee and the Master Servicer a liquidation
report with respect to such Mortgaged Property. In addition, the Servicer shall
provide the Master Servicer a report setting forth Servicing Advances and other
expenses incurred in connection with the liquidation of any Mortgage Loan.
Section 3.20. Reports of Foreclosures and Abandonments of
Mortgaged Property.
Following the foreclosure sale or abandonment of any Mortgaged
Property, the Servicer shall report such foreclosure or abandonment as required
pursuant to Section 6050J of the Code.
Section 3.21. Prepayment Charges.
The Servicer or any designee of the Servicer shall not waive
any Prepayment Charge with respect to any Mortgage Loan which contains a
Prepayment Charge which prepays during the term of the charge. If the Servicer
or its designee fails to collect the Prepayment Charge upon any prepayment of
any Mortgage Loan which contains a Prepayment Charge, the Servicer shall pay the
Trust Fund at such time (by deposit to the Custodial Account) an amount equal to
amount of the Prepayment Charge which was not collected. Notwithstanding the
above, the Servicer or its designee may waive (and shall waive, in the case of
(ii)(c) below) a Prepayment Charge without paying the Trust Fund the amount of
the Prepayment Charge if (i) the Mortgage Loan is in default (defined as 61 days
or more delinquent) and such waiver would maximize recovery of total proceeds
taking into account the value of such Prepayment Charge and the related Mortgage
Loan or (ii) if the prepayment is not a result of a refinance by the Servicer or
any of its affiliates and (a) the Mortgage Loan is foreseen to be in default and
such waiver would maximize recovery of total proceeds taking into account the
value of such Prepayment Charge and the related Mortgage Loan, (b) the
collection of the Prepayment Charge would be in violation of applicable laws or
(c) notwithstanding any state or federal law to the contrary, any Prepayment
Charge in any instance when a Mortgage Loan is in foreclosure.
Section 3.22. Confidentiality/Protecting Customer Information.
Each party agrees that it shall comply with all applicable
laws and regulations regarding the privacy or security of Customer Information
shall maintain appropriate administrative, technical and physical safeguards to
protect the security, confidentiality and integrity of Customer Information,
including, if applicable, maintaining security measures designed to meet the
Interagency Guidelines Establishing Standards for Safeguarding Customer
Information, 66 Fed. Reg. 8616 and complying with the privacy regulations under
Title V of the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, 15 U.S.C. ss. 6801 et seq., and the rules
promulgated thereunder. For purposes of this Section, "Customer Information"
means any personal information concerning a Mortgagor that is disclosed by one
party to this Agreement to the other.
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Section 3.23. Credit Reporting.
For each Mortgage Loan, the Servicer has and shall continue to
accurately and fully furnish, in accordance with the Fair Credit Reporting Act
and its implementing regulations, accurate and complete information (e.g.,
favorable and unfavorable) on its borrower credit files to each of the following
credit repositories: Equifax Credit Information Services, Inc., Trans Union, LLC
and Experian Information Solution, Inc., on a monthly basis. In addition, with
respect to any Mortgage Loan serviced for a ▇▇▇▇▇▇ Mae pool, the Servicer shall
transmit full credit reporting data to each of such credit repositories in
accordance with ▇▇▇▇▇▇ ▇▇▇ Guide Announcement 95-19 (November 20, 1995), a copy
of which is attached hereto as Exhibit F, reporting each of the following
statuses, each month with respect to a Mortgage Loan in a ▇▇▇▇▇▇ Mae pool: New
origination, current, delinquent (30-60-90-days, etc) foreclosed or charged off.
Section 3.24. Superior Liens.
The Servicer shall monitor the status of each Superior Lien in
accordance with Accepted Servicing Practices. If necessary to comply with
Accepted Servicing Practices and permitted by applicable law, the Servicer shall
file (or cause to be filed) a request for notice of any action by a superior
lienholder under a Superior Lien for the protection of the Trust Fund's
interest, with all out of pocket costs deemed to be a Servicing Advance, where
permitted by local law and whenever applicable state law does not require that a
junior lienholder be named as a party defendant in foreclosure proceedings in
order to foreclose such junior lienholder's equity of redemption.
If the Servicer is notified that any superior lienholder has
accelerated or intends to accelerate the obligations secured by the Superior
Lien, or has declared or intends to declare a default under the mortgage or the
promissory note secured thereby, or has filed or intends to file an election to
have the Mortgaged Property sold or foreclosed, the Servicer shall take, on
behalf of the Trustee, whatever actions are necessary to protect the interests
of the Trust Fund in accordance with Accepted Servicing Practices. The Servicer
shall not make such a Servicing Advance except to the extent that it determines
in its reasonable good faith judgment that such advance would be recoverable
from Liquidation Proceeds on the related Mortgage Loan and in no event in an
amount that is greater than the then outstanding principal balance of the
related Mortgage Loan. The Servicer shall thereafter take such action as is
necessary to recover the amount so advanced.
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ARTICLE IV.
PAYMENTS TO Master Servicer
---------------------------
Section 4.01. Remittances.
On each Remittance Date, no later than 5:00 p.m. New York City
time, the Servicer shall remit on a scheduled/scheduled basis by wire transfer
of immediately available funds to the Master Servicer (a) all amounts deposited
in the Custodial Account as of the close of business on the last day of the
related Due Period (net of charges against or withdrawals from the Custodial
Account pursuant to Section 3.04), plus (b) all Monthly Advances, if any, which
the Servicer is obligated to make pursuant to Section 4.03, plus (c) the amount
of any Net Simple Interest Shortfall not offset by Net Simple Interest Excess
for the related Due Period, minus (d) any amounts attributable to Principal
Prepayments, Liquidation Proceeds, Insurance Proceeds, Condemnation Proceeds or
REO Disposition Proceeds received after the applicable Principal Prepayment
Period, which amounts shall be remitted on the following Remittance Date,
together with any additional interest required to be deposited in the Custodial
Account in connection with such Principal Prepayment in accordance with Section
3.03(vii), and minus (e) any amounts attributable to Monthly Payments collected
but due on a Due Date or Due Dates subsequent to the first day of the month in
which such Remittance Date occurs, which amounts shall be remitted on the
Remittance Date next succeeding the Due Date related to such Monthly Payment.
With respect to any remittance received by the Master Servicer
after the second Business Day following the Business Day on which such payment
was due, the Servicer shall pay to the Master Servicer interest on any such late
payment at an annual rate equal to the Prime Rate, adjusted as of the date of
each change, plus three percentage points, but in no event greater than the
maximum amount permitted by applicable law. Such interest shall be deposited in
the Custodial Account by the Servicer on the date such late payment is made and
shall cover the period commencing with the day following such second Business
Day and ending with the Business Day on which such payment is made, both
inclusive. Such interest shall be remitted along with the distribution payable
on the next succeeding Remittance Date. The payment by the Servicer of any such
interest shall not be deemed an extension of time for payment or a waiver of any
Event of Default by the Trustee or the Master Servicer.
All remittances required to be made to the Master Servicer
shall be made to the following wire account or to such other account as may be
specified by the Master Servicer from time to time:
JPMorgan Chase Bank,
New York, New York
ABA#: ▇▇▇-▇▇▇-▇▇▇
Account Name: Aurora Loan Services Inc.
Master Servicing Payment Clearance Account
Account Number: 066-611059
Beneficiary: Aurora Loan Services Inc.
For further credit to: SARM 2004-7
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Section 4.02. Statements to Master Servicer.
Not later than the tenth (10th) calendar day of each month,
the Servicer shall furnish to the Master Servicer and the NIMS Insurer an
electronic monthly remittance advice in the Fidelity (or any successor thereto)
S50Y format (or in such other formats mutually agreed to between the Servicer
and the Master Servicer), such advice relating to the period ending on the last
day of the preceding calendar month.
Such monthly remittance advice shall also be accompanied by a
supplemental report provided to the Master Servicer, the Securities
Administrator, the NIMS Insurer and the Seller which includes on an aggregate
basis for the previous Due Period (i) the amount of claims filed on any LPMI
Policy, (ii) the amount of any claim payments made on any LPMI Policy, (iii) the
amount of claims denied or curtailed on any LPMI Policy and (iv) policies
cancelled with respect to those Mortgage Loans covered by any LPMI Policy
purchased by the Seller on behalf of the Trust Fund.
The Servicer shall prepare and file any and all usual and
customary tax returns, information statements or other filings required to be
delivered to any governmental taxing authority, the Securities Administrator or
its designee pursuant to any applicable law with respect to the Mortgage Loans
and the transactions contemplated hereby. In addition, the Servicer shall
provide the Securities Administrator and the NIMS Insurer with such information
concerning the Mortgage Loans as is necessary for such Securities Administrator
to prepare federal income tax returns as the Securities Administrator may
reasonably request from time to time. Such obligation of the Servicer shall be
deemed satisfied to the extent that substantially comparable information has
been provided by the Servicer throughout the calendar year.
Section 4.03. Monthly Advances by Servicer.
On the Business Day immediately preceding each Remittance
Date, the Servicer shall deposit in the Custodial Account from its own funds or
from amounts held for future distribution, or both, an amount equal to all
Monthly Payments (with interest adjusted to the Mortgage Loan Remittance Rate)
which were due on the Mortgage Loans during the applicable Due Period and which
were delinquent at the close of business on the immediately preceding
Determination Date. In the case of Simple Interest Mortgage Loans the preceding
sentence shall only apply to that portion of the Monthly Payment attributable to
interest. Any amounts held for future distribution and so used shall be replaced
by the Servicer by deposit in the Custodial Account on or before any future
Remittance Date if funds in the Custodial Account on such Remittance Date shall
be less than remittances to the Master Servicer required to be made on such
Remittance Date. The Servicer shall keep appropriate records of such amounts and
will provide such records to the Master Servicer and the NIMS Insurer upon
reasonable request.
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The Servicer's obligation to make such Monthly Advances as to
any Mortgage Loan will continue through the last Monthly Payment due prior to
the payment in full of the Mortgage Loan, or through the last Remittance Date
prior to the Remittance Date for the distribution of all Liquidation Proceeds
and other payments or recoveries (including Insurance Proceeds and Condemnation
Proceeds) with respect to the related Mortgage Loan.
Section 4.04. Due Dates Other Than the First of the Month.
Mortgage Loans having Due Dates other than the first day of a
month shall be accounted for as described in this Section 4.04. Any payment due
on a day other than the first day of each month shall be considered due on the
first day of the month following the month in which that payment is due as if
such payment were due on the first day of said month. For example, a payment due
on August 15 shall be considered to be due on September 1 of said month. Any
payment collected on a Mortgage Loan after the Cut-off Date shall be deposited
in the Custodial Account. For Mortgage Loans with Due Dates on the first day of
a month, deposits to the Custodial Account begin with the payment due on the
first of the month following the Cut-off Date.
ARTICLE V.
GENERAL SERVICING PROCEDURES
----------------------------
Section 5.01. Transfers of Mortgaged Property.
The Servicer shall use its best efforts to enforce any
"due-on-sale" provision contained in any Mortgage or Mortgage Note and to deny
assumption by the person to whom the Mortgaged Property has been or is about to
be sold whether by absolute conveyance or by contract of sale, and whether or
not the Mortgagor remains liable on the Mortgage and the Mortgage Note. When the
Mortgaged Property has been conveyed by the Mortgagor, the Servicer shall, to
the extent it has knowledge of such conveyance, exercise its rights to
accelerate the maturity of such Mortgage Loan under the "due-on-sale" clause
applicable thereto, provided, however, that the Servicer shall not exercise such
rights if prohibited by law from doing so or if the exercise of such rights
would impair or threaten to impair any recovery under the related PMI Policy or
LPMI Policy, if any.
If the Servicer reasonably believes it is unable under
applicable law to enforce such "due-on-sale" clause, the Servicer shall enter
into (i) an assumption and modification agreement with the person to whom such
property has been conveyed, pursuant to which such person becomes liable under
the Mortgage Note and the original Mortgagor remains liable thereon or (ii) in
the event the Servicer is unable under applicable law to require that the
original Mortgagor remain liable under the Mortgage Note and the Servicer has
the prior consent of the primary mortgage guaranty insurer, a substitution of
liability agreement with the seller of the Mortgaged Property pursuant to which
the original Mortgagor is released from liability and the seller of the
Mortgaged Property is substituted as Mortgagor and becomes liable under the
Mortgage Note. If an assumption fee is collected by the Servicer for entering
into an assumption agreement, such fee will be retained by the Servicer as
additional servicing compensation. In connection with any such assumption,
neither the Mortgage Interest Rate borne by the related Mortgage Note, the term
of the Mortgage Loan nor the outstanding principal amount of the Mortgage Loan
shall be changed.
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To the extent that any Mortgage Loan is assumable, the
Servicer shall inquire diligently into the creditworthiness of the proposed
transferee, and shall use the underwriting criteria for approving the credit of
the proposed transferee which are used by the Servicer, its affiliates or ▇▇▇▇▇▇
▇▇▇ with respect to underwriting mortgage loans of the same type as the Mortgage
Loans. If the credit of the proposed transferee does not meet such underwriting
criteria, the Servicer diligently shall, to the extent permitted by the Mortgage
or the Mortgage Note and by applicable law, accelerate the maturity of the
Mortgage Loan.
Section 5.02. Satisfaction of Mortgages and Release of
Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt
by the Servicer of a notification that payment in full will be escrowed in a
manner customary for such purposes, the Servicer shall notify the Master
Servicer in the Monthly Remittance Advice as provided in Section 4.02, and may
request the release of any Mortgage Loan Documents from the Seller in accordance
with this Section 5.02 hereof.
If the Servicer satisfies or releases a Mortgage without first
having obtained payment in full of the indebtedness secured by the Mortgage or
should the Servicer otherwise prejudice any rights the Seller, the Trustee or
the Trust Fund may have under the mortgage instruments, the Servicer shall
deposit into the Custodial Account the entire outstanding principal balance,
plus all accrued interest on such Mortgage Loan, on the day preceding the
Remittance Date in the month following the date of such release. The Servicer
shall maintain the Fidelity Bond and Errors and Omissions Insurance Policy as
provided for in Section 3.13 insuring the Servicer against any loss it may
sustain with respect to any Mortgage Loan not satisfied in accordance with the
procedures set forth herein.
Section 5.03. Servicing Compensation.
As consideration for servicing the Mortgage Loans subject to
this Agreement, the Servicer shall retain the relevant ▇▇▇▇▇ Fargo Servicing Fee
for each Mortgage Loan remaining subject to this Agreement during any month or
part thereof. Such ▇▇▇▇▇ Fargo Servicing Fee shall be payable monthly.
Additional servicing compensation in the form of Ancillary Income shall be
retained by the Servicer and is not required to be deposited in the Custodial
Account. The obligation of the Seller to pay the ▇▇▇▇▇ Fargo Servicing Fee is
limited to, and the ▇▇▇▇▇ Fargo Servicing Fee is payable solely from, the
interest portion (including recoveries with respect to interest from Liquidation
Proceeds) of such Monthly Payment collected by the Servicer. The aggregate ▇▇▇▇▇
Fargo Servicing Fees for any month with respect to the Mortgage Loans shall be
reduced by the aggregate Prepayment Interest Shortfall Amount for such month.
The Servicer shall be obligated to pay the aggregate Prepayment Interest
Shortfall Amount for any month to the extent not covered by the aggregate ▇▇▇▇▇
Fargo Servicing Fees for such month up to a maximum of the aggregate General
Servicing Fees for such month. The Servicer shall be entitled to recover any
unpaid ▇▇▇▇▇ Fargo Servicing Fee and the Seller shall be entitled to recover the
Seller Remittance Amount, to the extent not remitted, out of Insurance Proceeds,
Condemnation Proceeds, REO Disposition Proceeds or Liquidation Proceeds to the
extent permitted in Section 3.04 and out of amounts derived from the operation
and sale of an REO Property to the extent permitted by Section 3.17.
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The Servicer shall be required to pay all expenses incurred by
it in connection with its servicing activities hereunder and shall not be
entitled to reimbursement thereof except as specifically provided for herein.
Section 5.04. Annual Audit Report.
On or before February 28 of each year, beginning with February
28, 2005, the Servicer shall, at its own expense, cause a firm of independent
public accountants (who may also render other services to the Servicer), which
is a member of the American Institute of Certified Public Accountants, to
furnish to the Master Servicer and the party required to provide a certification
directly to the Securities and Exchange Commission pursuant to ▇▇▇▇▇▇▇▇-▇▇▇▇▇
(as defined below) (the "Sarbanes Certifying Party") to the effect that such
firm has examined certain documents and records relating to the servicing of
mortgage loans similar in nature to the Mortgage Loans and that such firm is of
the opinion that the provisions of this or similar Agreements have been complied
with, and that, on the basis of such examination conducted substantially in
compliance with the Uniform Single Attestation Program for Mortgage Bankers,
nothing has come to their attention which would indicate that such servicing has
not been conducted in compliance therewith, except for (i) such exceptions as
such firm shall believe to be immaterial, and (ii) such other exceptions as
shall be set forth in such statement. The Seller shall cause the Depositor to
provide a copy of such report to the Trustee. By providing the Master Servicer
and the Sarbanes Certifying Party a copy of a Uniform Single Attestation Program
Report from their independent public accountants on an annual basis, the
Servicer shall be considered to have fulfilled its obligations under this
Section 5.04.
Section 5.05. Annual Officer's Certificate.
(a) The Servicer shall deliver to the Master Servicer and the
Sarbanes Certifying Party, on or before February 28, each year beginning
February 28, 2005, an Officer's Certificate, stating that (i) a review of the
activities of the Servicer during the preceding calendar year and of performance
under this Agreement or similar agreements has been made under such officer's
supervision, and (ii) to the best of such officer's knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement
throughout such year, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
nature and status thereof and the action being taken by the Servicer to cure
such default. The Seller shall cause the Depositor to provide a copy of such
report to the Trustee.
(b) For so long as a certificate under the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act
of 2002, as amended, ("▇▇▇▇▇▇▇▇-▇▇▇▇▇") is required to be given on behalf of the
Trust Fund, no later than February 28 of each year, beginning February 28, 2005,
(or if not a Business Day, the immediately preceding Business Day), or at any
other time that the Sarbanes Certifying Party provides a certification pursuant
to ▇▇▇▇▇▇▇▇-▇▇▇▇▇, and upon thirty (30) days' written request of such certifying
party, an officer of the Servicer shall execute and deliver an Officer's
Certificate to the Sarbanes Certifying Party for the benefit of the Trust Fund
and such Sarbanes Certifying Party, its officers, directors and affiliates, in
the form of Exhibit E hereto.
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Section 5.06. Inspection.
The Servicer shall provide the Trustee, the Master Servicer
and the NIMS Insurer, upon reasonable advance notice, during normal business
hours, access to all records maintained by the Servicer in respect of its rights
and obligations hereunder and access to officers of the Servicer responsible for
such obligations. Upon request, the Servicer shall furnish to the Trustee, the
Master Servicer and the NIMS Insurer its most recent publicly available
financial statements and such other information relating to its capacity to
perform its obligations under this Agreement.
ARTICLE VI.
Representations, Warranties and Agreements
------------------------------------------
Section 6.01. Representations, Warranties and Agreements of
the Servicer.
The Servicer, as a condition to the consummation of the
transactions contemplated hereby, hereby makes the following representations and
warranties to the Master Servicer, the Depositor and the Trustee, as of the
Closing Date:
(a) Due Organization and Authority. The Servicer is a national
banking association duly organized, validly existing and in good standing under
the laws of the jurisdiction of its formation and has all licenses necessary to
carry on its business as now being conducted and is licensed, qualified and in
good standing in each state where a Mortgaged Property is located if the laws of
such state require licensing or qualification in order to conduct business of
the type conducted by the Servicer, and in any event the Servicer is in
compliance with the laws of any such state to the extent necessary to ensure the
enforceability of the terms of this Agreement; the Servicer has the full
corporate power and authority to execute and deliver this Agreement and to
perform in accordance herewith; the execution, delivery and performance of this
Agreement (including all instruments of transfer to be delivered pursuant to
this Agreement) by the Servicer and the consummation of the transactions
contemplated hereby have been duly and validly authorized; this Agreement
evidences the valid, binding and enforceable obligation of the Servicer and all
requisite corporate action has been taken by the Servicer to make this Agreement
valid and binding upon the Servicer in accordance with its terms;
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(b) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Servicer;
(c) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition of the servicing responsibilities by the Servicer or
the transactions contemplated hereby, nor the fulfillment of or compliance with
the terms and conditions of this Agreement, will conflict with or result in a
breach of any of the terms, conditions or provisions of the Servicer's charter
or by-laws or any legal restriction or any agreement or instrument to which the
Servicer is now a party or by which it is bound, or constitute a default or
result in an acceleration under any of the foregoing, or result in the violation
of any law, rule, regulation, order, judgment or decree to which the Servicer or
its property is subject, or impair the ability of the Servicer to service the
Mortgage Loans, or impair the value of the Mortgage Loans;
(d) Ability to Perform. The Servicer does not believe, nor
does it have any reason or cause to believe, that it cannot perform each and
every covenant contained in this Agreement;
(e) No Litigation Pending. There is no action, suit,
proceeding or investigation pending or threatened against the Servicer which,
either in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition, properties or
assets of the Servicer, or in any material impairment of the right or ability of
the Servicer to carry on its business substantially as now conducted, or in any
material liability on the part of the Servicer, or which would draw into
question the validity of this Agreement or of any action taken or to be taken in
connection with the obligations of the Servicer contemplated herein, or which
would be likely to impair materially the ability of the Servicer to perform
under the terms of this Agreement;
(f) No Consent Required. No consent, approval, authorization
or order of any court or governmental agency or body is required for the
execution, delivery and performance by the Servicer of or compliance by the
Servicer with this Agreement, or if required, such approval has been obtained
prior to the Closing Date;
(g) No Default. The Servicer is not in default, and no event
or condition exists that after the giving of notice or lapse of time or both,
would constitute an event of default under any material mortgage, indenture,
contract, agreement, judgment, or other undertaking, to which the Servicer is a
party or which purports to be binding upon it or upon any of its assets, which
default could impair materially the ability of the Servicer to perform under the
terms of this Agreement;
(h) Ability to Service. The Servicer is an approved
seller/servicer of conventional residential mortgage loans for ▇▇▇▇▇▇ ▇▇▇ and
▇▇▇▇▇▇▇ Mac, with the facilities, procedures and experienced personnel necessary
for the sound servicing of mortgage loans of the same type as the Mortgage
Loans. The Servicer is in good standing to service mortgage loans for either
▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, and no event has occurred, including but not limited
to a change in insurance coverage, which would make the Servicer unable to
comply with either ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac eligibility requirements or which
would require notification to either of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac;
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(i) No Untrue Information. Neither this Agreement nor any
statement, report or other document furnished or to be furnished pursuant to
this Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of fact or omits to state a fact necessary to make
the statements contained therein not misleading; and
(j) No Commissions to Third Parties. The Servicer has not
dealt with any broker or agent or anyone else who might be entitled to a fee or
commission in connection with this transaction other than the Seller.
(k) Fair Credit Reporting Act. The Servicer has fully
furnished, in accordance with the Fair Credit Reporting Act and its implementing
regulations, accurate and complete information (e.g., favorable and unfavorable)
on its borrower credit files to Equifax, Experian and Trans Union Credit
Information Company (three of the credit repositories) on a monthly basis.
Section 6.02. Remedies for Breach of Representations and
Warranties of the Servicer.
It is understood and agreed that the representations and
warranties set forth in Section 6.01 shall survive the engagement of the
Servicer to perform the servicing responsibilities as of the related Closing
Date or Servicing Transfer Date, as applicable, hereunder and the delivery of
the Servicing Files to the Servicer and shall inure to the benefit of the Master
Servicer, the NIMS Insurer and the Trustee. Upon discovery by either the
Servicer, the Master Servicer, the NIMS Insurer or the Trustee of a breach of
any of the foregoing representations and warranties which materially and
adversely affects the ability of the Servicer to perform its duties and
obligations under this Agreement or otherwise materially and adversely affects
the value of the Mortgage Loans, the Mortgaged Property or the priority of the
security interest on such Mortgaged Property or the interests of the Master
Servicer, the NIMS Insurer or the Trustee, the party discovering such breach
shall give prompt written notice to the other.
Within 60 days of the earlier of either discovery by or notice
to the Servicer of any breach of a representation or warranty set forth in
Section 6.01 which materially and adversely affects the ability of the Servicer
to perform its duties and obligations under this Agreement or otherwise
materially and adversely affects the value of the Mortgage Loans, the Mortgaged
Property or the priority of the security interest on such Mortgaged Property,
the Servicer shall use its best efforts promptly to cure such breach in all
material respects and, if such breach cannot be cured, the Servicer shall, at
the Trustee's or the Master Servicer's option, assign the Servicer's rights and
obligations under this Agreement (or respecting the affected Mortgage Loans) to
a successor servicer. Such assignment shall be made in accordance with Sections
8.01 and 8.02.
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In addition, the Servicer shall indemnify the Master Servicer,
the Trustee and the NIMS Insurer and hold each of them harmless against any
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments, and other costs and expenses resulting from
any claim, demand, defense or assertion based on or grounded upon, or resulting
from, a breach of the Servicer's representations and warranties contained in
Section 6.01.
Any cause of action against the Servicer relating to or
arising out of the breach of any representations and warranties made in Section
6.01 shall accrue upon (i) discovery of such breach by the Servicer or notice
thereof by the Master Servicer, the Depositor or the Trustee to the Servicer,
(ii) failure by the Servicer to cure such breach within the applicable cure
period, and (iii) demand upon the Servicer by the Master Servicer, the NIMS
Insurer or the Trustee for compliance with this Agreement.
Section 6.03. Additional Indemnification by the Servicer.
The Servicer shall indemnify the Master Servicer, the
Depositor, the Trustee, the Securities Administrator, the Trust Fund and the
NIMS Insurer and hold them harmless against any and all claims, losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and any other costs, fees and expenses (collectively, the
"Liabilities") that the indemnified party may sustain in any way related to the
failure of the Servicer to perform its duties and service the Mortgage Loans in
accordance with the terms of this Agreement (including, but not limited to its
obligation to provide the certification pursuant to Section 5.05 hereunder) or
for any inaccurate or misleading information provided in the certification
pursuant to Section 5.05. The Servicer shall immediately notify the Master
Servicer, the Depositor, the Trustee, the Securities Administrator or the NIMS
Insurer if a claim is made by a third party with respect to this Agreement or
the Mortgage Loans that may result in such Liabilities, and the Servicer shall
assume (with the prior written consent of the indemnified party) the defense of
any such claim and pay all expenses in connection therewith, including counsel
fees, promptly pay, discharge and satisfy any judgment or decree which may be
entered against it or any indemnified party in respect of such claim and follow
any written instructions received from the such indemnified party in connection
with such claim. The Servicer shall be reimbursed promptly from the Trust Fund
for all amounts advanced by it pursuant to the preceding sentence except when
the claim is in any way related to the Servicer's indemnification pursuant to
Section 6.02, or the failure of the Servicer to service and administer the
Mortgage Loans in accordance with the terms of this Agreement. In the event a
dispute arises between the Servicer and an indemnified party with respect to any
of the rights and obligations of the parties pursuant to this Agreement, and
such dispute is adjudicated in a court of law, by an arbitration panel or any
other judicial process, then the losing party (if the Trustee, then the Trust
Fund) shall indemnify and reimburse the winning party for all attorney's fees
and other costs and expenses related to the adjudication of said dispute.
Section 6.04. Indemnification with Respect to Certain Taxes
and Loss of REMIC Status.
In the event that any REMIC fails to qualify as a REMIC, loses
its status as a REMIC, or incurs federal, state or local taxes as a result of a
prohibited transaction or prohibited contribution under the REMIC Provisions due
to the negligent performance by the Servicer of its duties and obligations set
forth herein, the Servicer shall indemnify the Holder of the related Residual
Certificate, the Master Servicer, the Trustee, the Trust Fund and the NIMS
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Insurer against any and all losses, claims, damages, liabilities or expenses
("Losses") resulting from such negligence; provided, however, that the Servicer
shall not be liable for any such Losses attributable to the action or inaction
of the Trustee, the Master Servicer, the Depositor or the Holder of such
Residual Certificate, as applicable, nor for any such Losses resulting from
misinformation provided by the Holder of such Residual Certificate on which the
Servicer has relied. The foregoing shall not be deemed to limit or restrict the
rights and remedies of the Holder of such Residual Certificate, the Trustee and
the Trust Fund or the NIMS Insurer now or hereafter existing at law or in equity
or otherwise. Notwithstanding the foregoing, however, in no event shall the
Servicer have any liability (1) for any action or omission that is taken in
accordance with and in compliance with the express terms of, or which is
expressly permitted by the terms of, this Agreement, (2) for any Losses other
than arising out of a negligent performance by the Servicer of its duties and
obligations set forth herein, (3) for any special or consequential damages to
Certificateholders (in addition to payment of principal and interest on the
Certificates) and (4) if actions taken by the Servicer are at, and in accordance
with, the written request or written approval of the Master Servicer or the
Trustee.
Section 6.05. Purchase of Distressed Mortgage Loans.
The NIMS Insurer may, at its option, purchase a Distressed
Mortgage Loan; provided, however, prior to any such purchase, the Servicer shall
be required to continue to make Monthly Advances with respect to such Distressed
Mortgage Loans pursuant to Section 4.03. Any such purchase shall be accomplished
by remittance to the Master Servicer of the Purchase Price for the Distressed
Mortgage Loan for deposit into the Collection Account established by the Master
Servicer pursuant to the Trust Agreement. The Trustee and the Servicer shall
immediately effectuate the conveyance of the purchased Distressed Mortgage Loan
to the NIMS Insurer exercising the purchase option, including prompt delivery of
the Servicing File and all related documentation to the applicable NIMS Insurer.
ARTICLE VII.
THE SERVICER
------------
Section 7.01. Merger or Consolidation of the Servicer.
The Servicer shall keep in full effect its existence, rights
and franchises, and shall obtain and preserve its qualification to do business
in each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement or any of the Mortgage
Loans and to perform its duties under this Agreement.
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Any Person into which the Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Servicer shall be a party, or any Person succeeding
to the business of the Servicer, shall be the successor of the 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, provided, however, that the successor or surviving Person shall
be an institution (i) having a net worth of not less than $25,000,000, and (ii)
which is a ▇▇▇▇▇▇ ▇▇▇- and ▇▇▇▇▇▇▇ Mac-approved servicer in good standing.
Section 7.02. Limitation on Liability of the Servicer and
Others.
Neither the Servicer nor any of the directors, officers,
employees or agents of the Servicer shall be under any liability to the Master
Servicer, the NIMS Insurer, the Depositor or the Trustee for any action taken or
for refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Servicer or any such person against any breach of
warranties or representations made herein, or failure to perform its obligations
in strict compliance with any standard of care set forth in this Agreement, or
any liability which would otherwise be imposed by reason of any breach of the
terms and conditions of this Agreement. The Servicer and any director, officer,
employee or agent of the 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 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 Mortgage Loans in accordance with this Agreement and which
in its opinion may involve it in any expense or liability, provided, however,
that the Servicer may undertake any such action which it may deem necessary or
desirable in respect of this Agreement and the rights and duties of the parties
hereto. In such event, the Servicer shall be entitled to reimbursement from the
Trust Fund for the reasonable legal expenses and costs of such action.
Section 7.03. Limitation on Resignation and Assignment by the
Servicer.
This Agreement has been entered into with the Servicer in
reliance upon the independent status of the Servicer, and the representations as
to the adequacy of its servicing facilities, plant, personnel, records and
procedures, its integrity, reputation and financial standing, and the
continuance thereof. Therefore, except as expressly provided in this Section
7.03 and Sections 3.20, 7.01 and 7.04, the Servicer shall neither assign its
rights under this Agreement or the servicing hereunder nor delegate its duties
hereunder or any portion thereof, or sell or otherwise dispose of all or
substantially all of its property or assets without, in each case, the prior
written consent of the Seller, the Master Servicer, the Trustee and the NIMS
Insurer which consent, in the case of an assignment of rights or delegation of
duties, shall be granted or withheld in the discretion of the Seller, the Master
Servicer, Trustee and the NIMS Insurer and which consent, in the case of a sale
or disposition of all or substantially all of the property or assets of the
Servicer, shall not be unreasonably withheld by any of them; provided, that in
each case, there must be delivered to the Seller, the Master Servicer, the
Trustee and the NIMS Insurer a letter from each Rating Agency to the effect that
such transfer of servicing or sale or disposition of assets will not result in a
qualification, withdrawal or downgrade of the then-current rating of any of the
Certificates or the NIM Securities to be issued in the NIMS Transaction.
Notwithstanding the foregoing, the Servicer, without the consent of the Seller,
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the Master Servicer, the Trustee or the NIMS Insurer, may retain third party
contractors to perform certain servicing and loan administration functions,
including without limitation, hazard insurance administration, tax payment and
administration, flood certification and administration, collection services and
similar functions; provided, that the retention of such contractors by Servicer
shall not limit the obligation of the Servicer to service the Mortgage Loans
pursuant to the terms and conditions of this Agreement.
The Servicer shall not resign from the obligations and duties
hereby imposed on it except by mutual consent of the Servicer, the Master
Servicer, the Trustee and the NIMS Insurer or upon the determination that its
duties hereunder are no longer permissible under applicable law and such
incapacity cannot be cured by the Servicer. Any such determination permitting
the resignation of the Servicer shall be evidenced by an Opinion of Counsel to
such effect delivered to the Seller, the Master Servicer, the Trustee and the
NIMS Insurer, which Opinion of Counsel shall be in form and substance reasonably
acceptable to each of them. No such resignation shall become effective until a
successor shall have assumed the Servicer's responsibilities and obligations
hereunder in the manner provided in Section 8.01.
Without in any way limiting the generality of this Section
7.03, in the event that the Servicer either shall assign this Agreement or the
servicing responsibilities hereunder or delegate its duties hereunder or any
portion thereof or sell or otherwise dispose of all or substantially all of its
property or assets, except to the extent permitted by and in accordance with
this Section 7.03 and Sections 3.20, 7.01 and 7.04, without the prior written
consent of the Seller, the Master Servicer, the Trustee and the NIMS Insurer,
then such parties shall have the right to terminate this Agreement upon notice
given as set forth in Section 8.01, without any payment of any penalty or
damages and without any liability whatsoever to the Servicer or any third party.
ARTICLE VIII.
TERMINATION
-----------
Section 8.01. Termination for Cause.
(a) Any of the following occurrences shall constitute an event
of default (each, an "Event of Default") on the part of the Servicer:
(i) any failure by the Servicer to remit to the Master
Servicer any payment required to be made under the terms of this Agreement which
continues unremedied for a period of two (2) Business Days after the date upon
which written notice of such failure, requiring the same to be remedied, shall
have been given to the Servicer by the Master Servicer or the NIMS Insurer; or
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(ii) failure by the Servicer duly to observe or
perform in any material respect any other of the covenants or agreements on the
part of the Servicer set forth in this Agreement which continues unremedied for
a period of five (5) days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Servicer by the Master Servicer or the NIMS Insurer; or
(iii) failure by the Servicer to maintain its license
to do business or service residential mortgage loans in any jurisdiction where
the Mortgaged Properties are located; or
(iv) a decree or order of a court or agency or
supervisory authority having jurisdiction for the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of debt, including
bankruptcy, marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered against
the Servicer and such decree or order shall have remained in force undischarged
or unstayed for a period of 60 days; or
(v) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
the Servicer or of or relating to all or substantially all of its property; or
(vi) the 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, bankruptcy or reorganization statute, make an
assignment for the benefit of its creditors, voluntarily suspend payment of its
obligations or cease its normal business operations for three Business Days; or
(vii) the Servicer ceases to meet the qualifications
of a ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac lender/servicer; or
(viii) the Servicer attempts to assign the servicing
of the Mortgage Loans or its right to servicing compensation hereunder or the
Servicer attempts to sell or otherwise dispose of all or substantially all of
its property or assets or to assign this Agreement or the servicing
responsibilities hereunder or to delegate its duties hereunder or any portion
thereof in a manner not permitted under this Agreement; or
(ix) if any of the Rating Agencies reduces or
withdraws the rating of any of the Certificates due to a reason attributable to
the Servicer or (y) the Servicer's residential primary servicer rating for
servicing of subprime loans issued by any of the Rating Agencies is reduced
below its rating in effect on the Closing Date or withdrawn; or
(x) the net worth of the Servicer shall be less than
$25,000,000.
In each and every such case, so long as an Event of Default
shall not have been remedied, in addition to whatsoever rights the Master
Servicer, the Trustee or the NIMS Insurer may have at law or equity to damages,
including injunctive relief and specific performance, the Master Servicer, the
Trustee or the NIMS Insurer, by notice in writing to the Servicer, may terminate
all the rights and obligations of the Servicer under this Agreement and in and
to the servicing contract established hereby and the proceeds thereof.
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Upon receipt by the Servicer of such written notice, all
authority and power of the Servicer under this Agreement, whether with respect
to the Mortgage Loans or otherwise, shall pass to and be vested in a successor
servicer appointed by the Trustee or the Master Servicer, as the case may be,
with the consent of the other party and the NIMS Insurer. Upon written request
from the Master Servicer, the Servicer shall prepare, execute and deliver to the
successor entity designated by the Master Servicer any and all documents and
other instruments, place in such successor's possession all Servicing Files, and
do or cause to be done all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, including but not limited to
the transfer and endorsement or assignment of the Mortgage Loans and related
documents, at the Servicer's sole expense. The Servicer shall cooperate with the
Seller, the Master Servicer, the NIMS Insurer, the Trustee and such successor in
effecting the termination of the Servicer's responsibilities and rights
hereunder, including without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited by
the Servicer to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans.
By a written notice, the Trustee or the Master Servicer, with
the consent of the other parties and the NIMS Insurer, may waive any default by
the Servicer in the performance of its obligations hereunder and its
consequences. Upon any waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived.
Section 8.02. Termination Without Cause.
This Agreement shall terminate upon: (i) the later of (a) the
distribution of the final payment or liquidation proceeds on the last Mortgage
Loan to the Master Servicer (or advances by the Servicer for the same), and (b)
the disposition of all REO Property acquired upon foreclosure of the last
Mortgage Loan and the remittance of all funds due hereunder, or (ii) mutual
consent of the Servicer, the Seller and the Master Servicer in writing provided
such termination is also acceptable to the Rating Agencies and the NIMS Insurer
or (iii) with respect to some or all of the Mortgage Loans, at the sole option
of the Seller, without cause, upon 60 days written notice. Any such notice of
termination shall be in writing and delivered to the Trustee, the Master
Servicer, the NIMS Insurer and the Servicer by registered mail to the address
set forth in Section 9.04 of this Agreement. The Servicer shall comply with the
termination procedures set forth in Sections 8.01, 8.02 and 9.01 hereof.
In the event the Seller terminates the Servicer without cause
with respect to some or all of the Mortgage Loans, the Seller shall be required
to pay to the Servicer a Termination Fee in an amount equal to the product of
(i) the Termination Fee Percentage and (ii) the outstanding principal balance of
the terminated Mortgage Loans as of the date of such termination.
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Section 8.03. (Reserved.)
Section 8.04. Termination for Distressed Mortgage Loans.
(a) Subject to the requirements set forth in this Section
8.04, the Seller may terminate this Agreement with the prior consent of the
Trustee, the NIMS Insurer and the Master Servicer, with respect to the servicing
of those Mortgage Loans that are determined to be Distressed Mortgage Loans and
in such event servicing of such Mortgage Loans shall be transferred to the
Special Servicer. The appointment of a Special Servicer by the Seller and the
execution of a special servicing agreement between the Seller and the Special
Servicer shall be subject to the consent of the Trustee, the Master Servicer and
the NIMS Insurer and the receipt of confirmation from the Rating Agencies that
the transfer of servicing to the Special Servicer shall not result in a
reduction of any rating previously given by such Rating Agency to any
Certificate or the NIM Securities. Any monthly fee paid to the Special Servicer
in connection with any Mortgage Loan serviced by such Special Servicer shall not
exceed one-twelfth of the product of (a) 0.25% and (b) the outstanding principal
balance of such Mortgage Loan. All unreimbursed ▇▇▇▇▇ Fargo Servicing Fees,
Servicing Advances and Monthly Advances owing to the Servicer relating to such
Distressed Mortgage Loans shall be reimbursed and paid to the Servicer by the
successor Special Servicer upon such transfer to the Special Servicer.
(b) All reasonable costs and expenses incurred in connection
with a transfer of servicing to the Special Servicer including, without
limitation, the costs and expenses of the Trustee or any other Person in
connection with such transfer including the transfer of the Servicing Files and
the other necessary data to the Special Servicer, shall be paid by the Seller
from its own funds without reimbursement. The Seller shall be responsible for
the delivery of all required transfer notices and will send a copy of the
transfer notice to the Trustee.
(c) Notwithstanding the foregoing provisions of this Section
8.04, the NIMS Insurer may, at its option, withhold their consent to the
transfer of a Distressed Mortgage Loan to a Special Servicer and elect to
purchase such Distressed Mortgage Loan at a price equal to its Purchase Price.
Prior to such purchase, the Servicer shall be required to continue to make
Monthly Advances with respect to such Distressed Mortgage Loan pursuant to
Section 4.03. Any such purchase of a Distressed Mortgage Loan shall be
accomplished by remittance to the Master Servicer for deposit in the Collection
Account established pursuant to Section 4.01 of the Trust Agreement of the
amount of the Purchase Price. The Servicer on behalf of the Trustee shall take
reasonable steps to effectuate the transfer of servicing of such Distressed
Mortgage Loan to the NIMS Insurer to the extent necessary, including the prompt
delivery of all Servicing Files and other related documentation to the NIMS
Insurer or its designee.
(d) No Termination Fee shall be payable to the Servicer upon a
termination pursuant to this Section 8.04.
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ARTICLE IX.
MISCELLANEOUS PROVISIONS
------------------------
Section 9.01. Successor to the Servicer.
Simultaneously with the termination of the Servicer's
responsibilities and duties under this Agreement (a) pursuant to Sections 6.02,
6.04, 7.03, 8.01 or 8.02, the Master Servicer shall (i) within 90 days of the
Servicer's notice of such termination, succeed to and assume all of the
Servicer's responsibilities, rights, duties and obligations under this
Agreement, or (ii) appoint a successor having the characteristics set forth in
clauses (i) and (ii) of Section 7.01 and which shall succeed to all rights and
assume all of the responsibilities, duties and liabilities of the Servicer under
this Agreement simultaneously with the termination of the Servicer's
responsibilities, duties and liabilities under this Agreement; or (b) pursuant
to a termination under Section 8.02(iii) or Section 8.03, the Seller shall
appoint a successor having the characteristics set forth in clauses (i) and (ii)
of Section 7.01 and which shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the Servicer under this Agreement
simultaneously with the termination of the Servicer's responsibilities, duties
and liabilities under this Agreement. Any successor to the Servicer shall be
subject to the approval of the Master Servicer and the NIMS Insurer. Any
approval of a successor servicer by the Master Servicer and the NIMS Insurer
and, to the extent required by the Trust Agreement, the Trustee, shall, if the
successor servicer is not at that time a servicer of other Mortgage Loans for
the Trust Fund, be conditioned upon the receipt by the Master Servicer, the NIMS
Insurer, the Seller and the Trustee of a letter from each Rating Agency to the
effect that such transfer of servicing will not result in a qualification,
withdrawal or downgrade of the then-current rating of any of the Certificates or
the NIM Securities to be issued in the NIMS Transaction. In connection with such
appointment and assumption, the Master Servicer or the Seller, as applicable,
may make such arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree, provided,
however, that no such compensation shall be in excess of that permitted the
Servicer under this Agreement. In the event that the Servicer's duties,
responsibilities and liabilities under this Agreement should be terminated
pursuant to the aforementioned sections, the Servicer shall discharge such
duties and responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof with the same
degree of diligence and prudence which it is obligated to exercise under this
Agreement, and shall take no action whatsoever that might impair or prejudice
the rights or financial condition of its successor. The resignation or removal
of the Servicer pursuant to the aforementioned sections shall not become
effective until a successor shall be appointed pursuant to this Section 9.01 and
shall in no event relieve the Servicer of the representations and warranties
made pursuant to Sections 6.01 and the remedies available to the Master
Servicer, the Trustee, the NIMS Insurer and the Seller under Sections 6.02, 6.03
and 6.04, it being understood and agreed that the provisions of such Sections
6.01, 6.02, 6.03 and 6.04 shall be applicable to the Servicer notwithstanding
any such resignation or termination of the Servicer, or the termination of this
Agreement. Neither the Master Servicer, in its capacity as successor servicer,
nor any other successor servicer shall be responsible for the lack of
information and/or documents that it cannot otherwise obtain through reasonable
efforts.
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Within a reasonable period of time, but in no event longer
than 90 days following notice of termination pursuant to Section 8.02(iii) or 30
days following notice of termination pursuant to Sections 8.01 or 8.02(ii), the
Servicer shall prepare, execute and deliver to the successor entity any and all
documents and other instruments, place in such successor's possession all
Servicing Files, and do or cause to be done all other acts or things necessary
or appropriate to effect the purposes of such notice of termination, including
but not limited to the transfer of any Mortgage Notes and the related documents.
The Servicer shall cooperate with the Trustee, the Master Servicer or the
Seller, as applicable, and such successor in effecting the termination of the
Servicer's responsibilities and rights hereunder and the transfer of servicing
responsibilities to the successor Servicer, including without limitation, the
transfer to such successor for administration by it of all cash amounts which
shall at the time be credited by the Servicer to the Custodial Account or Escrow
Account or thereafter received with respect to the Mortgage Loans.
Any successor appointed as provided herein shall execute,
acknowledge and deliver to the Trustee, the Servicer, the Master Servicer, the
NIMS Insurer and the Seller an instrument (i) accepting such appointment,
wherein the successor shall make the representations and warranties set forth in
Section 6.01 and provide for the same remedies set forth in Sections 6.02, 6.03
and 6.04 herein and (ii) an assumption of the due and punctual performance and
observance of each covenant and condition to be performed and observed by the
Servicer under this Agreement, whereupon such successor shall become fully
vested with all the rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer, with like effect as if originally named as a party
to this Agreement. Any termination or resignation of the Servicer or termination
of this Agreement pursuant to Sections 6.02, 7.03, 8.01, 8.02 or 8.03 shall not
affect any claims that the Seller, the Master Servicer, the NIMS Insurer or the
Trustee may have against the Servicer arising out of the Servicer's actions or
failure to act prior to any such termination or resignation. In addition, in the
event any successor servicer is appointed pursuant to Section 8.02(iii) of this
Agreement, such successor servicer must satisfy the conditions relating to the
transfer of servicing set forth in the Trust Agreement.
The Servicer shall deliver promptly to the successor servicer
the funds in the Custodial Account and Escrow Account and all Mortgage Loan
documents and related documents and statements held by it hereunder and the
Servicer shall account for all funds and shall execute and deliver such
instruments and do such other things as may reasonably be required to more fully
and definitively vest in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer.
Upon a successor's acceptance of appointment as such, it shall
notify the Trustee, the Seller and Master Servicer, the NIMS Insurer and the
Depositor of such appointment in accordance with the procedures set forth in
Section 9.04.
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Section 9.02. Costs.
The Seller shall pay the legal fees and expenses of its
attorneys. Costs and expenses incurred in connection with the transfer of the
servicing responsibilities, including fees for delivering Servicing Files, shall
be paid by (i) the terminated or resigning servicer if such termination or
resignation is a result of an occurrence of a termination event under Section
8.01 or a Trigger Event under Section 8.03, (ii) the related Seller if such
termination is pursuant to Section 8.02(iii) and (iii) in all other cases by the
Trust Fund. Subject to Section 2.02, the Seller, on behalf of the Depositor,
shall pay the costs associated with the preparation, delivery and recording of
Assignments of Mortgages by the Seller or the Seller's designee.
Section 9.03. Protection of Confidential Information.
The Servicer shall keep confidential and shall not divulge to
any party, without the Seller's prior written consent, any nonpublic information
pertaining to the Mortgage Loans or any borrower thereunder, except to the
extent that it is appropriate for the Servicer to do so in working with legal
counsel, auditors, taxing authorities or other governmental agencies.
Section 9.04. Notices.
All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed by overnight
courier, addressed as follows (or such other address as may hereafter be
furnished to the other party by like notice):
(i) if to the Seller:
▇▇▇▇▇▇ Brothers Holdings Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Manager, Contract Finance
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to the Servicer:
▇▇▇▇▇ Fargo Bank, National Association
▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇ Fargo Bank, National Association
▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(iii) if to the Master Servicer:
Aurora Loan Services Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: E. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(iv) if to the Securities Administrator:
▇▇▇▇▇ Fargo Bank, National Association ▇.▇. ▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Group, SARM 2004-7
(or, in the case of overnight deliveries,
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ 21045)
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(v) if to the Trustee:
HSBC Bank USA
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Issuer Services, SARM 2004-7
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
(vi) if to the NIMS Insurer:
as provided in the Trust Agreement.
Any such demand, notice or communication hereunder shall be
deemed to have been received on the date delivered to or received at the
premises of the addressee.
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Section 9.05. Severability Clause.
Any part, provision, representation or warranty of this
Agreement which is prohibited or which is held to be void or unenforceable shall
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any part, provision,
representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall
be ineffective, as to such jurisdiction, to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law which prohibits or renders void or unenforceable any
provision hereof. If the invalidity of any part, provision, representation or
warranty of this Agreement shall deprive any party of the economic benefit
intended to be conferred by this Agreement, the parties shall negotiate, in
good-faith, to develop a structure the economic effect of which is as close as
possible to the economic effect of this Agreement without regard to such
invalidity.
Section 9.06. No Personal Solicitation.
From and after the Closing Date, the Servicer hereby agrees
that it will not take any action or permit or cause any action to be taken by
any of its agents or affiliates, or by any independent contractors on the
Servicer's behalf, to personally, by telephone or mail, solicit the borrower or
obligor under any related Mortgage Loan for any purpose whatsoever, including to
refinance a Mortgage Loan, in whole or in part, without the prior written
consent of the Trustee. It is understood and agreed that all rights and benefits
relating to the solicitation of any Mortgagors and the attendant rights, title
and interest in and to the list of such Mortgagors and data relating to their
Mortgages (including insurance renewal dates) shall be transferred to the
Trustee pursuant hereto on the Closing Date and the Servicer shall take no
action to undermine these rights and benefits. Notwithstanding the foregoing, it
is understood and agreed that promotions undertaken by the Servicer or any
affiliate of the Servicer which are directed to the general public at large,
including, without limitation, mass mailing based on commercially acquired
mailing lists, newspaper, radio and television advertisements shall not
constitute solicitation under this Section 9.06. Notwithstanding anything to the
contrary, this Section 9.06 shall not prohibit the Servicer or its agents or
affiliates from servicing the refinancing needs or other financial needs of a
Mortgagor who without solicitation, contacts the Servicer or its agents or
affiliates directly.
Section 9.07. Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
-52-
Section 9.08. Place of Delivery and Governing Law.
This Agreement shall be deemed in effect when a fully executed
counterpart thereof is received by the Seller in the State of New York and shall
be deemed to have been made in the State of New York. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (OTHER THAN SECTION 5-1401
OF THE GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 9.09. Further Agreements.
The Seller and the Servicer each agree to execute and deliver
to the other such reasonable and appropriate additional documents, instruments
or agreements as may be necessary or appropriate to effectuate the purposes of
this Agreement.
Section 9.10. Intention of the Parties.
It is the intention of the parties that the Seller is
conveying, and the Servicer is receiving only a contract for servicing the
Mortgage Loans. Accordingly, the parties hereby acknowledge that the Trust Fund
remains the sole and absolute owner of the Mortgage Loans (other than the
servicing rights) and all rights related thereto.
Section 9.11. Successors and Assigns; Assignment of
Servicing Agreement.
This Agreement shall bind and inure to the benefit of and be
enforceable by the Servicer, the Seller, the NIMS Insurer and the Master
Servicer and their respective successors and assigns. This Agreement shall not
be assigned, pledged or hypothecated by the Servicer to a third party except in
accordance with Section 7.02 and shall not be assigned, pledged or hypothecated
by the Seller without the prior written consent of the NIMS Insurer except as to
the extent provided in Section 9.12.
Section 9.12. Assignment by the Seller.
The Seller shall assign (exclusive of the Seller's rights
arising under Section 8.02 or the Servicer's rights under Sections 8.02(iii) or
8.03), its interest under this Agreement to the Depositor, which in turn shall
assign such rights to the Trustee, and the Trustee then shall succeed to all
rights of the Seller under this Agreement.
-53-
Section 9.13. Amendment.
This Agreement may be amended from time to time by the
Servicer and the Seller, with (i) the prior written consent of the Trustee and
the NIMS Insurer and (ii) the written agreement signed by the Master Servicer,
the Seller and the Servicer; provided that the party requesting such amendment
shall, at its own expense, provide the Trustee, the NIMS Insurer, the Master
Servicer and the Seller with an Opinion of Counsel that such amendment will not
materially adversely affect the interest of the Certificateholders in the
Mortgage Loans or the NIM Securities to be issued in the NIMS Transaction. Any
such amendment shall be deemed not to adversely affect in any material respect
any the interest of the Certificateholders in the Mortgage Loans or the NIM
Securities to be issued in the NIMS Transaction, if the Trustee receives written
confirmation from each Rating Agency that such amendment will not cause such
Rating Agency to reduce, qualify or withdraw the then current rating assigned to
the Certificates and the NIM Securities (and any Opinion of Counsel received by
the Trustee, the NIMS Insurer, the Master Servicer and the Seller in connection
with any such amendment may rely expressly on such confirmation as the basis
therefore).
Section 9.14. Waivers.
No term or provision of this Agreement may be waived or
modified unless such waiver or modification is in writing and signed by the
party against whom such waiver or modification is sought to be enforced and is
consented to by the NIMS Insurer.
Section 9.15. Exhibits.
The exhibits to this Agreement are hereby incorporated and
made a part hereof and are an integral part of this Agreement.
Section 9.16. Intended Third Party Beneficiaries.
Notwithstanding any provision herein to the contrary, the
parties to this Agreement agree that it is appropriate, in furtherance of the
intent of such parties as set forth herein, that the Trustee and the NIMS
Insurer receive the benefit of the provisions of this Agreement as intended
third party beneficiaries of this Agreement to the extent of such provisions.
The Servicer shall have the same obligations to the Trustee and the NIMS Insurer
as if they were parties to this Agreement, and the Trustee and the NIMS Insurer
shall have the same rights and remedies to enforce the provisions of this
Agreement as if they were parties to this Agreement. The Servicer shall only
take direction from the Master Servicer (if direction by the Master Servicer is
required under this Agreement) unless otherwise directed by this Agreement.
Notwithstanding the foregoing, all rights and obligations of the Trustee and the
Master Servicer hereunder (other than the right to indemnification) shall
terminate upon the termination of the Trust Fund pursuant to the Trust Agreement
and all rights of the NIMS Insurer set forth in this Agreement (other than the
right of indemnification) shall exist only so long as the NIM Securities issued
pursuant to the NIMS Transaction remain outstanding or the NIMS Insurer is owed
amounts in respect of its guarantee of payment on such NIM Securities.
-54-
Section 9.17. General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings
assigned to them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to include the other
gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles;
(c) references herein to "Articles," "Sections,"
"Subsections," "Paragraphs," and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, Paragraphs and other
subdivisions of this Agreement;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to Paragraphs and
other subdivisions;
(e) the words "herein," "hereof," "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean by reason of
enumeration.
Section 9.18. Reproduction of Documents.
This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications which may hereafter
be executed, (b) documents received by any party at the closing, and (c)
financial statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
-55-
IN WITNESS WHEREOF, the Servicer, the Seller and the Master
Servicer have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the date first above written.
▇▇▇▇▇▇ BROTHERS HOLDINGS INC.,
as Seller
By: __________________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Authorized Signatory
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
as Servicer
By: __________________________________________
Name:
Title:
AURORA LOAN SERVICES INC.,
as Master Servicer
By: __________________________________________
Name: E. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
Acknowledged by:
HSBS BANK USA
as Trustee
By: ________________________________
Name:
Title:
EXHIBIT A
---------
MORTGAGE LOAN SCHEDULE
(Including Prepayment Charge Schedule)
[INTENTIONALLY OMITTED]
A-1
EXHIBIT B
CUSTODIAL ACCOUNT CERTIFICATION
_____________ __, ____
▇▇▇▇▇ Fargo Bank, National Association hereby certifies that
it has established the account described below as a Custodial Account pursuant
to Section 3.03 of the Subservicing Securitization Agreement, dated as of May 1,
2004.
Title of Account: "▇▇▇▇▇ Fargo Bank, National Association in trust for
HSBC Bank USA, as Trustee for the Structured Adjustable
Rate Mortgage Loan Trust, 2004-7."
Account Number: ______________________.
Address of office or branch of
the Servicer at which account
is maintained:
___________________________________________
___________________________________________
▇▇▇▇▇ Fargo Bank, National Association
Servicer
By:________________________________________
Name:______________________________________
Title:_____________________________________
Date:______________________________________
B-1
EXHIBIT C
ESCROW ACCOUNT CERTIFICATION
_____________ ___, ____
▇▇▇▇▇ Fargo Bank, National Association hereby certifies that
it has established the account described below as a Custodial Account pursuant
to Section 3.03 of the Subservicing Securitization Agreement, dated as of May 1,
2004.
Title of Account: "▇▇▇▇▇ Fargo Bank, National Association in trust for
HSBC Bank USA, as Trustee for the Structured Adjustable Rate
Mortgage Loan Trust, 2004-7."
Account Number: ______________________.
Address of office or branch of
the Servicer at which account
is maintained:
___________________________________________
___________________________________________
▇▇▇▇▇ Fargo Bank, National Association
Servicer
By:________________________________________
Name:______________________________________
Title:_____________________________________
Date:______________________________________
▇-▇
▇▇▇▇▇▇▇ ▇
▇▇▇▇ ▇▇▇▇-▇ TRUST AGREEMENT
See Exhibit 4.1
D-1
EXHIBIT E
FORM OF CERTIFICATION
I, _____________, Vice President of ▇▇▇▇▇ Fargo Bank, National Association (the
"Servicer"), certify to [identify the company submitting to SEC], and its
officers, directors, agents and affiliates (in its role as [identify role] the
"Sarbanes Certifying Party"), and with the knowledge and intent that they will
rely upon this certification, that:
(i) Based on my knowledge, the information relating to the
Mortgage Loans and the servicing thereof submitted by the
Servicer to the Sarbanes Certifying Party which is used in
connection with preparation of the reports on Form 8-K and the
annual report on Form 10-K filed with the SEC with respect to
each transaction listed on the attached Exhibit A, taken as a
whole, does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which
such statements were made, not misleading as of the date of
this certification;
(ii) The servicing information required to be provided to the
Sarbanes Certifying Party by the Servicer under the relevant
servicing agreements has been provided to the Sarbanes
Certifying Party;
(iii) I am responsible for reviewing the activities performed by the
Servicer under the relevant servicing agreements and based
upon the review required by the relevant servicing agreements,
and except as disclosed in the Annual Statement of Compliance,
the Annual Independent Public Accountant's Servicing Report
and all servicing reports, officer's certificates and other
information relating to the servicing of the Mortgage Loans
submitted to the Sarbanes Certifying Party, the Servicer has,
as of the date of this certification fulfilled its obligations
under the relevant servicing agreements; and
(iv) I have disclosed to the Sarbanes Certifying Party all
significant deficiencies relating to the Servicer's compliance
with the minimum servicing standards in accordance with a
review conducted in compliance with the Uniform Single
Attestation Program for Mortgage Bankers or similar standard
as set forth in the relevant servicing agreements.
(v) The Servicer shall indemnify and hold harmless the Sarbanes
Certifying Party and its officers, directors, agents and
affiliates from and against any losses, damages, penalties,
fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses arising out of or based
upon a breach by the Servicer or any of its officers,
directors, agents or affiliates of its obligations under this
Certification or the negligence, bad faith or willful
misconduct of the Servicer in connection therewith. If the
indemnification provided for herein is unavailable or
insufficient to hold harmless the Sarbanes Certifying Party,
then the Servicer agrees that it shall contribute to the
amount paid or payable by the Sarbanes Certifying Party as a
result of the losses, claims, damages or liabilities of the
Sarbanes Certifying Party in such proportion as is appropriate
to reflect the relative fault of the Sarbanes Certifying Party
on the one hand and the Servicer on the other in connection
with a breach of the Servicer's obligations under this
Certification or the Servicer's negligence, bad faith or
willful misconduct in connection therewith.
E-1
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal
of the Servicer.
Dated: __________________ By: ___________________________
Name: _________________________
Title: ________________________
▇-▇
▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇. ▇▇-▇▇
▇-▇
▇▇▇▇▇▇ MAE GUIDE 95-19
ANNOUNCEMENT
REFERENCE
o Selling This announcement amends the guide(s) indicated.
o Servicing Please keep it for reference until we issue a formal
change.
SUBJECT "Full-File" Reporting to Credit Repositories
Part IV, Section 107, of the servicing Guide currently requires servicers to
report only 90-day delinquencies to the four major credit repositories. To
ensure that the repositories have up-to-date information for both servicing and
origination activity, we have decided to begin requiring -- as of the month
ending May 31, 1996 -- servicers to provide the credit repositories a
"full-file" status report for the mortgages they service for us.
"Full-file" reporting requires that servicers submit a monthly report to each of
the credit repositories to describe the exact status for each mortgage they
service for us. The status reported generally should be the one in effect as of
the last business day of each month. Servicers may, however, use a slightly
later cut-off date -- for example, at the and of the first week of a month -- to
assure that payment corrections, returned checks, and other adjustments related
to the previous month's activity can be appropriately reflected in their report
for that month. Statuses that must be reported for any given mortgage include
the following: new origination, current, delinquent (30-, 60-, 90-days, etc.),
foreclosed, and charged-off. (The credit repositories will provide the
applicable codes for reporting these statuses to them.) A listing of each of the
major repositories to which "full-file" status reports must be sent is attached.
Servicers are responsible for the complete and accurate reporting of mortgage
status information to the repositories and for resolving any disputes that arise
about the information they report. Servicers must respond promptly to any
inquiries from borrowers regarding specific mortgage status information about
them that was reported to the credit repositories.
Servicers should contact their Customer Account Team in their lead ▇▇▇▇▇▇ ▇▇▇
regional office if they have any questions about this expanded reporting
requirement.
▇▇▇▇▇▇ ▇. Engeletad
Senior Vice President - Mortgage and Lender Standards
11/20/95
▇▇▇▇▇▇ ▇▇▇ GUIDE 95-19
----------------------
ATTACHMENT 1
ANNOUNCEMENT
------------
Major Credit Repositories
A "full-file" status report for each mortgage serviced for ▇▇▇▇▇▇ Mae must be
sent to the following repositories each month (beginning with the month ending
May 31, 1996):
Company Telephone Number
------- ----------------
Consumer Credit Associates, Inc. Call (▇▇▇) ▇▇▇-▇▇▇▇, either extension
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ 150, 101, or 112, for all inquiries.
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Equifax Members that have an account number
may call their local sales
representative for all inquiries;
lenders that need to set up an
account should call (▇▇▇) ▇▇▇-▇▇▇▇
and select the customer assistance
option.
TRW Information Systems & Services Call (▇▇▇) ▇▇▇-▇▇▇▇ for all inquiries,
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ current members should select option 3;
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ lenders that need to set up an account
should select Option 4.
Trans Union Corporation Call (▇▇▇) ▇▇▇-▇▇▇▇ to get the name of
555 West ▇▇▇▇▇ the local bureau to contact about setting
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ up an account or obtaining other
information.
11/20/95